An interesting editorial from Andy Mooney CEO Fender

Discussion in 'Bad Dog Cafe' started by warrent, Jan 17, 2019.

  1. warrent

    warrent Friend of Leo's

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    Note:This editorial was directed at retailers and not players Also to give you an idea of how big Fender is, the marketing budget listed below is about the yearly sales of PRS.


    Fender’s Online Growth Initiative
    Reducing the number of players who quit
    playing by just 10% could double the market


    For going on four years, as CEO of Fender, I’ve opened every presentation with a slide that simply states “GROWTH,” written in large caps. It serves as a constant reminder that Fender is a growth company operating in a growth industry. Externally, demand for both recorded and live music is at an all-time high and growing. In 2017, 178 million people paid for a streaming service and 83 million attended a Live Nation concert—both record highs. Demand for both recorded and live music continued to grow in 2018 and will grow again in 2019.

    Despite the infamous Washington Post article proclaiming the death of the electric guitar, sales of electric and acoustic guitars, plus ukuleles, have grown steadily since 2008. The fretted instrument segment set a record high in 2017, and when the data is published for 2018 I have no doubt it will be larger still. Internally at Fender, we continue to be laser-focused on the three key initiatives we believe will continue to fuel industry growth.
    Product innovation. In four years, we’ve updated every single electric and acoustic guitar series in the Fender catalog, as well as our highest-volume digital amp series. We believe it’s critical to offer consumers compelling reasons to visit dealers’ stores and websites. With every update, we’ve offered dealers the opportunity to make higher margins on the updated series. We aim to excite consumers and dealers once again at NAMM this year.
    Marketing: We have more than doubled our marketing budget over four years and will spend a record high $50 million in marketing in 2019, directed largely at the ten million Fender fans now in our social network. The singular objective of this investment is to drive consumers to visit dealers’ stores or websites.
    Fender Play: We anticipate 100,000 users in Fender Play by the time this article is published. This may prove to be our most important industry growth initiative. We estimate that one million new players enter the market annually, but 90% abandon the instrument in the first year. The 10% who stick with it tend to commit for life and have a lifetime value (LTV) of $10,000, buying multiple guitars, amps, and accessories.
    If we can reduce the abandonment rate by just 10%, the incremental retail value of that cohort is $1.2 billion. We have an opportunity to add an incremental $1.2 billion in retail sales, not just next year but every year, and could quickly double the size of the entire market.
    Last holiday season, we aggressively marketed Fender Play in North America and witnessed sell-through of all electric guitars increase 15% year over year according to MI Sales Track data. This year we plan to be even more aggressive by incentivizing new players to commit to learning for an entire year by offering a 10% discount for the duration of their annual subscription on Fender gear at participating dealers or at Fender.com.
    Some dealers view this promotion as an effort on Fender’s part to directly compete with them. Nothing could be further from the truth. Fender.com revenues continue to represent roughly 2% of total. Consumers generally come to Fender.com to buy products they can’t find anywhere else: left-handed guitars, esoteric signature models like Yngwie Malmsteen’s scalloped-neck Stratocaster, or lifestyle products.
    I’d like to believe that the incremental players who commit to guitar for life as a result of this year’s Fender Play promotion will spend $10,000 solely on Fender, but the reality is that they’ll likely also buy Gibson, Taylor and Martin guitars—not too many I hope—plus a myriad of effects pedals and amps. I’m totally OK with that. I wish the entire industry a successful NAMM and another exciting year of GROWTH.
    Andy Mooney
    CEO
    Fender Musical Instruments Corp


    Music Trades Feb 2019
     
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  2. 2blue2

    2blue2 Friend of Leo's

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    Lots of interesting number in this editorial .
    But...Wow! 50 mill budget directed at Fender Fans
     
  3. getbent

    getbent Telefied Silver Supporter

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    I thought he was dead. Always thought he was funny on that show on the television though... EYEBROWS!
     
  4. VWAmTele

    VWAmTele Friend of Leo's

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    I'm not a potential 'Fender Play' customer, but maybe they should cut the cost in half. I think a $90 commitment from beginners who are not sure they're going to stick with it may be a bit steep, especially after laying out money for equipment. If a 10% increase in players could double their sales, wouldn't that be the smart thing to do?
     
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  5. Djentleman Dan

    Djentleman Dan Tele-Holic

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  6. Djentleman Dan

    Djentleman Dan Tele-Holic

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    Unless it costs Fender $80 to produce, yes. I agree.
     
  7. getbent

    getbent Telefied Silver Supporter

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    200w.gif
     
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  8. keithb7

    keithb7 Friend of Leo's

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    Those are some interesting stats from Fender's CEO. Despite the hype, I don't see the market like they seem to. Mind you I am not a CEO. However yes I took up guitar 37 or so years ago. In 37 years I have bought many times more than $10,000 worth of used vintage Fender gear. I have bought some new Fender gear. They never got my $10K. Alas, I am just one person. Yet, they were right. I stuck with guitar for life.

    Responding to the live music commets: How are the gigs in your home town? How's the pay?

    When was the last time we had a guitar hero in the Billboard Top 10? 178 million people paid for Streaming Service but few will toss $1 in your open case after you play a free show. 83 million people attended live concerts around the world. Growth stats compared to when? 1969? The world population has doubled since 1969.

