Almost all of HP’s current ink families are available in standard and high capacities.  Epson also offers range of capacities, while Canon has stuck to high capacity options exclusively in its two-cartridge systems.  Even Kodak offers high capacity tanks now, while maintaining its claim to the lowest ink replacement cost.  So what does this mean? Are manufacturers just pushing higher-priced items or can consumers really get a value from spending a little bit more at the register?

To start with, what is the monetary cost difference between a standard and a high capacity cartridge? Generally speaking, across manufacturers, high capacity inks are an average of 26% more expensive than their standard capacity counterparts.  Each of the major OEMs varies in the premium that they charge for their high capacity inks.  Interestingly, Brother leads the pack with a 68% price difference for individual high capacity inks compared to individual standard capacity.  On the lower end of the spectrum, Canon and Dell price their high capacity products at 14% and 18% higher than standard capacity inks, respectively.

The main argument and marketing message that manufacturers push when advertising their high capacity inks is the savings that consumers can realize.  The main savings really comes in the form of cost per page.  Of course, consumers are going to pay a higher price for more ink, but the value of that cartridge is also greater.
While we saw that Brother had the highest average mark-up for high capacity tanks, the manufacturer also has one of the largest yield deltas between standard and high capacity ink tanks.  On average, Brother standard capacity tanks have a yield of 422-pages, while the high capacity tanks offer a yield of 1,095-pages.  HP advertises quite frequently that consumers can print up to three times the number of pages with XL inks versus standard.  gap intelligence data supports the advertising claim with the average difference slightly under three times with 1,066-pages for high capacity and 463-pages for standard capacity.  Customers can definitely realize a savings when they front a few extra dollars at the cash register for high capacity inks.

On some of the newer printers, we see that consumers can save quite significantly on cost per page when they purchase the high capacity tanks.  HP offers a discount of about a 40% on the color CPP and 35% on black CPP for the high capacity hp932/933 inks compared to their standard counterparts, when used with the HP Officejet Pro 6700.  The manufacturer offers a slightly larger discount between standard and high capacity on its SOHO- targeted Officejet Pro 8100 with a color CPP discount of about 36% and a black CPP discount of 40%.  Epson’s official premium for its T711XXL inks over its T676XL inks is unknown at this time as the manufacturer does not offer pricing on its website.  However, according to channel pricing, the difference in price for the higher yield inks exceeds the increase in yield, leading to a very unusual premium for the higher capacity tanks.  Brother offers considerable discounts of 36% and 60% for its color and black and white CPP, respectively, on its MFC J5910DW.  Likewise, Lexmark offers high discounts of almost 40% on the color CPP and 25% on the black CPP for its Pro715, which uses its lex150/155 ink tanks.  Each of these manufacturers offers a rather high discount for customers that opt to purchase the high capacity inks rather than the standard.

The availability of high capacity inks has drastically increased over the past several years.  While there are many legacy products still available in the market today that do not have XL counterparts, most manufacturers’ current offerings are available in standard and high capacity.   Canon slightly switched up its strategy with its latest two-cartridge system, the PG-240 and CL-241, which debuted in late 2011.  The series offers three capacities of the black cartridges and two for the color.  The manufacturer’s standard capacity cartridge is currently only available on Canon.com’s website, while the high and extra high capacity versions are available throughout the US channel.  Offering three capacities for a single printer is a unique strategy, providing even further choices for potential home and office users.  The lack of availability of Canon’s standard capacity black and color cartridges throughout the channel indicate that resellers may be hesitant to stock so many products from the same line.  The reasoning could also be coming directly from Canon, who may be pushing its higher priced, higher capacity inks into the market.

Consumers may continue to complain about the high cost of inks, but manufacturers have come a long way and are offering different options to fit various needs.  The availability of high capacity inks has definitely increased over the past several years, catering to consumers who are willing to spend a little bit more upfront in order to gain long term savings.  Yes, the price is higher, but so is the value.  Consumers will likely move more in the direction of purchasing higher capacity inks versus their standard counterparts as information regarding cost per page becomes more prevalent in the main stream market.
Inkjet manufacturers are targeting small and home offices much more than the everyday consumer, a factor also leading to the influx of high capacity inks.  Inkjet has been trying to gain a place in the business segment for several years and higher yields are part of the key.  Toner customers have long accepted that they will pay more for supplies but receive considerably better CPPs in exchange.  Inkjet manufacturers are hoping that they can capitalize on this accepted notion in the business arena as well.

