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tysontom

Why Did Hi-Fi Dealers Dislike Selling AR Speakers?

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For many years—perhaps from the very beginning—AR had a difficult time selling their products in typical audio salon showrooms.  In fact, from 1954 until around 1974, AR made no attempt to cultivate good dealer relationships.  Nevertheless, and despite the lack of dealer success, AR outsold nearly every other speaker manufacturer worldwide for many years without a strong, formal dealer network.  How was this possible?  

AR products traditionally had the highest ratings and best reviews, but a prospective speaker buyer would never know it to visit the typical, small hi-fi showroom where one usually encountered a negative vibe in a showroom when an AR speaker was being demonstrated.  Many times, dealers would "doctor" the speaker, reverse the polarity, turn-down the level controls or place the speaker inappropriately or disadvantageously for good A-B demos with competing products.  Some dealers felt that customers would enter a store, make a decision to buy an AR product and simply go out and order it from the Allied Radio or Lafayette catalogs.

Was it due to....

1.   Low dealer profit margins?

2.   Lack of dealer salesman "spiffs" paid by AR?

3.   Lack of dealer promotionals?

4.   Lack of dealer co-op advertising?

5.   AR's lack of "hand-holding" and blasé attitude towards dealers?

6.   AR's traditional laissez-faire method of doing business?

7.   Other reasons?

 

Give examples of experiences you've had in dealer showrooms where AR speakers were intentionally maligned, "bad-mouthed" or "doctored" in order for a dealer to steer an unsuspecting customer to another product.

—Tom Tyson

Edited by tysontom
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Tom, your post brings back a lot of great memories.  Here's one that helps make your point:  In early 1970, my father asked me to research & recommend speakers to him.  Over several weeks, I carefully compared AR2aX,  KLH 6, KLH 5,  Dyna A25 and a few others at various stores, mostly on 45th St in Manhattan, which was at that time, stereo row. Early in the process, after a few A - B comparisons at one well-known store, the 2aX was my least favorite choice.  On the way home, I visited the nearby AR Listening Room where I was so favorably impressed by the 2aX that I thought the Listening Room was somehow rigged.  Eventually, after a few more listening trips, I realized that the store was rigged and that the AR listening room simply showed the speakers off accurately and in the best possible light.  

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13 hours ago, Martin said:

Tom, your post brings back a lot of great memories.  Here's one that helps make your point:  In early 1970, my father asked me to research & recommend speakers to him.  Over several weeks, I carefully compared AR2aX,  KLH 6, KLH 5,  Dyna A25 and a few others at various stores, mostly on 45th St in Manhattan, which was at that time, stereo row. Early in the process, after a few A - B comparisons at one well-known store, the 2aX was my least favorite choice.  On the way home, I visited the nearby AR Listening Room where I was so favorably impressed by the 2aX that I thought the Listening Room was somehow rigged.  Eventually, after a few more listening trips, I realized that the store was rigged and that the AR listening room simply showed the speakers off accurately and in the best possible light.  

Martin, this is precisely what I meant!  I've had several experiences through the years, and I think others have experienced the same thing.  It was the old "trade-disparagement" and "bait-and-switch," tricks that dealers would do, and Acoustic Research got it the worst of about any speaker company, probably due to AR's very casual attitude about dealers.

While in the Air Force out in El Paso, Texas—after I was humiliated by the little AR-2 experience—some friends of mine and I started visiting the various hi-fi showrooms around the area.  I had heard that a large JBL Sound dealership had a single AR-3 setup in their main listening room to compare with their Ranger Paragon, JBL's top-of-the-line speaker and easily one of the most beautiful pieces of audio cabinetry ever designed.  Sure enough, there was a single AR-3 well out from the wall, on the floor  hooked up to the speaker selector switch!  The salesman said that you could quickly tell how much "superior" the JBL speaker was than the little AR speaker!  I looked at the back of the single AR-3, and both level controls were turned almost all the way down, and the speaker sounded pathetically dull and bass-heavy (sitting on the floor).  So... the 20% efficient Paragon vs. the single 0.5% efficient AR-3 on the floor out from the wall, being switched back and forth!  What an insult.  The salesman said they only had that one AR speaker, but they wanted to show customers the superiority of JBL speakers!  After a spirited argument, we were asked to leave the dealership, not the first time for that, either! 

