Marketing Strategies: Bang Olufsen vs. Sony

Marketing Strategies: Bang Olufsen vs. Sony Marketing Strategies and Customer behaviors of High-tech products: Bang Olufsen vs. Sony Introduction The high-tech industry is experiencing furious competition in the global market, especially in the sectors of audio/video, loudspeakers and digital appliances. Bang Olufsen and Sony are both successful organizations offer examples of excellent strategies in their respective markets in the same industry. Compared to Bang Olufsen, Sony is a less expensive brand, which was founded in 1946 in Japan. It is one of the leading electronics and entertainment companies, offering quality digital and media products to the mass global market. Sony stands on a strong foundation of innovation, experience, talent, capital and desire (Sony 2008). Its products and services are available around the world. They are attached with strong design capability, good quality and high prestige. Bang Olufsen (BO) was founded in 1925 by two young Danish engineers, Peter Bang and Svend Olufsen. Known all over the world for spectacular, idea based, quality products (Christensen and Jà ¸rgensen 1997). It produces and develops a wide range of digital appliances as well as audio/video products. This report will assess the effectiveness of distinct marketing strategies of these two organizations, and then identify and analyze their key customer behaviors. Background of the companies 2.1 Sony With its commitment to quality and consistent dedication to customer satisfaction Sony is recognized as a benchmark for New Age technology. Sony adapts Digital Signage, which is a powerful tool to influence Customer behavior, both at point of purchase and at point of sale. Bang Olufsen: Bang and Olufsen have tied with e-commerce giant Amazon to influence their customer behavior, wherein products purchased by the customers will be provided with warranty registration forms which allows customer to register the purchased products for support throughout the life of the product. Key Customers Behaviors Jim Blythe (2006)says that many purchases are made without apparent conscious thought – people often buy as a result of unexplained impulses, or simply fall in love with a product for no apparent reason. In the market of high-tech products, the customer behavior follows the seven stages of CDP (Consumer Decision Process) model . First, they recognize that something is needed in their lives. Then they search for information. The information may be internal (remembering facts about products, or recalling experiences with them) or external (reading about possible products, visiting shops, etc). Based on the information, they conduct the pre-purchase evaluation of alternatives. During the process, they compare a number of factors (such as price, design, functions) of various brands to select the possible alternatives that best fulfill the needs (Yan 2008). Finally, they make the purchase, and then use the product for the purpose of fulfilling the need. The past-consumption evaluat ion will be carried out to consider whether the product actually satisfy the needs or not. They might dispose the product before or at the end of its life cycle (Blythe 2006). A simple goal hierarchy for buying a high-tech product might look like this: Find out which high-tech product best suit the individual needs. Find out which brand has the right product at the right price. Go and buy the product. Bang Olufsen targets the elite group, which can be explained as upper class customers who are educated, well-to-do, cultivated in their interests and highly individualistic and self-motivated. These consumers are normally wealthy with high income and good taste. Most of them have luxury houses/flats and cars. They would like to spend large amount of money to achieve the same quality for their audio and video equipment, long before design-widescreen TVs became fashionable. Bang Olufsen’s designs attract both men and women with a combination of high-end technology, spectacular and often audacious Danish modern styling, excellent performance and extremely functional integration into the typical upper middle class home (Austin and Beyersdorfer 2007). In addition to the luxury offers, Bang Olufsen had introduced a new range of smaller products (such as Serene) with relative lower prices to attract the wealthy fashion-conscious youth market. In a word, these customers are persons who are willing to sacrifice a lot to get the very best in some particular area. For this reason, the step 2 in the goal hierarchy might be missing from their purchasing process as they are wealthy and non-price sensitive, attracted only by the products featured with unique looking, high-end technology, personalization and customization (Dolbow 2002). Compared to Bang Olufsen, Sony’s customers have relatively lower standards of â€Å"lifestyle†, although Sony’s products still have higher prices and better qualities than the industry average. These groups of customers are price-sensitive. They totally follow the CDP and goal hierarchy estimated. Most of Sony’s products are marketed as value for money products with strong brand image and good design. Unlike Bang Olufsen, Sony does not want its products to be zero flaws, but meet the demands of the mass global customers. It limits the application of the high-end technologies such as finer art of design and frequency range to reduce the costs. Individualization is excluded from its production profile for the same reason. Therefore, its products