John Birkenshaw

 

　　By 2007, we will have seen a significant increase in the market share of digital printing at the expense of litho and gravure printing in particular. This transition will occur as, driven by end-user demands and facilitated by the technology advances, both offices and commercial printers choose to install and use more digital systems.

 

　　Table 1 shows the expected pace of change by print process over the next five years.

Table 1: Forecast of market share of print processes in next five years in EU (%)
	2002		2007
	Volume (%)	Value(%)	Volume (%)	Value(%)
Litho	57	57	55	54.5
Gravure	19	18.5	18	17
Flexo	12	10.5	12.5	11.5
Digital Office	4.5	5	5	5
Digital Commercial	4.5	6.5	7	9.5
Total Digital	9	11.5	11.5	14.5
Other	3	2.5	2.5	2
Source: Pira International Ltd.

　　Commercial digital share includes transactional or mainframe production printing (bills and statements), direct mail, books, packaging and personalisation as well as short-run mono and colour. The higher value of digital print reflects the premiums chargeable for very short runs or personalisation applications.

The decline in market share for litho and gravure is exaggerated when the value figures are considered beside relative print volumes. This reflects the continuing competition between established providers seeking to maintain volumes and reducing prices. The bulk of this print will be considered almost as a commodity and printers will try to develop specialist niches outside the normal, such as specialist finishing, coating or multiple unit print effects.

　　Print sectors in 2007

　　It is difficult to characterise print into a few sectors but it is useful to consider the likely changes in relative values as the markets and technology develop. Table 2 shows that promotional print (directories, catalogues, brochures, fliers, posters and direct marketing communications) will see much higher growth than packaging and publishing print as organisations look to boost their sales and business. Promotional print will be just one channel for the marketeer to get the desired message across. For businesses it will be increasingly vital to get the correct message across, to the correct recipient. Print is an extremely good medium to accomplish this, complementing the other media rather than a direct alternative.

Table 2: Forecast of share of print markets in next five years in EU (excludes newspaper printing)
	2002	2007
	(value %)	(value %)
Packaging	44	41
Publishing	24	21
Promotional print	25	29
Other (Transactional, stationery, security)	7	9
Source: Pira International Ltd.

　　For printers there will be significant changes in the macro markets they serve. Growth is forecast across the whole market in line with GDP over the next five years but within the overall market there will be shifts in value.

　　Promotional printing in 2007

　　Promotional printing will see declines in directories and large catalogues as retailers use better targeting and market segmentation to identify and service their customers more effectively. The market will polarise with fewer long runs (for popular holiday brochures, large mail order catalogues and store catalogues) and more targeted smaller editions printed regularly with product and price updates. Across Europe there will be more local market versioning to tailor the brochure toward the consumer with local languages and currencies and local product. There will be increases in variable content, using selective binding techniques, with personalisation of order forms and special offers becoming more common.

 

　　The real growth in promotional print will come through short-run and low pagination brochures and fliers, and direct marketing. The direct mail market will continue to see growth as organisations move from general above-the-line promotion to more measurable and controllable below-the-line expenditure. Businesses will develop their communications with customers as they explore and improve their customer relationship marketing programmes and use print as a valuable communication channel to identify, convert and service their clients.

 

　　Over the next five years there will be a convergence between general commercial printing and mainframe or production printing (e.g. bills and statements). Companies realise the imperative to maximise the opportunities of regular communication with their clients and will move from just sending out the depressing news of a bill to include marketing offers and ways for the recipient to benefit. This means applying the graphic arts aesthetic design to previously computer-generated material as the companies get better formatting control to print at guaranteed high speed and turnaround.

　　Changes in commercial print market by 2007

Table 3: Printing market transition table to 2007
	Main characteristics	Current trends	Key drivers	Status in 2007
Print process share	New digital developments in technology and targeting. Growth in digital and flexi, decline in litho and gravure.	Reduction in run length, explosion in amount of content and pages	Need to demonstrate cost effectiveness of every channel of distribution	Litho still largest share but more cost competition as a commodity. Higher value added with digital
Macro markets	Cost and effectiveness pressures	Economic cycle broadly optimistic	Increasing transparency and sharing of information between client and supplier to smooth administration	Print just one of several communication channels
Outsourced procurement	Intermediates acting to improve print and communication supply chain	E-enabling the business process	Early adopters of systems linking client and supplier, adding value beyond standard printer capabilities	'Trade' printers concentrate on maximising production efficiencies, saving sales costs. Other printers find specialist niches
Packaging		Minimising supply chain waste	Environmental considerations to reduce waste. Material science to minimise resources. Supply chain re-engineering
Publishing print	Books and magazines	Print-on-demand for books. Reduced time to market for magazines. More targeted advertising	Need to reduce waste across supply chain	Publishers developing brands rather than titles
Promotional print	Brochures, catalogues, directories, flyers	Moving from large catalogues to smaller, more tailored brochures and specialogues. Better targeting of direct mail	Clients need better measures of promotional effectiveness	Will grow as below-the-line spend becomes more effective. More personalisation
Other		Convergence of graphic arts and 'mainframe' printing	CRM developments of businesses needing personalised communication	High-volume, high-quality digital print (inkjet)
Source: Pira International Ltd.

