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STAMFORD, Conn., July 29, 2009 View All Press Releases

Gartner Says Printer OEMs Could Lose More Than $13 Billion to Third-Party Remanufacturers During the Next 12 Months

OEM's Should Use a Three-Step Marketing Campaign to Compete Against Low-Cost Remanufactured Supplies

Printer OEMs could lose more than $13 billion in the next 12 months as procurement managers and other supply buyers increasingly turn to remanufactured supplies to help them cut costs during the downturn, according to Gartner, Inc.

“Because printer supplies produce a higher margin than the product itself, this trend is leading to lower profits for printer OEMs,” said Ken Weilerstein, research vice president at Gartner. “In addition, there is potential for damage to the printer OEMs' brand because of poor quality and counterfeits. However, OEMs are well-placed to take advantage of the challenges facing the remanufacturers, and the marketing team must play a key part in this. OEMs already have the advantage of understanding the market, their competitors, and buyers' preferences.”

Gartner has identified three steps that marketing staffs can use to help their company win back market shares from supply remanufacturers in emerging markets and stop the remanufacturers from denting aftermarket profits.

Step 1. Design a Marketing Campaign That Begins With Education — During the downturn, organizations, procurement managers, and print supply buyers are extremely cost-conscious. OEM marketers should create a campaign to educate buyers and users. It will explain why buyers should continue to choose its products, and why these products cost more than those of the remanufacturers. To succeed, the campaign must draw on corporate branding, marketing communications, line of business marketing, partner marketing and field marketing teams, as well as senior management.

Step 2. Execute the Campaign Aggressively — In the minds of some buyers, remanufactured supplies are both less expensive and more environmentally friendly. Original supplies also have substantial cost savings and environmental benefits, and OEMS must present their side of the story effectively. Beyond branding, OEMs have inherent strengths in yields, reliability and image quality — the same areas where remanufacturers continually struggle to catch up.

Step 3. Utilize PR and Legal Successes Judiciously — Some OEMs work hard to protect their patents and copyrights against remanufacturers, but then fail to explain their legal actions in a way that customers can understand and appreciate. Even a favorable verdict can damage the image of vendors that come across as bullies. Public relations teams should address the OEM’s efforts proactively and explain the context fairly.

“Remanufacturers will continue to make inroads into the print supply aftermarket if an OEM competes purely on cost,” said Vishal Tripathi, principal analyst at Gartner. “Therefore, marketing campaigns need to focus on end-user education, highlighting aspects such as environmental friendliness and the importance of third-party certification for yield quality. These OEMs should back this with aggressive marketing that shows strengths while highlighting the quality challenges faced by remanufacturers.”

“Don't be afraid to play on concerns about counterfeit products and poor print yields,” said Laura McLellan, research vice president at Gartner. “Marketing against lower-cost competitors is never easy or inexpensive, but following these steps can remind corporate supply buyers why they should choose OEM-produced print supplies.”

Additional information is available in the Gartner report "Marketing Essentials: What Printer OEMs Must Do to Compete Against Low-Cost Remanufactured Supplies." The report is available on Gartner's Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=1035914&subref=simplesearch.

 

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