Bang Olufson Marketing Analysis

collision Olufson Marketing AnalysisThe aim of this report is to critic e rattling last(predicate)y assess the marketing strategies of Bang Olufsen considering their cable in United Kingdom. It comments on the B2B and B2C crops in brief. The report comments on the followingThe macro business environmentOrganisations Marketing MixOrganisations segmentation, targeting and positioning strategies.Based on the findings and observations, some(a) recommendations be erect forth at the end of the report.Company BackgroundBang Olufsen manufactures a highly distinctive and exclusive range of televisions, music systems, loudspeakers, teleph hotshots, and multimedia system products that combine scientific excellence with emotional appeal.Founded in 1925, by Peter BangandSvend Olufsen in Struer, Denmark, Bang Olufsen a/s is world renowned for its distinctive range of graphic symbol audio, video and multimedia products that represent their vision Courage to constantly question the ordi nary in search of surprising, long-lasting experiences.Bang Olufsen employs over 2,550 staff members and had a turnover of DKK 4,092 million (EUR 5486 million) in the 2007/2008 financial year. (Bang Olufsen)The Macro Business EnvironmentMost of the BO products are manufacture in Denmark. Considering the business in UK, it has to understand the political, scotch, socio-cultural and scientific environment in UK. Since Denmark and UK are the members of European Union (EU), there are some advantages for the organisation.PoliticalThe European Union (EU) allows the reposition movement of goods and services amongst almost 500 million consumers in 27 EU member states. Due to this, import duty is not payable on goods sourced from Denmark, being matchless of the EU member states. (Business Link UK)There could be changes in the VAT and service taxation policies with the formation of new government.EconomicThe economic crisis and recession had touched the business of BO as people and bu sinesses are more likely to hold on to their cash and not to spend it on high priced consumer goods.Due to the smoo because in share prices and real estate markets, the consumers of the high end products, like BO, will be less likely to spend as earlier.Another economic factor faced by the BO is currency exchange rates. As large part of the products pee-peed in Denmark and with the Danish Krone (DKK) pegged to Euro, devaluation of GBP to the Euro has ingrained sales in UK which is one of the largest markets of the community.Socio-culturalBO has adopted the philosophy of Danish Design, which is renowned for its high class design and quality. The products of this class are considered as status symbols and products of pride.TechnologicalCompetitors like Bose, Loewe who are alike known for their design, quality with the high prices are coming up with new products with the very(prenominal) functionalities as BO with equal or slightly lower prices.Due to the advancements in the tech nology, components are getting cheaper which may help companies like Sony, Samsung etc. with range of products in conglomerate qualities, targeting customers spanning across price conscious segments to quality foc intentd segments. juristicThe company has to ensure the protection of the trademarks of the put up. The logos and other trademarks should be registered in UK.The company should ensure that there are no patent infringements.Environmental surface and produce products under circumstances that comply with the demands of the standards ISO 14001 and OHSAS 18001.Bang Olufsen as an environmentally responsible company desires to create sustainable products. The considerations involved in the operation, design, and longevity of the products must(prenominal) be in mutual balance with the environmental impact of labor. (Environment, Bang Olufsen)The Marketing MixThe marketing mix is a combination of the Four Ps Product, Price, Place and Promotion all put ond to together to mee t the customer ineluctably. To create the right marketing mix, businesses endure to meet the following conditionsThe product has to stimulate the right features for example, it must look good and work well.The price must be right. Consumer will need to buy in large numbers to produce a healthy profit.The goods must be in the right place at the right time. Making sure that the goods arrive when and where they are wanted is an of the essence(p) operation.The target group require to be made aware of the existence and availability of the product through promotion. Successful promotion helps a firm to give out costs over a larger output (The Times 100).ProductBang Olufsen manufactures a highly distinctive and exclusive range of televisions, music systems, loudspeakers, telephones, and multimedia products that combine technological excellence with emotional appeal.Classification of ProductSpeciality products have unique characteristics that are important to buyers at any price.BO products are sort speciality product. BO products are made to fit in at a place where people feel at home.BO products are designed with the philosophy that they should generateUnique experiencesRelaxationComfort and stabilityUncomplicated solutions make life easyTranquillity and longevityConsumers are ready to pay aid prices for all the above characteristics.Product Mixes, Lines and ItemsBO product mix comprises of several product line of productss such as audio, video etc. The company has a diverse product portfolio. The product range today consists of acoustic, audio, video, plasma, telecom, gift items/accessories, as well as the business areas Automotive and Enterprise. The portfolio