The importance of addressing mobile print is based on several changes in the market – tablet and smartphone adoption is growing, digital content continues to multiply and is being consumed at a higher rate (thanks to mobile devices), and the number of people bringing in their own devices to work has greatly increased.  Indeed, research firm IDC predicts that smartphone shipments will reach 1.16 billion units by 2016, far surpassing shipments of traditional PCs.  And Forrester last week forecast that the installed base of tablets could reach 760 million worldwide by 2016.   This shakeup between traditional PCs and mobile devices will also have a dramatic effect on the platform hierarchy, with Android expected to supplant Windows as the operating system of choice.

To capture this dramatic shift in the market, vendors began developing app and email-based solutions, headlined by HP’s ePrint in 2010 and followed by Apple’s AirPrint and Google’s Cloud Print.  Today, most printer makers have at least dipped a toe into the mobile solutions arena.  For some, mobile printing has become an essential part of their go-to-market strategy.

It’s no secret that tablets are a potential threat to the print industry – there is no shortage of anecdotes and surveys to show that in many cases people favor their iPads over the printed page.  While it is unclear what the long-term impact of a shift to mobile devices means for printing, developing print functionality for mobile devices that is easy, intuitive, and well integrated is the best way for vendors to adapt to this transition.  The jury is still out on the overall impact of mobile devices and no vendor wants to be on the sidelines if and when mobile print does explode.

I recently learned an encouraging and somewhat counterintuitive fact in the history of mobile print: when the original iPad shipped, lack of print functionality was one of the biggest complaints (despite clamoring that tablets would kill printing).  This in turn led Apple to create AirPrint in 2010 just months after HP released ePrint.  Perhaps equally as encouraging is that Google continues to invest in its Cloud Print service.  R&D funds would not be allocated to such services if the demand did not exist.

To date, mobile printing has largely focused on consumer printing.  Take a walk through your local Best Buy and you will see ePrint endcaps, experience AirPrint demos, and find references to mobile printing stamped on just about all the new printers’ boxes.  The importance of mobile print is evident in the fact that the majority of new printers entering the retail channel today are mobile print ready.

Yet while smartphone and tablet-toting consumers are a natural target for mobile printing, businesses could ultimately prove to be a more receptive and significantly larger market for mobile services.  A recent Quocirca study from January 2012 revealed how IT consumerization is a driving force behind the adoption of mobile printing, as more employees bring in their own smartphones and tablets to work.  According to the study, around 55% of US and European enterprises see mobile print as a requirement, yet only 5% have actually deployed it, highlighting a huge opportunity for vendors with robust mobile print solutions.

Obvious roadblocks exist for mobile print in enterprise, such as the fear of data exposure and the fact that a user might print to an unsecure device.  HP has been one of the most proactive vendors regarding these fears with the roll out of its ePrint Enterprise solution, which among many features can secure print jobs through encrypted channels and can integrate with ‘pull-and-PIN’ printing solutions that require authentication.  But it’s not just HP – many other vendors and independent providers are making headway toward building or improving their own enterprise mobile printing solutions.

The landscape of consumer and business printing is changing as users migrate away from traditional PCs and toward mobile devices.  Businesses and other verticals such as education have the opportunity to benefit from email and app-enabled printing, which can support and improve the experience of tablet and smartphone users.  Consumers and business people still need to print and want to do it from their mobile devices.  Developing intuitive, safe, and well integrated mobile solutions is the key for successful vendors in this evolving print environment.

While smartphones represent the easiest culprit to point a finger at, some of the reasoning behind their popularity as image capture solutions comes largely from their ability to quickly share, a concept fundamental to photography in general.  Almost every image snapped throughout the history of photography has been captured with the intent of sharing something with others, whether that be a person, place, emotion, or event.  While venues for sharing have shifted over time, Facebook is today’s most popular method of showcasing these memories with its 690 million members and 2.5 billion photos uploaded each month.  Past surveys conducted by wireless memory card maker Eye-Fi confirm this deep desire to share, revealing that:

• 58% of camera users share their photos online within 24 hours
• 86% wish they could share new content within 7 days
• 56% desire the ability to share immediately
• 67% view cameras as not having enough built-in sharing capabilities

With the majority of consumer opinions skewed toward a “connected” preference, it’s no wonder that we are seeing not only the quantity of WiFi cameras increasing, but also the presence of the technology spread throughout manufacturers’ portfolios.  WiFi began as a niche feature within compacts, but is now spreading to interchangeable lens cameras as Samsung leads the way with three new mirrorless NX-series models, and even Nikon promotes WiFi compatibility for the launch of its latest entry-level DSLR (through accessory module).  Almost every major camera manufacturer (noticeably not Olympus or Nikon yet) debuted one, if not multiple, WiFi-equipped compacts this year to introduce connectivity within the price bands that are faced with significant smartphone threat.

