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Aiwa America Outlines Turnaround Plans

Las Vegas – Aiwa America has begun to implement a turnaround program that includes distribution-channel and product-assortment changes, a revamped sales organization, supply-chain management improvements, and a shift in advertising strategy, said newly appointed president /CEO James Palumbo.

Palumbo is among the Sony executives and engineers who took positions with Aiwa America and its parent to return the company to profitability. Sony recently increased its stake in Aiwa to 61 percent from 50.6 percent.

Planned product changes include a greater selection of lifestyle-oriented products that will appeal to high-end catalogs and small and regional AV specialty retailers that the company hasn’t tapped as successfully as it would like. Planned product changes will also strengthen the company’s position in catgeories other than portable products and personal entertainment products such as shelf systems. “We were a personal and portable entertainment company, and we want to become more of a home entertainment company, too,” said Palumbo.

Home entertainment means a greater selection of home theater solutions and a return to TV, which the company exited last year and will reenter this year initially with small LCD TVs. “We were never fully into the TV business, “Palumbo said. “We just had models.”

Aiwa’s product changes, which will move the company into a mid- to high-end position, will begin this year but shift into high gear in 2003, Palumbo said.

In other changes, the company will split its sales organization before April 1 into three parts: one dedicated to selling to distributors, another for national accounts, and a third for larger regional retailers and independents and a fourth for diversified sales and marketing for military accounts, among others. Before, Aiwa had a national accounts team and a separate team for all other accounts. The teams will work closely with customers to forecast sales and execute business plans, he said.

Aiwa will also re-deploy its advertising and promotion dollars to do less national advertising and devote more money to “advertising through retailers’ programs,” including dealer flyers and events, said marketing GM Eileen Toomey. Dealer ads could highlight key Aiwa technologies or products, Palumbo added. “We’ll work with dealers to plan these promotions,” he said.

Planned products that will appeal to the specialty retailers and high-end catalogs include:

The company’s first LCD TVs, including a 15-inch 16:9 model and a 15-inch model with built-in DVD player for personal entertainment in the home.

More lifestyle-oriented home audio products such as stylish minisystems and microsystems and clock radios. Two products, a $99-everday clock radio and a $249-everyday microsystem, will feature an unusual Aiwa-exclusive three-disc changer mechanism consisting of a rotating three-sided pyramid, each side holding a CD.

Aiwa’s first hard-disk audio recorder – which will also feature Internet radio, CD drive, and CD ripping capability – and a transportable hard drive with built-in CD player for ripping music.

To strengthen its position as a home entertainment supplier, the company will expand its selection of home-theater-in-a-box systems from five SKUs to seven or nine. Many of the systems will be solutions other than the traditional receiver/speaker packages and receiver/DVD/speaker packages that Aiwa has offered, said Toomey. They will include a solution consisting of two tower speakers, one incorporating DVD player, surround processor, and amplification for included surround and center-channel speakers. Also planned:

In another differentiation move, Aiwa introduced a three-disc headphone CD player at an expected everyday $129 and a 3-inch MP3-CD headphone portable at an everday $199, including five blank 3-inch CD-R discs.

In other changes:

New distributor agreements effective April 1 will yield “better execution” through the channel, Palumbo said.

An on-line ordering system will go on-line around April 1 to let dealers and distributors order products, check available credit, and track orders.