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 user 2009-12-07 at 10:17:28 am Views: 71
  • #23050
    Kodak printer ads remind consumers of lower ink costs
    click on this link below to see live video
    Photo giant Kodak burst onto the home printing scene in 2007 vowing to shake up the industry by selling ink at half the price of its competitors.But while the company has succeeded in doubling its tiny market share year to year – to 2% in 2009 – industry heavyweights Hewlett-Packard, Epson and Canon have yet to respond with major ink price cuts, nor are they expected to, says Andy Lippman, a senior analyst at Lyra Research.”It’s a testament to the business model,” he says. “You sell the printer at a loss and make it up on ink sales. If HP was to match Kodak’s pricing, it would be monumental, and you’d see an immediate impact on its profit margins.”The recession has taken its toll on sales of ink-jet printers, which are down 12% this year, Lippman says, but ink sales have fallen only 6%.”Consumers say they care about the high cost of ink, but when they go to the store to buy a new printer, they shop for price,” Lippman adds. “They’ve heard the messaging from Kodak, but it hasn’t resonated.”

    Kodak, which launched its printer line with an aggressive series of infomercials on pricing, is pushing back with an even feistier $30 million “Print and Prosper” TV and webcampaign.Its website, for instance, tells consumers they would have saved $110 in printing costs had they switched to Kodak. It also offers a price chart that promises to tell how much folks overspent with their various printer models from Epson, HP, Canon, Lexmark and Brother.The calculations are based on a basic formula, of, for instance, eight black-and-white documents, six color documents and a 4-by-6 photo printed in a specific time period. Kodak generally charges more than competitors do for printers.

    No. 1 HP says the ink-savings claims are misleading. “Their savings are probably at best at about $1 per month,” says Andy Binder, HP’s director of market development.Still, on an average HP color printer, Binder says that it costs about $75 to restock the six color inks and one black ink. Kodak’s inks are $9.99 for a black cartridge and $14.99 for color.Kodak says it bases its findings on an average of 1,500 printed pages per year for the average consumer. Binder says that’s way too high and that most folks print 750 pages.

    He adds that HP makes printers specifically for price-sensitive people who print a lot of black-and-white documents, which use less ink.Cheryl Pohlman, a Kodak marketing director, says the “Print and Prosper” marketing campaign has helped the company sell twice as many printers this year as last year.”There’s a frustration level when consumers go to the store and have to spend $75 on ink, especially in these economic times,” she says.

    Kodak shipped about 800,000 printers in the first three quarters of 2009 – up from 400,000 at the same time last year, IDC analyst Ron Glaz says.However, that’s not enough to pull it out of last place in market share, Glaz says.Industry leader HP shipped 18.4 million printers, down from 21.7 million in 2008. It’s current market share is 47%, down from 51% in 2008, IDC says.”People just don’t see the need to print as much as they used to, which is what’s causing the decline,” Glaz says. “A lot of homework is sent electronically now. They’re sending photos to Facebook instead of printing them. In this era of the smartphone, when we’re online all the time, do we really need to print everything we see?”When Kodak launched its printer line, it told analysts it would achieve $1 billion in sales by the end of 2010.

    Recession has an impact
    Lippman says that’s not going to happen, estimating Kodak’s sales to date at about $350 million.”They were a bit too optimistic about consumers and their understanding of print costs,” he says. “Plus, they couldn’t have foreseen the recession.”Consumers have been holding off their purchases of new printers, waiting for current printers to break or jam before buying, he adds.A visit to the store, however, would find some innovations to current printers, including some new models with Wi-Fi capability for wireless printing.One thing hasn’t changed, however: An ink refresh will still set you back almost as much as a new printer, unless you call on printer sales are down 12% this year.