 

Table 4: Advertising expenditure media split (%) by country, 2000
	France	Germany	UK	US
Magazines	32.6	24.2	19	12
Newspapers	17.9	43.5	40	34
Television	30.1	23.6	32	37
Outdoor & Transport	11.6	3.7	5	4
Radio	7.1	4	4	13
Cinema	0.8	0.9	-	-
Source: FIPP

　　There will be significant changes for companies that deal with non-specialist print buyers, i.e. non-publishers. The last two years have seen significant increase in the activities of specialist facilities management and managed service intermediates, such as Williams-Lea, Access Plus, Astron and Aiza Ltd among others. These organisations act on behalf of clients to specify and procure print and communications more effectively than non-expert buyers can, saving the overhead at the client. By placing jobs with companies specialising in particular processes and products the intermediates can improve the efficiency of the supply chain. They will start to handle prepress and supply print-ready files that do not require the print company to check and repair and optimise for their production, saving time and cost at the printer. They will take over a portion of the sales and marketing function for the printer and streamline administration, developing e-enabled supply chain to reduce the non-value adding elements within the supply chain. The business forms market has operated in this manner for some time; clients of the brokers and management companies are investigating their overall print requirements and placing the work with specialist suppliers able to fulfil their needs.

 

　　A problem faced by printers is that not even the largest print group is able to handle all the requirements of an organisation. So, a travel company may need high-volume holiday brochures; office stationery; business forms; point-of sale material; posters; T-shirts and hats; tickets and labels; travellers cheques; folders; training material; supplier contracts; content for the website; resort guides and a variety of miscellaneous printed material. All of this should conform to corporate brand specifications and match when combined into customer packs. No single printer (or even a large group) can produce the complete range of material needed. Printers often attempt to maximise the added value from a hard-won client relationship and print products that they are not well equipped to produce. This results in a product mix that contains unprofitable items that printers produce to stop the customer going to competition and possibly losing the work they are well suited to produce. The net effect is to introduce inefficiencies that reduce efficiency. One role of the intermediate is to place work with printers best suited to supply.

　　Publishing markets in 2007

　　Two of the most important publishing products, newspapers and magazines, are significantly funded by advertising. Hence any change in advertising expenditure and the split between different media potentially will have an effect on print production volumes over the next five years. Table 4 shows where ad spend currently goes.

 

　　Figure 1 (above), compiled from a variety of sources, suggests how advertising spend is expected to change by 2005. It must be said that there is considerable uncertainty in this data, especially concerning digital media. However, it is clear that print's market share of advertising is set to drop in all areas except direct mail. This is not a catastrophe as print volumes are still expected to expand over the next five years. Printed publishing products will need to evolve in response to these changes in the market and the evolution of new forms of media. Table 5 summarises some of developments in print products expected over the next few years.

A picture which emerges from this is that of print working with other publishing media, for example:

• Magazines and TV;
• Newspapers and the internet;
• Magazines and the internet and email;
• Books, e-books and on-demand books being produced from the same data source;
• Direct mail, brochures and catalogues, the internet and email;
• Personalised brochures etc. with CRM.

　　A major current change is the introduction of a number of new publishing media, that is to say, not media necessarily intended primarily for publishing but certainly having this capability, and in all cases the potential to carry advertising, hence providing a revenue stream for publishers. The main ones are:

• The internet;
• Mobile phones (WAP, short message system);
• Interactive digital television;
• Email.

　　The interesting characteristic of all of them is that they deal with individuals, and are interactive - it is a two-way communication. Furthermore, they all offer quick delivery at any time to any suitably equipped place, and therefore timescales are somewhat different from traditional publishing media.

 

　　The appeal of some of these media can be appreciated by considering the way in which teenagers have taken to MP3 music (much of it downloaded freely from the internet) and the use of the SMS messaging system on mobile phones. This needs to be contrasted against, for example, their declining readership of newspapers. Clearly, publishers cannot plan on the consumer of tomorrow having the same inclination to read printed material as has been the case, and this perhaps provides the strongest reason why publishers need to and are diversifying into these new areas.

