The talking machine world (Jan-June 1925)

March 15, 1925 THE TALKING MACHINE WORLD 113 Zenith Radio Prices Go Up By H. H. ROEMER Director Sales Promotion, Zenith Radio Corp. As there must be a reason for "prices downward" — there must also be a reason — and a good reason for "prices upward." Are the recent price declines in radio superinduced by a general falling demand for radio or the consumer public discriminating against inferior and defective sets? Radio — now grown to be a veritable human living thing — a member of our very household — in truth "one of the family," can only be judged favorably or otherwise by its performance. I have "listened in" with awe inspiring interest to letters read from station and pulpit as received from the isolated, from the crippled and from the aged — sympathetic, pathetic words from remote parts eulogizing Radio as a miracle by the hand of God and I have seen in all this the most tremendous possibilities intelligence has ever known in the educating of our people and in the enlightenment of the entire world. Yet, with all its magnificent possibilities and regardless of the visible sustaining demand of the public, Radio has already fallen beloSy the lowest depths of a commercial degeneracy by the hand of the unscrupulous who have seen no further in radio than the immediate Almighty dollar of today. Manufacturers who have urged and sweated their factories output volume to a visible sacrifice of efficiency and quality for which they intend that a willing public stands ready to receive and pay. Unlike most merchandise, radio to the average man is an unknown quantity. The general public will never understand the mechanism of radio — much less its scientific principles. But, that same public, as has been the history of merchandising ever since man traded his wares, is going to single out the efficiency of dollar value and bank upon "confidence" — confidence in his dealer — confidence in the manufacturer behind that dealer's merchandise. We are today witnessing a price decline in radio. What has caused this sudden action? A survey of jobbers generally will draw out the fact that from 15 to 70 per cent of some makes have been returned to the dealer — the jobber and the manufacturer, because of DEFECTIVE M \T I RIAL THROWN TOGETHER TO BRING IN QUICK DOLLARS. Meanwhile they pounded away on volume production. They did not read the writing on the wall. They did not reckon with that discriminating public whom they believed would continue to buy a "cat in the bag." They did not see ahead that sudden unexpected and tremendous return of their defective sets and were completely caught off their guard with production piling up and sets coming back from the field. What then was the natural sequence? UNLOAD — dump them on to an uneducated market at any price ! And what has been the effect? What about the dealer who bought and paid for sets purchased prior to the 15 or 30 day period of adjustment — before the period of price protection? He is compelled to take his loss not alone on the sets he has in stock but on all sets he has sold on the deferred payment plan and upon which he cannot collect a balance because his customer can secure a brand new set of that same make at a lesser price than the balance he owes. Does this procedure build consumer confidence in that dealer? And what about that consumer who bought and paid cash yesterday for a set which he sees advertised today at a drop of from 25 to 50 or 60 per cent less than he paid for his? Is his confidence with his dealer? But the dealer's loss does not end here. What about the sets he takes a loss on? Can he service the sales on sets he himself must take an actual cash loss on? For example : a set bought by the dealer prior to the protection and adjustment period lists at a certain figure. He is notified and the public is advised thru the manufacturer's advertisement of a cut of approximately 40 per cent. He has a stock of these sets on hand. At which end of the horn does he come out, when the cut in price is greater than the discount allowed him. Grant that this dealer is willing to take his actual cash loss (he can't do anything else) but, is he willing and will he service efficiently the set he simply traded dollars on and lost? Radio to stand on its own legs and build for the dealer — for the jobber and for the manufacturer a dependable consumer confidence has got to be built to satisfy the consumer public — that ultimate buyer. It has got to be built to meet all of the claims of its manufacturer and meet them 100 per cent. The Zenith Radio Corporation in November, 1924, also felt that beckoning call of ambition when its records showed 42,000 sets oversold. But, the Zenith Radio Corporation has surveyed the field. Jobbers will testify to their thousands of telegrams, long distance calls, and their persor/al visits to the Zenith factory to plead for sets which their dealer trade had sold. These same jobbers will testify further to the fact that cash premiums were being offered by the consumer to the dealer to secure Zenith sets but Zenith would not crowd production to the sacrifice of quality. Jobbers and dealers alike went away discouraged— heartsick at what seemed to be a lack of recognition on the part of Zenith to take advantage of a golden opportunity. But Zenith's ambition was tempered with conservatism and thru the binoculars of cool judgment Zenith saw beyond tomorrow — that greater value and prestige perfect merchandise inevitably creates — they saw the dealer and jobber problems ahead — they knew the effect of poor material and improperly constructed merchandise — they knew the time must come when the public would discriminate and they knew the natural reaction of goods returned to an already overstocked factory. Zenith was more interested in building up consumer confidence for its dealers by maintaining quality at a fair and equitable price and in saving the dealer his profits by delivering sets that required little or no servicing and that would make his customers extend a hearty hand of welcome instead of dodging to avoid customers whose sets