Lexmark Marketing Report December 9, 2011 Parker Raque, Bryan Welnetz, Ben Hengels, Gabi Donchez, Melissa Diehl
Group 2 Mktg 342 Section 004
TABLE OF CONTENTS
I. Executive summary II. MDP III. MRP IV. Research Approach V. Data Analyses and Results VI. Limitations VII. Conclusion VIII. Appendix
This report is to provide information for Lexmark International, Inc. to increase its knowledge of college students and their perception of the Lexmark brand. College students, who require large amounts of printing, hold a large share of the market. The question this research attempts to answer is “Should Lexmark change its promotional and product component of the marketing mix, in order to better accommodate college students?” We gathered information from 493 survey respondents, in which 89% of the respondents were college students. In this summary, we have recognized some of Lexmark’s key issues through statistical analysis and have demonstrated how our results will provide useful information.
1) Lexmark needs to identify how their brand is perceived by college students. We believe this is the most important issue to address because the consumers’ perception of a brand affects the way they make purchasing decisions. The most significant findings that address this are: Brand perception rankings: HP- 1, Canon- 2, and Lexmark and Epson were split evenly at 3 and 4. In asking the familiarity of Lexmark on a scale of 1-5, the mean for college students is 2.92 while the mean for non-college students is 2.98 (statistically significant through Z-test). Out of all the respondents that own a printer, 86% are college students- 70% of them own an HP, while only 2% own a Lexmark. In addition, the majority of the college students, 62%, own an inkjet printer. These statistics show that Lexmark is not as well-known as other leading brands. Without proper exposure to the brand, Lexmark is beating themselves when it comes to selling their product to students. A new ad-campaign could stimulate growth at universities.
2) Lexmark must recognize the buying or acquisition process of personal printers among college students. The most significant findings that address this are: Around 60% of our respondents purchase their printer at a brick-and-mortar store rather than an online store. The ideal price for purchasing a printer is between $51- $100. We found that it was the most common price range at 34% of the respondents. Knowing where the average student purchases their printer as well as the price range they aim for can help establish where their ad campaign should be focused. This information can also be useful creating their ideal product tailored towards the students’ needs.
3) It is important for Lexmark to be fully aware of the printing behaviors of college students as opposed to traditional customers. The most significant findings that address this are: 60% of respondents have printed on campus the most in the last month while only 32% printed at home. 65% use their printer for an academic purpose, which explains why most printing is done on campus. Understanding how college students use printers can teach Lexmark how they differ from the traditional customer. Knowing where college students print most often may help in designing the details for an adcampaign. Luring the student to print at home can potentially give Lexmark a chance to increase their home printer sales. We believe that it would behoove Lexmark to focus on increasing brand awareness. In order to change the perception of the Lexmark brand, Lexmark must market its product specifically to college students by forming a new ad campaign on college campuses. With that in mind, Lexmark should also focus on creating a new printer that can revolutionize printing for students. With a new product that meets the most important needs and wants of a college student, specifically print quality, low ink price, ink efficiency, and reliability, a student may buy a Lexmark printer and do the majority of their printing at home. Lexmark can proliferate its sales and brand familiarity within the college community with a new optimal product and a new ad campaign promoting it.
Lexmark, ranked one of the most admired companies by Fortune magazine, produces printing and imaging products and solutions for business and consumers. Although Lexmark has reported 4.2 billion dollars in revenue, only 40% of their sales are in the United States. Regarding this knowledge, Lexmark needs to expand its brand into a new market segment. A market that Lexmark has not taken advantage of are college students. To obtain a better understanding of college students printing behaviors, we administered a survey at The Pennsylvania State University. College students, who require large amounts of printing, hold a large share of the market. With 30% of adults acquiring a bachelor’s degree, this is a huge number a people that require printing. This study is to understand more specifically what the printing requirements are in college and what some of the current students’ beliefs are regarding printing and the Lexmark brand. The report is organized as follows: We first define the management decision problem (MDP) at Lexmark. This is followed by the marketing research problem (MRP) where we describe the goals of our preliminary goals for the research. In the next section we describe our research method (Internet survey). We will then present our analysis of all the survey results with descriptive statistics and some bivariate statistical analyses. Next we will cover some of the limitations to our study because there is no such thing as the “perfect” study. With all the research explained, we will present our interpretations of the data and our opinions about the next step for Lexmark. We hope that this report is useful for the future of Lexmark International, Inc. MDP Should Lexmark change its promotional and product component of the marketing mix, in order to better accommodate college students? Printing in college represents an opportunity to market to a large population. The number of young adults going to college is increasing rapidly in today’s society and the demand for printing is directly affected. Lexmark has the potential to infiltrate this target market as popular printing brand for students. By increasing its brand awareness and usage to students, the sales may increase drastically. Unfortunately, Lexmark must change their marketing mix in order to reach this segment of the college printing consumers. Lexmark has failed to understand the acquisition process of home printers for college students or its reputation at universities. Lexmark also must understand the importance and relevance of printing to the average student. Although the company has a range of new high technology products, it might be more beneficial to first understand the demand coming from this market segment.
