August 18, 1973
Philip Morse: He Sees Boom for Stereo Hardware
By RADCLIFFE
NEW YORK-
Less that three decades ago, Philip Morse, entrepreneur extraordinary, arrived in this country a virtually penniless refugee from war-torn Poland. Today, through an uncanny business sense, he is head of a multimillion-dollar corporate complex that produces sewing machines and a wide range of home stereo equipment.
How did he do it?
Last week, in a rare conversational mood, Morse sat relaxed on the glassed-in patio of waterfront Stamford, Conn., home, and sought to explain the secret of his success.
"We believe in serving the people," he said modestly, "and service to us is offering value for money.
Morse explained his concept of "value for money."
"We produce a popular-priced line of home stereo equipment. Morse Electrophonic equipment is truly mass-consumer oriented. Yet we do not compromise quality. The engineering and sound are comparable to much higher priced equipment."
That Morse has found the formula for success is indisputable. The company's net sales for fiscal 1973 was $161,257,438, a jump of S58.2 million over fiscal 1972, and an impressive leap of $129.9 million over 1969 sales.
Another strong point in the success of Morse Electrophonic Products is that the line is designed with a youth market in mind. Much emphasis is placed on decorator colors. eye-catching graphics, attractive
grille works. Does Morse believe that he may be alienating the older, more reliable consumer, by addressing his products to youth?
"No," he answers readily. "When it comes to stereo equipment, the young buyer today is amazingly well informed.
We believe that in addressing ourselves to the youth market, we can attract the older buyer whom the youth will influence
through his knowl-edge."
Morse's big concern these days is his company's role in helping to get the concept of 4-channel sound off the ground. We stressed Electro-phonie's commitment to bringing popular-priced quadrasonic equipment to the mass consumer market; and defended the practice by some manufacturers of promoting synthesized 4-channel sound.
"What we are doing," he said, "is not misleading the consumer, but merely, through a little harmless gimmickry, trying to orient him towards the concept of four speakers of sound."
His reasoning continued,
"After we have gotten the consumer to try four speakers of sound in his house, we can always prevail on him to upgrade his equipment to full four channel. It is, in fact, a practical approach to the whole theory of educating the consumer, if 4-channel is to enjoy mass popularity."
Morse's feeling was that the people who were really guilty of creating confusion in the 4-channel field were those who insisted on waging the seemingly unending battle of discrete vs matrix, et al.
"These are the people," he said,
"who should make a more determined effort to get together, agree on compatibility standards, and get down to the task of launching 4-channel as the viable new sound innovation it is."
Morse talked about marketing.
The company side-steps the popular practice of selling through reps, and, instead, sells directly to the retailer via a network of 300 company trained salesmen, servicing more than 20,000 retail accounts in the United States and Canada.
Morse said that the company maintains regional offices and warehouses in 15 strategic locations.
These are designed to increase market penetration and insure prompt product delivery.
The Electrophonic line of products is not fair traded. With much candor Morse explained that regardless of what the thinking of fair trade advocates was, he saw it as a deterrent to free enterprise and open competition.
Morse's thought about wattage ratings were just as candid. "It really does not matter," he said, "whether the IPP or RMS rating is used, just as long as all companies standardize their approach to ratings.
He feels, however, that the average consumer is more familiar with the IPP system of rating, and that this should be accepted as the standard.
Morse talked about brand names, and the consumer's attitude to brand name product. He said that the trend was gradually moving away from brand name products, primarily because brand name manufacturers were running out of innovative ideas. "The whole selling game is now in the ball park of the newly emerging manufacturer with creative ideas," he said.
Morse takes pride in pointing out that Electrophonic is becoming, with each passing year, a "made in U.S." line of equipment. We disclosed that as recently as five years ago, most of the parts used in Electrophonic products were manufactured to Electrophonic specifications by firms in Europe and various countries in the Far East.
"However," he continued, "within recent years greater emphasis has been placed on developing U.S. resources for certain component Parts."
He pointed out that Electrophonic had increased production of cabinets at its own Los Angeles stereo furniture manufacturing plants, and now produces or obtains, in the U.S. a major portion of its console and compact cabinets, speaker enclo-sures, grille cloths, knobs and hardware, name plates, stands, roll-about carts, dust covers and cartons.
Morse talked about expansion of the Electrophonic line. He said that during fiscal 1973 planning and construction of three additional plants began. Among these were a 91,000 square foot facility in Montreal which began operations in July of 1972, and is enabling the company to provide a better service to the Canadian market.
A 60,000 square foot plant was opened in Puerto Rico, in September of last year, and is used to assemble units designed for sale in Puerto Rican and Caribbean markets. Largest of the new Electro-phonic facilities is a 350,000 square foot plant in Dallas.
Morse explained. "With the addition of these three plants, we increased manufacturing space in the U.S. and Canada to nearly 1.5 million square feet at seven locations in major market areas. The company also owns a 50 percent interest in an electronic components parts manufacturing company in Hong Kong."
One of Morse's pet projects is his company's involvement in a Dept. of Labor sponsored program for hiring and training disadvantaged, jobless persons. He disclosed that during fiscal 1973, the program was instituted in Electrophonic plants in Brooklyn, Atlanta, Montreal and Puerto Rico.
Morse looked at the future for home stereo in this country, and said he saw it as being healthy despite political and economic upheavals.
He said, "Despite monetary problems at home and abroad, unemployment is definitely down, and money is not as tight as it was a couple years ago. People are buying home stereo products, and our line is priced just right, even for the customer on a small budget."
