NEW YORK - TO ENCOURAGE audio salesmen to push its costly stereo cables, 12 times a year Monster Cable flies a dozen or so top producers from stores around the country to all-expenses-paid weekends at places like the Napa Valley, Hawaii and Germany.
Founder, chairman and sole owner Noel Lee even lets the star salespeople zoom around in his 13 sports cars, including a $200,000 Ferrari.
Lee needs good salespeople because his product requires lots and lots of selling. Buy a $400 stereo from the Good Guys in California and chances are you'll also walk out with $50 worth of Monster cables. Buy a $1,000 Marantz amplifier from Ken Crane's Home Entertainment in California and you'll get sold on a $100 connecting cable.
Do you really need that fancy wiring? That depends on how well you hear. Some say heavy-gauge, rubber-coated lamp wire at 25 cents per foot affords nearly as much fidelity for audio signals as the gold-tipped, electromagnetically shielded cable Lee sells for between $3 and $125 per foot. Chances are most will never tell the difference. In short, it is a product where most of the value is in the mind of the buyer. Thus, Lee lavishes attention on the people who move his goods.
Unlike Kimber Kable and Straight Wire, which do minimal sales staff training and rely almost exclusively on print advertising, Monster Cable puts $13 million a year, 15% of sales, into training and incentive programs. These are aimed at convincing store owners and appliance salesmen that it pays them to push Lee's products.
Salespeople get fancy trips. Store owners get fancy markups. Most of the customers, after all, come to the store armed with competing price quots on the CD changers and the amplifiers. The wires, in contrast, are an afterthought and don't have to be competitively priced. Monster's cables typically yield a 45% gross margin, while the more visible audio and video components hover around 30%.
Cables are to a stereo store what undercoating is to a car dealer. At Ken Crane's, a chain of eight stores based in Hawthorne, Calif., Monster accounts for 2% of retail sales volume but 30% of gross profit.
Lee, a short, crisp 50-year-old with a mechanical engineering degree from California Polytechnic State University, started this firm in 1977.
He's since built it to expected sales of $90 million for 1998, more volume than almost all of Monster's competitors combined. Lee probably nets 10% pretax.
The huge sales and training budget covers more than junkets for the retailers. Sales personnel are taught things like this: Cheap cables pick up electronic noise from telephones, televisions, hair dryers or the audio equipment itself. Premium cables deliver more signal. What they don't say is that you can solve some of the interference problem by draping your wires away from sources of interference.
After Lee gets through training a store's staff, no customer can leave the store without becoming cable-conscious. In a Good Guys shop near San Francisco, Monster cables visibly hook up every active product display. The Monster name is printed on canopies above the sales racks, and its packages are lined up like invading army troops on the shelves.
Every month Lee sends out the numbers to each store that agrees to his aggressive sales strategy, tracking the performance of each salesman and a store's overall performance rank among competing retailers. The rankings are based not on dollar volume but on the percentage of customers who go out of the store with a Monster product. It's from this list Lee selects the winners of his all-expenses-paid weekends.
Early in the program, one Midwest salesman almost totaled a Ferrari by driving it off a cliff, but was saved from the Pacific Ocean by construction netting. For Lee, it was just another cost of doing business.
While i can understand where Viridian is coming from, the "service" that Monster is performing is purely profit minded and not intended to "enlighten" the general public.
If Monster were trying to improve cable performance, live up to their sales hype of reduced RFI / EMI susceptability and increase awareness to the general public, they would have switched from their "zip cord" configuration to the twisted pair design that they have just recently been pushing a LONG, LONG time ago.
Since Noel Lee has been aware of the advantages of such a design for many, many years and is now just making this type of product available, i think his motivations are pretty clear. He is trying to maintain Monster's market share and attempting to keep up with many of the "high tech" cables on the market. If he can get his "well trained" sales force to convince repeat customers that the "new and improved" Monster twisted pair is better than their "old fashioned" Monster zip cord, all the better. Repeat "rip-offs" are TWICE as good and profitable as only doing it one time. Sean >
I felt I had to post this article in light of another recent thread about Monster (tm) and how they have been trying to sue just about anybody they can for using the monster name. Personally I feel they do about as much for hifi as the likes of Bose - but with the added disadvatage that they give hi-fi a nasty macho sort of image that I personally loathe.
