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Business Printing Technologies Report The BPTR is best viewed through a web browser.
2003 DISTRIBUTOR SALES TRENDS REPORT Based on a new report from DMIA, Distributors continue gradual
diversification of their product lines and have lessened their dependence on
conventional forms, which will continue to pose challenges for manufacturers of
unit sets and continuous forms. A significant number of all survey participants indicate three dominant methods of reaching their customers. The following summary shows the percent of all firms that derive 50 percent or more of total annual volume from the three dominant sales methods: 73.2 % Outside sales representatives
DOMINANT PRODUCTS: Forms manufacturers serving the Independent segment should be concerned about the low proportion of large survey participants who identified continuous custom and stock forms as a "dominant" product. Another concern should be the very low proportion of all distributors who identified unit sets as a "dominant" product group. Large distributors appear to be the Independent segment leaders in product diversification. Conventional forms have become a secondary product group for many large distributors. Product mix shifts that are evident from this survey are due partly to declining demand for continuous and unit set forms and partly to distributor volume growth in other products. The "dominant product" summary shows that a sizeable proportion of large distributors are pursuing volume growth opportunities in cut sheet forms & mailers, commercial & quick printing, and stationery, envelopes & business cards. This also provides an indication of new opportunities for trade manufacturers. Conventional continuous, unit set and cut sheet forms are still a dominant or important secondary product line for many large and small distributors. The percentage of distributors who do not sell forms is very small. This indicates that forms manufacturers planning to diversify their product lines should be careful not to neglect conventional forms, diminish service levels or otherwise impair their competitive position in forms and related products. Form-label-card combination products have been recognized as a growth segment of the forms industry, but only a small proportion of survey participants indicate that sales exceed 5 percent of total annual volume. This signals a major marketing challenge for trade manufacturers who have invested in expensive equipment to produce form-label-card combination products. These trade manufacturers have to find a large number of distributors with limited sales of these products, or the small number of specialists with high sales volume in this category. Manufacturers considering investment in production capabilities for these products should also be concerned by the high number of survey participants who reported no sales (23.7 percent) or did not provide a response (18.5 percent). In this study, product groups that account for 5% to 20 percent of total annual sales volume have been designated secondary products. The following products were listed by survey participants as making up 5% to 20 percent of their total annual volume: SECONDARY PRODUCTS: With the exception of continuous and unit set forms, a sizeable proportion of
distributors plan to increase their sales in these secondary product categories
over the next two years and indicate that the profitability of these products is
increasing. MANY DISTRIBUTORS REPORTED NO SALES: Three of the above product groupsdigital printing, form-label-card
combinations and direct mailrepresent an opportunity for trade manufacturers
with the appropriate capabilities to expand their customer base by educating and
assisting some of the distributors who currently do not participate in these
industry growth segments. Among the smallest distributors with annual sales under $ 400,000, over 55 percent of survey participants have 1 person sharing or dedicated to outside sales. In this group, 26.1 percent of firms indicate that they do not have outside sales employees, which means that these are probably one-person distributorships. At the other end of the survey scale, in the largest distributor group with annual sales over $ 8 million, close to 85 percent of participants have 7 or more outside sales employees, including 15.2 percent of participants with more than 30 sales representatives. A high proportion of small distributors does not employ computer specialists and programmers or did not provide a response. This suggests that manufacturers have an opportunity to form technology-based alliances with distributors that would improve market access, transaction costs and ability to pursue new products and services for both partners. In the large distributor group, the number of information technology employees tend to increase with company size and 12.2 percent of the largest firms (over $8 million annual sales) have more than 7 people in this category. 42 percent of all distributorships indicate that they have in-house production capability. The existence of in-house production capability varies widely by distributorship size: 19.2 percent of distributorships with annual sales under $ 2.5 million have
in-house production equipment Increasing and Decreasing Vertical Markets Vertical markets where distributors expect sales to increase: Vertical markets where distributors expect sales to decrease: Also, the largest proportion of all survey participants expect to increase
their sales over the next 2 years in the following product categories: Increasing and Decreasing Vendors Categories where distributors have increased the number of vendors: Categories where distributors have decreased the number of vendors: Conventional forms outrank all other products in distributor responses indicating no change or decrease in product profitability. This has a serious negative implication for trade manufacturers of forms, because more distributors can be expected to focus their sales efforts on higher margin and higher growth opportunity products. Cut sheet forms and mailers are among the top six product groups where
distributors report increased profitability. A sizeable percentage of
distributors also indicate that cut sheet and mailer order sizes have increased.
This signals an opportunity for trade manufactures who have or can develop cut
sheet product manufacturing capabilities.
To order the full report, <https://www.printsolutionsmag.com/dmia/Salestrends03.html>click here.
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