Memorex, Koss move into portable audio - Memorex Telex Corp

Discount Store News, August 17, 1992

The booming personal and portable audio market has long been dominated by consumer electronics giants like Sony, GE and Panasonic, but a change seems to be underway. In recent months, two well-known accessory brand names, Memorex and Koss, have introduced extensive lines of value-priced, feature-rich products that are aimed at leveraging the two brands' high profile in the CE business.

Koss president and ceo Michael Koss noted that the 18-sku line, which will include a portable CD player, personal tape players, boomboxes and shelf systems, "is aimed squarely at national power retailers" who need a value-priced, but national branded, product line to build business and "offer an alternative to the market leaders." Koss has licensed its name to Hagemeyer, N.V., but retains final approval of new products, specs, and design, he said.

The Koss brand name, which has become omnipresent in the mass market headphone department, has created such high demand, Koss said, that customers are on allocation until production catches up with orders.

The Memorex branded line, from Tandy subsidiary Memtek, leverages the brand's popularity with discount shoppers, particularly women. "Over the years, they've become familiar with the brand and feel comfortable with us," marketing director Dave Williams said. "And women are dominant purchasers of portable and compact audio products."

The subtext here is that dominant brand names are starting to price themselves out of the market. "Price point is very important to the power retailers," Koss noted. Sony may be the most preferred brand in the industry, but a significantly lower price (as much as 30% lower, with identical or better feature packages) will be attractive to a large percentage of self-service shoppers, some manufacturers believe.

Williams noted that a niche has developed between high-profile market leaders like Panasonic and Sony and entry level no-name brands in traditional power retailers. "The customer, in focus groups, clearly told us that there was a spot for a recognizable, trusted brand that would fall between the two extremes," he said. "They felt that there was much too much of a premium on add-on features."

The Memorex line was put together with heavy input from retailers, he added. "Their ultimate customer wants a combination of advanced features, a trusted brand name, and a value price," Williams said. "No one out there is offering that combination today."

Memtek has concentrated on another issue as well, packaging. "Our focus groups told us almost unanimously that packaging was irrelevant," he noted. "But when they saw our full-color packaging, they routinely overestimated the price point. We developed full-color, feature/benefit type packaging specifically for the mass market, and we think it's going to sell very well."

Both Koss and Memorex product lines are due on retail shelves in the early fall.