Gibson Brands Inc., the classic guitar maker, filed for bankruptcy protection today. Gibson Brands Inc. was founded in 1902 and has been a top manufacturer of guitars, other musical instruments, electronics, and audio equipment since. Gibson guitars and musical instruments are sold in music stores worldwide as well as through the online store on the Gibson website.
In 2017, the company decided to close their almost 130,000 square foot manufacturing facility in Memphis and move to a much smaller complex in hopes of turning around their several years of decreasing revenues. So what are some of the possible reasons for these declining revenues that have led to the current file for bankruptcy?
First and foremost, it seems that Gibson might have failed to focus on their customers. They have been centralizing their business efforts around increasing revenues and entering into new markets instead of focusing on customer experience innovations and their core business — musical instruments. Since increasing revenues was the central goal, Gibson Brands attempted to broaden their focus from solely musical instruments to other musical equipment such as headphones, turntables, and studio/audio equipment. This attempted diversification led to more debts for the company, contributing to its decline.
In addition, some have blamed Gibson’s recent issues on the high prices and increasingly poor quality they provide to their customers. For example, Gibson released the “2017 Les Paul Standard” guitar with a picture displaying an easily observable ding on the guitar, which was priced just under $4800. It appears that for customers, the quality and the price of the guitars simply do not match. In addition, their major competitor, Fender, provides its customers with noticeably lower prices according to many guitarists.
It seems that Gibson may have also failed to listen to their customers and what they want. Bill Kelliher, a guitarist from the band Mastodon, mentioned how he stopped purchasing Gibson guitars because the company continuously did not listen to his requests and would always mess up the guitars he ordered. He said, “I just had a few certain things that I would like with my guitar — I told them I didn’t want it chambered and they made my second guitar chambered.” Mistakes like this make the customer feel unimportant and take away from a personalized customer experience. Could Gibson can find a way to give their customers a more personalized and special musical instrument buying experience and in turn see revenues grow?
This goes to show that even the biggest companies are not immune to bankruptcy and potential failure if they do not listen to their customers and are revenue driven instead of customer driven.
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