February 2, 2007
Smith & Wesson Targets Growth Opportunities
Firearms manufacturer Smith & Wesson had an image problem, and not from the usual politicians and groups opposed to the sale of handguns. No, the company that made Dirty Harry happy with its .44 Magnum found itself with a lot of inventory and too few sales.
The reason behind the decline was weight. For years, Smith & Wesson stuck to building “the most powerful handgun in the world” out of steel. It may have been powerful, but it also was a lot to carry around and shoot.
Other manufacturers developed lighter handguns that were every bit as powerful as Dirty Harry’s weapon of choice.
When Smith & Wesson hired its CEO Mike Golden, he found the company had lost share to foreign manufacturers and was quickly moving to non-entity status in the law enforcement and military markets. On the law enforcement side, Austria’s Glock was now becoming standard issue in many police forces (65 percent of the market) while Italy’s Beretta had become the handgun of choice for the armed forces of the United States.
Mr. Golden, who had never fired a handgun in his life, prior to joining Smith & Wesson, didn’t need to be able to hit a target on a firing range to do his job. He did, however, need to develop a plan to go after valuable target markets.
He started out by getting in step with the times and producing lightweight polymer weapons that met the competition, especially in law enforcement and military circles, head-on.
Smith & Wesson launched its M&P (Military and Police) line of lightweight polymer pistols. Today, the .44 Magnum is out but the Wesson SW 1911 is a powerful and much more lightweight replacement.
The changes made by the company appear to have come at the right time. This year, the government will reopen the bidding for the military’s handgun contract. Beretta, which has held the contract for 20 years, now has serious competition and some believe Smith & Wesson may displace it.
Smith & Wesson has already had some success in capturing military business. Mr. Golden hired a lobbying firm for government contracts after taking over at the company and it has paid dividends. According to an Associated Press report, the company has made four deals worth $20 million in the past couple of years to supply security forces in Afghanistan.
Where Smith & Wesson has maintained its lead is in the sporting goods market. Seventy-five percent of the manufacturer’s sales are generated in this market.
Mr. Golden said the key for Smith & Wesson, in all the markets it serves, ultimately comes down to it fulfilling the promise of its brand name.
“Our research shows that it doesn’t matter whether you’re male or female, old or young, Democrat or Republican, like guns or don’t like guns, the perception of the brand is extremely positive,” he said.
Discussion Questions: What lessons are there for retailers and other marketers from the Smith & Wesson experience?
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Brands are important, but not more important than customers. And, unless brands evolve with the changing needs of the market, they can be eclipsed by new brands.
The lesson here is simple: when you stop making things that people want to buy, your business will decline. The Brand doesn’t create the product’s reputation, the products reputation makes the Brand recognizable.
Mattel enjoyed their unrivaled market dominance for decades with only the smallest of innovations necessary to remain on top (if little girls wanted a doll to dress up and play with, what other choice did they have?). Yet in only a few seasons the upstart line of Bratz dolls made a serious dent in their business, little girls liked the product even though they never heard of the brand. The Barbies brand name didn’t ensure their market dominance, their product was simply less compelling.
Smith & Wesson’s savior, Mike Golden, is an executive with extensive experience in manufacturing and marketing (his resume includes Kohler, Black and Decker and Stanley Works). This is just the kind of experience that S&W needed. Mike knew that in order for a brand to be meaningful, its product must be relevant.
Smith & Wesson’s example of hiring an outsider to shake things up, with positive outcomes, might inspire other ingrown stagnant businesses. Sometimes promotion from within yields terrific results and sometimes it pays to try the opposite.
Perhaps there is a reason, but this lead-in neglects to mention what many firearms consumers consider the key to S&W’s troubles, and needing to update the line is only a part of the story. The second shoe is that the brand was sold to a foreign group in the 1990s. No great issue there, many major firearms companies are foreign owned these days. Except that the new management team decided to sign on to several of the “cease and desist” type of agreements that would release them from liability in the civil suits big city mayors were filing against the gun industry. They were the only major manufacturer to do so, and industry consumers voted their politics with their wallets. You couldn’t even sell a used S&W revolver at a gun show for a couple of years. Nobody would buy one.
