Marketing: Selling the Superstores

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Or Kmart. John Koss lost that account several years ago. Should he recover it, in one fell swoop Koss headphones would ship out to at least 1,700 stores.

But how do you win the hearts of the superstore buyers? To start, you need a great product priced to move rapidly. The Koss product line, once reserved for audio aficionados, has expanded to cover a wide range of price points and products, including PC accessories. You must have catchy packaging. John Koss is always trying to improve the company's point-of-sale displays. Don't neglect your office systems: Wal-Mart, Target, and other large chains don't write paper orders these days; electronic data interchange (EDI) is a must that Koss has had in place only since 1993. And you'd best deliver. It's not unusual for power retailers to expect turnaround in three to five days. And, Koss says, "you can't ship Wal-Mart short, or they cancel the order."

To get your foot in most doors, you'll need well-heeled sales reps hitting the pavement. But as important as reps are to certain chains, some chains, like Wal-Mart, all but ban reps. Those chains want to talk directly with company owners. You.

Working the Crowd
Las Vegas, January 6 -- "Please stay at the booth," John Koss implores his older brother as the doors open at the Consumer Electronics Show. "I have three appointments all coming at 2." Mike is dying to walk the floor, but John calls the shots here.

A half dozen independent reps work the booth at all times. Some wait anxiously for buyers to show up for appointments; others wait anxiously because they have no appointments scheduled. The best reps are wanted for booth duty at several vendors' exhibits. That's why you don't see all that much of Koss Corp.'s top three rep firms: House of Representatives, based in Sudbury, Mass.; Consumer Sales, in Chicago; and Triad, out of Eden Prairie, Minn. With vendors competing for the reps' time, it was hard work getting 50 of those reps to the sales meeting the night before at Anthony's restaurant, in Las Vegas. Koss Corp.'s marketing team mailed no fewer than four clever, timed-release invitations to each rep. A $70 Lands' End jacket was the prize for attending. The theme: "Take the chill out of cold calling."

The convergence of audio, video, and computer technology generates a hopeful (and loud) buzz on the floor of the cavernous Las Vegas Convention Center. Koss has aptly chosen to play up its noise-cancellation headphones. The brothers want their booth to state clearly that even in a mature market, Koss is still innovating. "Welcome to the Quiet Zone," says the banner, promising a needed respite from the relentless techno beat.

"CES is the most grandiose version of all the meetings" between buyer and seller, says Bob Griffin, a merchandising manager at Best Buy. Everyone at CES is jockeying for position. "Lots of our VPs and regional managers go to CES," continues Griffin, "and they can see what we go through as merchants." John Koss is truly a resource to the overloaded buyers. That's why one sales rep, Lynn Biter, is so upset when one of his accounts doesn't appear for a morning appointment. "Johnny can tell them what's good, what to order," says Biter. "He could teach them the business."

The Kmart and Wal-Mart buyers won't make appointments; Koss can only hope they'll make a pit stop at his booth. Anyway, buyers who do set times often fail to show. Everyone is routinely late. It's an expensive waiting game.

The show serves also as a forum for unfinished business. Dan Lemon, the buyer for the 205-outlet Army and Airforce Exchange Services, chides Koss about a late shipment, though he concedes, "Koss does a good job."

Koss takes criticism in stride. "It's almost better if you've made a mistake," he says. "Because then they get to see how you react." Bob Norris, the buyer from Ames, a New England chain, remarks that getting an extra Koss speaker "messed up my planagram." The planagram is the buyer's bible. In this case, Koss Corp. was lucky and gained an SKU from its error. While a small chain or an independent store might decide overnight to stock a product, power retailers have little such flexibility. They make decisions by March and April for the rest of the year. If your product's not on the planagram, you're generally out of luck until next year.

Inventory turnover outweighs most other measures of success in these circles, and CES presents an opportunity for Koss to probe his products' sales performance. "Christmas was good," says Kyle Turner as Koss and two sales reps take their places in the meeting room. Turner buys video and audio accessories for Blockbuster Music, a chain of more than 100 superstores. But he brings a mixed message: he wants cheaper models, at $20 or so, from Koss. "Forty dollars is too much for an advertised item," the buyer says.

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