Study Case - Bose: Better Products through Research Assume that you have been hired as a marketing consultant and thus p
Posted: Wed Mar 09, 2022 9:07 am
Study Case - Bose: Better Products through
Research
Assume that you have been hired as a marketing
consultant and thus propose a feasible plan to increase sales
growth and profit at Bose by providing a short, precise, statement
of recommendations as follows:
Required:
1. Introduce the key facts and information.
2. A statement of the recommended solution(s) along with
its justification and timelines (if possible)
3. A step-wise action plan of what needs to be done and
why, along with any other limiting or relevant
factors
4. A control and feedback/forward system is a must step in
the action plan (what to measure, the measurement tool, the
accuracy of measurement needed, how often a measurement should be
taken, and the maximum allowable deviation from set-point before
corrective action is required).
5. A contingency plan – what to do if the plan needs
corrective action. Identify the step in the plan that if something
went wrong, would likely cause significant deviation for planned or
projected results; then detail how the correction to get things
back on track should be carried out.
The Case:
" In a recent survey by brand strategy firm Lippincott, the most
trusted brand in consumer electronics was not Apple. Nor was it
Samsung, Sony, or Microsoft. It was Bose, the still relatively
small, privately held corporation that has been making innovative
audio devices for more than 50 years. Despite putting more than 30
million new sets of headphones alone on or in customers' ears last
year, Bose rang up only about $4 billion in revenues versus Apple's
$234 billion. But when it comes to the passion customers feel for
their brands, the Massachusetts-based technology company outshines
even Apple. Bose forges that deep consumer connection based on the
brand's design simplicity and brilliant functionality.
Bose adheres religiously to a set of values that have guided the
company since its origins. Most companies today focus heavily on
building revenues, profits, and stock prices. They try to outdo
competitors by differentiating product lines with features and
attributes that other companies don't have. Although Bose doesn't
ignore such factors, its competitive advantage is rooted in its
unique corporate philosophy. "We are not in it strictly to make
money," says CEO Bob Maresca. Given the company's focus on research
and product innovation, he points out that "the business is almost
a secondary consideration."
The Bose Philosophy
To understand Bose the company, you must first look at Bose the
man. In the 1950s, founder Amar Bose was working on his third
degree at the Massachusetts Institute of Technology. He had a keen
interest in research and studied various areas of electrical
engineering. He also had a strong interest in music. When he
purchased his first hi-fi system—a model that he believed had the
best specifications—he was disappointed in the system's ability to
reproduce realistic sound. So he began heavily researching the
problem to find his own solution. Thus began a stream of research
that would ultimately lead to the founding of the Bose Corporation
in 1964. It also led to the development of the long-standing Bose
slogan "Better Sound through Research."
From those early days, Amar Bose worked around certain core
principles that have guided the philosophy of the company. In
conducting his first research on speakers and sound, he did
something that has since been repeated time and time again at Bose.
He ignored existing technologies and started entirely from scratch,
something not common in product development strategies.
In another departure from typical corporate strategies, Amar
Bose put all of the privately held company's profits research and
development, a practice that reflected his avid love of research
and his drive to produce the highest quality products. In doing so,
he also bypassed the process of figuring out what customers wanted,
instead of keeping his research confined to the laboratory and
centred on the technical specifications of creating a superior
product.
Today, this approach is considered heresy in the innovation
world. Amar pursued this approach because he could. He often
pointed out that publicly held companies have long lists of
constraints that don't apply to privately held companies, noting
that "if I worked for another company, I would have been fired a
long time ago," For this reason, Bose always vowed that he would
never take the company public. "Going public for me would have been
the equivalent of losing the company. My real interest is
research—that's the excitement—and I wouldn't have been able to do
long-term projects with Wall Street breathing down my neck."
Innovating the Bose Way
The company that started so humbly now has a breadth of product
lines beyond its core home audio line. Additional lines target a
variety of applications that captured Amar Bose's creative
attention over the years, including military, automotive, home
building/remodelling, aviation, and professional and commercial
sound systems. It even has a division that markets testing
equipment to research institutions, universities, medical device
companies, and engineering companies worldwide. The following are
just a few of the products that illustrate the innovative
breakthroughs produced by the company.
Speakers.
