LXK » Topics » Strategy

This excerpt taken from the LXK 10-K filed Feb 27, 2009.
Strategy
 
Lexmark’s strategy is based on a business model of investing in technology to develop and sell printing solutions, including printers and multifunction products, with the objective of growing its installed base, which drives recurring supplies sales. Supplies are the profit engine of the business model. Supplies profit then funds new technology investments in products and solutions, which drive the cycle again and again. The Company’s management believes that Lexmark has the following strengths related to this business model:
 
  •  First, Lexmark is exclusively focused on distributed printing and imaging, and related document solutions. The Company’s management believes that this focus has enabled Lexmark to be responsive and flexible in meeting specific customer and channel partner needs.
 
  •  Second, Lexmark internally develops three of the key print technologies associated with distributed printing, including inkjet, monochrome laser and color laser. The Company’s monochrome laser technology platform has historically allowed it to be a price/performance leader in enterprise network printer-based products and also build unique capabilities into its products that enable it to offer customized printing and document workflow solutions. Lexmark’s focus is to advance its inkjet technology, products and solutions to address higher usage customers.
 
  •  Third, Lexmark has leveraged its technological capabilities and its commitment to flexibility and responsiveness to build strong relationships with large-account customers and channel partners, including major retail chains, distributors, direct-response catalogers and value-added resellers. Lexmark’s path-to-market includes industry-focused consultative sales and services teams that deliver unique and differentiated solutions to both large accounts and channel partners that sell into the Company’s target industries.
 
Lexmark is focused on driving long-term value for its shareholders by strategically investing in technology and demand generation to profitably capture supplies in high page generating segments of the distributed printing market.
 
The Printing Solutions and Services Division (“PSSD”) is focused on growth in high page generating workgroup products, including monochrome lasers, color lasers and laser MFPs. Lexmark’s PSSD strategy requires that it provide its array of high-quality, technologically-advanced products and solutions at competitive prices. Lexmark continually enhances its products to ensure that they function efficiently in increasingly-complex enterprise network environments. It also provides flexible tools to enable network administrators to improve productivity. Lexmark’s PSSD target markets include large corporations, small and medium businesses (“SMBs”) and the public sector. Lexmark’s PSSD strategy also requires that it continually identify and focus on industry-specific issues and processes so that it can differentiate itself by offering unique industry solutions and related services.
 
The Imaging Solutions Division (“ISD”) is focused on growth in the higher page generating inkjet products sold to SOHO and businesses through both retail and non-retail channels and original equipment manufacturer (“OEM”) partner arrangements. ISD continues to aggressively shift its focus to geographic regions, product segments and customers that generate higher page usage. Lexmark’s goal is to create printing products and innovative solutions that make it easier for SOHO and small business users to improve their productivity.


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Over the last several years, the Company increased investments in both the Company’s sales force and product and solution development. The Company increased its research and development spending by 5% in 2008, by 9% in 2007 and by 10% in 2006. This investment has led to new products and solutions aimed at targeted growth segments as well as a pipeline of future products.
 
Because of Lexmark’s exclusive focus on printing solutions, the Company has formed alliances and OEM arrangements to pursue incremental business opportunities through its alliance partners.
 
The Company’s strategy for dot matrix printers is to continue to offer high-quality products while managing cost to maximize cash flow and profit.
 
This excerpt taken from the LXK 10-K filed Feb 27, 2008.
Strategy
 
Lexmark’s strategy is based on a business model of investing in technology to develop and sell printing solutions, including printers and multifunction products (“MFPs”), with the objective of growing its installed base, which drives recurring supplies sales. Supplies are the profit engine of the business model. Supplies profit then funds new technology investments in products and solutions, which drive the cycle again and again. Management believes that Lexmark has the following strengths related to this business model:
 
  •  First, Lexmark is exclusively focused on distributed home and office network or desktop computer printing and imaging, and related solutions. Management believes that this focus has enabled Lexmark to be more responsive and flexible than competitors at meeting specific customer and channel partner needs.
 
  •  Second, Lexmark internally develops all three of the key print technologies associated with distributed printing, including inkjet, monochrome laser and color laser. The Company’s laser printer technology platform has historically allowed it to be a leader in product price/performance and also build unique capabilities into its products that enable it to offer customized solutions.
 
  •  Third, Lexmark has leveraged its technological capabilities and its commitment to flexibility and responsiveness to build strong relationships with large-account customers and channel partners, including major retail chains, distributors, direct-response catalogers and value-added resellers. Lexmark’s path-to-market includes industry-focused consultative sales and services teams that deliver unique and differentiated solutions to both large accounts and channel partners that sell into the Company’s target industries. Retail-centric teams also have enabled Lexmark to meet the specific needs of major retail channel partners.
 
Lexmark’s business market strategy requires that it provide its array of high-quality, technologically-advanced products and solutions at competitive prices. Lexmark continually enhances its products to ensure that they function efficiently in increasingly-complex enterprise network environments. It also provides flexible tools to enable network administrators to improve productivity. Lexmark’s business target markets include large corporations, small and medium businesses (“SMBs”) and the public sector. Lexmark’s business market strategy also requires that it continually identify and focus on industry-specific issues and processes so that it can differentiate itself by offering unique industry solutions and related services.
 
The Company’s consumer market strategy is to generate demand for Lexmark products by offering competitively-priced products to consumers and businesses primarily through retail channels and original equipment manufacturer (“OEM”) partner arrangements. Lexmark’s goal is to create printing products and innovative solutions that make it easier for consumers and small business owners to create, share and manage information and images. Lexmark continues to invest in brand building efforts that are reflected in its core product offerings, advertising campaigns and public relations efforts, all of which reinforce Lexmark’s value proposition.
 
