The CE Retail Trend Toward MI

Growing Number of CE Retailers Carrying
Pro Audio, DJ and Musical Instruments
Adds to CE Value of BBE

We have seen big changes within the ranks of traditional CE retailers. More big box and online CE retailers have added musical instruments and pro sound equipment (collectively known as MI) to their product mix. Best Buy's move into the MI business supports what many regional retailers have known for some time: MI can be a good business that meets the growing needs of their customers.

BBE Licensing News asked BBE Executive VP David McLaren about this trend.

Q: We've seen crossover into MI before. Why is it gaining momentum this time?

A: More consumers are recreational musicians and DJs than people in the CE industry thought, and CE retailers are seeing a real opportunity. It used to be the mom & pops that got it, while the majors may have had a few toy-grade instruments. Now major retailers are showing the way. With Best Buy's move, more traditional CE retailers are taking MI seriously.

Q: What does this mean for CE manufacturers?

A: Anything that takes retailers' focus away from traditional CE causes some people to be alarmed. Don't be afraid of it. Adding MI to the product mix can make retailers stronger. For one thing, it means increased floor traffic.

Imagine a family in a Best Buy store. Dad might be an active or latent musician, and he's drawn to the MI department. The sights and sounds of an MI environment can rekindle his love of making music, and he - and the family - are spending more time in a Best Buy store. Meanwhile, mom and the kids are around the store, shopping for white goods, electronics, games or computers. More time on the floor turns into more goods at the checkout counter.

Q. CE people know BBE for audio technology. How does this trend affect BBE?

A: At BBE Sound, Inc. we are in a unique position to understand the dynamics. We license CE manufacturers to add BBE HD Sound technology to their products, but for over 25 years we have been a major manufacturer in pro audio and musical instruments. We work with traditional MI retailers, CE retailers crossing over into MI, and of course we work with CE retailers supporting the BBE licensed CE products.

Millions of musicians, bands, DJs and other music enthusiasts use BBE pro audio products. With more CE retailers moving into MI, that means CE products with BBE technology are sharing floorspace with BBE pro audio gear, including our top-selling BBE Sonic Maximizer audio processors. With our G&L guitars and basses, we've got superb instruments with a rich heritage. G&L was founded by Leo Fender in 1980, and in his words, "G&L instruments are the best I've ever made."

Q: How can CE manufacturers take advantage of the MI movement?

A: BBE licensees are already in a good position. CE makers whose products feature the BBE brand and technology positioned better to win customers. I tell them to make sure retailers know that their brand has true professional audio technology from BBE Sound. After all, when their products are sharing floorspace with BBE pro audio, it's a powerful advantage to have BBE on your side.

Q: What can BBE do to help CE retailers maximize the benefit of BBE in MI and CE products?

A: There are simple ways to bridge the strong BBE reputation and brand awareness from the MI side to CE products. On the retail floor, that can be accomplished through things like signage, point-of-purchase displays and training. BBE HD Sound is a demonstrable feature; everyone can immediately hear a big improvement in sound quality. That's how our Sonic Maximizer processors are sold: a quick demo turns into an impulse buy. This same approach is effective in presenting step-up CE products that have the same BBE professional technology built-in. Our job is to help retailers understand this opportunity.

Q: What about reaching consumers outside the store?

A: We're doing more to create awareness among MI consumers before they walk in the door. In Q409, we launched the Make it Better with BBE Extravaganza contest in partnership with Guitar World magazine. Guitar World is the number one selling entertainment magazine sold in Walmart stores, so for one thing, that demonstrates the sheer strength of numbers in MI. For three consecutive issues, we sponsored a full-page promotional ad which featured Panasonic Viera televisions with BBE ViVA HD3D Sound and spotlighted major retailers which carry them.

People entered to win prize packages consisting of Panasonic Viera TVs, BBE pro sound hardware and software products, and the grand prize winner also received a top-of-the-line G&L Comanche guitar. These people know the BBE brand, and a good portion of them own and love BBE equipment. The message was clear and direct: quality sound is just as important as a quality picture, these Panasonic TVs have the magic of BBE sound, and here's where you can buy them. The folks at Panasonic understood and appreciated what we were doing, and they did a good job explaining the value to retailers. We did our part on the trade end by spotlighting this promotion in TWICE magazine. Altogether, I think we had a fresh, innovative approach that delivered value to Panasonic, the retailers, and consumers. US sales of the Panasonic models with BBE were up 20% in the quarter.

On our website, we're connecting our MI customers with CE brands featuring BBE. On the home page, we feature a flash presentation spotlighting various CE products, as well as banners which are visible throughout the site. There's no way a consumer looking for their next piece of BBE MI gear is going to miss the connection to our CE partners and licensees.

We've got a lot of things in the works to leverage the reputation and goodwill associated with the BBE name in favor of manufacturers with BBE technology in their products and the retailers which carry them.

CE / MI Crossover Spotlight: J&R Stores in New York City

At H&R, consumers buy BBE
equipment for making music
and choose televisions, car audio and portable audio featuring BBE

Take a look at J&R's website. From BBE pro audio...

... to CE products with BBE from Pioneer, Cowon and more:

Stage I Studio I Home I Mobile I Automotive

For more information please contact:

David McLaren, Executive Vice President

BBE Sound, Inc.
5381 Production Drive
Huntington Beach, California 92649
Tel (714) 897-6766
Fax (714)895-6728