While difficult to quantify, basic camera models have indeed suffered the most in the wake of converged devices, due in part to the consumer mentality that “Oh, I have a smartphone, I don’t need a separate camera.”  This factor has challenged the digital camera market, although should not be viewed as entirely negative.  The people who feel this way are not photographers nor do they care to be.  In the past, camera makers could count on these consumers purchasing basic point-and-shoots simply because they were the only available option for a quick snapshot.  Since users always have a smartphone at their fingertips, they have become the new ideal for capturing and sharing the spontaneity of life.

For novice shooters, a smartphone image is seen as “good enough”, just as the photo snapped with their old sub-$150 compact was, again reinforcing their “unneeded” mentality toward dedicated cameras.  While a general lack of interest in photography fuels this, the wildly popular effects offered by Instagram filters give “vintage” or “artsy” looks to images that prove very rewarding for casual shooters.  While mocked for “making bad photos worse”, often times Instagram (or similar) represents the first time that users have seen their own images with this type of “feel” and sharing is at the core of the service.  This could ultimately help inspire individuals’ interest in photography beyond iPhoneography and lead to a demand for more advanced gear (mirrorless segment!).  With connectivity built into cameras that offer better zooms/optics, photographic control, and even rugged attributes, consumers will continually value the differences offered by the “real” camera.

The ease of which captured content can be posted and shared is fundamental in the development and growth of the “connected” camera market.  Cameras are evolving as devices to be viewed as more of a complement to smartphones rather than a combatant, and fitting into an ecosystem of “connected” products.  WiFi is no longer just a way for cameras to transfer photos to a PC sans wires, but becoming a more dynamic element of the sharing experience.  We see this with companies that have strong smartphone, tablet, and HDTV portfolios leveraging their connected technologies (AllShare, DLNA).  These technologies form the ability for cameras to stream live, remotely view stored images, control the settings, post to social networks, and email direct, as well as archiving to PC or cloud-based destinations.  Manufacturers are launching their own online services to act as destinations to facilitate this device interconnectivity in the efforts of offering an easy and seamlessness experience.  Soon purchasing decisions, both new and repeat, will be made based on the eco system that the desired gadget falls within and the advantages that the product will bring to what they already own, making it critical for strong branding and again ease of use.

As avenues for sharing have changed throughout time, posting a picture onto a Facebook wall today is not that different in concept to what humans of antiquity did on the walls at their disposal.  While connectivity within cameras is still growing, the direction taken within the market falls in line with the human desire to share experiences, and looks to be increasingly embraced by both small and large camera formats.  Though smartphones are viewed by many as the harbinger of doom for the dedicated camera, teaming up with the very devices that threaten their existence may ultimately become their savior.  Fitting connectivity and compatibility into their picture taking advantages will allow cameras to continue to do what they do best as cameras, while smartphones will continue to excel in their strength as connected partners.

With ten data collectors currently employed for gap, there are still nine that I’m excited to get to know more about (see “Meet Our Data Collectors” on our blog for the previously written feature: http://www.gapintelligence.com/meet-our-data-collectors).  I personally have the pleasure of working with our incredible collectors every week, and many people in the office rely heavily on their data.  I think it’s time we all get to know more about who exactly they are.

My first blog in the series features a Q&A with Terrence in Atlanta, or as some may know him, region 1004.  Terrence is very good at what he does for our company and is always consistent and reliable.  I asked Terrence a few questions about himself and his experience to this point with gap intelligence:

• How long have you been working for gap?

3 years

• How did you get involved with gap?

I was looking for work after losing my previous job in the music industry. I replied to a posting on Craigslist and a few days later I received a call from gap.  After hearing the description of the job, it seemed like it would be pretty cool.   About 2 weeks later I started working!

• What is your favorite part of the job?

My schedule. I can go out and collect anytime I want as long as the store is open, and I’m not on the typical 9-5. Usually, I finish my collections early in the week so I can have plenty of extra time for other endeavors.

• What is your favorite product category to collect and why?

Notebooks. While I personally own desktops & tablets as well, I still like the functionality of the notebook with a keyboard. When laptops first hit the market, they were very expensive. I have enjoyed seeing the category evolve with newer operating systems and hardware, yet the prices still steadily decline.

• What is your favorite store to visit and why?

Frys. Although from a time perspective it takes me the longest to collect, I personally think that they just have some cool stuff.  I can spend hours in there just looking through all of the different gadgets and grown man toys that they have.  Costco is a close second as I have been a Costco member for quite some time and like their mix of products and reasonable prices.

