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Pioneer Outlines Strategies For Its Post-Plasma Era

8/17/2009 09:22:09 AM Eastern

Long Beach, Calif. - Pioneer
Electronics
will promote three core messages to consumers and the trade to
define its post-plasma position in the home electronics market, said Russ
Johnston, executive VP of the home entertainment business group.

The company will stress its A/V specialty roots, define its
mission as bringing the creative vision of music and movie professionals into
the home, and market itself as a "balanced" home-A/V company with the
engineering skills to develop its own high-performance home speakers, audio
electronics and Blu-ray Disc players, Johnston
explained.

The messages underscore the company's continued commitment to a core philosophy "focused on engineering excellence
and a maniacal commitment to create the best possible home-theater experiences," he said.

"For two years, plasma was at the center of the Pioneer brand's
repositioning in the home entertainment market," Johnston said. As part of that repositioning,
the company dropped lower-end A/V products and re-evaluated some distribution
channels, including mass merchants and warehouse clubs, he explained.

The Kuro brand was at the center of Pioneer's efforts to "break
away from a commodity stance to get more respect for the prices our products
stood for," Johnston
said. The company's brand message, he pointed out, was "Seeing and hearing like
never before."

Now, following an announced restructuring
that will take Pioneer out of the plasma display market in March 2010, the
company must survive in the home entertainment market without the halo effect
of the premium plasma sub-brand, Kuro. With plasma fading from the Pioneer
portfolio, Johnston
said the company asked itself, "Who are we without plasma?"

To get an answer, Pioneer in March began benchmarking the
competition's products, marketing, brand message, Web marketing and
distribution practices "to understand the A/V business outside the display
business at a higher level," said Johnston, who recently assumed sales
responsibility to go with his continuing marketing and product planning
responsibilities. As part of the benchmarking process, the company also set out
to understand Pioneer's current audio/video position by examining current
market conditions and soliciting the views of dealers and buying groups. Responses
were "across the board," Johnston
recalled.

From the benchmarking process, Pioneer North America developed a
three-pronged strategy "to solidify our core audio/video business," Johnston said.

First, Pioneer will strengthen its efforts to "remind" consumers
and the trade that Pioneer is an A/V specialist. The company benchmarked its
products and found that "our products stood on their own and stood out as
leadership products," Johnston
said. Those products include A/V receivers (AVRs), DVD and Blu-ray Disc players,
and speakers. The company must remind the industry of Pioneer's leadership in
these businesses because "internally and externally, a lot the focus was on our
display technology but didn't follow our core business in DVD and Blu-ray Disc
players, AVRs and speakers," Johnston
said.

Second, Pioneer will promote its "shared vision with creative
professionals" and its mission to bring the passion and emotion of musicians,
music producers, post-production houses, movie producers and other creative
types into the home.

To that end, Pioneer will promote its more-than-10-year
relationships with London's
Air Studios recording studio and with THX. "We've learned about their craft
[from Air Studios] and continue to work with them, and we have co-developed
products with them, including AVRs, disc players and speakers, all certified by
Air Studios. We've had these products for many years but didn't spend a lot of
time marketing the value of the relationships."

Likewise, Pioneer will more aggressively promote its relationship
with THX, whose mission is to certify the performance of audio and video
products "that bring the cinema experience into the home," he said.

Pioneer will promote its shared vision on its consumer Web site
and in its online dealer training program before the CEDIA Expo opens.
Pioneer's CEDIA exhibit will also promote that vision. Shortly after CEDIA, the
company will offer similarly themed in-store demo material.

For its third message, Pioneer will stress its "balance" in the
home-A/V domain, Johnston
said. Some brands are TV focused, he explained, while others are focused on
speakers and have little in the way of audio electronics. The brands that
concentrate on AVRs generally lack Pioneer's resources to develop optical
technologies, he added. "In DVD, we were part of the original group developing
the format" and was a key participant in developing the Blu-ray format, he
said.

Pioneer, he noted, was the first company to offer Dolby Surround
and Dolby Digital receivers and THX-certified receivers, and it is the only
supplier with THX-certified Class D amplifiers in its receivers. Pioneer is
also the only company to offer AVRs with Works With iPhone certification. These
models control USB-connected iPhones without the use of a separate dock.

To promote its messages, Pioneer will highlight its position in
ads on enthusiast sites and in "limited print ads," mainly in enthusiast
magazines, Johnston
said. But "the core of our marketing efforts will be to work directly with
dealers this year" in "more of a pull rather than push" strategy, he said.

Whether the Kuro name will be resurrected as part of the brand
message isn't certain. "We are
studying the best usage of the Kuro brand for the future," Johnston
said. "Pioneer has already injected the Kuro
DNA into other categories because it has come to mean more than just the best
display in the industry."

Although sales will decline as the company exits the plasma
market, Pioneer has no plans to open up distribution to compensate, Johnston said. "The
current economy put a lot of pressure on companies, especially AVR companies,
and our peer AVR companies have changed the way they go to market. They put
custom-installation lines online, and others are in or will be in retailers
they've never been in before."

Pioneer, on the other hand, has developed a fiscal plan "that
fully considers the business without plasma," so "we will not strive to chase a
number in our midterm plan," Johnston
said. Pioneer Elite, for example, "will remain a non-Internet brand," he said.

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