INTRODUCTION:
US Pioneer Electronic Corporation is a Strategic Business Unit of Pioneer Electronic Corporation. It was founded in Tokyo in 1938 that started with a capital of $235 and expanded to $843 million in worldwide sales by 1977. U.S. Pioneer started in the year 1966 with less than $200,000 in sales and fewer than 30 dealers.
Bernie Mitchell joined the company in the year 1970, to help the company grow he took up the task of developing the market making more people aware of and knowledgeable about hi-fi products and by 1977 it had around 3600 retail outlets.
Just at the time when the distribution building started to generate higher net sales ie.$80 million in 1974, the FTC Federal Trade Commission issued a complaint against U.S. Pioneer and three other competitors. In August 1975 the four companies signed consent decrees with the FTC promising not to engage in the alleged practices.
The immediate impact of the consent decree according to Home Furnishings Daily was a price war which lowered dealer profit margins to 5 or 6 %.
In 1976 retail dollar sales jumped 12.6% and unit sales increased 9.4% over the previous year. In 1975 U.S. Pioneer net sales increased to $87 million and the market share increased in all hi-fi product categories.
The hi-fi market was growing and the buyer profiles for component parts were changing. Research showed that sales of components were growing faster than sales of compacts and consoles.
In 1975, add-on sales accounted for 55% of total dollars spent on hi-fi components and new system sales made up the remaining 45%.
But on the same time decrease in profit margin lead to deterioration of relationship with the dealers. Dealers started disparaging pioneer products by misrepresenting product specification she ...