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A Layman's Guide to a Business Model..


dava4444
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Hi Guys

 

Been a lot of news about Gibson potentially 'going under'.. well the solid body guitar division that is, I can't help but look back.. back to the early nineties of Gibson..

Product lines were slim, quality control was high, and the result was customer experience focus. Of course many players got excited and encouraged Gibson to produce some of their older models..because the designs looked so enticing from pictures and it was rare to see one in the wild.

 

What do I think *now*?

 

Product lines are bloated, quality control is slipping, and the result is a product focused experience.

 

Bloated? what do you mean Dava?

 

Welp.. when I look at the most expensive Gibsons, I think to myself.. who on earth is going to buy these?? And then.. there seems to be a thing where 'models' are built around a feature.. for example.. Want a green flame top? thats a sub-model. or a Bigsby? that's another sub-model.

I think something more sensible could be done instead. Please indulge me a little further..

 

 

IIRC: Back in the Nineties it was basically; Les Pauls and SGs.. with limited runs of Firebirds and V's.

 

You got your Special, Standard and Custom.

 

The structure of today's market is similar imho to the 90s, with the exception of the internet.The internet is a powerful tool, not to be underestimated

 

 

For $5000 you can get a tailor made guitar by a small luthier.. to whatever you want. Flip! you can get whatever you want for $2000. Gibson should be doing this instead of making sub-models of these bloated expensive guitars.. inviting people to meet up with one of their luthiers and running through a truly 'Custom' experience. Saying Gibson is 'too big' for such a thing, well.. I find that wholley arrogant. A Custom Shop that isn't just a Gibson Luthier imagination of what someone *might* want..but what a Customer (paid upfront) *actually* wants.

 

No waste.No muss. No fuss.

 

And for us Average Joes (in my case 'Jock' haha) we get Gibson back in its purest form.

 

Business as a capitalist concept is expand and contract.

Clear away dead wood.. then after a bit try something new.

Rinse and Repeat.

 

Instead of sub-models.. we don't need to cut off the leg to save the arm. Many new models types have come to Gibson, and why shouldn't fully utilize them instead of making new sub-models?

 

For example.. What is a 'Studio'? Really, think about it. Now I would say a 'Studio' is for the studio that means it does NOT have to be in any way shape or form decorative.

One dot on the 5th,12th and 17th fret. No stain. Gloss finish.

These all should have coil splits, and double row adjustable pole pieces.

Why? because that means not only can the session artist be flexible, if they find a sound is regularly requested, they can modify to suit their needs.

 

I did a mockup of the headstock:

 

Studio.png

 

Or an Alt

Studio%2BAlt.png

 

The significance being 'playing through the night'.

 

The blog written Dec 2016, has many more Heraldic Inlays and ideas. (click the underlined for the link.)

 

 

What I'm suggesting is: all models except Junior, Special, Studio, Deluxe, Standard and Custom, would be limited runs. Gibson put out say.. 20 'Les Paul Supremes' a year. then do it again the next year and so on..

 

On the blog the most I had was..

 

9. Supreme*

8. Custom

7. Artist*

6. Professional*

5. Standard

4. Deluxe

3. Studio

2. Special

1. Junior

 

Each has a purpose.

 

Junior one pickup, wrapped bridge. simple, Black Stain or natural. I suggest varnish, instead of lacquer as it dries faster. cheap to make. lasts a lifetime!

Special.. we all know the Special. 2 pickup. lacquer gloss finish. Black or Red. A Standard for the budget conscious.

The Studio is outlined above.

The Deluxe is the estranged brother to the Standard. The experimental branch if you will.. The deluxe has more decoration than the Special and has some unique wiring (many Deluxes came with a rotary cap switch) but not exclusively.

You see what I'm saying here right?.. Gibson doesn't have to (I assume) waste thousands and thousands on Flame Maple caps to be experimental in their outlook. Every year they could have a new Deluxe that is almost totally different than the previous years.

With the exception of the Deluxe Heraldic symbol of the two arrows.

The Standard is.. the Standard. While Writing I am often imagining a Black SG standard.. my dream guitar hehe. Trust me to get a SG Standard the year (2015) it turns out to be a fancy paper weight + swingball bat :/ .. MAN just want a 90s neck SG Standard!

The Professional, all the switching options of the Deluxe and more, with the livery of the Standard.

The Artist.. Think about the RD Artist Headstock, then think about how decorative the fretboard could be also.

