Lexmark Marketing Report

December 9, 2011

Parker Raque, Bryan Welnetz, Ben Hengels, Gabi Donchez, Melissa

Diehl

Group 2

Mktg 342 Section 004

TABLE OF CONTENTS

I. Executive summary

II. MDP

III. MRP

IV. Research Approach

V. Data Analyses and Results

VI. Limitations

VII. Conclusion

VIII. Appendix

EXECUTIVE SUMMARY

This report is to provide information for Lexmark International, Inc. to increase its knowledge of college

students and their perception of the Lexmark brand. College students, who require large amounts of

printing, hold a large share of the market. The question this research attempts to answer is “Should

Lexmark change its promotional and product component of the marketing mix, in order to better

accommodate college students?” We gathered information from 493 survey respondents, in which 89%

of the respondents were college students. In this summary, we have recognized some of Lexmark’s key

issues through statistical analysis and have demonstrated how our results will provide useful

information.

1) Lexmark needs to identify how their brand is perceived by college students. We believe this is the

most important issue to address because the consumers’ perception of a brand affects the way they

make purchasing decisions. The most significant findings that address this are:

Brand perception rankings: HP- 1, Canon- 2, and Lexmark and Epson were split evenly at 3 and 4.

In asking the familiarity of Lexmark on a scale of 1-5, the mean for college students is 2.92 while

the mean for non-college students is 2.98 (statistically significant through Z-test).

Out of all the respondents that own a printer, 86% are college students- 70% of them own an

HP, while only 2% own a Lexmark. In addition, the majority of the college students, 62%, own an

inkjet printer.

These statistics show that Lexmark is not as well-known as other leading brands. Without proper

exposure to the brand, Lexmark is beating themselves when it comes to selling their product to

students. A new ad-campaign could stimulate growth at universities.

2) Lexmark must recognize the buying or acquisition process of personal printers among college

students. The most significant findings that address this are:

Around 60% of our respondents purchase their printer at a brick-and-mortar store rather than

an online store.

The ideal price for purchasing a printer is between $51- $100. We found that it was the most

common price range at 34% of the respondents.

Knowing where the average student purchases their printer as well as the price range they aim for can

help establish where their ad campaign should be focused. This information can also be useful creating

their ideal product tailored towards the students’ needs.

3) It is important for Lexmark to be fully aware of the printing behaviors of college students as

opposed to traditional customers. The most significant findings that address this are:

60% of respondents have printed on campus the most in the last month while only 32% printed

at home.

65% use their printer for an academic purpose, which explains why most printing is done on

campus.

Understanding how college students use printers can teach Lexmark how they differ from the traditional

customer. Knowing where college students print most often may help in designing the details for an ad-

campaign. Luring the student to print at home can potentially give Lexmark a chance to increase their

home printer sales.

We believe that it would behoove Lexmark to focus on increasing brand awareness. In order to change

the perception of the Lexmark brand, Lexmark must market its product specifically to college students

by forming a new ad campaign on college campuses. With that in mind, Lexmark should also focus on

creating a new printer that can revolutionize printing for students. With a new product that meets the

most important needs and wants of a college student, specifically print quality, low ink price, ink

efficiency, and reliability, a student may buy a Lexmark printer and do the majority of their printing at

home. Lexmark can proliferate its sales and brand familiarity within the college community with a new

optimal product and a new ad campaign promoting it.

INTRODUCTION

Lexmark, ranked one of the most admired companies by Fortune magazine, produces printing and

imaging products and solutions for business and consumers. Although Lexmark has reported 4.2 billion

dollars in revenue, only 40% of their sales are in the United States. Regarding this knowledge, Lexmark

needs to expand its brand into a new market segment. A market that Lexmark has not taken advantage

of are college students. To obtain a better understanding of college students printing behaviors, we

administered a survey at The Pennsylvania State University.

College students, who require large amounts of printing, hold a large share of the market.

With 30% of adults acquiring a bachelor’s degree, this is a huge number a people that require printing.

This study is to understand more specifically what the printing requirements are in college and what

some of the current students’ beliefs are regarding printing and the Lexmark brand.

The report is organized as follows: We first define the management decision problem (MDP) at Lexmark.

This is followed by the marketing research problem (MRP) where we describe the goals of our

preliminary goals for the research. In the next section we describe our research method (Internet

survey). We will then present our analysis of all the survey results with descriptive statistics and some

bivariate statistical analyses. Next we will cover some of the limitations to our study because there is no

such thing as the “perfect” study. With all the research explained, we will present our interpretations of

the data and our opinions about the next step for Lexmark. We hope that this report is useful for the

future of Lexmark International, Inc.