has more than 50 individual products, many of which are designed and manufactured as per the customer desires. (The Beoworld)Product LineBO has various products in each line, e.g. their audio product line has offerings as BeoSound 8, BeoSound 5, BeoSound 9000, BeoSound 3200 etc. They all belong t o the same product class high-end audio systems. (Audio, Bang Olufsen)Four Dimensions of Product MixThe four dimensions of genus Bos product mix are as followsWidth various product lines such as acoustic, audio, video, plasma, telecom etc.Depth on an average, in each product line 6-8 items are offeredLength video line of the BO offers various dimensions of TV (e.g. BeoVision 7 comes in 3 different dimension viz., 50, 40 and 32)Consistency all the products lines closely related in end use as all the products fall under similar set of products (i.e. high-end consumer appliances)(Adopted from Bang Olufsen)New Product DevelopmentThe four product-mix dimensions permit the company to expand its business in four ways. It can furnish new product lines, thus widening its product mix. It can lengthen each product line. It can add more product variants to each product and deepen its product mix. Finally, a company can pursue more product-line consistency. (Kotler, 381)Line Stretching and F illingThe company usually adds the items in the current product lines stretching it both-ways to some extent by adding lower as well as higher price products. It in like mien fills the lines by releasing the products in same line with different versions e.g. a new 50 TV was launched in the video line.BO markets its products in a manner that opens up more than one product from the product portfolio. E.g. the home integration line which consists of remote controls designed to control all of the other lines in ripe one remote control. In addition all products carry the same type of design and thus fit together aesthetically.Product management peachy design, mixed with robust technology, allows it to charge obscene sums to well-heeled consumers who want to buy originality and quality from an exclusive brand.Competing on price and product variety would be a dangerous game. The company is a pipsqueak in a consumer-electronics world dominated by giants such as Sony, Samsung, and Royal P hilips Electronics.Like Apple, it brings out very fewer products a year. In fiscal 2007 it released just 10 new models. But unlike Apple, BO keeps its handful of products on the market for up to a decade or longer without abandoning them for new models or cutting their prices. (Jay Greene, 2007)Product Features/benefitsBO products are made to fit in at a place where people feel at home.Products are too designed to be serviced and are expected to have a long life span. BO will actively support products for 10 eld following its discontinuation and often longer.The design itself carries a price tag as does the exclusive image.BrandingBO regards itself as the only company currently bridging the hoo-ha between design and consumer electronics. (Hansen and Nielsen, 2008)The philosophy is creating audio concepts that combine brilliantly authentic sound quality, simple yet surprising design and a touch of magic. So that living with it becomes a special pleasure. (Bang Olufsen Design Phi losophy, Beoworld, 2010)The gear should look smart, but technical performance should be outstanding. Designers and technicians work together in close collaborationism from the very start of a new product. (Bang Olufsen Design Philosophy, Beoworld, 2010)After sales serviceEvery Bang Olufsen customer is offered customised installation of products and link systems on delivery. Bang Olufsen provides the guidance and advice needed to ensure that the customer gets the full benefit of the new products from day one. (Installation, Bang Olufsen, 2010)The BO products offer performance and pleasure beyond expectations, so does the BOs International Guarantee. The Bang Olufsen product is guaranteed against all defects in workmanship and materials for three years. (International Guarantee, Bang Olufsen, 2010)PriceBang Olufsen for those who discuss design and quality before price. (Who are Bang Olufsen customers?, Beoworld, 2010).BO follows the Image Enhancement Pricing objective because BO products are seen as lifestyle products. BO products are always highly priced as the company delivers the quality, elegance, design, status quo resembling of the price.(Solomon et. al., 2009)(Hansen and Nielsen, 2008)QualityBang Olufsen products are designed to be not only aesthetically pleasing but alike essentially functional and easy to use. The expectations increase by a strikingly individual appearance must be completely fulfilled in terms of high quality performance in all areas when the system is switched on. Therefore, excellence in providing the consumer with the highest pleasure in both ownership and use rests on high quality as the common denominator of all activities and competence areas. (Competences, Bang Olufsen, 2010)PlaceBang Olufsen products are sold by over 1.200 dealers in more than 100 countries in an extensive network of sell stores. Approximately 65% of these stores are B1-stores, which exclusively sell Bang Olufsen products. The B1 stores account for 81% of the total turnover. (About us, Bang Olufsen, 2010)(Bang Olufsen (2010) Annual Report 2009-10, p24)Bang Olufsen products sold with the premium and luxury cars such as Aston Martin, Mercedes AMG and Audi A8 to name a few.Considering the huge costs involved in the luxury yacht market, it is amazing how little customers spend on their on-board entertainment systems, and how little consideration they give to the