If you manufacture refill consumables and the machines that use them, you deliver most value when consumers use your branded refills. Product digitization is how you prove it.
Refill consumables and the machines that use them are co-dependent. In theory, they’re one product with two parts. Sam buys your coffee machine once – usually at cost, or even at a loss – and your pod refills every month. Ed buys your office printer once, and your toner cartridges forever.
The business model is proven.
The consumer gets the perfect coffee or print, with lower cost up front. The manufacturer offsets poor initial returns with refill margins over a long customer lifetime.
But the model breaks down if the consumer stops buying your branded refills. And that threat is constant.
The threat at the heart of refill business
Every time Sam runs out of coffee, she pops to the store where she’s bombarded by competing brands and attractive offers. Every time Ed needs new toner cartridges, he’s served targeted online advertising offering white-label cartridges for half your price.
Unless you prove the value of your refills, you risk losing out. And that doesn’t just threaten your refill products. It threatens your entire business.
Consider. Your coffee machine can’t serve the perfect coffee if the pods aren’t optimized for the machine. Your printer can’t deliver perfect prints unless the toner is optimized for the ink nozzles.
You’re not at fault if your customers opt for cheaper refills. But your product no longer delivers its promise – the perfect coffee or printing experience (and your lifetime profit equation goes south).
Sam doesn’t care why her cup tastes wrong; she cares about her coffee fix. Ed doesn’t care why your printer isn’t printing; he cares that the office has ground to a halt. From Sam and Ed’s perspective your product isn’t doing its job, and your brand loses value.
So, you have a choice:
You encourage refill sales by competing on price, which will fast turn into a race to the bottom.
Or you add real value to your existing refills. With product digitization.
Product digitization adds value to branded refills
Product digitization works by embedding intelligent technology into your products, which generates a unique interaction when tapped with a reader or smartphone.
You embed tag readers into your machines and tags into your refills. When Ed puts your cartridge into your printer the two connect, and the printer automatically calibrates for the optimum printing experience.
Ed won’t buy bargain-basement toner cartridges if he knows he’ll get a worse experience – and the office will run less smoothly – if he does.
Food manufacturer Barilla are doing something similar to great effect, with their RFID-enabled oven that automatically cooks recipes embedded into tags in ingredients.
Sam taps the coffee pods with her smartphone and the embedded tag recognises the pods are unopened and delivers point-of-use installation instructions.
Or the tag recognises the products are used, and automatically reorders. Sam never steps foot into the store, with all those competing brands and offers. And even if she did, why would she buy an alternative when she knows she’ll get the best coffee from you?
The possibilities are endless, but the point is this: product digitization makes your refills – and therefore your whole product equation – more valuable.
Product digitization fulfils your product promise
Manufacturers of refill consumables and the machines that use them face a major challenge. Your core product promise – great coffee, efficient printing – relies on two-part product purchase, but the consumer doesn’t always play ball when it comes to refills.
So you have to show the consumer they’ll get a better experience and more value when they buy your branded refills. That’s what product digitization does.