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Someone shows it to them

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Someone shows it to them. Only time will tell how fruitful Beats and Apple will be together, but the projections show that they are poised for success. Discussion Questions Page 265 1. Please reference the other-oriented, environment- oriented, and self-oriented values in the text. Choose a few of these values and explain how they are relevant to Beats by Dre and Beats Music. 2. Refer to the generation groups and social classes in Chapter 4 and the ethnic subcultures in Chapter 5. With all of these concepts in mind, describe an ideal target market segment for Beats Music. 3. Refer to Table 5-2 in Chapter 5, entitled, “African American Segments Identified by Yankelovich.” Imagine that Beats has decided to target African Americans. Which of these segments would be the best target market for Beats? Explain your answer. 4. Refer to the three categories of innovation in Chapter 7. In which category of innovation are the following products? Justify your answer. a. Beats headphones b. Beats Music 5. Think in terms of family decision making from @ Chapter 6. What members of the household are likely to play each of the following roles in - < > ?? 6 A) Discussion Questions Page 265 1. Please reference the other-oriented, environment-oriented, and self-oriented values in the text. Choose a few of these values and explain how they are relevant to Beats by Dre and Beats Music. 2. Refer to the generation groups and social classes in Chapter 4 and the ethnic subcultures in Chapter 5. With all of these concepts in mind, describe an ideal target market segment for Beats Music. 3. Refer to Table 5-2 in Chapter 5, entitled, “African American Segments Identified by Yankelovich.” Imagine that Beats has decided to target African Americans. Which of these segments would be the best target market for Beats? Explain your answer. 4. Refer to the three categories of innovation in Chapter 7. In which category of innovation are the following products? Justify your answer. a. Beats headphones b. Beats Music 5. Think in terms of family decision making from Chapter 6. What members of the household are likely to play each of the following roles in the purchase decision for Beats Music or Beats headphones? a. Initiators b. Information gatherers c. Influencers d. Decision makers e. Purchasers f. Users 6. Reference the section of Chapter 7 on reference group influence. a. Are Beats headphones a necessity or nonnecessity? b. Are Beats headphones visible or private? c. Given your answers for a and b, how has Beats by Dre capitalized on this in the past? d. Do you feel reference group influence will play an important role in the success of Beats? Explain your answer. 7. Review the section of Chapter 7 on marketing strategy, WOM, and opinion leadership. Which strategy or strategies of those listed has Beats by Dre used to become so popular in its market? Source: "Beliebing in Streaming." The Economist, March 22, 2014, www.economist.com; M. Bush, “Beats by Dr. Dre," Advertising Age, November 15, 2010, www.adage.com; A. .. .. iii < > ?? 6 (13) CASE 2-3 BEATS BY DRE'S RISE TO THE TOP In 2006, rapper Dr. Dre and music industry mogul James Iovine began an endeavor that would change the face of the premium headphones market. They saw an opportunity as increasing numbers of consumers listened to music primarily on mobile devices. While listening to music on cell phones and tablets has convenient mobility, most consumers were using cheap plastic earbuds that came with their devices. In addition, digital music download piracy was increasing. Together, Dr. Dre and Mr. Iovine launched a company called Beats by Dre with the purpose of dramatically enhancing the listening experience for consumers using mobile devices for music delivery. Ultimately, the goal is for the listener to have an experience likened to the sound in the record studio. According to Mr. Iovine: You've got to be lucky enough to identify a problem where you think you can help. ... Apple was selling $400 iPods with $1 earbuds. Dre told me, "Man, it's one thing that people steal my music. It's another thing to destroy the feeling of what I've worked on." After two years in development with consumer electronics manufacturer Monster, Beats by Dre introduced Beats Page 264 headphones. The headphones are priced from $99 to $450, well above many of the competitors. However, Beats headphones have a unique appeal. They carry the "cool factor" of Dr. Dre and a heavy emphasis on bass. Beats headphones have been wildly popular with consumers, carrying a 70 percent market share in the premium headphones category in 2014. It is also the highest-selling brand of headphones for consumers between 17 and 35 years of age. Consistent with the "cool factor," marketing Beats headphones has taken a grass-roots approach. According to Mr. Iovine: We aren't buying a lot of ads. We market it our way. We're from the music business where you never get a lot of money to market. . ... They're making a beautiful white object with all the music in the world in it. I'm going to make a beautiful black object that will play it back. Dre and I decided to market this product just like it was Tupac or U2 or Guns N' Roses. ... We sold half a billion worth of product before we paid for one ad. While in development, Mr. Iovine would keep various designs in his office and would ask celebrities, such as musicians Will.i.am, Gwen Stephani, and Pharrell Williams, to try them and give feedback, which spread early awareness. Co-marketing has been a favorite strategy of Beats having partnered with many other brands such as HP lantons Chrysler 300s and Radio Shack Beats is also expanding into related < > ?? 