may not be able to fully meet the expectations of one specific person. In such products one feature appeals to one type of person, other features to another, the price, but no features, to a third, etc. But on the whole, the consumer will pay for a number of features that he or she never really wanted and perhaps never will use (Ravasi 2004). Marketing Strategies and Tactics The Bang Olufsen specialist will represent the Bang Olufsen showroom located closest to the customers residence, and the specialist and showroom will then be available for customer services. The Competitive Approach Bang Olufsen always had a more high-brow approach. It competes for upper middle-class discretionary dollars. In the fact, there are no any direct competitors of Bang Olufsen in the high-end electronics industry, because it does not want to make mass-market products with a broad appeal like its competitors – products without any regard for the preferences and needs of the individual end-users. Bang and Olufsen locates the showrooms close to its potential customer’s residence. In addition to the normal working hours, all the services and showrooms are made available to customers by appointment. Resources are selectively employed to serve its end-customers intelligently. Bang Olufsen highlights customization and personalization. It charges premium price to makes individual products for individual people (Hendriksen 2001). Basically, all the products share the same Bang Olufsen qualities, but each of them has a specific design profile that works individually to serve th e end-customers in the market. The integration of unique designs and high qualities are notable selling points of each product. The Quality Approach In parallel with the design and quality, Bang Olufsen, therefore, developed a marketing and communication strategy a lifestyle oriented strategy aimed at a smaller, but more international target group. The targeting strategy was best encapsulated in the advertising slogan of the period: Bang Olufsen is for those who consider taste and quality before price. The products offered by Bang Olufsen are therefore regarded as ‘lifestyle’ products. Each of them is manufactured to the highest standards, and that last 15-20 years instead of the industry typical 24 months. Bang Olufsen conducts a niche marketing strategy by operating under a completely different margin scheme than any of the large, well-sourced players like Sony, Philips, Samsung, Matsushita, Thomason, who all need market share to be visible and profitable (Hendriksen et al., 2002). The Differentiation approach Bang Olufsen is not built on a low cost structure. The advantage of cost leadership does not exist. Each of the products from Bang Olufsen is unique in the market. Product lies not only in the way it looks, but also in the way it works. Intelligent technology, advanced features and unconventional solutions are what set Bang Olufsen apart. Under this strategy Bang Olufsen strengths and skills are used to differentiate the company’s electronic products from those of its potential competitors. The differentiation strategy creates, or emphasizes, a reason why the target customers should buy from Bang Olufsen rather than from its competitors. It also creates a market-based advantage. In this way, Bang Olufsen’s products can command higher prices and margins and thus avoid competing on price alone. In addition, this strategy of BO is hard for potential competitors to imitate, because the differentiation is integrative. All the products are integrations of design, qualit y, aesthetics, and functionality. Marketing Strategies of Sony From a general point of view, Sony conducts a segmentation marketing strategy by dividing products into three main categories: Electronics, Game, and Pictures. This report only highlights the marketing strategy of its electronics division. Sony always responds quickly to catch the popular lifestyle accepted by most of the people. Compared to Bang Olufsen, Sony is more likely to conduct a â€Å"One product for the many† marketing strategy, with mass production to serve the majority of the market. Except the quality, price is utilized as a tool for competing with rivals. In recent years, Sony outsourced most of its non-core businesses such as assembling, packaging to organizations in developing countries for further reductions of its operating costs. The Annual Report 2008 states that Sony successfully re-engineered the company by dramatically reducing operating costs, streamlining the operations. As a result, on an annual basis and compared to three years prior, sales and operating revenue rose 23% (Sony 2008). Marketing 4Ps The report applies a simple marketing mix of 5P’s to analyze the difference between Bang Olufsen and Sony. Product Bang Olufsen Product Strategy Bang Olufsen develops and markets a unique rang of audio/video, communication and multimedia products. All the products are integrations of design, quality, aesthetics, and functionality, which are easily differentiated from the products of other companies (Hendriksen et al., 2002). According to the feature of target customers, Bang Olufsen discovers that their clients usually do not know what they really want. They desire something that could stand out of the mass, or lasts and represents something appeals to them, but not just follow the fashionable style. Bang Olufsen always keep the concept to produce groundbreaking products to satisfy its customers’ needs and update their products more frequently in the dynamic