　　Business issues to 2007

　　The nature of printing is changing as alternative communication channels mature and are exploited by publishers and companies. As well as competing with other printing companies, printers will increasingly have to face the challenge from new electronic media and communication companies trying to gain market share from print.

 

　　Print still has great strengths in comparison to new media. These will not change over the next five years. Print is tactile in nature, it has good legible design and there is no need for a recipient to have a specialist viewer. Individual print items can be differentiated in many ways, by using spot colours, specialist coating and finishing or using high-quality materials to provide a prestige product. Printing will further move to capitalise on these by improving quality, reducing lead-times and making the content more current by allowing economic reprinted updates rather than one long run. The industry will move away from economies of scale toward economies of scope, making the printed material more valuable to the client.

　　Services and product portfolio in 2007

　　The trend toward shorter runs, perhaps printed more frequently, with faster turnaround times will continue over the next five years. The lower order value will increase the pressure to reduce and automate both the prepress and administration functions.

 

　　The emerging new channels and systems are seen as a threat to many traditional printing companies. Instead, some successful former printers are re-inventing themselves as service providers to clients and are broadening their product offerings. Preparing content for printing is generally far more time-consuming and onerous than for alternative media. Printers can often leverage their skills to open new revenue streams by helping clients use their print content alternatively.

 

　　Printers will look at the total value chain of their customers and use process re-engineering techniques to take time and cost out of the process while maintaining their margins. The skills and systems the industry possesses will allow companies to reposition their services to offer additional communication products demanded by clients. The deep understanding of typography, design and colour means printers might offer content management through digital asset management systems. Repro houses and printers know the difficulties in preparing content for print.

 

　　Repurposing material for web and electronic distribution can be sub-sampled from the high-resolution images and typeset text relatively easily. Generating high-resolution printable files from web content is impossible without very noticeable poor quality artefacts in the printed version unless the image is greatly reduced in size. So print companies could be very competitive for managing multi-channel content.

 

　　Companies can increase their sales by broadening the range of services they offer to established print clients, taking advantage of the business relationship they have built up. Direct mail printers may become involved with data preparation and sorting of lists at the front end or response handling and fulfilment after the campaign has been mailed. Magazine printers might handle subscription mailing and personalising of copies during the binding process, or specialise in fast distribution to newsstands for time-sensitive products. Stationery printers might manage the stock at their clients, ensuring product does not run out at the client and smoothing manufacturing by eliminating urgent rush jobs that might destroy planned production to minimise set-ups and press changes.

 

　　Companies will look at the value chain of their customers to identify areas where clients are prepared to pay for improvements. In this way they can increase their share of the overall supply chain while providing reductions for their client, a win-win relatively easy sell. To succeed they will have to broaden their skills and activities over the next five years.

　　Print technology in 2007

　　Much print technology will be very similar to today's. The major big-league vendors (Heidelberg, Hewlett-Packard, Xerox and IBM), will back digital printing rather than smaller suppliers such as Indigo or Xeikon. The penetration and capacity of machines will be mainstream and widely accepted by all printers, rather than being considered low-volume niche machines. The unit value of unique digitally produced product will raise in comparison to mass-produced conventionally printed material.

 

　　The biggest change will be widespread acceptance and installations of high-speed and (relatively) high-quality inkjet machines. The spot colour VersaMark and process colour Business Color Press from Scitex Digital Printing will become products supported by major vendors of digital printing equipment and will be widespread in applications of billing and statements. The technology will eliminate the requirement for preprinted base stock, instead the mailer will print the entire communication onto blank paper with highly specific marketing messages along with the bill or statement message. There will be other inkjet machine suppliers providing competition and impetus for improvements in quality and productivity.

　　Print investment trends in 2007

　　An increasing pressure for printers is to match their process to market requirement. The market is in a state of change. Demand from varying customer demands and the message from suppliers is very confusing as the leading manufacturers change their offerings. Printers have to consider many competitive pressures when making their investment decisions.

 

　　One of the major drawbacks for printers investing in conventional technology is the lifespan of the asset. A conventional printing press will last for ten or fifteen years and at the end of that time it will perform in the same way as it does on day one, placing ink onto paper at a particular quality and speed. The problem is that the technology to do this will develop over the life of the asset, offering reductions in makeready and increases in speed while perhaps allowing a more efficient format or more colours and coatings. The competitive position of an asset will deteriorate over its life.

