Toshiba Ushers In Revised Sales-And-Marketing Tactics

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Carlsbad, Calif. -- Toshiba America Consumer Products (TACP) has refocused its sales-and-marketing strategy to enhance service and delivery, while pruning dealers who aren't prepared to make a full commitment to the line, field sales VP Rick Calacci told the press at the firm's recent dealer meeting here.

Following directives from Japan to refocus Toshiba as a marketing leader instead of an industrial power, Calacci issued four key goals TACP will strive to attain in the months and years ahead:

  • · Manage all aspects of the business "more efficiently and effectively in accordance with the customers' needs -- that's the dealer as well as the consumer."
  • · Create a synergy between all product categories in order to build a broad-based awareness of Toshiba as a total digital entertainment/communications company.
  • · Increase the mind share among consumers at the retail level, reinforcing the company's brand credentials and leadership position in digital technology.
  • · Become customer focused, and customer friendly, with both retail partners and consumers.

Calacci said that last April, Toshiba began a new program of distribution management that centered on "dealer and distributor authorization processes."

All dealers, he said, both those on direct distribution or on two-step distributor allocation, are required to have signed authorization agreements with the company to merchandise Toshiba products.

"With this system in place, we are now able to manage the who, the what and the where of our product distribution and sales," he said. "This kind of careful nurturing, and sometimes pruning, is crucial for maintaining a steady, controlled growth."

The bottom-line objective, said Calacci, is to ensure that Toshiba is one of the top three brands carried by every Toshiba dealer in every product category the company offers.

"Like every partnership, it's a two-way street," he said. "From our end, we are committed to fully support everyone who carries a full line of our products with all the tools they need to be successful, from state-of-the-art performance product and innovative promotions."

Toshiba's new "brand-building initiative" includes product training and retail-based incentive programs, Calacci said. "Most important, we are committed to be an on-time supplier in every product that we make." In exchange, authorized retailers will be expected to be "full-line supporters," including cross-category support for all Toshiba products.

"Our products are designed to work together in a consumer's home to provide real lifestyle benefits," the VP said. "This is the way they need to be displayed, and this is the way we expect them to be displayed going forward."

Toshiba will also expect accounts to supply the company with "accurate and timely forecasts" of their product needs. "This way we can ensure timely delivery and production," he explained. Toshiba began the process in 1999 with select accounts and found it to be very successful. The process will now be expanded to the broader range of Toshiba dealers through the back-half of the year.

Financially, the company looks to increase its 1999 high of $1 billion in sales by maintaining market share status in all existing product categories.

Toshiba has successfully carried out the first phase of its e-commerce strategy, said Calacci, which bars the company's distributor network from selling any product that is to go online. Authorized e-commerce partners may not carry any Cinema Series products online and are expected "to meet stringent requirements for quality, brand representation and customer service."

"These guidelines are put in place for one simple reason," he stated. "We believe in e-commerce not e-chaos."

Toshiba announced signed Internet agreements with eight e-commerce dealers: 800.com, Abt, Best Buy, One-Call, Sears, Stereo Advantage, Tweeter and Vans. The company is now about to implement "Phase 2" of its e-commerce strategy, which will limit the expansion of its e-commerce business.

"We will not authorize any additional e-commerce sites to merchandise our products for the balance of the year," Calacci said. "We will selectively continue to support our existing brick & mortar network who wish to expand to the Web. We believe we have already partnered with the best Internet sites that are e-commerce only."

Taking a jab at Sony, which recently announced its SonyStyle e-commerce site, he said, "While other manufacturers have begun to sell products direct through their own e-commerce sites, Toshiba has no intention in the immediate future to compete with our brick & mortar retailers through direct Internet selling."

Toshiba, he said, is in the process of sending cease-and-desist orders to anyone found selling Toshiba-brand products online without being authorized.

To stress the seriousness of his company's objectives, Calacci issued market share forecasts in its product categories through the third and fourth quarters.

  • · In portable color TV 27 inches and below, business is expected to be flat for Toshiba, compared to an industrywide growth of 27 percent for the category. Calacci said Toshiba has a limited presence in the product segment.
  • · In big-screen direct-view color television, Toshiba expects to grow its market share in line with the industry's projected growth of 16 percent, which would increase with the introduction of the company's first FST Pure flat-screen products later this year.
  • · In analog projection TV, Toshiba projects its growth at 35 percent, exceeding the industry's planned growth of 25 percent.
  • · In HD-compatible rear-projection TV, Toshiba "expects to mirror the industry's growth of 400 percent."
  • · In widescreen projection TV, Toshiba expects to triple its sales this year.
  • · In DVD, it expects to see 140 percent sales growth, compared to the projected industry average of 105 percent.
  • · In VCR, the company projects sales growth of 30 percent, compared to the industry's projected growth of 10 percent.
  • · The TV/VCR category will grow by 25 percent for the industry and 125 percent for the Toshiba brand, which Calacci attributed to an expanded lineup and the "strongest feature-to-benefit ratio in the industry."
  • · The cordless phone business will grow 10 percent in dollars for the third and fourth quarters of this year for Toshiba, while the rest of the industry is tracking down 11 percent. Toshiba's new 900MHz product and 2.4GHz product are expected to contribute to this growth.
  • · Also, Toshiba will also aggressively market a new product category that includes an SD-based digital audio player. Citing a Jupiter Communications study, sales of digitally downloaded music files will account for $9 million this year and are expected to reach $1.5 billion by 2005. Calacci said the current Internet music product is the "forerunner to a new line that will one day add 10 percent accountability to our company's overall presence."

Toshiba will remedy the shortfall in its digital television products with the start-up this month of a new production line in its Lebanon, Tenn., production plant. The plant will have the capability of producing and delivering 1.5 million television sets.

Calacci said Toshiba also has a number of promotions scheduled to increase the mind share of the Toshiba brand. He singled out a cross-merchandising promotion with Pepsi in which a Toshiba rebate coupon will be enclosed in 11 million cases of Pepsi Cola.

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