The Custom is the Custom we all know.

The Supreme is a supercharged Custom. optional floyd rose when made to order.

 

 

Now please note the * above.. like the other body types we could have limited runs of these models.

Erm this is bit hard to explain but..

 

Regular Production:

Les Paul and SG

6. Custom

5. Standard

4. Deluxe

3. Studio

2. Special

1. Junior

 

Limited Run:

3. Supreme

2. Artist

1. Professional

 

And limited run per year for all other solid body types.

 

Firebird

Flying V

RD

Explorer (which due to its popularity should have longer runs).

 

Okay been writing this for 2 hours and my missus is waiting patiently to watch old X-Files together.. her first time seeing it.

 

But you get the idea I am suggesting.. Gibson has expanded without contracting in so long, it makes it look like the bubble will burst. What I am suggesting is a great retraction but keeping their options open.

 

 

Please make sure to read the blog for some more mockups of Gibson Heraldic symbols.

And no matter what you do.. have fun be happy in life! Life's a garden.. dig it!

 

Dava

Edited by dava4444
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Guest Farnsbarns

How many multimillion dollar, international musical instrument manufacturing and marketing operations have you run? If you don't mind me asking.

 

What news about Gibson guitars going under? I've missed it.

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The market is way different. Today's consumers are the problem. People want the newest and the most options to choose from. Last year's model? Forget it! Just walk down any US grocery store supermarket cereal isle. There are are over 13 different Cheerios flavors alone! Consumerism has run amok.

 

So in effect, we are to blame.

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I don't think Gibson is goin anywhere anytime soon.

 

 

and, wouldn't it be that the industry has just taken this about as far as it needs to go? What more can be done to this instrument? a better question is, what more NEEDS to be done.

 

I agree that the # of models available has just stretched to where it has seemed to reach the point of diminishing returns.

 

and the more these companies try to offer, the more the quality suffers.

 

not really interested in signature models, or anything all that exotic.. I've been a guitar player since about the age of 10 or 11, (started at 8, but of course, you can't play when you pick one up).. the basic needs of the instrument, in my humble opine, hasn't really changed since that day in 1965 when I got my first guitar for my 8th Birthday. Although back then, they play ability of inexpensive guitars was atrocious. That is one thing that has definitely been a vast improvement. you can get a 200 dollar guitar (or less) that can be setup to play pretty nicely

 

 

but at the end of the day,, All these "innovations aside", it's a guitar, the magic is in the hands, not the chunk of wood.

 

what's changed with piano building in the last 100 years ? (Aside from the improvements in Digital pianos, but that's not where I'm going)

 

what about a Mandolin? those pretty much are the same as they've always been. Some have built in pickup systems, and that's a good thing. I know there's a few hybred and some one offs here and there you can find, buta mandolin, is still pretty much, a mandolin..

 

Ukes? what's changed there? and from what I read, Ukes are among the top selling stringed instruments.

 

Perhaps at my age *61 in a few months* it's down to, just give me what I need, and then, please.. get out of my way..

 

I have all the electrics I'll ever need, nothing lavish. all the usual suspects, some of them I bought 20+ yeas ago. these days, just not much in the market appeals to me, that I don't already have something very close to it.

Edited by kidblast
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Great points from everyone across the board!

 

@ Farnsbarns

 

IIRC

 

Pixxy Lixx and Phil McKnight reported about the closure of the Gibson Memphis Beale Street Factory.

Gibson not having a stand at NAMM. Moody's has downgraded them.

 

To quote Pixx Oct. 2017

'Their $1 bonds are trading at 52 cents.They're at junk bonds status at this point.'*

 

Talk began around Autumn.

 

 

 

*https://youtu.be/1DHswCnp1r4?t=1h7m51s

 

 

FZ Fan.. DUDE I could not agree more! @ pic .. nail on head!

 

Christopher J

I see what you are saying BUT man..if you believe that you gotta see what I was saying about a 'Custom Experience'.

 

There any untold amounts of Luthiers around the world who can make a Les Paul or SG (or any guitar) to Gibson Custom Shop QC or better for a fraction of the price.. The Derrig Les Paul being the most famous 'replica'.

Gibson most defo should be offering this experience at even lower price than what they are charging for their "custom" shop.. quite frankly they need hit with the reality stick. a Luthier without customer input is a Tailor without body dimensions. blind. This isn't Da Vinci's workshop full of artisans who can do what they want because they because they imagined it. this a business.

