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Case Study

Presented by:

Xerox Corporation

The Identity Crisis at

B2B Marketing Case Study

Happening Marketing 2009

HEC Montreal

Quebec

By Sema Barlas

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Joe Wilson founder of Xerox Corporation said change is a way of life here at Xerox. Did Xerox

change too fast for its identity to catch up? It seems now that no one knows photocopying, meaning

document management solutions, better than Xerox.

Xerox Corporation is a $17.6 billion technology and services enterprise engaged in developing,

manufacturing, marketing, servicing, and financing a portfolio of document equipment, software,

and services. The company's operations are guided by customer-focused and employee-centered

core values -- such as social responsibility, diversity, and quality -- augmented by a passion for

innovation, speed, and adaptability. The companys brand is a valuable resource and it continues

to be recognized in the top 10% of all US brands. Xerox figured in the 56P

thP

place in the

BusinessWeek-Interbrands Top 100 Global Brands list in 2007. Its brand was valued at $6,050

million in 2007 by the BusinessWeek-Interbrand, higher by 2% over 2006 TPF FPT.

Xerox has enjoyed a strong brand image of a leading company with innovative technologies,

products, and solutions that customers can depend upon to improve business results. However,

the Brand Division of Xerox led by Richard Wergan has been concerned for more than a decade

now that Xerox name has also become synonymous with photocopying. Strong brand image tied

to the photocopying is becoming a disadvantage for the company since the copier market is now

being perceived as old fashioned industry with stagnant or even declining profit potential. Also,

the brand image tied to photocopying undermines the current portfolio of companys innovative

and high-tech offerings. In sharp contrast to its brand image of manufacturer of photocopying

machines, Xerox has evolved today into a service-led technology company with strong customer

TP PT Datamonitor

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discontinued the manufacture and sale of mainframe computers in 1975 and exited the data

processing as well as PC market in early 1990. The company operates in over 160 countries

worldwide with concentration on mature markets, and distributes its products through wholly

owned subsidiaries and third-party distributors. Headquartered in Norwalk, Conn., Xerox ranked

142 among the Fortune 500 companies in 2007 and has 57,100 employees worldwide. Xerox has

a strong heritage of innovation. For instance, PARC has been responsible for such well known

and important developments as laser printing, the Ethernet, the modern personal computer,

graphical user interface, ubiquitous computing, advancing very-large-scale-integration, and

many more. However, it is often said that the company could not leverage fully the historic

innovations of PARC in creating a congruent image for the Xerox brand. Nevertheless, a strong

R&D heritage enables Xerox to stay ahead of the market today by introducing new technologies

and products on a consistent basis. Xerox received 558 US utility patents and launched 14

products in 2006 that together earned 208 industry awardsTPF FPT. Indeed, two thirds of companies

revenues comes from newly introduced products and the company introduces a new product on

every 11 daysTPF FPT.

According to Richard Wergan, client companies in B2B technology marketing are seeking for

strong brands that offer complete solutions, consisting of equipment sale, service, and supplies.

In many organizations, copiers are purchased by facilities managers, printers by the IT

department, and fax machines by office managers. That results in multiple service contracts and

a wide variety of brands and supplies -- especially ink and toner cartridges, which are usually the

TP PT Datamonitor

TP PT Xerox Corporation

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biggest expense. Having one-provider reduces the number of equipments (e.g., by installing

multifunction machines) and the number of pages printed, resulting in considerable cost savings

while increasing efficiency. The exclusive contracts are also beneficial for provider companies

like Xerox, allowing them to replace machines made by rivals and thus to provide all printing

equipment, supplies, and services, and in turn, to increase customer wallet share. Also, services

and non-equipment solutions are becoming a vehicle for converting prospects into customers; not

surprisingly, these non-equipment customers are more likely to upgrade their system with Xerox

equipment than other prospects. As a result, a single supplier managing clients whole document

related system for a monthly fee is becoming an industry standard. Furthermore, reducing the

number of equipments and pages printed enables the companies to building an image of and act

in a socially-responsible mannerTPF FPT. Because of strategic importance of providing comprehensive

solutions, Xerox has thus become a one-stop document solutions company by providing the

industry's broadest portfolio of offerings as part of the following three divisions:

Office Products Division serves global, national, and small to mid-size commercial firms as

well as government, education and other public sector customers. It offers laser and solid ink

printers, copiers, fax machines, multifunction systems (copy, print, scan, and fax), and software

solutions. Office division generated 55% of the total revenues during 2007.

