Innovation is the engine that drives progress. As clichéd as that may sound, it’s a statement that rings true and one that applies to the OP market as much as to other industries. And there are some who believe that there’s not nearly enough innovation around.
Durable’s VP of marketing Horst Bubenzer goes as far as to call it a "crisis". He says: "There is definitely not enough innovation in our OP industry today. We all live and act in a very traditional market with a lot of traditional products, so the tendency to focus on and invest in innovations is not well established."
The German OP market had a rough ride over the last decade and the perceived lack of innovation can be attributed to a whole range of factors: lack of vision, lack of funds, lack of consumer demand. But because of these hard times, adds Bubenzer, it’s even more important to focus on product development. "These days, when all consumers expect good product quality and a good price, innovation makes a real difference! Companies in Germany that are not willing to invest in product development and, by the way, do not have a significant export business, will be losing out in the mid term."
Stabilo’s international marketing director Horst Brinkmann is a little more upbeat. "Fortunately, the economic situation in Germany doesn’t paralyse all entrepreneurial activities! With the proverbial German spirit of research and inventive talent, a lot of new ideas are worked out day by day."
And it’s not as if there is a shortage of new products. Quite the opposite. Dozens are launched every day, many in the same old, same old category. But how many stick in the minds of the consumer, how many can be described as truly innovative and bring something new to the mix?
Most of the best known office products go back some time: Bic pens, Post-it notes, Pritt sticks, Sellotape, Leitz lever arch files… Does that mean that nothing major has happened since Bic introduced the humble pen in 1950 or 3M made everyday life easier with Post-its in 1980?
Not quite. But there’s no getting away from the fact that the process of innovation has changed somewhat. In effect, in the majority of cases today, rather than inventing completely new products, the name of the game is to improve existing ones.
Germany has always been regarded as a manufacturing stronghold, in OP as well as in many other industries. And despite the continuing sluggish economy, low consumer confidence and something of a mass exodus in manufacturing terms to eastern Europe or Asia, the ‘made in Germany’ label still accounts for something. That said, many German manufacturers nowadays prefer to be referred to as European or global players – but even they still use this quality benchmark tagline.
Faber-Castell’s international key account manager Karl-Heinz Raue puts it down to history: "Due to its central location in Europe, Germany has always been very influenced by technical and cultural trends in other markets. It is not a coincidence that the origin of many important manufacturers of paper and stationery products is in or close to cities with a strong history as trading posts going back to the Middle Ages. New products and trends passing through these cities were picked up and then further developed, with German engineering and the typical German strive for quality and perfection."
He adds: "The idea to differentiate and protect quality products against counterfeits by branding them with registered trademarks was created and supported by German manufacturers such as Lothar von Faber in the 19th century who had international trading experience. All these historical influences have created a common characteristic and the market behaviour of ‘German’ international manufacturers."
The long tradition and heritage of exiting products as the basis for further development can be both a source as well as an obstacle for innovation in Germany today. Faber-Castell’s GRIP 2001 is just one example where a standard pencil has been transformed into a more design-orientated and ergonomic everyday product. Other innovative companies in the German market – Henkel, Tesa, Sigel, Leitz, Stabilo and Durable to name but a few – are much the same. They have all added value through improving the design and functionality of existing products.
And there’s nothing wrong with that. As Brinkmann puts it, at the end of the day, "genuine innovation must simplify the customer’s life". He adds: "The challenge is not so much the number of new products, it is more how to win the battle in the consumer’s mind. If no one is able to differentiate your offer from the rest, no one understands the value of it which means everyone likes to get it for less."
As far as Durable is concerned, there are four factors which result in real product innovation: quality, functionality, a unique selling point (USP) and design, although quality is perhaps not as important as it should be.
Bubenzer explains: "Quality has lost part of its former power and importance. Quality today is more the price to enter the market than a competitive advantage. Functionality meanwhile is the backbone of a real product innovation because it delivers the benefits to the consumer."
