Ever heard the saying: perception is reality? I am sure you have. But what about when perception actually drives a change to create a new reality? Intrigued?
Let’s start at the beginning… Have you ever thought that buying ink supplies is a pain, is expensive, or harms the environment? If you raised your hand and said yes to any of these three questions, you are among the majority of consumers who find the overall process of purchasing supplies less than enjoyable. For years, articles have been published comparing the price of ink per ounce to Chanel perfume, gold, or gasoline in an effort to voice, even dramatize, the dissatisfaction with the high cost of supplies. The problem became exacerbated about 3 or 4 years ago when at-home photo printing reached its peak in popularity. Simultaneously, consumers were dealing with a dwindling economy and looking for ways to reduce their overall household spending. OEM ink manufacturers found themselves fighting a battle on two fronts – the consumers’ perception that their ink was too expensive and the lower cost alternatives offered by third party supplies and ink refillers.
OEM ink manufacturers found themselves fighting a battle on two fronts – the consumers’ perception that their ink was too expensive and the lower cost alternatives offered by third party supplies and ink refillers.
OEM efforts to advocate the importance of ink quality and the R&D investments made to ensure this were just not enough to persuade consumers. Customers were shifting to third parties or reducing their printing all together. In response to this trend, many ink manufacturers chose to do nothing, while others attempted to justify the value of their perceived higher priced ink. Then, something changed.
HP Leads by Addressing Key Consumer Complaints
Photo courtesy of: hp.com
In early 2012, HP launched its beta program for Instant Ink. The program mimicked a “Netflix” business model, offering a subscription service to customers for purchasing ink supplies and served as a groundbreaking effort by an established company to fundamentally change the way that consumers purchased ink supplies. HP debuted the program with two offerings that included six inkjet models. The beta program proved successful and HP officially launched the initiative in September 2013 with a simplified structure including three payment options and a national roll out at Best Buy. With about two years under its belt, HP has done a good job of continuing to educate consumers, simplifying the sign-up process, and showing real commitment to the program. HP touts that the program has been a success so far with a 97% retention rate. HP also claims that it took a mere 20 months to hit 500,000 subscribers, faster than other popular subscription based services such as Netflix and The Dollar Shave Club. The company has also expanded Instant Ink to Canada, the UK, Germany, France, and Spain.
As praise for HP continues for its efforts to show innovation and address key consumer concerns, other major print companies are finally addressing the perception around the high cost of ink, but in other ways. For the first time in many years, every major inkjet printer company has announced a product line that presents a shift in the traditional business model in terms of the relationship between hardware and supplies.
Change Infiltrates the Inkjet Market
In May of this year, Brother announced its new INKvestment cartridges along with hardware debuts. The INKvestment cartridges are described as Super High Yield cartridges that provide high volume printing at cost effective prices. While Brother did not reveal anything out of the ordinary in terms of ink yields, the manufacturer did create a pricing structure that effectively offered the lowest price point for black ink with comparable yields and the lowest known CPPs among current multifunction inkjets within the gap panel at the time of debut. While inkjet is not Brother’s primary focus as a company, the announcement of these products demonstrates the company’s attempt to find ways to continue providing a better overall value to customers and remain relevant in a changing market.
Photo courtesy of: epson.com
In August 2015, Epson expanded its Continuous Ink Supply System devices to the US market. While HP has done an adequate job of marketing its Instant Ink program, Epson blew any other inkjet marketing campaign out of the water with the exposure generated for its EcoTank products. Epson introduced the system with consumer-centric devices, along with a higher end device utilizing its new Replaceable Ink Pack System. Epson secured write-ups and reviews in every major publication from Forbes and The Wall Street Journal to print trade publications in order to promote its new devices and the official introduction of CISS products to the US market from an OEM print vendor.
Epson’s marketing message touts that customers won’t have to change their ink for 2 years and that they will have an ultra-low cost per page, directly addressing convenience and cost concerns. While the Total Cost of Ownership (TCO) is definitely lower on the CISS product, the catch with Epson’s business model is that customers will pay a significant premium on the hardware. Everyone knows that the printer and consumable business strategy is largely based on the razor and razorblade model, where the company generates its profit from the continued purchase of refills. With consumers’ perception that this is not ideal, Epson is attempting to flip the business model on its side. Yes, it’s a different technology with CISS, but does this remind anyone of Kodak’s attempt to offer low cost supplies with a premium on hardware? Ahh, Kodak, the inventor of the digital camera and the first print company to try to disrupt a long standing business model… always just a little bit ahead of its time.
Photo courtesy of: canon-asia.com
While Canon has not introduced anything that shifts its business model in the US, the company recently announced its own CISS products for India. It is unknown if these will make their way stateside, but at this point, we predict these will remain in developing markets for the near term. In line with that and in addition to its INKvestment offerings, Brother also recently released CISS options in developing markets. Although Epson only recently announced its EcoTank technology in the US market this year, the company has been selling the same type of printers in developing countries since 2010. The company has done a fantastic job of creating buzz in the US around the dated technology touting it as a brand new innovation. With its reported success abroad, Epson is testing the US market to see if Americans will buy in to the shift in business model and help change their perception of the print industry.
A New Reality
So what began as an attack on the ink supplies market and perpetuated the perception that all ink was priced astronomically high, resulted in change from established companies in a mature market. It forced these brands to evaluate their business models and their product lines, and rather than fight consumer perception, they’ve created offerings that seem to align more with consumer values and desired buying habits. These new offerings give consumers more choice in how they want to spend their money on print. While many OEMs have provided options with lower upfront costs in exchange for higher downstream CPPs and vice versa, these new offerings extend the options even further. Time will tell if companies such as Canon and Brother will follow Epson and introduce CISS products in the US.
While it has yet to be seen how successful any of these initiatives will be long term, at the very least, in this case, perception absolutely drove change and innovation to create a new reality in the ink market.