Pioneer's Mass Marketing Mistake
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Spotty-faced 18-year-old resellers are not the right people to sell $12,000 Pioneer plasma TVs, claims one of Australia’s leading marketing experts.

When struggling Japanese consumer electronics company, Pioneer, held a reseller get-together on Monday night to inform its valued partners that it was changing its retail technique and would now be selling its LX product range in 130 retailers including mass merchants such as Harvey Norman, representatives from boutique outlets reeled.

Not only would they lose sales to cheaper businesses with more buying power, but specialty retailers could now face decreased sales of their other high-end Pioneer products due to perceived decreased brand worth, said representatives who attended the event.

Following dramatic losses in plasma revenue over the past year, Pioneer has been forced to restructure its sales pitch numerous times to keep afloat. The latest about-face has already seen the company step on the toes of its most valued specialist retailers — businesses who stand by Pioneer’s high-end products and offer the after sales support, customer service and installation to prove it.

 

Analysing from an outside perspective Pioneer’s controversial announcement, Douglas Nicol, managing partner – direct marketing at TCG and former director of marketing giant George Patterson, told SmartHouse News that Pioneer would do better to set up dedicated, premium sales outlets to move its high-end, full-HD LX plasma.

“The Chanel boutique that we did on Castlereagh Street [in Sydney] works, and people are paying $20,000 for a piece of couture, because the experience is amazing,” he said.

The Chanel boutique operates on an appointment-only basis where customers enter waiting lists to view and purchase specially-designed products, from specially-trained sales and design staff. According to Nicol, Pioneer could still move units of its LX by working to a similar premise – where an increased number of customers will pay a premium for a product where the experience of buying it is pleasurable.

“The experience of buying in this setting can be engaging and pleasurable. High service levels for top-end cars, for example, romance the product,” said Nicol.

“If a spotty 18-year-old is selling it, you miss out on the experience.”

 

Mass Market Mess

Pioneer is in the right position to cash in on its premium reputation in the market, but for stock-moving reasons it has decided to allow almost any reseller with the floor space and merchandising capacity to sell its LX range, potentially sullying its brand name in the process, said industry expert and director of specialty AV retailer, Len Wallis Audio, Len Wallis.

“They are perfectly poised to take advantage of their position – they have a fantastic product. The opportunity is falling in their lap, but they just have to realise this,” said Wallis.

Pioneer’s decision to move its premium line-up into the box-moving market will no doubt lead to the brand selling more units, however the solution could be a short-term one, says Wallis.

“They can still get the figures if they keep out of the gutter. But if they get into the gutter like everyone else, what have they got to stand aside from everyone? Plus it costs them more to manufacture their products,” he said.

 

Nicholas Papas of boutique audio and video retailer and installer, Audio Solutions, says he understands Pioneer’s need to enter the mass market for products at the lower end, but he believes the LX range should be kept exclusive.

“It’s a complicated product. It needs installation and specialist advice. If the big boys get their hands on it, they’ll carve it up,” said Papas.

“The product will lose its exclusivity, its high-end type of appeal. We’d probably recommend that going into the mass market isn’t the best thing for Pioneer to do.”

However according to Papas, while his company is set to lose dollars due to consumers purchasing the LX range at cheaper resellers, he may make some of this back because of the one thing he offers which mass retailers don’t – specialist service. The fact that Audio Solutions makes money finishing mass retailer’s dirty work is telling of the state of the retail climate.

“We have to pick up the pieces for the mass retailers. I get five to 10 calls a week from people wanting me to install the products they purchased elsewhere. They think they’re getting a better deal buying it at a larger reseller but they’re not – mass retailers won’t give you the expertise you need, and customers end up paying us a whole lot of money to install their product, tell them how it works, and take their calls if they have a problem in the future,” he said.