Bose's first product was a speaker introduced in 1965. Expecting
to sell $1 million worth of speakers that the first year, Bose made
60 but sold only 40. The original Bose speaker evolved into the 901
Direct/Reflecting speaker system launched in 1968. That speaker
system was designed around the concept that live sound reaches the
human ear via direct as well as reflected channels (off walls,
ceilings, and other objects). The speakers featured a completely
unorthodox configuration. Shaped like one-eighth of a sphere and
mounted facing into a room's corner, the audio waves reflected off
the walls and filled the room with sound that seemed to be
everywhere but some from nowhere in particular. The speakers had no
woofers or tweeters, composed instead of eight
four-and-a-half-inches mid-range drivers. The speakers were also
very small compared with the high-end speakers of the day. The
design came much closer to the essence and emotional impact of live
music than anything else on the market and won immediate industry
acclaim. The reflective approach, although groundbreaking at the
time, is commonly found in home theatre systems throughout the
industry today.
Back then, however, Bose had a hard time convincing customers of
the merits of these innovative speakers. At a time when woofers,
tweeters, and size meant everything, the 901 series initially
flopped. In 1968, a retail salesperson explained to Amar Bose why
the speakers weren't selling:
"Look, I love your speaker but I cannot sell it because it makes
me lose all my credibility as a salesman. I can't explain to anyone
why the 901 doesn't have any woofers or tweeters. A man came in and
saw a small size, and he started looking in the drawers for the
speaker cabinets. I walked over to him, and he said, 'Where are you
hiding the woofer?' I said to him, 'There is no woofer.' So he
said, 'You're a liar,' and he walked out."
To resolve this credibility problem, Bose developed another core
competency—identifying and targeting the right customer with the
products it was confident were superior to even the best offerings.
For Bose, this has generally meant targeting higher-income
customers who aren't audio buffs but want a good product and are
willing to pay a premium price for it. For the 901, this included
using innovative display and demonstration tactics. This approach
has served Bose well. Although even today hardcore audiophiles
scoff at Bose products as little more than smoke and mirrors,
customers whose expectations haven't been shaped by preconceived
specifications perceive Bose products to be exceptional. So far as
the 901 is concerned, the product became so successful that Amar
Bose was known for crediting the speaker series with building the
company.
The list of major speaker innovations at Bose is a long one. In
the 1970s, the company introduced concert-like sound in the
bookshelf-size 301 Direct/Reflecting speaker system. Fourteen years
of research led to the development of acoustic waveguide speaker
technology, a technology today found in the award-winning Wave
radio, Wave music system, and Acoustic Wave music system. In the
1980s, the company again changed conventional thinking about the
relationship between speaker size and sound. The Acoustimass system
enabled palm-size speakers to produce audio quality equivalent to
that of high-end systems many times their size—a design so popular
it also remains in the current Bose portfolio of speakers.
Recently, Bose again introduced the state of the art with the Music
Monitor, a pair of compact computer speakers that rival the sound
of three-piece subwoofer systems. And Bose has led the way in
developing wireless speaker systems, a move that was quickly
followed by all competitors. Not only was each of these speaker
systems groundbreaking at the time it was introduced, but each was
also so technologically advanced that Bose still sells it today,
even the original 901 series.
Headphones.
Maresca recalls that "Bose invested tens of millions of
dollars over 19 years developing headset technology before making a
profit. Now, headsets are a major part of the business."
Initially, Bose focused on noise reduction technologies to make
headphones for pilots that would block out the high levels of noise
interference generated by aircraft. Bose headphones didn't just
muffle noise; they electronically cancelled ambient noise so that
pilots wearing them heard nothing but the intended sound coming
through the phones. Bose quickly discovered that airline passengers
could benefit as much as pilots from its headphone technology.
Today, the Bose Quiet Comfort series, used in a variety of consumer
applications, sets the benchmark in noise-cancelling headphones.
One journalist considers this product to be so significant that it
made his list of "101 gadgets that changed the world"—right up
there with aspirin, paper, and the lightbulb.
Automotive suspensions
Since 1980, the inquisitively innovative culture at Bose has
even led the company down the path of developing automotive
suspensions. Amar Bose's interest in suspensions dates back to the
1950s when he bought both a Citroen and a Pontiac, each riding on
unconventional air suspension systems. Thereafter, he was obsessed
with the engineering challenge of achieving good cornering
capabilities without sacrificing a smooth ride.
