Marketing has been present in many industry sectors for quite some time, acting as the key to success and/or downfall of various businesses. The range of these businesses is enormous, going from television advertisements of new cellphones to movie stars endorsements of luxury clothing. Nevertheless, there are still plenty of room for innovation and markets to explore.

In one of these untapped areas, Beats by Dre discovered a completely new market for its premium headsets. Beats by Dre have changed people’s perception when it comes to the way they listen to music. The strategy consists of Dr. Dre himself, a legendary producer and musician, endorsing audio products, the same way soccer players endorse sports shoes. As impressive as it may seem, they were the pioneers doing this, even though the diversity of audio companies in the market.

Nowadays, Beats by Dre has become a multibillion-dollar company with audio products selling all around the globe, with a good reputation. However, the company has been facing some rumors about their product’s quality and what they actually worth.

This report has the objective to analyze external and internal factors that could recover the company’s prestige and stimulate on the development of a new marketing strategy for Beats by Dre. Factors such as the environment scan and audit (SWOT, PESTEL, customer and competitor’s analysis).

‍

Beats by Dre is a North American company that sells premium headphones and audio devices all over the world. It was founded in 2006 by the famous rapper and music producer Andre “Dr. Dre” Young and former Interscope Geffen A&M Records chairman Jimmy Lovine.

Beats by Dre states that “People Aren’t Hearing All The Music” (Beats by Dre, 2017), so their vision is to make sure customers do.

“The company’s mission is to provide a superior end-to-end music experience – with headphones, devices and services – so fans feel the emotion and hear the music the way artists intended it to sound from the studio”. (Business Wire, 2013).

By the year of 2007, Beats by Dre teamed up with Monster Cable and finally released its first product a year later (Molina, 2017). After the release of the “Monster Beats by Dr. Dre Studio headphones” in 2008, the company notoriety has grown exponentially. Its enormous success is due to the excellent fusion between an excellent planning of disclosure and a good product. Beats by Dre bet on co-marketing deals with big names of sport and music so that brand recognition expanded into what it is today (Inc. Magazine, 2012).

Nowadays, the company has different products and services. Developed to provide a superior audio quality, the on/over ear headphones present technological innovations, such as noise isolation and wireless connection. Also along with its technical features, the product has a fashionable design, something critical for customer’s approval. The headphones’ price varies between US$130 and US$400 on their official website. The product can also be purchase on Apple and retail stores, and through other e-commerce pages. It is a top tier item with quality materials and luxury packaging. As mention before, Beats by Dre promotes its products mostly throughout celebrity endorsements. Big stars, such as LeBron James and Lady Gaga, creating a glamourous status by utilizing a Beats by Dre headset. The company also make advertisements through social media, commercials and internet videos.

Along the way, Beats by Dre has ended its manufacture deals with Monster Cable, has acquired music services from MOG and signed deals with HP and Chrysler. The company was 50,1% bought by HTC in 2011 and in 2012 was partially rebought by Dr. Dre and Jimmy Iovine. With all these outcomes, the biggest one occurred in July 2014, when Apple Inc. purchased the company in a billionaire transaction, renaming the company to Beats Electronics (Weber, 2014). The company remains on top, with 46%, when it comes to teens planning to purchase a Beats by Dre (Statistic Brain, 2017) and leading with 49% in terms of dollar sales of the wireless headphone market, when combined with Apple products. (Richter, 2017).

The new entrants for the premium headset industry has increased the competition among brands and weakened the superiority of standard recognized brands such as Sony, Bose and Sennheiser. These main new players are Bowers & Wilkins, Monster and Skullcandy. Nevertheless, Beats by Dre still holds 46% of the market share (Richter, 2017), but its portion has been decreasing over time.

The company also needs to remain innovative and come up with ways to differentiate its products in order to stay attractive to the customers, since competitors are presenting new features for their headphones, such as the ThinkEar, a personal audio system controlled by your brainwaves (NESTE, 2017). The cost competition will be an issue too, since companies are trending to adopt same pricing strategies for products with similar specifications. Even though price is more considerable for other products with same specs, the customer’s loyalty to bigger brands sometimes block these alternative competitors when they try to get into the market.

Due to Beats by Dre and other public known brands control of the market and international demand, new entrants still find it difficult to enter the business. Beats also faces substitute threats that uses different market strategies and partnerships, which increases their share of these elite market. Two of these possible substitutes are Soul by Ludacris and Sync by 50 Cent. With customers willing to spend money on products with a better quality sound and improved specifications, Beats by Dre requires innovation on their product offerings’ list.

The following table shows the brand, product, price and features that are alternative competitors for BeatsPro headphone, and BeatsPro itself.