total entertainment experience, often buying a pre-defined package says Torben Ballegaard Srensen, CEO, Bang Olufsen. (Ecoustics, 2005)Along with premium cars, BO also offers entertainment systems in the luxury yacht market.PromotionPull PromotionIn order to promote their products and utilize their existing distribution channels (exclusive BO stores), BO needs to address their product turnover life cycles and provide newer and improved products to their stores.In attempt to meet the customers demand for high quality, unusual design and up-to-date technology, BO nee ds to approach innovation and creation uniquely. This is where Idealab enters into the picture. It is BOs hope that this new, innovative approach to product design, development, production and sales will be their keys to answer this dilemma.Marketing outline Segmentation, Targeting and postureSegmentationDemographicThis segmentation categorises market based on age, gender, family structure, income and social class, race and ethnicity and geography.BO customers can be divided into four categories.First kinsfolk is of people who are young and well qualified, who have very few commitments, have large disposable income and are eager to fulfil their dreams.The next socio-economic class is of younger people who have just started a family, money is tighter and hence purchases are made only after careful consideration.The third category is of the ones who have it all, children are grown-up, despite of some possible financial obligations, the family still has surplus income and are looki ng for luxuries as second homes, exotic holidays or may be BO equipment.As per Jan Dalskov from Market Intelligence, most BO customers fall into this category.The last category, Grey gold, whose children have left home, have money to burn and can think of buying BO products for the rice beer of change or due to the external influences. (Who are Bang Olufsen customers?, Beoworld, 2007)PsychographicUnlike other circumstances producers of electronics, BO makes a few select products for the clearly defined few. Its therefrom broad appeal versus individual needs (Who are Bang Olufsen customers?, Beoworld, 2007).BehaviouralThis segmentation slices consumers on the basis of how they act towards, feel about or use a product (Solomon, Marshall, Stuart, Barnes, Mitchell, 220-21). BO products are often seen as Life-Style products. As the slogan says, BO products are for those who discuss design and quality before price. (The history, Bang Olufsen, 2010)Targeting severalise TargetingBO use s a differentiated targeting strategy. It focuses on design and quality over price. As a result of this they charge premium prices to customers to recover the higher designing and production costs. Differentiation is about justifying premium prices to prefer the product over other, less differentiated products. Due to this BO products are positioned as High Price = High Quality.PositioningBO products are very elegant in design to justify the higher price.PriceDesignBOSonySamsungBO products deliver best quality as compared other mass production electronics giants. As they describe It will never skip a beat. (BeoSound 2, Bang Olufsen, 2010)PriceQualityBOSonySamsungBO products are available in many of the stacked 5-star hotels, high-end cars such as Aston Martin, Mercedes SLS AMG S-Class. As Carsten Sander (Senior Director Scandinavia and Baltic) says that people normally have to decide between taking a vacation to some exotic place abroad, renovating their homes, upgrading their c ar etc. or buying one or more BO products. (Hansen and Nielsen, 2008)PriceStatus SymbolBOSonySamsungDiscussion and ConclusionThe company, BO, looks very strong at their brand position and recognition. Higher prices, elegant designs, supreme quality and collaborations with the luxury brands have placed company products in a corner market. Consumers are buying experience when buying BO products. Ownership of BO products creates a feeling of belonging to certain social class.Company is successful in keeping their brand image intact by delivering cutting-edge technology, high performing products. The company has strong and wide product mix, good length and depth of the product lines.shortly company has a generally tendency to launch 2-3 products in a year. The company can work on stretching the product line in both ways by keeping the brand image intact. Stretching the product line downwards i.e. offering the products of lower costs may affect consumers perception of High price = High quality. Entering into the lower price market will result in increase in competition from electronic giants such as Sony, Samsung etc.If company can concentrate on filling the product line i.e. more variations in existing product lines then it will give the consumer to choose the best suitable and feasible product to their needs.While working on the product designing and manufacturing, company can also invest in promotions.Focussing on top executives of the corporate firms may help the company to approach the potential customers. They can promote some free demonstrations, introductory offers to these executives who are willing to burn out some cash in order to maintain their social status. Exploring and expanding in this new segment of the market will give company the chance to reach to the potential customers.While exploring new B2C segments, company can also enter into B2B solutions by providing Audio painting solutions for the renowned conferences like Apples WWDC, Microsofts P DC etc. Similar to luxury yachts and cars, they can also reach Charter Jet manufacturers for collaboration, widening the product mix.