—Tom Tyson

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This is a topic I’ve written about on these pages at great length, several times in the past, so we’re essentially “re-taking previously conquered territory” here in this post. Still, an interesting subject.

This magazine ad is not a consumer ad from Stereo Review or another enthusiast magazine. Rather, this is a trade ad from one of the industry trade magazines that retailers received, such as High Fidelity Trade News. It is an AR ad aimed at the hi-fi retailer, telling them to carry AR speakers. The interesting point of the ad is that AR is practically pleading with the dealer to give them a try, saying, in effect, “We’ve learned our lessons! Now we have co-op advertising and promotions. Really. Carry our brand. We promise you’ll make money selling AR, finally, not like before.”

(Co-op advertising was a promotional allowance that the dealer accrued as a percentage of the business they did with that brand, that the manufacturer would pay them upon proof that they advertised the brand. Let’s say dealer A bought $10,000 worth of AR speakers and AR offered a 5% co-op allowance. That’s $500 that would accrue into that dealer’s ad fund for AR. After, say, 2 or 3 months, the dealer might have a few thousand dollars in their AR fund. The dealer would send AR copies of ad invoices from Stereo Review—‘proof of advertising’—and AR would credit them the money in their co-op account.)

Every manufacturer did this. Except AR. They were so arrogant and aloof (thinking “we build a better mousetrap and people will beat a path to the dealer’s door”) that they didn’t offer the usual ad allowances, spiffs, promos, etc. that are a normal part of good business.

Every 18-year old college marketing freshman learns the 4 ‘P’s’ of marketing:

Product

Price

Promotion

Place

AR did well on Product, but they obviously never went to college for the other three. As a result, they pretty much got their clock cleaned at retail by Advent, EPI and many others. Villchur, Allison, Landeau, et al. were not exactly marketing gurus. Their written ads were good—particularly Villchur’s—but their dealer policies were naïve and ineffective.

Remember, AR wouldn’t have needed those AR Sound Rooms so people could hear “how they really sounded” if their basic marketing policies were decent enough so dealers supported them and demo'ed their speakers properly. Think about that for a moment.

BTW, this trade ad was a flop. The dealers never supported the Classic line. By time the superb ADDs came out with far better dealer policies, the independent dealers (like Tweeter, Hi Fi Buys, United, etc.) were already very mistrustful of AR from years past and the terrific ADDs and Verticals never enjoyed the smashing retail success that they deserved. “Once bitten, twice shy.”

AR is a textbook example of two things:

1.     How to invent an industry-leading product that was vastly superior for a decade and still pack-leading in years 11-20, and

2.     How to fail miserably at marketing those superior products

Steve F.

 

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Correction (cut and paste error)

"The dealer would send AR copies of ad invoices from Stereo Review—‘proof of advertising’—and AR would credit them the money in their co-op account"

That should be "the local newspaper" or "the dealer's holiday catalog."

The dealer needed to provide proof to the manufacturer that they had advertised the product, then the manufacturer would reimburse the dealer out of their co-op fund.

Steve F.

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I can add a little something to this discussion that might shed some light on why there was dealer push back per AR sales and promotion.

Circa 1975 I was living in and about Los Angeles.  From time to time, say about once every three months in the "Stereo For Sale Ads" of the L.A. Times I would notice a short ad that promoted "AR speakers at Dealer Cost".   Various models would be listed, AR2ax, AR3a, AR4 and the prices would be approximately HALF of what Pacific Stereo - my "go to" store - would list the same items.  

One Saturday I decided to investigate further.  The address listed was in Seal Beach,  just south of LA proper so a short drive down PCH led me to a smallish, cinder block building in a parking lot adjacent to the beach.  There was a short line of folks waiting to enter this building.  Once I gained entry the "store", about 20' square was stacked floor to ceiling with AR speakers - new in the box.  You told the "salesman" what you wanted and he pulled it off the stack, you paid IN CASH and you were on your way.   

