Displacement Increases The Price Of Capital

By Patrick Hanna

Through my own experience trying to sell tape recorders, I have found that marketing is truly an effective propaganda tool. In Japan's traditional distribution system of consumer products, the distance between producers and consumers is very far. Communication between these two subjects is very difficult, if not impossible, because between them

• Language: English
• Publisher: Patrick Hanna
• Release date: Feb 1, 2024
• ISBN: 9798869208972

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Displacement Increases The Price Of Capital

Displacement Increases The Price Of Capital

Copyright © 2023 by Patrick Hanna

All rights reserved

TABLE OF CONTENTS

CHAPTER 1 : THEY KNOW THE QUALITY

CHAPTER 2 : THERE ARE MANY TRAINING

CHAPTER 3 : SEVENTH THEOREM

CHAPTER 4 : CHALLENGER SPACECRAFT

CHAPTER 5 : EXPERIMENTS IN A THOUSAND

CHAPTER 1 : THEY KNOW THE QUALITY

I have to admit that at first we intentionally printed the words Made in Japan as small as possible, so much so that one time US customs forced us to print them larger on the product.

Through my own experience trying to sell tape recorders, I have found that marketing is truly an effective propaganda tool. In Japan's traditional distribution system of consumer products, the distance between producers and consumers is very far. Communication between these two subjects is very difficult, if not impossible, because between them there are first-level, second-level and third-level wholesalers selling large volumes and then retailers. Thus, this process had to go through layers and layers of brokers standing between the producer and the final consumer. This distribution system of course also has some social value, because it creates more jobs, but it is too expensive and ineffective.

Through each floor, each layer, the price of goods is pushed up, sometimes the middlemen have never seen the type of product they sell and resell. Perhaps, such a distribution system can only be suitable for common, low-tech goods. But we realized from the beginning that such a distribution system could not help the sale of our company's high-tech products. Tier three or four wholesalers certainly did not have the same interest or enthusiasm for our company's products and the product ideas we had. We need to encourage customers to use products manufactured by our company. To do this, we must establish our own system of consumer stores and arrange our own sales methods and methods to the market.

We have launched on the market a number of brand new products, never before seen on the market such as transistor radios and personal televisions. As a result, we have a reputation as a pioneering company, but some also call us the testbed of the electronics industry. When we successfully manufacture a new product, giants in the electronics industry will observe whether our product is accepted and favored by customers so that they will rush to produce similar products. then sell it to the market to profit from our efforts. This situation has lasted for many years and we always have to work hard to move forward. Most of our major products have gone through similar situations, from the pocket radios and transistor televisions we created early on to the portable Walkman stereo, the Watchman flat-screen handheld microcomputer, and even the Discman brand record player. We were the first to sell stereo audio players in Japan. We also built the first home videotape recorder, inventing the Trinitron system, a new method of projecting a color image directly into a television tube. We innovated the 3.5-inch computer floppy disk, increasing its memory capacity to the highest level in the world compared to other computer disks of the same size. We revolutionized the way television news is recorded and transmitted worldwide with the introduction of handheld video cameras and compact video tape players. We have been at the forefront of manufacturing Mavica-brand filmless camcorders, compact disc systems (which can record a huge amount of data and news) and 8mm video cameras. Above are just a few of the products manufactured by our company and widely known in the market.

At first, when our company's path to success was unclear, our competitors often had a wait-and-see attitude to see how popular our new product would be. and whether it sells well or not. Therefore, in the early years, our company often monopolized the market and thus earned a lot of profits for a year or more until other companies were convinced that the new product was very valuable. Prospects. But after successfully manufacturing different products many times, competing companies have increasingly shortened the waiting time before jumping into producing products similar to ours. Today, we are barely three months ahead of them in holding exclusive rights to market new products before competitors enter the market to compete with us with versions of our own products. we create. (We were previously fortunate to have exclusive rights to sell Discman brand portable compact disc players for an entire year and exclusive rights to sell Walkman brand portable stereos for nearly 6 months). This is something to be proud of, but also extremely costly for the company. We must always promote improvement. Over the years, our company has spent up to 6% of revenue on research and development, some years even up to 10%. Our plan is to create consumer demand with the company's new products instead of asking them what products they prefer. Consumers don't know what's possible, but we do. Therefore, instead of conducting research on the needs and tastes of the market, we rack our brains to think about a certain product and its uses, and at the same time look for a consumer market for the product. by guiding and propagandizing the masses. Sometimes, the idea of a certain type of product flashes into my mind quite naturally.

I would like to give an example of a product that is now quite familiar to everyone, which is the Walkman. A new idea was born in my mind one day when Ibuka came into my office with one of those portable stereo tape recorders and a pair of standard-sized headphones. He sadly complained to me about the weight of this entire machine. I asked him what he was thinking when he complained like that and he immediately said: I really like listening to music, but I don't want to bother others. I can't sit next to my stereo all day. But the stereo is too heavy to be carried easily.

