In the next 5 years 100 CE brands will die
We don’t know exactly which brands will die but we do know that the traditional segments of the CE business (component audio, video, custom installation) are shrinking and are not likely to get better. If you are not working to actively engage with consumers the chances are good that your company will die. If you think that the answer to your sales slump is better products, you are deluding yourself. If you think that the business strategies that served you 20 years ago will serve you into the future, you are doomed.
How do we know that 100 CE brands will die in the coming five years? ... History.
Dig out a copy if an Audio magazine annual equipment directory from 20 years ago and note the huge number of brands that are now defunct or are shadows of their former selves. Here are some examples right off the tops of our heads:
Advent, KLH, EPI, Genesis, SoundCrafters, Zenith, RCA, Adcom, Proton, Empire, Magnavox, Colorado V Net, Polaroid, Kodak, Atari, Dynaco, Fisher, Recoton, Dahlquist, and hundreds of start-ups that faded away after a couple of years.
The next five years will see an even greater CE brand death rate than we’ve seen in the past due to profound changes in consumer behavior and distribution channels. Personal/portable audio is hot. Component home audio is not. Headphones are “in,” speakers are “out.” Wireless audio is growing. Wired custom installations have shrunk. Internet retail is thriving. Bricks and mortar specialist A/V retailers are all but extinct in most markets. Tablet sales are strong. TV sales are weak and will stay weak for the foreseeable future.
TV is an especially troubling scenario as TV purchases are a major driver of audio sales. There is no new video technology on the horizon that will drive accelerated TV purchasing by the masses. Ultra-high Definition you say? That will turn out to be the video equivalent to SACD – relevant only to a tiny minority of consumers and under-supported by content providers.
All of these trends and others have conspired to put most CE brands under extreme pressure. If your company is an older brand, especially one focused on the audio segment, the odds are good your sales are significantly lower then they were several years ago. If you’re very lucky (and good) you’re sales are flat. Some of you will survive, many will not.
If your company is new, selling new "hot" CE categories, you should not rest easy either. New companies in new segments face different but equally dangerous challenges. "Hot" product categories attract lots of competition. How many headphone, dock and wireless speaker competitors are out there? Way too many. There will be consolidation. New-ish companies typically suffer from under-capitalization and inexperienced staff. Some of these small new companies will survive, many will not.
Which brands will die? We could make educated guesses and name names but that kind of thing tends to tick people off. What we can do is name the behaviors that may lead to death or irrelevance in the coming years.
Resistant to change
Past success reinforces behaviors that brought success. But as the environment changes your methods and policies must change and adapt. The companies who continue to act in certain ways because “that’s the way we’ve always done it” will not survive. Question everything you’re doing and embrace change. Constantly.
Rely exclusively on product
Companies headed by engineers are especially prone to this behavior. “If we make the Presto-Changeo 1000 sound 1% better than our competitor’s (insert product type here), we will sell more.” We are all in favor of making great performing products. Striving for excellence is always good. But when “more air in the midrange” is the exclusive strategy and gets in the way of a more holistic business plan, you risk ultimate failure.
You are wasting half of your marketing money and effort – guaranteed. Do you know which half? How would you know? If you don’t have even rudimentary measurement systems in place the waste will continue and that isn’t going to help your odds of survival.
Don’t know what their customers think or how they act
In order to market effectively and design the right products you need to know who your customers really are, what they think and what’s important to them. Many companies claim to “know” their customers but the knowledge is anecdotal, out of date and not collected and studied in a systematic way. Act solely on your instincts and anecdotes from your sales staff and retailers and you run a huge risk of getting it all wrong. Taking the time to survey and have conversations with your customers will pay off in more saleable products, better targeted marketing and ultimately, higher profits. Customer research can be done more economically than you might imagine.
Don’t engage with customers
For decades CE brands didn’t have to worry too much about having a direct relationship with consumers. That’s what retailers are for. We don’t have to point out how things have changed in that department do we? Brands need to take total responsibility for engaging consumers in conversation and keeping them interested in the brand and even the category! There are a lot of consumer goods and brands competing for your customers’ attention and wallets. If you are not communicating with them in an entertaining way, the marketplace will punish you.
Lost faith in marketing
We have heard from some brand managers that magazine ads and reviews just don’t seem to make the phone ring anymore. Their conclusion is that marketing no longer works. Those particular methods may not work as well as they used to but that doesn’t mean that all marketing doesn’t work. The world has changed; your marketing has to change with it. Before we get angry calls from ad salespeople, let us point out that print advertising can still be an effective marketing tool if it’s well-executed and part of a larger plan.
There are certainly other factors that contribute to brand death including financial weakness and mismanagement of all sorts. But we're in the marketing business and these are the issues that we are most qualified to address.
Is there hope?
Yes and no. If you think your business will get better once the US economy turns around, think again. By the time that happens (we have faith it will), your brand may be so weakened that you won’t be able to take advantage. The competition will be fiercer than ever, with new aggressive brands coming into the market. You can’t wait for the tide to rise to lift your boat.
The hope comes from knowing that there are ways to stand out from your competition and grow your business. Educate yourself in the new marketing methods. Use the power of the Internet to learn about consumer engagement, marketing metrics, effective web site design, ecommerce and the other topics we’ve touched on here. Do some soul searching. Embrace change.
At very least subscribe to our blog posts which will plumb the knowledge of two successful (and humble) CE brand marketers. Better yet, contact us to discuss the challenges and techniques of marketing CE products in the 21st century.