It is time to discover how to reach out to this new target market while upholding its status with traditional customers. Our team believes we understand the problems that Lexmark is facing, and our research will be able to determine the most effective solution. The Management Decision Problem that we would like to address and research is, “Should Lexmark change its promotional or product components of the marketing mix to better accommodate college students?” By learning more about the advertising campaigns or new product ideas, Lexmark may be able to establish itself as a solid college printing competitor.
MRP To determine whether a new advertising campaign or product will successfully position Lexmark in universities. Lexmark, who has experienced large amounts of revenue in 2010, can expand its wealth even more by learning more about a new segment of the population: college students. College students have daily printing needs and it would be worthwhile to investigate the specifics. Without understanding these potential consumers, Lexmark cannot efficiently market their products to them. We would like to develop a research plan to answer our question ‘Should Lexmark change its promotional and product component of the marketing mix, in order to better accommodate college students?’ By answering the question effective in this ne we can determine whether a new advertising campaign or a new product line would bew market segment. 1. To gather demographic information about college students. Our first component of information that we would like to gather is the demographics of the average college student. We will first ask the age and gender in our survey so that we can understand any differences between males and females in printing or differences between in printing between older and younger students. To avoid assumptions between age and class year, we will also ask how many school semesters have been completed. This information is relevant because it will be the basis for a potential new advertising campaign. If the male population is significantly larger, it may be smart to advertise with sports players or with male directed products. The opposite may also occur in which Lexmark could advertise with feminine types of printer designs such as pink colors or flowery designs. The gender can be measured with a nominal scale while the age and income can be measured with ordinal scales. Other important demographic information could be learning whether the student lives on or off campus, where the student prints the most, or how often they print per week. 2. To know what features to provide that appeal to a college student
Another component that this research will investigate is what printing features would appeal to a college student. Knowing what features are preferred by students could determine how a potential new product should be designed or what kind of new technology is appealing. This could entail creating an efficient long distance wireless printer, a portable printer, or anything other new ideas that Lexmark innovators may not have thought of yet. The best way to research this component would be with an open-ended question so not to limit the ideas of new features. A checklist question with examples of printer features could also help measure what is most important to students.
3. To find out what type of advertising campaign would be optimal The last component of our MRP that we would like to research would be determining an optimal advertising campaign. This could be partially answered from the results of the aforementioned demographic portion of the survey. Before deciding on a campaign, we should learn Lexmark’s brand awareness and reputation to college students. We could survey this using a funnel question such as ‘Have you ever heard of Lexmark?’ The next step would be to learn where have they seen previous Lexmark advertising or if they would prefer a Lexmark printer over another popular brand. Name association questions may help us discover Lexmark’s true reputation. For further information about new advertising campaigns, focus groups or case studies can be used for more in depth exploratory research.
The 35 question survey was administered via the internet by all Mktg 342 class members to friends and family. This type of survey design allowed us to contact the largest amount of students possible. We sent a the link to the survey through email and Facebook requesting participation in the survey. This survey had a large demographic portion including questions discerning age, gender, and enrollment status and year. The next part of the survey inquired about their printing preferences, habits, and past experiences. These questions included how often they print, where they print, what features they use the most, if they have to print in color, and if they own their own printer, what brand it is, etc. The last portion of the survey was used to understand the students’ perception of Lexmark’s value. The results from this study will be evaluated and analyzed in the following portion of this report. DATA ANALYSES AND RESULTS Q2: 89 percent of the respondents to this question are current college students while the other 11 percent are not college students. Q3: Of that 89 percent, 15 percent are freshman, 19 percent are sophomores, 42 percent are juniors, 22 percent are seniors. Graduate students held .7 percent and 5th year seniors held .5 percent.
