Beats Electronics - Ismaiel Pekassa 53e2i

INTERNATIONAL BRAND MANAGEMENT

BEATS ELECTRONICS An analysis of the famous Dr. Dre’s brand

Ismaiel Ahmed PEKASSA

[email protected]

BEATS ELECTRONICS

I.

COMPANY’S PRESENTATION

Beats Electronics is a division of Apple which produces audio products. Headquartered in Culver City, California, U.S. the company was co-founded by rapper and hip hop producer Dr. Dre and Interscope-Geffen-A&M Records chairman Jimmy Iovine. Beats' product line is primarily focused on headphones and speakers, marketed under the brand Beats by Dr. Dre (rendered beats by dr. Dre); in particular, its headphone line characteristically places a heavy emphasis on bass, which, in advertising material, Dr. Dre stated allows listeners to hear "all" of the music. The company has also licensed audio technology to other companies for use in their own products, including HTC and Chrysler, and expanded into the online music industry with its 2012 purchase of MOG, and the subsequent launch of an in-house music streaming service known as Beats Music.

From left to right: Jimmy Lovine (co-founder), Dr. DRE (co-founder) and Luke Wood (president)

Beats' popularity was primarily influenced by its marketing practices, centered on product placement and branding deals with celebrities that were accessible due to Iovine's professional network. In 2012 NPD Group reported that Beats' market share was 64% in the U.S for headphones priced higher than $100, and the brand was valued at US$1 billion in September 2013. For a period, the company was majority-owned by Taiwanese smartphone maker HTC—the company reduced its stake to 25% in 2012, and sold its remaining stake back

to the company in 2013; concurrently, Carlyle Group replaced HTC as a minority shareholder, alongside Dr. Dre and Iovine, in late 2013. On August 1, 2014, Apple Inc. acquired Beats for US $3 billion in a cash and stock deal, marking the largest acquisition in the company's history. Formally created in 2008 and cofounded by the Hip Hop musician Dr. DRE and Jimmy Lovine, Beats Electronics is an American company, division of Apple since May 2014, selling products like consumer headphones, earphones, and speakers as well as patented Beats Audio software technology and streaming music.

II.

ANALYSIS OF THE PRODUCTS 1. Personal audio

Beats' original product line were Beats by Dr. Dre headphones. In promotional materials, Dr. Dre outlined the line's advantages by alleging that listeners were not able to hear "all" of the music with most headphones, and that Beats would allow people to "hear what the artists hear, and listen to the music the way they should: the way I do." In comparison to most headphones, Beats products were characterized by an emphasis towards producing larger amounts of bass, and are particularly optimized towards hip-hop and pop music. In October 2012, Beats unveiled its first two selfdeveloped products, the Beats Executive noise-cancelling headphones (to compete with similar offerings by Bose and Sennheiser) and the Beats Pill portable speaker. The company actually sells four types of personal audio products •

Headphones: like the Beats Studio, Studio wireless, Solo, Solo Wireless, Mixr and Pro, are a kind of headphones characterized by the reduction of external sound different of the sound coming from the audio headphone.

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Earphones: with the Powerbeats, Powerbeats Wireless, Tour and Urbeats, Beats Electronics wants to offer compact audio headset designed for classic music lovers, with the particularity of being intra-auricular and ultra-lightweight music headset. This is more recommended for classic music lovers and sportsmen who like hearing music when practicing a physical activity.

An earphone Powerbeats •

Speakers: with its portable speakers like Pills and Pills XL, lets people play their sound everywhere for an individual experience or either for a party.

A Speaker Beats Pills 2. Beats Audio The company has also licensed the Beats brand, under the name Beats Audio (rendered Beats audio), and technology to other manufacturers. In 2011, HP began to offer personal computers equipped with Beats Audio systems, beginning with its HP Envy line. The system features a software equalizer with a preset that HP marketed as being optimized for higher quality sound output.

An authentic HP’s computer produced in collaboration with Beats Electronics

Following its acquisition of a stake in the company, most new HTC smartphones began to be released with Beats Audio software, beginning with the HTC Sensation XE/XL with Beats Audio in September 2011. The software was to be included in most new HTC devices, such as the One series. The Sensation XE and Rezound were also bundled with Beats by Dre earbuds, but HTC abandoned the practice on future devices. A HTC product executive claimed that despite the prominence of the Beats brand, "an accessory like the headphone doesn't factor in when someone is buying a smartphone."

An authentic smartphone produced in collaboration with Beats 3. Car audio In 2011, Beats reached a deal with Chrysler LLC to feature Beats-branded audio systems in its vehicles. The first vehicle under the partnership was its 2012 Chrysler 300S luxury vehicle, which included a 10-speaker Beats by Dr. Dre sound system. Beats speaker systems have also been included in models from Chrysler LLC's other marques, including Dodge, and parent company FIAT.

4. Beats Music On July 2, 2012, Beats announced it had acquired the online music service MOG, in a purchase reported to have been between $10 million to $16 million. Beats stated that the acquisition was part of the company's goal to develop a "truly end-to-end music

experience." The acquisition did not include the company's blog and advertising network, the MOG Music Network, which was sold in a separate transaction to the broadcasting company Townsquare Media in August 2012.

