Strategies to deliver the creative stuff

Barney Cox
Monday, September 24, 2007

If there are two things printers notoriously lack, and dont often do anything to improve, its their management and marketing skills. Fortunately for HPM Creative Solutions (or Hillprint as it used to be known) directors Richard Mortimer and Peter Groves had enough experience to know that the knowledge they lacked could be gained in two ways: first, training, and second, by calling in external help.

“Peter and I left school at 16 and became machine minders, working our way up through various firms,” says Mortimer. They became directors of the County Durham firm in 1998 and “took it from a £1m turnover firm on the point of bankruptcy to £3m in four years.”

Back to school
“We realised that different skills were needed to get beyond £3m,” says Mortimer. To gain those skills, the two directors enrolled in a post-graduate business and marketing course at Durham University Business School and completed the course during 2004/05.

“It was that course that gave us the confidence to go beyond Hillprint and to look at industry in general,
to look at our customers’ needs and to build an integrated marketing company,” says Mortimer.

This course gave Mortimer and Groves the chance to share their experiences with a far wider peer
group drawn from many other industries. “The process showed us they faced the same problems as we did in print: pressure on margins and the impact of ex-Communist countries and China,” says Mortimer. “There was a common realisation that UK companies have got to offer intellectual input as well as first-class services and products.”

This realisation – that the branding and marketing of ideas was at the heart of UK industry’s future –
was one of the spurs to move the firm from print and design to a marketing and branding business.

The other was the state of the local print market itself and the pressure it was under. “The north east region has a lot of light manufacturing that’s heading abroad, and with it is going the supporting print,” Mortimer observes.

“At the same time, print firms, including us, have invested in highly-productive machinery such as long perfectors. We realised print was becoming a commodity and margins were being squeezed.”

So the decision was made to specialise in marketing and branding for small- and mid-sized firms, backed up by production. “We want to become the marketing department for smaller companies. They realise
brand is important to them, but they lack the in-house resources,” says Mortimer.

It wasn’t the firm’s first attempt to move up the value chain. In 2002 it had rebranded from Hillprint to Hillprint Media in an attempt to change the market’s perception and to promote the design side
of the business. The results of this earlier rebrand exercise were mixed, with little or no change in customer perception.

All change
“We’ve always had an element of creative design, but it’s hard to get around the market’s perception that agencies design and printers print,” says Mortimer. “We did customer surveys and even among our own print design customers there was this perception that printers can’t design. And our name incorporated the word ‘print’.”

With the ink still drying on their business qualifications, in early 2006 Mortimer and Groves went to RTC Business Consulting for external help with the strategy and structure. “We worked with RTC on our plans to reposition the business to eliminate any risk,” says Mortimer.

A review of the entire operation and its market was carried out, including interviews with suppliers, customers, potential customers, printers and advertising agencies to analyse current and potential markets. With this information a plan was drawn up on how to become a marketing solutions firm.

The Hillprint name was dropped and a new group structure adopted under the umbrella name of HPM Creative Solutions. Currently there are two divisions, HPM Shape and HPM Colour. Shape is the marketing and branding division, while Colour is the creative design-for-print wing. A digital media division, HPM Logic, is in the throes of being launched, and there are plans for several more divisions with further ideas for expansion. The name and the structure of the firm has been developed to make this possible. The external-facing divisions handling sales and the “intellectual stuff”, as Mortimer dubs it, can call on centralised group services, including administration, estimating, production and design, to implement their briefs.

The three-year plan forecasts a total sales increase of 50% from the current £4.5m, and a reversal of the current split of revenues of 65% from print and 35% from design and branding. The firm is also changing the way it defines design and print: previously design for print was counted within print revenues.
“Although we still see a growth in the print part of our business, it will become a smaller part of our total turnover,” says Mortimer.

In the longer term, margins are also set to improve as the business mix changes. “Our vision is that we turn a 10% net profit, but there is a cost to the business in doing this,” Mortimer explains.

There have been more than just financial costs. Some staff have not understood the changes and couldn’t make the “huge cultural shift”; these staff left the firm, as did some clients. Mortimer acknowledges that this was a critical issue. “The biggest problem was taking the staff with us, and there were casualties.”
But despite some pain along the way, the firm is already reaping the benefits of the new strategy and structure which were only rolled out to the market this spring. “We’ve got more work from existing clients, picking up new clients in new sectors, and we’re getting referrals from people,” Mortimer says.

“We’re expanding our marketplace. One example is that we’re in the middle of a big pitch to rebrand a shopping centre. As a commercial printer we would never have been at the table, but as an agency we are.”

In a neat twist to HPM’s journey and the importance that marketing played in it, the firm won the marketing category at this year’s Excellence Awards, the joint scheme run by the BPIF and Printing World to reward business best practice from print firms.

“The Excellence Award for Marketing gives us kudos with clients,” Mortimer says. “It’s been a great boost. We did our own marketing around winning the Award, including getting coverage in the local papers and we have brought in business as a result.”

HPM isn’t content to just compete with agencies – it wants to beat them at their own game. With his business skills and production skills Mortimer has identified the areas to build on to win more business.

One is brand management and the second is the changing landscape in agency-land. “There’s a revolution in agencies at the moment like in print,” he says. “The mid-size agency is getting squeezed out. Clever words and pictures are very secondary to having an understanding of the client’s real branding and marketing needs from an audit.”

Having been through the process, HPM is in a strong position to prove that it can practice what it preaches.
FACTFILE
Business area
Design and print
Turnover £4.5m
Number of staff 50
Problem Poor market conditions in print; not taken seriously in design
Solution Reposition and rebrand the firm as a marketing solutions provider

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