The system Bose developed was based on electromagnetic motors
installed at each wheel. Based on inputs from road sensing
monitors, the motor could retract and extend almost
instantaneously. For a bump in the road, the suspension reacted by
"jumping" over it. For a pothole, the suspension allowed the wheel
to extend downward, retracting it quickly enough that the pothole
wouldn't be felt by passengers. In addition to these
comfort-producing capabilities, the wheel motors were designed to
keep a car completely level during an aggressive maneuver such as
cornering or stopping. The system achieved Amar Bose's vision to
provide better handling than any sports car while simultaneously
giving vehicle occupants the most comfortable ride imaginable.
Bose invested more than $100 million over 30 years in the
groundbreaking suspension. In the end, the system was simply too
heavy and too expensive for use in passenger cars. Rather than
shelf the product, however, Bose did what it has often done—it
found a market where the technology could be used to provide
genuine customer value. The company now markets a smaller, lighter
version of the Bose suspension as the Bose Ride seat system for
heavy-duty trucks. Surpassing current air ride and other
conventional technologies in performance, its $6,000 price tag also
exceeded the going price of a truck seat by five to ten times.
Although most companies and drivers were skeptical at first, one
Texas driver's reaction drives home the value of this product, even
at the substantial price premium: "I had back pains. I used to feel
every bump in my back and neck. The truck still bounces down the
road, but I don't. It's almost like floating, detached from the
truck."
Bose's commitment to research and development has produced
state-of-the-art products that have contributed to the trust that
Bose customers have in the company. Customers know that the company
cares more about their interests—about making the best products
than about maximizing profits. But for a company not driven by the
bottom line, Bose does just fine in that department as well. In the
personal headphone market, Bose is second only to Beats (Apple)
with 11 percent of the market. And with wireless speakers now
dominating speaker sales, Bose leads with a decisive 22 percent
share, a full six points ahead of number-two Sonos.
Amar Bose passed away a few years ago at the age of 83. With the
passion of a genuine scientist, he worked every day well into his
80s. "He's got more energy than an 18-year-old," Maresca once said.
"Every one of the naysayers only strengthens his resolve." This
work ethic illustrates the passion of the man who shaped one of
today's most innovative and most trusted companies. His
philosophies have produced Bose's long list of groundbreaking
innovations. Even today, the company continues to achieve success
by following another one of Amar Bose's basic philosophies: "The
potential size of the market? We really have no idea. We just know
that we have a technology that's so different and so much better
than many people will want it."
Research
Assume that you have been hired as a marketing
consultant and thus propose a feasible plan to increase sales
growth and profit at Bose by providing a short, precise, statement
of recommendations as follows:
Required:
1. Introduce the key facts and information.
2. A statement of the recommended solution(s) along with
its justification and timelines (if possible)
3. A step-wise action plan of what needs to be done and
why, along with any other limiting or relevant
factors
4. A control and feedback/forward system is a must step in
the action plan (what to measure, the measurement tool, the
accuracy of measurement needed, how often a measurement should be
taken, and the maximum allowable deviation from set-point before
corrective action is required).
5. A contingency plan – what to do if the plan needs
corrective action. Identify the step in the plan that if something
went wrong, would likely cause significant deviation for planned or
projected results; then detail how the correction to get things
back on track should be carried out.
The Case:
" In a recent survey by brand strategy firm Lippincott, the most
trusted brand in consumer electronics was not Apple. Nor was it
Samsung, Sony, or Microsoft. It was Bose, the still relatively
small, privately held corporation that has been making innovative
audio devices for more than 50 years. Despite putting more than 30
million new sets of headphones alone on or in customers' ears last
year, Bose rang up only about $4 billion in revenues versus Apple's
$234 billion. But when it comes to the passion customers feel for
their brands, the Massachusetts-based technology company outshines
even Apple. Bose forges that deep consumer connection based on the
brand's design simplicity and brilliant functionality.
Bose adheres religiously to a set of values that have guided the
company since its origins. Most companies today focus heavily on
building revenues, profits, and stock prices. They try to outdo
competitors by differentiating product lines with features and
attributes that other companies don't have. Although Bose doesn't
ignore such factors, its competitive advantage is rooted in its
unique corporate philosophy. "We are not in it strictly to make
money," says CEO Bob Maresca. Given the company's focus on research
and product innovation, he points out that "the business is almost
a secondary consideration."
