Marketing: Selling the Superstores

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Koss taps quietly into his Hewlett-Packard pocket computer. "Will Blockbuster Music pick up any new brands?" he inquires.

"No," says Turner. "We don't need to have the world's selection."

Koss pushes. "Are you eliminating any Sony SKUs?"

Actually, Turner shares with Koss, he may add some low-end Sony models in the $10-to-$20 range.

That's the kind of tip Koss has been waiting for. Sony already controls about half the headphone market and threatens to gobble up more. To retain his shelf space, Koss must be more competitive on the low end. In recent years mass merchants have consolidated product selection and reduced the number of suppliers they feature. Koss Corp. has found itself odd man out on several occasions. That's how Koss lost Kmart and, last year, Circuit City. Since then, the company has worked furiously to expand its line and price points. Headphones priced higher than $19 seem pricey to buyers whose stores carry stripped-down versions for $3.

One afternoon, as both brothers head for closed-door meetings, three buyers from Wal-Mart Canada arrive -- unannounced, with no appointment. Other buyers, less important to Koss's future, are kept waiting. When that happens, the marketing team squirms. "These buyers are used to seeing the top guy," explains a staffer.

At times John Koss, the middle child who's everybody's pal, doesn't always know when to stop talking. That's evident when he and Michael meet Nancy Prasek, the buyer from Lowe's, a $6.1-billion home-building chain in the Southeast, a region where Koss Corp. is weak. "We've been trying to get in there for years," Michael whispers.

Prasek says she has time to look at only a few models, but John Koss walks her through the entire line of some 40 products. She glares at her watch. The rep assures her, "We really want your business!"

"You do?" she responds with mock amazement.

Some buyers are not bowled over at meeting CEOs and sales managers. Target's Teri Kohler is another who seems to care little for titles.

When Michael breezes into the Target meeting, the buyer is unimpressed. "My wife loves Target," the CEO says, pronouncing it in mock French, Tar-zhay. She smiles, barely, as in "So?"

The meeting includes the Triad sales rep and Koss manager Lenore Lillie, who was assigned to the account after striking a rapport with Kohler.

Kohler notes that sales of Koss products are down at Target but declines to specify models. She complains that Koss still owes her 1994 product-rebate dollars. And, oh yes, did she mention that Target ran out of stock on a popular headphone? It's almost an aside, but Lillie nearly chokes on the news.

Still, Kohler is not all cold water. She likes the new SportClip model -- which does away with the headband -- but not its $35 price tag. She invites Koss to submit a quote. Kohler must wrap up her planagram by mid-February, so the group agrees to reconvene in three weeks at Target's Minneapolis headquarters.

Koss types into his computer. The deadline doesn't leave much time to work on pricing and packaging.

Milwaukee, January 20 -- "I have never been so walking dead," says John Koss, finally back in his office. "It felt like everyone who came through the booth wanted to talk business. Unlike past years."

He's putting CES into perspective. "My goal was to gain a feeling for the attitude of the buyers. If they're optimistic about Koss and Christmas, we can expect business to grow."

He's in a quandary over the pricing conundrum with Target. "She wants a higher average retail price," he notes. Yet she's wary of taking a chance on the untested SportClip. "I'll put it on a string for her if she likes." Huh? "I'll take it right back if it doesn't sell."

Koss takes his relationships with buyers seriously. "I used to get depressed when he didn't come to the booth," he says, talking about Kmart buyer Tom Hooks, who won't acknowledge having been at CES. Still, at Hooks's request, Koss promptly mails new-product information -- and waits. "Your chances are better than 50-50," the buyer tells him.

But Koss has no time to dwell on disappointment. In the month after CES, the sales chief crisscrosses the country, appealing to buyers on their own turf: from San Francisco to Minneapolis, and from Delray Beach, Fla., to Dallas, to Richmond, Va., to Nashville. Valentine's Day finds him in Chicago. He calls on the Good Guys! (a rising San FranciscoÑbased electronics chain), Software Etc., Target, Office Depot, Circuit City, the Army and Airforce Exchange, Brendle's, and Sears. Wal-Mart Canada requests a quote, and Koss puts a note in his computer to plan a trek to Ontario.

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