Marketing analysis of the Xerox Harvard case study

Marketing analysis of Harvard Case Study (Xerox Book in Time) #9-599-119

It is simply a matter of costs. The Book-in-Time equipment allows for a publishing company to produce a 300-page book for $7, something which could have been previously reached only for lots larger than 1,000 copies. A significant decrease in publishing costs, given the fact that these cover up to 20% (including the paper and binding the book), would create the possibility of an increased profit margin.

The Book-in-Time solution provided by Xerox is one of the most efficient solutions for publishing companies running on-demand, short-books. The reason for this is provided by the fact that the Xerox solution is able to provide a cost-advantage on this segment of consumers.

Further more, if we look at Table E, providing an analysis of the on demand conversion potential, several long-runs can be targeted by the equipment Xerox provides. Subscription references, for example, have a 100% conversion potential (on the other hand, they only have 1% of the overall market). College textbooks, the university press and professional textbooks all have a 50% demand conversion potential.

So, in order to be able to estimate the market size for the Book-in-Time, one needs to take into consideration the conversion potential, in addition to the actual number of books. In this sense, we may estimate the on demand market to around 600.000 books per year.

3. Basically, Xerox has two separate options at this point, given the performances of the Book-in-Time and these were clearly expressed by the senior managers at Xerox.

The first option refers to sticking with what Xerox does best, printing and copying and delivering exclusively the product itself. This would mean selling the Book-in-Time equipment to all those elements of the value chain that may be interested, including publishers and book printers.

The main advantage such an option provides is the fact that it allows Xerox to operate on a market it fully knows and controls. As we have seen from the case study, Xerox has already gained an edge over IBM, the main competitor, and the invention and development of the Book-in-Time system will bring a new product on the market, an innovation that could significantly reduce the publishing costs, consolidating Xerox's position and market share.

The second advantage we may see in such an option is the fact that, as Steenburgh laid down the facts, this option provides a real synergy for the company, integrating several pieces into a significant system and allowing the company to gain more rather than operate them separately. It is important to note, however, that the solution provided by Xerox actually fits on a very specific niche, operating most efficiently only for run lengths of 1,000 and below. This would mean increased competition on the over 1,000 segment, with less competitiveness for Xerox.

The second option is much riskier and it involves entering the book production business. On the other hand, its potential is practically unlimited. The market for on-demand, short-run books is a market that exceeds the lifecycle of a normal book, providing numerous opportunities. Additionally, the book market itself is enormous: 50,000 new titles and 1.5 million repeat titles a year is a figure worth to be taken into consideration.

The main disadvantage in such an option is the fact that the competitors have already gained (1) a significant operating experience and (2) a strong position on the market. The first 12 publishers account for 85% of overall U.S. book publishing market, so Xerox would find it difficult to find the best niche into which to fit an entire publishing activity.

4. In my opinion, the best action for Xerox at the given time is a joint version of the two options it has at hand. On one hand, it can sell the equipment to the interested buyers from the value chain, which will probably consist into a profitable action that will have the capacity to later finance an entrance into the publishing market. This seems a prudent approach that will be able to benefit from the competitive advantage that the solution provides.