Until this year, the Ricoh Corporation may well have been the copier industry’s best kept secret.
Have you used a Savin, Gestetner or Lanier copier? They are identical machines, all made by Ricoh, the $2 billion American subsidiary of the Ricoh Company, the Japanese maker of cameras, copiers and printers.
Ricoh’s various brands command about 14 percent of the total copier market in the United States, and nearly 20 percent for digital machines. But compared with Japan, where Ricoh is the best-selling copier brand around, Ricoh’s market strength is little recognized in this country. Even investors pay it little mind. Ricoh’s American depository receipts are fairly lightly traded, although the share price has rebounded from its 52-week low of $75.50 in October, closing last Friday at $95.75.
Now, though, Ricoh is intent on making a name for itself in the United States. Over the last few years, it has been steadily buying up the companies whose products it makes, and it acquired the final holdout, Lanier Worldwide, in December.
Now, with all those brands part of the family, Ricoh is busily revamping its sales and back-office operations, adding dealerships, fleshing out its product line and mounting its most expensive radio and print advertising campaign ever, using the tag line ”Dependable Digital.”
”Finally, Ricoh will be one legal entity with one operating system, and, finally, we can break out from being a small player in a copier-centric environment to a big player in a network-centric environment,” said Jim Ivy, president of Ricoh’s Office Products Group.
Ricoh, to be sure, is not ditching its vaunted brands in favor of some elusive, cohesive image. Why would it? When they were independent, each company concentrated on a different market: Savin, for example, is strong in government and education circles, while Gestetner is a big player in hospitals. Ricoh has no desire to tamper with that loyalty, any more than General Motors would want to reposition the Corvette and the Cadillac as generic G.M. brands.
But just as most car buyers know that G.M.’s engineering and deep pockets stand behind Cadillacs and Corvettes alike, Ricoh wants copier buyers to know that every Savin, Gestetner, Lanier or Ricoh Aficio — the one brand Ricoh has always sold itself — comes with Ricoh technology, service and support.
Ricoh’s ultimate goal is to get its name into the corporate American consciousness, and then use the name awareness to sell every document-processing product or service that a company could need in the digital-network age.
The new approach does bring risks. One of Ricoh’s competitive advantages has always been that its products were sold at a discount to its competitors. And one reason Ricoh could hold prices down when Savin, Lanier and Gestetner were independent is that those companies footed the advertising, marketing and distribution bills — even as Ricoh benefited from the economies of scale that came with manufacturing all their machines.
Last year Ricoh did notch its prices up a bit, in part to pay for its new advertising push. So far, there is no evidence that the price increase hurt sales. But with the economy now slowing, some analysts wonder whether any office equipment maker can hold the line on prices.
In another sense, though, the timing of Ricoh’s new push is propitious. The Xerox Corporation, long the market leader, has a huge installed base of analog copiers, and until a year ago, it was fairly successful at getting those customers to trade up to higher-priced digital copiers.
But Xerox is grappling with the aftermaths of a bungled sales-force reorganization and a mismanaged attempt to consolidate customer administration offices. Lately, as Xerox management has been preoccupied with planning layoffs and trying to sell assets to raise much-needed cash, companies like Canon, I.B.M., Heidelberger, Toshiba and, yes, Ricoh, have been wooing many of those customers away.
Xerox has been ”out there convincing their customers to get a new digital machine, and that just opens the door for us,” Mr. Ivy said. ”If this were a sitcom, people would say the plot is too suspiciously pat.”
And yet, simply stealing market share from Xerox in the copier market could be a Pyrrhic victory: The overall market for copiers is in decline, now that printers are taking on many tasks that copiers once handled.
And customers are clamoring for one-stop shopping. They want to buy an entire document processing system — printers and copiers and fax machines, slow and fast machines, color and black-and-white — from a company that can provide products, service and supplies to each of their branch offices. And, more often these days, they want that company to set up and manage the entire corporate document processing system.
Ricoh, like most of its competitors, is emphasizing this full-menu approach for good reason. The profits to be made on selling copiers and printers are negligible at best. The real money lies in the high-margin service contracts and consumables like inks.
”We have to change the mindset of our salespeople and our customers away from the box to selling full document-management solutions,” said Katsumi Yoshida, chief executive of Ricoh, which is based in West Caldwell, N.J.
Ricoh is doing its best to get word out to its own troops. The company is taking eight warehouses that are currently segregated by brand and consolidating them into three mega-distribution centers that will stock generic machines. Only after a customer orders, say, a Lanier or Aficio, will a brand label be slapped on, just before shipping.
Ricoh is also melding its sales forces and tinkering with their compensation, so that salespeople do not push only one specific machine or brand. It is also streamlining its back-office systems so that salespeople, who previously spent 70 percent of their time on paperwork, can instead spend that time with customers.
