A Simple Formula for Better Equipment

By Aiwa CEO Joe Born

We grew up with home audio, we know the power of great music and a great stereo to set the tone, to fill a room, not with noise, but with a mood. We’re building products that are laser focused on delivering that experience to the people that understand it.

What does that mean? We’ve put together a series of posts that attempt to articulate what makes Aiwa a different kind of Audio equipment maker.

We put money into the equipment, not the marketing of the equipment

It’s a dirty little secret in our industry that premium audio brands typically put 70-80% of every dollar you spend into marketing. 70 to 80%!!! From advertising and endorsements to the expensive retailer showrooms, these are things that help sell the product, but, of course, do absolutely nothing for the sound. The conventional wisdom in our business is that that’s the only way to sell high end equipment. The belief is that you need comissioned sales people, expensive advertising, and high margin showrooms to educate consumers and push them to your brand.

This longstanding belief was formed in a time when direct sales and retail were the only two options, and both of these are relatively expensive. A direct company didn’t have to dedicate nearly 50 cents of your dollar to a traditional retailer, but they had to pay for mailings, kiosks, a phone bank, etc and suddenly the sales and marketing cost wasn’t much, if any, cheaper.

In 2015, things have changed, and we believe that calls for a re-evaluation of how to bring a new product to market. Today, 75% of all people do online research before a consumer electronics purchase, and 6 of the top 8 sources of information being from word of mouth or internet research. From peer and influencer reviews to social media, consumers are vastly more empowered today than they’ve ever been in the past. At the same time, we have more efficient channels than we’ve ever had before. Amazon and the warehouse clubs distribute products at markups that barely exceed what it would normally cost to ship good to a direct customer. What may have been true twenty years ago has now become a modern form of “there’s a sucker born every minute” cynacism.

At Aiwa, we believe we can win simply by putting more money in the parts that deliver better sound. By flipping that math upside down and putting 70-80% of value into our products themselves, the results are stunning. The speaker we’ll sell for $300 would sell for $700-800 in the traditional approach. Of course, without broad traditional distribution, we won’t be able to reach every customer day one, but we believe there’s a segment of the population that will appreciate and understand this approach and we believe they will help us spread the word. Not because of gimmicks or kickbacks, but simply because they want their friends to have better audio equipment.

It may take us longer to grow this way, but in the long run, we will be delivering a brand we can be proud of, and equipment you can be proud of.