Porters five forces analysis - Beats by Dre - Essay Example

Beats by Dre: PORTERS FIVE FORCES ANALYSIS BY Beats by Dre Table of Content Executive Summary/ Introduction 2. Description of Porters Five Forces Analysis a. Purpose b. Benefit to Business 3. Porter’s Five Forces Analysis on Premium Headphones Markets 4. Company Marketing Strategies 5. Ansoff Growth Matrix a. Purpose and Benefits 6. Strategies Adopted by the Business 7. Conclusion Beats by Dre Introduction The company that manufactures these headphones was formally incorporated in 2008. The founder of this company was Dr. Dre, who established it as a family business. The company specialized in manufacturing speakers, consumer earphones and headphones as well as beats audio software. This kind of software was facilitated by the new technology, which really boosted its output and adoption in the world. The company also established a service where people could subscribe to their streaming music from all corners of the world as long as they had internet connections with them (Brown, 2006). Through its great output and popularity in the market, the company has been able to take the largest market share in the global market since most people have adopted and appreciated its products globally. This has brought a revolution in the industry and new competitors too. The target population of the company is mainly the youths and teenagers. Through its marketing strategies, the company has been able to achieve and acquire its target in the market. Most of its clients are always excited about their product and services in the market. For instance, the software that it developed has been adopted in the market due to its efficiency and trendiness in the market. Since the inception of its recording studios in different countries in the world, the company has received different kinds of clients who really appreciate their services. Further, they also refer clients who are in need of similar services. Generally, the company has been able to establish itself fully in the market due to the kind of products and services, which it offers. However, it faces stiff competition from other manufactures that have entered in the new market but the company still stands strong due to loyalty of its customers (Bernhardt, 2014). Findings Describe a Porters five forces analysis This established framework is used to conduct an analysis within the industry. The framework has also been adopted in developing strategies for businesses. The forces applied in this context determine how the industry is competitive and attractive to other competitors and consumers in the global market. These forces exist in both micro and macro environments. It focuses on the industry rivalry where different companies and organizations have developed different kinds of forces to ensure and enhance their survival in the market. Most company’s desire t achieves high levels of profitability and popularity in the market. However, this is always a hard task because stiff competition exists in the market. This is because there are many new entrants in the market and the competitors, which exist, have already developed strategies and tactics that will ensure their survival in the market. Its purpose The model mainly focuses on both the bargaining power of suppliers and buyers in the market (Jurevicius 2013). Further, it gives an overview of the role of competitors in the market, threats brought by substitutes of the similar products in the market and finally the rivalry that exist among different suppliers in the market. The purpose of the model is to determine the competitive nature of the market and its attractiveness to new entrants (Moutinho 2011). It also helps potential investors to identify the gaps that exist in the market where they can decide to venture. In addition, it helps the management of different companies to understand and outline different strengths of their companies. Finally, most strategic analysts use the model to understand and determine how a new product will survive in the market and its profitability level. When a company understands its strengths, it invests its resources to work on its weaknesses (Moutinho 2011). Benefits to the business The model enables companies to understand and evaluate issues that are affecting and influencing their profitability margins in the market and within that specific industry. This is achieved through proper evaluation and assessment of the conditions that are prevailing in the market. It also helps companies to make appropriate decisions on whether to enter an already existing market or exit depending on the prevailing conditions in the local and global market. Finally, it enables them to develop competitive strategies that they will implement in order to establish and survive in the market. Hence, business today in the global market should highly adopt it (Moutinho 2011). Porter’s five forces analysis on premium headphones markets To analyze the market share taken by the headphones in the market, we will focus on the forces outlined in the model to discuss this. Firstly, we will focus on the supplier’s power in the global market. The company is one of the largest manufacturers of headphones in the global market (Martin 2011). It manufactures high-end headphones, which most consumers consider them quality and classy. Further, company’s ability to manufacture them in different colours makes it even better. Most of the headphones are ‘U’ shaped. From a recent report published in business review, the company had acquired sixty-four percent of the entire market shares. Most users of the headphones view it as a fashion accessory mostly used by celebrities in the hip-hop music industry. The company has the capacity to manufacture and satisfy the global market (Martin 2011). Secondly, the model helps its users to analyze the buying power of consumers who are its target consumers. The company appreciates that it has customers from different lifestyles hence it manufactures products as per their needs and requests. Therefore, the management has ensured that the prices of their products and software’s are all affordable to their customers in the global market. Further, the company follows the current rates of inflation in the world’s economy. To emphasize, most of the customers lies in the age bracket of 19-35 years who love to be trendy and follow the latest themes in the world of fashion. This gives the company an upper hand because their products are always on demands Further, the company faces the threat of substitution from their competitors in the global market. A lot of competition has emerged since the inception of the company (Martin 2011). Due to the high number of customers in the global market, most companies have tried to venture into this market and acquire their market share too. However, the company remains the most dominant in the industry due to its quality products. In addition, the management has decided to adjust the prices of these products in