MDP

Should Lexmark change its promotional and product component of the marketing mix, in order to better

accommodate college students?

Printing in college represents an opportunity to market to a large population. The number of young

adults going to college is increasing rapidly in today’s society and the demand for printing is directly

affected. Lexmark has the potential to infiltrate this target market as popular printing brand for

students. By increasing its brand awareness and usage to students, the sales may increase drastically.

Unfortunately, Lexmark must change their marketing mix in order to reach this segment of the college

printing consumers. Lexmark has failed to understand the acquisition process of home printers for

college students or its reputation at universities. Lexmark also must understand the importance and

relevance of printing to the average student. Although the company has a range of new high technology

products, it might be more beneficial to first understand the demand coming from this market segment.

It is time to discover how to reach out to this new target market while upholding its status with

traditional customers.

Our team believes we understand the problems that Lexmark is facing, and our research will be able to

determine the most effective solution. The Management Decision Problem that we would like to

address and research is, “Should Lexmark change its promotional or product components of the

marketing mix to better accommodate college students?” By learning more about the advertising

campaigns or new product ideas, Lexmark may be able to establish itself as a solid college printing

competitor.

MRP

To determine whether a new advertising campaign or product will successfully position Lexmark in

universities.

Lexmark, who has experienced large amounts of revenue in 2010, can expand its wealth even more by

learning more about a new segment of the population: college students. College students have daily

printing needs and it would be worthwhile to investigate the specifics. Without understanding these

potential consumers, Lexmark cannot efficiently market their products to them. We would like to

develop a research plan to answer our question ‘Should Lexmark change its promotional and product

component of the marketing mix, in order to better accommodate college students?’ By answering the

question effective in this ne we can determine whether a new advertising campaign or a new product

line would bew market segment.

1. To gather demographic information about college students.

Our first component of information that we would like to gather is the demographics of the average

college student. We will first ask the age and gender in our survey so that we can understand any

differences between males and females in printing or differences between in printing between older

and younger students. To avoid assumptions between age and class year, we will also ask how many

school semesters have been completed. This information is relevant because it will be the basis for a

potential new advertising campaign. If the male population is significantly larger, it may be smart to

advertise with sports players or with male directed products. The opposite may also occur in which

Lexmark could advertise with feminine types of printer designs such as pink colors or flowery designs.

The gender can be measured with a nominal scale while the age and income can be measured with

ordinal scales. Other important demographic information could be learning whether the student lives on

or off campus, where the student prints the most, or how often they print per week.

2. To know what features to provide that appeal to a college student

Another component that this research will investigate is what printing features would appeal to a

college student. Knowing what features are preferred by students could determine how a potential new

product should be designed or what kind of new technology is appealing. This could entail creating an

efficient long distance wireless printer, a portable printer, or anything other new ideas that Lexmark

innovators may not have thought of yet. The best way to research this component would be with an

open-ended question so not to limit the ideas of new features. A checklist question with examples of

printer features could also help measure what is most important to students.

3. To find out what type of advertising campaign would be optimal

The last component of our MRP that we would like to research would be determining an optimal

advertising campaign. This could be partially answered from the results of the aforementioned

demographic portion of the survey. Before deciding on a campaign, we should learn Lexmark’s brand

awareness and reputation to college students. We could survey this using a funnel question such as

‘Have you ever heard of Lexmark?’ The next step would be to learn where have they seen previous

Lexmark advertising or if they would prefer a Lexmark printer over another popular brand. Name

association questions may help us discover Lexmark’s true reputation. For further information about

new advertising campaigns, focus groups or case studies can be used for more in depth exploratory

research.

RESEARCH APPROACH

The 35 question survey was administered via the internet by all Mktg 342 class members to friends

and family. This type of survey design allowed us to contact the largest amount of students possible. We

sent a the link to the survey through email and Facebook requesting participation in the survey. This

survey had a large demographic portion including questions discerning age, gender, and enrollment

status and year. The next part of the survey inquired about their printing preferences, habits, and past

experiences. These questions included how often they print, where they print, what features they use

the most, if they have to print in color, and if they own their own printer, what brand it is, etc. The last

portion of the survey was used to understand the students’ perception of Lexmark’s value. The results

from this study will be evaluated and analyzed in the following portion of this report.

