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Thread: Your audio industry - challenges and opportunities ...

  1. #1
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    Red face Your audio industry - challenges and opportunities ...

    .... in uncertain and fast-moving times.

    The discussion about expensive accessories on another thread here has, led significantly off the track from the core issue I was tying to make. Let's separate it out and dissociate the underlying issues from the specifics of speaker stands, cables, etc. and look at the big picture. Audio dealers here at the CES yesterday are focussed on one issue, and it has absolutely nothing to do with the minutia of this product over that. It's survival. You may not believe that the business side of the audio industry has any relevance to you as a lone consumer. You'd be wrong. How, where and on what you spend moulds and defines the future industry as it always has. You have tremendous economic power. You do shape the future.

    Now, I've been misunderstood these past few days explaining how I feel about the fragmentation of the industry around me. I've drawn attention to the core problem which is, in the longer term, that insufficient numbers of young people are interested in and willing to pay for high-end audio. Although one contributor didn't agree with me, the demographic facts are obvious to anyone who age profiles attendees at a hi-fi show or audio dealers. It really doesn't need to be proven. It's as obvious as profiling attendees at the local bingo club minus the blue rinse.

    Bearing in mind that this Harbeth User Group information is read, has some small influence and long term archival value, I'd like to lay down, in black and white, on behalf of the entire industry exactly the position we the remaining industry find ourselves in. These are the facts, supported by independent Research companies - they are not Alan Shaw's 'angle', they are certainly not, as suggested Harbeth trying to gain commercial advantage. As the contributor noted, we are in a strong position, and it's because of that we can say here what many others cannot or dare not say publicly. You many not like it. You may not want to hear it, but it needs to be said. And I hope you'll see why we are so hostile to money wasted on what some would call fringe or even quack products.
    A contributor commented ....Personally, I'm sceptical of talk in the audio industry about "we need more young people to take part". This is not new - the trade magazines have been writing about this for many years now. And yet, the industry survives, and the really good companies even thrive. Harbeth, for example...
    The manufacturing/selling end of the audio business is consumed with this issue. It is an exceptionally serious problem. Yes, the trends are not new, but the industry is a shadow of its former self; shrinking by the month You may not see that from consumer-side.
    1 in 4 companies in the UK Hi-Fi industry could change ownership as a result of the current economic climate, claims leading financial analysts Plimsoll... the market could be set for a prolonged period of consolidation. ..."I am sure any director worth his salt would agree that, in the current climate, there are simply too many companies chasing too little market. ..The UK Hi-Fi market is still widely regarded as one of the UK's most fragmented sectors. In our report we analysed the UK's leading 130 companies are rated each on their acquisition attractiveness this will tell you which companies are set to be buying and which are exposed to takeover.
    These are very hard times for the industry indeed. It cannot survive the changes in consumption habits plus the recession unchanged.

    We here must continue to promote real value for money, real engineering and real long term satisfaction for the consumer. As always, the consumer can decide what's important to himself, but I fear that when there is no specialist audio industry to pass to our children for their pleasure, we will all bitterly regret it.

    Above all, "Support your local dealer", buy honest-to-goodness products and allow him to make a reasonable living so that he can be there when you need him most and you can and will make a difference. Please think twice about who you are supporting with your expenditure at dealer and product level. We will not give any space on this site to products which we believe are pulling against our view of the industry and its long term survival. But, I encourage you to please pop along to your dealer - he'll be delighted to see you - and take his advice on what will work best for you.
    Alan A. Shaw
    Designer, owner
    Harbeth Audio UK

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    Default The way forward (?)

    Alan:

    In your (locked) thread entitled "Your audio industry" you misunderstood my position. Possibly I wasn't clear enough. I don't deny the reality of the overall sales trends you describe. I have no doubt that they are declining, and that there is good data to back this up. I certainly have no data to suggest otherwise. So I'd be a fool to disagree with you factually, which is not at all what I intended to do. What I disagreed with was the overall, unqualified description of this trend as a "problem". I don't know that it's necessarily a problem for everyone.

    I find it very interesting that in an overall climate of declining sales, Harbeth's sales are increasing. That is also a fact, for which you presumably have hard numbers. And in light of what's happening in the industry overall, I'd suggest it's actually a rather remarkable fact. Might it not suggest that even though the perceived importance of high-fi equipment is declining in general, the appreciation of truly fine quality equipment (that, as you say, offers real value, real engineering, and real long-term satisfaction in terms of enhancing the ability to listen to and appreciate music) is actually increasing? Is this not also a possible explanation of why Harbeth's trendline is running counter to that of the industry at large?