 

None of that was aimed at you man.. just a bit mad at Gibson for bloating lines.

 

@kidblast

 

I hear you dude.. I am right there with you.

Edited by dava4444
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Preface: I hope Gibson is successful in years to come - mainly for the sake of the people who work there or otherwise rely on the company for their living.

 

It is extremely hard to maintain costs when you diversify range, the economies of scale for components and the cost of line changeovers bite almost immediately. You would generally do it if you either needed to do so to (1) remain relevant in the market (protect current volume) or to (2) grow (increase volume). In the first instance you likely take a profit hit as it's hard to maintain current price - or you cut back on quality to protect profit. In the latter you still likely take a profit hit per unit but plan to cover that though more volume.

 

The thing is that the former (1) is kind of unsustainable. The latter (2) is ok IF the market is growing/your share is growing and you are selling more units - the thing here is...are Gibson selling more units sufficient to cover the costs of diversification? - forget all the many (many!!) weird and wonderful - sometimes oddball and sometimes fantastic - versions, and just think about the ranging of HP and T lines alone... How many more LP's and SG's are actually being sold compared to when there was just one line? Is this an effort to maintain share (1) ...and potentially lose profit, or (2) grow share (and hopefully profit)?...and, how's it working out?

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How many multimillion dollar, international musical instrument manufacturing and marketing operations have you run? If you don't mind me asking.

 

What news about Gibson guitars going under? I've missed it.

 

 

 

They made less money than projected for 2017. Fender is also not making as much as they want. Even Clapton mentioned that maybe the guitar is on the way out. ( As long a knuckleheads like myself exist I don't see this happening ) I like this guy expressing his opinion, he does not have to be a corporation in order for myself to hear his view on this.

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Dava, when you buy Gibson when they go bankrupt, you can tryout some of these ideas.

 

Yes. Yes I can Megafrog [biggrin]

 

Edit: I DO NOT wish Gibson any ill.. I *hope* when reading my OP my passion for Gibson's wellbeing came through, loud and clear.

Or I would not have taken the time to write.

Edited by dava4444
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  • 3 months later...

In light of Gibson filing for Chapter 11.. I hope no one minds the bump.

 

I had an interesting thought yesterday.. could Gibson relaunch Orville brand guitars but the source is Mexican made only?

 

Fender have had a roaring success with Mexican Fenders.

Fender don't gimp their Mexican guitars, if the Mexican QC is higher than the American,

Fender will tell their american staff to work harder.. not tell their Mexican staff to gimp the product. this is the correct way round, and valuable to customers.

 

This wind seems to blow favor in all directions as; Epiphone can stay in SEA, some people were not keen to move Gibson out of the US, and Orville is a disused brand name with a lot of cache with collectors.

While making Orville's anywhere but Japan might a little upsetting to collectors, as anyone who's owned a Mex Fender, the quality for the price is not to be sniffed at. I feel.. it is a compromise that fits all sides.

 

The guitars could be limited to; LP, SG and MM. Special and Standard for the LP and SG.. with MM having two variations of single and double cut.

 

thoughts?

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In light of Gibson filing for Chapter 11.. I hope no one minds the bump.

 

I had an interesting thought yesterday.. could Gibson relaunch Orville brand guitars but the source is Mexican made only?

 

Fender have had a roaring success with Mexican Fenders.

Fender don't gimp their Mexican guitars, if the Mexican QC is higher than the American,

Fender will tell their american staff to work harder.. not tell their Mexican staff to gimp the product. this is the correct way round, and valuable to customers.

 

This wind seems to blow favor in all directions as; Epiphone can stay in SEA, some people were not keen to move Gibson out of the US, and Orville is a disused brand name with a lot of cache with collectors.

While making Orville's anywhere but Japan might a little upsetting to collectors, as anyone who's owned a Mex Fender, the quality for the price is not to be sniffed at. I feel.. it is a compromise that fits all sides.

 

The guitars could be limited to; LP, SG and MM. Special and Standard for the LP and SG.. with MM having two variations of single and double cut.

 

thoughts?

 

I've played just about every new Fender including some at Summer NAMM. USA, MIM & Asian. With the exception of the Top of the Line USA Guitars their QC leaves a lot to be desired. Rough Necks & Fret edges in particular on just about all of them. The VM Line are the worst. Basically a Guitar designed to be rebuilt into a Guitar by Modders. Then some of the weird concoctions from the Parts Bins? I own several older Fenders. I wanted to buy a new Tele but they don't make one I'd buy right now. I want an American Thinline with Traditional Bridge, Pickups, Tuners, Maple Neck, Switches & Controls. They don't make it! Unless you go Custom Shop for $4500.00. I checked.

