President & CEO, Korg USA, Inc.
By Dan Ferrisi
One of the best resources that our industry has is the collected experience, wisdom and insight of individuals who have spent what amounts to a lifetime in the music products industry, riding the rollercoaster through good times and bad, while seeing a veritable parade of products populating trade show booths and MI retailers’ shelves. One such industry veteran is Joe Castronovo, President and CEO, Korg USA, Inc., who recently granted The Retailer an interview to discuss Korg USA as it currently exists, his storied background with the company, where things might go from here and why Summer NAMM remains vitally important. There’s much wisdom to glean from this interview.
The Music & Sound Retailer: To start, let’s touch on your background. Share with me the highlights of your own story as pertains to the music products industry. Recount the path that you’ve traveled, bringing us right up to the present and where you are today.
Joe Castronovo: My background was in finance and operations. Prior to joining Unicord, which was the predecessor to Korg USA, I was working for the parent company, Gulf & Western. I was always into music, but I never actually played. Most of my brothers and sisters did. So, when I started working for Unicord, my siblings were very excited and it was kind of a mix of two worlds for me: passion for business and my love of music. I guess you could say it was by accident that I got into the music products industry. Unicord was a really interesting place, and I was hooked my first NAMM show, because I had no idea what to expect. We were only a keyboard and amplifier company then, and going to my first NAMM show was dramatic. Seeing all the products, I said, “Wow! This is really a cool industry to be working in.” I never knew everything that was involved because, being a distributor, you only see a couple of products. But, when you go to see the breadth of it, it really blows you away. So, that’s how I got started. It was a whirlwind after that, starting with Unicord and then, a year later, in 1985, Korg Inc., a Japanese company, bought Unicord. We became an international company overnight and the business of building a new company was very exciting. It was a great experience for me, and I’ve been here ever since: It’s been 28 years now.
The Retailer: In terms of what you accomplish day-to-day within Korg USA, what would you say your key duties and contributions are? What do you enjoy doing the most?
Castronovo: I was a finance and operations guy, so I always was fascinated with the supply chain and bringing products in and getting things out. So, developing efficient systems is something that I always like to keep my hands in, but maintaining consumer relationships, strategic planning and evaluating new opportunities for distribution are everyday assignments. We’re a mid-size company with only about 75 or 80 employees here in Melville NY, so you get involved in everything. It really is the full gamut. I can say that I don’t spend as much time in the finance area anymore, but I do invest a lot of my time in operational issues, sales and marketing initiatives, and looking for new products and new lines to represent.
The Retailer: Let’s talk about Korg USA in broad strokes. Give us a 10,000-foot view of the company, discussing some key characteristics and qualities that the company embodies.
Castronovo: Korg USA is a distributor, but consumers look at us as separate companies, too—meaning, to them, we are Korg USA, VOX USA, Lâg USA, Blackstar USA and HK USA. We’re not really just a distributor of products; we’re really a brand builder for the companies we work for. We’re not strictly just bringing boxes in and shipping boxes out. The key to our success has been how we nurture and build brands. We create innovative marketing and sales programs through our authorized network of retailers. We’re passionate about each of our products and brands. So, I think people see that and, from a broad company view, that’s our commitment to the manufacturers we represent.
The Retailer: Tell me about Korg USA’s growth and development over your time with the company.
Castronovo: When I started here, in 1984, it was an $18 million company. And then we grew to $100 million by 2002, powered by people who are passionate about what they do. That’s the one way all the companies in our industry are the same: 85 percent to 90 percent of the people are musicians. They continue to work at a music company because they’re passionate about it. This passion for the music products industry has helped us weather the recent economic downturn, as well as having ceased distribution of a major line in the past few years, as distributors sometimes do. Another key to our growth is continuing support from great manufacturers, who continue to develop and bring to market world-class products.
The Retailer: When you look at Korg USA as it currently exists, what would you say you’re the proudest of? What makes the company stand apart not only from competitors in the market, but also from all manufacturers in the music products industry?
Castronovo: I always try to look at it from the standpoint of a retailer or somebody who does business with Korg USA. I think we’re easy to do business with, and our customers understand that we try to build strong relationships with our retailer community and the end users. As a company, we are committed to providing what is necessary to maintain solid relationships with them. We’ve always gauged our success on how we answer the question, “Are we servicing our customers the way we ourselves would want to be treated?” We strive to provide quality product and services to the customers we serve. That’s what we’re proudest of, I would say.