    I don't doubt that the industry will continue to contract unless a lot of new, younger blood is brought in. But I don't think that's going to happen, in part for reasons that have nothing to do with "hi fi" or "equipment" or "audio" either. I think there will always be true aficionados of music, just as there are aficionados of other fine arts and other fine things in general. But I think that the rise of hi fi as an industry coincided, among other things, with a historical period in which music was a really dominant cultural force, in which keeping up with music was important to many people, especially younger people. A certain percentage of those people found it important enough to invest in really good gear to listen to their music on. However, in the last 20 or so years, the importance of music in the larger culture has been waning relative to other pursuits and activities. There are many reasons for this, including the emergence of other technological alternatives for home entertainment. Some would also say - and I don't disagree - that the way the popular music industry has evolved, and its excessive commercialization, has tended to drive away real quality in music, at least pop music.

    If this is all true, it's probably vain to hope that large numbers of new young listeners are going to flock to "audio" as a hobby, when in reality they're just not spending as much time listening to music as in years past. But the fact that the industry's contracting doesn't mean it's going to contract down to zero: there's no reason to think that will happen. And the companies that survive, and prosper, will - like Harbeth - tend to be companies that offer real quality, real value, real engineering, and real long-term listener satisfaction. There may be fewer of them, but I'm sorry, I don't see why that's a problem for anyone except those companies that don't make it through. To think that all high end audio companies will disappear, and that the whole hobby will disappear, I think is an unwarranted extrapolation from the data, even though I fully accept that the data shows a downward trend.

    The end of the dinosaur era was a big problem for you if you were a dinosaur. If you were one of the mammals, it was actually good news. I'm not suggesting that that's a perfect analogy; I'm just saying that there's more than one way to look at what's happening right now. It may be that you end up living in a smaller ecosystem, but if you as an organism can survive, thrive and prosper in that ecosystem, there's no problem as far as you're concerned. The problem is for the ones who don't make it.

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    Default Re: The way forward (?)

    That's good solid reasoning, and I'm substantially in agreement with you. We are, of course, not an economic analysis forum and all of this is presumably of little interest to many. But, my point is, and here we are in complete agreement, that there is zero possibility that any of us can turn young non-audiophiles into audiophiles with a budget to spend. It is not going to happen. Not even the mighty Japanese multinationals have attempted consumer re-education; they just roll with the market.

    As I said, Harbeth's position is totally irrelevant to the great economic machine. My concerns are about the dismantling of the audio industry by short-sighted consumer purchase decisions in response to hype. But there is a point of cohesion below which there really isn't 'an audio industry' as we know it. And once the retail sales outlets disappear the game is really up. By supporting the dealers and buying credible product the situation can at least be stabilised. I appeal to consumers to spend wisely. Buying opportunist products that come and go does not help the industry; that's my point.

    P.S. One thing I'm hearing repeatedly here in various rooms is how mightily fed-up retailers are with consumers playing one off against another to cut the price. Everyone needs to eat and the dealers say that there is a general perception that the public think they have vast profit margins to play with. It just isn't true. But dealers are human, and they're becoming more cautious about how much time and energy they can afford to invest in demonstrations that lead to sales elsewhere. There is substantial goodwill still, but much concern. Please support your local dealer. If he's providing a service and after care, he deserves to make a modest living.
    Alan A. Shaw
    Designer, owner
    Harbeth Audio UK

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    Default Another view of the Way Forward

    I'd liked to take up a couple of issues raised in this thread:
    http://www.harbeth.co.uk/usergroup/showthread.php?t=716

    Because my knowledge of the Audio industry is only based on conversations with dealers and a few specialist manufacturers, what I read in the HiFi press, and what I equipment I see on sale, I obviously cannot have the commercial insight that Alan has, however I believe some important aspects of 'the big picture' of the audio industry are being missed.

    In the view of many people in the audio community (I suspect the great majority) there is a "them and us" divide between "us" who value and buy 'real' HiFi products and "them" who buy inexpensive personal music players. While I agree totally with Alan that there is no way that the audio industry is going to educate a large number of consumers to buy their specialist offerings, there does appear to be a route via which more 'real HiFi product' could be sold if we look at what the "them" and "us" have in common.