were a veritable infernal machine and the source of endless costly servicing which ate into the profits their discounts afforded. Zenith saw December come and go witli a far less profit to its stockholders than had it taken advantage of its orders and pushed volume to make deliveries. And Zenith saw January come and go with orders still booked and oversold to the extent of 26,000 sets. Cancellations were many from all sections— but the reward for quality soon manifested itself. From all sections the demand again began to jump. Not that spontaneous "I want a Radio Set and want it today," — but that substantial demand for dependable quality and efficiency Zenith knew would come — and the public calmly put up their cash deposits and were willing to wait for Zenith. Zenith's factories are not laying off their employees. Zenith is busy filling back-orders and will continue to confine its output to the dictates of the already proven efficiency of its four inspection departments. Zenith holds no secrets in this important work. Zenith's inspection consists of four distinct departments organized for that express purpose. Inspectors are retained not on volume passing thru their hands but on volume found defective. The better the inspector the more will be his returns to the manufacturing department. The results of inspection No. 2 checks the efficiency and ability of No. 1 to detect its defects. No. 3 checks No. 2, and No. 4 checks No. 3. Considering this expensive procedure is there any wonder why, out of all the thousands of Super-Zenith sets shipped since last September, only eight were returned to the factory— and of these eight, which were immediately placed before the research department,— six were found perfect and in checking back to the dealer were found to be inoperative due to faulty antennae installations and battery hookups. Only two of these eight were actually defective from the standpoint of construction and it is a question in the Zenith Laboratory today whether these were not rendered ineffective during the handling by the carrier. These two sets, out of the thousands which have been shipped, have caused more dissension in the Zenith factory than any other cause in the average affairs of factory management. The advance in price of Zenith sets is due to the quality of material going into Zenith sets and the cost of its rigid inspection. It is the definite unchangeable intention of the Zenith Radio Corporation to deliver a product that will not alone stand up and deliver all that is claimed for it, but to eliminate the greatest possible percentage of servicing which every dealer and every jobber appreciates is an expense greater than he can even estimate in the handling of so many of the other makes. * There is no just cause nor can there be found tangible figures upon which to base a good reason for over-production on the part of radio manufacturers. The demand is by far greater than the supply. What appears to be a falling off of demand is nothing more than the public having been deceived is now holding off pending the reestablishment of confidence which, defective material has torn down. The present condition of oversold Zenith apparatus bears out this simple fact. There are figures available which place radio far in excess of all other statistical columns. But, there is that element of self destruction which many manufacturers are going to witness in 1925 and 6 — and that is in the manufacturer not delivering dollar for dollar value in keeping with the claims they set up and advertise in -behalf of their product. One need only digest a recent article in the "American Review of Reviews" to appreciate that a tremendous opportunity lies ahead for the dealer, the jobber and the manufacturer in radio. The following are excerpts condensed as gathered from the aforesaid article: "The automobile business required ten years to attain a volume of only 25,000 cars PER YEAR. In the early part of 1921 one of the large radio manufacturers alone estimated that 25,000 radio sets were all they could hope to sell in one year. But, before that year was over 25,000 sets was the quota they set PER MONTH. "The entire radio sales volume for 1920 was $1,500,000. In 1921— four times that amount or $6,000,000. 1922 raised the sum to $60,000,000, multiplying the business of 1921 by 10. In 1923 sales went up to $100,000,000" and 1924 trebled that figure, or in other words radio sales in 1924 were over $350,000,000 gross— 233 times the amount of its first year — and the industry is practically only three year,s old. "Today, within three years from radio's first spurt, the industry has placed itself in dollar volume, equal to the automobile industry when it was 17 years old — 1922. The phonograph business has in its long life produced figures far beyond the public's comprehension. And yet in the second year of radio's life as an industry, radio equalled the phonograph in sales and TODAY RADIO IS MORE THAN DOUBLE THAT OF THE PHONOGRAPH BUSINESS in point of dollars and cents. "It is estimated that approximately 3,000 manufacturers are making some part of radio or other. About half a million people are employed directly or indirectly in radio. There are over 1000 jobbers and 25,000 dealers, of which about 3200 are 'exclusive' radio dealers, selling radio goods only. "There are now three weekly magazines, 16 monthly radio magazines, 8 specialized trade papers, and 50 general magazines carrying radio sections. There are a total of 275 technical radio book's published to date !" Radio is here to stay. There is not the slightest question as regards the importance of radio to the public. It is no longer a question of, "Is radio here to stay?" — -The greatest question is up to the individual manufacturer and whether he is here to stay. And that is a particular point which has been settled affirmatively and with sincere emphasis by the executives of the Zenith Radio Corporation. Zenith prices have gone up because the public demand dependable performance — quality reception — and a durable product — all backed by a manufacturer that substantiates its claims.