Roger Murphy didn’t rent any old hotel meeting room when he unveiled a new logo and global branding for Targus Group International Inc.
The company’s chief executive revealed the moves at the hip, roped-off Tab & #250; Ultra Lounge at the MGM Grand in Las Vegas. The food and drinks were free and the setting was the massive International Consumer Electronics Show in January.
Murphy, who joined the Anaheim-based company in late 2004, is determined to take Targus out of its stodgier past.
For much of its 23-year history, Targus, a maker of laptop bags, backpacks and computer accessories, has been known for its strong notebook cases for globe-trotting professionals. They run from about $30 to $150.
Murphy is pressing big growth, with annual sales targets up from nearly $500 million to about $1 billion.
“If we are doing everything we should, we should be able to double this business in three to four years,” Murphy said.
He has a new owner watching over his moves. Last year private equity firm Fenway Partners Inc. bought Targus for $383 million. The company had been owned by another private equity firm, Apax Partners, since 1996.
Targus bumps heads with formidable competitors.
Microsoft Corp. and Switzerland’s Logitech International SA make accessories, such as computer mice and keyboards. Denver-based Samsonite Corp. is among rivals that make computer bags.
Targus is playing off surging demand for notebook computers, with prices falling below $500. Consumers need the company’s cases and accessories for their notebooks.
And there’s the growing demand for cases for portable DVD players and other smaller electronic devices, including Apple Computer Inc.’s iPod.
“Targus has a very strong position at retailers,” said Stephen Baker, director of industry analysis for the NPD Group Inc. in Port Washington, N.Y. “They’ve got strength to pivot around in the bags business, and they’ve extended into the notebook accessories business.”
Notebook bags and computer accessories might not be the sexiest products. But Baker said their profit margins are great, hitting as much as 60% on the bags.
The company’s sales have grown at more than a 10% clip during the past few years.
Discerning Consumers
Targus has had to shake up its product lineup.
“The consumer is becoming more discerning,” Murphy said. “They’re going to be more particular about the case or the accessory.”
Consumers want their bags to look good.
So Targus has trotted out colored bags, more backpacks and made other tweaks to old computer cases to attract new buyers.
A big target today: women. Women might buy a couple of bags, just like they do with purses.
They typically want their bags to have more style.
Targus unveiled the “Beemer” line for women in January. The bag has a black nylon exterior, but a “soft pink faux suede inner-lining” that “offers an eye-catching look and helps protect from scratches,” the company said.
The company’s Getta backpack,complete with Gucci-like stripes,picked up the “Technology is a Girl’s Best Friend” award from the Consumer Electronics Association earlier this year.
“Fashion will be a little more important in that category,” he said.
Prices are higher for the stylish bags.
The company also has boosted its backpack line, which targets students and casual laptop users. And Targus is looking to grow its consumer electronics lineup with a bag that carries portable DVD players.
Last summer, it unveiled accessories and carrying cases for Apple’s iPod. This could be a lucrative market. NPD Group’s Baker said there was $66 spent on accessories for every iPod bought last year.
Targus is sold along with a small club of competitors at retailers such as Best Buy Co., Staples Inc. and Circuit City Stores Inc.
In the past few years, big retailers have cut down on the number of companies who have shelf space at their stores. Targus has made the cut.
Murphy expects its computer accessories unit, which includes the iPod and personal digital assistant cases, to grow more quickly than laptop cases in the next few years.
He can see it when he travels by plane around the globe with nearby passengers using their laptops.
“They’re not doing spreadsheets or PowerPoints,” Murphy said. “It’s a platform to do a host of things,listening to music, watching DVDs.”
Going Global
Meanwhile, Murphy is trying to make Targus more like a big-time consumer products maker. He worked for Gillette, which is now part of Cincinnati-based Procter & Gamble Co., before joining Targus. Murphy headed Gillette’s operations in Britain.
Murphy saw Targus as a company with international sales, but lacking a true global model.
Regional units, such as Latin America or Europe, had grown too independent from its headquarters. That created inconsistent branding and repetitive operations from one region to the next.
“The essence of what we’ve been doing is saying, ‘Let’s leverage the global platform,let’s not allow the regions to operate as independent fiefdoms,” said Murphy, who spoke from a Targus office in Hong Kong.
A big problem: The different regions would buy the same basic components from too many suppliers.
Targus’ many regional operations were buying computer mice from more than a dozen suppliers. That kept the company from getting the prices it should have by leveraging its size.
Now Targus buys mice from six primary suppliers. The company also has cut down on the number of suppliers for its backpacks.
Murphy centralized the company’s “supplier” operations into one office. In keeping with his global perspective, he didn’t put it in Anaheim, but in Hong Kong. That makes it closer to the factories in Asia where the company’s products are made.
“The purpose of the sourcing group is to consolidate what was historically too many suppliers,” he said.
Image Makeover
Murphy also wanted to consolidate the company’s image around the world.
The company’s old logo had been tweaked by managers in regions around the world. It also was a bit stodgy. Targus’ new logo has a bold red color that’s aimed at boosting its retail sales.
“That is going to be a huge benefit,to have a consistent branding message,” Murphy said.
Despite the unified message, Targus still plans to tailor products for different regions, he said.
Asians tend to like lighter, smaller bags than Americans. Backpacks also are popular there.
Targus recently saw its bankroll grow to fund the expansion.
KPMG LLP agreed earlier this year to pay an undisclosed amount to Targus to settle an embezzlement case that involved its former chief financial offer. Targus charged KPMG had not provided proper oversight of the executive’s accounting-related activity.
Murphy couldn’t comment on the case except to say, “It’s a legacy issue that has gone away and allows us to focus on the important issues.”
