Founded in 1964 by MIT Ph.D. graduate Amar Bose with the goal of pushing the boundaries of speaker quality through research, the Bose Corporation has been a household name in music for over fifty years. Throughout the last few decades, Bose has enjoyed critical acclaim for the quality of its speakers and headphones as well as commercial success. However, over the last ten years, a new player in this industry has stolen a significant amount of market share from Bose: Beats Electronics. Beats was founded by Dr. Dre and Jimmy Iovine, two well-respected figures in the music industry, on the premise of emulating “what it’s like in the studio” to listen to a recording; it is now a subsidiary of Apple. Presently, Bose products are overwhelmingly ranked higher than Beats products by consumers and experts alike. Whether Bose products are “actually better” than Beats products is up for debate. However, there is no debate about the fact that Beats now reins in the headphone market with a 25% market share in 2017 compared to Bose’s 8% market share[1]. This is primarily because Bose lacks badly behind Beats in marketing and product design. As such, if Bose wants to close the existing headphones and speaker market share gap, Bose must quickly improve its marketing and product design strategies.
In the words of Robert Brunner, the engineer who designed the first Beats headphones, “The headphone prior to that [Beats]…was kind of busy and mechanical and articulated, tied heavily to an audio culture instead of a fashion culture. So we completely rearchitected, made it more streamlined, more iconic; just better looking to wear.”[2]. Brunner gave this answer during an interview with the MIT Technology Review in 2014 when he was asked to explain how one could convince people that a gadget can be a fashionable accessory. His response shows that Beats was not only committed to sound quality, but also to the look and feel of their products from the beginning. Conversely, Bose has exclusively focused on its “Better Sound Through Research” philosophy, choosing to prioritize product functionality over any other product dimension. In fact, during a 2004 interview with Discover Magazine, Amar Bose stated that he “formed this company solely for the excitement of doing really unique research.”[3]. During the interview, he threw shade at the idea of brand “image building” — one aspect of which involves emphasizing product design and packaging — suggesting that it would undermine the company’s efforts to deliver high-quality sound systems[3]. However, more than 50% of “purchases are based on emotions, especially when a client is unsure and must choose between two brands of products,” and product aesthetics substantially influence emotion[4]. It is perhaps one of the biggest reasons that Beats devices outsell Bose devices despite being perceived as having lower sound quality[5]. As tech review YouTuber Marques Brownlee puts it, the reason that people buy Beats is that “They’re just the best package, the presentation, the colors, the imagery, the accessories you get inside.”[5]. In order to combat the market share gap, Bose needs to revamp the style of its products to appeal to more customers, especially teenagers, 46% of whom preferred Beats over any other headphone brand when Apple acquired Beats in 2014[6]. Offering a larger color selection of headphones and speakers would be one way to start.
As if the product design gap is not challenging enough, Bose also lags far behind Beats in the marketing and advertising space. Beats’ approach to advertising has been to partner with musicians such as Ed Sheeran and Kendrick Lamar as well as athletes such as Colin Kaepernick on YouTube videos promoting the Beats brand. Between 2009 and 2010 Beats teamed up with Lady Gaga and Justin Bieber to release “celebrity product lines.”[5]. Bose’s approach to advertising has traditionally included releasing full-page educational themed advertisements in popular newspaper and magazines explaining how its products work. Only in 2013, did Bose begin engaging celebrities to promote its brand when it announced that golfer Rory McIlroy would be a “Global Brand Ambassador.”[5]. Despite eventually adopting the celebrity advertising model, Beats appears to be maintaining a sizable lead in terms of YouTube views and subscribers over Bose, an important advertising medium in the 21st century. As of October 29, 2018, Bose has 100,000 subscribers and Beats has 600,00 subscribers[7][8]. Further, Bose’ most popular video received 7 million views and Beats’ most popular video received 33 million views[7][8]. This might be attributed to Beats producing overall better quality ads than Bose or a first-mover advantage acquired by Beats: Beats by Dr. Dre was the first headphone company to market headphones and speakers using celebrities and that marketing strategy has become part of the company’s image[9]. Another important part of advertising is selling products in retail stores because the majority of shoppers want the “opportunity to look, touch, and compare products,” and “ability to try products“ before buying. Beats has been in the retail space for years, as opposed to Bose which only started selling their products through large retailers in 2017[5].
There is nothing wrong with pursuing “Better Sound Through Research” if it is done in conjunction with effective marketing and product design strategies. However, research alone is not enough to sustain a business. Neither is superior sound quality by itself. Buying is not usually a logical decision, but rather an emotional one. Marketing and overall product experience drive emotion and thus product sales. To be a leader in the future Bose will need a find a way to market and design their devices that is at least on par with Beats, if not better.
Sources:
- Richter, Felix. “Infographic: The U.S. Wireless Headphone Market.” Statista Infographics, 8 Feb. 2017, http://www.statista.com/chart/7993/headphone-market-share/.
- Metz, Rachel. “Three Questions with Beats Designer Robert Brunner.” MIT Technology Review, MIT Technology Review, 19 Sept. 2014, www.technologyreview.com/s/528046/three-questions-with-the-man-who-designed-beats-headphones/.
- Lemley, Brad. “Discover Dialogue: Amar G. Bose.” Discover Magazine, Discover Magazine, 1 Oct. 2004, discovermagazine.com/2004/oct/discover-dialogue.
- Moré, María. “The Importance of Product Design and Packaging in Branding.” More Than Branding, 14 Dec. 2010, morethanbranding.com/2010/12/14/product-design-and-packaging/.
- Dolan, Robert J. Bose Corporation: Communication Strategy for Challenging Apple’s Beats by Dr. Dre. Harvard Business School, 2018, Bose Corporation: Communication Strategy for Challenging Apple’s Beats by Dr. Dre.
- Richter, Felix. “Infographic: U.S. Teens Love Beats Headphones.” Statista Infographics, 8 May 2014, www.statista.com/chart/2227/preferred-headphone-brands-among-us-teens/.
- Officialbeatsbydrdre. “Beats by Dre.” YouTube, YouTube, www.youtube.com/user/Officialbeatsbydrdre.
- Bose. “Bose.” YouTube, YouTube, http://www.youtube.com/user/Bose/videos?flow=grid&view=0&sort=p.
- Hoskisson, Robert E., et al. Strategic Management Concepts: Competitiveness and Globalization. 12th ed., South-Western, 2015.
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