A newer product group B&O wants to focus on are custom and integrated approaches to home automatization. This category will concentrate on new developments in home automation programming, user centric design and new software programs, geared towards whole home integration. B&O will also allow third-party AV peripherals. The opportunities for Bang & Olufsen in the growing home automation market are significant.
If we look at the internal kitchen of B&O, B&O’s management raised capital for marketing, distribution and R&D for new products. This makes sense, because it tackles what we just discussed above. However, B&O’s shareholders disagreed with this strategy. They want the B&O management to focus on creating brand awareness, which also is a good point. Brand awareness is the key issue for B&O in China.
B&O Secondary Research - Desk Research
As a starting point for our exploratory research, we decided to do look for secondary data by using online sources. The findings that came out of that can be found below. Also these findings have been the basis for further explanatory research.
China is a key market for B&O. There have been plans in 2013 to open 50 new shops in the country with the focus on store concepts for the lower priced products like BeoPlay. This would result in an increased brand awareness for the premium B&O products.
Another fact that proves China is a key market for B&O is that they predict 20% of their sales will come from China in the future. Therefore, since 2014, some B&O products got adopted to Chinese preferences. For instance, they broke with classic Scandinavian design and added popular Chinese colors like yellow and red.
Brand awareness is one of the key issues for B&O in China. They are a relatively new player in the Chinese market which makes it hard to persuade Chinese to buy their premium priced products. Since the brand is unknown and Chinese consumers don’t know the brand history, why would they pay that much money for an unknown branded tv?
Therefore, B&O announced that they will work together with global advertising agency BBH to promote the high-end visual and audio products. They chose BBH because this agency has multiple locations worldwide. BBH Shanghai has been appointed to support the roll-out of B&O in China, especially the BeoPlay line.
Another issue is that B&O misses sales because of the lack of new product releases, even since the launch of their new BeoPlay product line. B&O recognized this and more and more, they now focus on the development of new products, which results in a higher R&D expenditure.
The focus on R&D results that B&O do more product launches these days than ever before. On the 5th of November, B&O released a new product, BeoPlay A2. Compared to other products in the BeoPlay assortment, this product is much cheaper ($399 instead of +$1000). Another product launch that recently happened, was the release of the BeoVision Avant. A 55-inch ultra high-definition TV targeting an elusive set of customers: the 'Upper Middle Class’.
