Ronco Inventions, LLC

Contact Information:

headquarters: 21344 superior st.
chatsworth, ca 91311 phone: (818)775-4602 fax: (818)775-4664 url: http://www.ronco.com

OVERVIEW

Ronco Inventions sells things like pasta makers, rotisseries, and food dehydrators via infomericals, which are televised commercials that last up to 28 minutes and 30 seconds. The firm's founder, Ron Popeil, is considered a pioneer of the infomercial. In early 2001, Popeil revealed that his firm was up for sale.

COMPANY FINANCES:

Sales for Ronco Inventions grew 11.1 percent to a record $250 million in 2000.

HISTORY

Ronald Popeil first began selling housewares at places like county fairs and state fairs and at stores like Woolworth's. He purchased the majority of his merchandise from his father, a profitable manufacturer based in Chicago. After learning that television commercials were much less expensive than he imagined, Popeil headed to a television station in Tampa, Florida to film his first commercial. Featuring the Ronco Spray Gun, a hose spraying device that consumers could use to wash and wax their automobiles as well as to fertilize their lawns, the commercial made its debut in 1962. At the time, rather than have people call him directly, Popeil arranged for the Ronco Spray Gun to be available at select stores, the names of which he mentioned on the air. Eventually, consumers were able to mail their orders and payment directly to Ronco via a post office box. By 1966, more than one million spray guns had been sold.

Popeil continued to sell his father's products, including the Chop-o-Matic and the Vego-o-Matic, as well as products other manufacturers began to send him. Sales in the late 1960s reached $8.8 million. Under the name Ronco Teleproducts, the firm completed its initial public offering in 1969, selling 22 percent of its shares for $5.5 million. The firm raised another $750,000 via an offering on the American Stock Exchange in 1970.

Heavy debt forced Ronco into bankruptcy in 1984. Popeil agreed to repurchase the firm's inventory from the bank for $2 million. In 1991 Popeil agreed to sell 200,000 of his Ronco Electric Food Dehydrators on USA Direct, a television shopping channel owned by U.S. mail order giant Fingerhut. A few years prior, the Federal Communications Commission (FCC) had relaxed regulations that limited commercials to 30- second, 60-second, 90-second, and two-minute segments. Home shopping channels like QVC had emerged, helping to boost the popularity of television-based shopping. Eventually, Popeil decided to develop his own infomercial for his food dehydrator, a move that resulted in the creation of Popeil's second company, Ronco Inventions.

In 1998, the firm introduced the Showtime Rotisserie and Barbeque Oven. More than 2.5 million units were sold for a total of $400 million by mid-2001. While continuing to work on new products and expanding into new markets, Popeil began looking to sell his company in the early 2000s.

STRATEGY

Throughout Ronco's history, Ronald Popeil maintained control of nearly every aspect of operations. While at first he sold his father's products, eventually Popeil began to invent his own devices and gadgets. According to a June 2001 issue of Sales & Marketing Magazine, "Popeil is not just Ronco's president and pitch man. He invents each and every product. He does his own testing and all the research and development. He's head of packaging and manufacturing. He is the sales and marketing manager. He oversees media buys. No detail is left unPopeiled. He conceives the infomercials, then helps shoot them, write them, and ultimately stars in them."

This strategy appeared to work for Ronco. By the beginning of the twenty-first century, the firm had sold more than $1 billion in products via television advertising. In addition, because Popeil chose not to hire producers, actors, and an extensive team of executives, Ronco's operating costs remained low. Ronco's plans for the early 2000s included marketing the Showtime Rotisserie and Barbeque Oven—introduced in the United States in 1998—in Europe.

CURRENT TRENDS

The use of television to sell products directly to consumers grew in the 1980s and 1990s, particularly as television shopping channels like QVC became increasingly popular. In fact, by 1999, QVC had become the tenth largest retailer of housewares in the United States, with profits of $564.2 million. Ronco founder Ron Popeil is credited for helping to launch this trend.

INFOMERCIALS PAYOFF IS HIGH FOR RONCO

During a single day in late 2000, infomercials staring Ronco founder Ron Popeil sold 40,000 Showtime Rotisseries, 18,000 Ronco Food Dehydrators, and 800 Popeil Automatic Pasta Makers. Popeil had first developed his selling skills working at various carnival booths.

FAST FACTS: About Ronco Inventions, LLC

Ownership: Ronco Inventions, LLC is a private company owned by founder and president Ronald Popeil.

Officers: Ronald Popeil, Pres.; Stuart Rosenblum, CFO; Robert Nordlicht, COO

Employees: 200

Chief Competitors: Competitors to Ronco Inventions include Sunbeam and other housewares manufacturers. The firm also competes with housewares retailers such as Williams-Sonoma and Linens 'n Things.

The growth of electronic commerce in the late 1990s prompted Ronco to build its own Web site. As a result, in addition to calling in their orders, Ronco customers were able to make purchases via the Internet. Increased online shopping was a trend that worked in Ronco's favor as sales completed via the Internet were less expensive for Ronco to process than those completed with phone calls simply because they eliminated the need for customer services representatives. In addition, because the firm was already shipping products directly to customers, its transition to Internet retailing proved much smoother than it did for many traditional retailers.

CHRONOLOGY: Key Dates for Ronco Inventions, LLC

1962:

Ron Popeil makes his first commercial

1979:

Ronco conducts its initial public offering

1984:

Ronco declares bankruptcy

1991:

Popeil forges an agreement with Fingerhut to sell electric food dehydrators on Fingerhut's television shopping network

2000:

Sales reach a record $250 million

WARNING LABEL SPURS ADDITIONAL SALES FOR RONCO

When advertising his new Rotisserie Oven on an infomercial in 1998, Ronco founder Ron Popeil developed the catch phrase, "Just set it. . .and forget it," in an effort to convey the convenience of his $160.00 appliance. A short while later, however, Popeil became concerned that leaving the oven completely untended might prove dangerous. As a result, he began placing warning labels on each of the ovens, and he mailed a similar caveat to his entire database of customers. Along with the warnings, Popeil included print advertisements for some of his other products, the result of which was $2 million in additional sales.

PRODUCTS

Ronco Inventions sells housewares including food dehydrators, rotisseries, pasta makers, sausage makers, and vegetable choppers. Other products include heath and beauty items such GLH Formula #9, a spray designed to cover bald spots. Key product release dates include the Veg-O-Matic in 1963, the Pocket Fisherman in 1972, the Miracle Broom in 1973, the Inside the Egg Shell Scrambler in 1977, both Mr. Microphone and the Smokeless Ashtray in 1980, the Ronco Electric Food Dehydrator in 1991, both GLH Formula #9 and and Popeil's Pasta and Sausage Maker in 1992, the Ronco Grip Spatula in 1997, and the Showtime Rotisserie and Barbeque Oven in 1998.

SOURCES OF INFORMATION

Bibliography

donoho, ron. "one-man show." sales & marketing management, june 2001.

graham, jefferson. the salesman of the century. new york: delacorte press, 1995.

porter, thyra. "ron popeil ronco: he's a successful inventor and a savvy merchandiser. . .but wait, there's more." hfn: the weekly newspaper for the home furnishing network., 27 november 2000.

ronco inventions, llc home page, 2002. available at http://www.ronco.com.

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. ronco inventions' primary sic is:

3634 electric housewares and fans

also investigate companies by their north american industry classification system codes, also known as naics codes. ronco inventions' primary naics code is:

335211 electric housewares and household fans manufacturing