The Bose Philosophy
To understand Bose the company, you must first look at Bose the
man. In the 1950s, founder Amar Bose was working on his third
degree at the Massachusetts Institute of Technology. He had a keen
interest in research and studied various areas of electrical
engineering. He also had a strong interest in music. When he
purchased his first hi-fi system—a model that he believed had the
best specifications—he was disappointed in the system's ability to
reproduce realistic sound. So he began heavily researching the
problem to find his own solution. Thus began a stream of research
that would ultimately lead to the founding of the Bose Corporation
in 1964. It also led to the development of the long-standing Bose
slogan "Better Sound through Research."
From those early days, Amar Bose worked around certain core
principles that have guided the philosophy of the company. In
conducting his first research on speakers and sound, he did
something that has since been repeated time and time again at Bose.
He ignored existing technologies and started entirely from scratch,
something not common in product development strategies.
In another departure from typical corporate strategies, Amar
Bose put all of the privately held company's profits research and
development, a practice that reflected his avid love of research
and his drive to produce the highest quality products. In doing so,
he also bypassed the process of figuring out what customers wanted,
instead of keeping his research confined to the laboratory and
centred on the technical specifications of creating a superior
product.
Today, this approach is considered heresy in the innovation
world. Amar pursued this approach because he could. He often
pointed out that publicly held companies have long lists of
constraints that don't apply to privately held companies, noting
that "if I worked for another company, I would have been fired a
long time ago," For this reason, Bose always vowed that he would
never take the company public. "Going public for me would have been
the equivalent of losing the company. My real interest is
research—that's the excitement—and I wouldn't have been able to do
long-term projects with Wall Street breathing down my neck."
Innovating the Bose Way
The company that started so humbly now has a breadth of product
lines beyond its core home audio line. Additional lines target a
variety of applications that captured Amar Bose's creative
attention over the years, including military, automotive, home
building/remodelling, aviation, and professional and commercial
sound systems. It even has a division that markets testing
equipment to research institutions, universities, medical device
companies, and engineering companies worldwide. The following are
just a few of the products that illustrate the innovative
breakthroughs produced by the company.
Speakers.
Bose's first product was a speaker introduced in 1965. Expecting
to sell $1 million worth of speakers that the first year, Bose made
60 but sold only 40. The original Bose speaker evolved into the 901
Direct/Reflecting speaker system launched in 1968. That speaker
system was designed around the concept that live sound reaches the
human ear via direct as well as reflected channels (off walls,
ceilings, and other objects). The speakers featured a completely
unorthodox configuration. Shaped like one-eighth of a sphere and
mounted facing into a room's corner, the audio waves reflected off
the walls and filled the room with sound that seemed to be
everywhere but some from nowhere in particular. The speakers had no
woofers or tweeters, composed instead of eight
four-and-a-half-inches mid-range drivers. The speakers were also
very small compared with the high-end speakers of the day. The
design came much closer to the essence and emotional impact of live
music than anything else on the market and won immediate industry
acclaim. The reflective approach, although groundbreaking at the
time, is commonly found in home theatre systems throughout the
industry today.
Back then, however, Bose had a hard time convincing customers of
the merits of these innovative speakers. At a time when woofers,
tweeters, and size meant everything, the 901 series initially
flopped. In 1968, a retail salesperson explained to Amar Bose why
the speakers weren't selling:
"Look, I love your speaker but I cannot sell it because it makes
me lose all my credibility as a salesman. I can't explain to anyone
why the 901 doesn't have any woofers or tweeters. A man came in and
saw a small size, and he started looking in the drawers for the
speaker cabinets. I walked over to him, and he said, 'Where are you
hiding the woofer?' I said to him, 'There is no woofer.' So he
said, 'You're a liar,' and he walked out."
To resolve this credibility problem, Bose developed another core
competency—identifying and targeting the right customer with the
products it was confident were superior to even the best offerings.
For Bose, this has generally meant targeting higher-income
customers who aren't audio buffs but want a good product and are
willing to pay a premium price for it. For the 901, this included
using innovative display and demonstration tactics. This approach
has served Bose well. Although even today hardcore audiophiles
scoff at Bose products as little more than smoke and mirrors,
customers whose expectations haven't been shaped by preconceived
specifications perceive Bose products to be exceptional. So far as
the 901 is concerned, the product became so successful that Amar
Bose was known for crediting the speaker series with building the
company.