• What is something that you’ve learned about retail and consumer electronics through working with gap?

I’ve learned about the shelf life and product cycles of consumer electronics. As a consumer, I keep up with some products more than others, notebooks in particular for me.  I have seen how quickly some categories, such as notebooks, come out with newer models, compared with other categories that have a slower cycle, such as digital frames for example. However, all in all, I have noticed that most consumer electronics models change at a pretty fast rate.

• What is the strangest incident to happen to you while collecting?

While not really strange, I was approached by a manager at Frys a while ago who noticed me looking at products and inputting the data into the old school Dell PDA’s with the stylus. The manager asked me if I needed any help and after I told him no, he questioned what I was doing with the PDA.  I told him that I was collecting pricing information and that the information would not being shared with other retailers.  He immediately told me to stop what I was doing and to follow him to the front of the store where he asked me who I worked for,  my supervisors name so that he could contact her, and then to leave the store that day.

• Share something interesting about yourself: Hobbies? Family? Other Job? Kids? Pets? Anything else!

I have 3 dogs: A Pitbull named Black, a Schnauzer named Max, and a Shih Tzu/Yorkie mix named Willow, as well as a cat named Socks.  I have been married to my wife Trina for ten years this coming June. I love traveling & reading nonfiction books, exercising, watching Sci-Fi movies, and walking in the outdoors. I’m an avid animal lover and have been a vegetarian for 15 years.  I grew up just outside of Washington DC in Temple Hills, MD and am an avid New York Giants fan.  My favorite video game is “Gears Of War”, and I love basketball & football.  If one day, Mr. Peterson would fly me to San Diego, I would love to challenge Karen 1 on 1 in basketball while I’m still young enough that I think I can take her!

It has been so much fun for me getting to know some things about Terrence’s experiences with gap intelligence, as well as more about him as a person.  We are lucky to have Terrence as a data collector for gap intelligence, and I gladly welcome his 1 on 1 basketball challenge any time…it’s on!

Stay tuned for future features on the other data collectors.

Athletics Director, Keenan created a bracket system that gappers enthusiastically played through over the course of a few weeks.  Finally, two champions were left:  Notebook analyst, Deron Kershaw and digital camera/camcorder analyst, Scott Peterson.

The final fight for victory was to be held following April’s company meeting, and there wasn’t an empty seat in the house.  If gapU had a Director of Gambling and Vice this would have been their moment to shine.  Gappers filed into the rec room while Keenan readied the table’s net for the forthcoming battle.

Deron and Scott played three games, up to 11 points.  Do you see how serious this is?  Sweatbands, people.

Revel was the goal, and revel is what we got.  All three games were accompanied by cheers, oohs, and boos from gappers supporting their favorite player.  Deron started strong by beating Scott in the first bout.  Unfortunately for gap’s resident shark enthusiast, the Peterson prevailed, winning the last two games, but just barely.

“Good games” were exchanged, the coveted Ping Pong Gap Champ trophy experienced its first award ceremony, and photos to commemorate the event were grudgingly taken.  Compared to Scott, your mad table tennis skills are probably just OK.

The Surfrider Foundation supplied gloves, buckets, and trash picker-uppers and in just a short amount of time, the team filled up over six buckets of bottles, cigarette butts, cans, glass, and all sorts of other trash! 

Print advertising for desktop computers during Q1 2012 totaled 342 retail circular ad placements, a year-over-year decline of 22% from the 436 desktop ad placements in Q1 2011.  The decrease in print advertising comes despite the fact that total desktop SKUs in retail increased from 272 in Q1 2011 to 339 in Q1 2012.  The first quarter of 2012 brought a continued dominance in print ads by HP, as well as an increase in desktop ads within Best Buy and Staples’ circulars.  Additionally, Q1 2012 saw an increased share of print ads for tower PCs over other form factors.

Desktop Print Ads by Manufacturer

HP remained dominant in Q1 2012 with a 39% share of desktop ad placements, but placed 26% fewer ads in Q1 2012 with 133 placements compared to 180 ads in Q1 2011.  Gateway and Dell both made a big increase in the amount of ads they placed, with Gateway more than doubling its share of all ads to 13% with 43 ads, compared to 28 ads in Q1 2011.  Dell’s ad share increased from 11% to 17% in Q1 2012 with 57 ads, up from 46 ads in Q1 2011.  Asus desktops were still included in less than 10% of all print ads, but the company nearly tripled its ad share from 3% in Q1 2011 to 8% in Q1 2012, jumping from 12 ads to 27.  Category newcomer Samsung crept in with 8 ads in Q1 2012, representing a 2% share of the category’s overall ads, which is more notable considering that the vendor’s market share is just two SKUs at Best Buy.  Compaq’s share of overall ads declined from 8% to less than 1% in Q1 2012 when it placed only one ad, and eMachines also showed a sharp decline in advertising and did not place a single ad in Q1 2012, from eight in Q1 2011.

