Pitney Bowes 2008 Annual Report Download - page 23

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Marketing
Our products and services are marketed through an extensive network of direct sales offices in the U.S. and through a number of our
subsidiaries and independent distributors and dealers in many countries throughout the world. We also use direct marketing, outbound
telemarketing and the Internet to reach our existing and potential customers. We sell to a variety of business, governmental,
institutional and other organizations. We have a broad base of customers, and we are not dependent upon any one customer or type of
customer for a significant part of our revenue. We do not have significant backlog or seasonality relating to our businesses.
Credit Policies
We establish credit approval limits and procedures at regional, divisional, subsidiary and corporate levels based on the credit quality
of the customer and the type of product or service provided to control risk in extending credit to customers. In addition, we utilize an
automatic approval program (AAP) for certain leases within our internal financing operations. The AAP program is designed to
facilitate low dollar transactions by utilizing historical payment patterns and losses realized for customers with common credit
characteristics. The program dictates the criteria under which we will accept a customer without performing a more detailed credit
investigation. The AAP considers criteria such as maximum equipment cost, a customer’s time in business and payment experience
with us. We base our credit decisions primarily on a customer’s financial strength.
We monitor the portfolio closely by analyzing industry sectors, delinquency trends by product line and exposures to ensure reserve
levels and credit policies reflect current trends to proactively manage risk. Management has taken additional actions in 2008 such as
reducing credit lines, strengthening collection resources, and revising credit policies to be more selective in managing the portfolio in
this current economic cycle.
Competition
We are a leading supplier of products and services in the large majority of our business segments. Our meter base and our continued
ability to place and finance meters in key markets is a significant contributor to our current and future revenue and profitability.
However, all of our segments face competition from a number of companies. In particular, we face competition for new placements of
mailing equipment from other postage meter and mailing machine suppliers, and our mailing products, services and software face
competition from products and services offered as alternative means of message communications. Leasing companies, commercial
finance companies, commercial banks and other financial institutions compete, in varying degrees, in the markets in which our finance
operations do business. Our competitors range from very large, diversified financial institutions to many small, specialized firms. We
offer a complete line of products and services as well as a variety of finance and payment offerings to our customers. We finance the
majority of our products through our captive financing business and we are a major provider of business services to the corporate,
financial services, professional services and government markets, competing against national, regional and local firms specializing in
facilities and document management throughout the world.
We believe that our long experience and reputation for product quality, and our sales and support service organizations are important
factors in influencing customer choices with respect to our products and services.
Research, Development and Intellectual Property
Our significant investment in research and development operations differentiates us from our competitors. We have many research
and development programs that are directed toward developing new products and service offerings. As a result of our research and
development efforts, we have been awarded a number of patents with respect to several of our existing and planned products. We do
not believe our businesses are materially dependent on any one patent or any group of related patents or on any one license or any
group of related licenses. Our expenditures for research and development were $206 million, $186 million and $165 million in 2008,
2007 and 2006, respectively.
Material Supplies
We depend on third-party suppliers for a variety of services, components, supplies and a large portion of our product manufacturing.
We believe we have adequate sources for our purchases of materials, components, services and supplies for products that we
manufacture or assemble. However, as we continue to shift from direct manufacturing to assembly of our products, we rely to an
increasing extent on third-party suppliers.