order to remain pocket friendly among all customers. Moreover, the company faces competitive rivalry in the global market. Other manufacturers have entered the global market, and they are competing with the company. However, most of them offer undifferentiated products in the market making them less attractive. The company has dealt with this my launching and implementing competitive market strategies. Finally, the industry in which the company operates in faces the threat of having so many entrants in the industry. Profitability nature of the industry attracts so many investors from different corners of the world. Most people in the world today appreciate the music industry; hence, they always buy products that make them feel comfortable. The company has no durable barriers to prevent other investors in the industry. Hence, the company focuses on enhancing the quality of its products in the market (Brown 2006). Additionally, the company ensures that the prices of its products are pocket friendly to all its consumers in both local and the global market. Marketing strategies employed by the company The company developed and implemented some strategies that have ensured its survival in a competitive market. Firstly, the company has clearly outlined and studied the needs of their customers in the global market. Understanding the needs of their customers has enabled it to develop products that suit their needs. For instance, these kinds of headphones were created and manufactured for lovers of hip-hop music in the global market. Secondly, the company has differentiated its products by ensuring that it is not just the normal headphones. The company has ensured that their product appreciates some fashion aspects that are mostly used by their target population in the global market. Headphones are manufactured in different colours and textures so the customers have a wide variety to choose from. Thirdly, the company emphasizes on selling the benefits but not the features of the product. The reason behind this successful brand in the global market is that it sells the value of its products when a good brand is already introduced and established in the market, most people will definitely adopt it very easily. This is an added advantage to the company, as it will mean more sales hence more revenue for the company (Benssoussan and Fleisher, 2008). Further, the company has always competed on the value of its products. Other companies competing in the same market normally focuses on the prices of their products. This is not the case for this particular company as it emphasizes on the value of its products first. Most celebrities in the music industry have adopted them as one of their most valuable accessories. The company also uses them in their marketing campaigns. This impact positively as most of its target populations love and embrace the kind of music, which they produce. Finally, the company has diversified itself by investing in different fields. Recently, the company sold its stake to the HP Company that sells computer hardware and software in the global market. All these strategies have enabled the company to establish a strong brand in the global market and makes huge sales successful year after year. Explain the Ansoff Growth matrix This tool for marketing planning enables business and companies to determine and evaluate growth strategies for their products in the market (Partridge & Sinclair-Hunt n.d.). For an existing product, the matrix focuses on market penetration and development strategies that will be adopted by the company to ensure and enhance the success. Purpose and benefits Market penetration mainly aims at increasing the market share of the product in both local and international market. Further, it aims at enhancing market dominance for its products currently and in the future. However, when we focus on product development, the main task is to enable the company to venture into a new market and create more distribution channels of the product. Pricing policies are also evaluated and implemented here. For a new product in the market, the matrix guides the company involved in product development. This requires the company to identify the consumer needs in the market and embark extensive research and development of the desired product (Darroch, 2014). Finally, diversification of the company’s products is also advised to the new entrants in the industry. These are important tools, which most business should adopt. Strategies that the business has adopted to expand and survive in the market The company has developed products, which suit the needs of their customers in the market. This was achieved after an extensive research, which triggered development of the product after the gap, was successfully identified in the market (Kluyver 2000). Hence, this is the reason why the company focuses on the value of the product other than prices in the global market. Currently, the company focuses on market development to ensure it remains dominant in the global market. This is not a new company in the global market and from its strategies, which it has developed since its inception; it has moved to greater heights in this industry. Conclusion Beats by Dre is a global brand that manufactures headphones. This brand has been appreciated and adopted by most of its customers in the global market. Its quality product and services attract most people to it and remain loyal to it. The company has adopted strong marketing strategies that have enabled it to acquire the largest market share in the global market as compared to their competitors in the same industry. Using the porters five analysis model, we have been able to evaluate the forces that affect the company in the market. However, the company has developed strategies in marketing of their products that have enabled it to conquer the market. References Bensoussan, B. E., & Fleisher, C. S 2008), Analysis without paralysis: 10 tools to make better strategic decisions, FT Press, Upper Saddle River, N.J. Bernhardt, L 2014, Chat #1 some bots just had a chat, Epubli GmbH, Berlin. Brown, J 2006, Dr. Dre in the studio: from Compton, Death Row, Snoop Dogg, Eminem, 50 Cent, the Game, and Mad Money : the life, times, and aftermath of the notorious record producer, Dr. Dre, Colossus Books, Phoenix. Darroch, J 2014, Why marketing to women doesnt work: using market segmentation to understand consumer needs, retrieved 31 October 2013, . De Kluyver, C. A 2000, Strategic thinking: an executive perspective, Prentice Hall, Upper Saddle River, N.J. Jurevicius, O 2013, Porters Five Forces, retrieved 31 October 2013, . Martin, A 2011, Headphones With Swagger (and Lots of Bass). retrieved 31 October 2013, < http://www.nytimes.com/2011/11/20/business/beats-headphones-expand-dr-dres-business-world.html?pagewanted=all&_r=0>.  Moutinho, L 2011, Strategic Management in Tourism, CABI, London. Partridge, L & Sinclair-Hunt, M n.d., Strategic Management, Select Knowledge Limited, London. Read More