An almost (or maybe they were?) bankrupt S&W returned to U.S. ownership and management a few years ago. And they publicly rejected any of the deals the previous managers had made.
The public responded to a renewed S&W with vigor, both in terms of public support and sales. As Mike Golden said, consumers LOVE this brand. It is the Harley Davidson of firearms and it took the most disastrous of PR blunders to damage it. But it is back, thanks to management that cares and consumers who appreciate what they do. Great job, Mike!
I find it intriguing that this story has been promoted in the national business media. Here we have a company that at one time met the expectations of its customers, that kept focusing on meeting the same expectations even as those expectations changed, that did some research to find out what the new expectations are, that is now meeting those expectations, and that is now more successful. This is a story, it seems to me, of the basic business mechanism.
Advertising agency execs appear to focus on branding to such an extent that branding has come to seem incredibly complex and mysterious. Perhaps this is on purpose and serves the interests of agency executives, I’m not sure. But branding is not mysterious, it is not complex. In my view, it is the result of meeting customer expectations. Brand promotion without the basic business mechanism is pointless.
But let me return to the question: why is this news? I will speculate that it is news partly because the business news media is not really all that familiar with the basic business mechanism, and partly because knowledge of that mechanism is lost in the cacophony that infuses the business world.
I believe we lose track of the business basics because we are not able to solve critical business issues (data: 100% of business organizations have an unsolved, critical business issue, and 94% of them don’t know it), so we distrust that the basic business mechanism is operative in the first place. So then we look far and wide for anything to not only help, but to distract us from our incapacity. This leads us to the current condition, which is that business operates at a very low level: 92% of all retail organizations have a 70% customer service rating or worse, 96% of all retail organizations meet customer expectations at 65% or worse, and 100% of all retail organizations are 25% inefficient or worse.
Brand recognition does not necessarily equate to sales. Brand equity does and brand equity has more to do with loyalty over time. Loyalty lasts only as long as the brand delivers what customers need and want; those needs and wants change over time. The brand name may be recognized but if the consumers do not continue to buy, brand equity disappears.
Take this for what it is worth…
Many Americans believe that guns are bad for families and the country. I think that this is something that needs to change and will if gun companies start a sport and make it big…i.e. best shot in the west contests.
They need to promote the industry and push responsible ownership. This is a family value in America. My fondest memories are of time with my father out shooting light bulbs…and we shot light bulbs because the thin glass and cheap metal would biodegrade fast and not pollute.
So – the industry needs to push responsible gun contests, family values and teaching everyone to protect themselves and our country. The right marketing manager and national program can do that…
Yes guns protect. Yes guns in bad guys hands can kill innocent people. But the truth of it is, shooting is fun!
Let’s get the message out to good families – this is a wholesome activity with many purposes that could be a binding experience too.
Right product for the market, understand the sales and purchase cycle (lobbying works in this case), and yes, bringing someone in with no vested interest in the status quo. Those are pretty universal tips, I’d guess.
Smith & Wesson’s marketing strategy to reinvent and reinvigorate its brand image should include providing an innovative, seamless promotional transition from Dirty Harry’s .44 magnum (the most powerful handgun in the world…), and the new and improved SW 1911. Simply remind military and other target customer/end users of its rich, colorful cinematic history, and tell them why the SW 1911 is still (pound for pound) the most powerful handgun in the world. Brand power perceived is brand power achieved.
Leon C. Farbes III
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Brands are important, but not more important than customers. And, unless brands evolve with the changing needs of the market, they can be eclipsed by new brands.
The lesson here is simple: when you stop making things that people want to buy, your business will decline. The Brand doesn’t create the product’s reputation, the products reputation makes the Brand recognizable.
Mattel enjoyed their unrivaled market dominance for decades with only the smallest of innovations necessary to remain on top (if little girls wanted a doll to dress up and play with, what other choice did they have?). Yet in only a few seasons the upstart line of Bratz dolls made a serious dent in their business, little girls liked the product even though they never heard of the brand. The Barbies brand name didn’t ensure their market dominance, their product was simply less compelling.
Smith & Wesson’s savior, Mike Golden, is an executive with extensive experience in manufacturing and marketing (his resume includes Kohler, Black and Decker and Stanley Works). This is just the kind of experience that S&W needed. Mike knew that in order for a brand to be meaningful, its product must be relevant.
