Yesterday, I discussed about cartridge remanufacturing and controversial issues related to this topic. Particularly, I end up proposing OEM entry into remanufacturing market and cited Lexmark Prebate program. Today, more details on what I think...
Protect your brand name and IP. These are the strategic assets. Refill cartridges are dominating the market, low print quality is somehow associated with the reliability of the printer and call center is receiving calls blaming the printer or the non-reusable cartridge in the first place. Once people believe that your product quality is deteriorating, you are in trouble. Given that assets and market entry is feasible (will talk on this in a minute) start remanufacturing your cartridges. Prevent the IP leak: third parties break into your products, the chips, the software in the chips-they did in the past.
Make profits. If OEM leaves refill to the third party, the losses should be calculated in an integrated manner: not only is the lost sales problem here. I’ll leave the calculation of the damage on the brand name capital to finance people. Plus, look into the lost sales of toner cartridges. Also consider this: sometimes it is more profitable to remanufacture some product types than to remanufacture others: depending on the investments on the assets required for remanufacturing and profit margins choose the feasible ones. In these cases, I personally believe that leaving low- margin+high-investment products to already competitive third party market is not a bad idea. Then the IP leakage. Years and million dollars of investment to R&D goes to waste.
Please your customers. Extending one more service to your customers. Offering reliability, credibility and also incentives, such as cash-backs, discounts etc.
Entry deterrent strategy. If there is money on the table, sooner or later somebody wants to take his share. If you are not interested, a third party will, or sometimes even a competitor. Deter entry by engaging in remanufacturing activities, defend your market.
Valuable information. Once I had the opportunity to talk to an executive from remanufacturing of power tool manufacturer, who is very dominant in US market. He told me that the information arising from disassembling the products is fed into the product development process to improve the design and functionality.
I am not only talking about cartridge remanufacturing. If you think, these points fit well for many other industries too.
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