Xerox: Not just a document company

One of the world’s most famous companies is attempting a brand extension. Marketing history shows that most companies fail at brand extensions. But then Xerox isn’t like most companies. Rahul Neel Mani reports

There is a need for a multi-tier channel strategy and strong channel partners to sell Xerox products, says German Gennady

The technology world thought that Xerox would never be able to overcome the damage done to its image when the bribery scandal involving the company surfaced a couple of years ago. These were the so called payments made over a period of years in connection with sales to the government sector by employees of the Xerox arm in India. The amount wasn’t too huge ($600,000 to $700,000), but the company’s image as a serious IT player was at stake. Since then, Xerox has been trying to overcome the stigma, and to some extent it has succeeded.

Now the company sounds bullish about its future growth and success in the country. Top company officials admit that the past few years have been miserable for them in terms of business, but some strict measures and target-oriented growth should set the ball rolling again. Xerox registered $50 million in sales when it started operations in India in 1987, but revenues for last year were only $100 million. This year the growth target is 30 percent.

The company has also announced a transformation of its office market strategy. "We are enhancing our line of offerings with several new products and value pricing—all to reach large and small customers with new products and services," says K J Herchold, vice-president, office group, developing market operations of Xerox.

The company has also got some software solutions developed by a wide array of industry partners using the open architecture of Xerox multifunction systems, and is focusing on people-based services designed to help customers reduce document costs and increase worker productivity.

New image

Xerox has transformed itself quite dramatically. From an analogue copier company it has now become a total IT company. It still sells copiers, but the focus is primarily on being a company which sells devices that can print, connect to networks, and are capable of producing complicated documents both for the production-publishing world and the office environment. "Xerox as a copier company is part of history; now we want to be known as an IT company," asserts Herchold.

Although Xerox was not clear on the post-scam scenario, the company’s marketing director, German Gennady says, "Since the days of the controversy we have become more open and transparent in our operations in all respects." One of the challenges for the not-so-media-savvy company is to give correct information to the whole world, and it is trying hard to make that possible. "The investigation which started last year is still continuing in the background. What we are now focusing on is technology and product development, and trying to forget the tainted history," says Gennady. Herchold chips in, "This year in April we introduced 26 new products (in the United States). By the end of this year, Xerox will be completing the launch of all these products in India as well."

These are multi-functional products for the office environment. Primarily printers, they can be configured to do a host of things, including adding colour. One of the major initiatives of Xerox is to treat colour on an office device as just another function. It is now offering products ranging from low-cost to high-end, with speeds ranging from 15 pages per minute to 55 pages per minute, and with both monochrome and colour capabilities.

The company is working towards the goal where a customer does not have to buy a separate copier, separate printer, and separate monochrome and colour devices for the office. Rather, he should go in for just one device which has all functions built in. "Adding colour to a multi-function device (MFD) makes it vastly more affordable as compared to making a separate investment in a colour-only device. That’s a key strategy of Xerox," says Herchold. The colour-capable devices of Xerox are intelligent and command-based, and can take a command for a limited and specified amount of colour outputs.

As part of its plans, Xerox will continue developing low-cost colour products in the near future. On its way is a new toner technology which produces better and clearer outputs. This is a part of the ‘colour capable’ mission of Xerox. "We continue to work on enhancing the functionality and performance of the networked device. Think about the controllers that are embedded in these devices," says Herchold. Xerox is believed to be working hard to optimise controller technology; company officials say they are working on the speed of the new range of MFDs.

Xerox is also said to be working on reducing product costs. "We have introduced entry-level 17 ppm laser printers priced at Rs 13,000 for the Indian market. Xerox is looking at giving personal laser printers to people at very affordable prices," says Gennady.

As a matter of fact, during the first six months of 2003, Xerox sold more printers in developing markets than any other product. 70 percent of those were personal printers. "Although Xerox is known for its sophisticated, high-end machines, we will continue to cater to high-growth areas such as personal printers," says Herchold.

Xerox as a copier company is part of history; now Xerox want to be known as an IT company, asserts K J Herchold

Competition

Commenting on competition, Herchold said that HP’s MFDs are usually based on inkjet printing technology, and they are less expensive. Xerox, on the other hand, will compete in the laser MFD space. "Xerox will be a competitive player in that business forever," Herchold declares. Explains Gennady, "If we sell in the same market space as HP with the same set of features, we will be priced less than HP. But if the product is feature-rich, the prices have to be higher."

The field where Xerox plays is very competitive. There are formidable competitors from Japan. It faces stiff competition in the printer segment from HP. There are smaller players who pose a threat in the low-cost segment. But it is also true that Xerox brings the broadest range of products to the customer. Xerox has best-of-breed continuous feed devices in India. Originally, when the company was started, it was dependent on the factory in Rampur that manufactured products just for the Indian market. Now it can import products and reach all varieties of Indian customers. "We see increasing demand for more sophisticated technology in the printing and copier business," says Herchold. The company feels that HP may be strong in printers, but they are not so strong in other products. Xerox also believes that India will not always remain a low-end, low-cost product destination; it will soon see great demand for high-end, sophisticated technology as well. Xerox is waiting for that time, with products ready in its stable. For now the company is content to sell over 90 products in India ranging from personal laser printers to 100 ppm machines.

As far as marketshare is concerned, Xerox dominates the production and publishing market with products like DocuTech. Its market share ranges from 50-80 percent, depending on the location.

Channel strategy

The company readily admits that the Indian market is complicated. "We now feel the need for a multi-tier channel strategy and strong channel partners to sell Xerox products," says Gennady. So here’s the strategy change: Xerox is shifting from being a direct sales company to a company that also sells through channels. "We are going to sell low-end, smaller products through channels," discloses Gennady. The company plans to engage various channel partners across India. "We want to see Xerox products in more and more retail outlets of these channel partners," he adds.

For machines that have a capacity of 55 pages and above, the company will continue relying on exclusive loyal partners since these products are more sophisticated than personal products. Machines and copiers that are 100 pages and above will be entrusted only to Xerox engineers and sales staff. The company is also planning to showcase its products in some of the upcoming malls in India, but it will not open its own retail outlets like HP.

Clearly, Xerox is regaining its confidence, but to survive competition from players like HP, the company will also have to regain a lot of the ground it lost in the last few years.