DATA ANALYSES AND RESULTS

Q2: 89 percent of the respondents to this question are current college students while the other 11

percent are not college students.

Q3: Of that 89 percent, 15 percent are freshman, 19 percent are sophomores, 42 percent are juniors, 22

percent are seniors. Graduate students held .7 percent and 5th year seniors held .5 percent.

Q4: Of the people who answered this question, 78 percent do have a personal printer. 21 percent do

not.

Q6: Of the people who answered this question, 70 percent own an HP. This is significant because it

proves that HP dominates the personal printer market. 2 percent own a Lexmark printer.

→ Lexmark has a large focus on the inkjet printer market, they cost less to produce and provide better

color/photo quality

Q7: 63 percent of the people who own personal printers have inkjet printers. 11 percent have laser

printers, 24 percent aren’t sure, and 2 percent own other kinds of printers, like deskjets.

Q8: The mean value of satisfaction is 3.7, which is very close to satisfied.

Q9: 57 percent of people had someone else purchase their printer, and 43 percent purchased their

printer themselves.

Q10: 43 percent of respondents purchased their printer at a brick- and- mortar store, 15 percent

purchased online, and 24 percent aren’t sure where they purchased their printers. 17 percent answered

other, but specified what kind of store they purchased their printer from.

Q11: 34 percent of respondents paid between $51- $100 for their printer. 21 percent paid less than $50,

and 17 percent paid between $101 and $150. 21 percent are not sure how much they paid.

Q12: 27 percent of respondents have owned their printer for 1.1- 2 years, 25 percent have owned it for

2.1 – 3 years, and 17 percent have owned it for 3.1- 4 years.

Q14: 65 percent of respondents use their printer for academic purposes, 41 percent use it for

recreational purposes, 26 percent use it for professional duties, and 30 percent use it for personal and

household management.

Q15: 69 percent of respondents have printers that print in color, 53 percent have color copying, 56

percent have black and white copying, 56 percent scan, 17 percent fax, and 39 percent photo print.

Q16: 35 percent of respondents replaced their ink cartridge 1- 3 months ago, and 29 percent replaced

less than a month ago.

Q17: 38 percent of respondents paid $11- $20 for black ink, 30 percent paid $21- $30.

Q18: 30 percent of respondents paid $21- $30 for color ink, 29 percent paid $11- $20, and 18 percent

paid $31- $40.

Q20: Of all of the people who took the survey, 6 percent don’t own a printer because it is too expensive,

7 percent because ink is too expensive, 1 percent because they don’t need to print, 3 percent because

they don’t have space for one, and 14 percent because they use a printer that they don’t own.

Q21: 70 percent of respondents printed on campus in the last month, 61 percent printed at home, and

13 percent printed at work.

Q22: 60 percent of respondents have printed on campus the most in the last month, while 32 percent

printed at home the most.

Q24: On a scale from 1 to 5 (very unimportant- very important), the mean value of importance of the

following printer features are:

- Color printing- 4.19 -> Lexmark provides better color quality

- Touch screen- 2.14

- Wi- fi access- 3.12

- Compact size- 3.46

- Fax- 2.54

- Color copying- 3.77

- Scanner- 4.01

- Duplex printing- 3.16

- Energy efficiency- 3.37

- Print quality- 4.35

- Print speed- 4.21

- Aesthetics- 3.09

- Ink efficiency- 4.26

- Ink price- 4.25

- Brand name- 2.79

- Reliability- 4.47

Q25: 76 percent of respondents would seek information online, 53 percent would seek info from a

friend or family member, 14 percent from print ads, and 20 percent from a brick- and- mortar store.

Q26: 85 percent of respondents have been exposed to the internet in the past 24 hours, 60 percent

have used a newspaper, 77 percent have watched television, 33 percent have read a magazine, and 40

percent have listened to the radio.

Q30: 41 percent of respondents are extremely familiar with HP and 35 percent are familiar. 38 percent

are familiar with Canon and 22 percent are extremely familiar. 28 percent are familiar with Epson and 19

percent are unfamiliar. 27 percent are familiar with Lexmark and 19 percent are unfamiliar.

Q31: Most respondents ranked HP as number1, Canon as number 2, and Lexmark and Epson were split

evenly as 3 and 4.

Q32: The responses to this question depend on what brand of printer each respondent owns, but

judging from the answers, most people seem pretty satisfied.

