Iconic German audio company Sennheiser acquired its local distributor, Syntec International, in August 2013 as part of a global policy to have subsidiaries rather than wholesalers.
The inaugural managing director of the new subsidiary is Bjørn Rennemo Henriksen, formerly the sales and marketing director for all Nordic and Baltic countries at Sennheiser’s Denmark subsidiary.
Digital Retailer recently interviewed Henriksen to find out why Sennheiser had enacted this change and how it is confronting the myriad challenges in the audio market.
Why did Sennheiser move to a subsidiary model?
Sennheiser is a family-owned company and the third generation has gradually taken over since 2008. Daniel and Andreas Sennheiser are now CEOs of the company and their father, Dr Jörg Sennheiser, is more and more doing nothing.
We can now feel this third generation taking over — new thoughts, new ideas, more stamina — the projects that have been launched over the past couple of years are not 6-month projects, they are 3-to-5 year projects.
We call this strategy ‘Lighthouse 2016’, and one of the significant bullet points is that we want to be financially independent.
What else is part of ‘Lighthouse 2016’?
One of the other significant bullet points is that Sennheiser shall remain a family owned business.
[The Sennheisers] would like to have subsidiaries all over [the world] in due time. Even if we wanted to take over any [other] partner in the world, that would require a significant amount of money, and the Sennheiser family would not do that before the money was in the bank.
We started building a new factory in Germany just before the GFC and the money was in the bank before we did that.
What changes have the new CEOs introduced?
The focus used to be the Sennheiser brand; we sort of hung on to the Sennheiser brand — ‘it will carry us through a crisis, it will survive this or that’ — it was like the brand driving the business.
Eighteen months ago at a large conference, I heard Daniel Sennheiser say, “We need to nurse our brand, because that is why we are where we are today, but we need to put the customer in that spotlight; we need to get more in contact with the customer; we need to speak more to the customer and we need to secure the feedback loop from the customer back to headquarters, because the customer is what will drive our future business”.
What is the customer telling you?
Consumer headphone sales over the past few years have increased significantly every year. The lifestyle segment, which is our newest category with our Momentum series [represents] what the customer is telling us: ‘We want lifestyle products and we want fashionable colours’, and if you look at traditional Sennheiser, we have never made a product that was not grey or black.
Is it tough to be a traditional brand when there are so many new entrants at high price points?
We tend to measure market share in two numbers — quantity and total value — and we are still doing very well.
We recognise that competition has been very tough. What Dr Dre has done is, to me, a very good example of how marketing can drive sales.
We’ve had the brand and the quality out there, but all of a sudden the consumer stood up and said: ‘We know you do fantastic sounding products, but I’ll tell you what — that red colour — I want that!’.
Has it been tough to respond to this challenge?
I am not saying Dr Jörg wouldn’t have done it but it is easier for the two brothers; they recognise the customer need and want to respond to that faster than we normally have done.
The market has turned and our competition has shown that headphones in any colour sells. The number one and overall criteria for Sennheiser is audio — the pursuit of perfect sound — so the compromise is to say, we need to make something small for the Sport series in partnership with Adidas, but the sound quality needs to be there.
We always thought that as long as we created great audio products the consumer will buy that, but today the consumers say they don’t care, because the youngsters have been listening to MP3s at 128kb compression for years and years and that is apparently good enough.
With that in mind, what is Sennheiser doing to get its high quality audio message across?
The perfect compromise that we’ve come up with is the Momentum series. Not only is audio important to us, so is the craftsmanship of what customers want to buy. The Momentum is in seven different colours, that product is built to last — you can’t break the band — and it sounds great.
We have made a compromise and we will continue to make that compromise. We’re still extremely proud of the brand and rightly so, but the youngsters want something in red and green, and next year in other colours, because today’s colours will be out of fashion.
And we will need to do other styles: closed ear, open ear, on ear, over ear.
A few years back, everyone wanted these ear canal ones that you can stuff into your brain and now that is out of fashion again, because people want a necklace feel to their headphones now.
Is it hard keeping up with headphone trends?
As a sales person, you always want the right products in the right colours when the market takes off. Unless you create the demand and are driving the demand, that is very hard.
Up until recently, Apple was always creating demand. It is about not only listening to the customers but getting that message all the way through to production — the most recent factory we built in Germany has lines we can change very fast.
Finally, what are your thoughts on the Australian market?
I look forward to getting to know the market. The key for me is to talk to the old Syntec team and to visit as many customers as soon as possible. I come from a region where logistics and distance was an issue and now that I am in Australia, I realise that I didn’t have an issue!