Key Performance Indicators and Marketing and Sales Operations at Beats Electronics - Case Study Example

Foundations of Global Business By: Executive Summary Business and, in particular marketing operations, have taken onto new trends that any company has to cope with so as to compete globally. In this report, key performance indicators in line with marketing and sales operations are analysed. In addition, more illustrations are provided using the case of headphones produced by Beats Electronics. In line with competitive analysis, Porter’s five forces analysis is used to provide the major elements of competition in the market such as threats of substitutes, threat of new entrants, the bargaining power of the buyers, bargaining power of the suppliers and competitive rivalry. Furthermore, marketing 4 Ps are also critically illustrated after which the Asnoff Growth Matrix is used to illustrate the trends in business growth. Introduction and Background Beats Electronics is a division of Apple Inc. that majorly specializes in the production of headphones and speakers (Monica, 2011, p. 01). These main products are branded ‘Beats by Dre.’ The operational headquarters of the organization are set in Culver City, California in the United States. Within the short time that the company has been in operation since 2008, the sales volumes have mainly been boosted by its vigorous marketing operations, especially in the United States (Wheeldon, 2014, p. 53). The marketing transactions are handled from a multi-angular approach which includes considerations of marketing mix elements, and the Asnoff Growth Matrix. Porter’s five Forces’ Analysis Porter (1998) invented a model that is used to track marketing operations in all markets, irrespective of the items of trade that are involved (The National Agency for Innovation and Research in Luxembourg, 2008, p. 01). There are five major determinants which interact in a bid to control the level of operations within the business market. These in include competitive rivalry within the industry, threat of new entrants, threat of substitutes, suppliers’ bargaining power and bargaining power of the customers. i. Competitive rivalry within the industry The level of competition among firms within an industry directly determines the effectiveness of the sector. Each company strives as much as possible to retain or improve its positioning within the market. As a result, several competitive strategies may be used such as pricing strategies, customer care services, value addition and diversity among other approaches. An organization has to come up with appropriate strategies so as to manage the competitive forces within an industry. ii. Threat of new entrants By all means, a company will devote all the available resources to create a barrier to any organization planning to venture in similar operations. The new entrants could either be new companies or those that plan to put in place more diversity in their products or services. The barriers created could be legal; for example the issue of patent rights, economic; such as venturing in economies of scale or even technological. It refers to all the efforts done to limit additional companies from taking part in the same business operation. iii. Threat of Substitute Products Substitute products are customers’ alternatives to the items that are already available in markets. The new items come as a result of innovations or technological advancements (Ahlstrom & Bruton, 2010, p. 131). Consequently, companies often fear that that their products may be replaced by other new items introduced in the markets. Substitutes pose a major risk to the profitability of a company’s transactions and all measures have to be put in place to reduce the impacts they create. iv. Bargaining power of the suppliers In a case where the suppliers’ influence is too high in a given sector, they may highlight their own terms and conditions with regard to price, quality and quantity to be supplied (Porter, 2004, p. 63). As a result, a company has to strive to gain access to a variety of suppliers of the same product so as to reduce their influence. v. Bargaining power of the customers In the event that the bargaining power of the customers in high beyond the expected levels, they may directly dictate the price levels. To avoid being dependent, a firm has to choose its clients carefully and be focussed towards satisfying the customers’ interests. This helps reduce their dominance over their rivals’ marketing strategies. Below is a graphical representation of the five forces developed by Michael Porter. Fig 1. Porter’s Five Forces (Porter, 2006, p. 04) Porter’s five forces analysis is crucial to a business since it can be used to determine the trends followed by marketing operations in line with the competition. In addition, it is a tool that is used to directly determine a firm’s competitiveness within an industry. Ideally, the tool is used by most organizations to estimate the profitability index of products, services and other