Executive summary ‘People aren’t hearing all the music’ is the slogan of ‘Beats Electronics LLC’. The behind motive is to let customers hear the sound of studio. It emphasizes quality but on the other hand it also cares about design and fashion. There are many competitors in the current headphone industry. In order to maintain our competitive power, we have two proposed new features in our products. First is to add a switching Iphone/android handfree. This design is still not popular in the earphone market now and is new to the headphone market.
Second is to provide a customized headphone service for the customers to design their own personalized headphone. This is also a new industry and can fit the price gap in the current market. Introduction Have you ever seen people wear a headphone with a ‘b’ on street? The letter ‘b’ stands for beats which is also the logo of the company ‘Beats Electronics LLC’. Beats Electronics LLC is a privately-held company that makes high-end headphones bearing the name of hip-hop music producer Dr. Dre. Beats Electronics LLC offers over-ear headphones, in-ear headphones, and speakers.
Beats Electronics LLC was founded in 2006 by Dr. Dre and Jimmy Lovine, and is headquartered in Santa Monica, California. Dr Dre makes good use of his popularity, celebrity and network, successfully targets on the young consumer base. Beats has few brands cooperate with few celebrities such as ‘beats by Dr Dre’, ‘Heartbeats by Lady Gaga’. Beats is also innovative and like putting gimmicks in its products. For example the ‘Beats by Dr Dre Studio’ headphone includes the active noise cancelling technology and Beats is going to announce a headphone made of recycled materials.
To sum up, Beats is a fashion, innovative brand. In order to maintain the fashion, innovative brand image, our management team would like to propose two features add on our products. First is to add an iphone-android switching handfree. Second is to provide a customized headphone to the customers. Feasibility Analysis Product feasibility analysis 1 Earphone is a smaller internal speaker that plugs inside the ears, headphone is a larger device that covers the ears over the head. 1 Earphone is a smaller internal speaker that plugs inside the ears, eadphone is a larger device that covers the ears over the head. Nowadays, more people like listening to music on street as it is easier to get music in today’s world. Since smartphone users are increasing significantly, there is a great business opportunity in the handfree earphone1/headphone market. The concept of mobile handfree seems isn’t very novel and it has already been quite popular in nowadays, so where is the business opportunity? In fact, most of the handfree in the market is designed for Iphone, only few brands are designed for android phones such as ‘Ultimate Ears UE vm series’.
The awareness of the rise of android phone in the earphone/headphone market is only in the recent six months, more and more brand manufacture handfrees for android such as Sony, audio technical etc. However, the ratio of Iphone handfree is still much greater than the android handfree. Someone may ask that is there really a big difference between Iphone handfree and android handfree. The fact is due to the different os system, if you use the wrong handfree, you MAY still have a chance to talk through your handfree but the volume control function MUST be useless.
The reason of that is because all Iphone are using the same os system, the hand free design can focus on the specific system, so the Iphone handfrees are button like design which controls the volume through the os system. However, the android phones have many different brands, each android phone is varied a little bit with others. Therefore, it is impossible to design a handfree that perfectly fits all android phone through system and the android hand free is a kind of wheel like volume control that changes the resistance of current. UE 200vi Iphone handfree, button like design UE 200vi Iphone handfree, button like design
UE 200vm Android handfree, wheel like design UE 200vm Android handfree, wheel like design Iphone handfree and android handfree are sold separately for a long time. Our team think that is inefficient, wasting excess resources. Moreover, people changes smartphones very frequently in nowadays, they may use galaxy3 for two months and switch to Iphone5. The problem has been solved in the recent two months. Some brands such as noisezero and JVC started using a kind of ‘switching handfree’ which contains two circuits within the handfree, customers can switch to Iphone mode or android mode up to them.
This kind of design is not quite popular yet and is only applied in the earphone market. As it can reduce waste of resources and satisfies customers’ habit, so our team would like to introduce this design into our products and be the first company to use switching handfree in headphones. Noisezero iXi Titanium switch handfree Noisezero iXi Titanium switch handfree Another feather would like to add on is customized design, customers can design their own artwork and printed on the headphones. This service is quite common in the high-end earphone market, some companies such as Ultimate Ears and JH audio.
However it is totally new in the headphone markets. Headphone has a larger surface area than earphone; it will be more fun for customers to personalize their own headphone. As Beats is a fashionable brand, we believe that there will be some customers willing to pay more and have a personalized headphone; this can show from the success of customized earphone market. Industry and competitor analysis The earphone/headphone market can be divided into two main types of firms. One is targeting on sound quality and one is targeted on the outlook design. Beats belongs to the outlook design type firm.