    (1) Both enjoy listening to music to such an extent that they beg, buy or steal to hear particular genres.
    (2) Both like to immerse themselves in their music either via loudspeakers (including docking stations for personal players) or headphones / earphones.
    (3) Both have access to the same universal quality: PCM at CD quality, even if they choose to use compressed audio.

    I'd therefore conclude that there is fundamentally no difference between the "them" and the "us".

    The artificial divide is reinforced in peoples minds by the gulf in the price of the products typically associated with the "them" and the "us". The "inexpensive = poor sound" vs "expensive = good sound" assumption is very misleading. I've been using an Apple TV (?220), in conjunction with iTunes running on a general-purpose computer, to stream CD-quality music to my HiFi DAC / Amplifiers / Speakers (Super HL5s) and the sound quality is astonishingly good, approaching that from a ?2800 transport! There is very little on the market in the price range ?500 to ?2500, apart from the Wadia iPod dock which uses the digital output from an iPod, that provides a significant advance on analogue playback from personal music players.

    Several companies (e.g. Linn, Naim, Meridian) sell custom systems that give very high quality music playback from music on hard disk (as opposed to optical disk) but these are expensive. If products were available within the ?500 - ?2500 price range that provided a noticeable improvement in sound quality over current personal music players, and integrated seamlessly with current de facto standards (e.g. iTunes), there might be a viable way forward for the audio industry as such products would provide a bridge to what is now classified as real HiFi.

    I also agree totally with your view Alan that we need to support our dealers to ensure that they (and the Audio industry) survive, however in my experience there are some dealers who will fight tooth and nail to prevent a transition to the scenario I describe above. Views such as "I will never allow a computer to be connected to a HiFi system", "Sound from personal music players is inferior" and "A disc transport is always superior to streamed music" are still commonplace. So I'd conclude that the dealers need education!

    Finally I agree in general with the view that Harbeth should be immune to this situation. You have a range of speakers that are natural sounding and very transparent, so they will be seen to be superior if and when a greater number of listeners have access to high quality digital sources. If I were you I would not be too complacent. The market for the hi-end equivalent of an all-in-one dock for personal music players (i.e. those containing DAC, amp and speakers) could become very competitive. I'd guess that you may have looked at active versions of Harbeth speakers but rejected this approach; you may need to reconsider this decision, particularly as class D amps reach maturity and match traditional designs on sound quality.

    The future should be very interesting.

    David

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    Default Re: Another view of the Way Forward

    Again very well considered feedback.

    I have been to see a couple of those speaker/amp/iPod all-in-one packages and I agree that for what you get they are astonishingly convenient and inexpensive. And seemingly brimming with new technology. They will undoubtedly fulfil the needs of significant numbers of aspiring hi-fi users on a limited budget. They could be a stepping stone to better equipment, and I see their appearance as you do, as positive overall in stimulating interest in hi-fi..

    But - their extremely competitive price points have been achieved by manufacture not of individual parts from distant (far east) suppliers (that's the reality of a dwindling supply base and I have no issues with that in the real world) but of the whole system. My mouth fell open when I heard the retail price of one of these boxes because I assumed that it was the landed cost we were discussing - the prices are so incredibly low.

    The down side is that the profit margin that sustains the entire manufacturing-distribution chain is also very low in both pecentage and actual dollars. So low that such products cannot in any sense be economically worthwhile at this phase of the industry. Over dinner last night I got some idea of the unimaginabe (to me, from the UK) overheads of running a business here in the USA. A dentist who pays $10,000 a month for professional indemnity insurance; a small retailer who pays $2,000 a month for Public Liability Insurance; a family man with three children who just cannot keep up with his private medical insurance payments of $2,500 a month so is longer covered. This is a hugely expensive place to operate. And dealers need both sales and margin to be able to open their shop door to welcome you.

    So, whilst I agree that these fantastic feature packed and inexpensive products are perfect for the consumers, their economic contribution to the traditional hi-fi retail chain is negligible or even negative. But at least it keeps the idea of quality sound on the consumer's agenda,
    Alan A. Shaw
    Designer, owner
    Harbeth Audio UK

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    Default Getting the best overall service from your dealer ...

