Anthem Music Group Offers High Margin Instruments
“Freedom Pricing,” Strict Anti-Internet Policy Protects Dealers
It’s no secret that there are many wind and brass instrument dealers frustrated by ever-shrinking sales and margins. Many are even contemplating or looking into “private labeling” of China-made instruments. For those, there is now the Anthem Music Group.
“It is very difficult for a retailer to reverse integrate into importing and manufacturing,” says Kilkenny, president of Anthem. “There is no ‘one-stop shopping’ in regard to manufacturers in China, and many of the good instrument makers do not go to the NAMM show or the Music Messe show. Successful importers have relationships with many different suppliers, and are able to travel overseas frequently to inspect shipments and view working conditions, understand the international business culture, and be able to communicate effectively.
“Having a team of technical experts to evaluate product is essential, and perhaps most importantly, an importer must offer the manufacturer some sort of volume. This is difficult to do for retailers on an individual basis.”
With this knowledge, Kilkenny has launched the Anthem Music Group. Already, 20 retailers are on board and the instruments are a success. “Initially, we put the instruments in circulation for a full year,” in a test pilot program that had 500 of his products in Massachusetts students and band directors hands.
Not an OEM Operation
Kilkenny stresses that they are not an OEM company just placing a name on a product line, but offer a line developed by retailers, technicians, and band directors alike, made by manufacturing partners that offer exclusive features to the Anthem Music Group.
Anthem has created a full line of student instruments including flutes, clarinets, saxes, trumpets, trombones, as well as background instruments such as French horns, tubas, and euphoniums. All Anthem student products are packaged in custom ABS cases. At the request of their retailers, the company will be introducing their step-up flute and wooden clarinet this fall.
“John Gill, our director of operations, specifically manages product quality and development,” he says. “John has a vast amount of industry experience and can evaluate instruments from the perspective of both retailers and manufacturers.” Industry veteran Jack Faas is also on board as a consultant and making sales calls for the new company.
Anthem touts what it calls “Freedom Pricing,” which allows dealers to independently set their own retail price based on their respective market. For this to work, the company must offer a pledge of exclusivity, and that includes not allowing dealers to sell products on the Internet or in mail-order catalogs. “By providing protected territories, dealers will not have to price match with the Internet or the dealer across town,” Kilkenny says. “Dealers then have the choice to obtain a very attractive profit margin when the situation allows, or they can sell at low prices to help customers and increase overall sales.”
Kilkenny is actually a drummer who studied and played professionally. He was vice president of sales and marketing and a part owner of Grover Pro Percussion, before moving onto Sonaré Winds in August of 2002. He left his position as president of Sonaré Winds in 2007. He cites both companies as being great to work for and he gained valuable learning experiences at both places.
“Upon leaving Sonaré, I knew that I wanted to remain in the music industry and was open to many different ideas,” he explains. “It wasn’t until I started receiving phone calls from various retailers that the idea for the Anthem Music Group developed. Dealers were asking me questions regarding the importation of instruments from China and asking if I would consult with them to create private label lines. My first two questions were, ‘Why are you looking for something different?’ and ‘What has your experience in China been thus far?’”
He says he learned several things from the exchanges, including that many independent retailers were simply anxious to increase their profit margins. “Many mainstay manufacturers are already making instruments in China but apparently not passing on much of the savings,” Kilkenny says. “Retailers profit margins seem to be shrinking to the point where dealers are no longer satisfied. They seem to be fed up with building brand names only to have the margins chiseled away at each year.”
Kilkenny says he felt that there are many consumers who simply cannot afford the mainstay products on the market. “Over the past several years, instrument prices seem to be increasing at a greater rate than that of inflation and disposable income is rapidly eroding., Many families have difficulty affording $800 for a student flute or trumpet, or $1,300 for an alto sax.”
This all pointed the way to the founding of Anthem Music Group. The business plan involved creating quality woodwind and brass product lines for student, step-up and background markets; creating instruments with good profit margins; and offering membership to the group on a very exclusive basis. “Anthem is dedicated to the success of independent retailers. Marketing the Anthem brand allows us to offer our pledge of dealer protection and exclusivity.”
Dealers – and the band directors they serve – can be understandably skeptical when one hears the terms “quality instrument” and “China made” in the same sentence. But Kilkenny says that it’s all in the approach, and that it involves both keen analysis and good old-fashioned pavement pounding: “One factory might make a good flute but a sub par clarinet,” he explains. “We have built partnerships with the instrument makers that create the best instrument in their class.”
Retailers, educators, and manufacturers have been involved in designing Anthem instruments for the U.S. market he says. They have partnered with the top instrument makers in China and we maintain a presence in each factory. “John [Gill] and I have spent a lot of time working with the craftspeople and spot-checking instruments. By maintaining a presence, our scrap rate goes down and our quality improves. Finally, we test and adjust each instrument at the Anthem headquarters before shipping.”
There long-term plans include reaching out to band directors and end users, but the new company is first and foremost focused on the retailers.
“Our first step is to win over the retailers,” he says. “They are the ones who maintain the most influence over the school music teachers. By offering territory protection, quality product, and high margins, we are providing incentive for the retailers to pioneer our brand. So far, the response from the teachers has been overwhelmingly positive. Our prices allow band directors to extend their bid dollars to get more for their money.”
“The price point on Anthem instruments has significantly improved our cash flow by allowing us to pay for our entire master order before Christmas and eliminating our long term debts,” says Todd Manning of Manning Music, who recently signed on with Anthem. “With Anthem’s Protected Territories, we get to work with a TEAM of other music stores, not compete against them. With Anthem’s Freedom Pricing, we are consistently realizing a true 100 percent markup.”
Anthem Music Group can be reached at (978) 667-3224 or email@example.com.