While MOG indicated that it would continue to operate independently with no immediate change in service, Beats subsequently announced a new, subscriptionbased online music service known as Beats Music, which launched in January 2014. In comparison to its competitors, such as Spotify and Google Play Music, the service emphasizes recommendations by music professionals alongside algorithmic recommendations. MOG was shut down on May 31, 2014, and existing s were directed to Beats Music. The company Beats Electronics has different types of products that we classify in 2 types: the products line extension and the brans line extensions.

III.

ANALYSIS OF THE COMPANY’S LINE EXTENSION By selling different types of products such as headphones, earphones, speakers and streaming music service, the company Beats Electronics is characterized by three category of products line extension: organic line extension for the different kinds of headphones, inorganic line extension for the earphones, speakers and organic category extension for the music streaming service. a. Organic line extension: in this category we can find the different types of headphones sold by the brand, like the Beats “Studio” (classic and wireless), “Solo” (classic and wireless) and the “Pro”.

The different kinds of headphones

b. Inorganic line extension: in this category we can find the different kinds of earphones like “Powerbeats” (classic and wireless), the “Tour” and the Urbeats. These products are particular because they are all intraauricular earphones so the consumer has a particular comfort hearing music with them by the fact that they have a high level of noise isolation, are ultra-lightweight and are easy to transport and use. With these earphones, Beats Electronics targets most the sportsmen who need to have a practical meaning of hearing their music while doing sport.

c. Organic category extension: with its streaming music service named Beats Music, the brand’s objective is to integrate the huge and developing market of music’s streaming services, which is dominated by three giants which are the Swedish Spotify Music, Google Music and the French Deezer.

IV.

ANALYSIS OF THE PRESENCE OF THE PARENTS BRAND IN THE BEATS BRAND’S PROCESS

In February 2014, Apple has bought the company Beats Electronics and has become the main owner of the firm. Nevertheless, Apple is not really present in Beat Electronics brand’s process because, most of the decisions of the brand are still taken by the board of Beats, especially by Dr. Dre and Jimmy Lovine. For example, any of the products sold by the company includes the brand name “Apple”, but still “Beat by Dr. Dre”. Nevertheless, Apple started selling Beats Products inside the Apple Store, especially headphones, earphones or even speakers. So, Apple, which is the parent’s company of Beats Electronics, is not very present in the brand’s process because Apple want to leave the prestige Beats Electronics has on the market, but in the same way, also uses the notoriety of this brand to sell its IPhone with the Beats by Dr. Dre products in its Apple stores. V.

SWOT Analysis 1. Strengths: o Beats Electronics main strength is its brand name used ender a famous hip-hop singer and producer who is Dr. Dre. People buying headphones or speakers produced by the company are usually attracted by the brand name, because Dr. Dre has been a famous hip hop singer. They also know that by purchasing its product, they will have a particular and unique hearing experience, especially for Rap/Rnb songs.

o o o

Beats offers to its customers the best quality product in of materials and sound (due to the noise cancelling’s technology) Has many important partners like HTC, HP or Chrysler and celebrity endorsers like P-Diddy, LeBron James or Justin Bieber Belongs to Apple: the company can have the necessary investments it needs due to the fact that Apple is its parent.

LeBron James wearing Beats earphones in an ad 2. Weaknesses: o The price is a weakness for Beat because the headphones sold by its competitors are most sold at a cheaper price o The vulnerability of the products: Beats by Dre products usually damage quickly and when this happens, it is very difficult and expensive for the consumers to repair them. o End of its partnership with Monster, who was known as a very good headphones manufacturer 3. Opportunities: o Trust in Dr. Dre as a leader in the music industry o Always new partnerships and celebrity endorsers, factors that give a status to the brand; o Expanding line products: there are always new types of products that are produced by the brand and others that are usually updated 4. Threats: o Strong and influent competitors like BOSE, SENNHEISER, SONY who sale as Beats Electronics almost the same types of products (such as SONY who even has his own music’s streaming service) o Unauthorized dealers or counterfeits products that dirty the reputation and the image of the brand.

An example of a counterfeits product

VI.

ANALYSIS OF THE BRAND’S VALUE WITH THE LOGO

Beats by Dr. Dre’s logo is very simple and represents a “b” that is at the middle of a red circle. The red, that represents the dynamism, youth and speed represents perfectly the values of the brand, that target most youth, sportsmen and businessmen. The letter “b” at the middle also express the values of the brand. On this logo, we can also notice the sentence “Beats by Dr. Dre”, that is the name of the brand. This sentence shows that the brand is more focused on music and is owned by a famous rap/Hip-Hop musician.

The name “Beats” is also a great symbol of this brand because it directly describes the kind of product the brand sells, because it is very simple to pronounce, especially for young people, and express music. A beat refers to volume fluctuations due to interference between sounds of different frequencies. VII.

IS BEATS ELECTRONICS A CONCEPT OR AND OBJECT?

The company is actually dominating the headphones markets with the different kinds of audio products it sells like the Beats Solo, Studio, earphones and speakers. With Beats Music, the company also wants to take some market shares in the big music’s streaming service market that is actually dominated by Spotify, Google Music or even Deezer. Beats has also experimented other kinds of audio services like cars’ audio system, computers and smartphones audio systems with Chrysler, HP and HTC. Today, the brand Beats Electronics is clearly seen as a concept product specialized in music and audio services because the brand is presently present in all the segments an activities linked to music and audio services, even if some of them like cars’ audio systems are not currently very well-known.