Production Solutions Division offers digital systems to companies in the graphic

communications industry and to large enterprises. These high-end devices include colour and

black-and-white printing and publishing systems, digital presses and "book factories," wide-

TP PT Spaeth, T. (2009). Brand evolution: Signaling dramatic change or keeping change under wraps. Conference Board

Review, January/February, 58-65.

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format printing, business development solutions (e.g., teaching client companies how Tto

effectively build, market, and sell digital printing) T, work flow solutions (e.g., enabling

companies to analyze, streamline, automate, secure, and track their digital workflows), and

application solutions (e.g., providing web-based processes for personalizing direct mail). Xerox

also offers associated software, support, and supplies such as toner, paper and ink. Production

division generated 30.9% of the total revenues during 2007.

Document Outsourcing Division helps its clients to improve and manage their document

intensive business processes - everyday processes like customer communications, billing,

training, or records management. For instance, Xerox Global Services helped Bouygues Telecom

of France to improve customer communications. Central processing centre established by Xerox

now receives, opens, sorts, and scans all letters posted or faxed to Bouygues Telecom from all

over France. The scans are loaded into Bouygues Telecoms customer relationship management

system, where Bouygues Telecoms customer-service agents can use them like any other piece of

customer information. As a result, customer correspondence handling times reduced from two

weeks to one day at Bouygues. Outsourcing division generated 14.2% of the total revenues

during 2007 and managing client companys document flow is a fast-growing part of the Xeroxs

product mix.

Xerox recorded revenues of $17,228 million during the financial year ended December

2007, an increase of 8.4% over 2006. Some of the reasons for the growth were 9% increase in

post sale, financing and other revenue, 8% increase in service, outsourcing, and rentals revenue,

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and 7% increase in equipment sales revenue. There was a rise in color revenues as well. The

operating profit of the company was $1,685 million, an increase of 13.2% over 2006. The net

profit was $1,135 million, a decrease of 6.2% over 2006*.

Competition

Because of its diverse portfolio, Xerox faces intense competition on the basis of technology,

performance, price, quality, reliability, brand, distribution, and customer service and support

across different industries (e.g., electronic office equipment, IT services, IT hardware, and

Software). The companys key competitors include Canon, Ricoh, IKON, Hewlett-Packard, and

in certain areas of the business, Pitney Bowes, Kodak, Oce, Konica-Minolta, and Lexmark (See

Table 1). Some of the companies like Canon and Hewlett Packard Company have larger scale

operations and have generated higher revenues than Xerox. In the office market, Japanese

companies such as Canon and Ricoh are offering competitive products at lower prices. This has

been a big threat since customers in the low-end market are more price-sensitive. In the market

for mid-to-high-end production machines, Heidelberger Druckmaschinen from Germany and

other companies such as Canon and Ricoh have also developed competitive products, with high

quality and performance. In the US multifunction peripherals market Canon has the leading

market share in 2007*. It is important to note, however, that no other company is positioned, in

terms of its offerings, better than Xerox in providing comprehensive document management

solutions to businesses. Also, competitors of Xerox suffer from a similar image problem; many

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of these companies are strongly associated with core competencies in an industry other than

document management.

Xerox Brand

Brand image is the identity of a company and, according to Mr. Wergan, Xerox has been

concerned for more than a decade now that its brand is underleveraged in the market place and

that it did not effectively represent the Xerox organization as it is today. In an interview with

press, he said "Our business had evolved; our brand, a $6 billion asset, had not. Our visual

system, although well designed, was designed for print media; customers now access us via the