    The CES 2010 show is now over. I've been listening to dealers in various rooms talking with manufacturers about the issues they face. All manufacturers want to support their dealer network, to remove obstacles to sales generally and to be supportive of you the consumer. Aside from the long term socio-economic issues of interest moving away from hi-fi (discussed in previous posts in this thread) there is a current and seemingly widespread issue: customers themselves. Let me explain.

    It was interesting to hear, directly and unprompted from a sample of dealers around the world who are not aware of our thread of how they classify would-be customers visiting and calling/emailing their outlets. There will always be a percentage of those just browsing with no real interest to buy - I do that myself in computer stores. But unlike me wandering around in PC World not consuming sales-staff time, the proper demonstrations of audio equipment absorbs the time and skills of sales people, and speakers and amplifiers are heavy. A serious demonstration can run from thirty minutes to several hours, and be repeated over several days. This is, of course, the service that good dealers exist to provide. But it has a cost.

    Again, from what I gleaned, dealers categorise customers along these lines.

    • (A) Honest browsers; customer is open and up front that he's gathering information, is not ready to buy, doesn't need much sales staff time. He's the lifeblood of the store and his honesty motivates the dealer and allows the dealer to correctly apportion time to him. Dealers welcome these visitors. They are the next generation of buyers.


    • (B) Buyer; see below.


    • (C) Not-serious buyer who abuses the dealers facilities and stock. Can you imagine just how physically and mentally exhausting it is to put on demonstration after demonstration in the store, take product to the prospects home, up several floors, install it to find that there really was no intent to purchase at all? This category strips the goodwill the dealer is more than willing to extend to (A) through sheer exhaustion. It's an all too common problem and growing.

    Upon further discussion (B) was subdivided. As a generalisation, (B1) group is of (I was told) professional people who are used to assimilating information and making swift decisions. They decide and buy in a hour or two with minimum fuss. They have researched what they want in advance. The sales process is efficient and businesslike and the sales staff are freed-up to attend to group (A).Unfortunately, there is a significant other group (B2) who arrive armed with magazines, reviews, forum messages etc. and sometimes with would-be advisors. They do want to buy something, have the funds, but they are anxious and difficult to reassure. Their mind is in a whirl, hunting through reviews as they listen. This group is very vulnerable. They frequently make the wrong purchase decision because they have mental conflicts and divided loyalties between what they have read about a product, internet chit-chat and their friend's advice. They have not invested time in developing their own judgement so they do not trust their ears.

    A subgroup is (B1A) with all of the above characteristics who then bombard dealers with innumerable emails and phone calls trying achieve price reduction. This often involves complex combinations of products and trade-in allowances. They do not actually have the financial budget to purchase the product they aspire to own so need a deal to make it happen. This group has the most destructive potential because it is driven solely by price, and has no understanding of the costs of providing a local showroom or sales support service. Although they are chasing price down they are the most demanding of dealer's time and hence they are the most expensive group to serve. And again, divert resources from real customers and knowledge exchange with nascent (A) customers, vital to the industry. Ebay or similar ultimately appeals to this buyer who is willing to take a gamble on the non-warranty.

    My point is this: we all (me included) fall somewhere on the A-C scale for the goods and services we buy in our daily lives. If dealers are to nurture those taking their first tentative steps into quality audio they can only do that thanks to those customers who are paying today's bills.

    It's clear to me .... use and respect your dealers. If you are only browsing, tell him! He'll respect you because he wants you as a customer one day. And please understand that a price list is carefully calculated to minimise your outlay yet to allow investment back into a proper dealer organisation for the long term.
    Alan A. Shaw
    Designer, owner
    Harbeth Audio UK

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    Default Audio industry, retailers & consumers: healthy fruit from a healthy tree...

    Dear All,

    You're right in many respects as to the consumers' behaviour about facing the financial problems regarding the audio industry or the retailers' struggle,

    But we need to realise one thing: It isn't the core of the problem. Look elsewhere. We're running through a new medieval age, no matter the "technology step up"...

    It is the value of education in music and its role to contemporary society that's being degrading. And don't take for granted or standard the situation in western countries like the U.S., U.K., France or Germany. The vast majority of the world is struggling to survive, or to earn their daily living. As for real education or entertainment, I'm very sorry to say that I daily face that situation of the Roman Colosseum, where lions are eating humans, while the crowd is cheering up and applauses the Caesar. NO QUALITY. The media gives us cheap entertainment and we accept it. Especially harmful in the -so called- developed countries.

