Nikko Audio Case History

# 402

Case Study

Nikko Audio

Situation

Nikko is a huge industrial manufacturer based in Japan. Its electronics division manufacturers amps, preamps, EQs, tuners, and crossover networks for some of the world’s best known professional and consumer audio brands. With original Terada Circuitry, Nikko’s amps, preamps, and tuners are rated among the best in the Industry.

Problem

Twenty-five years earlier, the agency had been called in to launch the brand. With original “Terada Circuitry,” the first FET tuning, and the first black cosmetics ever seen at the big Consumer Electronics Show, Nikko had made an impact that had endured. But, its base of audio specialty dealers, once over 1,000, was now under 400.
   Nikko had kept its word. When the brand was launched, Nikko had committed to audio specialty retailers promising to hold the line against mass discounters. This kept Nikko from competing directly with other brands, most of whom were their OEM customers? But, its pledge was also to its dealers not to expand Nikko lines into discounters channels, which would have undercut the audio specialists ability to hold margins and sell to high end customers.
   Now Nikko was losing its dealer base anyway. Specialty dealers were either changing their business model or going out of business. They could no longer compete on technology alone as comparable lines came onto the market in discounted brands.
   While Nikko was losing its dealers to discounting, the Company was also allowing its brand recognition to slip. It had not actively advertised or promoted for over four years. It had no public relations support. And its lines were typically late to market. With last year's models backing up in its US warehouse, the factory would not ship new competitive lines. The founders, as a matter of Japanese honor, could not break their commitment to the remaining dealers. They decided they needed to either build the brand or sell it, or both. The agency was called.

Solution

The Power of Technology Campaign: Nikko decided to reintroduced the brand to North American high-end dealers and audiophiles. The Power of Video Technology took the brand into video and, therefore, to home theatre markets, six months later. And, The Sight & Sound Sweepstakes sold the brand through.

   With no new line to sell, the agency recommended building the brand around its established legacy with professional audio engineers. By profiling Nikko loyal engineers, including Ian Eales (Recording), Steve Gilbard (Sound Reinforcement), and Frank Serafine (Sound FX & Design), the agency could build brand equity, load the dealers with last years lines, and sell out. This, in turn, would clear the deck for a new line intro two years down the road.
   To capitalize on this campaign, Nikko needed to do two things: 1. It had to commit to a full-saturation one-year media schedule in representative trade and audiophile media. 2. It needed to add a few components to bridge video’s marriage with audio.
   Audio Magazine had a reputation for being more credible with high-end audiophiles, but Stereo Review had the circulation and was by far the dominant player. Most advertisers would supplement either Audio or High Fidelity in conjunction with Stereo Review to optimize media reach and frequency strategies. But few could sustain the frequency that would be required to build the Nikko brand back to where it had once been.
   The phone rang around 10:00pm on a Thursday night. “SR has just made a bid for Audio,” the voice said. The agency had lunch with the publisher of Stereo Review the very next day. As the Stereo Review/Audio deal came down three months later, the agency had a signed agreement worked out in advance with the publisher over that lunch. It included the first combo rate in Stereo Review/Audio history, a printed 24-page catalog insert in the full-run October issues of both magazines, plus a supplemental run of 1.5 million cataloges for POP handout.
   The agency met with several dozen audio engineers. It was amazing how many of the entertainment industry's top engineers owned Nikko components. It was even more amazing how many still had working components they had bought a quarter century earlier when Nikko first came into the market. Ads featuring Steve Gilbard (sound reinforcement for Madona et al), Ian Eales (recording engineer for Al Jarreau et al) and Frank Serafini (SFX for Tron et al) were rotated in Stereo Review and Audio. POP banners, take-one sweepstakes entry forms, and pyrmid shaped coutner-top entry boxes were produced to support the Sight & Sound Sweepstakes. Press conferences were staged in advance of CES. Press kits -- that included video news releases with B Roll clips of Nikko's featured engineers -- were also produced and hand placed with feature editors in the entertainment, as well as audiophile, media.

Results

Nikko cleared its warehouses, revamped its line and went back out, but the days of audio specialists had wained. The company was finally sold to Asti Pacific 5 years later.

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