of 6
7/29/2019 NetRam Case History
1/6
1
A Case History
Don KlostermanFormer, Sr. Vice President,
PrincipalParker Stephens, Inc.
2802 Knoxville Ave.Long Beach, CA 90815
714.501.5949 cellE-Mail: [email protected]
mailto:[email protected]:[email protected]7/29/2019 NetRam Case History
2/6
2
As the surrogate-marketing department forthis fledgling computermaker, we worked withNFL Hall of Fame CoachBill Walsh.Parker Stephens usedMr. Walshs credibility tocommand respect andattention with in-storemarketing.
NetRam Computers Became the #1 Selling Computer Brand inFrys Electronics, the 13th Largest Computer Retailer, in only
six months. It Outsold All Other Brands, Combined!
Unique strategic differentiation gave NetRam thecredibility for ease of sales. Better, it propelled
NetRam from $0 to over $30million in sales in justeight months time, using only in-store marketing.
Our strategies resulted inunprecedented in-storeexposure at this normally stingyretailer.
7/29/2019 NetRam Case History
3/6
The Birth of NetRam Computersas a Viable Consumer Brand
By Don KlostermanFormer Sr. Vice President, Parker Stephens, Inc.
This is a true American success story of small group of people who were armed with little more than determination on their wayto creating the opportunity for themselves to become the next Dell. If only things had gone just a little different.
Parker Stephens is a medium sized advertising and marketing services firm located inCosta Mesa, Ca. We are principal owned and operated by a group of seasoned advertisingexecutives who trained and worked for years in big 10 advertising agencies such asSaatchi & Saatchi, McCann Erickson, Ogilvy & Mather, as well as Wells Rich & Green and
former O.C. regional power Salvati Montgomery Sakoda which merged with Bozell and is now FCB. Additionally our key
partners have client marketing experience at Sunkist Growers, Allergan Pharmaceuticals, and at IRS Records, a former divisionof Capitol Records. That broad experience was put to the test with this client.
One day in 1997 we were introduced to a couple of motivated individuals who manufactured single units and small batches ofcomputers, mainly for corporate customers. They made them in their very small offices in Orange County, one at a time. Theyhad sales then of about $1.5 million per year. They wanted to increase their business, so one of the partners, a determinedperson, decided he wanted to sell computers at retail, and specifically at Fry's Electronics. Frys is the 13 th largest computerretailer in the country, and is well known for its hardball style of relationships with its computer vendors.
The partner was terribly naive as to what it takes to be successful in the retail environment, but he got on the phone one daynevertheless, called the Fry's headquarters, learned the name of the computer buyer, and became such a persistent pest for 30
days that the buyer finally caved in and granted a meeting. He was given three weeks to make his once-in-a lifetime pitch.
The two NetRam partners met with us to ask for our assistance, to which wepromptly declined. The world did not need, we felt, another non-descript, white boxcomputer built by a couple of determined, yet nave guys in little more than agarage-type environment, They also had little backing, little marketingknowledge, no packaging, no positioning, no sales materials, no technical support, no retail presence whatsoever....etc. But forsome reason I couldnt get it out of my mind, so later that night I decided to stop in to the Fry's store in Fountain Valley on myway home. I thought I'd be there for about 15 minutes. I ended up being there until closing, some three hours later. The reason
was that I had found the Fry's sales people receptive to talking with me, and I became intrigued. Of course I posed as a3
7/29/2019 NetRam Case History
4/6
customer. I was able to become very friendly with one of them. The next morning I decided to stop in to the store again, and thesame sales clerk from the night before was there again. This time he suspected I wasn't a customer, so I confessed and toldhim I was performing in-store research for a new computer company. Wed become friendly enough that he saw I haddeveloped a genuine interest in how Frys sells computers, so he opened up to me to reveal the inner secrets of what waswrong with competitive offerings, and where the opportunities for a new computer company existed.
Using that information as a foundation, I spent the good part of the next week going into mostof the So. California Fry's stores, and some competitors. After this period there were some veryobvious opportunities which arose for a new computer company, and that enabled our firm toput together the proper strategies which eventually lead us to what was to become a greatsuccess.
During the next two weeks we put the presentation together for Fry's. I boarded a planeheaded to their headquarters in San Jose along with one of the NetRam partners, andproceeded to make the presentation to the buyer. I took a direct and frank approach, laying out
all the issues Id learned in my many hours in his stores. Of course, this was risky because essentially, all the issues I laid outwere problems for which the buyer was responsible. I felt I had to take the aggressive road. It turned out to be the right one.
To my surprise, the buyer was appreciative of all the research that had been done, but he was especially interested in the factthat we had set up NetRam as the only computer company that A) was aware of the unique competitive issues that existed atFrys; and B) had set up our marketing plan and in-store presence to uniquely address those issues.
Well a few short days after the meeting we received an initial order. That then set off a frenzy back at our place, because mostof the marketing materials we presented to Frys were only in concept form. All the packaging, labeling, in-store marketing andP.O.P., sales training to store personnel, returns, customer service, 800 lines, in-store factory reps, you name it, all had to beput into place in a short one month period. The two NetRam partners were barely equipped to handle the office andmanufacturing duties, so it was incumbent upon us to become NetRams Marketing Department, and for me to assume the
surrogate marketing director's job.