    When serious approach of music itself (and I don't mean beating kettles and producing electronic noise) is given through family, early school education and cultural events promoted especially by the state, then you do have the opportunity of having a balance and progress in hi-fi industry and merchants as well.

    This is exactly the basement of the problem we discuss. Who will get seriously interested to buy a decent system for reproducing music (=culture), and not an electronic cheapo, simply because the latter is today's fashion? And the merchants will simply follow this rule in order to survive. And the poor new generation will torture them with financial issues and pressure. It is a chain effect. We, the audio society, the audio enthusiasts, are A MINORITY. You can't expect from a fixed minority to raise and support the "keep on walking" of the audio industry and the valuable contribution of a retailer or local store. Not like this. Alan's achievement is not the rule, unfortunately...

    If you think that I'm over-criticising or being a pessimist, you should perhaps also think that a healthy fruit rises from a healthy tree. And then, if the tree isn't properly watered, what would you expect to eat... and pay for it? I see too many expensive devices advertised. For so few consumers. And I see too many cheapos advertised. For so many consumers. If we don't teach the young ones to learn about real music and its contribution to their minds & souls, we don't have a real point of how to improve the audio industry's health and survival.
    Just some thoughts...

    Cheers
    Thanos

  8. #8
    Paris Kotsis Guest

    Default Diversion of money from audio to computer companies ...

    Quote Originally Posted by Thanos View Post
    When serious approach of music itself (and I don't mean beating kettles and producing electronic noise) is given through family, early school education and cultural events promoted especially by the state, then you do have the opportunity of having a balance and progress in hi-fi industry and merchants as well....I see too many expensive devices advertised. For so few consumers. And I see too many cheapos advertised. For so many consumers. If we don't teach the young ones to learn about real music and its contribution to their minds & souls, we don't have a real point of how to improve the audio industry's health and survival.
    Dear Thanos, I think it all comes down to money, not education. Capitalism only cares for the former. The explosion of CD meant lots of money went to big companies, the inventors of CD and of course the big discography companies. That era ended ten years ago and since a new digital format (more money) could not "persuade" the majority of people to buy once more the same music, the game changed. Now the game is played in the internet, and in fact it seems that the vast quantities of free music files found "illegally" there, serve a certain purpose: to easily persuade everyone to buy cheapos. Now, that is BIG money once more, but that money now goes to computer and related gadget companies and God knows how much of it goes to discography for their "silent co-operation" which is only given an alibi by lawsuits. The result is cheap music, cheap sound and, finally, a "cheap" youth in terms of culture. Ι keep telling myself that under those circumstances something good might arise someday, but probably not in our lifetime.

  9. #9
    honmanm Guest

    Default "Truth inflation"?

    There are a number of underlying problems (as you have pointed out).

    There is the problem of "good enough" - that is, for most people once a certain standard of reproduction has been attained there is little or no urge for anything better. We're seeing this now with limited uptake of Blu-Ray because DVD is "good enough". Similarly in audio the quality of mass-market devices is so much better than it was 20, 30 years ago - meaning more people are satisfied with what they've got. Another way of putting this is that the rate of technological advance is slowing.

    The format shift to MP3 has probably had an effect in that the loss of sound quality caused by compression limits the amount of improvement that can be gained from having better equipment in the chain. And the free exchange of MP3 probably means that individual recordings are no longer prized as they were when one had to "save up" to buy an LP. Do teenagers still play one track to death?

    There is also the generational factor - each generation has its own values and Generation Y is a lot more relational than the selfish baby-boomers or angst-ridden generation Xers (generalisations, of course). I suspect that most of the tweak-obsessed audiophiles are Gen Xers! As to the industry, other than the problem of "good enough" there are two more - used equipment and hype.

    Thanks to the Internet there is a much greater appreciation of older equipment, so there is (a) a more active market in used equipment and (b) it is much more widely known that a good service will restore old equipment to original spec, and that substitution of modern electronic components will, perhaps unsurprisingly, update classic equipment to modern sonic standards. This is great in one way, but between that and the "good enough" effect I suspect that the market for entry-level hi-fi has been obliterated - and very few people ever darken the doorway of a hi-fi shop.

