Analysis of the Market for Beats - Essay Example

Analysis of the Market for Beats The focus of this analysis report is an audio device company. Beats by Dr. Dre is a that is famous worldwide for audio devices. The market that will be analyzed for this product is the United Kingdom; a country found in Europe. Beats by Dr. Dre is a company that is affiliated to Apple Inc. They deal with audio devices ranging from earphones, headphones to speakers and many other audio products. There are several factors that make this specific brand special worldwide. The first is the celebrity endorsement that it the company has invested heavily in. The product has been featured in numerous music videos and ad campaigns that have created a very high profile image for the brand and its products (Libby, and Tregarthen 34). The numerous endorsements by celebrities have made it very glamorous to be associated with the brand. That explains the large number of young people wearing the headphones and earphones around their necks. School going children and young working adults all possess or wish to own a pair of Beats headphones or earphones. Other than the popularity that the product has gained from celebrity endorsements, the brand produces high-quality products. The sound quality of the audio devices is much higher when compared to the competitor products. The bass produced by the earphones is appreciated by music lovers of specific genres such as hip-hop, dance and electronic music. The market in the United Kingdom is promising for products produced by Beats. In fact, the BPI released statistics that suggest that companies dealing with technology would enjoy transacting business in the United Kingdom. The UK has 64.1 million resident citizens. Of this population, 12% are young adults who are between the age of 16 and 24. This accounts for 7.1 million young adults which are the target market for beats. In the past five years, according to BPI, there was an increase in sales made by the technology sector accruing to $11 billion. The sales in smart-phones and tablets accounted for the majority of growth in the technology sector. Music was among the key driving factors for this massive growth in sales. This is because the United Kingdom was found to purchase more music related products than other first world countries by approximately 25%. All these facts indicate that Beats doing business in the United Kingdom would be a profitable endeavor. Beats is a household name in every country on the globe. However, this does not mean that it is the only producer of quality audio devices; especially in the United Kingdom. There are many other brands such in the United Kingdom. Such brands are like: Denon, Sony, Philips, Grado and Sennheiser. The market conditions in the United Kingdom fit the description of imperfect competition. First, the number of dealers is not large. The number of producers is not that many in the market. Secondly, the products in the market are heterogeneous. Beats and its competitors do not produce headphones and earphones either. They produce many other products. For example, Beats has a wide range of speakers, from small sized speakers commonly called Nicki pills to heavy-duty speakers that can be used in gatherings of large crowds. Prices can be charged higher simply because of the preference the product bears. This is a typical case with Beats. The brand is associated with high profile customers e.g. DJs, musicians and many other people mostly in the entertainment industry. As said earlier, the customers of Beats pay a higher price for the products. The customers are willing to buy Beats headphones at a higher price rather than buy headphones of equal quality. The rivals in the market interact in a healthy manner. There is always a constant rivalry that exists between the producers of audio devices. The competitors always seek to release more products that will be of better quality or have better features than the last product. One tactic often used is to offer similar products at a cheaper price. This method ensures that those customers unable to buy their products simply because they cannot afford the products offered by the competitors. Competitors in this market seek ways to preserve the fat profit margin that they have. For example, Beats offers high prices for the products that ensure that the company can make higher profits and still keep its sales up. There are certain barriers that prevent entry of competitors or make it hard for the new companies. Competition to develop new technologies encourages innovation in this sector. This innovation also helps companies cut a niche from its competitors. The government prevents monopoly of the sector giving space for new companies in the market (Libby, and Tregarthen 87). As mentioned in the beginning, the Beats brand is one that is driven by popularity in the market as a result of a creative marketing. This campaign has worked well in the other countries. This is a strategy that can do very well for Beats in the United Kingdom. If the Beats products are associated with high profile celebrities in the United Kingdom, then this will ensure that it is attractive to other people in the country. For example, if highly successful people in the United Kingdom (especially in the entertainment industry) are associated with the product, then the product will sell successfully in the country. Another factor that can boost sales of Beats products in the United Kingdom is the wide portfolio of products that it currently has. Giving people a choice of products to purchase gives the company presence. The increase of sales in phones and tablets in the United Kingdom will make provide Beats with a gap to fill. It is true to say that there are other brands of audio devices in the United Kingdom. However, a brand such as Beats will fill the gap for high-end audio devices needed by music lovers everywhere in the UK. Each day, new music enters the market. This music is often accessed through smart-phones and tablets. The increase in the number of devices being purchased translates to an increase in demand for audio devices. Beats should take advantage of its global presence and get into the United Kingdom market. It will surely be a successful venture. The size of income that will be earned by the company will be high. The price of elasticity of demand will also be healthy. Beats products are luxury products. They are not necessarily essential for anyone to live life. People can do without Beats products. If a consumer of music wants to purchase an audio device, then they can purchase a device of similar quality but of a cheaper price. This means that the suppliers need to maintain a constant or higher rate of demand. If Beats need to increase the demand, then the celebrity endorsements need to be increased. If not, they need to maintain. The design can also be improved. This ensures that the number of products is increased, and there is a wider variety of audio devices available to the market. If new products are introduced to the market, this also helps Beats get new customers who will find the new products more interesting than the older products. The market of audio devices can only grow. This is because new music is always being introduced. With each new genre, a specific need arises. For example, an audio device company can enhance the bass or speed, among others. Each day innovations are made to address these needs. This means that the sector can grow and develop. This fact provides space for new companies to enter the market. If the existing companies can invent new products to address the need, then they create a niche that they can occupy and compete with the big multinational companies. Beats can also fill this gap if it stays “on its toes” and commits to staying ahead of the competition. They can even grab the market share of new products or more efficient devices. A person can start a new business in this market. There are two factors that make this possible. First, if the company is innovative, the new product can ensure that new customers are attracted, and older customers are retained. Owning a patent on a new product further ensures that the success of the company because the competing companies cannot produce similar products. Secondly, the new companies or businesses are protected by the government. The various laws that protect companies from monopolies ensure that the interests of new businesses are protected, and they are allowed to flourish. These laws enacted by the government also protect the interests of the already existing companies as well. However, if a new business is interested in venturing in the market to offer already existing products, then it would be hard for that company to grow in the market unless they have experience in similar markets in the world. Work Cited Libby, Rittenberg, and Tregarthen Timothy. Principles of Microeconomics. New York, NY: FlatWorld Knowledge, 2012. Print. Read More