Q4: Of the people who answered this question, 78 percent do have a personal printer. 21 percent do not. Q6: Of the people who answered this question, 70 percent own an HP. This is significant because it proves that HP dominates the personal printer market. 2 percent own a Lexmark printer. → Lexmark has a large focus on the inkjet printer market, they cost less to produce and provide better color/photo quality Q7: 63 percent of the people who own personal printers have inkjet printers. 11 percent have laser printers, 24 percent aren’t sure, and 2 percent own other kinds of printers, like deskjets. Q8: The mean value of satisfaction is 3.7, which is very close to satisfied. Q9: 57 percent of people had someone else purchase their printer, and 43 percent purchased their printer themselves. Q10: 43 percent of respondents purchased their printer at a brick- and- mortar store, 15 percent purchased online, and 24 percent aren’t sure where they purchased their printers. 17 percent answered other, but specified what kind of store they purchased their printer from. Q11: 34 percent of respondents paid between $51- $100 for their printer. 21 percent paid less than $50, and 17 percent paid between $101 and $150. 21 percent are not sure how much they paid. Q12: 27 percent of respondents have owned their printer for 1.1- 2 years, 25 percent have owned it for 2.1 – 3 years, and 17 percent have owned it for 3.1- 4 years. Q14: 65 percent of respondents use their printer for academic purposes, 41 percent use it for recreational purposes, 26 percent use it for professional duties, and 30 percent use it for personal and household management. Q15: 69 percent of respondents have printers that print in color, 53 percent have color copying, 56 percent have black and white copying, 56 percent scan, 17 percent fax, and 39 percent photo print. Q16: 35 percent of respondents replaced their ink cartridge 1- 3 months ago, and 29 percent replaced less than a month ago. Q17: 38 percent of respondents paid $11- $20 for black ink, 30 percent paid $21- $30. Q18: 30 percent of respondents paid $21- $30 for color ink, 29 percent paid $11- $20, and 18 percent paid $31- $40. Q20: Of all of the people who took the survey, 6 percent don’t own a printer because it is too expensive, 7 percent because ink is too expensive, 1 percent because they don’t need to print, 3 percent because they don’t have space for one, and 14 percent because they use a printer that they don’t own. Q21: 70 percent of respondents printed on campus in the last month, 61 percent printed at home, and 13 percent printed at work. Q22: 60 percent of respondents have printed on campus the most in the last month, while 32 percent printed at home the most. Q24: On a scale from 1 to 5 (very unimportant- very important), the mean value of importance of the following printer features are: Color printing- 4.19 -> Lexmark provides better color quality Touch screen- 2.14 Wi- fi access- 3.12 Compact size- 3.46 Fax- 2.54
Color copying- 3.77 Scanner- 4.01 Duplex printing- 3.16 Energy efficiency- 3.37 Print quality- 4.35 Print speed- 4.21 Aesthetics- 3.09 Ink efficiency- 4.26 Ink price- 4.25 Brand name- 2.79 Reliability- 4.47 Q25: 76 percent of respondents would seek information online, 53 percent would seek info from a friend or family member, 14 percent from print ads, and 20 percent from a brick- and- mortar store. Q26: 85 percent of respondents have been exposed to the internet in the past 24 hours, 60 percent have used a newspaper, 77 percent have watched television, 33 percent have read a magazine, and 40 percent have listened to the radio. Q30: 41 percent of respondents are extremely familiar with HP and 35 percent are familiar. 38 percent are familiar with Canon and 22 percent are extremely familiar. 28 percent are familiar with Epson and 19 percent are unfamiliar. 27 percent are familiar with Lexmark and 19 percent are unfamiliar. Q31: Most respondents ranked HP as number1, Canon as number 2, and Lexmark and Epson were split evenly as 3 and 4. Q32: The responses to this question depend on what brand of printer each respondent owns, but judging from the answers, most people seem pretty satisfied. Q34: Most respondents neither agree nor disagree with the statements. Most people seem to not know that much about Lexmark. Q27: 57 percent of respondents are male, and 43 percent are female. Q28: The mean age of respondents is 23 years old.