Desktop Print Ads by Retailer

Best Buy was the most active advertiser in Q1 2012, climbing from the number two spot in Q1 2011 to take over the top spot in Q1 2012 with a 33% share and 114 placements, a notable increase over last year’s 96 placements.  Fry’s Electronics fell to number two in Q1 2012 with 100 placements, equaling 29% of all desktop ads, from its total of 168 ad placements in Q1 2011.  Staples was the only retailer aside from Best Buy to increase its ad share and went from 17% in Q1 2011 to 23% in Q1 2012 with a total of 77 ads.  Ads from Office Depot and OfficeMax declined; Office Depot dropped from 56 ads in Q1 2011 to only 20 ads in Q1 2012, while OfficeMax fell from 41 ads in Q1 2011 to 29 ads in Q1 2012.  Walmart jumped in with two placements total in Q1 2012, or 1% of all ads.

Desktop Print Ads by Form Factor

Despite the increasing popularity of AIOs in the market, tower desktops remained by far the most-advertised form factor in Q1 2012, increasing its share of ad placements to 70% from 61% in Q1 2011 despite the total number of tower ads dropping from 263 to 247.  AIOs held steady with 20% of all ads in both Q1 2012 and Q1 2011, although the total number of AIO ads decreased from 88 in 2011 to 70 in 2012.  This is particularly interesting considering there were 22 more AIO SKUs in retail in Q1 2012 for a total of 78 different SKUs compared to the same time period last year when there were only 56 total SKUs.  Slim form desktops and nettop ads declined in Q1 2012.  Nettops held onto less than 1% of all ads with only two placements compared to eight placements a year ago, and slim form desktops decreased to 10% of overall ads with 36 placements versus 75 in Q1 2011.

What Does It All Mean?

Comparing desktop PC ads to other categories such as notebooks and digital cameras helps to add context to changes in desktop advertising volume.  Notebook ad placements actually increased between Q1 2011 and Q1 2012 from 824 ads to 841, a 2% year-over-year increase.  Digital camera ads decreased by 12% within the same time period, from 809 total ads to 720 ads.  Something interesting happens when you look at the discount amount for each category.  The average discount for both notebooks and digital cameras increased from one year to the next, while the average discount for desktops dropped quite a bit.  In Q1 2011, the average desktop discount was $94 per ad, and in Q1 2012 the average discount fell by 25% to $71.  Notebook discounts increased by a small 1.9% from $154 in Q1 2011 to $157 in Q1 2012.  Digital cameras, however, increased their average discount by 19% year-over-year, from $57 in Q1 2011 to $68 in Q1 2012.

What can be inferred from this difference is that it is most likely not larger economic forces related to the recession or consumers’ discretionary spending that has spurred the drop in desktop advertising while other categories have increased spending.  The 25% increase in total desktop SKUs in contrast to the downward shift in desktop ad spending also tells us that it does not necessarily reflect a shift in focus for retailers away from the desktop category.  It is more likely that unforeseeable forces such as the flooding in Thailand negatively affected supply of desktops which rely on components from that region.  Fewer products in the supply chain may have prompted manufacturers and retail chains to slow the ad presence and average discounts on their products in an attempt to keep the flow of goods steady while waiting for the component market to return to normal, which will likely happen by Q3 or Q4 of this year.  That said, these same component pressures also impacted notebooks so this trend certainly suggests that vendors are redirecting some of their advertising dollars away from desktops.

With notebooks, Samsung started as a price-focused brand and largely concentrated on affordable netbooks.  Then, in 2011, Samsung made an incredible transformation and is now considered one of the most successful premium notebook brands in the industry.  In fact, the company went from 12 notebook placements in the retail channel at the beginning of 2011 to 24 placements now, boosting its average selling price from $504 to $782.  Doubling shelf presence and increasing ASPs by 55%? I think most manufacturers would take that!

