Magazine article Marketing

Rank Xerox Seeks a Sharper Image

Magazine article Marketing

Rank Xerox Seeks a Sharper Image

Article excerpt

Rank Xerox faces a big dilemma in its bid to regain share from rivals. Stay premium, or risk its cache to go for growth? Mike Johnson reports

The crowd surges downhill form Barcelona's Olympic stadium out to the city and the sea, flushed and buzzing after its morning bearing witness to the greatest sporting spectacle on earth. But there is one fortress impregnable to this human tide: the harbour.

Home to spiked tyre-shredders, machine gun-toting body armoured soldiers and row upon row of airport-style metal detectors. The harbour is the centre of the Olympic corporate hospitality machine, and people worth protecting. Here, on board their magnificent 50,000-ton floating hotels, megafirms like Mars, Coca-Cola and Rank Xerox are pressing the flesh in earnest.

Rank Xerox? Flesh-pressing is all for Europe's biggest name in photocopiers. Business customers are wined, dined, cultivated--and, preferably, converted. Ideally they are snatched away from arch-enemy Canon, which pulled out of the Olympic this year because it didn't feel the brand exposure justified the $25m sponsorship fee. Rank Xerox has a debt to settle. Canon is the brand which nearly killed it off. Rank's revenge isn't just about fighting back. If only it were that simple. "Rank Xerox" used to be synonymous with "photocopier". Then, under threat, it retreated to the top of the market. Now it's trying to get back share. That means moving steadily back downmarket and all the time jealously guarding its premium cache.

When US patent laws finally decreed that Rank no longer had the exclusive rights to the xerographic copy process in 1979, Cannon stepped in and wiped out its market dominance almost overnight. Canon tapped the mood of the market and attacked with a range of convenience copiers which exposed fatal defects in the slumbering American giant. Rank fell far -- and fast. By 1980 its profits had halved.

The first step to recovery came in recognising those defects. A 1980 exercise in benchmarking -- measuring how well you do it against how well the enemy does it -- taught a harrowing lesson. It found that, compared to Japanese brands like Canon:

* Rank's lead times -- turning a prototype into a fully marketable product -- were twice as long;

* defects per 100 machines were seven times more;

* it used nine times more production suppliers;

* most disastrous of all - its unit manufacturing cost equalled their selling price.

"The mistakes we made were down to the fact that we brought something technological good to the market thinking people would bite our arm off to buy it," says Rank's UK communication and corporate affairs manager Richard Grimes. "That was naive."

Next came a concerted effort to transform manufacturing efficiency. During the 80s its machine defect rate improved tenfold and production suppliers were cut from 5000 to 500. Manufacturing costs fell in parallel. "The only way to survive was to retrain the whole organisation worldwide," says Grimes. "In that journey some of our people weren't going to make it. By 1984 we had stopped the rot."

Now, he reckons, in terms of product reliability and pricing, Rank Xerox is finally on a par with Canon. But in terms of share, it has a mountain still to climb. Canon claims 28% of the 144,500 copiers sold or rented in the UK last year compared to Rank's second-placed 18%. Canon's supremacy is based on its strength in the low to mid-volume (up to 30 copies per minute [cpm]) market -- which, including personal copiers up to 12 cpm, accounted for nearly 80% of the copiers sold here last year (Dataquest).

Rank's strengths have always been with medium to big machines; improvements in product range and upgrades of old products, says Dataquest, pushed its placement levels up 10% across. Western Europe last year. Canon's placements remained static.

Their distribution strategies are widely divergent. …

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