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Pioneer Outlines Strategies For Its Post-Plasma Era

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 post-plasma, 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 lines online, and others are in or will be in retailers they’ve never been in before.”

Pioneer 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.