The Retailer: Being on both sides of the desk, as it were, must give you a unique perspective.
Castronovo: Making sure their needs are fully met is important, because they’re your customers. That’s another thing: As a distributor, you are also in contact with the end consumers a lot. So, you have to support both groups: the retailers who represent your goods, and the loyal consumers who purchase and use them.
The Retailer: In the music products segment, there are often a great number of creative individuals who work for MI companies. Would you say that the Korg USA team is a very creative one, where the products you are involved with daily are actually a big part of the team’s personal lives?
Castronovo: Oh, absolutely. Many of our employees are members of local bands and gig regularly. They are all passionate about the products they work with and play. That’s what makes this industry and this job so exciting.
The Retailer: Does this kind of personal connection lead to a fruitful, productive workplace and dedicated employees?
Castronovo: Yes…because they take it personally, which is really important. However, the trick is, we also run businesses. So, while it’s something you love, it’s a business, too. And you can’t lose sight of either one. It makes for a wonderful marriage.
The Retailer: Shine a light on some of what Korg USA will be introducing in the months ahead.
Castronovo: Over the years, the manufacturers that Korg USA has represented have continued to develop innovative products. They are striving to produce market-driven products, and our expectations for the future are no different. I can’t yet share anything specifically with you, but come to the Summer NAMM show and you’ll see some of the new things that we’re going to be presenting there and throughout the year.
The Retailer: What products are available right now through Korg USA that you’re finding to be particularly persuasive to the marketplace?
Castronovo: Our Kronos keyboard, which has proven to be a game changer in the workstation market. It’s the best-sounding keyboard Korg has ever produced and, in many ways, it’s unique for what it does. The high-end workstation category has been challenging over the last few years, but we have seen great results since the Kronos’ introduction. Our Lâg Guitar product offerings have really been gaining attention from the dealer network. They are wonderful instruments for both price and playability. We are excited about the future of this brand. And Blackstar is arguably the hottest new amplifier brand to come along in some time.
The Retailer: What is your philosophy when it comes to working with dealers and the dealer channel? Would you say that working closely with dealers is a big part of Korg USA’s approach to business?
Castronovo: It is our philosophy. The music retailer is the backbone of the music products industry. They are dedicated businesspeople who serve their local communities and are a valued resource for musicians. Having that positive relationship, we try to provide as many tools as we possibly can to support their efforts. We try to build those relationships through a mutually beneficial partnership based on working together. In fact, during each Winter NAMM show, we formally recognize those dealers who best exemplify that working partnership.
The Retailer: So, then, that mutually beneficial partnership is core to your business philosophy.
Castronovo: Absolutely. I’ve been in this industry for a long time. There tends to be a lot of misunderstanding in this business about the relationship between the manufacturer/distributor and dealers, and it can be, at times, adversarial. For example, the retailers might say, “The manufacturers don’t understand” or “The distributors don’t understand,” and vice versa. Korg USA’s philosophy is continually to cross those bridges and work together. We have to do that if we’re all going to be successful. We try to do that as best we can.
The Retailer: Is there anything that the dealer channel could do that would be helpful to you, as a manufacturer? Do you have any suggestions to give the channel, which would help them sell Korg USA products even better?
Castronovo: I guess I would say keeping up with the consumers. Their ability to research and get information about our products has never been easier; they are so much more informed than in years past. As such, the retailers need to be informed, as well. We have a dedicated social media and video team that strives to create more and more information to post on the Internet through our multiple YouTube channels, Facebook pages, Twitter, Soundcloud and other social media outlets. This includes product and artist information, sound bites and “how to” videos, as well as artist videos. Retail employees can make use of more than 100 videos just for VOX products alone, and more than 250 videos for Korg, for example, to help familiarize themselves with our current products and the artists who use them. We and retail store owners need to encourage their salespeople to utilize these outlets and learn about our products, so they are as knowledgeable as possible when consumers come in to ask about them. It’s a valuable resource that is being provided and, hopefully, more and more retailers are taking advantage of this.
The Retailer: So, Korg is very much attuned to the social media craze.
