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D&M Outlines Global Reorganization Strategy

Mahwah, N.J. – D&M Holdings
has reorganized its global operations to move marketing and product-development
decisions closer to local markets, bring retailers more aggressively into the
product-planning process, and stimulate technology collaboration among its
consumer and professional audio brands and OEM speaker business, chairman and
CEO Jim Caudill said.

Other changes will improve
supply-chain management, bring efficiencies to procurement, and move the
company into new audio-related product categories — including a more
aggressive headphone lineup — while maintaining the premium positions of the
Denon, Marantz and Boston Acoustics brands, he said.

The changes will “re-energize the
company for growth” in its “relatively mature” product categories, said Caudill,
who came to D&M only a year ago from Stanley Black & Decker.

During a presentation to the trade
press at the company’s headquarters here, Caudill said he has also reorganized
the company’s eight business units into three divisions — consumer,
professional and OEM speakers, mainly automotive OEM speakers. Each division now
has its own global president to provide dedicated leadership resources to those
businesses, he said. Previously the eight business units reported to Caudill.

The consumer division president
is Tim Bailey, who took the reins six months ago and whose business experience
also includes time at Stanley Black & Decker. His division includes Denon,
Marantz, Boston Acoustics and McIntosh, while the pro division consists of
D&M Professional, Allen and Heath, and Calrec.

With these and other changes, such
as the appointment of the company’s first global operations senior VP, Caudill
said he is transitioning the company from a holding company of aggregated
brands and business units that operated “almost in silos” to a global operating
company with all brands operating as part of the same team.

Collaboration among brands will
enable the brands to capitalize on their scale with vendors and, in a “big
shift,” improve technical collaboration “to better capitalize” on “some of the
best technology assets” in the audio industry, Caudill said.

The new global operations senior
VP will oversee all three business units to improve supply-chain management,
share best practices and deliver global cost leverage in procurement, Caudill
said. In the past, D&M didn’t have a “disciplined global approach” to
improve fill rates and on-time shipments, he noted.

In moving marketing and product
development closer to geographic regions around the globe, D&M brands will
be able to develop products that are “consumer relevant” and meet local-market
needs, Caudill said. The strategy will also help D&M brands work with local
dealers to develop go-to-market strategies.

“Product planning and marketing
have historically occurred in Japan,” said Caudill, and the company’s regions have
been treated as “sales and distribution arms.”

D&M had “no marketing
infrastructure in North America,” he said, pointing out that as D&M bought
up brands, local marketing infrastructure and product planning withered.

For that reason, the company is
looking to hire a North American VP who will take charge of product planning
and marketing for the Denon and Marantz home audio brands in the region. For
Boston Acoustics, those tasks are handled by recently hired VP/GM Mitch
Nollman, formerly with Bose.

Similar positions have been
established for the company’s Asia-Pacific and European regions.

The company is also looking to
hire a new North American president for its consumer division.

Getting closer to local markets
will give D&M brands “real-time feedback from the market” and enable them
to use that knowledge to “build out adjacent categories,” Caudill said. “Our
brands have earned the right to be broader than just the categories they are in…while
maintaining their premium audio position.”

Besides getting closer to local
markets, D&M will improve “transparency” to “reach out to distribution
partners and collaborate and share ideas on new products,” he said. D&M
will “be much more collaborative in the planning process with [retail] partners.”

He promised “a much higher level
of engagement with our retail partners” as well as improved marketing
communications “to do a better job positioning the brands” and new packaging
that will better communicate product benefits and brand positioning.

The company will also put “a lot
more rigor” in consumer research in a “quantitative or informal way,” Caudill

 In developing plans to enter new product
markets, the company has already identified “growth areas” in its consumer,
professional audio, and OEM speaker businesses “to leverage technologies in
adjacent [product] markets,” Caudill said.

Headphones will be one of the
first categories into which D&M consumer will expand aggressively in North
America, where it currently offers headphones only under the Denon brand.
Digital media management is another potential area to enter, he said.

To facilitate expansion into new
categories, management is letting employees know that “change is OK,”
particularly in thinking about new types of products, he said.

As part of that effort, the
company must retain audio-industry talent but balance that with “individuals
from outside who will bring a fresh way of thinking,” Caudill said. For its new
North American president, for example, Caudill is looking for an industry
veteran with industry insights and knowledge, but the new North American
marketing VP need not be from within the industry because disciplined marketing
processes can be applied to multiple industries, he said.

As the company rolls out its new
strategies, it does not plan big shifts in the distribution channels for the
Denon, Marantz and Boston Acoustics brands, whose products are available
through big-box retailers, the specialty and custom channel, and authorized
Internet retailers, Caudill said

The benefits of the changes will
take a little while to take hold, he admitted. It will take 12 to 18 months to
see the first new products resulting from the new product-development strategy
and 12 or more months for dealers to begin enjoying some of the benefits of supply-chain
management improvements, he said.

In the next 12 months, he added,
the company will announce new product categories, and “headphones will be among

The Bain Capital-owned company,
incorporated in Japan, employs 2,500 people around the world. As a privately held
company, it does not divulge sales statistics.