Arguably the most important ingredient in a crowded marketplace, says Bubenzer, is the vital point of difference, or the USP. "The USP is often hidden in the functionality aspects and reveals a certain uniqueness in comparison to competitive products in the market."
"Lastly, design is appearance, feeling, taste, smell, colour, for example, of a product – it strongly delivers the emotional aspect. In times where ‘me-too’ products dominate our market, design more and more becomes the competitive advantage."
One area where design is paramount is in the SOHO market. Indeed, this sector has become ever more important in recent years and it clearly opens up new possibilities for innovation. Not because innovation is more important in that ‘privatised’ sector of the OP industry, but because the goal posts have changed somewhat here.
SOHO users demand products that are functional, competitively priced, but also respond to an emotional need. Design, convenience, safety and compatibility with home life are much more important in this particular segment.
Raue says: "The SOHO market is certainly more receptive for innovative products than the corporate sector. It’s closer to B2C, where consumers are taking their purchase decisions more for their individual use and pay out of their own pockets."
However, he adds, it would be wrong to restrict innovation to this particular segment only. "Due to the price sensitivities and complexities of the supply chain, it may be more time and money-consuming to launch innovative products in the corporate office market, but for the development and maintenance of a sustainable business there is no other option."
Brinkmann also admits that bigger companies are much more difficult to penetrate in terms of getting them to try new products and understand innovations. But instead of targeting the SOHO market in particular, Stabilo is approaching things rather differently. Brinkmann explains: "Stabilo’s brand-building efforts are focused on individual peer groups. We call them ‘stylish nightowls’, ‘interactive workaholics’, ‘urban unconventionals’ and ‘active leaders’, and create product innovations that satisfy their needs specifically.
"To give one example, the ‘s move elastic writer – as well as looking interesting and individual – has been designed with creative people in mind; those who need to have flexibility, design aspects and comfort in their writing tools."
Innovation and branding are always closely linked and often offer the ideal combination, certainly as far as Bubenzer is concerned. "A lot of good products were not successful in the end because they were missing the support of a strong brand name. Brands deliver the ’emotional injection’ for an innovation. They draw a clear picture in the mind and leave a unique mark in the heart of the consumer."
Raue agrees: "Consumers in every market are prepared to pay a premium price for a product that makes them feel more comfortable. Especially in the B2B sector, vendors often underestimate the influence of emotions on buying decisions. A brand will not be able to maintain its emotional value if it does not underline its competence through continuous innovation.
"It’s the old hen and egg discussion: only a strong brand can create the premium margin to invest in innovation, but without innovation a brand will not be able to justify the premium price in the long run."
But neither innovative nor well-branded products will impress customers if they don’t know they are available in the first place. And this is where marketing comes into play. "Yes", says Bruno Ghibely, managing director of Novus, "the German mentality is typical for innovation and development and technical progress. But in the past we haven’t had overwhelming success in marketing our own inventions. Most inventions made by Germans were successfully marketed by the Japanese and the Americans."
Raue believes that the problem is not necessarily a lack of innovation in the OP industry, but the fact that consumers are simply not aware of it. He elaborates: "There are a lot of innovative products already on the market – also in the office products industry – that consumers would love to buy and use.
However, they are not aware of their existence and cannot find these products on the shelves or the printed and electronic catalogues of the trade. I think we do actually have a lack of marketing and distribution activities for innovative products."
When it comes to marketing, the 2004 Dymo LabelWriter campaign of course set the bar at a very high level. So high that the average German small to mid-sized manufacturer simply wouldn’t have the means to pull a Dymo-style TV campaign out of the hat. But that’s not what it is about, adds Ghibely: "It depends on the product and the scope of the product. Then a marketing campaign can be launched which is adequate, affordable and – ultimately – successful."
At the centre of it all, of course, are the consumers. Their needs – the desire to work more efficiently, to save time, to enhance communication in the office environment – must be the starting points for any innovative process.
And while the manufacturer obviously has to produce the product, the remainder of the ‘selling cycle’, including marketing, should be shared by all channel partners. They have an equally important part to play, albeit in different ways.