The Top Photo Papers - Here Today Gone Tomorrow?
ARS ANALYST OUTLOOK -- March 8, 2001
By Patricia Lloyd, Print Media Analyst
In the past two years the number of photo papers available in retail has doubled. Not only do consumers have more to choose from, but also, in general, the papers cost less. A variety of package size allows the user to select from 10, 15, 20, 50 and 100 sheet packs. Due to increased marketing efforts, users are also more open to buying photo papers for printing images from the web, digital cameras, scanners, and more. Awareness is also enhanced through promotions, which have doubled in the past few years.
In the race for market share in the coated photo paper arena Hewlett Packard proves to be a steady performer, while Kodak and Jet Print Photo charge past Epson, which seems drastically in need of a pit stop.
HP has carved out a solid fourth of this market and shows no signs of letting go. Their 15-sheet Premium Photo Paper (C6039A) accounts for a large chunk of those sales. With a .99 price point and availability at virtually every major retailer, this product serves HP well. The company also promotes their print media products frequently -- ARS tracked 97 separate promotions in the last six months of 2000. The most popular promotions include buy two get one free offers, and free paper with ink, camera, or printer purchase. HP also uses idea kits and sample packs free with ink purchases to give customers the opportunity to try different papers.
While HP held the pole position, Epson was second in market share in July of 2000. According to NPD Intelect sales data, Epson had 16.92% of the coated photo paper market in July; however, by December 2000 that number had dropped to 10.7% dragging Epson down to fourth place. What happened to Epson paper sales in the last half of 2000?
Ironically, Epson printer sales skyrocketed in the last half of 2000. Tremendous marketing activity and a new printer line, arguably the best dollar-for-dollar printers in the industry, boosted Epson from fifth to third in overall unit sales. Epson doesn't seem to be able to transfer that success to its photo paper line. The company's top selling products are the 20-sheet Photo Paper (S041141) priced at .99 and the 20-sheet Photo Quality Glossy Paper (S041124) at .99.
ARS believes Epson's problems involve product placement, promotions and packaging. Epson has a huge presence at CompUSA, which is struggling itself. Comparatively, very few SKUs of Epson paper are available at Office Products Superstores. Office Depot and OfficeMax carry approximately 27 and 29 HP print media products respectively. Those same stores stock an average of five Epson products.
ARS recorded 21 Epson media promotions for the last six months of 2000, far behind HP's 97 promotions. Epson's promotions tended to be less imaginative than others', although recently Epson promoted three SKUs of media free after a mail-in rebate. Epson must catch the consumer's eye with more creative marketing efforts.
Epson's packaging is also fairly drab. The mostly white, text-intensive packaging just doesn't stand out on the shelf.
So, which manufacturers have come from behind to pass Epson? Kodak and Jet Print Photo both turned in terrific performances in the second half of 2000 and overtook Epson. Kodak moved from a 13.79% market share in July to 17.49% by December, in part due to a marketing push that included 50 separate promotions. Their top selling 15-sheet Inkjet Photo Weight Glossy Paper (158-5199) priced at .99, and 15-sheet Inkjet Premium Picture Paper High Gloss (824-5276) also .99, both gained market share for the period.
Kodak's brand name and trademark yellow packaging are appealing. Consumers can typically find nine to ten Kodak products at Office Products Superstores and Best Buy. Kodak's recent decision to discontinue their Premium Picture Kits, which included software on CD, is a good move. Instead of having kits priced at .99 and refills at .99, Kodak will simplify and now market Premium Picture Paper at the lower price point. New 15-sheet Ultima Picture Paper priced at .99 is the heaviest weight photo paper on the market at 270g/m2.
Jet Print Photo is definitely a brand to watch. Late in 2000 International Paper gave Jet Print Photo a huge push with a national television and print ad campaign. "It's not a photo until it's printed on Jet Print Photo paper," was splashed across CBS, ABC, Fox, Newsweek, Time, Wired and others. Jet Print Photo increased its market share by three percentage points, moving from 8.98% to 12.05%. The company is particularly strong at Staples, but benefits from shelf space at all Office Products Superstores, Best Buy, Kmart and Wal-Mart. Jet Print Photo recently put together an excellent sample pack, which was available at Best Buy for one cent. This promotion reached many potential customers, regardless of what printer they own.
Packaging is also something Jet Print Photo does well. The distinctive packaging jumps off the shelf with bright, bold pictures on a black background. With three to five products in retail, Jet Print Photo has passed Epson, who has three to four times as many products on the shelves. Jet Print Photo's top selling 20-sheet MultiProject - Gloss Finish (07033-0) is attractively priced at .99. The 20-sheet Premium Photo Paper - Brilliant Gloss Finish (12744-0) priced at .99 doubled in market share during the last six months of 2000.
With Kodak and Jet Print Photo showing no signs of slowing down, Epson must re-tool their marketing and packaging, while re-thinking their heavy reliance on CompUSA as their major retailer. In this ever-changing market where players will come and go, manufacturers will need to change with the times. They will need to become ever more creative with their marketing and promotions, packaging and retail presence.
Note from Steve: I recently tried Kodak's new Ultima Picture Paper, both the Satin and Gloss, and was really impressed with the way it looked coming out of my Epson 1270. I tried the old formulation Kodak glossy a year or so ago and concluded that it was a terrible match for the Epson photo printers but am happy to report that the new paper is excellent!
