Blog 10.1 – Why Fender Guitars owns Squier.

This concept does not fall into any of the categories as given in the syllabus, but the same concepts apply as this is a promotional strategy.

Fender guitars is an American guitar manufacture famous for their iconic designs and well crafted instruments. Fender owns and have formed another company by the name of Squier. Squier shares the same designs with Fender and is owned and operated by Fender. So if they are so similar, why does Fender own Squier? Fender is a very respected brand known for making great guitars. As you may expect from a great guitars, the prices are quite expensive. If fender wanted to make cheaper guitars to reach a larger market, they would tarnish their brand reputation as solely a high quality guitar company. Instead, Fender makes Squier guitars at a much lower price in order to reach more of the market. By doing this under a different brand name, Fender is able to hold on to their high brand reputation while simultaneous hitting a lower price market with another brand. This strategy is a very strong promotional tactic that is very effective. Not only does it widen Fender’s market, it also keeps the legacy and reputation of Fender held high.

We actually see similar concepts to this more often than you may think in business. For example, many people may not know that the German car company Audi also owns Lamborghini. Audi chooses to make their highest performance cars strictly as Lamborghini in order for Audi to sell a wider range of cars and keep the reputation of Lamborghini as strictly performance. Lamborghini would lose a lot of status if they made sedans and SUV’s that were driven by soccer moms and middle school teachers. Instead, Audi chooses to build these more practical cars under their own name in order to maintain Lamborghini’s status and heritage.

1. Describe the target market (ie. what segments are being targeted)?  How do you know this is the target market? Did the company make good decisions to reach the target market?

Back to guitars. The target market of Fender and Squier are both different, which is why owning both companies is such a brilliant idea. Fender’s target market is guitarists who are in search of a well made guitar that are willing to spend a fairly large amount. Squier, however, targets guitarists or new guitarists who are just getting started or staying on a budget. What is so valuable about the companies being related is that if a new guitarist is a fan of Fender but isn’t quite ready to purchase an expensive guitar, he/she can purchase a Squier guitar and still get a guitar that looks and behaves similar to a Fender guitar. This smart business decision gives Fender/Squier a large target market and puts them at a dangerous place to their competition within the market.

1. Does it work? Why or why not? Any general observations?

I believe this strategy works extremely well. As a matter of fact, the Squier Stratocaster has become one of if not the most common first guitar for many players, including myself. Also, if a person who starts with or owns a Squier guitar decides to upgrade, they may be very likely to upgrade to a Fender because they have learned to love and enjoy playing their similar Squier. This allows Fender/Squier to not only attract multiple markets, but also lock their customers into their brands when they are ready to change guitars.