Q34: Most respondents neither agree nor disagree with the statements. Most people seem to not know

that much about Lexmark.

Q27: 57 percent of respondents are male, and 43 percent are female.

Q28: The mean age of respondents is 23 years old.

BIVARIATE STATISTICS

Q 2&4. Crosstab: 321/421 students own a printer (76.25%)

Q 2&8. Z-difference: On a scale of 1-5 for satisfaction of a personal printer, the mean for college

students was 3.64. The mean for non college student average was 4.

Ho: u1=u2. Z= -2.76 P=.0058. Reject the null.

Q 2 & 30. Z-difference: In asking the familiarity of Lexmark on a scale of 1-5, the mean for college

students is 2.92 while the mean for non college students is 2.98.

Ho: u1=u2. Z= -.361 P= .718 Do not reject the null.

Q 2 & 7. Crosstab: Of the college students 192 of the 311 respondants (62%) have inkjet printers. The

other 38% is split between those who have a laser printer, other form of printer, or are unsure.

Limitations

When conducting marketing research, there are always going to be variables and factors that limit the

accuracy of your information. The main limitation of all survey research is that the respondents in the

sample aren’t necessarily a representation of the actual population. Furthermore, we also faced

difficulties that were specific to our own report. Our hardest obstacle to overcome was the miscoded

information in the data view of SPSS. This caused parts of the data to become useless when performing

bivariate analyses. Next, as the workload increased, we found it increasingly difficult to split the work

which meant we needed to meet outside of class as a group.

Conclusion

After administering our survey at The Pennsylvania State University, we were able to perform a

statistical analysis on the compiled data, which allowed us to interpret the results. Using SPSS, we

conducted a univariate analysis of each question. Following this, we were able to combine questions and

create bivariate statistics. The use of SPSS allowed us to understand which information was relevant to

Lexmark and aided in the final recommendations.

Initially, we recognized the core issues that Lexmark faced before administering the survey. Lexmark

needs to identify how their brand is perceived by college students. Also, Lexmark must recognize the

buying or acquisition process of personal printers among college students. Finally, Lexmark needs to be

fully aware of the printing behaviors of college students as opposed to traditional customers. These key

issues were taken into account when completing our statistical analysis.

With each question we used SPSS functions to create tables for all the numbers. We read through

means and standard deviations, and could see noticeable differences in responses to some questions. It

was useful to know that the majority of the respondents were current students and that the average age

was 23 to better understand the demographics of respondents. Lexmark’s brand perception was

determined to be significantly lower than other leading brands such as Canon and HP. This type of data

from the sample gave us information to understand the reputation of Lexmark in the overall population.

In addition, the use of bivariate statistics allowed us to analyze the relationships between two variables.

When appropriate, we combined data from two specific questions to attain relevant information that

answers Lexmark’s issues. Most of our bivariate analyses involved question 2, in which responses

determined if the respondent was a current college student or non- college student. This question

allowed us to specify the information towards strictly college students. When comparing two

nominal/ordinal variables, we used the Cross tabulation technique. Cross tabulations allow us merge

two frequency tables together. Another form of bivariate that we used is a Z-difference test. The Z-

difference test compares one nominal/ordinal variable with one interval/ratio variable. Once means are

computed in SPSS, the Z-difference and standard deviation formulas give us our null and alternative

hypotheses. With our Z-score, we determine if the differences are significant based on the P-value (also

found in SPSS).

The univariate and bivariate statistics allowed us to answer our marketing research problem. Our MRP is

to determine whether a new advertising campaign or product will successfully position Lexmark in

universities. Two key findings that address this are: First, since Lexmark has a low market share, a new

advertising campaign could raise awareness of their brand. We know this because out of the 78% of the

respondents that own a personal printer, only 2% own a Lexmark. Second, we learned what printing

features were most important in choosing a printer. Specifically, the most vital features are print quality,

low ink price, ink efficiency, and reliability. Knowing this information along with the combination of

other statistics allows us to project what kind of product that college students are looking for.

We believe it would be beneficial to Lexmark to start a new ad campaign directed toward college

students. According to the data, college students have low exposure to the Lexmark brand. A new ad

campaign can increase the brand awareness on college campuses. However, a new ad campaign should

be put on hold until Lexmark creates or markets an ideal product that meets student’s needs. Lexmark

can increase its sales and brand familiarity within the college community with a new optimal product

and a new ad campaign promoting it.