    Hype... where do I start... why does the most trivial widget have to be accompanied by a sales spiel that paints it as a breathtaking advance in technology? This is a kind of "truth inflation" in which the words used to describe products become as meaningful and valuable (and useful) as a Zimbabwe dollar. The hi-fi press has not helped here, it is rare to read a review that gives any indication of whether the product would appeal to me. Audiophiles picked up on magazine language and developed the "sonic wine-fancier act" which a normal person would run a mile to avoid. And with the relentless hype there arose a tendency to under-appreciate older equipment - leading to a surplus of good used gear (for which I was very grateful!).

    The hype-mongers played on audiophile angst and (to some extent) one-upmanship to get their customers into a dizzy upgrade spin. A dealer once explained his recipe for success as being to always sell the customer a new component that would reveal the weaknesses in the rest of his system - thereby generating another upgrade opportunity, and so keeping the customer in a wallet-stripping orbit round the black hole of hi-fi. Most dealer are not like this - some may be naive and regurgitate the manufacturer or magazine hype, others genuinely try to understand the customer's taste and direct the customer to the most appropriate equipment - even if it is sold by someone else.

    So I think a lot of the problems are structural ones that have existed for 20 years or more. I suspect that, as with any industry consolidation, we will not lose those companies who make a well engineered product at a fair price. Unfortunately the (relative) giants responsible for some of the worst hype will probably be with us too.

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    Default Another piece of goodwill eroded ....

    The Harbeth factory and sales network goes the extra mile to serve our customers and where necessary, to work overtime to help out. That's because we respect you and your support for us.

    Over Christmas I received numerous private emails from a customer who wanted a pair of speakers in a particular veneer not in stock in his local market. We had no orders on hand from the importer for the model/veneer but the would-be customer was adamant that he would only accept that veneer upon which he had set his heart. In an effort to short-circuit the normal sales process to help him fulfil his dream I made a special trip (in the snow) to the office over the Christmas break to physically check the stock to be sure we had a pair of cabinets - we did. Customer reassured, I left a note on the Production Manager's desk for his immediate attention, and we discussed what to do when we got together for a briefing on the first day back at work. After some negotiation with staff concerning paid overtime, we found a way to squeeze this special pair into an existing order. A new Production Schedule was generated by the planning system and staff individually informed of the changes to the routine and what they needed to do.

    The dealer took a deposit and we entered the formal sales order with the importer, produced order confirmations etc. and confirmed in further emails to the customer directly (c.c. the importer) the order status. We could not have gone any further to be responsive.

    I hear today that the end user has picked-up a pair of this model in a standard veneer on the internet used market. Our sales network has very good market intelligence (far more than you might suppose) and within hours the importer, retailer, myself and many other dealers across the world were talking about this situation. In the absence of any notification from the buyer of the change of plan we would have wasted precious time making these speakers when we have already lost a week's production due to the heavy snow.

    Earlier in this thread I have mentioned the exceptional difficulties the audio industry faces and how we must all work together, customers, sales people and manufacturers. Efficiency in the sales and manufacturing operations are critical and it disappoints me that incidents like this cost time and money and erode the goodwill that this industry survives on. As for the dealer who's supported the process for the new pair, I would of course expect him to apportion the deposit to cover his time and effort and not to refund it to finance the purchase of the used pair. Surely that's only fair to him. My own time - I'll write that off to experience. As for how we handle this type of appeal for special help in the future, it will be with greater caution, so everyone loses. Now I've experienced first-hand what dealers face all too often, I marvel at their ability to take the beatings.

    As I said before, it's your industry and your purchase behaviour year by year, day by day shapes the future. Is it really be wise to drive the authorised dealer to extinction? How will that benefit any of us now and the next generation of audiophiles?

    There is no Warranty on second-hand speakers. It is not transferable from first user.
    Alan A. Shaw
    Designer, owner
    Harbeth Audio UK

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    Default Dealers

    Alan:

    You have spoken in your recent posts about the importance of customers' being fair to dealers and understanding of their importance to the audio industry. On the whole, I agree with you. But it seems to me that your posts have been one-sided in the sense that they have focused on the difficulties of being a dealer, and the negative behaviour of (some) customers, and the financial implications of such bad behaviour for health of the audio industry.

    But surely, the dealers play a role in this as well? I mean, there are dealers, and there are dealers. Some are fine, committed, enthusiastic, knowledgeable individuals. Others, perhaps not so much. I have certainly spoken to dealers and sales staff who are rude, opinionated, aggressive, dismissive, and who have very much pushed faddish, "flavour of the month" products and loudly claim their superiority (rather than encouraging the customer to make up his/her own mind) over other products, whether for business reasons or because they're just as much "audiofools" as the more extreme members of the customer base.

