My friend said I could post this but that is proprietary and can not be plagiarized. It's pretty interesting. Then I went to the Bose web site, again, pretty interesting.
Bose: Competing by Being Truly Different
Principles of Marketing
BA 251, Spring 2011
The purpose of this paper to see how the concepts taught have been applied by our case study subject. The Bose Corporation and its founder Amar Bose is our subject. A brief history of the corporation and its founder will be covered before concepts of marketing are applied to the case. In the first section, Bose’s business and products will be defined. A few of its competitors will also be identified. In the following sections, the company’s focus will be explained, its philosophies looked at especially toward its competitors then marketing concepts and strategies will be explored.
As a conclusion, ideas of the future of Bose and a personal interpretation and understanding of this subject will be presented and what has really accounted for its success.
Amar Bose and the Bose Corporation
As a twelve year old, Amar Bose brought a few of his friends together to become coworkers at repairing model trains and radios. By doing this he was helping supplement his family’s income during WWII. His interest in electronics and making money never tired. In the 1950s Amar Bose, a grad student at MIT finally decided to buy his first new stereo system from Radio Shack. Amar Bose played the violin as a child and so had a keen ear for music and sound WIRED 10/01/07. But when he tried his new system his disappointment drove him to develop what he expected from a stereo. Amar Bose began a journey that not many would start. He decided not to use existing technologies but develop his own from scratch in building a sound system that could deliver sound so lifelike.
In 1964, Dr. Amar G. Bose (now a Professor of Engineering at MIT) founded Bose Corporation and became CEO, which he continues to be. Dr. Bose’s commitment to replicating lifelike sounds through stereo was a slow thorough commitment. The research and development of this vision and future ones are never hurried. It was in 1965 that the first Bose speaker was introduced. Its sales fell short of the goal. The technology Bose invented was unbelievable for consumers to fathom. In an age where size mattered in the speaker industry, Bose was so small. Yet despite a slow start Bose continued to reinvest its income back into itself and its research and evolved its original speaker product into the Series 901 and many more products over the decades.
Speakers (Claim to Fame)
The 901® Direct/Reflecting® speaker system introduced in 1968 revolutionized how people heard their music. It became an instant success as consumers listening experiences felt so real and so space efficient. Bose used technologies never seen nor experienced before. Bose continued its reinvestment into its research and development. In 1972 it entered the professional sound systems market then in 1975 Bose brought lifelike live concert quality sound to the consumer with its “bookshelf size” 301® Direct/Reflecting® speaker system. Then after 14 years of development in 1984 The Acoustic Wave© and Wave© systems revolutionized the industry. These systems were small enough to be placed on tabletops and are still being sold and modified to compliment new technologies such as Ipods.
Other lines of products
Bose has continued its research with delivering superior sound through Home Theater Systems and stereo systems, yet its product development has not been limited to this. Dr. Bose began designing a noise reducing headphone for pilots that evolved into the digitally powered QuietComfort® 15 Acoustic Noise Cancelling® available to anyone. Bose products are found in concert halls, homes, cathedrals and cars. A query as to why potholes feel so hard riding in a car sent Dr. Bose onto yet another journey of discovery after 20 years it looks like Bose is close to introducing the Bose Suspension System. For almost fifty years Bose has been inventing solutions and products when people thought there didn’t need to be any more improvements. Today Bose has made the Fortune 500 list and remains a privately held company with limited access to financials and corporate information.
Bose is not alone
As Bose introduces its technologies to the market it affects other companies. Polk Audio, Cambridge SoundWorks, Inc. and Klipsch Group, Inc. are among many companies competing for the market segment that Bose has attracted.
Polk Audio started with three Johns Hopkins physics and mechanical engineering students in the mid-1970s, who would build and design new loud speaker designs in their home. There complex knowledge of physics and engineering helped them to develop high performance affordable systems. Polk Audio has a wide range of audio systems from home to car. Its success has stemmed from the customization process in which customers submit how where and why specifications for usage and Polk Audio delivers.
Cambridge SoundWorks, Inc. is a factory-direct sound speaker company that is now part of Creative Labs Inc. digital entertainment brands. This is a relatively young company (1988) that has emerged in the high performance sound system industry. This company produces High Fidelity speakers and systems that compete directly with Bose, yet its success in sales may not be in the caliber of its product but in its ability to have huge discounts through its website.
The most successful of the competing companies against Bose is Klipsch Group, Inc... Klipsch has been in operations since 1945 “producing no-compromise, premium-quality audio products”. While comparison shopping online Klipsch is compared directly against Bose. This company was also founded by a gentleman that yearned for the sound of a live concert in his home, and adapted the technology of his day (a horn) to his needs. This company is truly the original in the industry. Its steadfastness and continued dedication to the industry has won the loyalty of many.
