Kinkos Case Study
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Kinkos: Case Study
Kinko’s was founded in 1970 by Paul Orfalea, whose nickname was Kinko. His first market was students at University of California, Santa Barbara who bout school supplies and copying services. The company began to grow as Orfalea had friends and family open the first branches near other colleges and universities in the area. By the 1980s Kinko’s had 80 branches close to campuses and offered 24 hour operations. By the 1990s the operation grew to 127 branches that offered leading edge technology service not only to the student base, but also to small and home-based businesses. By 2001, Kinko’s put FedEx boxes at their stores, and offered everything that a small business office would need from self-serve copiers, personal computers with the latest applications and internet access, to work spaces and small conference areas. Kinko’s had grown to 1,200 stores including nine international locations. Kinko’s also benefitted from and kept pace with the internet boom. By launching it’s interactive website, Kinko’s reached the on-line shopping generation. Customers could now order printing jobs and other services on-line with options to have their printed jobs delivered to their doorsteps or picked up at a retail location.
Whether it was intentional or not, Paul Orfalea found a way to grow and evolve with his customer base. The students of the 70s who needed pencils, notebooks, and copies of homework assignments had become the business leaders of the 80s, 90s and 2000s who needed sales materials, brochures, and other corporate communications. After 30 years of evolution Kinko’s was purchased by FedEx in February 2004. The company is now FedEx Kinko’s Office and Print Services, Inc., and is headquartered in Dallas, TX. (“FedEx Kinko’s Office and Print Services, Inc. Company Profile,” November 2005) The company is still affectionately know to its customers as Kinko’s. This was a strategic marketing move for both companies as many customers think of the Kinko’s name when they need to use FedEx. FedEx customers who normally would not use Kinko’s are directed to nearby Kinko’s stores as drop box locations and for customer service when they do not have the supplies and knowledge of how to send FedEx packages.
As Kinko’s grew and evolved, so did their market. From a management standpoint, the continued long-term success of the company rested on understanding and managing those market segments. In 2003, Gary Kusin became President and CEO at Kinko’s. As a 1976 graduate Kusin was, if not actually a Kinko’s customer, at least representative of the customer base that had developed from the early days – from student to business leader. As such Kusin was able to keenly identify the market segments and sub segments that comprises Kinko’s business units. His goal and mission became managing and cultivating those segments to ensure Kinko’s future market and financial success. His job also included ensuring that, as Kinko’s completed its merger with FedEx, it did not loose its market identity.
Through marketing research reports, Kusin identified three significant market segments – the consumer market, the local business market, and the commercial business market. Although each segment had different needs, Kinko’s was servicing those markets through the same locations and with the same staff and management. Kusin identified that there was virtually no difference in how Kinko’s branches handled a student needing tow or three copies of a term paper and a Fortune 500 company needing several hundred copies of a brochure for their sales forces. He also found that Kinko’s was losing revenues in those important market segments. But rather than delve into the complexities of financial modeling and forecasting, Kusin identified the details of each market segment and identified the needs that would restore and maintain those customer bases.
The consumer market segment included retail customers who need personal copying and printing services. According to their marketing studies, retail customers spend no more than $50 per order, and use Kinko’s retail services little more than once per month. As personal computer and printer technology increased, the needs of retail consumers decreased. Also, the rise of office supply superstores such as Staples and OfficeMax give retail consumers an alternative place to get copy work done. Many consumers no doubt found a convenience in the ability to get a copy job completed while they shopped for supplies at these stores. A service that Kinko’s did not have.
The local business market consisted of mostly retail customers who needed larger and more complex printing and copying services. Kinko’s built a reputation as an alternative or off site office for smaller home-based businesses, and for independent sales people on the road. While these customers were also retail based, they visited Kinko’s stores three to four times each month. The bright spot for Kinko’s is that branch managers were given a budget and decision-making freedom to creatively market their branch to the local business community. However, the same technologies that reduced the retail consumer market was widely available to the business market. However, Kinko’s still offered a convenience to businesses that technology could not substitute for, such as conference rooms, work spaces, and free supplies (staples, paperclips) at the self-serve units.
The commercial business segment includes larger corporations who needed to out source their document services. The commercial segment included on-site facilities management customers and non-facilities management customers. The commercial segment is the most complex and requires a separate, non-retail staff and management. The facilities management sub-segment required on site document management from an outside source. Kinko’s fell short to the competition in expertise in this area although they could offer significant cost savings over their competitors. The non-facilities management segment was most vulnerable to competition from the office superstores and from locally owned printing companies. However, Kinko’s competitive edge for this sub-segment was created in their web based services – DocStore, with online ordering and delivery. Kinko’s customers could order and receive complex print jobs without visiting a retail location.
Since retail branches are currently the hub of all Kinko’s services, Kusin began by overhauling the stores. Customer service, drop boxes, and fax machines are literally at the door. Pick-up, drop-off, and workstations are at the back in a more private setting. For internet customers, the entire store is on their personal computer at home or in their office. Branch staff responds to emails and may even call customers to coordinate document orders.
Technology represented the largest threat and opportunity to Kinko’s marketing model. Where technology made Kinko’s core services, multiple copies and color printing, it also allowed Kinko’s to harvest the high volume customers who did not have time to drop off and pick up their orders. Kinko’s internet site also makes it possible and cost efficient to separate its retail services and commercial document management operations. The FedEx merger gives Kinko’s the financial support of a $2.1 billion international company. (“FedEx Kinko’s Office and Print Services, Inc. Company Profile,” November 2005) Both companies will benefit from each other’s market strength and position. It is difficult to determine if the future growth of the company will stem from FedEx’s financial position or from Kinko’s market identity.
FedEx Kinko’s Office and Print Services, Inc. Company Profile. (November 2005). DATAMONITOR, (Reference Code: 17382), 4-9. Retrieved March 27, 2008 from Business Source Premier. EBSCO Host. database.
McGovern, Gail., & Schulman, Seth. (October 5, 2005). Kinko’s. Harvard Business School, (9-506-024), 1-23.