Case Study: Lessons From Martin Guitars: Three Ways to Survive a Downturn

by Kimberly Smith

Published on 1/26/2010

Company: C. F. Martin & Co.
Contact: Dick Boak, Artist & Public Relations
Location: Nazareth, Pa.
Industry: Musical instruments
Annual revenue: $93,000,000
Number of employees: 825

Quick Read

Economic downturns come and go—every 11 years or so, according to Dick Boak's calculations. He's a historian at heart, and during his long tenure at C. F. Martin & Co., maker of fine guitars, he's seen a few dips—perhaps none as titanic as 2009's. But as keeper of the archives, he understands that the current downturn isn't the first, nor the last, the company must endure.

And endure the company has, for 177 years—through the Great Depression, World Wars, and a Civil War—outlasting countless fads and trends to become the oldest-surviving acoustic-instrument maker in the world.

The keys to its success? High-quality products, adaptability, and a willingness to learn from the past—all of which came into play during the plight of 2009.

Challenge

Founded in 1833, C. F. Martin & Co. is the oldest-surviving acoustic-instrument maker in the world and largest producer of acoustic guitars in the United States. The company is known both for its fine instruments and for its innovations that have become industry standards.

Martin guitars—which regularly sell for several thousand dollars apiece—are handmade, often using the same design and techniques introduced by the company founder in the 1830s, and there are no plans to change or fully automate that process.

"With micro-carpentry—carpentry on a very precise basis—every detail makes a difference. There's no good way to do exceptional quality without using your hands," explained Boak, a long-term staffer who manages several areas within the company, including public relations, exhibitions, archives, and limited editions.

For that reason, he said, the company considers its employees to be its most-valuable asset. "It's years and years of skill-building that enable us to produce products that are significantly better than anything else in the marketplace," Boak continued. "If you have a product that's special and requires special skills to make, you have to value your people."

So even as the 2009 recession hit hard, and high-end guitars weren't selling, company layoffs weren't considered an option. C. F. Martin instead had to find a way to keep those workers employed through the downturn.

Campaign

This wasn't the first time C. F. Martin had experienced a poor economy; through its 177-year journey, it has survived the Civil War, the Great Depression, and both World Wars. And the historian in Boak felt he could gain inspiration by looking at the company's past.

"When everyone starts saying this recession is the worst since the Great Depression, it just seemed obvious to me that we should look back to the Great Depression, when we introduced a number of low-priced guitars called Style 15," said Boak, who went on to describe the line as all mahogany and devoid of any decoration.

"In the current situation, it seemed a good idea to create products that had tonal integrity but were bare bones and aimed at a tough economy."

Those within the company agreed, and feedback from the manufacturer's international sales team and retailer base both confirmed that a less-pricey product with good tone was the answer.

The resulting 1 Series model was forged of solid wood to maintain quality tone. To lower the cost of production, the company switched to a new type of lacquer that requires less time to polish; it did away with decorative inlays; and it crafted the new product's neck out of sturdy Stratabond, rather than mahogany, which is more difficult and costly to acquire.

The 1 Series was designed to go head-to-head with similar products from competitor Taylor but was offered at an even lower price point—retailing at $1,199—with the expectation that stores would sell it at a discount for less than $1,000.

"People in general have tremendous respect for the Martin brand. If they have a choice between Martin and any other brand, they'll pick the Martin if the price is right," Boak explained.

C. F. Martin allocated capacity for 8,000 1 Series instruments in the 2009 production run to see how the market would react. It then set about generating awareness for the new line.

The line was first introduced at top industry trade-show events, including the Musikmesse International Fair held in Frankfurt, Germany, in March 2009. The company website and mailings to Martin Owners Club members included promotions, and the company ran a full-page center spread in its monthly magazine, The Sounding Board.

Moreover, C. F. Martin replaced its music-history campaign, which has long run in select music publications, with an ad that featured the 1 Series as "the guitar you've been waiting for."

Results

Following the Musikmesse International Fair, C. F. Martin brought home 8,000 orders—the entire production allotted for 2009. Immediately, it began booking new orders for 2010, as well as reorders from retailers who reported that the 1 Series quickly sold out in their stores. Needless to say, the company is increasing 1 Series production in 2010.

Lessons Learned

·  Look to the past for inspiration: C. F. Martin isn't the only company to have survived the Great Depression, among other events—so how did those organizations manage? By studying the strategies—past and present—of those companies that have kept plowing through the tough times, you might just stumble upon the gem that will help your company through.

·  Fill a niche: Offer new product variations at lower price points, but don't forsake the quality that has fortified your reputation. 1 Series guitars may not be quite as fetching as the company's more-expensive instruments, but they maintain a quality tone that musicians have come to expect from the Martin brand. As a result, consumer trust has remained intact.

·  Remain adaptable: Though others have jumped on the "latest and greatest" to speed up their production processes or save a few bucks, C. F. Martin has purposely kept its operations "old school" and uncomplicated, with thinking craftsmen who can adapt on their own.
Beyond the merits of quality and customization that have undoubtedly helped to build the company's reputation and brand, such an approach has also enabled the company to remain flexible, to quickly react to market conditions, and to sail through the downturn.