Print

Comment

Email

Digg

Del.icio.us

Reddit

Twitter

The growth of printer consumables has been on the upswing, especially in the OEM segment, notwithstanding the adverse effects of the slowdown on the Indian printer market. There was actually a big benefit: it nearly wiped out the gray or counterfeit market for consumables (a long time menace for OEMs and compatibles). The compatible and refilled segment, although impacted partially, had reasons to smile as it slowly emerged as an organized business. The decline in the printer market, across all categories stymied the growth of consumables.

Laser Power
Although there is no organized data available to measure the correct size of the ink and toner market in India, it can be roughly estimated that the total domestic consumable industry would be around Rs 3,015 crore . With the rise of laser printer adoption among Indian enterprises, demand for laser toner cartridges have been on a high as well. FY 09 witnessed a significant jump in laser toner consumption as it clearly dominated the market with over 60% share. Laser printing offers high value printing, both in terms of quality and quantity, which is attracting more consumers. The growth rate, therefore, is estimated to be over 30% for laser toners.

The market share for inkjet cartridges at less than 40% remained stagnant last year. Although the demand for inkjets is shrinking, the technology continued to have pull from customer segments like home, SOHO and those with need for photo or color printing. The market for DMP (Dot Matrix Printer) cartridges is, however, dying. Catering to the needs of only a negligible amount of customers from retail or PSUs like banks and government establishments, the market share for DMP cartridges reduced to a meager 1%.

CyberMedia Research                                                                                              DQ Estimates

PPrinter vendors make much more money out of consumables--this was proved beyond doubt in FY 09; notwithstanding the market, the consuables business grew appreciably. It would be not surprising if the HPs and Canons increase their focus on consumables in the near future

The Party Goes On
Out of the total consumable market, the original or OEM cartridges contributed Rs 1,604 crore, a growth of around 90% over the previous year. The development clearly showcased individual consumption of original cartridges soaring, along with those associated with new printer installations. The key to making money by the principals is not on printer sales, but business generated through consumable sales. With that fact in mind companies like HP, Canon and Samsung have come up with aggressive marketing policies in order to beat the competition from the growing refilled or compatible cartridge vendors and capture maximum market share.

Last year, all leading OEMs led a massive drive to promote original cartridge use and create end user awareness on the benefits associated with it. HP introduced several initiatives to lure the end users and enhance their knowledge on original cartridge usage vis-a-vis refilled or compatible cartridges. In order to offer best valued products and services to its customers, HP launched BCP (best choice portfolio), consisting of its various range of cartridges to address different customer verticals that are customized to their needs. BCP not only offers choice but gives good value proposition to customers that could be extremely helpful for operational cost optimization in a challenging economic environment. The OEM major invested heavily towards various channel and end user campaigns across the country. In a bid to provide value added services to its large enterprise accounts, HP floated the MVC (most valuable customer) program. Under the MVC program, HP entered into a special contract with the clients and offered several special services to them.

Samsung also introduced several initiatives to offer valued services to its customers. Apart from being very aggressive in its go-to-market strategies, Samsung enhanced its customer approach dramatically. The company increased its channel base across India and its number of stores by creating Samsung axis points from where customers can buy original cartridges as well as avail after sales support. Samsung has also been very focused towards its large accounts, and has come up with certain value services for them like the VIP program, which is typically a special pricing contract for its customers offering them great value and services. It also initiated several promotional schemes for SOHO and SMB customers. Canon expanded its original ink centers to 350, across the length and breadth of the country, so that there is easy availability of original cartridges. Other programs like Print City and City Specific campaigns have culminated into healthy growth for the company.

Going by the trend, government and large corporates were the two customer segments that have received great traction over the last year. The customer segment based strategies undertaken by the vendors have proved to be very effective in enhancing original cartridge adaptation among end users.

CyberMedia Research                                                                                              DQ Estimates

The compatible market is becoming increasingly organized, and in the process, obiliterating the gray players. The OEM market for cartridges and other compatibles reflects the market share of printer vendors

The Other Side of the Business
As mentioned earlier, the OEM market thrived last year, due to near wipeout of fake cartridges, but the threat from the refilled and compatible cartridges market took a serious turn as the latter gradually started to operate in an organized manner. Unlike before, the consumable market can now be broadly classified into three divisions, the OEMs, the unorganized or gray market and the after-market organized re-fillers or re-manufacturers.

With the new breed of organized players like Cartridge World and Re-fill entering the Indian market, the re-filled and re-manufactured cartridge segment has started to behave in a more mature and organized manner. It is being served with proper products, rationalized pricing, and adequate service offerings for customers. As customers are becoming quality conscious, besides being price sensitive, the smaller and local re-fillers addressing the unorganized sector are reducing in number, and organized players are emerging, acting as boosters for this market to flourish. The cleaning process which got intensified from last year with the formation of associations like the Cartridge Recyclers and Traders Associations (CRTAI) and the Indian Cartridge Remanufacturers and Recyclers Association (ICRA), is emerging as a strong and revamped contender in the Indian consumable market for the OEM players.

Like OEMs, organized re-fillers too are carrying out aggressive branding and end user awareness activities centered on cost effectiveness, quality assurance and post sales service through the usage of refilled or compatible cartridges. With a growth rate of nearly 30% and the rapid expansion plans with which these players are operating in India, this sector is one to watch out for.

Piyali Guha
piyalig@cybermedia.co.in

Page(s)   1