When you got home you found that you had a full-up, original AR speaker with all the associated warranty cards.  Nothing was amiss with the product.

This of course had to be some "back dock" special.   I have heard rumors - totally unsubstantiated - that if you had the cash and an 18 wheeler, you could pull up at the AR mother-ship in Boston and load out all the speakers you wanted during this era - at wholesale cost, with no questions asked.  I never saw any of the ADD vertical products for sale - but ALL of the classical era speakers, including 10pi, AR-11, et cetera were available.  I bought my first AR speaker, a set of AR-2ax at this place - I almost pulled the trigger on some AR-3as but even with the dealer cost break that was still a stretch for my limited finances.  Wish I had.

I wonder if this was calculated into retail dealer reluctance to push AR product?   A savvy retailer had to know this was going on - it was a regular occurrence and everybody who was "into" AR knew about these events.  Though by '79 when I bought my AR-10pi speakers the back door deal had not been in the paper for several years.  So Pacific Stereo got the business - along with a Marantz 2265B - perhaps the sweetest receiver I have ever heard.   Darn good rig that one.

Was it perhaps AR moving out models that had been obviated by later designs?  Or was it some clever entrepreneurs working an angle?  It is said at that time that a lot of illicit product was moving from Southern California to Boston - perhaps this was a way to "round trip" the transportation costs?  Whatever it was it went on for years - and left a lot of very happy folks around LA.

 

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Any idea of the timeline when this rental plan was offered?  Dealers here in the UK have been offering home trials for a few decades but usually the dealer offers up their own demo pair and I have always declined home trials because I would feel a bit guilty if the trial (or trials) failed to win the dealer a sale from me.  Home trials of equipment funded by the manufacturer with pick up from local dealer seems a more workable arrangement IMO.

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I know I'm just reiterating what I've stated on these pages before, but given the context, I feel it bares repeating.  Back in the day, as a 19 year-old "nerd", I was, even in that early time, most interested in what it took to simulate a live musical performance in a home setting, with the state-of -the-art gear at my disposal.  I had combed every audio magazine of the day looking for information, Stereo Review, High Fidelity and Audio, and came to the conclusion that AR speakers, at least from an advertising standpoint, seemed closest to my stated goal.  With a thirst to learn more, I visited the AR exhibit at Grand Central Station in early 1973.  I quickly realized that all the advertising hype was in fact true (at least to my ears), and set out to purchase a pair of AR-3a's.  I then visited an audio retailer on 6th Ave, NYC  (adjacent to the aforementioned 45th Street conglomerate of retail audio stores).  I was quickly shunted away from the AR products and introduced to the "Fairfax" (house) brand of speakers, for which I fell hook, line and sinker,  in most likelihood more to the sales person's hype than to my own ears.  Several months later (and after "donating" the aforementioned Fairfax's to my parents), I revisited that same audio salon and insisted that I wanted to buy a pair of AR-3a's.  After much dis-suasion, I did leave with a pair of 3a's, and the rest is history.

Whatever the relationship  (or lack thereof) existed between AR and its retailers,  I can only vouch to the superiority of their product.

Call it snob appeal, elitism or whatever you choose, AR knew what they had.  To this day, I am a total shill for their vintage offerings.

Rich W

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That AR ad dates from 1962, Jeff. 

I was lucky enough to have friends whose fathers & brothers owned AR speakers, so I was able to listen to them in the home environment, and got a good feel for their sound. When it came time to buy, I was already pre-sold.

I do remember my first visit to what we'd now call a "high-end" audio shop. This would have been in the early '70s, and they had a single pair of AR-3a systems on display for comparison against the brands that they sold. It was exactly as Tom has described - the level controls were turned down, and the speakers were placed on the carpeted floor, making them sound muffled & bass-heavy. I also have no doubt that the 3a would have outperformed any of the other speakers on display, most of them from tiny one-off companies, or overpriced British imports. 