transactions in any business environment. Porter’s Forces Analysis for Premium Headphone Market The headphones industry has been very competitive, especially with the emergence of new items in the industry. Prior to the establishment of Beats Electronics and introduction of Beats by Dre in the market, there were competitive products in the markets already; for instance, Sony had similar products already selling in the market. The competitive rivalry in the headphones industry existed mainly between Sony, RDX and mobile phone producers like Techno, Nokia and Samsung Companies (Lieberman, Esgate, & Lieberman, 2013, p. 102). Beats by Dre became a substitute in the year 2008 and demanded a wide market share in the same year. Suppliers’ influence was low, and the production of these products was high to an extent that market surpluses were realized. As a result of a wide variety of products in the market, customers had many options at the time of purchase, but the high market demand had little impact on the pricing levels adopted by the manufacturers. The premium headphones industry had many entrants when Beats got into the market. More companies have ventured in the same operations, producing more sophisticated products that could meet all the requirements of the consumers. Some of the advancements that have been made include Bluetooth headphones as opposed to the earlier cases where only Bluetooth earphones were available in the markets. Porter’s five forces analysis is, therefore important to the premium headphones industry. Marketing Mix Elements for Beats Electronics Marketing mix elements, commonly referred to as marketing 4 Ps, are important tools used to evaluate the market position of the products of an organization. In addition, they are used to set up competitive standards and to raise sales despite the competitive trends in the market. They include product, place, promotion and price. i. Product Beats Electronics produces a variety of audio products. Some these include Beats by Dre headphones and speakers. Their major emphasis is on bass, as this is the quality that appeals most to their customers. Other considerations that put in place to make its products more acceptable include portability and reliability. The headphones are designed to be easily carried by the users and reduce inefficiencies during use. ii. Place In spite of the fact that the company has its headquarters in California, in the U.S., the products are available in most countries of the world. The company uses various strategies to make its products reachable to the customer (Palmer, 2010, p.107). For instance, the licencing of HTC to distribute its products made the products available in all the HTC outlets all over the world. iii. Promotion The social media is the central promotional platform used by Beats in creating awareness on its products. In addition, investment in value addition and consumer satisfaction is another trend that can be used in the process of meeting the requirements of all the customers. iv. Price The pricing strategy put in place by Beats is competitive. The prices are relatively low compared to those of earlier companies (Codita, 2011, p. 91). In addition, the company produces a wide variety of headphones which implies even distribution of prices to the satisfaction of the customers. Asnoff Growth Matrix Ignor Asnoff developed four growth strategies that can be used by organizations in expanding their operations in the prospective market areas (Business: the ultimate resource, 2009, p. 962). In this growth matrix, the four major strategies identified include: i. Market penetration The major goal in this case is to increase the market within the existing market segments (Gessinger, 2009, p. 182). Organizations that rely on this approach can either sell more to the current customers or find new buyers within the existing markets. ii. Product development The same markets are targeted with new products from the same companies. This approach requires learning the changing tastes and preferences of customers and tailor-making products that satisfy these needs. iii. Market development In a case where new products may not be easily developed, there is an option of finding new markets for the same product (Kumar, 2010, p. 176). Globalization has increased the use of this strategy due to elimination of barriers to trade (Ervin & Smith, 2011). . iv. Diversification This is a combination of market development and product development (The National Agency for Innovation and Research in Luxembourg, 2008, p. 02). In this case, new products are produced and distributed to new markets other than the already existing ones. Asnoff’s growth matrix is important to organizations that are just getting into operation or those that are facing stiff competition in their areas of operation. Diversification is one of the most commonly used competitive strategies since it helps in identification and exploitation of new marketing opportunities. Beats Expansion and Survival Strategies A major