Kinko's case about the TOy

1. Kinko’s
Group 7
Goyam Jain 14P139
Kaarthvya Chodey 14P144
Prathihasth 14P155
Abhishek Kumar 14P182

2. Kinko’s Value proposition
Paul, the founder realized that
photocopiers were not easily accessible
to many students
Paul decided to offer his customers,
who were college students, a consistent
high quality services in a timely and
reliable helpful manner, at a reasonable
price
1970s 2000s
evolved over time by expanding their
services to serve new customer
segments
introduction of self-service computers
and photocopiers working areas and
24/7 service
introducing public teleconferencing
rooms, Fed-Ex drop boxes, color copiers
and printers, high-speed internet and
email access
incorporated online and in-store
services

3. Reasons for Kinko’s success earlier on
The location of Kinko’s stores near schools
 Kinko’s started to expand its services and gave another incentive for customers to
increase their loyalty
 Lack of competition
Developing a long term relationship - Kinko’s was a “Cool” company and had Fans
not only customers

4. Kinko’s Customer Segments
Consumer Segment
Personal use including anything from printing posters, generating banners for birthday
parties to photocopying tax returns
Industry wide market was estimated between “$3-$5” billion, declining by 2%
In 2003 generated approximately $600 mil, equivalent to 30% of Kinko’s revenues
declining by 6% yearly
Customers served by branch personnel in 1200 locations
Valued convenient locations, quality and low prices
Problems Faced
Decline due to technological substitute
Shared lost to competition

5. Kinko’s Customer Segments
Local Business Market
Walk-in clients used Kinko’s as a second office in order to satisfy their copying, printing
and other document needs
Industry wide market was estimated between “$5-$7” billion, declining by 4%
In 2003 generated approximately $1 billion, equivalent to 50% of Kinko’s revenues
declining by 5% yearly
Customers have no formal sales relationship depend on branch manager who establish
contacts with local business
Valued convenient locations, customer service, quality, speed & price
Problems Faced
Decline due to technological substitute
Customer Service not provided

6. Kinko’s Customer Segments
Commercial Solutions Segment
suppliers managed the firms’ duplicating
and printing requirements directly on the
customers’ premises
Market for FM was estimated to be
between “$12-$15” billion and was growing
between 1-3%
Kinko’s revenues from FM were less than
$30 million
FM Business Non FM Business
consisting of large and small branch jobs
and drop-in projects requested by firms’
mobile professionals
Non-FM industry was estimated to be
between “$2-$5” billion
Kinko’s revenues from commercial Non-
FM were over $300 million
Problems Faced
Strong Competition from Xerox & IKON
Low and unspecialized sales force of
500 people
Not as cost competitive as presumed
Problems Faced
Shrinking Market
Competition from superstores

7. Problems in Stores
Misleading Layout
Confusing Signage
Complicated machines
Unspecialized staff
No economies of scale being realized through negotiation with its vendors
Average utilization of copy machines too low – 13% for black & white, 5% for color
Support & Administrative costs at 10% - much higher than industry average of 4%

8. Suggested Alternatives
Option 1
Focus on the Commercial Business
Option 2
Radically overhaul the Retail Business
Recommendation
Kinko’s should choose the second option as they have to consider the type of people
working with them
Kinko’s was not equipped to deal exclusively with the commercial solutions segment
with the staff it had since Kinko’s branch managers were used to developing relationships
with their own environment, same levels and cultures, not with a Fortune 100 companies
Besides Kinko’s was not sure of how would FedEx interpret this move to reduce Kinko’s
investment in retail footprint
Another important issue the culture of Kinko’s was based on it is a cool company and a
business resource it has a culture of encouraging building relationships and exchange
experience with its customers which built Kinko’s reputation
So to maintain its culture, values and identity and despite the facts that it customer
segments are project to minimal growth or remain flat over the coming years, Kinko’s can
expand and grow via new products and services in its branches and expand into new
industries

9. Other Suggestions
 Management should consider re-designing Kinko’s stores to be more convenient
and comfortable to the customers and develop a new signage system which allows
better utilization of resources
They have to halt the “one size fits all” model, and start to differentiate treatment
between different customer segments according to their needs
Take initiatives of cutting cost and reduce expenses to improve their margins
 Increase the utilization of machines and decrease the fixed costs of machines,
labor costs and improve productivity of employees by re-locating them to other
more busy locations, and introduction of training programs on customer service
Effective vendor negotiations and realize economies of scale especially with
hardware vendors
 Introduce a consistent pricing strategy and reduce variation of prices between
different branches to maintain credibility among their
Introduce a loyalty program to reward frequent customers