6 We aren't buying a lot of ads. We market it our way. We're from the music business where you never get a lot of money to market. . They're making a beautiful white object with all the music in the world in it. I'm going to make a beautiful black object that will play it back. Dre and I decided to market this product just like it was Tupac or U2 or Guns N' Roses. ... We sold half a billion worth of product before we paid for one ad. While in development, Mr. Iovine would keep various designs in his office and would ask celebrities, such as musicians Will.i.am, Gwen Stephani, and Pharrell Williams, to try them and give feedback, which spread early awareness. Co-marketing has been a favorite strategy of Beats, having partnered with many other brands, such as HP laptops, Chrysler 300s, and Radio Shack. Beats is also expanding into related product areas, including portable wireless speakers and automobile speaker systems. Beats also sent complementary headphones to many influential celebrities in the music and sports industries, such as Lady Gaga, P. Diddy, Michael Phelps, Justin Beiber, and Ellen DeGeneres. When the public saw their favorite celebrities sporting Beats headphones, the popularity skyrocketed. Ad Age reports that celebrity endorsements have been shown to improve sales by as much as 20 percent. As part of an ambush marketing campaign, just before the 2008 Olympics, Beats sent customized headphones in the national colors to Lebron James. James immediately asked for 15 more and the entire U.S. Olympic basketball team arrived in Shanghai wearing Beats headphones. All this is despite the fact that Beats was not an official Olympic sponsor. As a result of these efforts, Beats headphones have become a fashion accessory in pop culture. In early 2014, Beats began its own music streaming service called Beats Music. A streaming service helps to counteract the digital piracy issue. Not only do the musicians receive higher royalties from streaming, but they also can connect directly with the fans by controlling their profile, selling merchandise, and updating fans on upcoming events and releases. The music streaming industry is growing fast. In 2014, there were roughly 29 million subscribers of music streaming services, and many more using free streaming services like Pandora. By 2018, predictions suggest there will be around 191 million subscribers. Beats Music provides a free trial and is converting 70 percent of those consumers into subscribers. Roughly 1,000 consumers subscribed to Beats Music daily in 2014. In the summer of 2014, Dr. Dre and Mr. Iovine sold both the electronics and music streaming businesses to Apple for $3 billion. Further, they agreed to work for Apple in an advisory role, while maintaining some equity. Analysts suggest that perhaps Dr. Dre will be able to bring the “cool” back to Apple. According to Apple CEO Tim Cook: Music is such an important part of all of our lives and holds a special place within our hearts at Apple. That's why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music III ?? 6 < > fashion accessory in pop culture. ? In early 2014, Beats began its own music streaming service called Beats Music. A streaming service helps to counteract the digital piracy issue. Not only do the musicians receive higher royalties from streaming, but they also can connect directly with the fans by controlling their profile, selling merchandise, and updating fans on upcoming events and releases. The music streaming industry is growing fast. In 2014, there were roughly 29 million subscribers of music streaming services, and many more using free streaming services like Pandora. By 2018, predictions suggest there will be around 191 million subscribers. Beats Music provides a free trial and is converting 70 percent of those consumers into subscribers. Roughly 1,000 consumers subscribed to Beats Music daily in 2014. In the summer of 2014, Dr. Dre and Mr. Iovine sold both the electronics and music streaming businesses to Apple for $3 billion. Further, they agreed to work for Apple in an advisory role, while maintaining some equity. Analysts suggest that perhaps Dr. Dre will be able to bring the “cool” back to Apple. According to Apple CEO Tim Cook: Music is such an important part of all of our lives and holds a special place within our hearts at Apple. That's why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world. Mr. Iovine mirrored that sentiment: I've always known in my heart that Beats belonged with Apple. The idea when we started the company was inspired by Apple's unmatched ability to marry culture and technology. Apple's deep commitment to music fans, artists, songwriters and the music industry is something special. This match has much promise; however, it remains to be seen how the corporate cultures of the two companies will align. Dr. Dre reportedly is a workaholic who disregards artificial deadlines, which might cause some friction with Apple. However, like Apple, Dr. Dre prides himself on a lack of marketing research. Apple also has historically had a market orientation, believing that consumers do not know what they want until someone shows it to them. Only time will tell how fruitful Beats and Apple will be together, but the projections show that they are poised for success. Discussion Questions Page 265 1. Please reference the other-oriented, environment-oriented, and self-oriented values in the text.