Businessmodel of Lexmark International

Customer Segments

Both Lexmark International’s laser printing and imaging products and enterprise software solutions are targeted primarily at business customers. The Company serves business across multiple sectors, including the healthcare, financial services and insurance industries. A significant portion of the Company’s revenue is also derived from contracts with the US federal, state and local governments, as well as international governments and agencies.

Lexmark International’s native US remains its largest single market; however, the majority of the Company’s sales come from its international customers. Around 35% of the Company’s international sales come from within Europe, the Middle East and Africa. Lexmark International also sells products and services across North and South America, Asia, the Pacific Rim and the Caribbean.

Value Propositions

Lexmark provides value to its customers in the form of quality, dependable physical products and efficient and versatile enterprise software solutions.

The Company’s commitment to innovation and development helps to maintain this value, retain existing customers and attract new clients.

Lexmark provides a wealth of free learning and technical support resources to its customers, and allows customers to interact with one another through its community forum.

The quality of Lexmark’s products and services is enhanced through the Company’s collaboration with companies from a range of sector and jurisdictions, notably strategic alliances with high-profile companies associated with quality, including Microsoft, Canon and SAP.

Channels

Lexmark International’s portfolio of software solutions and laser printing hardware can be viewed on the Company’s website at www.lexmark.com. Products, however, cannot be purchased from the Company online, instead customers must contact members of the Lexmark International sales team.

Lexmark International also collaborates with a network of resellers that are authorised to sell the Company’s products either online or in physical stores.

Customer Relationships

While Lexmark International’s products and services can be viewed online, they are not available on a self-service basis. In order to make a purchase, customers must contact one of Lexmark’s international sales teams directly, or request for a sales representative to contact them, in order for the Company to more accurately fulfil the individual needs of each client.

Lexmark International also provides personalised technical support to its customers both online and over the phone, in addition to making a range of learning, training and troubleshooting resources available on its website.

The Company interacts with its customers directly, keeping them updated with company developments, through its news section, blog, newsletter and social media accounts, including with Twitter, Facebook, LinkedIn, and YouTube. The Lexmark International website also hosts a community forum for users of its enterprise software products.

Key Activities

Lexmark International is a developer, manufacturer and supplier of printing, imaging, device management, managed print services, document workflow, and business process and content management solutions.

The Company has two operating segments: Imaging Solutions and Services and Enterprise Software.

• Its imaging solutions segment provides colour and monochrome laser printers and supplies, software applications, and software solutions.
• The enterprise software segment provides a range of enterprise content management, business process management, document output management, customer communications management, process analytics, and enterprise search software products and solutions. The Company also manages a network of partners that supplement Lexmark International’s own capabilities, and provides ancillary and technical support services to its customers.

Key Partners

Lexmark International’s development of laser printing, imaging and enterprise software products is supported by a network of partner companies.

The Company organises its partners into four main categories:

• reseller partners, comprising consulting companies that assist in marketing and selling Lexmark International products in return for being able to provide greater functionality to their customers;
• technology partners, comprising software developers which help the Company to develop effective solutions in return for access to resources;
• solution partners, comprising systems integration and referral partners that provide various support services; and
• channel partners, which assist in the sale and distribution of Lexmark International products. These partners include resellers Advisaris, E.Novation, Loffler, Zirtex Systems, Plus Technologies and Active Navigation. The Company also has strategic alliances with high-profile companies such as Microsoft, Accenture, Fujitsu, Oracle and IBM.

Key Resources

Lexmark International’s key resources are its product designs and technology, its IT infrastructure, its manufacturing facilities, its supply chain resources, its distribution and sales networks and its personnel.

There are more than 150 patent applications filed with the US Patent and Trademark Office in Lexmark International’s name, including applications entitled ‘Portion of a display screen with icon’, ‘Laser printer toner cartridge’ and ‘Replaceable unit for an electrophotographic image forming device having positioning features for electrical contacts’.

Cost Structure

Lexmark incurs costs in relation to the operation of its manufacturing facilities – including the acquisition of supplies, the research and development of new products and solutions, the maintenance of its IT infrastructure, the management of its distribution and sales channels and the retention of its personnel.

The Company has more than 12,500 employees worldwide, representing costs in the form of salaries and benefits, and, in addition to its many manufacturing plants, the Company operates a number of offices that accrue costs in the form of utilities and rent.

Revenue Streams

Lexmark International generates revenue through the sale of physical laser printing and imaging products and enterprise software solutions. The Company has reportable segments: Imaging Solutions and Services, and Enterprise Software. Around 54% of the Company’s revenue is derived from international sales, including exports from the US, with Europe, the Middle East and Africa accounting for 35% of worldwide sales.

In 2015 Lexmark International generated annual revenue of $3.55 billion, down from $3.71 billion in 2014. In 2015 sale of products accounted for around $2.89 billion in annual revenue. No one customer accounted for more than 10% of the Company’s total revenues in 2015.