Description

View a free Webcast on this topic here. Epson has quietly launched a new consumer printer marketing strategy in China that could have explosive ramifications for the rest of the printer market. For more than a decade, the printer industry has counted on a lucrative combination of low-cost hardware that draws in buyers and high-priced supplies that deliver some of the best margins of any business. But cost-conscious Chinese consumers don't like paying high prices for consumables. HP has responded with its Simple Black cartridges, which deliver inferior print quality for a lower price. Now Epson has gone one big step further and made low-cost cartridges the centerpiece of its Chinese consumer printer strategy. If Epson's strategy sells printers, competitors will have no choice but to respond in kind, and not just in China. Epson is deploying this strategy to other developing markets. This could start a consumables pricing nuclear war that melts the razor-and-blades model and incinerates the industry's rich profit margins. This report examines Epson's reasons for deploying this strategy, the phased roll-out plan, international variations of the strategy, and the industry's delayed realization. The report also examines HP's and Canon's positions on Epson's strategy. Lyra uses its in-depth knowledge of the Chinese printer market to explore the difficulties of selling to Chinese consumers, the aftermarket penetration rates in China, and how Chinese consumers are reacting to Epson's strategy. This report will be published in its entirety in Lyra's China Market Advisory Service.

Table of Contents

Introduction Copying the Blades Instead of the Razors Chapter 1: Epson's Dilemma The Razor-and-Blades Business Model Problems with the Model The Industry's Delayed Realization Epson's Aftermarket Vulnerability Going to Plan B China Issues Chapter 2: Epson's Strategy Epson's Strategy, Phase 1 Epson's Strategy, Phase 2 Epson's Strategy, Phase 3 International Variations ME Photo 20 Marketing Strategy Competitive Analysis No Smoke or Mirrors Chapter 3: Epson's Impact Is It Working? Will It Work? What's Next for Epson? Key Drivers for Epson Options for Competitors HP's Position Canon's Position The Industry Afire? Conclusions