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Thursday, 03 August 2017 09:09

PRINT STRATEGY - Demand On Uncoated Paper


Christopher Jones of Lock Stock Print, comments on how having a flexible print management strategy with regard to paper can insulate companies against the impacts of foreign demand and a weak pound.

 

In today’s digital economy print remains the marketing lifeblood for many UK companies, but now it feels like it is under attack from the global forces of world economics. The result of the Brexit referendum in 2016 had an immediate impact on the strength of the pound, which correspondingly raised the cost of imported paper.

 

Right now, the Asian market is experiencing high levels of demand, with greater margins in the home market, due to location, and a small number of mills, this means Asian mills are shifting sales to their local markets. This has two major consequences here in the UK, the price of uncoated paper increases and the availability decreases causing much longer lead times.

There is no way for an individual company to change these worldwide effects but there are ways company can use smart strategy to mitigate the impact.

 

Print Cost = Paper Cost

It is worth remembering that the major cost of any print job is paper. On average, the price of paper is makes up around 60 percent of the total print cost. This means that companies looking to reduce their print expenditure should seriously look at this element.

 

When advising our clients, we always consider three elements of the print job in order to help them reduce their expenditure.

 

Type of Paper

It goes without saying that different types of paper have different price points. However, the requirements for print are not always fully considered, in relation to the changes in supply and pricing.

Many companies simply purchase based on previous behavior or due to time constraints – it’s always easier to repeat what you did last time. Rebuying, or modified rebuying, becomes habit forming and can cost tens of thousands across the year.

 

We should always remember that paper is different to print. We often see printed direct mail items over-engineered for highly-disposable print products, which is wasting money. For higher volumes which require web offset or gravure, on a short lifespan promotion or CTA e.g. ‘sale ending next week’, recipients will never notice a 10gsm. Therefore, a reduction will have little impact on the brand equity or creative production, which means you don’t have to have the weight.

 

For example, a company, which has always used 80g for its promotional leaflets will, in general, specify the same again. However, by shifting to a 65g-70g stock for its next campaign, the company could instantly save money. In addition, a decrease in paper weight could enable an increase in pagination, increasing promotional space, without increasing postage costs.

 

Furthermore, paper weight is just one of a myriad of variables; occupancy, colour, absorption, all impact on pricing and reproduction of creative assets, by spending time identifying the correct print strategy for each campaign, companies can save money and improve reproduction.

 

Timing

The rise in Asian demand has led to uncoated paper lead-times increasing from five to six weeks to 10-12 weeks . This can cause major problems because of where paper/print often comes in the marketing timeline. More often than not, companies concentrate on the content and creative, leaving the print to the end. The doubling of lead-times reduces flexibility and options available, placing further pressure on price.

Our message is simple, plan ahead. Do you have to order paper at the time of the job? Are you flexible in the type of paper required? The longer you have to implement a print strategy – the more money will be saved.

 

Postage

The second largest cost of any print job, after paper, has traditionally been postage and distribution, and in many jobs today it actually the largest cost segment. However, these two elements are not unconnected. It is essential that people look at paper and distribution as one, with regard to the price package. Companies will know they have to have the right amount of pagination to make their print commercial, but the type paper, the size and format, all will impact on postage. This impact may only be two pence but that can soon become can be 2p per item but on a print run of 500,000, this will be £10,000. If the client runs quarterly campaigns, they could be saving £40,000 by looking at paper and postage together.

 

At the moment, Asian demand remains high and analysts are predicting that the pound will remain at its current level for the immediate future, so it appears that the uncoated paper price increases are here to stay. Our recommendation is to use this external shock as an opportunity to employ print strategy as way of mitigating these costs, and potentially providing savings greater than the price rises, money which can be reinvested in marketing activity.

 

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