Own brands as a tool for business survival in a crisis: The experience of Audimania

Bookshelf speakers Arslab Old School Superb 90

Today we will talk about how to keep up with the tastes of consumers, which vary in accordance with the jumps of the ruble exchange rate, and what interesting business can offer its fans in a period of economic instability.
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Crisis: a reason to compromise

The crisis has changed the docking of groups of products, brands and target audiences of almost any business. The most striking example is the sphere of sales of electronics and, in particular, equipment intended for music lovers: the products they had planned to purchase earlier became unavailable to certain segments of buyers. And since the issue with the purchase did not go away, people began to look for alternatives, compromises.

The disadvantage of the current crisis situation is that the vendors offering electronics (and especially Hi-Fi and High-End audio equipment, which is most relevant for Audio Mania) are in a large price spread, not too many - there are many trade-off solutions in the line top "manufacturer may not be.

However, the number of brands that “everyone knows” is also small, so buyers are more focused, for example, on solving the problem of comfortable listening to music or watching movies, rather than on purchasing goods of a particular manufacturer. Direct pursuit of brands has changed the search for optimal solutions for the tasks that the buyer would like to decide.

Today, buyers of audio equipment readily come to the demonstration of the equipment brands, the names of which they first heard. The main thing is that the proposal should be suitable for the price, quality and character of the sound, fit into the interior, if this is important, and have technical support in the person of the representative office of a particular brand or company-seller.

Time for change: how the market has changed

But back to the beginning of the story with the jumps of the exchange rate. Although the main characters of the news in December 2014 were home appliances stores and stories about how buyers panic buy refrigerators and televisions, Audio Mania also experienced a surge in sales during this period.

December 2014 was a record in the entire history of the company, if you count in rubles. People really didn't know what to do. Many people remember the default, when those who had rubles in their hands lost a lot. Therefore, of course, those who planned to purchase imported goods, and in our assortment of the majority of them, rushed to implement their plans. And well done. After all, the dollar rate, which was then spinning around 55 rubles, can now only be dreamed of.

The turnover of December 2015 did not catch up with the figures for December 2014. The traditional pre-New Year surge was, but the company did not see panic in the company. But the structure of demand and the composition of the target audience for 2015 have changed quite dramatically.

Due to the fact that the income in rubles for most buyers remained unchanged (or even decreased) part of the audience, which was classified as middle class in Audiomania, left this zone and was almost in the “budget” segment. Premium class has become average. And some customers have ceased to be the target audience of the company.

Of course, in reality, these processes took some time, so that dramatic changes in the composition of the audience in the company were not noticed. As a result, the average check for Audiomania practically did not change as compared with the pre-crisis period - in rubles, of course.

If something has changed over the past year - so is the ability to predict the number of orders. Previously, the company could clearly predict the seasonality of demand and even build monthly turnover forecasts with almost 98% accuracy, but now it’s impossible to use historical data from previous years.

Everything that happened before 2015 “no longer matters”: it is impossible to build forecasts based on these data.

Nevertheless, 2016 in Audimania began optimistically. In comparison with the same period last year, January 2016 brought Audiomania 26% more orders. People are gradually learning to live in new conditions: they are getting used to, looking for alternatives and are interested in domestic developments in the field of audio, which during the crisis period can “shoot” and win a decent market share from Western brands.

Own brands as a crisis management tool

Audiomania not only sells audio equipment, but since 2008 has been releasing its own acoustic systems (Arslab brand). Arslab acoustics production is carried out in Riga, it employs some of the best employees who previously worked at the Radiotehnika factory in Riga, and the development of models is carried out under the guidance of Russian engineers.


Yury Fomin (left) and Artem Faermark (right) / Photo Stereo.ru

It would seem, why create production, develop new models of speakers, if you can sell what someone has already made and successfully brought to the market? First of all, retailer companies are now enough - but we don’t want to be simply “one of many”.

In addition, by offering our own interesting product to the market, we easily compete with other manufacturers. And since in Russia the production of audio equipment is still at the level of “handicraft workshops” and amateur home-made products (there are actually no domestic manufacturers of such speakers), it’s about competition only with Western brands - but in the local market.

Another important point is that there are not so many brands on the market of high-quality audio. People often don’t know exactly which manufacturer’s product they need, and seek advice from a company they trust. Therefore, the Audiomania brand, in which we also invest a lot of money and effort, is excellent.