So how did they do it? Here are the 6 ways Samsung has cultivated its premium image over the last year:

1. Divested from netbook market faster than any other manufacturer

Samsung rode the netbook wave to gain share as it entered the notebook market, but was equally opportunistic with its exit.  In March 2011, 10-inch netbooks accounted for 33.8% of Samsung’s retail notebook assortment.  By July, only four months later, netbooks accounted for just 4.8% of Samsung’s retail presence.  That’s 33.8% netbooks to 4.8% netbooks in four months.  Getting out of the cheap, underpowered netbook market was critical to boosting Samsung’s brand image and proved wise from a business sense as well… Dell and Lenovo later pulled the plug on netbooks and Acer continues to suffer from its high proportion of the low-margin devices.  The speed at which Samsung shifted their assortment to full-sized notebooks proved to be an important step in changing perceptions.

2. Focused on design

Marketing departments can only work with what you give them.  Samsung made a commitment to R&D and its marketing branch is now working closely with engineers, which has resulted in innovative technologies and premium, sleek designs.  Samsung borrowed from their TV division and focused on developing products with beautiful screens, where users interact with the product, and weren’t shy about touting their ultra-bright notebook displays at CES.  Samsung’s Series 9 laptop line shocked everyone with its thin form factor and sleek curves.  The line was the first true competitor to Apple’s MacBook Air and was essentially an ultrabook before Intel even invented the term.

3. Owned all components

Samsung jokes that they own nearly everything in their supply chain, even the ships that transport their components (fact check: this is partly true).  Owning the components gives Samsung more control of supply chain and allowed them to be faster and more responsive with product launches and applying feedback.

4. Chose resellers wisely (and excluded some)

In early 2011, Samsung notebooks and netbooks were already available at Best Buy, Fry’s, MicroCenter, and Sam’s Club.  Those retailers would refresh their assortments with higher-end Samsung laptops, but the most impressive part of Samsung’s move to the premium space was revealed when the company chose new retailers to expand to.  Of the five remaining major retailers that were not yet carrying Samsung notebooks, the company strategically rolled out notebooks to new retailers in an order that corresponded with the retailer’s average notebook price, starting at the chains with the highest ASPs.

• April – Added to Costco – $747 avg price
• June – Added to Staples – $665 avg price
• Oct – Added to OfficeMax – $658  avg price
• Nov – Added to Walmart – $448 avg price

This was no accident.  So why did Samsung choose not to add Office Depot, the final major retailer lacking Samsung notebooks?  A member of their marketing team flatly said, “we don’t need to be in all three office stores right now.”  Unsaid was that Office Depot is extremely slow to refresh their laptop assortment and doesn’t attract the premium customers Samsung is looking for.  Once the two favorite office stores were hooked, Samsung was ready to land a whale.  By the time November came around, Walmart knew exactly which manufacturer to go to when looking for high-end notebooks to compliment its more affordable options.  After making its debut at Walmart with laptops ranging from $498-$648, Samsung caught the industry by surprise early this year when its Series 7 Chronos line was added to Walmart’s shelves for $1,000, nearly $300 above the next highest model at the time.

5. Added marketing material to reseller websites (including pictures and videos)

It’s relatively easy to make your product stand out on shelves, but how do you make your product stand out on websites?  Samsung has been relentless in providing spec sheets, pictures, and even videos for e-commerce resellers.  Check Amazon, check Newegg, check Walmart.com.  Nearly every Samsung laptop page is full of content to inform and get the customer excited about the product.  Style and aesthetics are important to the Samsung brand so this allows Samsung to be defined by their own pictures, videos, and message, rather than just the reseller’s text.

6. Innovation

You can’t have a premium brand with boring products.  Samsung unveiled three innovations that oozed “premium” last year:

• Brushed Black Metal Casing – You’ll see a lot of copycats this year, but Samsung made its thin brushed black metal casing popular with its Series 9 laptops in 2011.  The company’s new Series 9 line includes a similar casing and is the thinnest 15-inch laptop in the world.
• ExpressCache Technology – Flash memory on the motherboard that dramatically speeds up web browsing and reduces resume times.
• Battery Life Plus Technology – Keeps 80 percent of the cell’s original capacity lasting up to 1,500 charging cycles, up to five times longer than other notebooks

These are the specs that don’t make it onto the price tag at Best Buy, but keep customers happy (and impressed).

What now?

Moving forward, Samsung will continue to build its premium brand.  However, with the rise of thin ultrabooks, other manufacturers will have their shot at going premium.  In the retail channel, only Apple and Sony command higher average notebook prices.  It will be interesting to see how Samsung applies its strategy to its other product categories and how competitors emulate these moves in search of higher margins.  There are only so many shelf slots for $1,000 laptops, particularly as the economy is slow to recover, so the vendors who follow Samsung’s example and cultivate a premium brand will have the best shot of succeeding.

