How the tiny family-owned company Bang and Olufsen survives and prospers in spite of all the
multi-nationals can do.
Consumer electronics is dominated by multi-nationals who believe growth and acquisitions are the keys to survival in this price-point conscious industry.
So how come in a remote country town in the north west of Denmark, an organisation with a mere 3000 employees is prospering and charging premium prices? B&0 is still in the hands of the families who started it back in 1925. Young Peter Bang and Svend Olufsen were both keen experimenters from boyhood with electricity and their first radios were built in the attic of the Olufsen house. Right from the start the company followed a philosophy of innovation.
The company has always striven to set higher standards of performance than its competitors and,
as a consequence found itself moving inevitably towards the upper-end of the market. Along the
way styling became an important element of the B&O philosophy. A number of their products are in
the permanent design collection of the Museum of Modern Art in New York.
The company uses freelance designers who are answerable to the product strategy department
who are responsible for marketing planning and the technical feasibility of ideas.
It took more than style, however, to give Bang & Olufsen its unique positioning in the marketplace.
A long time ago it was realised that the key to survival lay in offering products which were not only
different but had qualities which could not be found elsewhere. Back in 1938 they produced a radio
with a preset programming function for 16 stations. In 1943 a B&O gramophone had an option for
programming a 3 minute pause between tracks - time to allow you to bow to your new dancing
The first B&O TV receiver appeared in 1952. In 1951 they produced the world's first stereo
cartridge. They invented the HX professional recording system which increases the headroom
available for recording high frequency signals on all tape types. This system is now found in most
good quality tape decks. In 1982 they introduced the Beolink system which gives round the house
sound and round the house remote-control.
For all their small size Bang and Olufsen produce practically everything themselves. They even
make much of their own production equipment. Such are their capabilities that they supply injection
moulding equipment to other manufacturers and have developed such diverse products as an
insulin pen and extension units for telephone switching exchanges.
Their entry into the telephone receiver business grew out of a contract to develop a new standard
telephone for Danish Telecom. Since then they have sold over 200, 000 units of their elegant and
The company regularly gets suggestions for new product categories. These are considered but
unless there is scope for a distinctively B&0 concept, it will not proceed. Car audio is an example.
Because the car stereo has to fit into a set size hole in a console, there is little or no scope to
produce a distinctively different product that would fit into the B&O family of products. Today, B&O operate in more than 20 countries around the world. Their biggest single export market in terms of combined TV, video and hi-fi sales is the United Kingdom.
As mentioned earlier, this equipment does not fit into an existing selling or price-point structure and would face an uphill struggle in the bazaar atmosphere of the typical electrical retailer. This led to the decision to carry out the entire marketing, distribution, and selling (retailing) operations in- house.
The calm and luxurious atmosphere of a Bang and Olufsen showroom is highly conducive to the
appreciation not only of the performance of the product but the elegant styling too. The
arrangement leaves no place for opposition or competitors for, as B&0 will...