    It seems to me there's some responsibility on both sides. Yes, a customer must understand that there are certain financial realities, a dealer needs a reasonable return in order to stay in business (why bother, otherwise), and that it's an abuse of trust and good faith to burn up a huge amount of someone's (irreplaceable) time when you're really gratifying your own obsessions and know you have no intention of entering into any kind of financial transaction no matter what.

    However, the dealer should also treat the customer fairly and with respect, ideally know something about audio and music, and not be overly doctrinaire or dogmatic (Product X is great! Product Y is crap!) about what's available. Not all dealers fit into this category.

    Ultimately, I think that as with any successful relationship, business or personal, a degree of trust is essential. A level of trust, on both sides, elevates the commercial exchange from being a transaction - isolated and mainly concerned with price - to a relationship, which is ultimately far more beneficial to both sides. I think that one thing that dealers (and perhaps manufacturers as well) should be thinking about, particularly in the current climate, is the question of how to build that trust, and maintain it over the long term. That, it seems to me, is the precondition of customers' truly understanding the value of what they're being offered.

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    Default Re: Dealers

    I totally and absolutely agree. There is no place for dealers who do not add value. They do not deserve your dollar, nor my patronage.

    But in my experience, Harbeth dealers are decent, hard working people. They may not be typical of the industry as a whole, but they deserve to survive. We picked them with care. If you find any dealer anywhere in the Harbeth network who you honestly believe is not adding value to the Harbeth brand, be sure and let me know. Privately.
    Alan A. Shaw
    Designer, owner
    Harbeth Audio UK

  13. #13
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    Default Re: Dealers

    I should have added that any negative experiences I have had over the years are totally unconnected with my Harbeth dealer, who is a fine person and a pleasure to deal with. Not only was it a pleasure to buy my two pairs of baby Harbeths from him (first the P3-ES2s and then the P3ESRs), his demo of the Monitor 40.1s left no doubt in my mind that they are absolutely, totally worth their selling price and then some (even if they were "only" sitting on $500 stands!) and that they're the speaker I'll buy if I am ever in that segment of the market.

  14. #14
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    Default Re: Dealers

    Thanks for the clarification.

    None of us are perfect and occasionally the stresses and strains of retail life erode the time we'd like to spend with customers. But a specialist niche brand like Harbeth appeals to dealers who have confidence in the product and want to expose that to customers through good demonstrations in a respectful, low-pressure environment. Since we never push them for orders, there is never any reason for them to push you into a decision. If Harbeth is right for you that's great; if something else suits you at this point in your audiophile career, we're perfectly content to bide our time. Experience shows that we'll hook you eventually!

    Dearer rooms come in many shapes and sizes and amounts of acoustic damping. The common factor the the welcome extended to the visitor when he's made an appointment and can be properly welcomed. Peter Selesnick's place in LA (attached) is a fine example.

    PS. The "frivolous 90%" .... here!

    >
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    Alan A. Shaw
    Designer, owner
    Harbeth Audio UK

  15. #15
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    Smile The "marketing mix" and promotion incl. reviews ...

    We've mentioned customers and dealers. Perhaps we could touch upon the role of promotion, one part of which is critical review. This is a long post - sorry - but I feel it is important.

    At the CES show I overheard a reviewer tease a manufacturer with the claim that "my review must have sold lots of these [$10,000] products so you better be nice to me!" It was said in semi-jest, so when he'd gone, I asked the manufacturer what the outcome of the review really was. He laughed. Six months had passed and the review, whilst glowing, had resulted in four enquiries nationwide across North America and one dealer demo. No sales. My turn to laugh; I told him that statistically, I felt he'd actually done well with the four enquiries, and that it didn't surprise me at all that he'd sold nothing. Why?

    This week at the CES in Las Vegas I've been studying how the hi-fi specialty equipment business really ticks. I didn't set out from the UK to do so, but was motivated by events as I arrived. Even after more than twenty years at Harbeth, I still consider myself an outsider in the audio industry. My original commercial training was in the semiconductor industry - powerful, wealthy, disciplined and science based. So I just can't help myself subconsciously comparing the audio industry with the business norms in the microchip industry. Wrong to do so perhaps, but working for the Japanese at the start of one's career is a formative experience and I'm grateful for the opportunity at NEC Corporation.