And, the company is finally giving the sales staff a full range of products to sell. Until now, Ricoh concentrated almost entirely on mid-speed machines — the category of copiers that generally sell for a top price of $26,500, and have top speeds of between 45 and 69 pages a minute. It now offers a range of slower copiers, selling in the $2,800-to-$7,000 price range, that analysts say are competing effectively against Canon and Xerox in the small-office market.
This year, Ricoh also plans to introduce a 105-page-a-minute machine that, at $100,000, will be a comparable bargain to the 110-page-a-minute machines from several competitors that can cost more than $200,000.
Ricoh also offers software that speeds up the process of sending scanned documents from laptops or desktops to copiers, and that stores edited copies of the documents in the copier. It even has a new document management product called ECabinet, a $14,000 device that can automatically archive any fax, e-mail or other document that touches the network. Other companies have comparable products now, but analysts say Ricoh offered them first, and often has the lowest prices.
Printers will soon complete the product line. In April, Ricoh carved out a separate printer division to sell Ricoh laser printers — big sellers in Japan — in the United States, as well as to develop new printer products. In early January, the company hired Ann E. Moser, who has worked in the printer divisions of I.B.M., Lexmark and Xerox, as vice president of its new group.
Ricoh does not yet offer ink-jet printers, which cost less than laser printers. But it may buy ink jets from another company to sell under one of its brands. And some of its Savin dealers have started carrying Hewlett-Packard inkjet printers.
”By offering printers, Ricoh completes a product line that few can match,” said Benjamin A. Reitzes, an analyst with UBS Warburg.
For now, though, copiers remain Ricoh’s bread-and-butter items. In 1998, Ricoh became the first copier manufacturer to offer an 85-page-per-minute copier for a price as low as $48,500, and analysts say it is still selling strong.
”High-speed copiers are the copier market’s sweet spot, and Ricoh was there first,” said Jack L. Kelly, an analyst with Goldman Sachs.
Ricoh was also one of the first copier manufacturers to offer a ”tandem” feature that lets customers hook two 85-page copiers together, enabling them to deliver the volume and speed of a Docutech — Xerox’s highest-speed, highest-margin and most expensive product line — at a third of the Docutech’s price. Ricoh also was the first to show customers how to cluster machines — that is, hook up a mix of color and black-and-white machines of various speeds, and use software that automatically directs any copying job to the appropriate copier.
”Clustering and tandeming lets you do huge volumes cheaply, and Ricoh is making that argument quite vocally and successfully,” said Steven H. Reynolds, a digital copier industry analyst at Lyra Research.
Competitors are not sitting idle, of course. Brian L. Merriman, president of the big copier distributor Danka Worldwide, said Canon was about to introduce an 85-page-per-minute copier, and that Toshiba’s 80-page-per-minute machine was starting to sell well. ”Ricoh makes a good product, but its growth is going to slow considerably,” he said.
And even Xerox is filling in the gaps in its product line. It has a formidable array of both color and black-and-white copiers in the mid-to-high-speed range, and has said it will soon introduce a new line of relatively inexpensive copiers, with a top speed of 35 pages a minute. Color versions of the low-priced line are in the wings for midyear.
”Xerox is still the premier brand, and we’ll recover from any tarnish on it real soon,” said Paul A. Hartley, a Xerox vice president.
Not if Ricoh can help it. Ricoh’s brand advertising really takes the competitive gloves off. One example: A new ad for Ricoh’s Savin copiers asks, in bold letters, ”Is Your Connection With Xerox Getting a Little Frayed?”
In October Ricoh mounted its $32 million ”Dependable Digital” corporate campaign that does more than twit the competition. The new Ricoh ads stress the breadth of tasks — copy full reports, collate documents and such — that Ricoh’s products can do, rather than the technology inside the machine.
”Customers are telling us they care more about what’s coming out of the system than what’s inside the product,” Mr. Ivy said.
Marketing to end-users is a major change for Ricoh. Until now, Ricoh had always relied on so-called push marketing — ads and promotions aimed at getting dealers to push Ricoh products at customers.
But Ricoh’s new campaign is aimed at pulling customers into the dealerships to ask for Ricoh-branded products by name. ”Brand awareness gives a certain perceived sense of quality, reliability and responsibility,” said Donovan O. Dixon, senior document management industry analyst at Gartner Dataquest.
The big unanswered question now, though, is whether Ricoh can keep introducing new products at the pace the market demands. The company is grappling with a long-standing conservative culture that was loath to send a product to market before it had been tested and retested. Analysts say Ricoh could have gotten its 85-page machine to market two years earlier, if it had been willing to take risks.
It is a criticism Mr. Ivy readily accepts. ”We’ve let plenty of opportunities slide because we spent too much time aiming before firing,” he said. ”Now we’re going to aim, fire, adjust, then aim and fire again.”