Vistaprint 2015 Annual Report Download - page 12

4
• Price Primary Market Segment: This part of the market has a sizable number of small businesses but the
lowest per-customer annual spend. These businesses choose a customized product primarily based on the
price of the product offered, and are often incentivized to purchase through a promotional discounted direct
marketing approach and cross-selling of products. The Vistaprint brand has historically gained the most
traction in this segment, and we believe our biggest competition in this space is either non-consumption or
printing from a desktop or photocopier. It remains an important part of our business as we are able to
aggregate millions of orders from customers in this segment, enabling scale advantages in our business.
• Higher Expectations Market Segment: This part of the market is made up of a similar number of small
businesses as the Price Primary segment, but with higher per-customer annual spend. We believe the
segment is highly fragmented in terms of suppliers and several times the total revenue opportunity of the
Price Primary market segment, as these customers typically purchase a broader spectrum of marketing and
promotional products from multiple vendors. These customers have more sophisticated marketing needs
and choose their marketing providers not solely on price, but on a blend of value, supplier reputation,
product quality and selection, customer service and overall experience. We believe this segment represents
the most significant growth opportunity for our Vistaprint brand over the long term.
• Locally Focused Market Segment: We believe the third market segment is the largest and most fragmented
among the micro businesses. The customers in this segment often choose to work with local graphic
designers, agencies, resellers and local, offline print shops to meet their marketing needs as their primary
purchase consideration is personal service. Many of these graphic designers and resellers, or the
customers themselves, have a level of graphic design sophistication that enables these customers to create
and manipulate images in professional publishing and design programs, rather than rely on design
templates. They also typically require a broader selection of specifications. Our Vistaprint brand serves very
few of these customers in comparison with the Price Primary and Higher Expectations market segments.
However, we are now serving this segment through brands that are managed by our druck.at, Easyflyer,
Exagroup, Pixartprinting and Printdeal business units.
The Marketplace for Customized Products and Services for the Home and Family
While the market focus of our Vistaprint brand is primarily on micro business marketing products and
services, many of our product formats are also purchased by consumers seeking customized announcements,
greeting cards, calendars, stationery, apparel, personalized gifts, photo books and related photo products. In the
past, many such products were supplied by an industry comprising print manufacturing wholesalers and local
retailers, such as stationery stores. Compared with today’s Internet-based alternatives, traditional offerings were
relatively limited, prices were significantly higher, and delivery often required long lead times. Graphic designs were
limited and it was rarely possible to incorporate full color photography into the design. We serve the home and
family market through the Vistaprint brand, as well as through our Albumprinter business unit, which in turn operates
through the Albelli, Bonusprint, Allfoto, Onskefoto, and FotoKnudsen brands.
Our Brands
We are increasingly adopting a multi-brand/multi-merchant approach, which we believe will help us
effectively develop value propositions that resonate strongly with very different parts of our large and heterogeneous
addressable market for mass customization. As such, we have structured our organization to provide significant
autonomy and decentralization for the individual business units who manage our brands. We believe that this
autonomy will allow for greater customer responsiveness, greater focus, and more innovation than if we were to
manage our customer value proposition centrally.
There are many types of customer needs that can be addressed differentially. Some examples of where we
expect differential approaches by our various business units and brands are customer targets, nationally or
regionally-specific content or product formats, creation methods for graphic designs, website user experience,
quality attributes, delivery speed, price, service, quantity focus, product breadth and depth, advertising levels and
methods, and merchandising.
We have many localized websites serving countries in North America, Europe, Asia Pacific and South
America. We recognize that our customers have differing needs, skills, and expertise, and we offer a corresponding
range of products, price points and customer service options. Our websites offer a full complement of tools and
features allowing customers to create a product design or upload their own complete design, and place an order on
a completely self-service basis or with varying levels of assistance.