I also pondered and thought over and over about an idea that had been in my mind for a long time. Now, thanks to Ibuka, that idea has become clearer. Through personal experience, I know that it is difficult for young people to live without music. Most people have stereos at home and in their cars. I have also seen quite a few people walking on the streets of New York or Tokyo carrying large tape players and radios emitting loud music on their shoulders. I also remember one time my daughter Naoko, who had just returned home from a sightseeing trip, ran upstairs to play a music tape before coming down to greet her parents. What lbuka complained about inspired me. I instructed the engineers to immediately get me one of those small cassette recorders called Pressmans and told them to remove the recording circuit and speakers, and replace it with a stereo amplifier circuit. I also outlined a few other details I wanted, including adding a very small and light stethoscope to this new machine, which turned out to be one of the most difficult parts of the project. manufactures Walkman machines.

Everyone is talking about my project to build a Walkman. It seems that no one agrees with my opinion. At a meeting discussing product planning, an engineer said the following: The idea sounds very good, but we have to consider whether anyone will buy this new machine without a recording circuit. Personally, I think it will be difficult to sell.

I replied to him: There are millions of people who have bought car stereos that don't require a recording circuit, and I think there will be millions of people who will buy these as well.

No one openly criticized me, but I felt that I could not immediately convince the group of engineers in charge of the machine building project, even though they were forced to carry out my orders. I even set the selling price of that device to suit the budget of young people who like to listen to music before making their first device. It must be said that Pressman machines (small tape recorders used for journalists) are relatively expensive, selling for up to 49,000 Yen in Japan. I said I wanted the retail price of the new stereo model to be tested to be no more than 30,000 yen.

The accounting department objected, but I insisted that they comply with the valuation as I wanted. I also told them that when the company produces that new machine in large quantities, of course the product price will decrease. They thought we should start with machines that were cheaper than the Pressman. But I chose the Pressman configuration because we stock many Pressman parts at service facilities around the world, and we know that the product is very reliable. So we can get started without having to worry about not meeting technical requirements.

A few days later, I invited Kaoru Shoji, my golfing buddy and a novelist, to the club to play golf with me. When we were in the car going to the club, I gave him a set of headphones and started the music player. I also put on another set of stethoscopes and observed his expression. He was very surprised and extremely happy to hear the Grieg Piano Concerto played by his wife, artist Hiroko Nakamura. He laughed cheerfully and seemed to want to tell me something, but I couldn't hear anything, because the receiver was still pressed tightly against my ear. I immediately realized this was a problem that needed to be solved. I immediately asked the production department to add a button-activated microphone to the machine so that two people listening to the same machine could still talk to each other over the music through the hotline.

I thought we had launched a miracle product, so I was very happy and extremely proud of this new product, but the marketing department was skeptical. That made me quite confused, but I strongly believe that this new product will definitely be popular with many people, so I personally take responsibility for this project. And I really don't regret accepting that assignment. Indeed, ever since it was first introduced to the market, the Walkman has sold incredibly well. I've never liked the name Walkman, but it seems to stick in people's minds and is easy to remember. Some young people in the company nicknamed this new device the Walkman while I was away. When I returned, I ordered this name to be immediately replaced with a more appropriate name like Walking Stereo or something more grammatically correct, but they said it was too late, because of the advertising program. with the name Walkman were all prepared and the newly manufactured machines were all printed with this brand. Both the US and UK Sony branches were concerned that it would be difficult to sell a product with such an incorrect English name, but we did it. Later, we tried to replace Walkman with other names when sold abroad, such as Stow Away when sold in the UK or Sound About when sold in the US, but those new names were not popular and only Walkman was the real deal. loved by everyone. Finally, I called Sony branches in the US and UK and told them: This is an order: the device name is still Walkman. Now I can confirm that it is a great name.

Soon we could barely keep up with the growth in market demand. We had to design a series of automatic machines to process piles of orders sent to the company. Of course we promoted sales with a large advertising campaign. In Japan, we hire young couples to hang out in Tokyo's Ginza area called Pedestrian's Paradise on Sundays and deliberately show that they are listening to music on Walkmans. At first I thought that listening to music alone would be considered insensitive, but customers increasingly expressed their desire to use this portable stereo as a personal item. I thought people liked sharing their Walkman with others, but that's not the case. Therefore, we removed the voice line and a stethoscope from most new models. From the beginning, I was sure that the Walkman would be very popular, but I really didn't anticipate that the market demand would be so great. I asked the project team to initially trial production of 5 million units, but in the end, we shipped over 20 million units with over 70 different models. We also make stereos that are waterproof and sandproof, with many more to come.

The interesting thing about the Walkman is that at first we got rid of the recording function and the rewind function. Now, we have to re-equip all the functions that we removed, and even have to install a very small speaker so that the machine can still broadcast sound without having to go through the headset. . In addition, we also installed some new equipment that allows copying from one tape to another.

My purpose in telling you this story is very simple, that is, I believe that no market research document at that time concluded that the Sony Walkman music player product would be successful, much less could it be. think this will become a viral event and will attract many imitators. Furthermore, this small device has completely changed the music listening habits of millions of people around the world. Many of my friends in the music industry such as conductors Herbert von Karajan, Zubin Mehta and Lorin Maazel and virtuoso Isaac Stern contacted me to buy more and more Walkmans. This is a very valuable recognition of the soundness of my idea and the brilliance of the product. As