Report for BeatsLou ShiyuHistoryIn the world of headphones and speakers, Beats by Dr. Dre are well-known, even though the company is relatively young. The idea of the company came from the collaboration between Andre Young and Jimmy Iovine. Andre Young, better known as Dr. Dre, is a hip-hop artist and famous producer. Jimmy Iovine is also a producer and the chairman of Interscope Geffen A&M Records. Dr. Dre was approached to back Dr. Dre branded sneakers, but Iovine suggested speakers instead. Both men wanted to bring back the experience that music has to offer which had been lost due to a decline of audio quality. The company was established in 2006, and it released its first pair of headphones in 2008. Today, Beats offers a variety of sound systems, high-quality headphones, and operates a digital music service. Beats headphones include models such as, Pro, Studio, Wireless, Mxr, Solo (HD), and Executive. For earphones, Beats offers Tour, Powerbeats, Heartbeats, and Urbeats. The types of speakers offered by Beats include the Pill, the Beatbox, and the Beatbox Portable.Beats by Dre has one storefront located in New York, New York, which was opened in 2011. Even though this is the company’s only store, Beats prod ucts are sold by number of other retailer whether in their stores or on their online sites. Some of these stores include Best Buy, Target, Nordstrom, Brookstone, and Walmart. In order to promote its products, Beats by Dre has used several celebrities, mainly popular artists. Musicians such as Nicki Minaj, Will.i.am, Lady Gaga, and Justin Bieber all have promoted the brand. Famous athletes, like Lebron James, also promote Beats products. These types of endorsements help create the strong brand image that Beats by Dre possesses.Mission Statement“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 tosound from the studio.”Beats by Dre is a well-known company providing customers a variety of headphones, earphones, and sound systems. Beats promotes the idea of music being an experience with the proper audio equipment. The company sells its products at one storefront, online, and through other authorized retailers.In the future, Beats hopes to keep its strong brand image. Beats wants its customers to continue associating the company with high-quality products. Through the development of new products, Beats by Dre could also reach out to different target audiences in the future.Beats by Dre’s main customers are music lovers. This group consists of people who enjoy listening with high-quality audio, aspiring artists and producers, and people in the music business. Beats customers pay higher prices than others, but they feel that owning a Beats product sets them apart and shows their appreciation for music.In terms of capabilities, Beats by Dre can expand its reach by opening more retail stores. While the products are sold in other authorized retailers, Beats storefronts can express the company’s brand image more clearly than the other retailers.To further the business, Beats by Dre wants to incorporate two new ideas. The first idea consists of a rental service for airplane flights. The second idea offers customers the option to personalize their Beats products.SWOT AnalysisStrengthsBrand name: Named after the successful and famous, music producer, Dr. Dre. The use of Dr. Dre’s name helps create a brand image for the customer that suggests Beats products are the best for those producing music.Product quality: Beats by Dr. Dre is manufactured by the well-known brand called Monster. Monster’s cable and technologies has been proven to the consumer s, thus, Beats by Dr. Dre will be recognizing as a high performance and quality headphone. The design is innovative and fashionable.Product line: Beats product line includes headphones, earphones, speakers and audios with various models and colors to choose from.Multiple distribution channels: Beats distribution channels include online shopping, a retail store, and merchandise stores such as Best Buy.Product placement: The Beats by Dr. Dre headphone sets are marketed throughout the music industry by music professionals and well-known musicians. Also, Beats is trusted by music producers and fashion designers. Beats products have been used in several music videos for artists like Lady Gaga.The products are also loved by celebrities:WeaknessesPrice: The brand positioning is towards high-end, thus the average price for a set of headphone is about $150, compare to other brand which their average price will be around $80. As the result, the costs for the consumers will inevitably be high.Market share: For competitive brand such as Sony and Panasonic, they have different types of product for different market. For example, they have noise canceling headphones similar with Bests by Dr.Dre retailing price from $100- 300, however, they also have ordinary headphones start from $15-100. Beats currently don’t have headphones under $100 that may appeal to individuals that are on a budget.OpportunitiesProduct line extension: Beats need to extend to a larger market like home theatre experience and high-en d audios to meet customer’s needs. Similarly with the continuous progression of the Apple’s iPods, Beats should look to create new products in order to offer its customers different and newer options.Corporation with Car Company: By providing cars with high performance audio systems, Beats can reach out to a larger market.Marketing and PR: Beats can improve their PR skills by hosting evening parties with celebrities to improve brand awareness. Beats can also do more marketing campaigns to strengthen the brand impact.Expand international market: With the influence of Hip-Pop music and American celebrities, Bests is more and more well-known out of Unites States. This is a great opportunity for Beats to start promoting outside the United States and gain market share from foreign countries.ThreatsTechnology advancement: With the constant development of technology, Beats by Dre may be threatened.If there is a new type of technology that other manufactures have and Beats do not have, it will be a