Bang & Olufsen was founded in Struer in 1925 by Peter Bang and Svend Olufsen. They are one of the leading providers in the market of high-end sound systems, operating in the electronic industry in both the Danish and the International Market. Bang & Olufsen designs, develop and market a wide range of luxury audio/video products, including music systems, loudspeakers, television sets and multimedia products that combine new technology with Danish stylish design. In recent years Bang & Olufsen have experienced a huge decrease, in sales with repeated deficit. (B&O Annual report 11/12 (AP) p 8). In 2011, t o turn their deficit into profit, Bang & Olufsen launched a new five years strategy plan, “Leaner, Faster, Stronger”. The goals for the new strategy plan are to attract new customers with new cheaper products and create new distribution channels, with a new cost product line.
How will Bang & Olufsen’s new strategy plan “leaner, faster, stronger”affect their future position in the Danish consumer market? * What are the core competences of Bang & Olufsen?
* What are Bang & Olufsen’s main challenges in terms of consumer developments? * What is Bang & Olufsen’s current competitive situation in the market? * How will the new strategy affect Bang & Olufsen’s brand value?
We have chosen to focus on the BtC market to ensure a more thorough analysis. To answer the problem statement we will make use of different marketing theories and models. We will make an internal analysis by using the Value chain in order to determine B&O's core competences. To locate the most important external factors which influences the industry B&O operates in, we will use a PEST analysis. To analyse new potential customers on the Danish consumer market and determine consumer developments we will apply segmentation theory. Furthermore, we will use Porters 5 Forces to analyse the current competitive situation in the market. Finally, we will discuss how B&O’s brand value possibly can be affected as a result of the new strategy. To conclude we will determine what threats and opportunities there are and how B& can turn threats into opportunities.
The core competences
Through a value-chain analysis of B&O (Appendix 1) and with help from the VRIN model we have identified three core competence. The first competence to mention is their innovative skills, especially within creating amazing sound and acoustic. B&O are constantly reviewing their technologies and design opportunities (AP p 25) to produce products that create value for the customer. Second competence is B&O’s design process and their ability to produce award winning designs. (Eilers, 2012) Through many years of experience, B&O have built an extended know-how on processing materials and designing timeless designs. Their design process lies deep in the B&O infrastructure and operations. The company’s concept developers cooperates with external designers to ensure that the interaction between aesthetics, user friendliness and the technology is optimised. (AP p. 35) The third competence we have identified in the value chain is their process of creating quality. B&O’s ability to combine and process materials in a way that is hard for competitors to imitate, ensures a durability of 10-15 years. This is also a part of the operation in the value chain in which the quality is ensured. We can conclude that these three core competences creates brand value and a competitive advantage for B&O. They create value for the consumer, they are rare, inimitable and non-substitutable and which combine the biggest characteristics of B&O. Through their lifetime, B&O has managed to challenge both technology and design, which has led them to be recognised worldwide for their skills and knowledge in Innovation, design process and quality.