Distribution, Price, Features Advance VTech Phone's Fortunes

BEAVERTON, ORE.— In a price-driven market, it's one thing for a high-end multihandset cordless-phone system to take its place among the five best-selling 2.4GHz cordless phones. It's quite another for it to be joined in the top five by its compatible accessory handset.

According to NPDTechworld, that's what happened during the year ending April 2002, when VTech's VT2431 multihandset phone captured fourth place in retail-level sales of 2.4GHz phones, followed in fifth place by the companion VT2420 handset.

Only one other handset in the top five lineup was a multihandset model: Siemens' AX2400 accessory handset.

All it took was the right distribution, the right features and the best price. The 2431's average selling price was $139, and the accessory handset's average price was $71.

VTech's broad distribution among major national retailers obviously played a role in the success of the two products, which use frequency-hopping digital spread spectrum technology. VTech-brand phones are sold by retailers such as Best Buy, Circuit City, Lowe's, Office Depot, Sears, Staples and Target, among others, whose sales are tracked by NPDTechworld. Wal-Mart, not tracked by NPD, also sold the products during the time period.

The quantity of distribution doesn't tell the whole story, however. Having the right retailers get behind the phone also helped significantly, said product development manager Brad Pittman. "All of our accounts do a good job with POP, especially the office superstores," to explain the multihandset concept, he said. "Best Buy and RadioShack have also done a great job of explaining the advantages in their circulars." Best Buy also aggressively advertised the product, he added.

Still, phone manufacturers can do more to get the idea across to consumers, and one way is to begin offering two handsets in a package, he said. VTech, AT&T and one other brand have already begun to do so, he said.

Another way will be to offer accessory handsets designed for specific rooms, such as kitchens or splash-resistant outdoor handsets. VTech will do so beginning in 2003, Pittman said.

Key brand- and product-specific factors also contributed to the two models' sales performance, Pittman said. One factor is the company's status as a prime manufacturer. VTech is only one of two brands to manufacture all of its own cordless phones, Pittman said. A second factor is the economies of scale that come from manufacturing phones on an OEM basis for other brands, including the AT&T brand that it purchased two years ago. Largely as a result, Pittman said, "We have always been able to offer more features at a lower price than competitors."

Also driving sales was a key feature not previously available in 2.4GHz multihandset systems: a speakerphone in both the base and handset, Pittman said. A good-looking style, small size and user-friendly features — such as a phone directory appearing on the handset's LCD display — also contributed to making the phone a top seller, he said.

VTech supported the 2431 and 2420 with its industry-standard co-op program, and the 2431 was among three models highlighted in VTech's first TV ads, which ran on national cable networks for six months last year through the fourth-quarter selling season. The campaign was part of a branding strategy, so the 15- and 30-second spots lacked dealer tags. VTech didn't have details on how much the campaign contributed to the two phones' success.