Gemeinhardt’s Stand on the “Commodity Manifesto”

By Bob McKinley, President & CEO, Gemeinhardt Co., Inc.

(Reprinted from Letter to Authorized Dealers January 9, 2004)

I actually made up the “Commodity Manifesto” phrase as a way to draw attention to some of the current challenges that music instrument manufacturers, dealers and music educators are facing. With the recent onslaught of low priced instruments being offered through new retail outlets, I wanted to share with you what we think about the Band & Orchestra “Commodity Manifesto”. The phrase is actually a relevant prompt for determining where you stand on two basic questions for our US market:

1. Are Band & Orchestra instruments commodities?

2. Are Band & Orchestra Music Retailers the best way to sell and service instruments?

The “Commodity Manifesto” camp would say the instruments are commodities and as commodities, should be sold through the cheapest distribution channel. What do you think? …

Here is what we think!

As active participants in our US market economy, we applaud anyone who tries to implement improvements in products, service, delivery and price while continuing to satisfy customers, employees and investors. This process, which inevitably has its successes and failures, is, in part, the engine that makes America great!

We also know that products need to be manufactured to customer wants and needs and made available through distribution channels that will provide satisfaction from the earliest part of the sell cycle through to the end of the instrument’s useful life.

We believe it is our collective responsibility to assist our customers in obtaining the best value. With all the competition for today’s student’s time, there will still be students exiting the music programs; however, we believe that no student should exit the music program due to dissatisfaction or unnecessary frustration with an instrument. Unfortunately, we believe that some of the experiments introduced this last fall that subscribe to the “Commodity Manifesto”, probably resulted in frustrated students leaving the music program.

Here is how we think it through… First:

Are B&O instruments commodities?

At Gemeinhardt, we do not believe that band and orchestra instruments are commodities. Some musical instruments may be close to being a commodity, but B&O instruments are clearly not. The reasons for this are at least two-fold.

1. At a minimum, band & orchestra instruments must play in tune with themselves; play in tune with other instruments; and work well mechanically. It isn’t good enough to just look like an instrument. It takes specialized product knowledge to select, present and sell or rent an instrument to instill confidence in the new players that their instruments will work both for them and for the band or orchestra.
These instruments must contribute to the success of the full band or orchestra, not just the individual student. In some parts of the world, very young children begin music lessons with private teachers using entry level, ‘throw-away’ instruments. However, in the US, the majority of students begin with ensemble instruction.

2. B&O instruments require service. No manufacturer, at any level, has made a band instrument for the US market that doesn’t need maintenance and eventual repair during its useful life. It takes specialized, technical training to properly maintain and repair instruments. In this regard, B&O instruments are different than, for example, computer printers, which have evolved into low priced, disposable items sold in self-service distribution channels.

For these two reasons, B&O instruments are not commodities, yet computer printers are. The new student needs assistance in selecting an instrument and the instrument will need technical service. It needs to be durable and reliable whether it is standing the rigors of marching band or repeated use in a dealer rental pool.

Are specialty music retailers the best way to market to customers?

At Gemeinhardt, the answer is clearly yes. The reason is actually articulated in our dealer agreement and is based on our knowledge that B&O instruments are not commodities.

We expect retailers to be knowledgeable about the products they sell (because our end users need it) and we only authorize retailers who can provide the technical service to maintain and repair instruments as they are used. These are the very reasons why we deliberately do not sell through cheaper distribution channels that are focused on selling commodities.

We believe that those commodity retailers, who facilitate the sale of an instrument that cannot be played successfully with other instruments in the school band and/or cannot service the instruments when they need adjustment, will eventually fail and exit the market. They cannot sustain a competitive position with their current formula because it does not fully meet the need. That is why we see reactive changes like offering contract repair services at some of the large commodity specialist outlets experimenting with instrument sales to counter much higher than expected product return ratios.

Our call to Action!

Our industry depends on bringing new students into music education programs, helping them become proficient and enabling them to enjoy making music. Putting inappropriate instruments into the hands of beginners is a clear risk to this process. The reality is that most of the low priced instruments currently in the market do not play in tune, are not durable and are not repairable. They are being purchased by inexperienced consumers from channels that are not providing them the pre-sale information they need to make an informed decision or the post-sale service and support that the instrument will need. Manufacturers, retailers, and music educators must each do their part to combat this risk.

At Gemeinhardt, our mission is pure and merit based. We will continue to seek more efficient and effective ways to manufacture and deliver the instruments that meet flute and piccolo players true needs at the lowest practicable prices. Our entire team knows the need to remain competitive and we are committed. We will also continue to develop new and better instruments as well as educational aids.

This is our call to action. As our market is tested for “Commodity” status, we all must work together to tell this story. It is up to all of us to match the real customer wants and needs with the right product and service.

So where do you stand?

You need to know your own stance on the issues. Capitulate and sell an instrument that you know will not work and risk losing a customer for life. Or help your customers (and if necessary, your un-informed suppliers and competitors who are pursuing the “Commodity Manifesto”) to understand the real value proposition that needs to be offered and delivered.

Together, we can make a difference for every child who wants to make music. At Gemeinhardt, we strive to continually update our knowledge of the ever-shifting requirements of our players, music educators and dealers, and we remain very open to your thoughts and ideas that will help us match those wants and needs.

This past year has been very interesting and challenging for our marketplace. In 2004, we are looking forward to working with you and your staffs in the continuous process of better serving our customers and not buying-in to the “Commodity Manifesto”.

From our staff to yours, we would like to wish you and your employees all the best as we rise to the challenges and opportunities in 2004!

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