Pioneer Electronics Inc - Consumer
Electronics - US
Pioneer Electronics Inc
Strategic Direction
·
Pioneer is recognized by
consumers primarily for its audio products, in particular in-car systems. The
company is trying to change this perception by adopting a premium strategy for
its plasma televisions. Pioneer's recently launched global marketing and
product development initiative, known as "Project Kuro," is expected
to guide the company’s business strategy in the United States for the
foreseeable future.
·
Pioneer’s goal with its upscale
Kuro line is to deliver the ultimate viewing experience for consumers without
focusing on price points and breaking away from the commoditized pricing which
has plagued the industry. Not only can consumers expect to see more high-end
plasma offerings from Pioneer, but the company is also venturing into the 1080p
projector segment and LCD televisions.
·
Pioneer’s emphasis on producing
high-end performance products rather than focusing on volume and price is
clearly evident in its retailing strategy. To maintain the high-end image
incorporated under the Project Kuro initiative, the company intends to
distribute the Pioneer brand through established retailers such as Best Buy,
excluding warehouse club channels and other price-driven mass merchant
retailers. In addition, consumers will see more merchandising space dedicated
to Pioneer products at Best Buy locations, where featured products will include
the Pioneer 1080p plasma television set, receiver, speaker system and Blu-ray
Disc player. The company's high-end Elite brand will be reserved for A/V
specialty dealers and custom installers. Moreover, Pioneer is expected to
launch more company-operated stores in the United States.
·
Pioneer will continue to forge
ahead in the development of in-car audio and navigation systems. The company is
expected to put a greater emphasis on voice command for in-car audio and
navigation systems, a technology that is emerging as a key feature for in-car
consumer electronics products.
·
The 2007 agreement between
Sharp and Pioneer involving collaboration on the development of next-generation
DVDs, audio, car electronics and television displays will likely begin to bear
fruit in the US market sometime in 2009. Pioneer-branded LCD displays supplied
from Sharp have already been introduced in Europe in 32-inch, 37-inch and
46-inch sizes, and similar products are expected to be launched in the US
market sometime in 2009, targeting secondary room applications.
Key Facts
|
Full name
of company:
|
Pioneer
Electronics (USA) Inc
|
|
Address:
|
2265 E.
220th Street, Long Beach, California 90810, USA
|
|
Tel:
|
+1
310-952-2000
|
|
www:
|
www.pioneerusa.com
|
|
Activities:
|
In-home and
in-car consumer electronics
|
Source: Euromonitor International from
company reports, Trade press
|
|
2005
|
2006
|
2007
|
|
Net sales
(company-wide)
|
¥754.9
billion
|
¥797.1
billion
|
¥774.4
billion
|
|
Net profit
(company-wide)
|
¥ (85,758)
|
¥ (6,761)
|
¥ (17,992)
|
|
Number of
employees (company-wide)
|
38,826
|
37,622
|
42,775
|
Source: Trade press, Company research
Company Background
·
Since its founding in 1938,
Japan-based Pioneer has evolved from being a simple audio speaker manufacturer
to a global supplier of innovative consumer electronics. These products span a
broad spectrum of electronics, and they include large-screen plasma TVs, DVD
recorders, DVD players, stereo systems, other audio/video components and in-car
entertainment/navigation devices.
·
Pioneer Electronics (USA) Inc.
is headquartered in Long Beach, California, and it is a subsidiary of Pioneer
Corporation. The company established its North American operations in 1972.
·
For the fiscal year ended March
31, 2008, Pioneer Corporation reported lower operating revenue, operating
income and a higher net loss. Consolidated operating revenue decreased 2.8% to
US$7.7 billion, mainly a result of lower plasma display and DVD recorder sales.
This decline occurred despite increased sales of DVD drives, Blu-ray
disc-related devices, car audio products and car navigation systems.
·
Sales of aftermarket audio
products declined in North America, and OEM sales rose. Sales of aftermarket
in-car navigation devices remained steady while OEM sales increased. As for
in-home consumer electronics, sales declined by 8.8% to reach US$3.3 billion.
The decrease in sales was largely the result of declining demand for plasma
televisions, mainly in North America and Europe.
·
Pioneer forms part of the
second-tier of global manufacturers in the consumer electronics market,
following industry leaders Sony, Matsushita and Philips.
Production
·
Through its production facility
in Springboro, Ohio, Pioneer supplies OEM mobile entertainment products to
various vehicle manufacturers including Ford, General Motors, Toyota and Honda.
·
The company’s other production
facility, located in Pomona, California, is slated to be closed by the end of
March 2009. The company plans to replace the Pomona operation with supplies
from Japan.
Competitive Positioning
·
The television subsector is
facing an unprecedented level of competition as established brands, such as
Pioneer, battle it out with low-priced Chinese and private label brands.
Margins continue to fall on sales of televisions as retail pricing gets
squeezed. At the same time, Pioneer must also contend with the encroachment of
LCD televisions into the 40-inch and 50-inch arenas, traditionally the domain
of plasma televisions. As the pricing gap between large LCD and plasma
televisions continues to shrink, it is expected that most consumers will turn
to LCD, given its higher resolution.
·
Despite the challenges facing
plasma televisions, Pioneer continues to aggressively push the technology. In
2008, Pioneer launched a number of new 1080p Kuro plasma televisions in its
Pioneer and Elite lines that are much thinner than previous versions. Pioneer
is trying to capitalize on the growing demand for increasingly thin flat-panel
television sets.
·
To support its television
launch, Pioneer also unveiled its next-generation Blu-ray disc players as well
as its new Elite series of A/V receivers priced at more than US$1,000. These
efforts are an attempt by Pioneer to position the company as a high-performance
supplier of home theatre equipment. The company is trying to aggressively
promote the entire audio/visual experience to consumers.
·
These marketing and promotion
initiatives are all a part of Pioneer’s new global re-branding and product
development initiative, Project Kuro. In fact, the company is set to launch the
second leg of its fully integrated global advertising campaign behind the
project Kuro strategy, wherein Pioneer will stress the emotional experience
involved when using Pioneer products at home. Aiming for high-end entertainment
enthusiasts, Pioneer’s television campaign will run on national cable channels,
including ESPN, as well as in print media with advertisements in Esquire, Men's
Health and Wired magazines.
·
Faced with a slowing US economy
in 2008, Pioneer found itself challenged in its attempts to sell high-end
in-home consumer electronics products. However, the company faced even greater
challenges in the in-car segment as US vehicle sales plummeted during the year
with Pioneer’s OEM business suffering as a result. The aftermarket subsector
also faced difficulties as many car owners were reluctant to spend money on
in-car vehicle upgrades. Regardless, Pioneer continues to focus on new product
development for aftermarket products. As noted, the company is paying
particular attention to enhancing voice command technology for use in both
in-car audio and navigation devices.
|
Product
Type
|
Volume
Share
|
Rank
|
|
In-car
Media Players
|
15.0%
|
2
|
|
In-car
Speakers
|
16.0%
|
2
|
|
In-car
Navigation Systems
|
3.9%
|
5
|
|
Other
in-car Consumer Electronics
|
10.0%
|
2
|
Source: Euromonitor International
