Bose Corporation`s Competitive Advantages and its Shift to an Online-Only Model
| Case Code: BSTR615 Case Length: 15 Pages Period: 2019-2020 Pub Date: 2020 Teaching Note: Available |
Price: Rs.400 Organization : Bose Corporation Industry :Electrical & Electronics Countries : Global Themes: Competitive Strategy/ Channel Strategy & Development/ Generic Strategy/Core Competence |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Creating Sustainable Competitive Advantage
Bose’s products were the result of long-term research. It took 15 years of hard-core research for the development of its path breaking technology in high end audio and for the noise cancellation technology. According to Forbes’ Allen Adamson, “The brand’s pedigree in creating high-end audio equipment is well-known and well-respected. It’s made them leaders in the audio category. Be it broadcasting sound, or canceling sound, their products are top class, examples of ingenuity and innovation.”
The technology used in the noise-canceling headphones for the consumer led to quite a few successful innovative products such as the headphones for professional pilots in the military and commercial space along with headsets for NFL coaches.
Delivering Superior Customer Experience
Whenever Bose launched a new product, a demonstration was held at its stores to create a ‘wow’ feeling for its customers. It was observed that once the customer had had a live experience of Bose’s products at its stores, he/she became hooked to it. Joel Rubinson, President at Rubinson Partners, Inc., said, “One of the most impactful demos I ever saw was in a Bose store. The stores do a lot more than sell products…they are experience stores that demonstrate the superiority of Bose and the better lifestyle one can live as a result of buying their products”..
Premium Pricing
Bose relied on minimum advertising and its products catered to a niche target market. Most of the products of Bose were priced more than that of its competitors such as Sony, Beats, Harman, Bowers and Wilkins and Samsung. With excellent sound system and innovative features, most of the products of Bose were high-end products with even the speakers and components priced high. As most of the products of Bose were the result of extensive research done by its engineers, the company owned a majority of the patents of the technologies it invented. The patents ownership ensured that the company was in a position to set a high price for its products which were the first to debut in the market...
Competition
The competitors to Bose were companies such as Sonos, Bowers and Wilkins, Samsung, Sony, Xiaomi, Beats and Harman. The advent of voice activated speakers from Amazon and Google further increased the competition for the company. Apple had also emerged as a major competitor with its Totally Wireless Headsets (TWS) which were extremely popular among millennials. As of 2018, Apple was in the top position with a 24% share of the headphones market worldwide followed by Sony in second position with 22%. Panasonic was in third position followed by Bose in the fourth. (Refer Exhibit IV for the Comparison of Bose and its Competitors)...
Retail goes Online
Since the early 2000s, the retail industry in the US and other countries had been facing massive onslaughts from the online e-commerce companies and the year 2019 saw the highest number of retail store closures. The industry was hit by the changing demographics and by online onslaughts. The effects were such that there were a series of shutdowns of retail business and a reduction in the number of retail stores, which led to the proliferation of both small and big online sellers. According to Coresight Research , in 2019, the US retail market saw the closure of 9,302 retail stores, which was a 59 percent more than in 2018. (Refer Exhibit V for the Retail Stores Closed in the US in 2019)...
Making Bose’s Online Model Work
With the stores closedown, Bose had to work on augmenting its online strategy. It had already been carrying out online sales through its website since 1999. Most of the ecommerce net sales for Bose from its online store Bose.com had been from the US and the global net sales for Bose in 2019 was US$ 192.9 million...
Analysts Tear into the Strategic Decision
Bose’s decision to close down its retail stores in some global markets evoked a mixed response from analysts and retail market experts. Retail analyst Craig Patterson (Patterson) opined that closure of the stores pointed to the fact that the company was deviating from the direct-to-customer trend. The direct-to-customer trend had made the brands open more stores to directly engage with the customers and provide a total customer brand experience...
Looking Ahead
It remained to be seen how the strategic move by Bose to close its retail stores would impact its sales performance and also whether customers would continue to purchase its products online. Even though ecommerce was fast replacing the sales in the traditional retail store, would the customers go in for the online purchase without ‘experiencing’ the Bose products in person?..
Exhibits
Exhibit I: A Bose Retail Store
Exhibit II:The Guiding Principles and Values of Bose
Exhibit III:Product Range of Bose
Exhibit IV:
Comparison of Bose and its Competitors
Exhibit V:
The Retail Stores Closed in the US in 2019
Exhibit VI:
Bose’s Facebook Followers from April 2017 to January 2020
Exhibit VII:
Bose’s Twitter Followers from April 2017 to January 2020
Exhibit VIII:
Detailed Information on the Various Hashtags Used by Bose
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