State of the Industry Report: Chasing Dollars
The Expert: Bill Reid, vice president of sales and marketing, New Dimension Labels, Austell, Ga.
What are your thoughts on the current state of the label market?
Bill Reid: We produce custom prime labels, so I can only comment about this segment of the market. Our label sales have been growing year-over-year as more distributors educate themselves on selling prime labels to current accounts and new prospects. Selling prime labels that go in packaging can be a longer sales cycle. Once a distributor invests his or her time and is able to penetrate an account, then, in most cases, the end-user will continue to use the same vendor as long as the product continues to look and perform as promised. Changing vendors on a label product that is working properly can lead to label failure. A failure of a label (e.g., fading, cracking, peeling off, etc.) at any point in a product life cycle can be disastrous.
A problem area (not necessarily new) that we run into is that customers need labels in-hand quickly for drop-dead dates for product launches. The time from product inception to launch keeps getting shorter. Because of this, sometimes proofing and color matching is rushed. For example, we had a new product launch for a startup company where the end-consumer demanded and signed off on us to match ink colors from [its] website. [The company was] in a rush and ended up with color variations that could have been prevented if the proper time was taken in the proofing and color-matching stage.
What do you think the biggest changes will be this year, and what will drive them?
BR: We see growth in the requirements for printing on different substrates for unique applications. Printing on clear substrates is growing as younger consumers want to see the product they are purchasing through the packaging. Because of this we do more experimenting with different nontraditional substrates that can run through our digital equipment. We find we do more testing of stocks and working with our substrate supplier’s technical experts to provide solutions that will work on both our digital and flexographic printing equipment. That way we can provide fast-turnaround digital production for shorter runs and longer-run capability with our flexographic equipment.
What kind of plan or growth strategy has your company implemented in order to stay relevant and profitable?
BR: Our strategy has always been to continue to invest in our resale channel. What works best for us is finding better ways [to] support our distributors through the entire sales process. Since the prime label market has not been penetrated (as an overall percentage) by resellers, we feel that there is an abundance of growth opportunity for us and our customers. In many cases, it may be helping our distributor[s] penetrate an account where they are already selling document or commercial print products.
Digital printing certainly has taken off in this sector, but what limitations does this method bring? Are there any misconceptions among resellers?
BR: A major limitation in our digital equipment is that it is not economical for super long-run projects. This technology is changing and newer equipment coming out is better on long runs. The cost to purchase longer-run digital equipment must be weighed against flexographic methods.
A common misconception is that the price for a digital label is going to be lower than flexographic printing. Depending on the substrate and the quantity, this may or may not be true. Digital does not require printing plates [and] press wash-ups, and waste is minimized. But the investment in the latest digital technology can be costly coupled with click charges and maintenance agreements.
I think that, for the most part, our distributors and our company could do a better job of marketing the power that digital provides to small and midsize companies. For example, the Coca-Cola Co. had success with the “Share a Coke” marketing campaign. This campaign provided a buyer the ability to purchase a Coke variably [printed with] a consumer’s name and the names of family, friends, colleagues, or even the names of people they want to know better. The power to variable print packaging is also available to small to midsize companies and not just the huge multinational conglomerates. Smaller companies need to also take advantage of the ability to:
- Print variable labels or regionalized packaging depending on the demographics of the market.
- Support “cause marketing” campaigns (e.g., breast cancer awareness and patriotic campaigns) in their packaging.
- Quickly test market new designs.
- Take advantage of on-demand customization of labels in short runs. For example, setting up a website where the end-consumer can design and order customized packaging for an event. Consumers are drawn to customized packaging for events and special occasions.
What kinds of business conversations motivate you, and how do you and your supply-chain partners take those conversations to the next level?
BR: Any conversation that allows us to become closer and partner with a distributor and his or her customer, we have found, leads to a greater chance of success. Whether that involves a distributor and his or her customer visiting our facility; being involved with a project from the conception/testing; or visiting the end-user with our customer. It’s all about building trust. Once we build the trust we feel that in most cases success will follow.
Based on past trends, what are your expectations for the short-term future of labels?
BR: The trend we see not ending any time soon is for marketers to continue to demand high-quality labels with very short turnaround times. We need to continue to respond and accommodate these requirements.
We also see marrying label manufacturing with web-to-print technology as a way to help distributors differentiate themselves and better service label accounts. We are fortunate because our LaunchPad Technology Services division offers web-to-print mobile friendly portals to distributors. We can provide this solution all under one roof and do not need to bring in a third-party vendor.