 

　　For many companies a written-off asset seems to provide a great source of competitive advantage. Depreciation charges are not always a significant proportion of the overall cost make-up. Faster throughput, reduced waste and improved labour utilisation all provide more added-value opportunities for new investments. So there is a great deal of pressure on companies, none of which have really dominant positions within commercial print markets, to invest or die. This cycle results in general over-capacity and limits the profitability of the whole industry.

 

　　In North America, the takeover of World Color Inc. by Quebecor in the late 1990s was notable by their decision to rationalise some of their capacity and retire older presses and close less efficient plants. Other major printers have followed suit and the marketplace is more closely balanced between print supply and demand. In Europe over the same period mergers and acquisitions have continued apiece but rationalisation has been slow to follow. The UK has seen some high-profile casualties because of the loss of much work (particularly the less time-sensitive catalogues and books) to the European mainland at least partly due to currency fluctuations.

 

　　Profitability has been further pressured with the economic slowdown in 2001. January 2002 has seen planned reductions by Jarrolds and St Ives with Flair-Spectrum placed into receivership. The next five years will see European overcapacity in conventional printing reduce. Companies without strong balance sheets will find it more difficult to raise the necessary finance to buy new assets, as their competitive position declines there will be casualties.

 

　　There will be increasing polarisation as large groups buy medium-sized companies with strong customer relationships, probably pan-European or global as suppliers follow their customers as they expand geographically. Larger groups will act to rationalise their assets, using their most efficient manufacturing plants and best client relationships.

　　Environmental issues in 2007

　　The initial launch of environmental concern across printing and packaging has died down with a more measured approach to consider the situation. Environmentalism has become mainstream as effective environmental management provides economic and consumer benefits of reducing the overall cost and waste cross a supply chain. There will be increasing recycling of all waste materials, backed up with legislation and taxation. Wastage in the supply chain will be seen as an opportunity for suppliers and customers to improve the chain. This is happening in books with the introduction of digital print-on-demand systems to avoid lost sales and author relationships for low-selling titles. Interestingly the leaders are not established printers but distributors who look at the overall chain and see opportunities to reduce waste and spoilage (and take a higher proportion of the value for themselves). This will spread as retailers and print originators look to comply with legislation and improve their image to consumers while taking cost out of the supply chain.

 

　　The magazine and newspaper industries will see significant changes to reduce the problem of unsold titles supplied to retailers on a sale or return basis. They will be unable to bear the costs of up to 33% of expensively manufactured and distributed copies having to be returned to the publisher for destruction. Newspapers have adopted a distributed production model with nationals being printed at a number of locations. Early returns from a number of important sales locations will provide immediate feedback to the publisher who will better judge appropriate run lengths. Established magazine titles will endeavour to increase their subscriber base rather than rely on the impulse purchase. Large retailers will take quantities of best-selling titles (magazines and books) not on sale or return and offer discounts. By using efficient customer response analysis they will use the same forecasting techniques used for other fast-moving consumer goods and apply the same pressures to printers and publishers.

 

　　There will be subtle process development to help satisfy these environmental pressures that will also satisfy similar economic and consumer pressures. So the choice of cut-off on a fixed cylinder circumference web offset press will be an even more critical decision.

　　The customer interface in 2007

　　Customer contact will be ever more important at every level over the next five years. Successful printers will increase the amount of time their representatives spend with customers not less. Client service and sales personnel will spend less time on mundane administration and paperwork, more on cross-selling and process improvement adding value to the client.

 

　　The key for this will be improvements in administration offered by the specialist print-related e-commerce systems that are becoming more widely used. During the past 15 years the production of print has become digital; today virtually every printed item comes from a digital file. The use of computerised management information systems within printers has increased over the same time and is also handled digitally. However the administration still remains largely separate from the production.

 

　　Expect the integration of production and administration within a single standard to provide significant competitive advantage for early adopters well before 2007. Print management companies will take the lead in this trend. This will be a way of reducing the costs to client while increasing the number of individual orders being carried out.

 

　　Wide-ranging standards will develop, most likely based around the emerging JDF de-facto standard. The growth of e-business in all fields has demonstrated the capability of reducing administrative overheads across the supply chain while greatly improving the customer service offering. These expectations will become mainstream in printing, the transparency of the process will greatly increase as the client base becomes more demanding.

　　As ever the strategy of the majority of printers will lie in establishing and maintaining a USP (unique selling point) for their operation. There are limited opportunities to be the lowest cost producer. If the company competes on price at the expense of sustained profitability the outlook will be bleak.

[时间：2004-03-15  作者：Bisenet  来源：Bisenet]