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Shifting Gears

Anton/Bauer was merrily selling its video equipment batteries to camera maunfacturers as original equipment. Trouble was, all the action was in the replacement market.
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It was around 1981, Anton Wilson recalls, that his market began to shrink.

Up until then, the television-cameraman-turned-entrepreneur had done pretty well. He and his college roommate, an electrical engineer named George Bauer, were running a company called Anton/Bauer Inc., and among its products was a high-quality, rechargeable, nickel-cadmium battery. In the late 1970s, the market for portable video cameras -- the kind TV stations use for on-the-scene reports -- had begun to take off. And each camera needed batteries of just the sort that Anton/Bauer could provide.

Other battery makers in the motion picture and video industry marketed their wares primarily through dealers and representatives. Wilson, however, decided to focus on the original equipment market -- the camera manufacturers. If he could convince them to package his company's batteries and chargers with their cameras, he figured Anton/Bauer would gain both credibility and market share.

He had, moreover, an idea that would distinguish his products from the competition's. Traditional batteries were worn on belts around the waist or over the shoulder. Anton/Bauer's would be held in a special bracket that snapped onto the back of the camera. Not only did the bracket system help consolidate a camera operator's equipment, it improved the camera's balance by offsetting the weight of the lens. Anton/Bauer, Wilson decided, would offer the brackets at cost, and make money on the batteries that went with them.

The strategy worked. Within two years, all the major video camera makers had either made the bracket standard equipment on their U.S. cameras or offered it as an option. From 1977 to 1981, Anton/Bauer's sales grew 1,114%.

Then came Wilson's incredible shrinking market. By 1981, most broadcast and cable stations had already purchased the equipment they needed, and the recession was forcing other stations to cut back on expenditures. "Very, very rapidly," remembers Wilson, "what had been a booming market for new camera sales changed from a new market to an after-market. And we almost got caught with our pants down."

While Anton/Bauer had solidified its OEM relationships, competitors had been "less myopic" with regard to the growing need for replacement batteries bought mainly through dealers, says Jane Lytle-Manns, Anton/Bauer's director of operations. The competition had built up its dealer networks, and had hired representatives who sold to end-users: broadcast stations, video production houses, and corporate video departments.

Worse, Anton/Bauer had licensed its now-standard mounting bracket to most of the same competitors. "It was so expensive to get involved in infringement litigation, we decided to get income from licenses rather than spend money in court," says Lytle-Manns. As competitors' dealer sales rose, Anton/Bauer's revenues declined 26% between 1981 and 1982. "It was quite clear," she adds, "that if Anton/Bauer continued to sell batteries only through the camera manufacturers, we were going to starve to death."

The key to survival, Anton/Bauer's management decided, was to build a dealer network as quickly as possible. But the trick was to do that without jeopardizing relationships with the camera manufacturers, some of whom also sold replacement batteries to dealers. Anton/Bauer had initially agreed not to compete with its OEM customers at the dealer level, and even now it couldn't afford to alienate its best customers. "If the camera manufacturers stop selling Anton/Bauer batteries with their cameras, we are no longer original equipment," explains Lytle-Manns.

In shifting gears, Wilson decided to borrow a page from the Japanese, whose business methods he had been studying since the mid-1970s -- and who, after all, manufactured most of the video cameras. He knew the Japanese valued loyalty and honesty above all. "Rather than tell. the camera manufacturers what we were going to do," he recalls, "I asked their permission." Wilson made it clear that his company simply wouldn't survive unless it sold through dealers -- that it was in the dealers' own best interests to support their supplier's decision.

Wilson also arranged a pricing structure that would satisfy the camera makers. The OEMs would get volume disselling small to medium quantities of batteries to dealers for a lower price than Anton/Bauer. Wilson pushed this arrangement because he ultimately intended to concentrate on marketing such nonbattery-related products as portable lights and high-technology electronic accessories to the dealers.

Once ilson got the go-ahead from camera makers, marketing director John O'Keefe began to woo dealers through direct mail and personal telephone calls, explaining the Anton/Bauer line and pricing structure. Because the industry was small and tightly knit, most dealers already knew the company's products. Anton/Bauer's name was on service contracts and warranties, and it regularly exhibited at industry trade shows. "Dealers knew we were the batteries used by the camera manufacturers, and they wanted to sell our line," says Lytle-Manns. By the beginning of 1983, about 75 dealers had signed on, a number that has since swelled to more than 150.

The company's task then was to maintain those dealers by making their selling job as simple as possible. Anton/Bauer's interviews with dealers, for instance, revealed that many salespeople got confused by the number of batteries and chargers on the market. To eliminate some of the confusion, Wilson designed a charging system that could be used with any of Anton/Bauer's three basic categories of batteries: camera, recorder, and lighting. O'Keefe also asked dealers about the kinds of support literature they found useful. Based on the responses, he worked with an advertising agency to design a price catalog with photographs of each product in the proper category. If a product applies to more than one category, it appears twice.

Not forgetting its roots, Anton/Bauer has also tried to make the OEMs' selling job easier. The company provides manufacturers with product sheets, for example, showing Anton/Bauer accessories with the camera manufacturers' equipment. Then, too, as vice-president of marketing Joe Lankowski puts it, "We jump when they say jump." Once, for instance, Hitachi Denshi was developing a new camera to be introduced at a trade show, and Anton/Bauer was asked to design a bracket for the camera. But the blueprints needed for the design were delayed, and Anton/Bauer didn't even know what the camera looked like until it arrived in Las Vegas the day before the show. That night, the company's engineers worked long hours with hacksaws, electric drills, and cans of spray paint. The prototype was on display the next morning, looking like a production model.

Since it has set up the dealer network, the company must do business with more than 250 customers instead of 10, and overhead costs have grown accordingly. Still, revenues seem to have risen fast enough to cover the additional expenses. From 1982 to '83, sales increased 68%. Anton/Bauer is projecting that sales this year will increase by more than 30%, bringing sales to over $5 million.

Ironically, sophisticated products like Anton/Bauer's new Lifesaver battery recharger are lengthening the life of batteries and will eventually slow down the demand for replacement batteries. "Just as tire manufacturers improved the product to the point that people need fewer tires during the life of their car," says Lytle-Manns, "we have improved charging technology to the point that people need fewer batteries during the life of the camera." That, of course, may be good for the consumer. But the heat is on for Anton/Bauer to come up with new products -- and to watch closely where the market moves next.

Last updated: May 1, 1984




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