Lexmark’s strategy involves the following core strategic initiatives:
 
  •  Expand the penetration of the product segments in which the Company participates. Lexmark is focused on increasing its participation in a number of higher-usage growth segments such as workgroup monochrome lasers, workgroup color lasers, workgroup laser MFPs and non-entry inkjet AIOs.
 
  •  Expand the penetration of the market segments in which the Company participates. Lexmark is driving to expand the Company’s presence in enterprise, SMB and the non-entry segment of the consumer market.


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  •  Continue to develop Lexmark’s brand awareness and brand positioning. Management believes that its product and market segment initiatives will be aided by improving its brand awareness and brand image with the objective of reaching higher-usage customers that drive supplies sales. To drive these improvements, Lexmark launched a new advertising campaign in 2006 that has continued through 2007. The core message of the campaign highlights the Company’s deep and proven experience helping some of the world’s leading companies to be more productive. In 2007, the campaign also highlighted the industry-leading recognition and awards for its laser product line. Lexmark believes that this campaign will continue to build brand image and awareness, and in the long term will support the execution of its strategic initiatives.
 
In addition to investments in the Lexmark brand, the successful execution of this strategy involves increased investments in both the Company’s sales force and product and solution development. The Company increased its research and development spending by 9% in 2007, by 10% in 2006 and by 8% in 2005. This investment has led to new products and solutions aimed at targeted growth segments as well as a pipeline of future products.
 
Because of Lexmark’s exclusive focus on printing solutions, the Company has formed alliances and OEM arrangements to pursue incremental business opportunities through its alliance partners.
 
The Company’s strategy for dot matrix printers is to continue to offer high-quality products while managing cost to maximize cash flow and profit.
 
This excerpt taken from the LXK 10-K filed Feb 28, 2007.
Strategy
 
Lexmark’s strategy is based on a business model of investing in technology to develop and sell printing solutions, including printers and multifunction products (“MFPs”), with the objective of growing its installed base, which drives recurring supplies sales. Supplies are the profit engine of the business model. Supplies profit then funds new technology investments in products and solutions, which drive the cycle again and again. Management believes that Lexmark has the following strengths related to this business model:
 
  •  First, Lexmark is exclusively focused on distributed home and office network or desktop computer printing and imaging, and related solutions. Management believes that this focus has enabled Lexmark to be more responsive and flexible than competitors at meeting specific customer and channel partner needs.
 
  •  Second, Lexmark internally develops all three of the key technologies in distributed printing, including inkjet, monochrome laser and color laser. The Company’s technology platform has historically allowed it to be a leader in product price/performance and also build unique capabilities into its products that enable it to offer customized solutions.
 
  •  Third, Lexmark has leveraged its technological capabilities and its commitment to flexibility and responsiveness to build strong relationships with large-account customers and channel partners, including major retail chains, distributors, direct-response catalogers and value-added resellers. Lexmark’s path-to-market includes industry-focused consultative sales and services teams that deliver unique and differentiated solutions to both large accounts and channel partners that sell into the Company’s target industries. Retail-centric teams also have enabled Lexmark to meet the specific needs of major retail channel partners.
 
Lexmark’s business market strategy requires that it provide its array of high-quality, technologically-advanced products and solutions at competitive prices. Lexmark continually enhances its products to ensure that they function efficiently in increasingly-complex enterprise network environments. It also provides flexible tools to enable network administrators to improve productivity. Lexmark’s business target markets include large corporations, small and medium businesses (“SMBs”) and the public sector. Lexmark’s business market strategy also requires that it continually identify and focus on industry-specific issues and processes so that it can differentiate itself by offering unique industry solutions and related services.
 
The Company’s consumer market strategy is to generate demand for Lexmark products by offering high-quality, competitively-priced products that present an exceptional value to consumers and businesses primarily through retail channels and original equipment manufacturer (“OEM”) partner arrangements. Lexmark’s goal is to create printing products and innovative solutions that make it easier for consumers and small business owners to create, share and manage information and images. Lexmark continues to invest in brand building efforts that are reflected in its core product offerings, advertising campaigns and public relations efforts, all of which reinforce Lexmark’s value proposition.
 
Lexmark’s strategy involves the following core strategic initiatives:
 
  •  Expand the number and the penetration of the product segments in which the Company participates. Lexmark is focused on increasing its participation in a number of growth segments such as color laser, laser MFPs, low-end monochrome laser printers and inkjet AIOs.
 
  •  Expand the penetration of the market segments in which the Company participates. Lexmark is driving to expand the Company’s presence in its enterprise, SMB and consumer market segments.
 
  •  Continue to develop Lexmark’s brand awareness and brand positioning. Management believes that its product and market segment initiatives will be aided by improving its brand awareness and brand


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Table of Contents

  image. To drive these improvements, Lexmark launched a new advertising campaign in 2006. The core message of the campaign highlights the Company’s deep and proven experience helping some of the world’s leading companies to be more productive. Lexmark believes that this campaign will continue to build brand image and awareness, and in the long term will support the execution of its strategic initiatives.
 
In addition to investments in the Lexmark brand, the successful execution of this strategy involves increased investment in product and solution development. The Company increased its research and development spending by 10% in 2006, by 8% in 2005 and by 18% in 2004. This investment has led to new products and solutions aimed at targeted growth segments as well as a pipeline of future products.
 
Because of Lexmark’s exclusive focus on printing solutions, the Company has formed alliances and OEM arrangements with companies such as Dell, IBM and Lenovo to pursue incremental business opportunities through its alliance partners.
 
The Company’s strategy for dot matrix printers and other office imaging products is to continue to offer high-quality products while managing cost to maximize cash flow and profit.
 

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