Focus: Erosion?



Wherever you look today, you see evidence of sophisticated branding efforts within the OP industry. The German OP market specifically is a kaleidoscope of brand-consciousness, focus on price, private label and tradition. And it’s that dollop of tradition that still accounts for much in the importance of highly branded products in the country.
Says Sigel managing director Werner Bögl: "Our branding policy is one of our central strategies. A strong brand gives the consumer orientation. There is so much surplus in Germany nowadays that this is a more decisive factor than ever before. German consumers still rely on the stationery brands that they have been familiar with for decades, some of which they have grown up with."
Fellow manufacturer HSM Pressen agrees wholeheartedly. The company’s head of marketing, Stefan Schraff, explains: "At a time when more and more cheap and low quality products appear on the market, brands are like ‘good friends’. They promise a certain standard and quality to the end-user. Without a brand, customers may not actually know what features and advantages a product can give them. This, in the end, will lead to confusion and uncertainty. Brands protect us from being overwhelmed by a flood of information and signals."
Jochen Weber is marketing & merchandising director at Staples in Germany. He admits that brand perception is – despite all savings measures – still very high in Germany. "The German consumer automatically relates well-known manufacturers with quality. This is why these articles are important and are an integral part of our product range."
Having said that, the penetration of private label products in Germany is way ahead in global country comparisons. Resellers of all kinds – from the small dealer to the big boxes and the large wholesalers, not to mention a host of manufacturers themselves – are making good use of the need for more price-competitive office products.
Staples entered the German market in 1998 and faced severe difficulties at the beginning. Now it has 55 outlets across the country and a balance sheet that’s finally in the black. And in Germany, like in its home market, Staples is a strong advocate of own brand products and offers about 750 of them to its customers, mainly consumables such as paper, ink and toner, writing instruments and mail & ship products. Corporate Express and Lyreco have a similar range in the country.
But Weber strongly refutes the claim that own brands are necessarily of low quality. He asserts: "We demand a high standard of quality for our own brand products. They undergo diverse tests – both on a European and global level. For example, we have had our ink and toner products tested at the Rochester Institute for Technology in Boston."
Low price
Naturally, own brand products are usually offered at a lower price level to give the consumer more choice. Weber says: "With our own brand products, customers can obtain high quality at low prices. They can save up to 25 per cent in comparison to OEM products. That said, we do not see our own brand products as competing with, but rather as complementing the brand articles. Both product lines have their justification and can very well exist alongside each other. We have observed that customers often choose a combination of branded and own brand products."
But while much is made of the increase of private label products and the influence of discounters such as Aldi or Lidl, the trend is not as dominant as it is in other countries, such as the UK for example. According to Sigel’s Bögl, "discount supermarkets such as Aldi have focused exclusively on private label and no-name products for years, but low sales over the last few years have now forced them to include brands in their range as well". And, he adds: "Aldi or Lidl only sell stationery products as part of special promotions. This does not, however, fulfil customer requirements on a daily basis."
In addition to the fact that private label products are sometimes degraded to crowd pleasers, rather than valuable alternatives to their branded equivalents, some manufacturers also regard them as category killers. One common complaint is that the increase of own brands cause a lack of innovation, much needed in the office products sector. Staedtler positions its brand as "consistent with excellent consumer-orientated product lines", after "decades of experience in the development and manufacture of professional writing and drawing instruments".
Managing director Axel Marx adds: "Over the course of the past years, considerable investments have been made in the development of new, innovative products and product concepts that offer intelligent solutions. For any brand manufacturer, innovation is an indispensable continuous process that guarantees a leading edge on the competition – of significant importance when it comes to the differentiation to me-too products offered by low-cost suppliers."
Innovation is not just about product development, of course, but can take a number of shapes and forms. Avery Dennison marketing director Peter Sperl explains: "In the mid-1990s Avery-Zweckform started to push the internet and other e-marketing activities. This year we expect over 1.5 million individual visitors on our German websites. And we have almost 500,000 email addresses which we regularly inform about new products and promotions.
"This modern form of e-communication creates fast and strong pull-effects and supports the product sell-out at our trade partners. It is an innovative and highly targeted way of marketing with clear benefits for all involved groups. It’s all these different types of innovation that make a brand unique and desirable. Therefore, innovation is key for the long-term success of a strong brand."
Co-branding has also become a popular way of increasing one’s brand image and exposure. The Nike swoosh on binders or Warner Bros cartoon characters on writing instruments are just two examples where companies are riding on the back of a powerful, and entirely different, brand that is firmly aimed at a specific target audience.
Most companies don’t have the means to co-brand on that scale, but strategic alliances of some sort are becoming increasingly popular. Staedtler, for example, has been successfully cooperating with Scout, a well-known German manufacturer of school bags and accessories.
Scout pencil cases are equipped with Staedtler ergosoft pencils, meaning that they hit the target group spot-on and generate replacement purchase business in sales outlets. In addition, one million Staedtler school timetables were again distributed by McDonalds in 2005.
Avery Dennison, meanwhile, is working with a number of companies in the software and hardware market such as Micosoft, Corel, Konica-Minolta or Kyocera.
Keeping a brand in the mind of the consumer is as much linked to marketing as it is to anything else. And while office products and sport seem unlikely bed fellows at first sight, for many manufacturers it has proven to be a profitable combination. From sponsoring Formula 1 motorsport to your local football team, the likes of Brother, Pilot, Office Depot and Bic have been dipping their toes into that particular water for some time.
And as far as Germany is concerned, 2006 could be the year that sports marketing sees a new peak, with the World Cup Finals being held in the country this summer. For the OP sector in particular, chances are that marketing efforts will take the form of special promotions rather than full-blown sponsorship deals, for cost reasons as much as companies’ specific target audience.
Avery’s Sperl says: "For large global consumer brands, it probably makes sense to sponsor events like the World Cup Finals as it is a perfect platform to reach hundreds of millions of people with their messages – albeit at enormous costs.
"However, this kind of sponsoring wouldn’t make sense for an OP brand like Avery-Zweckform. That said, we see other ways for Avery-Zweckform in Germany to benefit from the hype created by this event. At the beginning of January we launched a national football promotion which will be sold in all distribution channels.
"We created special SKUs of printable supplies offering a 110 cash-back when consumers have collected enough points printed on the packs. In addition, sweepstakes give them the chance to win home TV entertainment sets to fully enjoy the matches. This promotion will be supported by various marketing activities like a big PR campaign, live in-store promotions, e-marketing, etc."
Bögl is equally keen to make the most of the event. "We are running a promotion with a difference for the trade and for consumers. Instead of the usual sponsoring of footballers or football teams, we have chosen to sponsor the consumer. Millions of photos will be taken and printed out during the World Cup. Therefore, we give consumers 20 per cent more contents in every Everyday plus Photo Paper pack, while at the same time offering them the chance to win a photo competition."
He adds: "The World Cup will certainly boost the economic situation – and not only in Germany. And both industry and the trade will profit from this upturn."

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