In this regard, I'm surprised that an audio shop that sold limited-distribution, price-controlled turntables, amps & preamps might not offer the AR-3a at its commonly-available discounted price as part of a system with the electronics representing the high-profit end of the deal. I guess the desire to try to sell esoteric speakers at manufacturer's list price was just too much to resist.

 

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21 hours ago, Jeff_C said:

Any idea of the timeline when this rental plan was offered?  Dealers here in the UK have been offering home trials for a few decades but usually the dealer offers up their own demo pair and I have always declined home trials because I would feel a bit guilty if the trial (or trials) failed to win the dealer a sale from me.  Home trials of equipment funded by the manufacturer with pick up from local dealer seems a more workable arrangement IMO.

AR tried the "Speaker Rental Plan" for a short period of time in the early 1960s.  As part of the customer-centric culture at AR, it was well received by potential customers but not with dealers.  In the words of Thomas Huxley, it was "a beautiful hypothesis slain by an ugly fact."  Major pain in the tail for dealers even though they received additional compensation for their effort.  For $2 a week, a customer could rent a pair of AR-3s!  If they didn't like the speakers, they could be returned to the dealer.  Of course, the speakers became "used" right then and there, and likely the unusually heavy AR-3 speakers would get a few scratches along the way.  Some big-city dealers in New York, Boston and Chicago tried this plan, but it was soon dropped because of dealer complaints.  Most did indeed stay "sold," but it was not a popular thing with dealers. 

--Tom Tyson

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I'll reiterate what I said in my post above. This applies to the rental program and is borne out by everyone's retail experiences stated above:

"Remember, AR wouldn’t have needed those AR Sound Rooms [or rental programs] so people could hear “how they really sounded” if their basic marketing policies were decent enough so dealers supported them and demo'ed their speakers properly. Think about that for a moment."

Good sales and marketing programs are just as necessary to overall business success as having a great product.

They may have been "customer-centric," but the dealer was their 'customer' also. Astonishing that otherwise intelligent people like Villchur, Allison and Landeau could be so incompetent when it came to sales and marketing. With just a little effort, AR could have maintained its market dominance for several more years and could have provided Advent and EPI with some real retail showroom competition in the 1970's. Instead, AR surrendered the retail showroom front without a fight, and retreated to the safety of mail-order discount and military PX. AR couldn't duke it out with Advent on the Tweeter Etc showroom floor, partly because their (AR's) dealer policies were so ill-suited.

Steve F.

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This is an interesting topic and I was unaware that certain dealers actually tried to sabotage AR speakers by placing them in poor locations and turning down the controls.    In my later high school years, I learned that the AR3a was considered by many as the holy grail of speakers; and people who wanted 3a's but could not afford them purchased the lesser models such as the 5, 2ax, etc.   In my case, I bought the AR5's without auditioning them.   They did not disappoint.   The place to buy discounted equipment in my area was a storefront in East Orange, NJ called Sound Reproduction.   I got everything from there..Dual turntable, Dynaco amps, and AR speakers solely based on the reputations of these companies and hearing some variation of these products in others systems.

I never even considered going into an audio house to audition products because at 17 to 18 years old and working a part time job I couldn't afford those prices.   So the audio houses had two and a half strikes going against them when young people such as myself were entering the hi-fi market.

During that time frame, the only "bad-mouthing" of AR speakers I witnessed was by an audio salesman demonstrating a pair of Marantz speakers to a customer.   They did not carry the AR line.  And I wouldn't call it bad-mouthing per se because he was explaining the virtues of the Marantz compared to the AR's...more efficient and punchier playing rock music (Albeit "colored" which he didn't mention. ;))

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On 2/28/2018 at 8:54 AM, Steve F said:

I'll reiterate what I said in my post above. This applies to the rental program and is borne out by everyone's retail experiences stated above:

"Remember, AR wouldn’t have needed those AR Sound Rooms [or rental programs] so people could hear “how they really sounded” if their basic marketing policies were decent enough so dealers supported them and demo'ed their speakers properly. Think about that for a moment."

Good sales and marketing programs are just as necessary to overall business success as having a great product.

