Q&A: Keeping Up With The Klipsch Group

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T. Paul Jacobs

Klipsch Group says it’s changing with the times.

In 2014-2015, the Voxx-owned speaker company moved around personnel, created multiple newexecutive positions, and combined the leadership of its home speaker business and its commercial and cinema businesses under one VP/general manager.

At CES, the 70-year-old supplier of the Klipsch, Jamo and Energy brands embarked on its biggest product launch ever as part of an effort to reposition itself as a technology leader without turning away from its heritage in offering high-performance high-efficiency speakers with flat response and wide dynamic range, said Klipsch Group CEO Paul Jacobs. The new products represented a major push into soundbars, wireless multiroom audio, Bluetooth speakers, and active monitor speakers.

Jacobs has been with Klipsch for more than 20 years and has more than 30 years of experience in retail, manufacturing, sales and management. The company was purchased by VOXX International in March 2011.

TWICE asked Jacobs to explain what Klipsch Group hopes to achieve with all the changes. Here’s what he had to say in an email exchange:

TWICE:With all the personnel shifts and new hires in 2014-2015, what is Klipsch Group trying to accomplish?

Jacobs: Our objective over the past year was to put a structure in place that allows us to build a sustainable, scalable company in a market that is radically different than it was just a few years ago. We wanted to focus on our core competencies and add talent that would complement what already existed internally, while adding new insights and pushing the company in a new direction.

The purpose of this change was not to leave any areas of the business that we are in but to position the organization to be successful for at least another 70 years.

We created the VP/GM of digital, streaming and portable audio solutions and VP/GM component-audio positions to simplify, streamline and guide multiple disciplines and resources within the company, like program management, product development and channel marketing.

This approach aligns with the four tenets of our business, which are focus, transparency, simplify and execution.

We elevated and empowered existing employees with strong skill sets and also brought people from outside with experience to lead us in a new direction, particularly in the fashion and premium goods world that we have not been in before.

TWICE:At CES, you launched an expanded selection of soundbars and Bluetooth speakers, your first soundbars with HDMI inputs, your first wireless multiroom speakers, your first active speaker pairs (which feature digital and USB-computer inputs), and the first Jamo-brand Bluetooth speakers. What does this say about how you were positioned before and where you want to go?

Jacobs: Our commitment to component audio has never been greater. Our box line has never been tighter. The Klipsch and Jamo expansion in the custom-integration space and the component systems that we are launching now and in the coming year have never been stronger.

We have not changed our philosophy on our core competency in component audio. Our core competency is building great speaker systems, regardless of the form factor, what the source is, or where the power comes from.

Our mission over the past 70 years has remained the same, going back to Paul Klipsch. He built the Klipschorn and then the Heresy, which was a change in form factor and application, to reach a larger audience while delivering the Klipsch experience.

Soundbars are nothing more than reshaping a 5.1 component system. When small 5.1 component-speaker systems were in the market, televisions were way more than 1-inch thick and did not hang on walls. Soundbars are a simple home audio solution for consumers that remove the confusion and complication of building their own small component system.

We have not positioned ourselves differently. We are positioning ourselves around market demands, how people buy, where they purchase products and how they use them.

PAST INITIATIVES

TWICE:You previously diversified from passive component speakers to tabletop wireless speakers in 2013 with AirPlay, Wi-Fi, DLNA, and Bluetooth; to soundbars in 2012 under the Klipsch brand (with the Jamo brand preceding that in 2011); Bluetooth-only speakers in 2013, and headphones in 2013.

Jacobs: This is about evolution and maintaining relevance in a rapidly changing market, which is being driven by consumer demand and technology. Klipsch is the only market-leading audio company to present a complete loudspeaker portfolio with strength in passive box, custom installation, and wireless speakers with high-resolution, high performance audio in our Reference Premiere HD Wireless system. High performance is a critical factor for every Klipsch product.

We have some very unique Bluetooth products that are a throwback to our Heritage series’ style and design, using premium materials that offer portability and affordability.

Combining PlayFi capabilities with our Reference Premiere HD Wireless speakers allows consumers to create entire ecosystems within their homes.

