SINCE its foray into the Malaysian market three years ago, Thai paper producer Advance Agro Public Co Ltd (AA) has revolutionised how office paper is marketed in this country.
The first unwritten rule it broke is “You don’t advertise office paper.” Paper for photocopiers, facsimiles and printers is traditionally seen as a commodity, but AA went against the grain by investing heavily in a TV and print advertising campaign to promote its Double A premium-grade paper.
The mainstream advertising efforts have since subsided, but the lull masks perhaps an even grander plan for spreading its message. AA is in the midst of developing a nationwide network of “foot soldiers” via the recruitment of photocopy service outlets to be Double A-branded copy centres.
Not long after AA came to Malaysia, it held a much-publicised, month-long nationwide search for “Double A Twin Angels” to act as ambassadors for the brand. The pretty girls may be “the face of Double A”, but the “hands and legs” are these branded copy centres, which interact directly with the end-consumers.
Before this article explores further how the copy centres fit into AA’s overall plan, it's useful to understand about the brand Double A and the market segment it competes in.
The typical office paper is 70 grammes per square metre (gsm), but Double A is a more expensive 80gsm paper.
Double A’s selling points include extra whiteness, high opacity, superior smoothness (hence less photocopier jam) and ability to reproduce copies that are “as sharp as the original.”
AA does sell 70gsm paper as well, but one would not know it by looking at its advertising efforts, which are all focused towards building the Double A brand.
In fact, when Malaysian journalists recently visited its factory in Prachinburi province (a two-hour drive east of Bangkok), the company officials never talked about its other brands unless prodded.
An email StarBiz sent to AA asking what was its share in the 70gsm paper market in Malaysia got this response: “Our target is to expand the 80gsm segment by promoting its benefits to the end-user.”
In the 80gsm segment, Double A currently commanded a 50% share, executive vice-president (marketing) Charnvit Jarusombathi said during a press conference with Malaysian journalists at Double A marketing head office in Chachoengsao (just outside Bangkok). His target is to increase that figure to 60% within two years.
Double A accounted for about one-third of AA’s sales in Malaysia last year, which totalled over RM100mil. By the way, the sales were also contributed by Quality Yellow – a 70gsm paper brand.
AA’s resolute focus on the 80gsm category – only a niche market at present with 30% industry share – is in anticipation of a paradigm shift. AA believes 80gsm paper usage will overtake that of 70gsm paper in about five years. This has happened in markets like Singapore, Thailand, Hong Kong and Australia.
“It's not worth risking copy machine/printer jam with low-quality 70gsm paper because the costs of the machine, consumables like ink and spare parts are higher than that of paper,” Jarusombathi said, adding that productivity would also be affected.
AA, which is listed in Thailand, certainly is farsighted. And its bold vision includes banding together the nation’s disparate network of generic copy centres – by recasting them in its image.
The Double A Copy Centre (DACC) programme was introduced two years ago.
Among benefits of being a Double A-branded copy centre are the public’s brand recognition of Double A as well as AA’s support in terms of advertising and promotion, special paper prices, training, and assistance for equipment upgrades.
The programme can be a springboard to a whole new wave of marketing activities, if what’s happening in Thailand is any indication.
But first, AA needs to build a critical mass of DACCs in Malaysia. And judging from Jarusombathi’s growth expectations for the DACC network, the letters AA could have stood for “Ambitious & Aggressive”.
So far AA has signed up 100 franchisees to be DACCs, of which 45 are up and running. Jarusombathi aims to see 500 DACCs operating in Malaysia by the end of next year.
It is a target that requires an average of one DACC be set up every day except Sunday! The DACC network size would equal that of 7-Eleven, which reportedly also targets to have 500 outlets by end-2005.
Actually, a comparison with Pizza Hut might be more practical, because AA’s next step, based on what is already happening in Thailand, is to get DACCs to offer delivery service – albeit office delivery instead of home delivery.
In Thailand, about 1,000 DACCs have been set up since the DACC scheme was launched in late 2001.
A Double A statement said these DACCs controlled 60% of the Thai copy centre business, and the DACC concept had helped move the consumer paper consumption pattern from 70gsm paper to 80gsm paper.
This year, AA’s emphasis is on training copy centre owners rather than expanding the DACC network further. “We want DACCs to have the same service standards,” Jarusombathi said.
The DACC delivery service (currently confined to Bangkok) kicked off about two years ago, the first of its kind in Thailand. Customers order by calling a four-digit number (1759), after which the Double A call centre will select the nearest DACC to service them. Despatch riders deliver the reams of paper within three hours.
There is no immediate plan to introduce the service in Malaysia, but this year, the delivery service is slated for launch in Singapore, Taiwan, South Korea and Hong Kong.
Surisak Thawansakvudhi, one of the DACC operators in Bangkok participating in the 1759 programme, told StarBiz that delivery service now contributed half of his total revenue.
The profits are not as high as those from other activities such as photocopying, but he said: “I accept the lower profit margin because it entails an increase in the customer database and I can expand into other businesses such as laser printing.”
He said since becoming a DACC 1½ years ago, his photocopy centre had nearly doubled its revenue while profit rose by 50%.
“There was a big effect on margin because Double A paper was more expensive, but the bigger volume now offsets that,” he noted.
Thawansakvudhi is also one of the 10 DACC operators who sit on an advisory council representing all DACCs in Thailand.
Through monthly meetings, the council gives feedback to the AA management for setting DACC policies and directions.
AA did not reveal DACCs’ percentage contribution to Double A sales in Thailand. But the company did note that DACCs would contribute about 15% to Double A sales in Malaysia this year.
In its home market, AA has begun to promote the DACCs through ads. Asked whether the same would happen in Malaysia, Jarusombathi replied: “May be next year we’ll advertise the DACCs.”