Misplaced Audio Priorities?

Retailers’ audio promotion priorities are MP3 players, home theater in a box (HTiB) systems, A/V receivers and MP3-docking speaker systems, in that order, based on the frequency with which they place the products in their run-of-press newspaper ads and newspaper circulars. That’s based on an analysis of IFR Monitoring data supplied to TWICE (see table below).

 Based on the sales volume of those categories, however, retailers’ audio promotion priorities might be misplaced. Here’s why:

IFR tracks advertised pricing, promotion and product placements by more than 2,000 retailers in the U.S. and Canada.

During the 12 months ending Sept. 2008, IFR found MP3 players to be retailers’ most-advertised audio category, exceeding the next most advertised category — HTiB systems — by a ratio of about 3:2. That’s logical. Factory-level sales of MP3 players will hit about $6 billion in 2008, up from only $424 million in 2003, whereas HTiB sales will hit only about $940 million, according to CEA’s mid-year forecasts. Retailers are logically spending more to advertise a larger, high-growth category that will generate more traffic.

Using the same criteria, you’d think retailers would be advertising MP3-docking speaker systems more aggressively than they have been, but they’re not. MP3 docking speaker systems were advertised only 43 percent as often as HTiBs, IFR found, yet the docking-speaker market is larger than the HTiB market ($1.1 billion vs. $940 million at the factory level, based on CEA’s forecasts for 2008.) Retailers are certainly getting a lot for their advertising buck when they advertise docking speaker systems, but how many more speaker docks could they sell if they advertised the high-demand products more aggressively.

What are your thoughts?

Retailers’ Audio Promotion Priorities