U.S. Pioneer

U.S. PIONEER ELECTRONICS CORPORATION

PURPOSE OF THE REPORT

• U.S. Pioneer is facing a problem with its value network; its marketing channels, the dealers in particular, are disparaging Pioneer products.

• Pioneer upset dealers/other manufacturers with its new price list with multiple gross margins. Some dealers are dissatisfied with the margins they are getting on Pioneer products so they are not trying to sell them and they are comparing the equipment negatively to other manufacturers

• Components face competition from compacts and consoles

U.S. Pioneer’s strategy options were:

• Distribution Shift. Shift retail distribution away from specialty stores to department stores and catalog showrooms

• Multiple Branding. Offer several product lines of varying quality and price points under separate brand names

• Company-owned stores. Move toward operating its own retail stores

The purpose of this analysis is to:

• Evaluate the strength and weaknesses of each strategy

• Recommend what plan should be adopted, rejected, or modified and adopted

• Determine the best marketing channels

RECOMMENDATION

• Adopt superordinate goals. Pioneer should set a goal to have dealer satisfaction as high as consumer satisfaction with the company.

• Introduce more high-end components for specialty stores to help them with their margins

• Update franchise agreements to reflect the current free market environment for electronics

• Expand department store and catalog showroom sales with first time buyer components to increase base of buyers willing to upgrade

• No new franchises to discounters

• Continue heavy advertising

• Continue marketing efforts toward college students

ANALYSIS

Situation Analysis (SWOT Analysis)

The strengths of Pioneer include the following:

• Pioneer’s marketing and advertising efforts have helped to get their name out during the early years and helped to keep sales up throughout the 1970s.

• Pioneer helped lead the push for component systems.

• Pioneer has a global presence. In 1977 65% of total sale was from international markets (not Tokyo).

• Pioneers strengthened its distribution system between 1972 and 1975.

The weaknesses of Pioneer include the following:

• Pioneer’s dealer relations quickly went downhill. Dealers felt that Pioneer did not care about them.

The opportunities of Pioneer include the following:

• During the 1970’s the hi-fi industry was taking off.

• Component systems were becoming more popular.

• During this time the demographics were changing in a way that only helped Pioneer (more young adults 18-24, more college graduates, more household incomes of $25,000 and over).

• It was predicted that there would be an increase in market share through department stores, catalog showrooms and