What does Forbes know about speaker cable, interconnect or hi end marketing. I'm not a fan or detracter of the Noel Lee but it seems to me that about 17 years ago when I first heard about cable there wasn't much else out there. He may have paved the way for the better cables we use now. The lawsuits are just stupid but we've developed a culture in which it is cheaper and more expedient to sue for money than it is to earn it! I like my speaker cable better than zipcord and my interconnect better than patchcords, so thanks to whoever made them possible
I am often surprised & always dismayed that many companies with the resources to conduct research (such as Monster Cables) -- and thereby introduce a better performing product at a competitive price -- don't seem to hit the cutting edge of consumer available technology. Cheaper to buy research from shoe-string operations, I suppose (as evidenced by the pharma industry where good marketers buy out good researchers). Few giga-corps (Siemens is one, at least) offer anything special to the (ailing?) hi-end/music reproduction industry. More's the pity.
There was also a very interesting article in Inc. Magazine about Monster cable. Noel Lee did do a great thing for this industry when he did bring the attention to cables. Prior to his entrance into the market, you bought a stereo system and they threw in the cables. They were 16 awg lamp cord and tin plated interconnects--what more did you need--the sound went through these right? Now the cable market is abundent with all types of companies. Those that put 15% of sales into R&D, those that put 15% of sales into training and incentives, those that put 15% of sales into their personal pockets as they sell snake oil. The later is the one that burns me. I personally like the ones that put the money into R&D, but fully understand the business philosophies (particularly when a company gets big) in spending money in sales training and incentives. In his case it appears to have worked. And keep in mind that while other manufacturers may spend higher % of sales on R&D, Monster may be spending significantly more $. Unlike sales training (where the % is usually what's required), it's the $ spent in R&D that lead to results. As for the lawsuits--a high end cable company and a children's movie? I don't see the connection.
First, let me state that I have never owned any Monster Cable products. But, they have the right to market their product any way they want to. If this includes trips for salespeople, I'm sure the salespeople love it. I went on a similar trip provided to the top salesmen for Bang & Olufsen in the 80's. It was an effective sales tool and a nice vacation. Some may consider it distasteful, but sales is not a particularly tasteful field. I never sold anyone a product they didn't want, but took the time to show the B&O stuff to each customer. Many bought it. Many people are not really particular about which product they buy, as long as it sounds good to them, and fits their taste and budget. If Monster Cable gives them better sound than lamp wire and does not break the budget, they'll buy it. Now comes the good part. They have been made aware that cables make a difference. When they go to get new equipment, they will consider cables part of the purchase. Then they can choose a better cable from one of the better makers that we all would endorse. So Monster may be considered a "gateway" cable which leads to better cable purchases, which helps the high-end boutique makers to get sales which they would never get otherwise. If a consumer never thinks that he needs anything but lamp cord, he will never even consider a $1500 interconnect. And before you accuse Monster of profiteering, think about the prices of the cables from companies you do like, and the exorbitant prices they charge for a few feet of wire. Does anyone really believe that it costs $6000 to make a couple meters of even the best speaker cable? The simple fact is that the cable industry in general is being used as a profit vehicle to overcome the drop in the audio market. It doesn't matter if it is Monster or Nordost or Kimber, etc.
I have to agree with Twl and disagree with Sean. First of all when did it become Noel Lee or Monster Cable's job to educate. They make and sell cables pure and simple. If they want to pour their dollars into agressive marketing and sales incentives so be it. I imagine if other cable companies had the financial means of Monster Cables they would do the same. And the point about Monster being a gateway cable brand is a great one. Once you can hear differences in anything, cables, speakers, components, or think you can hear the difference, can the upgrade bug be far behind?
A business that wants to stay in business for long needs to make money (though I suppose there are exceptions). There are various ways to do that but it seems that a good sales team and marketing program are a good start. Kudos to Noel Lee for surviving so long in the business world and making good money at it. I certainly wish I could do that. And I doubt that Monster Cable (tm) sees education as its core business. Though I agree that educating the consumer is another way to show them the possibilities of products new to them.