    Top 10 grossing tours of 2018:

    1. Ed Sheeran - $429,491,502 (99 shows)

    2. Taylor Swift - $315,186,362 (48 shows)

    3. Beyoncé & Jay-Z - $253,514,983 (48 shows)

    4. Bruno Mars - $237,770,168 (100 shows)

    5. Pink - $180,402,074 (88 shows)

    6. Justin Timberlake - $149,277,272 (76 shows)

    7. U2 - $119,203,900 (55 shows)

    8. The Rolling Stones - $117,844,618 (14 shows)

    9. Kenny Chesney - $114,333,176 (42 shows)

    10. Journey & Def Leppard - $97,095,894 (60 shows)

    Name the guitar hero in each show. I can get The Edge (57), Keith Richards (75), Phil Collen (61), Neal Schon (64). I am skeptical that this picture represents great growth for Fender guitars. Fender will likely adapt to a changing market and survive. An example being the lessons offered. CEO's like to make Forward Looking Statements. After all it is their job.
     
  9. warrent

    warrent Friend of Leo's

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    So the guy at number one is this guy, who plays what instrument?

    cd19a22a-3c76-46ce-a18f-690a05cf85df-Ed Sheeran (8) FIX (WEB CROP).jpg
     
  10. TokyoPortrait

    TokyoPortrait Tele-Afflicted

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    This iis excellent. I'm going to work out how much I've spent, deduct that from my Life Time Value, divide that into my expected number of years remaining on this planet and present it to my better half as conclusive proof I must spend more money every year. Otherwise, I won't reach my full worth...
     
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  11. Jupiter

    Jupiter Telefied Silver Supporter

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    I’m over 10g’s in gear if you count the guitarmaking tools...
     
  12. oldgofaster

    oldgofaster Tele-Meister

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    It ain't rocket science.

    I'll say it again...GC, Fender, etc.,

    Do a BASIC setup on your guitars......LOWER THE ACTION ! ! ! !

    It's no wonder people quit when the strings are 1/4" above the frets.
     
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  13. VWAmTele

    VWAmTele Friend of Leo's

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    Maybe self-tuning guitars are the answer? Hmmm....
    ;)
     
  14. maxvintage

    maxvintage Friend of Leo's

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    This is a good strategy on fender's part. Rather than dreaming of the next guitar hero, focus on people who want to make music making part of their lives. Get them hooked, make it easy, they'll keep at it. My inlaws just bought themselves a couple ukes for Xmas, and they are forming a neighborhood band with the folks on their street. There's your market: they:ll discover the joy of music making, and they'll buy guitars.

    90% of pop music is just amplified folk music--major chords, simple diatonic melodies. Learn a few chords, a couple blues licks, crank it up. I mean that's the history of countless bands. Most of what we do on sites like this is mystify something really simple. It SHOULD be single, simple is good. Complex is good too, but if people want to make simple music fender should be happy to sell them the tools.
     
  15. maxvintage

    maxvintage Friend of Leo's

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    Just to elaborate, most of this site is dedicated to telling people they can't do X unless they have Y. You need to have 12 guitars and 8 amps, because you need to do exactly what insert-guitar-hero-here used on some album from back in the day. No you just can't get that tone without an original Klon with magic capacitors. It's all just mystification: The guy who's tone you are trying to cop just played a frickin' E major barre, or a F major cowboy chord. Oh but you have to have whatever amp he was alleged to have used, and the same guitar, with the same pickups, and the same pedals and....zzzzzzzzz

    It was a good marketing strategy for a long time but the number of people who want to fuss about which Klone is better is shrinking all the time. I like that stuff, but I'm in the demographic that starts thinking about selling stuff off, not buying more
     
  16. VWAmTele

    VWAmTele Friend of Leo's

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    I don't know much about the recording industry, but I'm assuming that it cost a whole lot less to produce techno music with one singer than it does a 7 piece band with guitars, bass, a real drummer, etc... Today's youth is being force fed a lot of crap that's simple and cheap to produce.

    All the online lessons in the world will not come close to making kids want to play guitar compared to a real true guitar hero. I'm guessing that almost everyone on this forum started playing because of someone they saw/heard on TV/radio years ago. That is how you build a lifetime passion.

    Maybe all the guitar manufacturers should get together and invest in and subsidize young guitar oriented bands and help them get their music seen and heard.
     
  17. TheGoodTexan

    TheGoodTexan Moderator Staff Member Ad Free Member

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    Did you ever notice that when you notice somebody, they usually don't notice you back, because they're busy noticing someone else who is noticing you, but you didn't even notice?
     
  18. WelshBluesMan

    WelshBluesMan Tele-Meister

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    People always get hung up on the fact that electric guitars have dropped out of the pop charts. I don't know what it's like in the US, but in the UK the charts seem to be driven almost entirely by what teenage girls listen to.

    There was sod all in the charts when I was a teenager, I'm only 28 now... When I was 13, the UK charts were dominated by basically the same kind of Simon Cowell manufactured drivel as today. Yet somehow, me and my mates were all into '60s, '70s and '80s rock bands. Go on YouTube and find a clip of Jimi Hendrix or Led Zeppelin, and there will be dozens of comments underneath from 15 year old kids who love that stuff.

    Don't panic, everything will be fine.
     
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  19. SixStringSlinger

    SixStringSlinger Friend of Leo's Silver Supporter

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    I read an interview with one of those "retro" bands of the sort that seemed to have a bit of a moment in the early 2000's, where one guy said something to the effect of "there's crap, there's always crap, and there's always gonna be crap". People forget that whatever magical "past" all their favorite music came from was not full, exclusively, of whatever they happen to think is good music. What we remember and still talk about now is not all there ever was, it's just what has made it through the filter to now, be it because it's objectively amazing or because there are still millions of boomers out there still eating it all up.
     
  20. Mike Eskimo

    Mike Eskimo Telefied Ad Free Member

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    I get Fender Play as a marketing tool but any kind of discount for enrolling should be much bigger than 10%.

    YouTube is the greatest teaching tool since your drunk buddy insert name here , and neither one of those cost anything.

    And youre way less likely to end up buying one of those awful fender mustang amps if you learn from your drunk buddy or YouTube...
     
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