environment. Ground-breaking products have been launched for the audiophile world, with BeoLab 5 named as one of the world’s finest loudspeakers, and within TV (Aigner et al., 2006). Over the past few years, the branded business has extended into new areas. BO has developed sound systems for, so far, six Audi models. These have attracted strong praise with BO being awarded the title of â€Å"Best Brand 2008† in the Car-HiFi category in the respected German auto magazine â€Å"Auto Motor und Sport† (Anthony 2008). In the automotive area, Bang Olufsen has also entered into a strategic partnership with Aston Martin, the UK’s sports car maker, and latest, Mercedes-AMG. Through its Enterprise department, BO focuses on sales to hotels where the company’s products are currently represented in more than 200 five-star hotels across the world. In addition, BO Enterprise has initiated and expanded a number of partnerships with leading property developers for the supply of audio/video products for exclusive property projects (Vej 2007). To ensure that all the products are in the highest standards, Bang Olufsen only concentrates on fewer product categories. Sony – Product Strategy Unlike Bang Olufsen, Sony has a broad list of electronic products. In the fiscal year 2005-2008, it launched the BRAVIA brand of LCD television. It took a strong position in each major market, and became the first to bring to market organic light-emitting diode televisions (Russinovich 2005). Sony mainly focuses on the marketing development to increase the products variety to meet the demands from different customer groups. People at different levels of socioeconomic status may find their favorable products from Sony. Moreover, Sony’s products are normally with a short lifecycle, for example 12-24 months. New products are quickly imitated by the competitors. Therefore, Sony has to update its product lists frequently to catch sales. This typical marketing strategy is also adopted by most of its competitors, such as Apple, Samsung etc. Price In theory, price is really determined by the discovery of what customers perceive is the value of the item on sale. Pricing Strategy of Bang Olufsen According to an online research, the average BO purchase is  £2,800 (Underwood 2005). The prices are much higher than the industry average. The price reflects the product’s quality and brand image (Raun 2009). Customers regard price as one of the notable aspects of Bang Olufsen, which stands for the highest value of design, outstanding performance, durability, and long-term reliable services. Pricing strategy of Sony: Being a premium brand and known for its high quality products, Sony adapts premium prices for the products. It sells its products at comparatively higher price. Promotion Bang Olufsen – Promotion Strategy Bang Olufsen produces differentiated products to satisfy their elite customer group. Around 80% of its sales revenue is generated from between 800-1000 of its customers. It determines that the promotions are only available for a small amount of VIPs, which are especially used to establish the long term relationships with those important customers. Sony – Promotion Strategy Sony adapts dynamic promotion strategies through Marketing communication, Advertising, Sales promotion, Public relations and Direct selling. Place (Distribution) Bang Olufsen – Place (Distribution) Strategy By the end of May 2008, Bang Olufsen has 822 B1 shops across the world, which accounts for 81% of the total turnover. Bang Olufsen dedicates to provide the best services for its customers. Customers could make the appointment online for after working hour services. Because most of its products are very expensive, only small amounts of relatively cheaper products are sold via online dealers. Sony – Place (Distribution) Strategy Sony practices Selective distribution of its products through selective dealers. It distributes products in various channels (Zone-Level, One Level and Two-Level Channels). Sony also distributes through online facility which proved to be more effective and efficient way of distribution. People Bang Olufsen’s Strategy It motivates the people with their knowledge towards technology and provides greater opportunities to explore and carrier growth to achieve. Sony’s Strategy Sony is driven by its mission to offer an opportunity to create and fulfill dreams of all kinds of people, including customers, employees, share holders and business partners. Conclusion This report compares the marketing strategies and key customer behaviors between Bang Olufsen, the very expensive high-tech products provider, and Sony, a less expensive quality high-tech products provider. Although they operate in the same industry, there is no actual competition existing between them as they target different customer groups. Reference Aigner, G., Budzinski, O., and Christiansen, A. (2006). The analysis of coordinated effects in EU merger control: where do we stand after Sony, BMG and Impala, pp. 311–336. Anthony, S. (2008). Sony: Winning the DVD battle but losing the innovation war, Innovation Insights. Austin, R. and Beyersdorfer, D. (2007). Bang Olufsen: Design Driven Innovation, Harvard Business School Case. Blythe, J. (2006). Essentials of marketing communications, Prentice Hall. Christensen, S. and Jà ¸rgensen, J. (1997). Analysing Bang Olufsens BeoLink (R) Audio/Video System Using Coloured Petri Nets, Lecture Notes in Computer Science, pp. 387-406. Dolbow, S. (2002). Bang Olufsen Tunes Sales Channel for S20K Plasma-Based TV