Checking the Schematic
Feb 1, 1998 12:00 PM, Ken Lopez
Change is always around the corner and yet constantly with us. The systems contracting industry is undergoing fundamental change that will ultimately affect all those who call it home. Included in the whirlwind are manufacturers, consultants, representatives, systems contractors and integrators, and even customers. All are faced with a degree of complexity and rapidity of change that can be daunting.
One of the driving forces of this change is technology. The familiar analog devices of the past are rapidly giving way to digital audio, digital signal processing, digital switching, digital routing, and digital systems configuration. This new and promising technology exerts a profound impact not only on the systems that are being designed and implemented, but also on the fundamental functions and processes of the industry. The way business is organized and carried out is being changed by the tools we use.
It is common to interact with a broad array of individuals and institutions during the cycle of a project. A complex set of working relationships must be forged with customers, consultants, governmental agencies, regulatory bodies, manufacturers, manufacturerOs representatives, general and sub-contractors and even competitors. The list is seemingly endless and continues to grow with each new project.
Moreover, fundamental relationships among key players are getting more difficult to maintain. The relationships we rely upon may themselves may be changing. The goal of this short article is to question and raise our awareness of the potential of change. We must begin to exercise the visionary within us if we are to maximize those potentials.
Common differences The key to successful relationships often lies in understanding the different points of view involved. If the fundamental forces that shape an associateOs view of the world can be understood, the first steps to a working relationship can be taken. It is important to realize that systems contractors, manufacturers and representatives do not often share the same point of view or even the same definition of terms.
Manufacturers look out at the world searching for opportunity. Their nominal function is to provide goods and services to the marketplaces in need of them and thereby make a profit. They exist to fill market needs by unifying capital resources, materials, labor and expertise in the creation of new products. A few leaders will also add vision.
Most business ventures feel a need to categorize and compartmentalize the world into markets to understand their needs and the potential for opportunity. This categorization is done in an attempt to create order out of the chaos of the marketplace. Once the markets are categorized and the relevant opportunities chosen, product development can begin. In MBA terminology, this is called market segmentation and targeting.
Systems contractors and consultants tend to look at the world as a series of challenges and opportunities embodied in the projects they confront. The world is a design/build opportunity. They are usually in search of system solutions to problems that are also systemic in nature. Solutions and knowledge are the true commodities. Products are only a component of the solution, yet product development is often the focus. Thankfully, more manufacturers are taking the solution approach. A few even exercise their visionary tools and have come to understand that new creations have the potential to redefine the markets they serve.
Additionally, a potential point of confusion arises when the term OmarketO is used because multiple definitions are possible. Markets may be defined geographically to describe distinct geographical areas, such as a country, region, state, province or metropolitan area. Markets are often defined by demographic classification of human populations based on age, gender, occupation and income. Markets may also be defined as the professional end user of the product or service, such as houses of worship, conference centers, schools, theme parks, or lodging and gaming facilities. Lastly, markets are defined in terms of the distribution channel, or the path the product takes to the end- user, such as the contracting market.
When a manufacturer says it is market driven, what is really meant? When contractors speak of the markets they serve, which definition of the word are they using? These are not academic questions. Many manufacturers and dealers have not clearly determined their target markets, and as a result, they are never really successful because they are not focused properly.
Product development In the early decades of the industry, most manufacturers specializing in professional audio products focused on one or two market segments. In the 70s, the power of popular music and the technology to create and reproduce it began to have a major impact on the professional audio industry. As improvements were made in the recording chain, the demands on the reproduction chain increased. Sound- reinforcement systems evolved from speech-range systems to full-range, high-level entertainment systems, and manufacturers worked to create new products to meet these new demands.
As new companies continue to enter the marketplace, competitive pressures escalate, and the cycle of productdevelopment quickens. Gone are the days when dealers memorized model numbers with the secure notion that they would be good for ten years or more. New products and new technologies now arrive at a dizzying pace, with new brand names, manufacturers and carbon-copy products arriving in record numbers. How many clones of a popular compact mixer or popular loudspeaker are necessary, and does the market need them? Why do dealers support these companies? A visit to any major trade show will bring this point into focus.
There are now dozens of manufacturers of loudspeakers, mixing consoles, microphones, power amplifiers and signal-processing equipment. Recording, editing, measurement, interconnection and presentation equipment have been recently transformed with the influence of new technologies. Applying new technologies to the creation of new products fuels competition as each company attempts to beat the others to market with the latest features and lower price points.
Distribution and sales Once markets are targeted and products are developed, the manufacturer is faced with the need to develop a contractor-dealer network. Establishing and servicing this network is time consuming and difficult. It can take years to develop a truly functional network. Although retail dealer counterparts may be worried about being replaced by chain stores, catalogs and the Internet, contractors can rest assured that design and installation are, for the foreseeable future, still needed. Manufacturers must have a long-term outlook and commitment to bring the necessary resources to the table.
