Pilot Light

Inferno is a PR consultancy. This is not. This is Inferno’s blog.

Cutting loose from Razors and Blades

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Indeed…

There has been a lot of talk recently about Kodak’s revised entry into the printer business.  Despite the patronisingly silly brand name (EasyShare sounds like it could be a double packed chocolate bar or a load of any other things) it actually represents a major challenge to a classic business model: ‘razors and blades’.  For any non-armchair economists out there, this means that the main product is sold for the lowest price possible (sometimes even at a loss) but the bits that make it work have fat enough margins to more than make up the difference.  Aircraft, jet engines, games consoles, razors, electric toothbrushes and inkjet printers are all sold on this basis.  This is a very, very successful model despite structurally meaning that the biggest consumers subsidise the dabblers (which may seem unfair).  It also opens up opportunities for brave competitors.

You can easily make a case to a business customer that to pay a bit more for a thing at the start in exchange for much lower running costs over its useful life makes a lot of sense, but this is a harder concept for consumers to ‘get’. 

I once drove to PC World in Croydon just to get a midrange photo printer that was on clearance for £50.  I took me about 18 months to work out I had been conned as the thing consumed more ink than an LA tattoo parlour, making it a £350+ purchase in no time.  I moved on to a wonderful Canon PIXMA with its single ink tanks, but it still costs something like £50 to re-ink the thing totally (no I don’t use nasty refilled or unofficial cartridges – they gum up printers). The new Kodak models cost £17 to re-ink, but are dearer up front.  Stateside, they have embarked on all kinds of obvious but effective consumer PR tactics (are you an ink miser? Do you sneakily print colour in the office?  Do you stop your kids printing in colour? Etc) to underline the point.  Interestingly, Kodak have also been shifty with press about what the actual dpi resolution of the printers is, just like Intel and AMD have sometimes tried (and failed) to de-emphasise the clockspeeds of their processors.  Megapixels, dpi and Ghz are spouted as fighting words by fanboys but actually are deeply misleading and mean little once you get beyond a certain baseline.  

A bold move on the whole, which may give them a niche amongst the thrifty at worst or a place at the top table of printer brands at best. There are occasional backlashes against the fact that by volume printer ink is one of the most expensive liquids on Earth.

However, razors and blades works for a simple reason – consumers like low prices, even if they are an illusion.  This will be a real marketing challenge to watch. 

J

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Written by pilotlight

25/05/2007 at 11:49 am

Posted in marketing, PR, Tech

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