Examples of Manufacturing Businesses
Today, it's arguably the biggest multiroom audio brand in the business. Second to none. It's an example of a manufacturer developing a down-market product that offers a low-point of entry that adapted to the new trends of ...
Examples of Manufacturing Businesses
AudioAutomation & ControlCCTV/CamerasCentral VacuumCE Pro 100Distributed AudioDistributorsEquipment RacksHDMI CornerLightingPower Protection/Mgmt.
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Citing revenue losses up to 55% in the industry, he says compelling product and marketing strength have replaced old integrator tenets of fat margin, reliable product and limited distribution.
Saying it’s a "completely different ballgame" for the entire industry, Elan president Paul Starkey says traditional principles that “built the industry” (fat margin, limited distribution, reliable product) have been “sacrificed” by dealers, replaced by the need for compelling product and consumer leads from manufacturers.
He even praises competitors Sonos, Control4 and SnapAV for their market approaches, and mentions that smaller manufacturers are bound to struggle.
In a conversation with CE Pro, Starkey comments on a wide range of massive changes taking place in the industry that led to Nortek restructuring the AVC Group into the larger CORE Brands group.
Changing Integrator Principles: Because of the down market, integrators really want more compelling products that drive more customers to them. The more successful brands have done that. They have created new pie when the existing pie was shrinking either through lower price points or product innovation that opened up more customers to integrators.
Five years ago, the three things dealers wanted most were limited distribution, fat margin and reliable product. Now, dealers have moved away from those two principles, instead saying they need more compelling product and more customers. For us to compete, we had to change the alignment of our brands. We had to get out of the dollar for dollar investment that we are making in R&D and marketing to address the problem. That is the core genesis why we believe that the brands being more narrowly focused than they have been in the past can be more effective.
Sonos, Control4, SnapAV: One of surprising brands during the downturn was Sonos. Eight years ago most of the manufacturers thought Sonos was kind of an interesting toy that wouldn’t really be adapted to our space. Today, it’s arguably the biggest multiroom audio brand in the business. Second to none. It’s an example of a manufacturer developing a down-market product that offers a low-point of entry that adapted to the new trends of streaming audio, control through smart phones and tablets, and wireless audio. All in all, it’s made a big impact on the custom installation space.
Control4 has done a good job in terms of introducing turnkey integration to more customers who could never have afforded a system from 2002 to 2007. Those kinds of price points were not available. Also, I think what we are seeing with SnapAV with lower-priced products in many cases is opening up more jobs for dealers.
These three companies with compelling products have not only grown their own market share, but also grown the market in general for certain clients. This has happened while a lot of the traditional brands in the market - ours and others - have seen anywhere from 40 percent to 55 percent declines in their top-line sales.
End of Limited Distribution: With an expanding market, the whole limited nature of an exclusive dealer channel goes away. There is no limited distribution of Sonos. There is none for Control4; their leadership has said from day one that they will sell to anyone in any way they can. It’s fascinating that some of the tenets the industry held on to five or six years ago have really been tested or sacrificed when there is a compelling product, and customers can be driven back to the dealer via lead generation and marketing. It’s a wake-up call for the manufacturers.
The formula that we used to build this industry prior to 2007 is now a completely different ballgame. This is one of the adaptive missions that the CORE Brands have to have. It has to become easier for dealers to find and service customers. It’s interesting that the industry has moved to more of a marketing focus than just a pure product focus.
Small Manufacturers vs. Big: People ask me if I think the small companies in the custom channel will win out in the end. If you look at where people spend their money, they spend their money with the large companies like Lutron, Creston, Sonos, Control4, and the CORE Brands. At the end of the day, dealers will gravitate to manufacturers who are devoting the proper amount of resources to the market. In today’s economy, the opportunity for $2 million to $3 million manufacturing companies to survive is much more difficult than it was in the past.
Jason has covered low-voltage electronics as an editor since 1990. He joined EH Publishing in 2000, and before that served as publisher and editor of Security Sales, a leading magazine for the security industry. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He is currently a member of the CEDIA Education Action Team for Electronic Systems Business. Jason graduated from the University of Southern California.
I remember when CEDIA’s 2nd trade show was at the Lowe’s Annatole in Dallas. 55 exhibitor’s and I think 7,000 sq ft of floor space. A very knowledgeable and well respected account of mine when I was in the rep business commented, (DD of ESC, Basalt, CO) “These guys don’t get it! Everyone at this show is asking for more, less expensive boxes. We don’t make any revenue on less expensive, we want more expensive boxes that are client’s can,t live without!”