While Gurpreet accurately observes that the number of exclusive SKUs in retail is increasing, within the digital camera market, the practice of providing exclusive SKUs to retailers is definitely not a new concept.  Store-specific SKUs have long been a tradition for many camera makers, and introduce a number of benefits to the involved companies, as well as common shoppers.  So what’s the big deal with store-exclusive digital cameras?

Exclusives cannot easily be compared to those placed at other stores.

Perhaps the biggest reason to stock unique SKUs, and the greatest combatant against “Showrooming,” is the average shopper’s inability to directly compare similar models across retail or the internet.  This factor somewhat levels the playing field for those who do research and those who simply shop.  The majority of exclusive camera SKUs are identical to those offered at other outlets, although feature product names/part numbers that we have never heard of, thus thwarting consumers who have done their research.  By altering the base model, chains such as Best Buy, Costco, Target, and Walmart have historically enforced separate discount paths with their exclusives, which makes them appear more competitive by offing a 16-megapixel camera at a lower price point, for example, and helps them better adapt to the elasticity of various brands.

This practice began as somewhat of a seasonal activity, with companies like Kodak and Nikon traditionally introducing Black Friday SKUs that only remain for the holiday season.  Perhaps the best examples of how impactful these camera models can be come from camera heavyweight Nikon.  In 2009, 2010, and 2011 Nikon brought exclusive cameras to Target including a CoolPix S203, a CoolPix S205, and a CoolPix L105, respectively.  These cameras were derivatives of aging members of Nikon’s line, offered at current shelf prices ($139, $139, $199), but with massive discounts that led to very aggressive net prices ($79, $79, $99).  Shoppers’ perceived value and impulse drove these unheard of models to achieve sales numbers higher than the majority of cameras that spent an entire year within the channel!

Exclusives are offered in unique colors.

Notoriously catering to Best Buy, brands such as Canon and Sony will designate one specific color of a camera as a chain exclusive.  While typically not discounted independently from other retailers, the ability to offer an exclusive color should not be underestimated, as purchases are often made based on shoppers’ desire for stylish camera gear.  Best Buy loudly broadcasts “Exclusive Color” in its advertising, as a way to deliberately draw shoppers away from its competitors based on its exclusive offering of a model in pink or blue, for example.

Exclusives come with added incentives.

Exclusive camera models often come packaged as a bundle or with an added incentive for shoppers.  Walmart is the first retailer that comes to mind, as the majority of its exclusive camera SKUs come with coupon packs for 100 free 4×6 prints from its 1 hour photo lab.

These coupons are worth $15 and give shoppers an increased level of value compared to purchasing a similar camera elsewhere.  Among others, FujiFilm’s Walmart-exclusive cameras promote these coupons, which notably benefit both them and the retailer, as Walmart utilizes FujiFilm photo-processing equipment within its lab!

Another form of bundles are the single-box solutions that appear at certain chains.  These include a camera paired with additional necessities such as memory cards, straps, and cases.  Kodak was historically strong in this area, often times offering a free case, a AA-battery charger with cameras at OfficeMax, and a float-strap with its waterproof camera this year at Sears, while other chains featured the camera alone for the same price.

Exclusives provide brands with a foothold at new retailers.

Another major benefit of exclusive SKUs are the growth opportunities that they offer for various brands.  A retailer that has historically shied away from a certain camera maker may be tempted to experiment with an exclusive offering.  Walmart again illustrates this point, as Panasonic is ushered into the chain this year for the first time in 4 years on the back of an exclusive ultra-compact superzoom.  Walmart’s $159 Lumix DMCSZ02 is a derivative of Panasonic’s Lumix DMCSZ1 ($179) and represents a non-US model that is not available to shoppers outside of the mass merchant.

Industry underdog General Imaging was similarly dealt a major victory this year with its first ever placement at Walmart with the $119 X400, an exclusive camera that breathes new life into an older member of its line (2010’s X5 = $149).  FujiFilm has historically been very successful at leveraging its S-series bridge cameras as exclusives, with derivative models found at chains such as Best Buy and Staples, in addition to Walmart, who welcomed back the brand after a 1 year absence with the $199 FinePix S2940 last year (S2950 = $229).  Not only do these types of placements grow brands’ retail product counts, but they also provide an avenue for global models that were not initially intended for widespread US distribution.

How everyday purchases may be exclusively influenced.

With the growing and undeniable appeal of stocking store-exclusive camera models, it seems logical for the same reasoning/benefits to carry over into product categories outside of cameras and consumer electronics as a whole.

