Fasulo: Sony’s Strategies Are Working

Sony U.S. generated record profits for November
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Sony U.S. generated record profits for November
Sony Electronics President Mike Fasulo (left) and Toshi Okuda present one of the company’s 4K Ultra HD TVs that is helping win share of the high-ticket LED LCD TV segment.

San Francisco — Despite employing a new go-to-market strategy that eschews price-slashing promotions, Sony Electronics U.S. managed to generate record profits for the month of November, including the Black Friday period.

That was the declaration of Sony Electronics U.S. president Mike Fasulo at a roundtable press conference  here Tuesday.

Instead of stressing price, Sony has implemented a new strategy designed around the customer experience to win the point of sale for key categories, including TV (particularly 4K Ultra HD), high-performance audio (including high-end soundbars and Hi-Res audio), digital imaging (particularly mirrorless and action cams), and mobile electronics, he added.

“Because we are in a conversion model right now — I’ve been very clear that this is a turnaround, and it is turning around very nicely and very quickly, which is good,” said Fasulo.

He called the Black Friday strategies employed by some manufacturers, who slashed prices on Ultra HD TVs well under $1,000 this early in the game, “irresponsible.”

He said such actions were likely the result of manufacturers with misguided inventory problems.

He added that Sony is doing very well with its year-end inventory position on TVs, and that Sony Electronics U.S. operations will show a profit at the end of the year on a consolidated basis.

Concerning industry efforts to market Ultra HD TV, Fasulo said, “We can’t forget that this is market creation, and consumers are still confused. The more demonstration and more explanation we can do, the better [it will be] for everybody. Then, you can charge after market share. There’s a crossroad, a shift, where we should all be working as an industry to get excitement about what this new technology is all about.”

Fasulo said that over the span of his first year since taking his unit’s top job, Sony has successfully started to implement its “Gemba” strategy for bringing the excitement surrounding Sony’s new products and technologies to areas where consumers can engage with the technology and the brand.

This year Sony took dollars out of its advertising budget and directed them on “experience selling” at retail, Fasulo said, adding that the goal is “conversion” of customers.

“It’s about selling through products as opposed to load ‘em and leave ‘em. Those days are over,” Fasulo explained.

 Despite recent downwardly revised sales estimates for the corporation, Fasulo said Sony Electronics in the United States has been making significant progress developing and growing businesses around the key categories on which it has decided to focus.

Fasulo said since revising its strategy last year, Sony has taken a different approach than most consumer electronics manufacturers by not focusing on overall market share from a SKU sales perspective, as it winnowed down the company’s product mix to focus on those models that can generate the best value performance for the customer and the highest profit margins for Sony and its dealer partners.

Fasulo said Sony cut its assortment of 2,000 SKUs down to just over 800 in 2014. He said Sony plans to shrink that further over the next six months.

While other CE manufacturers are scaling back distribution and dealers to focus only on the top few national chains that rely on price and volume to compete, Sony is concentrating on better goods that deliver higher value and greater overall customer satisfaction.

In addition to boosting the bottom line, Sony hopes the effort will help restore its lost brand cache from years ago.

Fasulo acknowledged that Sony has reduced the number of accounts that it serves on a direct basis to 50 and “will refine that further next year to 20 retailers across the nation,” he said.

Sony takes a hands-on approach to those accounts it handles with direct sales, sending Sony teams into stores to provide sales and merchandising assistance.

“This has proven to be very positive and very successful, and the retailers like it too, because they get instant access to information,” he said.

Fasulo said that Sony’s managed branded home entertainment department in 353 select Best Buy stores this year “is doing phenomenally well,” chalking up an average of three times the sales volume prior to the department installation. Sony trains Best Buy sales associates, who are dedicated to the Sony department, Fasulo said.

For those accounts it no longer handles directly, Sony has arranged with a third-party company to take on the “back-office” logistics. He added that Sony remains committed to specialty retail to help drive the Sony message, and hopes it doesn't end up the only one left doing so.

 “Our job is to get Sony Electronics in the United States back to a sustainable, profitable entity for the corporation, and we are going to do that by providing the best customer experience,” Fasulo said.

Where Sony has not changed is in “those premium areas that Sony stands for.”

For its focus categories, Fasulo said Sony’s strategy “is working.”

He said one of Sony’s goals at the start of the year was to sell a 4K Ultra HDTV at a $1,500 price point, and Sony’s biggest seller at Black Friday was a $1,499 model. Sony remains a market share leader in high-end 4K Ultra HDTV products, he said.

In audio, Fasulo said Sony has excelled in sales of high-end soundbars, with its top-end $1,299 SKU representing the company’s largest seller.

In imaging, Sony has been successful in getting U.S. consumers to switch from full-sized DSLRs to mirrorless interchangeable-lens cameras, Fasulo said. Sony’s Toshi Okuda cited the A6000 and A7 cameras as popular models this year.

Okuda said that while Sony’s camera market share is running only a little over 10 percentage points, the company has gained significant momentum in sales of mirrorless models, which bodes well for future growth.


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