Partnerships: a vital imperative for growth in developing markets

By Xerox

Irina Maslennikova, Marketing Director for Xerox International Group, is responsible for Central and Eastern Europe, Russia, Eurasia, the Middle East, Africa and India.

Here she explains the growth of small to medium-sized businesses in developing countries, and how strategic partnerships are fueling development.

There’s a huge and growing market in developing countries: small and medium-sized businesses (SMBs). For a company like Xerox, success in this arena requires a broad portfolio of reliable technology, products that are competitively priced , and the right business partnerships to cover the market.

Xerox Developing Markets Operations (DMO) is leading the company’s charge into the SMB segment. Within the Xerox DMO world, SMBs represent the majority of the market – and the market is growing in virtually all developing countries, with a significant focus on the smaller offices business.

To give an idea of the scale of the sector, there are 19 million SMBs in the EU, and in most of the member states they make up more than 99 percent of enterprises. SMBs generate a substantial share of European GDP and are a key source of new jobs and business ideas. IT offers significant benefits to SMBs, as it does other, larger organisations.

However until recently, as confirmed by Scott Moore, an IDC consultant, SMBs in Central and Eastern Europe have long been reluctant investors in IT. Several factors in this segment have driven change and a sustained period of high growth in IT spending. These include the commoditisation of basic IT products, affordable prices for even the smallest of companies; increased EU and national government funding for SMB technology investments; and a higher awareness from SMBs to invest to increase competitiveness in the wider European marketplace.

The Xerox Approach

This presents a key market opportunity for Xerox. SMBs are coming to Xerox looking for solutions. Seventy-nine percent of all visitors to Xerox.com consider themselves SMBs, and 56 percent of visitors to the site are companies with less than 25 employees.

In developing markets, the distinction between a large company and a small or medium-sized business is not as relevant. Customers of all size are more inclined to purchase low-cost products because of budget constraints and economic environments that often make them cost conscious. DMO is Xerox’s primary market for laser devices below the $1000 mark, with 75 percent of all laser devices sold in these markets having a rated speed of less than 20 pages per minute.

Xerox is very well positioned to address the needs of small to medium-sized businesses head-on with an array of products that are specifically tailored for this market.

Xerox recently launched an affordable desktop multifunction copier/printer designed specifically for small businesses. The WorkCentre 3119 offers rock-solid reliability at a low price while delivering the features required in today’s busy office environments. Xerox also launched the WorkCentre 4118 desktop multifunction device with features that recognise that small businesses want high-end performance in an easy-to-use, compact device. Through an expanding array of digital copiers, printers and multifunction machines – in monochrome and color – Xerox products meet the needs of small businesses without compromising on quality or features.

But effectively serving the needs of all SMBs in developing countries where Xerox operates can be difficult – unless the right business model is in place. That model must focus heavily on strategic partnerships. Partnerships are increasingly seen as a vital component in driving new technological developments, increasing productivity and moving products successfully through the channel and into the marketplace.

Defining “partnership”

Companies around the world now operate in a truly interdependent, interconnected global business environment where customer focus, purchasing decisions and requirements are more demanding, more intelligent and more instant than ever. To meet these challenges, growing numbers of companies are turning to a range of partnerships – combining their technologies, knowledge, commercial strength and local presence – to bring a wealth of new and innovative solutions to the market.

While the term ‘partnership’ is fast becoming the mantra of the modern global business environment, its definition and real value to the companies that participate is sometimes less clear.

Good partnerships are typically characterised by mutual cooperation and responsibility. They aim to achieve a specific goal or objective. For the SMB market, partnerships are the key to delivering an ever-expanding portfolio of solutions, products and services, which offer more choices to customers and meet the demands of a savvy and technically competent market.

Successful partnerships are those that consistently deliver clear, tangible benefits, flexibility and choice. Those that offer a real chance for alignment of each partner’s unique attributes and capabilities enable an organisation to play to its strengths and strengthen its weaknesses. A winning partnership also has the right support mechanisms, making it easier to drive solutions, products and services into the marketplace.

Partnerships need to bring innovative technologies, market strength and thought leadership to the customer. Accomplished partnerships are based on common business goals and intense collaboration.

Clearly, partnerships involve much more than simply a desire to work together for individual and mutual benefit. Partners must have business strategies that are complementary, be highly innovative in their approach and be completely focused on serving the needs of the end user – together.

Partnering for success

DMO chooses its partners very carefully. It provides products, technology, support and structure to help those partnerships thrive, which means serving the customer and results in success for Xerox and its partner companies.

Given the breadth and diversity of the SMB sector, one of the major challenges for a vendor like Xerox is market coverage. A direct sales model is not cost effective because, even if Xerox could hire enough sales staff to cover all small and medium businesses, that expense would be rolled into the total cost of the products, putting them out of reach for a cost-conscious enterprise.

To reach the SMB market effectively, Xerox uses a distribution channel characterized by solid, mutually beneficial partnerships. The two-tier distribution strategy comprises, on the first tier, master distributors – logistical companies which are very good at moving boxes and warehousing – and, on the second tier, resellers, dealers, and concessionaires – local business owners often known to customers in their area. This second tier allows Xerox end-user customers to develop relationships with a local business which provides Xerox-quality support and service.

DMO’s channels partners are selected to ensure Xerox covers a market, but we don’t engage more partners than needed to attain that goal. This enables the channel to achieve higher retained margins with Xerox, compared with other vendors who are over-distributed.

This is just one way Xerox supports its channel partners. We also have the industry’s broadest and deepest product portfolio – which is award-winning and priced to market. With this portfolio, Xerox channel partners can sell a better range of products and provide more comprehensive solutions than if they were competing on price alone. And Xerox offers training to partners and provides a Web portal – Xerox PartnerNet – which is a comprehensive marketing and learning resource.

Partner or Perish!

In the SMB space and other areas of business, partnerships are clearly the only way forward for business. There is currently no vendor with the capability to offer an entirely comprehensive IT solution on its own, so companies must partner to deliver – and, for the SMB market, to distribute. It’s that simple.

No one company could ever claim to know all its customers across multiple markets without a range of strategic relationships with key partners. Partnerships – like those Xerox has and continues to nurture in its channel distribution strategy – offer a degree of flexibility and market penetration that would be very difficult to achieve independently. Xerox relies on its partners to help it get closer to the customer, understand what the customer needs and – just as importantly – does not need, and so together offer a range of solutions suited to the market.

“Partner or Perish!” may seem like a strong phrase, but it is also a realistic assessment of what the future may hold for those who don’t embrace the concept of partnership. Partnerships are not merely a “nice to have.” They are a strategic imperative for long-term sustainable business, in particular in the SMB arena in developing markets.

Partnerships are fundamental components of Xerox’s strategic vision and key to the future of the company – in particular in its capacity to continue serving and grow the SMB market. They enable the delivery of Xerox products to the market through a strong reseller and channel network, bringing the manufacturer closer to the customer.

While the concept of partnerships is laudable, it is somewhat redundant without customers. For the SMB marketplace, these partnerships with channel distributors and resellers are vital to engaging, serving and retaining customers. And if it’s good for the customer, it’s good for business.

Partner or perish? For Xerox, the choice is clear.