One of the most dynamic elements of my job as Camera Analyst here at gap intelligence is our weekly retail store visits.  As a huge Star Wars fan, one of my favorite things to do while visiting retail is to briefly steal away to the toy aisle, just to take a peek at which Star Wars toys are on the shelf.  While I did just admit to collecting toys, I must add (defensively) that my scope is strictly limited to Astromech droids, i.e. the different color variants of R2-D2s.  In my quest to “find the droids I’m looking for”, I am always doing research and remain on the lookout for unique models, although often times I feel driven to purchase multi-packs containing figures that I really don’t want, just to get one R2 unit.

While on a recent visit to Walmart, I came across a rarity, a dedicated Astromech droid multi-pack in a wild variety of colors that I had no knowledge of!  This represented a perfectly catered Star Wars find that I had never imagined, never heard of, never seen online, nor done any research on… it was a Walmart exclusive!

Many of you already know me since I am kind of a big deal.  For those of you living under a rock, my name is Herbie the Fighting Hedgehog and I am lucky enough to be gap intelligence’s company mascot.  I live a pretty sweet life.  I rarely leave the office though so you can imagine my excitement when Product Analyst, Erin Vogelsanger, offered to take me to a San Diego Padres baseball game!  I was thrilled; though I had some research to do.

Baseball?!?!?  I had never heard of it.  So, after all of the gappers left one evening, I logged into Vogelsanger’s computer and did some research.  Baseball involves a wooden stick, a round thing called a ball, and four bases you run around.  There are teams that play against each other in a giant stadium where they serve tasty treats.  As I logged out of Vogelsanger’s computer and perched back on my desk I could hardly contain my joy.  This adventure was going to be thrilling!

Vogelsanger picked me up around 4pm and carried me to her car.  Vogelsanger wears many hats at gap intelligence including a hard hat as the company’s Safety Coordinator.  So, when she strapped on my seat belt it was to be expected.  Vogelsanger picked up her special fella, Mike Hartman, and we headed downtown for a dinner.  Downtown had so many large buildings.  I felt so tiny next to them.  Hartman was nice enough to share his beer with me and I must say I am a huge fan!  Beer is delicious.  Like really really really delicious.  As we strolled toward Petco Park, home of the San Diego Padres, I could only imagine what other yummy treats awaited me.

Vogelsanger and Hartman slinked down the aisle into our seats and I could hardly believe my eyes.  Petco Park was magical!  I was in awe of the bright lights and the pristine green lawn.  The sights and smells of the game were a feast for the senses.  We hadn’t been sitting there for more than a minute when an extremely helpful young lady approached us to offer us assistance in securing more tasty treats.  Hartman pulled out a tiny card, the lady swiped it, and POOF…a beer and peanuts appeared!  Petco Park is heaven on earth.  Hartman was nice enough to share his goodies with me yet again.  Peanuts are salty bits of nom nom nom.  I could eat a whole bag by myself!

For those of you who know me, I like to dress to impress.  I wear my signature “g” sweater everywhere I go.  It’s very rare that I see any one dressed snazzier than myself.  As Padres Account Executive, John Torris, worked his way toward our seats to say hello to Vogelsanger, I was dazzled by his suit.  Torris definitely looked sharp.  He was thrilled to meet me face to face.  It’s not every day that a hedgehog attends a Padres game after all.  Now that I think about it, I’m sure the reason he was probably so dressed up was to meet me!  As I said before, I am kind of a big deal.  I asked Torris if there were any plans in the works to make Padres gear in hedgehog sizes.  He said he would get to work on it right away.  Music to my ears!

I really got into the swing of things at the game.  I shared a rather large hotdog called a “Friar Frank” with Hartman as well as a cinnamon churro.  I found several comfy places to take in the sights.  My favorite spot was on top of Hartman’s Padres cap; Vogelsanger’s furry boots were plush to sit on too though.  From what I could tell, the Padres are an exceptionally good baseball team with the potential to do very well this season.  Word on the street is that the Padres looked white hot at spring training.  What I saw was quite impressive.

Despite my attempt to send good mojo the Padres way by wearing my rally cap, they lost in extra innings by two runs.  Though that was disappointing I must say all and all my trip to a baseball game at Petco Park was my most fantastic adventure to date!  As Vogelsanger secured me into her bag for the trip back to the office, all I could think is I am the luckiest hedgehog in all the land.  Not only do I get to be the world’s coolest hedgehog at an amazing market research firm, but I get to soak up the company perks as well.  I can’t wait for my next San Diego Padres baseball game!  Hooray for season tickets!