System, Brandweek, pp. 14. Hendriksen, O. (2001). Long-term Monitoring at Bang Olufsen Office Building, in Editor (ed)^(eds), Book Long-term Monitoring at Bang Olufsen Office Building, City, pp. Hendriksen, O., Brohus, H., Frier, C., and Heiselberg, P. (2002). Pilot Study Report: Bang Olufsen Head Quarter, Paris, France: International Energy Agency. Raun, H. (2009). Strategisk analyse og và ¦rdiansà ¦ttelse af Bang Olufsen pr 21. oktober 2008. Ravasi, D. (2004). Bang Olufsen A, S, Bocconi, Mailand. Russinovich, M. (2005). Sony, rootkits and digital rights management gone too far, Marks Sysinternals Blog, October, Vol. 31. Sony (2008). Sony Global Annual Report 2008, in Editor (ed)^(eds), Book Sony Global Annual Report 2008, City, Sony, pp. Underwood, R. (2005). The case for fanaticism. At high-end Danish electronics firm Bang Olufsen, design is king, Even if it means sacrificing revenue, FAST COMPANY, Vol. 101, pp. 84. Vej, P. (2007). Bang Olufsen Holding, International Directory of Company Histories: Volume 86, pp. 24. Yan, G. (2008). Sony Style in China,:, No. 010, pp. 22-23. Emergency Planning Techniques: Private and Federal Sector Emergency Planning Techniques: Private and Federal Sector Emergency Planning Abstract The basis of this paper deals with the emergency planning techniques of both the private and the federal sector. They each have their own way of writing and carrying out the emergency plans. There are similarities in each and there are differences in each. However, both have the same goal of protecting people and property. Thoroughly discuss how private planning may differ from governmental emergency planning. Should there be any difference? If so, when and how. Planning for a major disaster can take many different forms. On a governmental level, the federal, state, and local governments are responsible for the protection of its citizens. Emergency planning is designed specifically for this area and can come from such things as the use of intelligence gathering and even Congress passing laws like the USA PATRIOT ACT. On a private level, businesses are responsible for the protection of their employees and assets. More often than not, these emergency plans are also dubbed Business Continuity Plans (BCP). These plans help if a disaster like a tornado should strike their area. Even more narrowed down than that, there are even plans for families to help protect themselves in their home. From top to bottom it is kind of likened to a bulls-eye. The outer circle is the Unites States government all the way to the smaller middle part, the individual/family. The bottom line is that it is important to have some kind of plan in place in all levels to ens ure the utmost safety. On the governmental level, one of the main areas of planning and the one that is forefront in the event of a major national disaster is the Department of Homeland Security (DHS). The DHS was created in response to the terrorist attacks on the United States on September 11, 2001. This particular department heads numerous other agencies that assist in the event of a catastrophe of national significance. The Federal Emergency Management Agency (FEMA) which was created by Jimmy Carter by executive order on March 30, 1979. (Woolley, 2005) The main goal of FEMA is to put together a response plant to catastrophes that happen in the United States which surpass the resources and abilities of local and state jurisdictions. States also have their own emergency management agencies but when an incident is too much for them the governor of the state where the incident takes place must declare a state of emergency and make a formal request for assistance to the President of the United States that F EMA and the Federal Government respond to the disaster. Like most government agencies FEMA is under high scrutiny whenever a disaster occurs. In recent years the agency has not gotten very high marks for their efforts. Most notably are their responses to natural disasters like hurricanes. They are often criticized for their response times like in the cases of hurricanes Hugo in 1989 and Andrew in 1992. Most notably was the way FEMA (and the government as a whole) handled Hurricane Katrina in 2005. In the wake of Katrina, the United States Congress issued a scathing report on how it was handled noting that elements of the National Response Plan were executed late, ineffectively, or not at all. It cited, in part: DHS and FEMA lacked adequate trained and experienced staff for the Katrina response The readiness of FEMA’s national emergency response teams was inadequate and reduced the effectiveness of the federal response Long-standing weaknesses and magnitude of the disaster overwhelmed FEMS’s ability to provide emergency shelter and temporary housing FEMA logistics and contracting systems did not support a targeted, massive, and sustained provision of commodities (Congressional Select Committee, 2006) Get help with your essay from our expert essay writers FEMA is just one part of the National Plan for emergency readiness. Another agency in the mix is the Transportation Security Administration. This agency was also started as a direct result of the 9/11 attacks and is also under the umbrella of the DHS. As stated in their mission statement, â€Å"The Transportation Security Administration protects the Nation’s transportation systems to ensure freedom of movement for people and commerce.