Weekly television digest (Jan-Dec 1963)

NEW SERIES VOL. 3. No. 2 TELEVISION DIGEST— 7 MANUFACnTHING, DISTRIBUTION. FINANCE MANUFACTURERS DECRY CONSIGNMENT PLANS FOR DEALERS: Not since PMlco's spec taculor "Instant Dividend" skyrocket (Vol. 2:9 p7) has industry attention been so focused on dealer-aid programs as it is on the sales & display types introduced by GE & Westinghouse (Vol. 2:40 p9). Although GE & Westinghouse disclaim any national plan or retailing ambitions, consignment programs ore spreading. Westinghouse is testing in Salt Lake City & Minneapolis, will soon open Toledo, and, we were told, "will announce a 4th test city, somewhere in the midwest, in next week or so." GE sales & display program is operating in Salt Lake, Memphis & Kansas City. Plan Westinghouse will introduce in its 3rd & 4th areas, incidentally, will be factory made. Salt Lake & Minneapolis programs were developed by distributors there. Factory plan, Westinghouse told us, "will combine & reflect our experiences in the first 2 areas." There's dealer support for such programs, but our conversations with TV manufacturers lost week revealed little liking for consignment programs & no plans to follow suit. Manufacturers were unanimous that their soles have been unaffected, & their dealers undisturbed, m the GE & Westinghouse test cities. There was general agreement, too, that : (1) Manufacturer encroachment on dealer responsibilities will rob him of initiative & independence. Or, as Philco put it for us, "There most certainly will be an adverse effect on dealer initiative if manufacturers get into retailing directly or indirectly." Not so, GE previously told us. "A dealer is in business to make money. If this program can help him make more money, then it's good for him and all the negative opinions will fade away." (2) Too much manufacturer cdd may serve to "bail out incompetent dealers," as one executive expressed it. Westinghouse expressed it this way: "True, some dealers ore in a predicament and looking for an opportimity to stay in business. This program can give them that opportunity." Westinghouse told us: "In Minneapolis we're getting dealers back who were out of the TV & stereo business. We're also getting more sales and more exposure of our high-end merchandise. With this plan, dealers who couldn'f afford to get too deeply into high-end merchandise ore now back in that business and doing very nicely." (3) Small dealer is not becoming obsolete, despite rising costs of distribution & increasing competitive pressinre from big discounters & notional variety chans. "You can delude yourself that distributors are moving away from small dealers to the big chains and so-called mass merchandisers," Motorola Consumer Products Pres. Edward R. Taylor told us, "but we've cautioned our distributors to be very careful about the discount chains. I don't think the market can support them at the rate they're expanding." (4) Present distribution patterns are not outmoded. Despite Magnavox's success & Sylvania's decided move in that direction, there's no industry trend to direct selling. There's no belief, either, that any manufacturer will attempt to do his own retailing on a national scale. "I don't think anyone would be that crazy," Zenith Soles Corp. Pres. Leonard C. Truesdell told us, adding: "I've seen these plans come & go over the past 35 years. They fcdl because of the simple fact that the dealer is a dealer because he wants to be an independent businessman. He doesn't want to be a commission salesman. Sure dealers need help, but in the form of plcmning & programs that don't pull the rug out from under them. Present distribution programs aren't outmoded. The only thing wrong with them are manufactinrers who dump merchandise, cut prices and shrink profits & margins so that it gets harder all the time for the dealer to stay in business. All the dealer really needs is a decent margin of profit." Here core other comments we roimded up :