huge problem for them.Competition: There are several other companies that make similar products to Beats. Some companies include Sony and Senheisser. Many of these competitors have lower prices than Beats by Dre, which causes further problems. Beats will always have to compete with other companies with their similar products and lowers prices.PR with celebrities: Beats uses several celebrities and artists to promote its brand. If any of these individuals gain bad publicity, it may reflect poorly on the company. If the celebrity has a negative image within the media, customers may think that Beats by Dre accepts the bad behavior portrayed by the individual. This would affect the company’s image and possibly sales.1st IdeaSpecific ItemBeats brand has limited styles of headphones. There are two categories: earphones and headphones, simply means in-ear phones and on-ear phones. There are four different kinds of phones under the earphone category and six different kinds of phones under the headphone category. All the earphones do not require battery and some of the headphones do require battery. The phones that will be available to rent on the airplane will not be those that require battery. After considering the characteristics of all the earphones and headphones, the company should provide one kind of phone from each category to serve the rental market. We do not want to provide more choices to the customers because: 1. It takes time to introduce the characteristics of every phone 2. It just makes it hard for customers to make a choice with so many options. It makes it simpler to choose just between either earphones or headphones. Under the earphone category we will provide our customer s with “urBeats.” T he main characteristic of this earphone is its durability. The sounds are guaranteed under our brands, so to save cost for both customers and our company urBeats is the best choice. This earphone is described as “Grid-Iron Touch” on our official website and it offers customers a relatively cheap price. Under the headphone category we will provide our customers “Executive”. Beats Executive is made for travel. The headphones provide customers with very good sound quality and it is lightweight and comfortable to wear. It also helps to reduce the jet engine noise.PricingThe rental price will be based on the products original prices, and also will be based on flight hours (or in other words, how long will you use the headphones or earphones). The retail price for urBeats is $99.95 and for Beat Executive the price is $299.95. The rental price of each phone will be less than 10% of the original price to make sure customers think it is worth it to rent. The price that will be charged if the flight duration is around 6 hours (half hour is allowed)is $ 4.95 for the urBeats and $ 8.95 for Beats Executive. If the flight duration is 6.5 hours we will still charge the same price as the 6 hour flights. If the flight duration is more than 6 but less than 14 hours (far international flights) the rental price of urBeats is $ 9.95 and Beats Executive is $ 17.95. We will follow the 95 cents strategy for the rental market to make the price look less but still with 95 cents profits.AdvertisingTo advertise and introduce the new rental option for flights to customers, we will post advertisements on the official Beats website. Pamphlets will also be available within the stores where Beats are sold(eg: BestBuy). These outlets will help introduce the new rental policy“w hen you are flying with a plane.” Also there will be advertising through media like television. The ad may include a line such as “phones rental is available, check it out now!” at the end of the television commercial to give customers an impact that “Beats will rent their phones?” This will help attract customers and encourage them to get further information about the flight rental market. By contacting airport advertising departments, ads can also be placed within the airports on plasma screens. Shuttle buses will also be used by placing advertisements on the outside of the shuttle to introduce the new service to potential customers.Store DesignThe rental service will be available through different airlines. First we will collaborate with airplane companies rather than have our own store at airport. It is very expensive if we need to reach our target market. The cost of renting stores at different airports will be so expensive and will only reach a limited number of customers. Some airports have many terminals. Assume the rental store is located at terminal 3 of an airport and a customer is by terminal 1. Althoughhe/she knows that Beats has a rental service at terminal 3, he/she most likely will not go all theway to terminal 3 just for a rental phone. However, by indentifying the major airports within the United States through research, the service can also be provided within existing airport stores. This then allows customers to get the products from both the airport stores and on the planes. One purpose of the airport stores is to provide customers a way to try the products and get their feedback. Another purpose is to advertise our band. By working with airplane companies and making deals with them, the plane attendants can help reach the customers and provide our products to them.Visual MerchandisingAs mentioned above, the service will only have two products available for customers to rent during their flights. In order to present the products, pamphlets will be printed out and placed in the back of the seats on plane for customers. These pamphlets will introduce the products to the customers and help them decide whether they want to rent earphones or headphones. A POS machine will be needed during this process. Both the earphones and the headphones will have numbers on them to identify with one and another. Customers will need to use credit card for the rental service of either kind of phones; cash will not be accepted. When customers use their credit card to rent the earphones, attendants may need another device like a laptop or a similar system to record the last 4 digits