 

I agree Gibson is going through some tough times right now but I feel their Import line of Epi's offers some great Guitars at bargain prices. Also there are some great deals to be had on some excellent quality USA Gibsons. You may have to buy, return & exchange. Or send it to Gibson Factory for Warranty work to get it right. And when they get it right they're great. That's something you can't do with a Fender.

 

I have a good collection of Gibsons & Epi's. I bought a new Gretsch instead.

 

Lars

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I've played just about every new Fender including some at Summer NAMM. USA, MIM & Asian. With the exception of the Top of the Line USA Guitars their QC leaves a lot to be desired. Rough Necks & Fret edges in particular on just about all of them. The VM Line are the worst. Basically a Guitar designed to be rebuilt into a Guitar by Modders. Then some of the weird concoctions from the Parts Bins? I own several older Fenders. I wanted to buy a new Tele but they don't make one I'd buy right now. I want an American Thinline with Traditional Bridge, Pickups, Tuners, Maple Neck, Switches & Controls. They don't make it! Unless you go Custom Shop for $4500.00. I checked.

 

I agree Gibson is going through some tough times right now but I feel their Import line of Epi's offers some great Guitars at bargain prices. Also there are some great deals to be had on some excellent quality USA Gibsons. You may have to buy, return & exchange. Or send it to Gibson Factory for Warranty work to get it right. And when they get it right they're great. That's something you can't do with a Fender.

 

I have a good collection of Gibsons & Epi's. I bought a new Gretsch instead.

 

Lars

 

 

Hi Lars

 

From what you have written, you must have a LOT of money, enough to afford higher end stuff, Gibson is in a place that Fender is not, Fender have ways of generating income by hitting that £300/$400 price point, Gibson struggles to do this, I own a collection of 30+ guitars, many of them Squiers.. hmmm maybe that's too generalized :/

My first 'real' guitar was a 1994 Fender Mexican Contemporary Special Strat bought as a shop return in 1995. I took it to a luthier for dress & level and it smashes many modern era guitars. I still own it today. I don't know what you are talking about as far as QC goes, I and many others disagree.. but I realize I should be cagey in praising Fender too much on this website.

 

You seem to questioning my knowledge of QC. I am happy with Mexican Fender's QC..I'm not the only one.

Epiphone however..I have hated every SEA Epiphone I have ever owned and could not wait to see the back of it, Every Squier I sold I later regretted selling and missed.

The only Epi's worth anything to me are 70's era Japanese Epi's.. the Scroll Custom is one of my dream guitars.

 

I guess this is a good excuse to show off the guitars I own, so you and anyone know I'm not talking from imagination..

 

ibatf7.jpg

2ia9ymh.jpg

1965 Trans-Era Fender Mustang (rebuilt by myself)

156947b.jpg

You can see my collection of Alden's mixed in there.. and my collection of Showmaster/Stagemasters

2us8y1s.jpg

ak8mk9.jpg

 

I've been busy refinishing the Gibson SG with the Jaguar Trem into a more solid black with heavier gloss.

 

5kq5jd.jpg

 

Lovely Japanese guitar:

2duwp3s.jpg

 

2004 American Standard (Deluxe body with replacement neck)

149bgba.jpg

 

plays great but the noiseless pickups make this crazy oscillation under high gain.:/

 

1986 Peavey USA Falcon Deluxe (Basically a 80's American Standard Strat Plus.. not to be confused with the cheaper but still good USA Predator)

 

2qbudch.jpg

 

 

Point being.. I too want Gibson to protect their brand. Make USA guitars (even though I am Scottish).. but because Gibson's revenue streams are so limited there imho need to be a bridge between the SEA Epiphones and full blown Gibsons.. flip I am NOT buying another new Gibson after all the palava I went through with the 2015 SG Standard :( I dropped £850 on that.. thats a huge chunk of cash!

