Archive for December, 2010

A New Cartridge or a New Printer?

When I was a marketing student at Ohio State University 14 years ago, I always thought that selling printer at a very low price and cartridge at a high price was a brilliant idea. This marketing strategy has proven to be the answer that the company has been looking for. The printer was simply a gimmick, enough to turn customers into a captive market, while the cartridge business is simply the cashcow. Everything was simple, and to be honest, those were the good old days.

But then, customers got smarter, they have found a way to ‘refill’ the cartridges with their own ink. Genius? Not really, because their ink was inferior, and in some cases it leaks and in the ends produce an unsatisfactory results. The big manufacturers heavily promote this, and how buying original cartridge will lengthen the printer’s life. As time goes by, the ‘inferior’ ink gets better and better, and becoming more and more popular.

Well, the multi-billion dollar printer companies are still making a lot of money because they still dominate the market, so practically the pie is big enough for everybody. So the story should end here if you’re expecting a happy ending. Wrong!

Knowing that the ‘substitutes’ are closer to their ‘par’, the companies try different tactics to maximize their profits by ‘killing’ the substitutes and create greater demand for original cartridges. They invented a smart chip. These chips are so smart, they can send information to the printer that the customers should buy a new one, for one or more reason, either it is empty or expired. Third party refillers cannot reset the smart chip, so even though it is already refilled, the cartridge will not work. Worse than that, the cartridge will stop working when it passes its expiry date even though it is not empty.

The Smart Chip has Spoken

These companies might be brilliant in coming up with such strategies, but they have to realize that such strategy also have its moral hazards:

1. Customer’s Rights to choose suppliers

Customers do not have the options to choose their own suppliers. They become absolute captive market. In the old days, they can decide to buy the premium from the main source or take the risk and spend less money to buy from other source.

2. Customer’s Right to decide when to buy

Customers  do not have the option to decide when they should buy a new cartridge. Now, it really doesn’t matter whether you print 100 pages per week or 1 page per week, when the time comes, you should buy a new printer because in every cartridge, there is an expiry date.

3. Environmental Issue

Buying one printer (complete with a complete initial cartridges) has become far more cheaper than to buy the original cartridges. This ‘illogical’ phenomenon has really forced people to throw away their printer, and buy a new one. This is a disaster from the environment standpoint. In my opinion, the manufacturers should be “green” and provide the refills.

As marketers, we have to be aware that we should create a better world and competition in the long run will improve everyone (and  also, it makes life more interesting) (PW).

If you want to know  more about Smart Chips, check out these links:

  1. Smart Chip in Printer Cartridges
  2. Printers: Printer, Smart Chip, Cartridge Expiration

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