† (Transportaton Security Administration, N/A) This particular agency is most noted and seen at our nation’s airports but are also responsible for transportation of land and sea as well. Like FEMA, there have been criticisms of this particular department as well. There have been complaints of invasion of privacy, theft of airline passenger’s possessions, and wasteful spending in its hiring practices. FEMA and the TSA are just a couple of the many areas in which the federal government has set its emergency planning into motion. As stated before, the governmental agencies are under a microscope and when something fails (or appears to have failed) it will be put into the spotlight. Citizens often turn to their governments for answers and direction, as they should, when a disaster occurs. Some involved in security planning privately feel that there are those agencies that need to do more in the way of explaining emergency and security plans to employees. However they also believe that the government has come a long way in emergency planning since the 9/11 attacks on the Pentagon and World Trade Center. In the private sector, planning for an emergency becomes more focused. The emphasis is on a much smaller populace depending on the size of the entity whether it be a business, school, hospital, etc. No matter how much planning or preparation an entity does, there can never assurances that all crisis will be handled flawlessly. If a business fails to plan properly, the likelihood of problems during a disaster will greatly intensify. One issue that arises is that the managers of the business and public safety officials sometimes underestimate the issues that may arise during a crisis situation. Administrators normally don’t have experience or prior training with emergency management issues. That is where the area of the Director of Security would come into play. This person would be responsible for writing up the emergency plan (i.e. Business Continuity Plan). Business continuity plans are essential in helping companies stay afloat through any misfortune and aid them in coming back more quickly after the setbacks. Without the BCP companies could be in great danger of going out of business is a disaster occurs. This could not only impact the business itself but the people it employs and the economy of an area if the business is large enough. Mary Carrido, president MLC Associates stated, After the Oklahoma City bombing, 40 square blocks were barricaded off for weeks. This devastated 4,000 businesses; 210 are not in existence anymore. (Rodetis, 1999) Had there been some kind of back-up plan to help these companies more businesses could have been saved. It’s much easer to minimize a risk than to try and recover from a setback. A thorough plan can take a few months or even years to develop, depending on the size of the organization. Unfortunately a recent study by KPMG, LLP, found nearly 40% of respondents either lacked business contin uity plans or had not tested theirs within the last six months. (Rodetis, 1999) In this day and age, especially with the technology available, it is unbelievable that many businesses do not have proper planning. The old adage of not planning to fail but failing to plan comes to mind. The next part to discuss is the really whittled down part, family planning (not the kind where you want to have kids). This is extremely important on this level too because families should do things like practice regular fire drills so the whole family knows where to go or find exits from the house in the event of a fire. These plans should also involve making sure fire alarms are placed properly throughout the house and ensure that the batteries are in working order. Also if some sort of disaster should occur while the family is away, there should be different means as how to contact one another and have a known meeting place if the family is separated. One should determine the type of risk that is most likely to happen whether it be a hurricane, tornado, man-made disaster, etc. and prepare for those risks. According to the FEMA website, it is suggested that enough food, water, and other supplies are stocked up enough to last at least three days. As written in the paper, the governmental and private sectors are different in many ways but the one underlying similarity is the basic need for protection of life and property. The differences are in the way plans are carried out and how they are managed. The federal government would not have to go through the same processes as say a business would to receive assistance. Ultimately some plan needs to be in place on all levels to minimize the risks and if there are areas in the federal level that need to be changed so response times are better or relief aid gets to an area sooner or mandating that all companies have a document emergency plan, then these actions need to be taken. References Congressional Select Committee. (2006, N/A). Executive Summary of Findings. Retrieved July 16, 2007, from United States Congress: http://www.gpoaccess.gov/katrinareport/execsummary.pdf. Rodetis, S. (1999, February 1). Can your business survive the unexpected?(business continuity plans). Retrieved July 17, 2007, from Journal of Accountancy: http://www.highbeam.com/doc/1G1-53878194.html. Transportaton Security Administration. (N/A, N/A). Mission, Vision, and Core Values (Who We Are). Retrieved July 17, 2007, from Transportation Security Administration: http://www.tsa.gov/who_we_are/mission.shtm. Woolley, L. (2005, September 12). FEMA Disaster of an Agency. Retrieved July 17, 2007, from newsmax.com: http://www.newsmax.com/archives/articles/2005/9/12/102827.shtml.