The real issue, to me, is not whether Monster Cable (tm) agressively markets its product or, *gasp*, makes a larger profit then other cable manufacturers. Or even that their top sales people are sent on trips around the world; many other companies do that. Can such incentives lead to deception? Yes. But then any incentive program, in any industry, improperly implemented can lead to deception. To me, the real issue is whether or not Monster Cables(tm) sales and marketing program actively and knowingly encourages the deception of their customers. And, whether or not their customers are convinced of the absolute necessity of purchasing a product that they cannot afford or do not really need. The quoted article seems to imply that the sales staff leave out some facts, but doesn't clearly state that they are engaging in deceptive practices(it could merely have been negligence). If Noel Lee believed that his companies products were so much snake oil foisted on an unsuspecting public I'd say that he was wrong and deserves to be exposed. But I have used Monster Cable (tm) products in the past and didn't find them to be that bad. I've since moved on to better cables, but my point is that I don't think the product itself garbage.
As to Monster Cable (tm) cables being a "gateway" to better things, I'm not entirely convinced. Perhaps some people have found it so. But most of my friends buy electronics from Best Buy or Circuit City. They may be convinced that Monster Cable (tm) is better than zip cord. But the chances of them going on to purchase other brands is slim since neither Best Buy or Circuit City seem to carry much more than Acoustic Research and Monster Cable (tm) cabling; well, and whatever house brand they have. Most of them are astonished when they learn what my system costs; and I have a fairly modest system relative to many of those posted on this site. Even after listening to it they would never conceive of spending that kind of money. Some of them are true music lovers. They would rather purchase a 100 cds then a $1500 cd player. A better system is simply not a priority with them.
I guess the long and the short of my post is that if Monster Cable (tm) is engaging in deceptive and predatory sales practices then by all means expose them. But lets not exoriate them because they make more profit than our favorite cable manufacturer, because we don't like their products, or because we don't like their marketing techniques (remember, there is a difference between a company engaging in business practices we simply dislike and those that the cross the line into deception and fraud).
Suing other companies and individuals for using the word "monster" is another issue. My wife used to be a senior editor for Motorola. Part of her job was to deal with issues related to the use of their trademarks. Why? Because if improperly used they could lose the right to protect those trademarks. Intellectual property and reputation are perhaps the most valuable assets of any company. When stolen it can lead to significant losses in reputation and business. Translation: the company stands to lose money if they allow their trademarks to be infringed. Though having said that, it does appear that Monster Cable (tm) has become more aggressive than absolutely necessary in protecting their trademarks. To the point of needlessly hurting other companies. Now that is something they deserve to be slapped for.
This is a great discussion about a subject that I believe continues to hurt the High End Audio Industry, that of its participants looking down on its marketing successes. It is not limited to Monster Cable. Look at all of the Krell and Mark Levinson bashing that goes on. This is the only industry that I can think of off hand that punishes its participants for having a business plan that includes marketing techniques that are utilized in almost every other industry that I know of.
Every cable manufacturer owes Monster Cable for the opportunity to have a marketplace to sell to. They should pay Noel Lee a royalty for every interconnect or speaker cable that they are able to sell outside of the interconnects and speaker cables that come standard in the box. Noel Lee was one of the, I would argue the most important, pioneers of the cable industry.
I attended one of his in-store sales meetings when I sold stereo back in the early nineties. To begin with, Noel Lee is a really nice, down to earth, guy. He understands that it is important to sell a customer on the notion that cables are a separate component. For this to be successful it is important that High End Audio Salespeople are trained in how to educate those who are not necessarily audiophiles. This education, in my opinion, opens the door for future members of our hobby. I know that it was a salesman who pushed me toward B&W speakers instead of the Cerwin Vega speakers that Consumer Reports rated highly that brought me into this hobby over 20 years ago.