 

But if you offer me a way of getting North American QC without that hefty price tag.. maybe I would and others would take that chance.. and Gibson have been flirting with the lower end for ages (since 2006?) it's just a fact that the States (and pretty much all western countries) have priced themselves out of the job market. Current Mex Fender's have moved to a flat radius fretboard, which I feel was a big mistake.. but that's a design issue/decision not a QC issue. If Gibson still want to charge big money for their models.. they need a revenue that will enable them to do so without hurting their brand as a whole.. Epiphone *I feel* cannot provide that stability, a third 'middle brand' *I feel* could..

 

kind regards

 

Dava

Edited by dava4444
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So you are proposing that the bankrupt company open up a new manufacturing site in Mexico to build Orville guitars, adding another product line to promote etc?

 

OR the rumor-mill has been cranking out that the creditors will move Gibson to China.

 

So... ? what would you suggest Mega?

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OR the rumor-mill has been cranking out that the creditors will move Gibson to China.

 

Gibson Brands Inc. is in a state of bankruptcy that means the bondholders are running the company solely for their own repayment. The creditors would have to go to court to move their claims against the company, which are many, ahead of the bondholders. In that instance, the company would be sold in pieces to satisfy the creditors. A very large percentage of the creditors are suppliers and other stakeholders in Gibson Guitars.

 

"move Gibson to China" is not nearly as simple as the rumor-mill thinks it is.

 

rct

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The QC thing is odd... Ive never seen a bad Gibson in real life or ones with the QC issues that I see reported on here... Im not actually doubting that they exist as ive seen the pictures but im not sure they are as wide spread as people think...

 

As for what Gibson should do next it matters not what any of us think.. Unless one of you are up for the new CEO role at Gibson?

 

The one obvious thing is to do what they have already stated they will do which is to dump all the non guitar related businesses' and concentrate on the Guitar side of the business which from what I have read was still turning over $100 million a year. It seems cos of the fact Tronical are suing them they have dumped the auto tuners so theres that out of the way.

 

The rest will come down to who ever takes overs business plan.

 

Personally I still think they should start making amps again.. Or do a deal with Marshall or something.. That makes more sense to me than some of the other weird things they have done the last decade or so.

Edited by Rabs
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The one obvious thing is to do what they have already stated they will do which is to dump all the non guitar related businesses' and concentrate on the Guitar side of the business which from what I have read was still turning over $1 Billion a year.

 

And there it is again.

 

2017 110 million.

 

January 2017 to January 2018, 121 million. A modest 10% growth in revenue for Gibson Guitars.

 

I just don't know where this freakin 1 BILLION thing came from.

 

rct

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Personally I still think they should start making amps again.. Or do a deal with Marshall or something.. That makes more sense to me than some of the other weird things they have done the last decade or so.

 

Well they tried this already w/the Trace Elliot Acquisition about 18 years ago. Seems that it didn't weather the storm all that well, even tho the Goldtone Amps were excellent. Those that bought them were well pleased, but I guess the idea never really caught on. I still have the 2x12 30watt combo I purchased in 2003. I have no plans to part ways with it.

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And there it is again.

 

2017 110 million.

 

January 2017 to January 2018, 121 million. A modest 10% growth in revenue for Gibson Guitars.

 

I just don't know where this freakin 1 BILLION thing came from.

 

rct

Im sure I read it on several different web sites.. But I wont say it again :)

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Im sure I read it on several different web sites.. But I wont say it again :)

 

Good lord I don't know where or how people come up with such a thing. It would only take about three minutes of looking at what constitutes a 1 Billion dollar a year subsidiary of a larger corporation to see that 1 Billion is more than twice the size of all 10 of Gibson Brands Inc.

 

Crazy talk. The filing lists the value of the entire company at 100 to 500 million.

 

rct

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Good lord I don't know where or how people come up with such a thing. It would only take about three minutes of looking at what constitutes a 1 Billion dollar a year subsidiary of a larger corporation to see that 1 Billion is more than twice the size of all 10 of Gibson Brands Inc.

 

Crazy talk. The filing lists the value of the entire company at 100 to 500 million.

 

rct

It did seem odd.. Its just a number that stuck in my head that I didn't really think about. Cos really if they were making that much they wouldn't be in this situation would they...

 

Im going to edit the post now.

 

My brain has not been working properly the last 6 months or so :( too much stress.

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It did seem odd.. Its just a number that stuck in my head that I didn't really think about. Cos really if they were making that much they wouldn't be in this situation would they...

 

Im going to edit the post now.

 

My brain has not been working properly the last 6 months or so :( too much stress.

 

It's ok. It's been in all kinds of guitar places, it isn't just you.

 

rct

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