Moving closer to the customers: effects of vertical integration in the Swedish commercial printing industry

Abstract

This paper reports on a study regarding how vertical integration is used to increase customer relations in the printing industry and illustrates the competitive consequences with vertical integration towards customers. Results show that since direct customers are perceived as more loyal and profitable than advertising agencies and/or print brokers, integration of content creation is common to increase relations with direct customers. However, as direct customers' part of total production is still very small, integration of content creation gives rise to a potentially competitive situation between printing firms and advertising agencies. Printing firms recognized this problem as they try to avoid this competition. Two different approaches to the problem are illustrated. Printing firms either focus on simple jobs that are not of advertising agencies' interest or they isolate these services in a separate firm, and consequently can compete for direct customers and still be a printing firm to advertising agencies.

Keywords:

• vertical integration
• buyer–supplier relationship
• competition

Acknowledgements

I thank the editor for this issue, Sheila Wright, for her detailed feedback and suggestions that helped to significantly improve the paper. I would also like to show my respect to my colleague Dr Magnus Viström, Packaging Mid Sweden, for his collaboration on our quantitative survey study. The financial support of the Kempe Foundations and Grafiska Företagens Stipendiestiftelse is gratefully acknowledged.