Price Cuts, Rick Rac Highlight Mitsubishi Meeting

April 4, 2001
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KEY BISCAYNE, FL — Ductless air conditioning remained a static sector of the industry for much of the 1990s.

A prime reason was the perception among contractors that the technology was too costly. So for the past three years, Mitsubishi HVAC Advanced Products Division has moved to negate that issue.

“Consumers want the product, but ductless units were seen as too costly for contractors to propose to customers,” Craig Little, vice president, Sales and Marketing, told some 150 wholesalers and supply house personnel at the company’s annual distributor meeting, held here recently. “Contractors said prices need to be lowered by 30%. Over the past three years, we did that.”

“We listened to our contractors,” said Bill Rau, senior vice president and general manager. “We need a dedicated contractor base.”

In more specific terms, the reductions come on what Davis Watkins, central sales manager, called “the industry’s best-selling models, which make up 80% of sales volume according to ARI data.” (He noted there would be price increases of 2% to 7% on the remaining 20% of sales volume products, adding that this constitutes the first price increase in that area in six years.)

Distributors also were given an overview of new products that were scheduled to be announced in the trade media this month.



MEET RICK RAC

With the price restructuring moving into place, the company is turning its attention to more aggressive marketing of ductless technology in general and an emphasis on Mitsubishi’s expertise in the field.

The meeting marked the unveiling of Rick Rac, a 7-ft tall “spokesperson” consisting of a window air conditioner head, a packaged terminal air conditioning body, and ductwork for legs and arms. Those products are all considered competitors to ductless a/c and, as far as Mitsubishi is concerned, they are not as good as ductless technology for comfort cooling.

A new advertising campaign will find Rick Rac begging for coins on a street corner and sitting forlornly among pigeons in a park, as if to say the glory days of his technologies are behind him.

Rau predicted that, “In a few short years, the ductless business will grow by a factor of 10. The industry is going to take off.”

It was noted at the meeting that, industry-wide, about 50,000 ductless units were sold domestically each year in the 1990s. Rau predicts domestic sales in excess of 100,000 in 2001, with exponential growth continuing from there.

For Mitsubishi, the area of focus will be on high-end users of window units and keeping people “from going to Home Depot.” Part of that strategy consists of taking business from the PTAC sector, and benefiting from people upset with “misapplied central air conditioning.” Rau asserted, “We want to help consumers get a product that they like better.”

Rau labeled 2001 as the “Year of the Contractor.”

“We are entering a time of significant and sustained growth,” he said. “We can generate more leads than the system [of installing and servicing contractors] can handle. That’s why we need a dedicated contractor base.”

“We are going to do all we can to make it easier to sell our products,” he said. Rau encouraged distributors to pass along the price cuts to their contractor customers. “If you are not passing the cuts on, we end up creating our own competition.”

“We have to work together,” he concluded. “We have done as much as we can on pricing. We want to bring the business back to you.”



TRAINING CONTRACTORS

Little noted the contractor base has to grow. “We’ve got to build a team of contractors we can win with and can count on,” he said. He told distributors that Mitsubishi will work with them in reaching contractors. “Our people can go with your people to make these calls.” Part of that includes software to help “ensure that the proper contractors are reached.”

In the pipeline is a CD-ROM that teaches about products, pricing, applications, current market situations, and incentive programs.

Currently the company said it has 5,000 contractors in its database, but is working to target those most likely to offer ductless units to end users.



INCREASING INTERNET

In other developments, Marketing Manager Mike Smith noted the company is moving more and more to the use of the Internet for communication. He said the downloading of brochures in the year 2000 saved some $300,000 in printing costs.

In related news, Allan Dziwoki, Information Technology man-ager, cited the use of online search functionality to help in locating distributors and dealers who carry the company’s products.

John Gabilondo, Operations manager, said the company is cross-training staff in search of a more effective way to look up parts, prices, and product availability.

Much of the daylong session was devoted to incentive programs to encourage distributors to a “preseason” stocking of products. “This stocking approach is designed to increase over-the-counter business,” said Watkins.

Publication date: 04/09/2001

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