BIVARIATE STATISTICS Q 2&4. Crosstab: 321/421 students own a printer (76.25%) Q 2&8. Z-difference: On a scale of 1-5 for satisfaction of a personal printer, the mean for college students was 3.64. The mean for non college student average was 4. Ho: u1=u2. Z= -2.76 P=.0058. Reject the null. Q 2 & 30. Z-difference: In asking the familiarity of Lexmark on a scale of 1-5, the mean for college students is 2.92 while the mean for non college students is 2.98. Ho: u1=u2. Z= -.361 P= .718 Do not reject the null. Q 2 & 7. Crosstab: Of the college students 192 of the 311 respondants (62%) have inkjet printers. The other 38% is split between those who have a laser printer, other form of printer, or are unsure.
Limitations When conducting marketing research, there are always going to be variables and factors that limit the accuracy of your information. The main limitation of all survey research is that the respondents in the sample aren’t necessarily a representation of the actual population. Furthermore, we also faced difficulties that were specific to our own report. Our hardest obstacle to overcome was the miscoded information in the data view of SPSS. This caused parts of the data to become useless when performing bivariate analyses. Next, as the workload increased, we found it increasingly difficult to split the work which meant we needed to meet outside of class as a group.
Conclusion After administering our survey at The Pennsylvania State University, we were able to perform a statistical analysis on the compiled data, which allowed us to interpret the results. Using SPSS, we conducted a univariate analysis of each question. Following this, we were able to combine questions and create bivariate statistics. The use of SPSS allowed us to understand which information was relevant to Lexmark and aided in the final recommendations. Initially, we recognized the core issues that Lexmark faced before administering the survey. Lexmark needs to identify how their brand is perceived by college students. Also, Lexmark must recognize the buying or acquisition process of personal printers among college students. Finally, Lexmark needs to be fully aware of the printing behaviors of college students as opposed to traditional customers. These key issues were taken into account when completing our statistical analysis. With each question we used SPSS functions to create tables for all the numbers. We read through means and standard deviations, and could see noticeable differences in responses to some questions. It was useful to know that the majority of the respondents were current students and that the average age was 23 to better understand the demographics of respondents. Lexmark’s brand perception was determined to be significantly lower than other leading brands such as Canon and HP. This type of data from the sample gave us information to understand the reputation of Lexmark in the overall population. In addition, the use of bivariate statistics allowed us to analyze the relationships between two variables. When appropriate, we combined data from two specific questions to attain relevant information that answers Lexmark’s issues. Most of our bivariate analyses involved question 2, in which responses determined if the respondent was a current college student or non- college student. This question allowed us to specify the information towards strictly college students. When comparing two nominal/ordinal variables, we used the Cross tabulation technique. Cross tabulations allow us merge two frequency tables together. Another form of bivariate that we used is a Z-difference test. The Zdifference test compares one nominal/ordinal variable with one interval/ratio variable. Once means are computed in SPSS, the Z-difference and standard deviation formulas give us our null and alternative
hypotheses. With our Z-score, we determine if the differences are significant based on the P-value (also found in SPSS). The univariate and bivariate statistics allowed us to answer our marketing research problem. Our MRP is to determine whether a new advertising campaign or product will successfully position Lexmark in universities. Two key findings that address this are: First, since Lexmark has a low market share, a new advertising campaign could raise awareness of their brand. We know this because out of the 78% of the respondents that own a personal printer, only 2% own a Lexmark. Second, we learned what printing features were most important in choosing a printer. Specifically, the most vital features are print quality, low ink price, ink efficiency, and reliability. Knowing this information along with the combination of other statistics allows us to project what kind of product that college students are looking for. We believe it would be beneficial to Lexmark to start a new ad campaign directed toward college students. According to the data, college students have low exposure to the Lexmark brand. A new ad campaign can increase the brand awareness on college campuses. However, a new ad campaign should be put on hold until Lexmark creates or markets an ideal product that meets student’s needs. Lexmark can increase its sales and brand familiarity within the college community with a new optimal product and a new ad campaign promoting it.