The list of major speaker innovations at Bose is a long one. In
the 1970s, the company introduced concert-like sound in the
bookshelf-size 301 Direct/Reflecting speaker system. Fourteen years
of research led to the development of acoustic waveguide speaker
technology, a technology today found in the award-winning Wave
radio, Wave music system, and Acoustic Wave music system. In the
1980s, the company again changed conventional thinking about the
relationship between speaker size and sound. The Acoustimass system
enabled palm-size speakers to produce audio quality equivalent to
that of high-end systems many times their size—a design so popular
it also remains in the current Bose portfolio of speakers.
Recently, Bose again introduced the state of the art with the Music
Monitor, a pair of compact computer speakers that rival the sound
of three-piece subwoofer systems. And Bose has led the way in
developing wireless speaker systems, a move that was quickly
followed by all competitors. Not only was each of these speaker
systems groundbreaking at the time it was introduced, but each was
also so technologically advanced that Bose still sells it today,
even the original 901 series.
Headphones.
Maresca recalls that "Bose invested tens of millions of
dollars over 19 years developing headset technology before making a
profit. Now, headsets are a major part of the business."
Initially, Bose focused on noise reduction technologies to make
headphones for pilots that would block out the high levels of noise
interference generated by aircraft. Bose headphones didn't just
muffle noise; they electronically cancelled ambient noise so that
pilots wearing them heard nothing but the intended sound coming
through the phones. Bose quickly discovered that airline passengers
could benefit as much as pilots from its headphone technology.
Today, the Bose Quiet Comfort series, used in a variety of consumer
applications, sets the benchmark in noise-cancelling headphones.
One journalist considers this product to be so significant that it
made his list of "101 gadgets that changed the world"—right up
there with aspirin, paper, and the lightbulb.
Automotive suspensions
Since 1980, the inquisitively innovative culture at Bose has
even led the company down the path of developing automotive
suspensions. Amar Bose's interest in suspensions dates back to the
1950s when he bought both a Citroen and a Pontiac, each riding on
unconventional air suspension systems. Thereafter, he was obsessed
with the engineering challenge of achieving good cornering
capabilities without sacrificing a smooth ride.
The system Bose developed was based on electromagnetic motors
installed at each wheel. Based on inputs from road sensing
monitors, the motor could retract and extend almost
instantaneously. For a bump in the road, the suspension reacted by
"jumping" over it. For a pothole, the suspension allowed the wheel
to extend downward, retracting it quickly enough that the pothole
wouldn't be felt by passengers. In addition to these
comfort-producing capabilities, the wheel motors were designed to
keep a car completely level during an aggressive maneuver such as
cornering or stopping. The system achieved Amar Bose's vision to
provide better handling than any sports car while simultaneously
giving vehicle occupants the most comfortable ride imaginable.
Bose invested more than $100 million over 30 years in the
groundbreaking suspension. In the end, the system was simply too
heavy and too expensive for use in passenger cars. Rather than
shelf the product, however, Bose did what it has often done—it
found a market where the technology could be used to provide
genuine customer value. The company now markets a smaller, lighter
version of the Bose suspension as the Bose Ride seat system for
heavy-duty trucks. Surpassing current air ride and other
conventional technologies in performance, its $6,000 price tag also
exceeded the going price of a truck seat by five to ten times.
Although most companies and drivers were skeptical at first, one
Texas driver's reaction drives home the value of this product, even
at the substantial price premium: "I had back pains. I used to feel
every bump in my back and neck. The truck still bounces down the
road, but I don't. It's almost like floating, detached from the
truck."
Bose's commitment to research and development has produced
state-of-the-art products that have contributed to the trust that
Bose customers have in the company. Customers know that the company
cares more about their interests—about making the best products
than about maximizing profits. But for a company not driven by the
bottom line, Bose does just fine in that department as well. In the
personal headphone market, Bose is second only to Beats (Apple)
with 11 percent of the market. And with wireless speakers now
dominating speaker sales, Bose leads with a decisive 22 percent
share, a full six points ahead of number-two Sonos.
Amar Bose passed away a few years ago at the age of 83. With the
passion of a genuine scientist, he worked every day well into his
80s. "He's got more energy than an 18-year-old," Maresca once said.
"Every one of the naysayers only strengthens his resolve." This
work ethic illustrates the passion of the man who shaped one of
today's most innovative and most trusted companies. His
philosophies have produced Bose's long list of groundbreaking
innovations. Even today, the company continues to achieve success
by following another one of Amar Bose's basic philosophies: "The
potential size of the market? We really have no idea. We just know
that we have a technology that's so different and so much better
than many people will want it."