Castronovo: Yes––we have our own Facebook pages, YouTube channels and Twitter accounts for most of our brands. And they’re all very active, with large numbers of followers. In fact, as of now, our Korg Facebook page has nearly 100,000 “likes”! It’s extremely important to establish these relationships and be close to the consumers. And, certainly, the end users who are buying our products are so socially connected that you, as a company, have to be on there now. You have to keep them informed, and that’s where they get all their information. There are generations of consumers who rely solely on the Internet for their information; it’s amazing how young they are and using the tools that are out there to look up information and define what they need. You want them to be part of a community of buyers who are sharing information, so it’s vital for the future to be active where they are spending so much time.
The Retailer: Economic times during the past few years have been generally difficult. How well has Korg USA weathered the continuing economic storm?
Castronovo: I wouldn’t say we were prepared—I don’t think anybody was prepared—but I think it started early on for us. We saw the high-end products market being affected early on, especially high-end amplifiers and keyboards. As a distributor, we offer many product segments, covering high- and low-priced categories. So, at the beginning, we thought it was just OK, but then it really took a big dip for us. The biggest challenge has been forecasting what was coming next. During that period, we also ceased distributing Marshall Amplifiers, which created a few more challenges. But, we were fortunate enough to bring on some new product lines—Blackstar Amps, Lâg Guitars and HK Audio—since then. Now, the economy seems to have stabilized, and is starting to improve slowly.
The Retailer: Did you take any steps either ahead of the recession or during its depths to minimize economy-related pain?
Castronovo: We refocused a little bit of our marketing, going more toward social media and the Internet. And I think that’s just the trend of what’s happening everywhere, as well. Like most companies, we pared down where we could, because sales were off. And we hope that that was enough, until things get better.
The Retailer: What would you say is the state of the industry right now? Do you think we’re in a good place? And this isn’t simply economically, but also in terms of innovation, product development, etc.
Castronovo: The industry had a couple of rough years, as we all know. The Winter NAMM show was very positive, and it seems that many in the industry agree that business is recovering…but slowly. I certainly agree with those sentiments, as well. The industry has many great companies that have continued to innovate and create great products. I see that continuing and, although we will face challenges, I’m confident about the future.
The Retailer: What does the future hold for Korg USA? Do you foresee any major changes or shifts in terms of products, market segments, business relationships or company strategy? What can we expect to see?
Castronovo: Since we have three brands that are fairly new in the U.S.—Lâg Guitars, Blackstar Amplifiers and HK Audio—we’ll be continuing to grow them while maintaining a high level of awareness for Korg and VOX. So, there won’t be any changes overall. Korg Inc., our parent company, continues to produce innovative products, so we look for more great things in the future. As for Korg USA, part of our strategy is to grow through offerings for the current brands we represent and through product-line acquisitions.
The Retailer: Any preview of what those acquisitions might be?
Castronovo: We continuously look for opportunities to expand our company and look for product lines that complement our current product offerings and the markets we serve.
The Retailer: Is Korg USA going to be at Summer NAMM? What is your trade show strategy, as far as where you think you need to go and whom you’re trying to reach out to?
Castronovo: Yes, we’re planning to attend the summer show. We like the size of that, and we like what we can do in that space. I still think the NAMM show in California is the number-one show in the world. The challenge to continually create new products is what makes the show special for the attendees. I see the NAMM show in the winter in California as the premier show, and it has been, so I expect that to continue.
The Retailer: The retailers really seem to notice who comes to the Summer NAMM show and who, in the manufacturer community, is a supporter of it.
Castronovo: I agree. We’ve been in and out of the show for years. It’s a smaller footprint for us and serves a more local community. It’s a chance to spend time with the dealers; we see customers who may not have attended the Winter NAMM show. The summer show has made sense for us for the products we offer. You’re right about the retailers, because we’ve heard the same thing. They seem to value the companies that do exhibit in Nashville.
The Retailer: Do you have any closing thoughts?
Castronovo: We have a lot of work to do, but I think the industry is still pretty strong. I feel that we, as manufacturers and distributors, have to support all our retailers, both large and small. We really do. We owe it to the companies that we represent to provide quality service and support to keep the industry healthy. We must remember that we are in an industry that helps people realize their dreams. That is something that keeps us coming to work every day.