    There is a wide misconception in the high-end audio industry about the relative importance of individual elements in the marketing mix, namely:

    • the product itself
    • its pricing
    • availability and
    • its direct advertising/marketing exposure, including exhibitions (like CES) and third-party reviews.

    Marketing people argue about how to prioritise and apportion the marketing budget and effort. A cheapened product with more advertising push? A better, more expensive product with less advertising but more journalistic endorsement? There is no universal answer that suits all products, all markets, all penetration strategies. Iinternational marketing agencies such as Saatchi & Saatchi charge billions to recommend and manage the marketing mix for their clients. All products need the oxygen of publicity - but what's the best way to get the consumer's attention? All products in a competitive market need some sort of promotional mix to help them carve a niche

    If the industry had certainty that exhibitions were the most effective way to market audio, then that would be the dominant marketing tool. But the traditional public exhibition model is looking expensive and outmoded. How about reviews; or price manipulation? There is no universal marketing fix. What works for one products in one industry may just not work for another. In this confusion of ongoing trial-and-error to get the consumer's attention, dealer interface is (for Harbeth) extremely important, which is why we say 'support your dealer'. Other direct communication channels - such as here at the Harbeth User Group are another way. Price of course, is also a factor, as is availability. But where does that rank the review in the promotional mix and of importance to the consumer?

    The honest answer is nobody knows. There has never been any research to prove the value of a review, good or bad. So we have to make some assumptions; we have to assume that a positive review could enhance the product (and brand) to some small indeterminate amount. Most likely a single good review would not generate a single sale. That's been our long experience and we're not alone. Not even ad hoc reviews in the mighty What Hi-Fi? generate identifiable sales. Surprised? Conversely, a single negative review may not influence sales or brand image at all. Why? It's because the consumer is aware that the review process is imperfect, reviewers will naturally have preconceptions and likes-dislikes and may not understand the product. Also truth inflation has inured the reader who then gives the manufacturer the benefit of the doubt. Overall then, the review is a useful component of the promotional mix, but not - in most audiophile brand's experience - life or death. It's real values is psychological, reassuring salesmen and dealers that they're carrying 'hot' products. I'm not sure about this but this is what I feel. I may be wrong.

    So, what is the precise function of a review? For whom is the reviewer writing? Who rewards him? What qualifications or credentials does he have? How does a manufacturer decide to engage this or that reviewer? And I think the most interesting question about the relationship between manufacturers and reviewers: why are they not more honest with each other? The reviewer feels under an obligation to reward the relationship with glowing praise, and naturally, the manufacturer happily accepts that. But if the manufacturer explained that the review is but one part of the overall promotional mix under his control, and possibly a rather small part, the reviewer could be relieved of the implicit pressure to talk-up the product and he could then be more balanced and objective. That would be good for the consumer.

    It cannot be much fun being a reviewer when so much is expected from him by the public and the manufacturer. It's a job I would never undertake. Time for us all to get real?
    Alan A. Shaw
    Designer, owner
    Harbeth Audio UK

  16. #16
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    Default A small courtesy to the factory?

    Quote Originally Posted by A.S. View Post
    ...Over Christmas I received numerous private emails from a customer who wanted a pair of speakers in a particular veneer not in stock in his local market...
    I understand that this second-hand transaction has or is going through today. We do sympathise though that none of our dealers could possibly be expected to include accessories with a ticket price equalling the speakers themselves.

    I personally regret that the customer (see my previous post, one up) has not advised us here at the factory that we should cancel the build of the new speakers that he so desperately needed. It needs several hours to completely assemble, test and pack the speakers from pre-tested parts, time wasted when we are already way behind due to the weather. The real pity is that going forward we at Harbeth UK cannot be expected to engage directly with customers in markets where there is already a functioning distribution network to discuss special deliveries etc. etc. and certainly not during staff holidays. Enquiries, orders and progress chasing should be enacted through the proper channels i.e. with our Authorised Dealers.

    There are no Warranties on used goods and they cannot be registered for extended Warranty. We have marked the Production Records for this pair accordingly. How loyal, hard working audio dealers tolerate this all-too-common situation beats me. How can we retain our industry in these tough times for the benefit of all unless we all pull together and cooperate and don't 'chase deals'?
    Alan A. Shaw
    Designer, owner
    Harbeth Audio UK

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