Our Heritage Bluetooth speakers create a true wireless, PlayFi, and high-resolution audio ecosystem from Klipsch. There is no other audio company in the industry doing anything like this today.

We are onto something extremely interesting in headphones. The new form factors that we will deliver in neckband-based, Bluetooth in-ear monitors do not exist in the industry today. More important, we have changed our approach in headphones. We have gone from offering a limited number of high-performance in-ear and on-ear products to being a true, complete brand that offers end-to-end solutions to fill key price points and deliver great sound. Klipsch brings brand cache and incredibly unique products that do not exist in the market today.

All in all, most everything is new, whether in materials, form factor, use case, or our approach to the market, as in the case with headphones.

RETAIL CHANGES

TWICE:What other changes do you plan to make to your product selection?

Jacobs: We don’t see a radical change in what we are doing but instead a continual evolution. It’s a matter of evolving form factors, finding material usage, looking at how technology is evolving and, most important, looking at how people use and want to use products.

The biggest change in approach to product and the retail marketplace is consumer-driven. We will continue spending time researching consumer trends and needs to ensure we are delivering the right product mix at the right time.

As for retail, what’s going to happen to online and in brick and mortar? Are people going to make changes to where they buy? Who would’ve thought years ago that Urban Outfitters would be the number-one reseller of vinyl records today?

We’re going to continue to keep up with what consumers want because they are the reason we’re building products in the first place.

GO-TO-MARKET STRATEGIES

TWICE:What has your go-to-market strategy been, and what if anything is changing?

Jacobs: Our position has always been legendary high-performance sound. What we are evolving to is legendary high-performance sound and technology. We believe that the application of technology, material choices and form factor allow us to reach different types of consumers and look at different kinds of retail stores.

I referenced Urban Outfitters earlier. I don’t know that record companies were looking at Urban Outfitters 10 years ago as a great source of distribution. You should never turn away from how people shop and where they want to buy. With the products that we are building, we are looking into where people interested in these types of product want to buy them. In many cases, it will be our traditional consumer electronics partners, whether online or brick and mortar. But in many cases, it may be more fashion- and lifestyle-driven. We don’t see radical, transformative change. We see more opportunities for our premium products to be sold in unique places, exposing the Klipsch brand to a much larger group of people.

TWICE: In recent years, Klipsch Group has sponsored live-music venues, sponsored live-music events, and appointed sports figures as brand ambassadors? What is the future of these programs?

Jacobs: Klipsch will continue to maintain a strong position in live music, anchored in the Rock and Roll Hall of Fame + Museum in Cleveland and its related events: The Rock and Roll Hall of Fame Induction Ceremony and Music Masters. Klipsch will also continue its Emerging Artist program.

TWICE:Industrywide, how has the passive component-speaker market fared in recent years, and what is the outlook for 2016 and beyond? What’s your take on the industrywide outlook for soundbars, headphones, and wireless multiroom-audio speakers?

Jacobs: A misconception is that the passive box-speaker business is declining when, in fact, a lot of it has moved to custom installers. We’ve seen a decline in traditional passive box speakers sold through traditional brick-and-mortar retail. We’ve seen an increase in people spending fairly significant sums of money with premium online retailers, people buying high-performance, high-end systems as part of their custom-installation package. A big driver in the component loudspeaker business was 5.1 systems, which have been replaced by soundbars.

The secret formula for the industry moving forward is to stop taking all of the performance, premium materials and pricing down to the lowest common denominator and assuming that someone buying a 60-inch flat-panel television is not willing to pay more than $300 for great sound. Oftentimes customers aren’t given an option beyond this. There is a tremendous growth opportunity in offering high-quality products made with premium materials that deliver powerful experiences sold in places where people want to buy them.

This question ties nicely to the first question in this interview. We restructured the company to drive and maximize business. Instead of being focused on what’s happening in passive box speakers, we are looking at what consumers want and where they want to buy. We are creating the same powerful, premium audio experience and maintaining the legendary Klipsch image that has served us well for the past 70 years.

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