strategy that has been put in place by Beats in enhancing its growth and meeting the competitive forces from mobile phone manufacturers is market development. This happened through acquisition of 50.1% of the company’s shares to HTC mobile manufacturers in the year 2011 (Rosenbaum & Pearl 2013, p. 91). As a result of this acquisition, it would be possible to include HTC in finding new markets for the products that the company produced. The acquisition by HTC Company was a major milestone towards enhancing growth and development of the company with regard to the amount of sales that were realized at the time of its establishment. In addition, the company has also diversified its products and sells globally. Consequently, there is increased market share for its products, hence increased business growth. The wide range of audio devices that are manufactured by Beats Electronics gives it a wide market demand. The items are designed to meet specific users’ needs and also to attract in new customers to buy the products. The company’s promotional strategies through the social media are also aimed at creating new markets for its products. In spite of the fact that the company has only been in operation since 2008, its products are very popular and widely accepted by the customers all over the world (Beats Electronics, 2010, p. 01). There are signs of growth of the company symbolized by the increased demand for its high quality audio devices. Conclusion Marketing operations can be evaluated using numerous tools. Other than the conventional marketing mix elements, Porter’s five forces are useful in evaluating the competitive position of an organization. In the case of Beats Electronics, the audio devices that are manufactured by the company have been readily accepted among the customers. Its efforts towards growth, analysed using Asnoff’s growth matrix, show clear signs of future growth and development. Product diversification as a strategy will be useful to the organization in increasing its market share and consequently its financial position. ReferencesTop of Form Top of Form Top of Form Top of Form Top of Form Top of Form Top of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Bottom of Form Top of Form Top of Form Top of Form Ahlstrom, D., & Bruton, G. D. (2010). International management: strategy and culture in the emerging world. Australia, South-Western Cengage Learning.Bottom of Form Beats Electronics, 2010, ‘Beats by Dre’ viewed 31 October 2014, http://www.beatsbydre.com/aboutus Business: the ultimate resource. (2009). Beijing, Citic Publishing House. Codita, R. (2011). Contingency factors of marketing-mix standardization German consumer goods companies in Central and Eastern Europe. Wiesbaden, Gabler. http://public.eblib.com/choice/publicfullrecord.aspx?p=748116. Ervin, J., & Smith, Z. A. (2011). Globalization a reference handbook. Santa Barbara, Calif, ABC-CLIO. http://ebooks.abc-clio.com/ebooks_pageformat/9781598840742/pg_cover.asp. Gessinger, G. H. (2009). Materials and innovative product development using common sense. Burlington, MA, Butterworth-Heinemann. http://public.eblib.com/choice/publicfullrecord.aspx?p=452993. Kumar, D. (2010). Enterprise growth strategy: vision, planning and execution. Farnham, Surrey, England, Gower. Lieberman, A., Esgate, P., & Lieberman, A. (2013). The definitive guide to entertainment marketing: bringing the moguls, the media, and the magic to the world. Monica, S. 2011, ‘Associate Marketing Manager’ Beats by Dre, Santa Monica, viewed 31 October 2014, https://www.smartrecruiters.com/BeatsByDrDre/998941-associate-marketing-manager Palmer, D. E. (2010). Ethical issues in e-business: models and frameworks. Hershey, PA, Business Science Reference. Porter, E. M, 2006, ‘The Five Competitive Forces that Shape Strategy’ Harvard Business Review, viewed 31 October 2014, http://www.exed.hbs.edu/assets/documents/hbr-shape-strategy.pdf Porter, M. E. (2004). Competitive strategy: techniques for analyzing industries and competitors. New York, NY [u.a.], Free Press. Rosenbaum, J., & Pearl, J. (2013). Investment banking valuation, leveraged buyouts, and mergers & aquisitions. Hoboken, Wiley. http://public.eblib.com/choice/publicfullrecord.aspx?p=1204848. The National Agency for Innovation and Research in Luxembourg, 2008, ‘Asnoff Matrix: the product/ market grid’ Luxinnovation G.I.E. viewed 31 October 2014, http://www.innovation.public.lu/en/ir-entreprise/techniques-gestion-innovation/outils-gestion-strategique/080612-Matrice-Ansoff-vers-eng.pdf The National Agency for Innovation and Research in Luxembourg, 2008, ‘Porter’s Five Forces Analysis, Luxinnovation G.I.E, viewed 31 October 2014, http://www.innovation.public.lu/en/ir-entreprise/techniques-gestion-innovation/outils-gestion-strategique/080905-5-forces-Porter-eng-2.pdf Top of Form Wheeldon, J. (2014). Patrons, curators, inventors and thieves: the storytelling contest of the cultural industries in the digital age. Bottom of Form Bottom of Form Bottom of Form Bottom of Form Read More