of the cards with the number on the headphone together. This will make it easier when customers return the earphones to the attendants after they have arrived at their destination because we will still be able to check if there are any damages to earphones or loss of the earphones. If the earphones are lost, then we will charge the original price of the lost earphones on Beats website from the credit card, which was recorded together with the earphone’s number. If there is a damage we will check thedamage and charges will be depends on the damages. Beats will make sure to provide customers good quality earphones (clean and no damage) on flights. There will be extra or back-up earphones on each airplane to make sure the quality of the earphones is kept up to standards for each customer.2nd IdeaBeats by Dre is a new service in the market targeted at music lovers and the innovative. The Beats range of headphones is attributed to its high quality sound. Designed by one of the best music producers (Dr Dre), these headphones are intended to allow users to enjoy music as it was intended. The fact that these headphones receive the endorsement of celebrities puts them on high demand.According to Vaishali, a retail mix is a method of combining different retail variables in an alternative to achieve a high marketing strategy. The aim of this strategy is to attract more customers. Such variables include aspects such as specific items, pricing, advertising, store design and visual merchandising.A comprehensive SWOT analysis of the headphones reveals certain aspects that are important to the development of this retail mix. The headphones have a reputation. This reputation revolves around the pure sound quality that the headphones produce and popularity among young people especially college students and workplace newbies and celebrities. This builds strong sense of trust for customers. However, the price of the headphones is quite prohibitive to most individuals.One new service we are going to offer is personalization. Personalization is the process of adding words, numbers, colors, designs and other characters onto existing models of electronicproducts of Beats through engraving, embroidery, different ways of assembly or other personalization techniques. This allows customers to create exclusively designed headphones or speakers with names, dates, poems, sentiments or any other message to make it unique and memorable. The customization service would make Beats products meaningful as gifts when customers have needs to send gifts to others.Specific ItemBasically, we recommend for Beats to provide two specific personalized services, which are changing colors and engraving. When customers browse the official website of Beats, an added section called “personalization” will appear on the site to introduce features and pricing of this new service and direct customers to online shopping.One headphone has separate parts being assembled together. However, for existing headphones of Beats, every headphone body is painted with one color and customers can only select one color for one headphone. Whatever the unpopular color you choose, you are able to find the exactly same product that others are using. For those who are not necessarily professional towards music but proud of their sense of taste, they have a strong personality and the desire for specially designed product for themselves. Beats is likely to lose attention from them due to the lack of customization service and the widespread popularity among the public that makes Beats common. By customizing headphones online, people are able to create their own headphones with various colors for each part of the product and the logo on the headphone as well. Moreover, people are able to select the color of the cables that come with the headphones. There are eight basic colors available at present, which are black, red, white, dark blue, light blue, green, purple and pink. Beats can offer more colors if the personalization reaches expectation and makes profits. After designing a colorful headphone, customers aredirected to the final step to type whatever they want to be engraved on the headphones. Beats will engrave words on the body by laser, which is permanent. In order to achieve more flexible customization, three positions can be selected from to display the engraving, which are the left side, right side, and the top of the frame of the headphone.Beats also sells speakers and earphones. Considering that speakers have lower demand than headphones and earphones are too tiny to hold different colors and words on one body, we will first implement the customization service for headphones only. Then after some time we will evaluate feedback to decide on later actions.PricingPersonalized headphones would be priced higher than existing models that are available online and in-store. This is a result of complex technology for painting different colors. Additional laser engraving technology and intensive labor effort of handling the task and assembling is also needed. On the other side, the main aim of a business is to sell its product. Since the target market of Beats are music lovers from 18 to 34 years old, primarily males, who are urban, hip and tech-savvy, high prices are likely to prevent them from purchasing Beats and direct them to Beats’ competitors. The final price is based on h ow many colors the customer is selecting for the headphone. If the customer picks a light blue headphone and only changes the blue logo to red, the sales price would be lower than changing the logo’s color to red as well as changing the color of the surface on the left side to black. The pricing range is between 10% to 15% more depends on models of headphones and their original prices.The engraving feature is free since it is already an advantage compared to competitors of Beats. Hopefully this will attract a cluster of customers away from its competitors. The engraving makes Beats headphones a unique and desirable gift for oneself, for friends, and forfamily members. For the purpose of appealing to more customers, the