They may have been "customer-centric," but the dealer was their 'customer' also. Astonishing that otherwise intelligent people like Villchur, Allison and Landeau could be so incompetent when it came to sales and marketing. With just a little effort, AR could have maintained its market dominance for several more years and could have provided Advent and EPI with some real retail showroom competition in the 1970's. Instead, AR surrendered the retail showroom front without a fight, and retreated to the safety of mail-order discount and military PX. AR couldn't duke it out with Advent on the Tweeter Etc showroom floor, partly because their (AR's) dealer policies were so ill-suited.

Steve F.

Rather than criticize and attack the old AR management team in hindsight, "...Astonishing that otherwise intelligent people like Villchur, Allison and Landeau (Gerry Landau) could be so incompetent when it came to sales and marketing," I was really trying to get CSP reader's experiences of dealers disparaging AR (and by the way, there were other companies, such as Dynaco, treated this same way, too) in comparison to more profitable in-store products. 

We've been down this AR-bashing road many times in the past, and I was not trying to reopen that part of the discussion.  Again, this is what I was asking:

"Give examples of experiences you've had in dealer showrooms where AR speakers were intentionally maligned, "bad-mouthed" or "doctored" in order for a dealer to steer an unsuspecting customer to another product."

It is a bit insulting to accuse these (now gone) AR management people of "incompetence" when, in fact, the company did remarkably well for the first twenty years of operation.  AR outlasted most of its competitors as well.  It is easy to look back fifty years and criticize the way a company ran its organization; anybody can do that, and what worked then is not directly comparable to the way business worked twenty or thirty years later.   

Actually, in the beginning, AR had a strong network of dealers—especially in large cities—but over time the company, now commercially successful, was unwilling to accede to the typical demands of most hi-fi dealers of the day, for example:

1.   product discounts as high as 40-50% or more with additional large-volume discounts;

2.   kick-backs (spiffs) to sales reps for "pushing" their products;

3.   rebates (in some cases) from the manufacturers for exceeding "quotas" in sales;

4.   extended-payment terms with manufacturers (many dealers had on-going cash-flow problems);

5.   ability to "transship" products to other (often unauthorized) dealers;

6.   the usual co-op advertising (which AR actually always did to some degree):.

7.   expectation not to be told what they should stock in inventory or what or how to demo, and the list goes on.

So who could blame the dealers!  They run a business, and they're in it to make a profit, pay employee salaries and keep the lights on and so forth; therefore, they expected the manufacturers to give them favorable terms to be able to sell products and be profitable.  The better the terms, the more likely a dealer will be happy and push that manufacturer's products, but in long run the manufacturer has shoulder the brunt of those terms, and many manufacturers could not survive the true cost of doing business.  Among those, by the way, were Advent, KLH, Fisher and EPI.   

"Remember, AR wouldn’t have needed those AR Sound Rooms [or rental programs] so people could hear “how they really sounded” if their basic marketing policies were decent enough so dealers supported them and demo'ed their speakers properly. Think about that for a moment."

What a croc!  A hi-fi dealership is not an altruistic endeavor to enlighten the would-be customer.  It is a business, and the dealers would "push" a product that sold well with the right amount of incentive, and incidentally, KLH, EPI, Advent and many others gave the dealers this incentive to keep favor with them.  Some dealers were even taught methods of competitive "trade disparagement" rather than simply talk about the virtues of one's own product or how best to demonstrate it. 

You might ask how I know this.  I owned a hi-fi dealership during the mid-1970s, and we carried such products as Bose, AR, Allison, Epicure, Advent and KLH.  I know how the system works.

But a quick look at AR's Music Rooms:

The AR Music Room in Grand Central in New York alone brought in over 100,000 visitors each year, but the company policy was to demonstrate AR products and answer questions, but never to initiate sales of any kind.  To do so was strictly against company policies.  It was simply a listening room for the public at AR's expense.  Of course, by doing this, AR knew that people could listen and evaluate in a "sales-free" environment and make decisions without the usual sales rep's pressure to sell products.  This type of commerce-free environment simply did not exist in a dealer's showroom; the dealer was there to make money first (and foremost) and to please the customer second.

