The small print

As consultants will tell you, "listening to the consumer" is considered the ultimate in marketing strategy. But what does it involve? And does it really bring benefits?

TVS Electronics (TVSE), which makes keyboards, computer peripherals and dot matrix printers, set itself the target of finding out "" and has reaped the benefits through some unglamorous yet honest-to-goodness R&D work.

Until early this year, TVSE was fighting for every inch of space in the dot matrix printer market.

According to market share reports published by the international infotech and telecom research agency IDC, in the last two years TVSE and Wipro Electronic Peripherals were locked in a contest for every unit of dot matrix printers sold.

Their volume market shares in 2001-02 and 2002-03 were at 35 per cent each with Wipro ahead by a few basis points in 2002-03.

However, in the current fiscal it's a different story. In the April-June quarter of 2003, for instance, TVSE's market share surged ahead to touch 43.8 per cent, while Wipro's share dipped to 29.3 per cent.

TVSE executives point out that the new dot matrix offering, TVS Proton, which was rolled out across the country through 2002-03, has boosted their fortunes by a crucial four percentage points, the remaining growth taking place through the existing product line.

TVS Proton, which is being pitched as the "world's quickest bill printer", will contribute to 25 per cent of the sales in that segment by mid-2004.

First, a look at why there was the need for a Proton in the 3.28 lakh units Indian market for dot matrix printers.

On one hand, if personal computer penetration was growing in double digits with small and medium enterprises getting computerised, the preference for a dot matrix printer was declining.

The market for dot matrix printers was declining because of superior products like ink-jet printers that offered high-quality print outs.

Also, the concept of taking multiple copies of a bill was going out of vogue as most companies were going in for electronic bills and vouchers.

IDC predicts that the demand for dot matrix printers will decline at a rate of 4 per cent annually over the next five years while the market has been stagnant for the last two years.

TVSE executives, however, argue that in spite of predictions that the dot matrix segment will decline by 8 per cent this year, the industry has managed to grow by 12 per cent. This is mainly because of growth in demand from small and medium enterprises in smaller towns.

However, TVSE felt that there was a need for dot matrix printers, particularly in the case of first-hand users like retailers, chartered accountants, doctors, distributors, who used computers to keep an account of business transactions and generating bills.

"For any invoice these customers required multiple copies, their main concern being the cost of printing," explains S Narendran, general manager, marketing, TVS Electronics. Narendran adds that PC penetration was growing at more than 20 per cent in the smaller towns.

As these computers are bought by small and medium enterprises, they would need low-cost, affordable printers that could be used in a rugged environment.

Thus, dot matrix would fit the bill as the cost of printing was as low as two paise to 30 paise. In inkjet, a print out would cost you 35 paise onwards. One print-out with a laser printer costs 60 to 70 paise.

"We wanted to build a printer for the small enterprise," adds N V Mahadevan, product manager, printers, TVS Electronics.

In February 2001, TVSE put together a team of 17 members consisting of executives from research & development, product management, marketing and sales, quality and customer support. This team visited 600 customers across cities like Chennai, Bangalore and Hyderabad.

Mahadevan says, "We would observe what the customer was doing and map the process of usage."

The observation process threw up several insights. Dot matrix printers were used the most to print bills towards the end of the month and the first week of the next month, and a failure at this time was crucial. And this occured on many counts.

Changing the ribbon cartridge that dot matrix printers use was a monthly ritual. This was not just expensive but time consuming too "" it could mean half a day's downtime.

So TVSE devised the Inkbank which the company claims to have patented. The Inkbank, which is fitted in the ribbon cartridge, helped extend the life of the cartridge. This can print 10 million characters against three million off the existing ribbon cartridges.

With the refill Inkbank, the ribbon has to be changed only after 40 million characters as opposed to a change every nine million characters with brands made by the unorganised sector.

So, even as the initial cost of the ribbon was Rs 250 against Rs 160 for the local brands, the cost for printing a million characters was 6.30 paise with the TVSE cartridge against Rs 18 on the locally-made cartridge.

The company claims that this cut the cost of printing by 50 per cent which translated into minimum savings of Rs 1,000 per year.

The R&D cell also soughted out another common glitch "" the tendency of printers to jam. All it took after an endless wait for the service engineer was a dose of oil. So the Proton introduced a self-lubricating mechanism, "Selicon" which eliminated the need for oiling.

The other problem to be addressed was dust choking the works. This problem is more pronounced in dot matrix printers because users tend to keep the printer lid open to check whether the cartridge is rolling.

Proton's designers solved the problem by providing for a translucent blue top cover.

Now to the problem of speed. The norm for measuring speed in printers was the number of characters printed per second.

This was, however, an insignificant measure as far as the end-user was concerned, given the chances for many slip-ups in the process from the paper entering the printer to the final bill being delivered. TVSE decided to look at the number of bills printed in a minute.

This was, however, going to be a difficult promise to deliver because it would include, not just the performance of the printer head, but also other parameters like how fast the paper goes inside, how fast the printer ejects the bill and even tearing off the printed part of the roll.

"There was a difference between speed of characters and the delivery of a quick bill, " says Mahadevan. Because what added to the cycle time of taking a print-out were issues like tearing the bill from the machine.

Because printers normally had plastic shells, the user would tear it off the printer unevenly, sometimes destroying the whole bill in the bargain.

"In continuous stationery used for making bills in department stores of restaurants, you cannot have a perforation as the size of the bill is not clear. So we offered a steel part to deliver a clean tear-off," says Narendran.

To reduce paper jamming, Proton introduced a built-in roller that would make it easy to load paper. Normally dot matrix printers need a separate accessory for a paper feeder to mount on top of the printer which was bought by customers for an additional Rs 250.

The Proton was test-marketed in February 2002 and rolled out nationally by early-2003.

The company simultaneously incentivised dealers with a privileged partner programme and graded dealers into four categories "" gold, silver, blue and basic"" based on the sales they delivered.

It also incentivised the dealer sales personnel with "I-points" which they can earn on every printer they sell.

Mahadevan says that the dealer's sales force can win prizes like a TVS Victor in a short span of nine months. He claims that sales through these channels increased by 30 to 32 per cent.

However, IDC reports hint at the challenge in the near horizon. Dot matrix printers, which form a third of total printers sold in India currently, will shrink to just under 13 per cent of total printers sold in India by 2007.

Will Proton manage to sustain its momentum in a shrinking market?