PS Store Mgr Report

August 14, 1973

A CONFIDENTIAL REPORT TO STORE MANAGERS - UP-DATED This is the August, 1973, version of a report Ted made a few years ~o. Most of the content reflects Ted's thinking that shapes the "image" of Paci fi c -- and our di recti on in pr,oduct; so if some of it looks pl ag足 iarized, it is!

Suppliers change, and so does our merchandising emphasis and this is our latest chart on whose products you should be featuring in your store -- "featuring" to me means whose products are displayed in the most advantageous places, whose products your salesmen are turned on to, whose products are always on d~splay, etc.

As per the original letter, the info is for your personal use only: it's not to be discussed with any representative.

Thanks for listening,

Dick Schram

A CONFIDENTIAL REPORT TO STORE MANAGERS: For some months nany of us have been visiting the stores and work­ ing on the sales floors when we could - since live been back in the E~eryville dungeons, I've spent ny spare time puzzling over the product movement reports. I've seen some things that quite honestly surprize me - certain products are obviously being pushed which in Pacific's best interest, shouldn't be. In some of the more blatant examples, I've talked to the store manager, and much to my shock, he didn't know it wasn't in his best interest to promote that product. I now intend to live up to my obligation, \'Jhich is to let you know what products should be pushed. Your obligation is to stay on top of your inventory, your displays, and your salesnien to 17i2ke sure all elerr,ents of your store are headed for the same goal.

I've made up a chart that's for your personal use, it should not be shown or discussed with any supplier or factory representative. The reason this document was never written before is because I was afraid that someone in our e~ploy would screw up and talk about it to one of his friendly "reps" etc. All we need, is for it to get in the hands of an unfriendly supplier, and it'll really mess up some good relation­ ships we have. Please be discrete with whom you discuss what's on the attached sheets.

The chart breaks down brands by product category - this was done for example, because we want to push Advent electronics and speakers, but not their raw tape. The first column show the average margin for that brand if the products are sol d at "Pacifi CiS Pri ce". You know that the two most critical aspects of your performance that youlre jud­ ged on are: 1. meeting profit objectives; 2. meeting sales goals.

If you want to exceed your sales goals, the eas;es! way to dO tnls is to get your salesmen to close every sale they can - lf they have to take a deal at minimum, then they take it. This honestly, is the ~ way you'll meet your sales objectives; the managers that are the most successful at discounting usually have the best growth rates. You know that if you take any deal at minimum, you need another.sale (or two) at a strong margin to balance out your average gross margln. So !hen I ask you, what store manager who's doing his job well, will allow hlS sales­ men to become, as a group, hyped up over new receiver models of the following brands: Sony, Marantz, Pioneer. Since Pacific's s~lesmen dis­ count an average of 4% in a package, every Sony, Marantz or Ploneer sys­ tem your salesmen sell because they like it, costs you margin. It's your job to get them turned onto the products that make you money.

For this ene, live assi0~ed each brand in each prcduct group a num足 ber from 1 to 5. The numbers are misleading - 4 is not nearly as good as 5. Four (4) is only second best. One (1) is the worst possible thing you can sell and still have your store and the company meet it1s long range objectives. Two (2) is a lot better than 1. Three (3) is a lot better than 2. Four (4) is one hell of a lot better than 3, and 5 is just out of sight!

The implication of these charts is that, in some cases you and your

sales~an have some choice as to what to sell the customer. 'I'm with you

on wanting the customer to get a good value, but any salesman who pushes a Sony 7055 or a Marantz 2230 over a Spectrosonic 310-4 is doing such, in most cases, purely for emotional reasons. I can make a true statement that the Spectrosonic puts out more power across the bandwidth than ei足 ther the Sony or the Marantz(50 watts/channel versus 30) and it has more useful features. I know you can point out a feature on the Marantz (or the Sony) for everyone I point out on the Spectrosonic, which goes to prove that the decision(Spectrosonic or Marantz or Sony) is a biased one on the part of your salesmen, and being part of the management group, ~ are responsible for affecting their predjudices.

It isnlt only just how much attention you give to training your salesmen, itls whether or not you1re using all the tools (in addition to salesmen) at your disposal to sell products that are important to Pacific.

Answer the following questions and see if you're doing all you can to make your store1s facilities contribute to our success: 1. Where in the store, is the best single spot for a tape

recorder to be, so that it gets sold? Is that space

being occupied by a Sony (a "1") or a TEAC (a 115")?

2. What blank tape do you use to demonstrate tape recorders with? How about blank cassettes? Is it Scotch (a"lll) or is it Maxell (a "5")?

3. When you want to demonstrate your very best records through your very best speakers, which cartridge do you use? AlOE IV ("5"), a Stanton 681 EE ("4"), or a Shure V15III ("l")?

4. How many receivers are displayed without a walnut case?

How many advertised systems do you have with a pair of Quad headphones available for use at the receiver? Do you display all the models of Quad headphones ("5") as well as all-the model s of Koss ell ")?

5. Are your Quadraflex demos ("5") in as good shape cabinet足 wise as your JBL demos ("l ")? In your sound rooms, the speakers that are placed on the floor or in a corner produce more bass (for either the improvement or degra足 dation of the sound). Are the speakers in the best positions "5" or "4" brands?

6. Are you displaying to best advantage all the items

that Pacific has an exclusive on (or a semi-exclusive)?

These items include: Fisher 205a, XP79, Micro/Acoustics Altec 872A, E~pire 999 XEX, ZEX, BIC Lux 71 2/R, Bose, Advent and Cerwin Vega products (especially in Northern California); AOC lOE4, Spectrosonic receivers; all Quad足 raflex and Trans Audio speakers.

7. Do you spiff systems or products that donlt contribute to the growth of Pacific? A ~anager might decide to put up and spiff a s,jlsten using a rlarantz 2270, a Dual 1229 and a pair of J~L L-100 speakers and the system may show a huge profit ~2rgin, but it probably ainlt adding to Pacific's growth. Better to put up a Lux 2R, Garrard Zero 100 and Quad 66's for the same margin -- that adds to our growth. In the real dollars that it costs'to bring in a customer from an advertisement, every Spectrosonic sale "buys" you an additional customer that a ~1arantz 3 or a Pione~r sale does not. Howls that for affecting growth?

Maybe these questions can get you turned on to using all your facilities in promoting Pacific's long range plans. If you come up with some wild idea that'll help us all move more of the important brands, let me know, preferably written. (Then I can send a copy to all the managers.)

Good Sefl i ng,

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