A memorable mention needs to be made of the two Industry leaders. Sony is Sony a huge producer of every type of electronics and diversification in the world from TVs, digital books, game consoles to movies. When comparing revenues Sony is huge $88billion vs. $2 billion. The second mention is Monster Cable, a company founded by a laser fusion engineer from the National Lab Lawrence-Livermore. He developed special speaker cables and accessories, and, has reinvested heavily into his research department (sounds familiar).
Bose and its customers
When looking at whether Bose is a customer driven company we ought to look at how it all started. Dr. Bose was convinced he could invent a product that was inspired from his prior disappointing experience. His following inventions and further developments were based upon his thoughts and ideas in that he wanted to solve problems. The first speaker system invented by Dr. Bose can be seen as a challenge. He was certain he could find a solution. Today the company still looks for the solutions for the problems and challenges that Dr. Bose presents. And the notion that time is of no consequence in solving problems allows for the R&D to be thorough. Remembering this we go on to ask the following question and additionally who the customer in Bose’s case is.
What is a customer-centric company?
The Business dictionary defines it as “An approach to doing business in which a company focuses on creating a positive consumer experience at the point of sale and post-sale. A customer-centric approach can add value to a company by differentiating themselves from competitors who do not offer the same experience”. From everything that is written about Bose and its products this definition is true. The ultimate experience that a customer experiences through Bose products is exactly as definition says. Yet initially in the development of product, the primary approach is not for the customer but for Dr. Bose. Through the company’s focus for research and development on exquisite products the trust that it has built in its brand there are an estimated 17 million customers that aspire to have its products.
As the case study states, Bose has 10 million customers. These customers have purchased the highest end product on the market. Bose products appeal to everyone that appreciates the pure sounds relayed through the speaker systems be they through their home entertainment system or their car audio a system.
During an interview with Elizabeth Gardner, April 2000, Director of Marketing for Bose, Cheryl Ferreira, is noted as saying that with technological evolution, Bose products have become less expensive than other products and that the customer base was no longer exclusive to the affluent and the audiophiles.
Audiophiles are people who seek the highest quality of sound and look for products like Bose to satisfy their needs.
Today you will find Bose covering the ears of many air commuters as they block the sounds of the jets they are in. Bose is ranked high in market share for its products, usually second and third in its categories. TWICE, 7/6/2009. Bose was found to be the most trusted brand by consumers Forrester Research 2006. Revenues and financials are kept quite hidden yet estimates for 2006 were $1.8billion and an estimated $2.1 for 2009 Datamonitor May2009. Once the suspension system is fully developed Dr. Bose that hopes to produce enough over time that the cost of manufacturing will decrease and it be installed in more models of cars than the higher end luxury cars. In this case the Bose brand will have crossed into another market segment.
Bose innovation first, business second
The Bose Corporation is a unique company. Following Dr. Bose’s philosophies, the Bose Corporation’s primary mission is on focusing on developing ideas, product development and encouraging internal competition to develop the best ideas. How does a company like Bose analyze its competition when it takes decades on the R&D of its products! It seems Bose is in no hurry to jump ahead of its competitors in the race for innovations. Once the product has been developed and is on the market it is the Bose product that sets the stage. After 40 years the 901 Series is still in use. No matter how fierce the competition may seem Bose does not compromise its brand by participating in price wars and slander. Respect is always called for when referring to or speaking of competitors.
Bose and Marketing Strategies
In marketing one’s brand a company uses a marketing strategy. Marketing is basically the process that companies follow to build relationships and capture value from the customer. Marketing is the establishment of the long term relationship so that by building a positive connection can continue it. There were three strategies looked at during this course the Customer Driven Marketing Strategy, the New-Product Development Strategy and Pricing Strategies.
Bose may have fallen into the appearance of being a customer-centric company, yet it follows the New Product development marketing strategy. Dr. Bose in the 1950s fell into the idea generation stage idea screening stage simultaneously after his disappointment of his first stereo system. Traditionally a company will receive a bunch of ideas that they then will have to filter through and decide which ones to keep. I am sure Dr. Bose has a head full of great ideas that he has to sit down and sort through in order to get to the next bid invention.
Once the idea has been screened it goes through concept development and testing. In Bose’s case this can take decades to complete. The perfect example for this would be The Bose Suspension System. Dr. Bose’s interest in suspension dates back to the 1950s when he purchased both a Pontiac Bonneville and a Citroën DS-19C, any one that has ridden in either would understand his fascination with the unconventional air suspension systems for its time. It was not until 1980 that research and development began on his new venture. Now almost 30 years and $100million later Bose is still perfecting the system. Traditionally a company after the development process would test the product with customers to see if it appeals to their wants and needs. I cannot really see Bose putting too much effort in this step of the processes after such extensive research and development. Bose has already completed its market strategy development by partnering up with a single automotive manufacturer that will adopt the technology in its higher end luxury cars. By doing this they have already looked at the Business analysis, once there is a larger adoption of the product and higher volumes are produced (which should lower costs) partnering up with an automotive manufacturer is the best strategy to follow.