As far as Monster Cable products are concerned, I believe that they are very underrated in the Audiophile community. Their high end interconnects and speaker cables are competitive with anything that is out there. You may like them more or less than other cables, but I would argue that they offer more more performance for their pricepoints due to the economies of scale of their manufacturing compared to smaller cable manufacturers. There are some horrible sounding esoteric hand made cables and some great sounding machine assembled cables. I have owned many different interconnects and speaker cables from various manufacturers and I have always liked the way that Monster cables have tended to sound in my different systems, full bodied. Not the most detailed cable, but not the least either.
How do Monster Cable detractors explain the performance of their power conditioners? What about their Entec line of DA Converters. Do you remember their highly rated and wonderful sounding phono cartridges?
I read Sean's post and I respectfully disagree with the idea that a twisted cable technology is necessarily superior to other technologies. As an example, Tara Labs and others have made exceptional solid core cables for many years. There are also many different variations of twisted cables. AudioQuest, Cardas, and Kimber are excellent twisted cable manufacturers that utilize different philosophies, materials, and manufacturing processes to create their products.
My last point is about sales incentives in the High End Audio Industry. Monster is far from the only High End Manufacturer to offer sales incentives. When I was selling in the industry Adcom, a respected high end audio company, had the best incentive program of all companies. They offered their products on a point system based on individual sales person Adcom performance. They were far from the only ones doing this. It is also standard for High End Audio Companies to sell their components to audio salespeople, reviewers, and other insiders for accomodation pricing, typically 50 percent of retail.
I agree that profiteering in the audio industry - cables in particular - is dragging it down. - I believe good cables can benefit a system, I have heard the improvements and have spent a couple of hundred on them myself, but ANYBODY marketing a cable for thousands of dollars is a huckster and a profiteer.
For sake of clarity, i brought up "consumer education" following up on Viridian's comments. I don't think it is any manufacturer's job to educate the public. However, i do feel that it is a manufacturer's job to continually research their field and improve their products. Given the amount of time that Monster has been around and the amount of resources ( people and funding ) that they have at their disposal, can anybody honestly say that they have done such ?
As to my comments about twisted pairs being "superior", i was specifically making comparisons between Monster's "old style" zip cord and their newer twisted pair design. Using identical conductors, type and amount of dielectric, etc... a twisted design ( as compared to zip cord ) lowers inductance, lowers nominal impedance, reduces the susceptability of RFI, increases high frequency linearity, etc... Those facts are what i based my statement on. Sean >
As someone else pointed out, with most luxury or status items you know what you are getting, they are not being sold based on any false representation of quality. With $6000$ cables? You are buying the Brooklyn Bridge.
I think the basis for the arguments against Monster is disdain for unbridled capitalism. All's fair in love and war (and capitalism) but the free market should encourage excellence and allow the little guy with the big idea to come out on top. I know that this naive and probably simplistic but in a perfect world, the best product would win. Enter marketing. Sales incentives and media blitzes provide an environment where pure crap can be foisted onto the public. Is rampant marketing evil? Personally, I don't care much for it. It's taken variety out of radio and TV and forced the likes of Britney Spears and N'Sync down our throats. It's created an environment where it's impossible to buy a hamburger without being assaulted by a barrage of ads for the latest movie (and action figures for the kids). It's forced many unique mom and pop stores out in favor of generic super stores. Free market forces are no longer encouraging excellence, they are rewarding the aggressive and greedy in our society. Mega-marketing, sales incentives and lawsuits are all convenient ways of making lots of money but what do they actually produce? I'm just glad that there are still a few people out there who are compelled to make the best products they can and that there are also a few people who reward them for doing so by buying their products.
Well said Jlambrick. It's up to the consumer to discern quality from pure crap - unfortunately the average N. American is not very discerning or critical. The majority of the public seems quite happy partaking in a throwaway society where quantity of crap takes precedence over quality, aesthetics, and durability - not to mention that all this cheap plastic crap is marketed in the most ambarrasingly tacky manner. An appreciation for visual harmony in products, as well as in architecture, cities, and the landscape was, for the most part, lost somewhere around the 1950's. That may seem like quite a digression but if I'm not mistaken, what I and I think many of us seek in our hi-fi systems, is the ability to step out of the mundane world that is getting more despoiled by the day, and tap into a pure and harmonious world of music. I guess I'm becoming a jaded romantic.