Having our own brands, the ability to manage production, develop and manufacture models that are in high demand right now is a very powerful tool in a crisis. But in order to use this tool, constant contact with customers is necessary: ​​communicating with them, we determine what interests them, what products are most popular now (and not only in relation to their own brands).

In addition to the fact that it is necessary for successful sales, it is also useful for statistics. Understanding demand and its dynamics - the key to success at all times. And now it is doubly valuable.

The ability to directly contact the end consumer of the product that retail gives is our great advantage compared to “traditional” audio equipment manufacturers. The fact is that usually the production is very far from the consumer. Between the buyer and the manufacturer are a retail store, and a distributor, and sometimes also a wholesale company. There is almost no feedback. And when it is, there is a large time delay.


Artem Fairmark / Photo Stereo.ru

In addition, demand varies from country to country. Therefore, to produce a commercially profitable product that will sell well, the manufacturer needs a lot of research. The main difficulty in this case lies in collecting data from end users, which can take a long time and is very difficult, since the brand has no “organic” access channels to the buyer: the “layer” of intermediaries in the form of wholesalers, distributors and retail interferes - and each country where the sale of equipment, this composition of the "layer" is different.

In this case, it is much easier for us to work: the Arslab brand is focused on Russia, and there are no mediators between production and the buyer. Therefore, we can promptly introduce new models, change priorities in production.

It turns out that everyone benefits from the “symbiosis” of the retailer and the manufacturer: the store and the production. Buyers know that we are really good at audio technology, and not just resell the product - even if they stop choosing not on the products of our own brand. Retail gives you the opportunity to directly know the mood of customers and respond to them in a timely manner.

The very idea of ​​combining production and sales is nothing new, but our tasks are different from those that other companies have set themselves. We are not trying to bring into our assortment everything that is on the market, and to wait until demand itself comes - on the contrary, we are interested in offering the market the most interesting, “tasty” goods.

We make different products for different target audiences: not for nothing, for example, Audiomania entered the capital of the Finnish acoustic manufacturer Penaudio (now the products of this brand are also manufactured at the factory in Riga - we even managed to improve the production technology compared to the Finnish one).



Bookshelf acoustics Penaudio Charisma

For Audiomania and Penaudio, this cooperation is an opportunity to distribute business tasks: Audiomania is engaged in the production and promotion of the Finnish brand in the Russian and world markets, and Penaudio founder Sami Penttila can fully concentrate on the design of new acoustics.

We also have no task to make the “cheapest” columns. The Arslab brand is produced under the slogan “High-End at the price of Hi-Fi”, but this is our opportunity to offer the market a quality product at a guaranteed competitive price, and not an attempt to save on everything. In general, pricing for our own brands is based on the scheme when the price corresponds to the product, and the product turns out to be slightly better than the consumer expects.

Prices for high-end audio systems are usually measured in six- and even seven-digit figures, while many Arslab models can be bought at a price within a hundred thousand rubles and lower - that is, several times cheaper. It often happens that at the exhibitions clients tell us: “Your 80,000 speakers sound better than the half million system in the next room.” This means that we did everything right.

In the period of economic instability, such a pricing model becomes especially popular: the demand for Arslab speakers in Russia significantly exceeds supply (prices for “own” acoustics of Audiomania still had to be increased due to the crisis, but disproportionately to the growth rate). In Russia, Arslab acoustics has become even more competitive than before - this played a role in increasing sales. As a result, the turnover of 2015 for Arslab products increased by 51% compared with 2014.

Now (despite the crisis, and in some sense thanks to it), the main task of the brand is to reach a new production level, to provide as many Russian music lovers as possible with high-quality acoustics at reasonable prices.

Regarding the goals of Audiomania as a retailer, we strive to ensure that 100% of sales fall on our own brands and exclusive deliveries, when we buy goods directly from a manufacturer abroad and not from a local distributor / wholesaler (now our brands and exclusive deliveries make up more than 40% in sales).

This is an approach that allows you not just to “resell something”, but to form a trusting relationship between the manufacturer and the end user. A buyer who purchases a product “seriously and for a long time” (and in the field of audio technology that is the way it should be), certainly deserves it: both in a crisis and at any other time.

PS More materials on the topic of audio - in our blog " Hi-Fi World ".