Case Study: Bose The Bose Corporation was found by Amar Bose in 1964. It has been known for its high-end speakers and headphones. It will soon release an automotive suspension system that unlike anything else on the market. Bose is a brand with very high level of equity and is the most trusted brand of 22 best-known consumer technology brands. It has been very successful financially as well.
The company has unique business philosophies that have lead to truly groundbreaking innovations and high levels of consumer trust. For example, the company’s founder Amar Bose has kept it private in order to control the degree to which the company invests in and conducts research which he considers the lifeblood of the company. He plows all of the privately held company’s profits back into research. Also, time and time again, he has ignored existing technologies and started entirely from scratch.
This commitment to research and development allows Bose to outdo the competition by differentiating product lines with features and attributes that other companies do not have, while most companies today focus heavily on building revenue, profits and stock price. When identifying competitors’ strategies, Bose may particularly look at those competitors who are also in the audio equipment industry and following the same or a similar strategy, called a strategic group. These competitors in a strategic group are Bose’s key competitors. Bose can succeed only if it develops strategic advantages over these competitors.
Facing these key competitors, Bose needs to know all dimensions of their strategies such as how each competitor delivers value to its customers, each competitor’s product quality, features, and mix; customer services; pricing policy; distribution coverage; sales force strategy; and advertising and sales promotion programs. Bose also needs to know the details of each competitor’s manufacturing, purchasing, financial and R&D as well. Based on Bose’s philosophy, it may pay more attention to its competitors’ product dimensions and R&D.
In order to know what its competitors can do, Bose will then learn about its competitors’ strengths and weaknesses through secondary data, personal experience, and word of mouth. It may also conduct primary marketing research with customers, suppliers, and dealers. Particularly, Bose can also benchmark themselves against other firms, comparing its products and processes to those of competitors or leading firms in other industries to identify “best practices” and find ways to improve quality and performance. A company must design competitive marketing strategies by which it can gain competitive advantage through superior customer value.
While many companies develop formal competitive marketing strategies and implement them religiously, some companies don’t conduct expensive marketing research, spell out elaborate competitive strategies, and spend huge sums on advertising. These companies sketch out strategies on the fly, create more satisfying solutions to customer needs, and win customer loyalty with or without knowing it – like Bose. Michael Treacy and Fred Wiersema classified competitive marketing strategies into three more customer-centered strategies: operational excellence, customer intimacy, and product leadership.
A company with operational excellence provides superior value by leading its industry in price and convenience. It works to reduce costs and create a lean and efficient value-delivery system. It serves customers who want reliable, good-quality products or services, but who want them cheaply and easily. A company with customer intimacy provides superior value by precisely segmenting its markets and tailoring products or services to match exactly the needs of target customers. It serves customers who are willing to pay a premium to get precisely what they want.
It does almost anything to build long-term customer loyalty and capture customer lifetime value. A company with product leadership provides superior value by offering a continuous stream of leading-edge products or services. It relentlessly purses new solutions and get new products to market quickly. It serves customers who want state-of-the-art products and services. In a given target market a company can have one of four different competitive positions: market leader, market challenger, market follower and market nicher. Market leader is the firm in the industry with the largest market share.
Market challenger is a runner-up firm that is fighting hard to increase its market share in an industry. Market follower is a runner-up firm that wants to hold its share in an industry without rocking the boat. Market nicher is a firm that serves small segments that the other firms in an industry overlook or ignore. Each market position calls for a different competitive strategy. For example, the market leader wants to expand total demand and protect or expand its share. Market nichers seek market segments that are big enough to be profitable but small enough to be of little interest to major competitors.
Bose is a market leader. First, Bose is essentially customer-focused without knowing it. The company has its unique business philosophy which translates into a clear differentiation strategy. Through differentiating its product lines with features and attributes that other companies don’t have, Bose offers customers superior value that other companies cannot offer. Bose cares more about their customers’ interests by making the best products than about maximizing profits. This makes Bose win the high level of consumer trust and establish a strong brand image.
Second, Bose pursues its product leadership. With its technological leadership, the company continuously pursues new solutions and offers a stream of leading-edge products to satisfy customers’ needs of state-of-the-art products. Third, Bose has larger market share in its target market. According to market information from NPD Group, Bose leads the market in home speakers with a 12. 6 percent share. And that market share translates into financial performance. All these establish Bose as a frontrunner in the audio systems market.