Sales revenue is the life blood of the business, but unlike the retail markets, system projects can take months or years to develop into a purchase order. Many manufacturers sell identical or similar products to the retail music markets to generate more immediate sales returns, which can help subsidize commercial product lines. More significantly, new technologies and products developed for other professional marketplaces may soon find their place in the systems market. This can become a double-edged sword. To justify the development and marketing costs that mainstream retail products demand, sufficient sales must be generated. The quest for a successful product consumes a large portion of a company's competitive resources.
The development of the network is crucial to a successful sales and marketing plan. So, you might ask, what do manufacturers look for in a dealer? Dealer performance (sales) and qualifications dominate the thinking of most sales management. Financial stability and the ability to mount a comprehensive sales effort with the requisite management skills are high on the list of desirable dealer qualities. Engineering and technical expertise are of increasing importance because of the rising complexity of systems. Finding and creating a relationship with qualified systems contractors over a broad area such as the continental United States can be a huge undertaking that outstrips the resources of most factory sales forces. Who makes these important decisions?
The manufacturer's representative The manufacturer's representative is ultimately responsible for creating and maintaining the contractor-dealer network and a great deal more. As the factory struggles to win the product development and marketing competitions, they usually abdicate the work on the street to the factory representative.
The representative is much maligned when things are not going well. When the problems have been solved, the dust has settled, and the project is declared a success, the representative rarely gets any credit. As resources for the systems contractor, they are unequaled, yet they are overworked and underused.
How did the manufacturer's representative become the industry lightning rod? It is a function of the service they provide and the pivotal position they occupy in the chain of distribution. Most manufacturers assume that the representative works for them because they are paid by sales commissions. Most dealers assume the same, but the reality is somewhat different.
Representatives often become the catalyzing agent among the sales department, the contractor, the consultant, the customer, the credit department, the shipping department, the local bureaucracy and a legion of lesser players in the completion of the typical complex project. In short, they become indispensable to the process and the players.
The representative's prime concern is the establishment and maintenance of a functional network of dealers. These dealers serve a diverse array of markets for many manufacturers. Carefully choosing dealers who can compete and coexist is a delicate task considering the variables of close physical proximity, multiple market segments, product-placement decisions, technical complexities and competitive pressures. To accomplish this impossible task requires patience, market and product knowledge and a sense of the political geography, and it requires living in the territory. No factory salesperson in some distant city can ever fill the bill.
In addition to the constant maintenance of controlled distribution, there are the daily details that contribute to getting it done - ten calls to the factory for literature and twenty calls to the credit department and the dealer so that the order on hold will be shipped today. There are more calls about technical details, application information, shipping dates, stocking and delivery. It is these administrative tasks that get the job done.
As important as they are, however, there are far more crucial tasks to accomplish. Is it not time for manufacturers to bring modern communications technology to bear on these issues? The valuable resources of the representative sales force should be used elsewhere.
Making choices One of the most important functions exercised on behalf of dealers is that of choosing products. The market and product knowledge that is gathered and honed over many years in the field comes into play when the time comes to pick product lines to represent. In this process of choice, the dealer is saved a great deal of research and analysis.
Representatives are often called upon by the factory to pioneer new product lines. They must estimate its applicability to the market, solicit the appropriate dealers and get the product tested, specified, sold and installed.
When a dealer comes upon a challenge that requires a unique product solution, the call often goes to the representative. The same is true for the consultant who may not work with audio on a regular basis. When updating is required on product files or new product offerings, they call on the representative.
Dealers often benefit from incidental aspects of their relationship with their representative. Experience, stability and perspective come with a long career in the field. Often, the representative will outlast sales managers, presidents and even companies.
I was once told that manufacturers and management come and go, but the territory and the dealers will always be here. In the long run, I work for them and the customer. This means that the representative is often the most powerful ambassador to the factory. Make use of this valuable resource to have your voice heard and acknowledged.
With the escalating blitz of new technologies and products, learning about technical details and applications in real-world situations can be difficult at best. Manufacturers once took it upon themselves to ensure a general level of knowledge and expertise industry wide. They often provided the technical context of system design, electronics, acoustics and installation techniques.
The cost and diversion of the competitive effort leaves little time and few resources for training and education. It is true that many companies provide adequate technical information for specific products, and the Internet is a great resource for delivering this information on demand. Sadly, the typical factory seminars of old are rarely held today. Out of necessity, the focus is often on products and features.
We are faced with a wholesale change in the technologies of our trade. Systems contractors, manufacturers, representatives, consultants and end-users all share in the need for updated technical knowledge. They will also share in the benefits should this knowledge be made available.
Who assumes this responsibility? Private educational enterprises and a handful of universities do their part. Industry organizations such as NSCA are stepping up with their own technical certification and educational programs. S&VC has developed its course, "Technical Fundamentals of Audio." We must, however, do more. We need a concerted, coordinated, industry-wide effort. The resources, business and profit potential to justify their deployment surely exist.
A knowledge conduit already exists in the form of the representative network, through which local technology shows for their knowledge-hungry dealers are presented. Combined effort among all the key players could go a long way to bridging the knowledge gap as it develops. More importantly, an enhanced level of industry-wide knowledge will enable us to evolve and capitalize on the emerging systems market of the future. All it takes is vision.
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