- by Dan Daley
in The Biz
There’s been much talk in recent years about how the pro audio industry has become commoditized. There’s no doubt that digital technology and offshore manufacturing have combined to make many products more affordable and accessible, and that the additional number of players attracted to this pool has further propelled commoditization by expanding the scale of the overall pro audio market.
But lest you start to equate every bit of audio technology with toasters, the fact is that there are always some categories that, although their scale suggests they are mass-market products, their intrinsic cost/price equation will indicate otherwise. In the larger consumer marketplace, that could describe the automobile industry, which makes large, complex pieces of metal that have to compete with many other large, complex pieces of metal in an environment that holds prices down even as the cost of making each unit creeps up (a.k.a. “margin”). In the world of pro audio, that would also describe audio consoles.
» A Little Marketing
A promotion run by Avid over the past winter caught my eye, a trade-in proposition that offered to take 10 percent off the sticker price off of a VENUE console with the trade-in of any console valued between $5,000 and $15,000 MSRP, and 20 percent off of any console valued over $15,000 MSRP. The promotion ended in March and, according to Lee Stein, Avid’s director of live sound sales in North America, this was timed to coincide with the run-up to the spring/summer touring season. He adds that it’s been successful, as was one that the company ran several years ago when the Icon console line, aimed at the studio market, was still under the Digidesign rubric.
Avid’s not alone in this tactic. DiGiCo has run what it calls a trade-up program for the last year, largely unadvertised, not necessarily linked to the touring season and focused on its SD5 system. Originally limited to customers replacing their old D5 desks with new SD5s, the promotion has since been expanded to any type of console for trade-in, yet applies only to purchases of new SD5 boards. It provides anywhere from a $12,500 to a $25,000 credit, depending on what kind of console is being traded in, says Jack Kelly, president of DiGiCo’s U.S. distributor, Group One Ltd. The program is still in place, although Kelly says it will end at some unspecified point in the future.
Other brands take other routes. Yamaha’s current “Test Drive” promotion that gives a user 72 hours hands-on with a new CL series desk is a tactic that marketing manager Marc Lopez says is used to help launch new models but is also applied just prior to the spring touring season.
» Perks and More
But cash incentives are often used to attract buyers, particularly for customers new to a brand, as opposed to repeat buyers, who can sometimes be lured in with promotions that don’t involve the sales price directly, such as upgrades to existing equipment. In a business climate like this one, where buyers are watching costs and tours are going out slimmed way down — Live Nation’s global attendee count has dropped 10.4 percent since 2008 — price reductions can be highly motivating.
“It’s a way to get customers to make a decision rather than putting it off,” says Stein. “It can move sales forward and at the same time make converts.” Stein says it was a successful tactic both times, helped along by the ongoing industry-wide transition from analog to digital platforms. He compares it to the situation a decade and a half ago when the recording business migrated en masse to digital platforms, most notably Pro Tools, which became Avid’s flagship product when it acquired Digidesign in 2004. This time, he says, the transition is happening even more quickly, and it’s crucial to get buyers’ attention, especially those who will be making their first foray into a digital console.
» Raised Expectations?
Promotions can be very useful. Avid’s Stein says the current VENUE promo has “exceeded our expectations,” though he could not comment on specific sales numbers. However, they can also raise expectations, as any retailer knows. Stein says he doesn’t think that customers have come to expect promotions like this to occur regularly, and that it’s not affecting their purchasing patterns. Group One’s Kelly was more cautious, acknowledging that that was a potential concern. But both say the trade-in concept is consistently more successful than other promotional tactics, such as zero-percent lease deals and rebates. “This is really the most popular thing we’ve tried,” says Stein.
It’s also a way to keep the console sales cycle humming. Taking trade-ins of older models is way of getting them out of circulation, often for good. Avid asks that those taking advantage of the promotion “decommission” their trade-ins and show proof of that, something Stein says customers can be very creative at doing, referring to several Internet videos of consoles being demolished, like “Requiem for a Console” (youtu.be/ WLzlfs7_lfU). They can also donate the boards to charity. Kelly says some of the analog consoles DiGiCo took in were offered to any churches whose sound gear was damaged by Hurricane Sandy in the Northeast. He adds, however, that in this case, there were no takers.
The concept is at the heart of the psychology of selling — people want to feel like they are getting a deal. But like any mind game, it has to be done carefully, and the seller has to remain aware of the dynamic it creates. Last year, JC Penney decided that the idea of the “sale” had become so baked into consumer expectations that they would simply drop their prices all the time and do away with special pricing and promotions. Six months later, they reversed course after the store posted a 20 percent drop in revenue. It turns out that people really do like sales. So no matter what you’re selling, the bottom line is always to make the buyer feel special.