Audio Giant Harman Makes Name For Itself With New York Store

60-Year-Old Audio-Industry Pioneer Raked in $4.3 Billion in 2012

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The grand-opening party on Madison Avenue last week featured a red carpet, an exclusive guest list and performances from DJ Cassidy and singer Miguel in a pre-celebration of the public opening Nov. 21. It was a big night with big names and the one perhaps least known -- Harman -- was the one hanging above the store's door.

An ad for one of JBL's portable speakers
An ad for one of JBL's portable speakers

The 60-year-old U.S.-based audio-industry pioneer with sales of $4.3 billion last year has focused on building a stable of individual brands including JBL, AKG and Infinity. The store, the first in the U.S. -- its Shanghai shop opened in 2010 -- also features that approach. Seven window displays highlight a handful of the more-familiar brands from its global portfolio of 16.

Why now?
Harman isn't fixated on raising its own umbrella-brand profile, but rather the highly visible retail store, combined with aggressive product introductions and an increase in marketing campaigns for its individual brands, will likely do just that. Add to that the hiring seven months ago of Ralph Santana, formerly CMO of Samsung Electronics America and before that a longtime PepsiCo marketing executive, and Harman is poised to become more of a known name.

"The store is really going to be a statement about what Harman represents, a statement about our brand, and a showcase … delivering an integrated brand experience," Mr. Santana said.

Ralph Santana, CMO, Harman Electronics
Ralph Santana, CMO, Harman Electronics

Building on Harman's experience in Shanghai and some smaller hybrid stores, he said, the company has realized retail is a significant awareness driver. The stores also offer a place for consumers and audio-industry customers (Harman owns 80% of the global market for luxury-car sound systems) to experience entire portfolios by brand. Professional is an important category for Harman, which markets sound equipment such as amplifiers, mixing consoles, microphones and speakers for touring musicians and stadiums, plus software to connect it all. Radio City Music Hall, Skywalker Ranch and nine of the 12 FIFA soccer stadiums in Brazil use Harman professional systems.

"It may seem like 'why now?' for a retail store in the U.S., but when you look … we've been doing this for quite awhile," in China, Mr. Santana said. "There is just no better time. We've got some really breakthrough products and it's a perfect time for us to put a stake in the ground in the biggest media market in the world and jump right out into the culture with our own store."

Some of its products, such as a new lineup of portable speakers from JBL, are getting their own marketing push this fall with a campaign created by Doner called "Take Your Music Further." The products, named Charge, Flip, Micro and Pulse, will be supported with four TV commercials that will run in the U.S., Europe, Russia, India, Asia and South America. Doner also created an earlier JBL TV campaign that featured Maroon 5, and one during this year's Grammys with Paul McCartney.

But even a Beatle may not help Harman stand out. The audio industry is crowded and competitive, with dozens of other names linked to celebrities. Headphones alone are now a $2.4 billion industry and have grown exponentially over the past few years, particularly in the $100-plus category where many Harman Kardon headphones play. And JBL just added another line to the category with the announcement of its Synchros line of high-end headphones.

Span the gamut
Portable audio speakers, the focus of the JBL campaign, is another category seeing a surge of competition, with Beats' Pill and Jawbone's Jambox both making splashy debuts. Bluetooth-enabled speakers exploded to more than $260 million in 2012 sales from $60 million in 2011, according to NPD.

Harman believes its competitive advantage lies in the breadth of its brands and products. "Harman is unique in the context of going from stage to home to car to personal audio; we really span that entire gamut," said Mr. Santana. That's "what we want to draw together in the consumer's mind. We understand the legitimacy and heritage of audio quality that goes right from the moment the note is recorded, when it gets played back in your car or in your home or another device like headphones. We're really there for the entire journey."

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