Our first P.O. was for 32 machines. They were to be the industrys first Pentium II systems offered at retail, so the deadline wasvery tight. The launch was a complete success, in spite of some severe manufacturing issues that strained our patience, aswell as that of the Frys buyer. Those 32 machines all sold within 36 hours.
With some adjustments and success in the manufacturing process, and a couple of short test months at Frys, it wasnt longbefore we started receiving larger, substantive P.O.s, on a weekly basis. $100,000 P.O.s per week came through the faxmachines. Then, a few weeks later half million dollar orders; then a million dollar orders, then two million dollar P.O.s, PERWEEK. Can you imagine? A company that was selling only $1.5 million in annual sales is now a $30,000,000 company and ison track to be a $50 million company, in its first year of retail presence!
4
7/29/2019 NetRam Case History
5/6
We also started to become the favorite computer to sell of a few key store salesmen throughout the chain who were extremelyinfluential to the rest of the sales army at Frys. Our strategy was to have a strong management presence in each of the 16stores, identify the key sales people and make them strong advocates. That required thousands of hours of our time in thetrenches. We knew we had the best computer on the market, and we added the best sales closing materials, the best in-storemarketing, the best packaging, the best sales training, the best manufacturers rep presence, and the best sales commission of
all the offerings. We didnt spend one dime on traditional advertising, so our profits were applied in the store where manycustomers would come in not having a specific brand in mind at the time of purchase. Remember that pre-launch research? Weaccurately determined that if we could get a small percentage of those naive buyers wed be a hit. After all, Frys is a very highvolume chain, and even a small percentage of market share there can make a company successful.
We devoted a strong presence to the five new Frys grand openings that occurred to huge success. Computers literally sold bythe pallet load at these festive and high volume events. We used them not only as promotional launching pads, but astremendous first impression opportunities to train the new sales forces at these new stores to sell NetRam as the Go Tosystem. It was common to see up to three end caps and huge sales mountains of our NetRam Computers for sale, and itdidnt take long for those mountains to whittle down in the form of fast register sales.
We became the number one selling computer in the Frys chain, outselling all other brands, including the national brands,combined!
It wasnt long that we were able to break into anothermajor, mid-west retail chain. Sales soared. The twopartners could not continue managing the company withthis growth so they sold it to another party whom had beenhelping them with financing along the way.
5
7/29/2019 NetRam Case History
6/6
Bill Walsh Gets Coached for NetRam
NFL Hall of Fame member and 3-time SuperBowl Champion coach with the S.F. 49ers BillWalsh receives direction from NetRams RetailMarketing Director, Don Klosterman during arecent shoot for a video project at a FrysElectronics store. Fast growing NetRamComputers and Mr. Walsh have teamed up topromote its increasingly popular line of highquality computers that are made only with world-class, brand name components.
(A past press photo and caption.)
Our in-store marketing was beefed up with the new owners ability to persuade NFL Hall of Fame legendary coach Bill Walsh tobecome company spokesperson. They had a contact who knew Mr. Walsh and since we didnt have much operating profit yet,he agreed to provide his services for few dollars and interest in the company. We worked with him in producing on screen salesvideos, in-store P.O.P. materials and of course web site presence. Mr. Walshs name and likeness gave our unknown computerbrand accelerated credibility that endeared NetRam not only to unknowing customers, but also, and very importantly, to theFrys sales staff who are so influential to the sales process. After all, that army of sales people held the keys to our success or
failure. Our success was made possible by our ability to endear ourselves to them. Of course, using Mr. Walsh properly wascritical, and we did that very well.
That company decided to build a new factory in the Irvine Spectrum. It was a beautiful, state-of-the-art facility. I referred to it asThe House that Parker Stephens built. Prior to that the larger orders were built by a third-party contractor in Costa Mesa. Thatcontractor was very efficient and built computers to very high standards. We had a great thing going and felt we were on ourway to becoming a true national power in the category.
The new owners took over. When the new factory opened, the new owners found it extremely difficult to manufacturecomputers with the same high quality on which our foundation had been built. And worse, they could not deal with the neweconomics of the computer business. Many problematic computers left the factory and became faulty returns. This turned out to
be the kiss of death. Our reputation was gravely damaged, and NetRam soon lost the Fry's account. NetRam went out ofbusiness. It was heartbreaking, to say the least.
We proved however that we have the ability to successfully create a unique presence for a new brand in a very crowded field.And better, we did it without spending one dime in advertising, putting all our energies into the in-store environment to empowerthe consumer to buy, quickly, with knowledge and confidence. The experience also unfortunately reaffirmed to all of us thatgreat marketing and determined effort alone dont create success. Its truly a team process.
We put our many years of working for blue-chip, national brands to work for NetRam and succeeded.
----------------------- // -----------------------
Don KlostermanFormer, Sr. Vice President, Principal
Parker Stephens, Inc.2802 Knoxville Ave.
Long Beach, CA 90815714.501.5949 cell
E-Mail: [email protected]
6
mailto:[email protected]:[email protected]