Hulu for Windows 8: A Reason to Dump my iPad Working with Designers Requires a Whole New Attitude from CE Pros Does the Industry Face a Looming Technician Labor Shortage? The Big Drawback of Boxee TV Cloud-Based DVR Silvercar Audi Rentals: Now That’
Citing revenue losses up to 55% in the industry, he says compelling product and marketing strength have replaced old integrator tenets of fat margin, reliable product and limited distribution.
Saying it’s a "completely different ballgame" for the entire industry, Elan president Paul Starkey says traditional principles that “built the industry” (fat margin, limited distribution, reliable product) have been “sacrificed” by dealers, replaced by the need for compelling product and consumer leads from manufacturers.
He even praises competitors Sonos, Control4 and SnapAV for their market approaches, and mentions that smaller manufacturers are bound to struggle.
In a conversation with CE Pro, Starkey comments on a wide range of massive changes taking place in the industry that led to Nortek restructuring the AVC Group into the larger CORE Brands group.
Changing Integrator Principles: Because of the down market, integrators really want more compelling products that drive more customers to them. The more successful brands have done that. They have created new pie when the existing pie was shrinking either through lower price points or product innovation that opened up more customers to integrators.
Five years ago, the three things dealers wanted most were limited distribution, fat margin and reliable product. Now, dealers have moved away from those two principles, instead saying they need more compelling product and more customers. For us to compete, we had to change the alignment of our brands. We had to get out of the dollar for dollar investment that we are making in R&D and marketing to address the problem. That is the core genesis why we believe that the brands being more narrowly focused than they have been in the past can be more effective.
Sonos, Control4, SnapAV: One of surprising brands during the downturn was Sonos. Eight years ago most of the manufacturers thought Sonos was kind of an interesting toy that wouldn’t really be adapted to our space. Today, it’s arguably the biggest multiroom audio brand in the business. Second to none. It’s an example of a manufacturer developing a down-market product that offers a low-point of entry that adapted to the new trends of streaming audio, control through smart phones and tablets, and wireless audio. All in all, it’s made a big impact on the custom installation space.
Control4 has done a good job in terms of introducing turnkey integration to more customers who could never have afforded a system from 2002 to 2007. Those kinds of price points were not available. Also, I think what we are seeing with SnapAV with lower-priced products in many cases is opening up more jobs for dealers.
These three companies with compelling products have not only grown their own market share, but also grown the market in general for certain clients. This has happened while a lot of the traditional brands in the market - ours and others - have seen anywhere from 40 percent to 55 percent declines in their top-line sales.
End of Limited Distribution: With an expanding market, the whole limited nature of an exclusive dealer channel goes away. There is no limited distribution of Sonos. There is none for Control4; their leadership has said from day one that they will sell to anyone in any way they can. It’s fascinating that some of the tenets the industry held on to five or six years ago have really been tested or sacrificed when there is a compelling product, and customers can be driven back to the dealer via lead generation and marketing. It’s a wake-up call for the manufacturers.
The formula that we used to build this industry prior to 2007 is now a completely different ballgame. This is one of the adaptive missions that the CORE Brands have to have. It has to become easier for dealers to find and service customers. It’s interesting that the industry has moved to more of a marketing focus than just a pure product focus.
Small Manufacturers vs. Big: People ask me if I think the small companies in the custom channel will win out in the end. If you look at where people spend their money, they spend their money with the large companies like Lutron, Creston, Sonos, Control4, and the CORE Brands. At the end of the day, dealers will gravitate to manufacturers who are devoting the proper amount of resources to the market. In today’s economy, the opportunity for $2 million to $3 million manufacturing companies to survive is much more difficult than it was in the past.
Jason has covered low-voltage electronics as an editor since 1990. He joined EH Publishing in 2000, and before that served as publisher and editor of Security Sales, a leading magazine for the security industry. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He is currently a member of the CEDIA Education Action Team for Electronic Systems Business. Jason graduated from the University of Southern California.
I remember when CEDIA’s 2nd trade show was at the Lowe’s Annatole in Dallas. 55 exhibitor’s and I think 7,000 sq ft of floor space. A very knowledgeable and well respected account of mine when I was in the rep business commented, (DD of ESC, Basalt, CO) “These guys don’t get it! Everyone at this show is asking for more, less expensive boxes. We don’t make any revenue on less expensive, we want more expensive boxes that are client’s can,t live without!”
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