Smith & Wesson’s example of hiring an outsider to shake things up, with positive outcomes, might inspire other ingrown stagnant businesses. Sometimes promotion from within yields terrific results and sometimes it pays to try the opposite.
Perhaps there is a reason, but this lead-in neglects to mention what many firearms consumers consider the key to S&W’s troubles, and needing to update the line is only a part of the story. The second shoe is that the brand was sold to a foreign group in the 1990s. No great issue there, many major firearms companies are foreign owned these days. Except that the new management team decided to sign on to several of the “cease and desist” type of agreements that would release them from liability in the civil suits big city mayors were filing against the gun industry. They were the only major manufacturer to do so, and industry consumers voted their politics with their wallets. You couldn’t even sell a used S&W revolver at a gun show for a couple of years. Nobody would buy one.
An almost (or maybe they were?) bankrupt S&W returned to U.S. ownership and management a few years ago. And they publicly rejected any of the deals the previous managers had made.
The public responded to a renewed S&W with vigor, both in terms of public support and sales. As Mike Golden said, consumers LOVE this brand. It is the Harley Davidson of firearms and it took the most disastrous of PR blunders to damage it. But it is back, thanks to management that cares and consumers who appreciate what they do. Great job, Mike!
I find it intriguing that this story has been promoted in the national business media. Here we have a company that at one time met the expectations of its customers, that kept focusing on meeting the same expectations even as those expectations changed, that did some research to find out what the new expectations are, that is now meeting those expectations, and that is now more successful. This is a story, it seems to me, of the basic business mechanism.
Advertising agency execs appear to focus on branding to such an extent that branding has come to seem incredibly complex and mysterious. Perhaps this is on purpose and serves the interests of agency executives, I’m not sure. But branding is not mysterious, it is not complex. In my view, it is the result of meeting customer expectations. Brand promotion without the basic business mechanism is pointless.
But let me return to the question: why is this news? I will speculate that it is news partly because the business news media is not really all that familiar with the basic business mechanism, and partly because knowledge of that mechanism is lost in the cacophony that infuses the business world.
I believe we lose track of the business basics because we are not able to solve critical business issues (data: 100% of business organizations have an unsolved, critical business issue, and 94% of them don’t know it), so we distrust that the basic business mechanism is operative in the first place. So then we look far and wide for anything to not only help, but to distract us from our incapacity. This leads us to the current condition, which is that business operates at a very low level: 92% of all retail organizations have a 70% customer service rating or worse, 96% of all retail organizations meet customer expectations at 65% or worse, and 100% of all retail organizations are 25% inefficient or worse.
Brand recognition does not necessarily equate to sales. Brand equity does and brand equity has more to do with loyalty over time. Loyalty lasts only as long as the brand delivers what customers need and want; those needs and wants change over time. The brand name may be recognized but if the consumers do not continue to buy, brand equity disappears.
Take this for what it is worth…
Many Americans believe that guns are bad for families and the country. I think that this is something that needs to change and will if gun companies start a sport and make it big…i.e. best shot in the west contests.
They need to promote the industry and push responsible ownership. This is a family value in America. My fondest memories are of time with my father out shooting light bulbs…and we shot light bulbs because the thin glass and cheap metal would biodegrade fast and not pollute.
So – the industry needs to push responsible gun contests, family values and teaching everyone to protect themselves and our country. The right marketing manager and national program can do that…
Yes guns protect. Yes guns in bad guys hands can kill innocent people. But the truth of it is, shooting is fun!
Let’s get the message out to good families – this is a wholesome activity with many purposes that could be a binding experience too.
Right product for the market, understand the sales and purchase cycle (lobbying works in this case), and yes, bringing someone in with no vested interest in the status quo. Those are pretty universal tips, I’d guess.
Smith & Wesson’s marketing strategy to reinvent and reinvigorate its brand image should include providing an innovative, seamless promotional transition from Dirty Harry’s .44 magnum (the most powerful handgun in the world…), and the new and improved SW 1911. Simply remind military and other target customer/end users of its rich, colorful cinematic history, and tell them why the SW 1911 is still (pound for pound) the most powerful handgun in the world. Brand power perceived is brand power achieved.
Leon C. Farbes III