So, therefore, I kind of wish I hadn't mentioned this topic and will refrain from it in the future.

—Tom Tyson

 

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38 minutes ago, tysontom said:

I kind of wish I hadn't mentioned this topic and will refrain from it in the future.

I sympathize, Tom. But I do remember my first hi-fi purchases, around 1970. Fortunately I had heard of "spiffs" and other ways salesmen steered customers to the highest-profit, not the best-sounding, speakers. It was fun to visit the hi-fi stores but I had a fraternity brother in the '60s who advised me well. So on my meager budget I ended up with a KLH 18 tuner and Dynakit ST-35 17wpc power amp kit. Used headphones (Superex IIRC) for months until I could afford the $88.00/pair AR-4x's. The following year I added an AR TT and a Dynakit PAT-4 followed not too long afterward by a Wollensak 2520 Dolby cassette deck. I would have bought the identical Advent 201 but apparently Henry did not allow discount mail-order houses to sell his products. And that may be another reason the dealers didn't like AR. People could listen to demos in the hi-fi showroom, with all its overhead, then go buy from the discount mail-order house.

As an aside, I forget what happened to the 'phones. The Cassette deck eventually wore out (or maybe I just wanted something new when Dolby C came out). I sold the Dynakits on ebay a decade ago for much more than I paid for them and I still have the KLH tuner, AR speakers and TT! Talk about value!

-Kent

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First of all, if you’re going to insult me and say that my opinion is equal to a container of s***, then at least spell it correctly: crock, not croc.  There, that’s better. Now I feel properly admonished.

I agree completely with this, however. Completely, totally, 100%. You could also replace the term “hi-fi dealership’ and replace it with ‘loudspeaker manufacturer’ and it would be equally true.

What a croc!  A hi-fi dealership loudspeaker manufacturer is not an altruistic endeavor to enlighten the would-be customer.  It is a business,

…the dealers would "push" a product that sold well with the right amount of incentive, and incidentally, KLH, EPI, Advent and many others gave the dealers this incentive to keep favor with them.  

There is an important concept here that needs to be fleshed out—the vague implication in this passage that since KLH, EPI and Advent gave dealers incentives to “keep favor with them” that it somehow meant that KLH, EPI and Advent didn’t make worthy, credible products. 

That’s untrue—their products were quite worthy and credible. I’m not talking about personal taste, per se, but there is no question that they endeavored to design and build good speakers.

Here’s the point: A company can and should be good at both engineering/design and sales/marketing. If the industry norm behavior at that time was offering spiffs and kickback and high commissions, then so be it. AR should have followed suit. Or suffer at retail. AR chose to suffer at retail. Did they do a lot of business anyway for a nice stretch of time? Sure! But they could have and should have done even more business, for a longer period of time. That’s my point.

Now to the Sound Rooms. See above: A hi-fi dealership loudspeaker manufacturer is not an altruistic endeavor to enlighten the would-be customer.  It is a business.

Why do you think AR had these rooms, with their nice low-key, no-pressure, no sales atmosphere? To “enlighten the customer?” No. To impress the customer. To get the customer to think to themselves (and spread the word to others) that “AR was such a nice company, they have these really cool sound rooms, I heard these great speakers there, the people were so nice, they patiently and calmly answered so many questions, I felt really comfortable, etc, etc.”

To what end? Altruism? No, so the customer would seek out and buy AR speakers—regardless of whether or not the customer got a good demo at a store. The AR Sound Room was a device to increase AR’s sales—not to enlighten would-be customers. Because, as Tom said, “A loudspeaker manufacturer is not an altruistic endeavor.”

As far as not criticizing any individuals who have passed away, that’s an unusual way of looking at things, in my view. Are we not to evaluate and criticize a deceased past president who plunged us into recession or a coach who made the wrong call in a 1955 game or a general who blundered in a famous Civil War battle? Does the fact that the individual is no longer alive render them immune to criticism? Not in my book. My criticism of AR’s marketing stands, as my opinion, even though those AR individuals have passed away. And my criticism of AR’s marketing in no way diminishes my virtually boundless admiration for their product excellence and superb customer service.

Steve F.

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