Test marketing was a process that was skipped when the original Bose speaker was introduced. During the commercialization process, when the product is introduced to the market, customers believed that the product was not a gimmick. They could not fathom the concept of smaller size and lager almost perfect sound. It was the first of its kind, so its timing on the market was good in that there is always a need for great music, yet when the salesman explained to Dr. Bose how the customers thought his product was a gimmick Dr. Bose overcame this problem by using innovative displays and demonstration tactics. Thus began the “Bose Room”.
Marketing and Competitive Strategies
Generally when companies put together a marketing plan they combine tools called the marketing mix or the Four Ps. Product is the first. Price is second, this is the delicate value that the customer is willing to pay for the product. Third, is Place where and how is the customer going be introduced to the product and lastly Promotion what incentives will be used to encourage the customer to buy. Bose’s unbending commitment and focus on developing the highest quality and performance products is key to its marketing strategies. By producing the most unique and innovative product it has produced a brand value in electronics that is similar to The Ritz-Carlton in hotel chains. Bose has maintained its value by proving to customers over and over that their overall experiences with the product are worth every dollar they have spent for the product. How the company presents its product was unique in many ways. Bose rooms were set up like they were in the customers’ homes and a realistic genuine experience was had. Promotions were and are limited with Bose products. Products that are in the later stages of growth and may be replaced by a newer version would be advertised with a small percentage discounts (this is available to see online at bose.com) and financing (with approved credit) of the products are always available.
There are four basic competitive strategies, Porter, three that are positive/winning strategies and one that is not. Porter stresses that companies need to follow a clear strategy. The three winning strategies are overall cost leadership, differentiation and focus. To be successful a company should only pursue excellence in one. Bose has indeed succeeded in differentiating itself in the market. By continuing with its’ innovations in the electronic and soon to be mechanical field it has maintained a strong position in the market. Bose’s competitive strategy is not necessarily intentional in that the success of the company came from the curious mind of its founder. Bose also naturally delivers superior customer value with its product leadership a discipline value, Treacy/Wiersema. It is difficult to determine any formal strategy followed by Bose. The strategies that are used be it on purpose or as a result of the company’s philosophies has worked here in the US and many developed countries. Despite a global economic downturn Bose is showing a significant percentage growth. It will never catch up on the market leader Sony but it has become quite the market challenger by increasing its market share. Bose has expanded into the international markets significantly over the years. New markets are opening where distribution of wealth between consumers and corporations are so different from the US. These new markets can allow for Bose to enter as a market challenger with the potential to be the market leader. Corporate offices and buildings need to be pursued in these new markets. Bose systems need to be installed and used especially in the overpopulated emerging economies. In these economies the growing middle class with disposable income has not grown enough to be of significance in buying power.
As Cheryl Ferreira stated, the benefit of being a privately owned company allows the company to have leeway to experiment with its Mix. The majority of the mix is in print. The company believes its traditional ad vehicles have worked so well that there is no need for change. The Bose philosophy is also adopted into the Marketing strategy. Just as Bose has earned the trust of its customers, the companies and publications that Bose uses to advertise with need to have the same level of trustworthiness. Bose chooses its print partners carefully. Shelf life is an important factor. Bose wants its ads in a magazine that will be read a few times and their ad seen just as many times (Nobody throws a National Geographic magazine away!) As the company has become more available to new markets the marketing department is finding new challenges. As Cheryl Ferreira said in 2000 “We haven't found the right publications to reach a younger demographic, say 18 to 34. We have good coverage in publications that target a broad market, from 25 to 60, but the lower end of that is a little thin. And we want to reach the below-25s with advocacy for the future. We haven't been able to crack that one.” With the statistics and standings of Bose against the Goliath Sony in 2010, I believe in true Bose fashion, Ms. Ferreira’s department has overcome that challenge.
The position of Bose in the industry is a shear testimony of how determination, vision, belief and a solid philosophy has helped in its success. Dr. Bose’s continued reinvestment of revenues into the company allowed for the research and development of so many innovative products that continue to be made and used. The ability for innovations to be developed over decades could never have succeeded in a typical corporation. Dr. Bose has maintained that if Bose had to answer to the stock market the company would never had been a success, nor he be able to work under those circumstances. The Bose Corporation is primarily a research and development company steered by an incredible forward thinking man who has employed like-minded people. The culture in the company is Dr. Bose and there is concern for the future when he is gone. When I began this paper I was inclined to speculate that Bose’s corporate structure was setup to continue in current projects and have the talented minds to come up with new ones. I would not have been incorrect in my assumption. Dr. Bose on the other hand had a trump card that was played quite recently. On the day before this paper was due it was announced that MIT became the majority owner of the Bose Corporation. Dr. Bose donated most of the stock to his alma mater. The stock does not have voting power and MIT is barred from ever selling it. Dividends will be issued when the company chooses. This play by Dr. Bose is unprecedented and by donating his company to his university he has actually guaranteed for future of his company with employees from MIT.
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