Pure Monstrosity re: Monster tm cables


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.

It takes sizzle to sell sizzle.

(from Forbes Magazine)
neubilder

Showing 2 responses by gallaine

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.
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.