At the risk of entering a political area, one reason why the society at large has become so mercenary, is because that is what they have been taught to do from the time they first opened their eyes. The media blitz of materialism, which is foisted upon us by those who control the captital, the production, the distribution, the marketing, the retailing, and the planned obsolescence, is a game in which the consumers are actually "farm animals" being "fleeced" of their dollars by psychological manipulation. Since this mental control game was perfected years ago, and has been undeniably successful in its implementation, the only game left to play is, which company will finally monopolize all the world's production? In a world where money is the only valued commodity, those with the most money rule. Who has all the money? I know, but I am not going there. This is an audio forum after all.
I cannot argue against Jlambrick's assertion that, "Sales incentives and media blitzes provide an environment where pure crap can be foisted onto the public." But the operative word here is "can". I have not personally experienced the marketing tactics ascribed to Monster Cable, even though I have recently frequented stores which carry their products. I would also add that the logical conclusion of the belief that sales incentives are bad is that incentives in any industry are bad. After all, as a software engineer, if I receive a bonus for shipping a product within schedule and budget I might be tempted to take a few short-cuts just as a salesman might be tempted to inflate his volume by foisting unneeded and unwanted product on an unsuspecting customer.
My issue here is that a single article with little in the way of fact is not a sufficient basis for arriving at an informed opinion. Journalism is not free from the sizzle or aggression ascribed to Monster Cable. Lurid tales of child abuse, murder, rape, and theft sell. Nor are journalists free from bias; not many people are, including me. Because it is in print does not make it true. My position is not that *all* journalists are rumor-mongers and all newspapers false. But that we must take care when forming an opinion for or against a company or person based on what we read. Again, I ask, if you have further information that corroborates the article please share it. Otherwise, lets exercise some moderation; I'll admit to some exaggeration since this thread has been rather civil in its disagreements.
Is capitalism running rampant? Can society's ills be laid at the feet of a mechantilist elite ready and willing to "fleece" us of our hard-earned money? Are we doomed to be sheep unable to throw off the shackles of a program of conditioning that begins at birth? I don't know. Am I being melodramatic? Yes. Perhaps I am not quite as alarmed as some about the future. Maybe I am an exception, but this aggressive marketing that others speak of has less and less effect on me as the years go by; not that I am entirely immune. I watch television at most a few hours a month, read popular magazines almost not at all, shop at major department stores even less, throw unsolicited mail directly into the trash without even opening it, and do not answer the telephone unless I recognize the caller with caller id. I don't do this out of paranoia. It is simply my response to unwanted marketing - avoid it or ignore it when that isn't possible. Instead of television programs I read books (which are largely free from advertisement) or watch movies on DVD (fast-forwarding through any advertisments at the beginning if possible). The few hours of television programming I do watch are mostly PBS or A&E. The result is that I am less and less aware of the latest and greatest cereal, soap, Ginsu (tm :) ) knife, orange peeler, frozen entree or Gee-gaw. This isn't to say that I am free from materialism. But, I suppose, this is more a response to Twl's assertions. It is possible to escape a large part of the marketing hype, though you may argue that my techniques are rather severe or that I should not have to exercise them in order to be free of the evils of aggressive marketing. Maybe so.
Gallaine, I don't think anyone would argue that your [techniques are rather severe or that.. (you)...should not have to exercise them in order to be free of the evils of aggressive marketing]. It's more like a life-style & as such probably doesn't put any strain on you. I think that what certain posters are alluding to is that the marketing techniques can captivate and affect a significant majority of people; and that these people act according to the marketing plan, at least for some time; this, in turn, limits available choices (mom & pop storeschoice in the arts, in entertainment, whatever...). To take an extreme example, if the latest global mega-trend product is disposable art -- "look once, enjoy, & throw away. The next piece in your mail tomorrow" --then that's all that there will be available. You're free to choose, of course; but in order to really choose, one needs to have SOME variety...
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