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Toshiba Reaping Benefits Of Brand Upgrade

Many major CE vendors have a popular new strategy to upgrade their brands. They design cutting-edge digital lineups aimed at retailers that have salespeople who can explain and sell new technology, while mainstream items are sold to mass players. For Toshiba it’s old news.

Toshiba America Consumer Products began to change its product and distribution strategy several years ago. As a prime mover behind DVD’s introduction and by introducing its first HDTVs four years ago, Toshiba has been transformed. The company has moved away from selling a broad line of CE products to just about everyone to repositioning itself as more of a high technology CE brand by segmenting its video lineup for appropriate levels of distribution.

It is a strategy that several other well-known CE brands have embraced. Or as Scott Ramirez, marketing VP of Toshiba America Consumer Electronics, puts it, “It’s interesting to me when I read now that every one of our competitors is reinventing themselves. We started our [distribution] channel policy four years ago and have built on it. Some others are trying to make that switch now.”

If Ramirez seems to have a “been there, done that” attitude about Toshiba’s competition, he’s earned that right. An almost 20-year veteran of the CE industry, Ramirez broke into the business with Panasonic where he was involved in training and sales. He then spent ten years with Hitachi in various marketing and sales roles. He joined Toshiba just when it introduced its HDTV lineup four years ago.

Last month Ramirez sat down with TWICE at Toshiba’s offices here to discuss the development of the Toshiba brand, new technology it is planning to introduce and overall business in general.

Did the digital revolution in consumer electronics become the driving force in changing Toshiba?

For Toshiba this is not a digital revolution, it’s simply a digital evolution. We have always been focused on the highest possible picture quality for our TV products, and were a leader in the introduction of DVD to the U.S. market. In addition, we’ve always had a strong distribution policy, which includes our select distribution Cinema Series line. We look for dealers that are committed to the brand, those dealers who were looking for something new and something better. With our regular Toshiba line and Cinema Series line we now have product for every level of distribution.

Why did Toshiba change its focus and add the Cinema Series line?

We wanted to refocus on the product itself, because when you try to sell everyone, cost and price become the most important factors. Now when you are involved with channel distribution and doing a segmented line you can focus on the best possible product for that distribution level. We think we have the best projection TVs out there. We can make a series of products that has some of the best features available in Cinema Series, providing the newest and best technology in the industry.

Toshiba has stressed its expertise in a variety of video display technologies as the digital TV market grows. Are consumers showing any preferences?

In our view we think the consumer is technologically agnostic. Consumers don’t buy technology, they buy benefits. What are the benefits [in video displays]? There could be a lot of things, such as picture quality, ease of use and with the advent of so many flat-panel displays, form factor has now become a key factor. Or as some say, “Thin is in.” We are involved in several technologies, but we aren’t married to one or the other. We want to offer the best set of benefits. Variety is the key. We don’t think that this is a winner-take-all situation, but being in so many of these areas will give us a great advantage.

Can you discuss which video display technologies Toshiba offers. What formats are you looking at in the flat-panel arena?

In flat panels we are just shipping our first LCD set to get our toes in the water, a 15-inch unit. Next year we will have a significantly expanded lineup. In plasma we have two 42-inch widescreen 720p models and a 50-inch widescreen 720p set. Both are true HD. In plasma we plan to stay in the 720p HD arena.

For smaller screen sizes we have a joint venture with Matsushita for LCD production and we are working on OLED which we think has a lot of promise due to low power consumption. If we can get that, OLED could replace LCD.

And we are looking at other technologies. In a joint venture with Canon, we are working on SED (surface-conduction electron-emitting display). It is a technology that takes the benefits of flat CRT and puts it into a form factor of plasma that is four-inches thick. Manufacturing could begin during 2003 with products available by 2004. We see SED as a big part of our future.

As you can see we have plenty of irons in the fire.

Toshiba also offers chip-based LCoS and DLP video displays. What is the company’s commitment to those formats?

We are about to ship a 57-inch widescreen rear-projection TV, the Toshiba Cinema Series 57HLX82, a LCoS unit that features the world’s first three-1080p chip rear-projection system and a host of other new technology, which will retail for $8,999. It was introduced at CEDIA, and that high-end audience was very impressed with its performance.

We are also proud of our new MT8 720p DLP front projector, which will ship in November. This model uses Texas Instrument’s new HD2 chipset, Faroudja’s new DCDi+ de-interlacer/scalar and a Carl Zeiss all glass color-corrected lens system. It has everything a true videophile would want and provides a terrific 100-inch image.

What role do distributors make in implementing Toshiba’s retail strategy? How important are buying groups?

We want to partner with those distributors who are most committed to the Toshiba brand, and we think the 16 we have now are the right partners for the future. We can’t sell everyone direct. We are looking for dealers who know how to sell quality product, whether they are large or small. Some of those smaller dealers need distributors, so [distributors] make a difference. As for buying groups, we have built strong, long-term partnerships with several that are very important to us. The group structures definitely help us with a broader base of retailers.

Wal-Mart is beginning to build HDTV departments in 1,500 stores. Does Toshiba have any interest in selling HDTV to mass merchants?

We are in the mass merchant distribution area, but not involved with HDTV. Today retailers need to receive the right [HDTV] signal to display the product and [manufacturers] need retailers that have sales floors with educated salespeople. In the future when high-tech products become mainstream products, then we will move into those distribution areas. But for right now HDTV has to be explained. With so many technologies you don’t need more confusion by putting them on the shelf with no explanation.

Toshiba is up against Mitsubishi in a number of specialty accounts. Has Mitsubishi’s expansion into Best Buy resulted in much additional business for the Cinema Series?

We continue to express the benefits of the Cinema Series to independent and regional dealers. Recent events will increase the value of that type of distribution. We have also seen an increase in demand. We have a highly differentiated line, and with Cinema Series we try to offer state-of-the-art, which provides an opportunity for those retailers with selling floors.

How have executive changes in sales and marketing during the past several months affected the company’s effectiveness in the marketplace?

Over the past year there were changes in our sales management team, which has been reorganized and refocused. This hasn’t had any [negative] effect on the brand. In fact the effect has been positive. Our sales and marketing teams are interacting better, giving us one team with a single goal, a single message. It has freshened up our organization.