It doesn’t mean that the sound quality of Beats is bad but there usually have some brand with better sound quality in the similar price level. A part of the price is charged base on the design and brand but not because of the sound quality. The major competitors of beats are Skullcandy, Soul, Marley and Aerial. Skullcandy and Aerial are also classified as fashion outlook headphone brand and target on young users. Comparing with these two brands, beats has a better sound quality advantage. Soul and Marley are also using celebrity effect, using the artist Ludacris and Marley respectively.
Comparing these two competitors, beats has a first mover advantage and has a greater network. Beats participate with the most famous artists such as Lady Gaga and Justin Biber, this is more appealing to young customers comparing with Soul and Marley. Therefore, Beats has a leadership position in the fashion headphone market. For the handfree market, it is a rising industry with a low entry barrier, especially for the headphones. The reason of the rise of handfree is link with the trend of increasing smartphone users and the users switch phones more frequently in nowadays.
It’s hard to prevent competitors enter this market but what can we do is to differentiate the handfree by using the smartphone switch design and apply it into the headphone market as it is still not popular yet. Android is growing 3x times faster than iOS. Android is growing 3x times faster than iOS. http://www. androidng. com/android-vs-iphone-growth-rate-metrics http://www. androidng. com/android-vs-iphone-growth-rate-metrics For the customized headphone market, it is a blue ocean, a completely new industry.
There’s only customized earphone market and we think that it won’t affect the customized headphone market too much. This is because customized earphones are the top hi-end internal speakers design for the senior users with a luxury price. Sound quality is the first priority and design is the second priority to these customers. For us, we put design is the first priority and sound quality is the second priority so that we can sell it relatively cheaper price than the customized earphone as we don’t need to use those expensive spare parts to boost up the sound quality.
There’s a price gap2 between generalized earphone and the CM earphone. The cost for adding customized artwork on earphone is only around $300-$450 in Hong Kong, we assume for headphone is around $600, even if we charge above it, we are still much lower price than the customized earphone and can fill in the price gap in the market. Financial feasibility analysis 2 The maximum price of generalize earphone in the current market is around $4000 and the price of CM earphones is around $6000-$17000 The maximum price of generalize earphone in the current market is around $4000 and the price of CM earphones is around $6000-$17000 The finance of Beats is quite good. It has a steady growth every year. The first year revenue growth has reached 46. 2%. From 2009-2011, it has around $14MM revenue increase every year. After HTC has purchased 51% of shares of Beats, it has a greater financial support from HTC. Moreover, as the handfree industry is still rising and customized headphone is a new market, we believe that Beats will earn even more than before.
Organizational feasibility analysis Beats is an international global brand but the whole company has only total 76 employees till 2011. In order to meet the quick expand of the company, Beats is keep recruiting new employees such as regional manager to increase the depth of the management team. In these few years, beats has corporated with the famous cable company ‘Monster’, acquired ‘MOG,Inc’ and joint venture with ‘Chrysler Group LLC’ to obtain different technologies and improve the products. Today, these technologies have become the most valuable asset of the company.
In future, beats can reduce the cost of raw material to manufacture the handfree as our team idea is to combine the Iphone and Android handfree into one. For the customized headphone, we suggest beats to acquire a factory to help manufacturing the customized headphone like ‘Ultimate Ears’. This is because it can give confidence to the customers as the factory is under the brand Beats. Second, Beats can manage the factory directly using backward integration and reduce the power of supplier. Marketing Strategy The early marketing strategy of Beats is to corporate with some famous companies like ‘Monster’, ‘HP’, ‘HTC’.
This is a win-win strategy; both brands have become more popular after cooperating together. Beats also use different celebrities such as Lady Gaga, Kobe Bryant to design the headphone and promote. In the future, Beats can keep using this strategy, participate with different celebrities in different. This can attract the young customers segment very effectively. STP Young customers with a seeking uniqueness, fashion characteristic and like listening to music would be our targeted customers. We position ourselves to give customers a symbolic, fashionable and high quality value. P strategy For price, our product will charge a bit higher than the similar competitors as we have a better brand loyalty and to give a hi-end impression to the customers. For the customized headphone would charge about HK$4000-$6000 to fill in the gap in the market. For product, the two new features would be a differentiation strategy. For place, our products will distribute to the consumer electronic shops in different places in the world. We would also open more private retail stores like the one in Soho, New York, selling and exhibiting all product collections.
For promotion, we would remain using the celebrities to promote. Conclusion Earphone/headphone industry is very competitive. Our team believes that innovation is the key of success. In the future, we will still focus on the fashionable headphone market. With the above explanations, we believe the switching handfree and customized headphone will lead us to another level of success.
Reference http://www. privco. com/private-company/beats-electronics-llc Mingo Headphone http://www. androidng. com/android-vs-iphone-growth-rate-metrics