Kinko's

Customer Segments

From the market research, customers can be divided into three distinct segments: consumer, local business market, and commercial solutions. Consumer customers visit Kinko's for personal use. Local business customers use Kinko's as a second office. The market research reveal that both of these customer segments value convenient, locations, customer service, quality, speed and price. However, for local business customers, the cultivation of relationships with small businesses is important. Unlike consumer and local business segments whom Kinko's do not have a special serve or formal sales relationship, the commercial solutions segment is served by a direct sales force. This segment can be divided by customers' needs into two lines of businesses: facilities management and non-facilities management. Non-FM sub-segment customers value speed, price and customer service which is almost the same as local business and consumer customers while FM sub-segment customers have requirements not only for quality and speed but also for cost control, competitive pricing, and experience or expertise. (Table 1 show details for each segment). From analyzing customers' needs, low price is the most common need in all segments. Therefore, Kinko's faces a main problem about customers' price perception. Changing overall customers' perception may require a large investment for advertising and marketing, but Kinko's has an opportunity to change perception in a specific group of customers such as commercial business by offering a contract with low price.

Market Analysis

In term of competitor, it depends on customer segments. For consumer, local market, and non-FM commercial solution customers have a similar competitors such as Mom and Pop and superstores. For FM commercial solution has different competitors which are Xerox, IKON, and in-house production. Kinko's has the largest market share for consumer and smallest for FM commercial solution. However, the industry-wide market for FM segment is estimated to be between $12 and $15 billion which is much larger than other segment and is growing between 1-3% while other segments are facing declining in growth. Kinko's also has a revenue growth only in commercial solutions segments. (View table 1). In addition the technology substitution also has an impact to Kinko's revenue. As technology becomes more affordable, many customers have their in-home printers. Although there are a variety of technologies and other segments tent to use in-house equipment, non-FM customers' technology substitution is forecasted to decrease by 40%. From an increase in growth rate for FM segment market, a big market size of FM segment, and a decreasing rate of the technology substitution for non-FM, commercial solutions segment is very interesting to invest.(View table 1).

Kinko's Situation

Kinko's is losing its market share to competitors because it does not provide better services than other competitors. This can be proved by customers complaining. Kinko's customers experience confusion at some point while in the store and also have to take long time to finish even simple tasks. Additionally,