engraving service is free at the beginning and then waits for market response. If it attracts enough customers and increases sales figures by large amounts, Beats can price the service for several dollars to make more profits.AdvertisingBeats seldom runs television commercials, so magazines that feature music and the fashion industry would be selected as the media for Beats to advertise its new services. For example, Nylon Guys, GQ, Men’s Vogue, Vibe and Billboard are good choices to display Beats advertisement. Specific samples with different colors and engraved words are needed to be showed in print ads to exhibit the sense of trend and innovation. The engraved words are designed to be moving, inspiring or creative to impress and persuade readers.Outdoor advertising is the other major media tool Beats should use. Effective channels to promote a new service for the company of electronics would be digital billboards, bus advertising, and street furniture, which can reach the public easily and are relatively long-lasting compared to other outdoor channels.Store DesignA place designed for the personalization service will be planned, of which the area is based on size of the store, within Beats’ existing stores. Upon this, the store should be situated where its targeted clients have no problem venturing. An interactive television screen on the wall will play an introduction of how to personalize the headphones and produce samples of the customized products. Two or more helpful salespersons are there to promote the new service. The retail mix has to ensure that it has enough staff to run the store and to interact with clients. Clients are fundamental in facilitating the success of the business. Catering to their needsguarantees the survival of the business in the volatile environment. Also, various types of personalized models will be exhibited in the area, and customers can make a purchase if they don't want to spend time designing by themselves. In this case, these personalized headphones are sold as ordinary headphones but with higher retailing prices. Drawing in new customers is fundamental to the success of the business. Posters featuring customization services will be shown in the door-way of the store to catch attention of passing people.Visual MerchandisingSuccessful visual merchandising has the ability to maximize sales. Various samples of headphones with distinctive designed styles will be displayed in the show window to attract attention and engage passing people. On the opposite side of the door way, a magnified model is hung from the ceiling by a string so that it can rotate around to show the product in 3-Dimensional degrees. It is creative and eye-catching to motivate people to walk in and increases the possibility of them making a purchase.In the personalization area, pictures of people’s upper body are shown on the wall, which indicates that they are enjoying the music and customized headphones are hung on the position of their ears, which makes it look like they are wearing headphones. Customers can freely take the headphones down and try them with media players.Effective marketing for the store will see its sales increase and the store achieving its objectives. As is with any business organization, the main objective is to make profits. It can achieve this through different marketing strategies among them direct marketing which involves directly reaching out to customers. Retail mixing is a profitable opportunity that allows the observation of different customers and analyzing it to maximize on profits by offering products that suit them.Conclusions & RecommendationsBeats by Dre are very high quality headphones, but the only thing that makes the customers choose other brands like Sony and Sennheiser over Beats is that Beats are very expensive. The Beats in-ear headphones start from $99.99 and the over-the-ear headphones start from $199.99, whereas Sony and Sennheiser have in-ear headphones starting from $19.99 and over-the-ear headphones starting from $39.99. Beats should make a line of headphones that are less expensive.Beats should also offer customization of headphones in terms of coloring and engraving. Currently websites such as customize these headphones according to the requirements of the customer.Another suggestion for Beats is that they should allow the customers to exchange their old beats headphones for newer models, because these headphones are so expensive, it should allow its customers to get them exchanged for an appropriate price depending on the model and the condition of their old headphones.Beats by Dre are known because of Dr. Dre. It is important that the brand has its own identity. It should be known for the quality and design of the headphones and not because Dr. Dre is associated with the brand. So, Beats should promote the brand for the high quality of sound that it provides.Also, Beats by Dre are not widely available internationally. In the United States, they are very easily available, whereas in some countries like India, they are not easily available. Because of this, people end up buying headphones from other brands like Bose and Bang and Olufsen, which are far more expensive than Beats. Also, people do not know about Beats inthese countries because they see them only in the music videos. Beats should, therefore, be promoted by the local artists, like they are promoted here in the United States.Works CitedSanburn, Josh. "How Dr. Dre Made $300 Headphones a Must-Have Accessory." TIME Business & Money. Time, Inc., 16 Jan. 2013. Web. 14 Apr. 2013.</2013/01/16/how-dr-dre-made-300-headphones-a-must-have-accessory/>.AuthorStream. . 26 May 2011. 20 April 2013.</Presentation/Mirdu-1033530-retail-marketing-mix/>. D, Vaishali. Retail Mix. 24 August 2011. 20 April 2013. </?Retail-Mix&id=6516084>.Edriaan, Koening and Media Demand. Chron. n.d. 20 April 2013.</purpose-retailing-mix-17933.html>.Management Study Guide. . n.d. 20 April 2013.</marketing-mix.htm>.McGraw Hill. The World of Retailing. McGraw Hill, n.d.Martin, Andrew J. 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