Internet. We needed a brand we could protect and leverage in the digital environment, the key to

the future of Xerox." However, according to him, it was not clear to Xerox what the root of the

problem was. In particular, the company was not certain as to what the brand do stand for

existing clients, prospects, channel partners, and employees today as well as what the brand

should stand for instead. Xerox had already tried an unsuccessful rebranding initiative in 1994 in

the form of a new logo. Figure 1 presents the new logo, which was abandoned later, and the

original logo, which was in use at the start of rebranding initiative in 2007. Therefore, Xerox

team was cautious this time and decided that, if any rebrading effort should take place, it should

be carried out in consultation with a global brand-consultancy agency with experience in

technology marketing, with creative and strategic capabilities, and agency with ability to

implement the solution globally. Also, understanding the brand and implementing the changes

would be a long term project, spanning somewhere between two to three years; therefore, the

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compatibility of the agency with the culture at Xerox was important. Following an extensive

search, Interbrand, a brand consultancy firm that is a unit of Omnicom Group, was selected to

lead the rebranding effort.

The goals of the rebranding process were specified as follows:

To understand via systematic research T the fit betweenT the existing brand promises, theactual capabilities of the company, and the core customer expectations.

To decide a rebranding strategy that would align the brand image with what XeroxCorporation actually is today and would provide a direction as to what Xerox should

become in the future. It was very important, however, that the new image would leverage

the existing equity in the brand while weakening the old but flourishing the new

capabilities of Xerox. This meant that dramatic changes in immediately visible brand

attributes (e.g., brand name) should be contemplated carefully. Also, the team saw a need

for intense and targeted marketing campaign or any other publicity that would magnify

the reasons for even small changes in the brand (e.g., a minor change in logo) so that the

media, customers, channel partners, and employees would start talking about what Xerox

is today.

To turn the rebranding effort into a vehicle for organizational restructuring, for change oforganizational culture, and for creating the right image of the brand and the Xerox

Corporation in the eyes of employees. Since the company has become a service-led

technology firm where employees created the product, to some extend, at the time of

delivery, the employees perception of the Xerox was very important. Therefore, the

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impact of rebranding process on the organization itself would be as equally, if not more,

important in achieving the desired brand image in the long-term as the actual immediate

changes in the brand itself.

As a first step in the rebranding process, Xerox and Interbrand undertook an extensive research

and spent more than 18 months interviewing some 5,000 people across the globe to identify the

perception of Xerox brand by existing clients, prospects, and employees. Sixteen Interbrand

offices in 20 markets handled Xerox's employee and customer research. According to the media

reportsTPF FPT

, brand research revealed the following insights:

Most relationships in the B2B service-led technology marketing are established for long-term with high start-up and switching costs; therefore, client companies seek for

dependability. The Xerox brand was perceived as dependable by the employees, existing

clients, and prospects.

The service or product being marketed is too complex for client companies to understandor to judge the quality; therefore, client companies seek for brands that instill trust.

Again, the Xerox brand was perceived as trustworthy by the employees, existing clients,

and prospects.

Technology is changing at an unprecedented rate in todays market; therefore, clientcompanies demand flexibility and adaptability. The Xerox brand was perceived as

TP PT http://www.identityworks.com/reviews/2008/Xerox.htm

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flexible and adaptable by the employees and existing clients, but flexibility and

adaptability was not readily associated attribute of the Xerox brand in the minds of

prospects.

Responders, but especially small and medium size business prospects, perceived theXerox brand as relatively established, unapproachable, and formal.

In summary, these findings seem to suggest that rebranding should ensure that the new image

communicates Xeroxs continual evolution and resonates with large, medium, and small

business clients and prospects, channel members, and employees; it should be more

approachable, more open, more human, but slightly less formal brand; it should appear modern

and flexible in addition to being dependable and stable.

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Table 1

Revenue and Profit Figures for Xerox Corporation and its Competitors

Competition Revenue in 2007

(in Million dollars)

Profit in 2007

(in Million dollars)

Xerox 17,228 1,135

Ricoh 17,546.6 947.5

Canon 38,091.4 4,150.8

IKON 4,168.3 114.5

Hewlett-Packard 104,286 7,264

Pitney Bowes 5,730 105.3

Kodak 10,301 676

Konica-Minolta 8,715.3 615.2

Lexmark 4,973.9 300.8

Heidelberger Druckmaschinen 5,031 194

Source: Datamonitor

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Figure 1

The New Xerox Logo in 1994 and the Original Xerox Logo.

Logo in 1994

Original Logo

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