`

Former Thomson exec attempts to revive Proscan TVs: U.S. subsidiary sells South Korean flatscreens

February 25, 2008

In the mid 1990s, Carmel's then-giant Thomson Consumer Electronics annually sold $300 million worth of high-end televisions under the name Proscan. But by the end of the decade, the company's French owners had abandoned Proscan in favor of a strategy emphasizing the betterknown RCA brand.

Now a former Thomson executive based in Indianapolis is attempting to revive Proscan.

Last year, Pat Deighan sold nearly $50 million worth of Proscan high-definition flatscreen LCD televisions in the United States. This year, he said he's on track to double that total. Pretty good for a guy who runs a solo operation.

"It's a staggering amount of money, but it's all relative," said Deighan, 44, pointing out that the profit margins in the television industry are razor-thin.

Deighan joined Thomson in 1990 as a designer and moved on to project management and marketing and sales, posts that helped him develop contacts with major retailers. He left Thomson in 2005.

Before he departed, Deighan got to know Proscan well.

Thomson had introduced the brand in 1986 as a luxury alternative to the massmarket appeal of RCA. The company sunk big money into marketing Proscan as a high-end-but-easy-to-use boutique product, as its tag line indicated: "Proscan. So advanced. Yet so simple." And the investment paid off. In its peak year, Thomson sold $300 million in Proscan televisions.

But in 1997, Thomson changed course and stopped advertising Proscan. By 1999, products with the name were no longer sold in stores.

The Proscan brand remained on the sidelines until 2005, when Thomson licensed it to the South Korean electronics firm ON Corp., which already was selling Chinese-made flatscreen televisions in Australia and Europe.

ON Corp. wanted an established brand name to help it penetrate the North American market. With the help of a South African minority financial partner, Nuworld Holdings, ON Corp. set up a U.S. subsidiary and put Deighan in charge. He now runs the domestic operation primarily out of his home.

In the two years since taking charge of Proscan, Deighan has outsourced everything but the sales functions, which he handles himself. Customer service and warranty support, for example, is provided by contract through a call center in Cleveland. That's important, Deighan said, since up to 10 percent of televisions industrywide are returned for defects

"I think this is the future of U.S. corporations," Deighan said. "As they continue to look for cost efficiencies, they'll become much smaller and rely on outsourcing."

ON Corp. designs the televisions and handles manufacturing overseas. Parts of its business are outsourced as far away as Australia.

It's a complicated business model, but it's working. The Proscan brand is making a rapid comeback with consumers, thanks primarily to two major retail relationships Deighan has struck.

Hoffman Estates, Ill.-based Sears now stocks Proscan television sets in its 900 stores. And Atlanta-based Aaron Rents Inc., a rent-to-own retailer that offers furniture, appliances and electronics, sells the TVs through its 1,500 locations.

There are two keys to Proscan's recent success, Deighan said: its affordable price and its piano black "cabinet," which makes the televisions look like more expensive sets.

Lingering Proscan brand equity from the Thomson years adds a perception of quality. But the televisions are priced to be bargains. Proscan 32-inch sets start about $600, 42-inch sets run about $1,000, and 47-inch models cost $1,400. Similar high-definition models with better-known brands are generally $500 to $1,000 more expensive.

Proscan is trying to re-establish a foothold in a crowded TV market with lots of familiar names, including Sony, Toshiba, Samsung and Panasonic as well as upstarts like Vizio, Olevia and Polaroid.

The fact that ON has not launched a marketing campaign to support the revived brand puts it at a competitive disadvantage, said Jonlee Andrews, a professor in Indiana University's Kelley School of Business and director of its Center for Brand Leadership. She said that means ON is leaving Proscan's success in the hands of retailers.

"It's a good question whether anyone even remembers them," she said.

Even so, she said, there may be a segment of shoppers drawn to the brand. While one group of consumer electronics buyers is highly concerned about performance and puts great stock in well-known names, she said another is more cost-conscious and simply wants a good deal.

ON will have to aim for penetration with the second group.

"It's the number of outlets available that will drive their success, rather than this is something people aspire to own," she said. "For that group, whatever I can get at the best price is just fine with me."

Former Thomson executive Dave Arland sees more potential.

Many consumers who bought Proscan TVs in the 1990s are getting ready to replace them, said Arland, who spent 16 years with Thomson.

Further, he said, broadcasters next year will stop sending analog signals over the air, a move that will prompt many consumers to buy digital TVs.

"Consumers are out there. They're buying and replacing sets ... Everybody's got to make a decision in the next year on any TV that uses an antenna," said Arland, who now is president of locally based Arland Communications.

"You've got a very well respected name in 'Proscan,' he said. And even if you don't know what it is, it sounds good."
Source: XMLAr00500.xml
ADVERTISEMENT

Recent Articles by Peter Schnitzler

Comments powered by Disqus