Fundamentals of Marketing
Executive Summary
The purpose of this report was to explore potential strategies that will create a successful marketing campaign for Skullcandy Corporation to establish high-quality headphones with noise-canceling wireless headphones. The report explores the potential market segment that will give the highest headphone sales in the audio industry. The company will target the youth market segment through product differentiation and establish a more disciplined headphone marketing strategy to mitigate product imitation. The report used micro and macro environment analysis in the headphone market in Australia in order to establish the most profitable and sustainable marketing or branding strategy to adopt in Australia. The findings showed that there is increasing demand for headphones in Australia, especially the youth market segment. Therefore, the company will specifically align its headphones to position in this market segment strategically. Recommendations to Skullcandy Corporation align headphones according to market segment and sales team in order to improve customer experience. The company should also segment its retailers by consumers and align its headphones with their preferences and values for improved distribution. The future research should focus on consumer values, competitive mapping and establishing the market size for each segment for more informed decision-making strategy.
Introduction
This report will explore potential strategies to create a successful marketing campaign for Skullcandy Venue noise-canceling wireless headphones. The goal is to improve the sales of the product and create a structured breakdown of the current consumer market, followed by recommendations to achieve this. To do this, the micro and macro environments including the marketplace and other influential factors, consumer segments and attractiveness will be dissected to demonstrate a complete understanding of expanding sales (Ratten 2015, p. 442).
Unfortunately, Skullcandy headphones are a new release, thus a limited amount of information available online from non-advertising sources such as for their website. Information will be pulled from the official Skullcandy website, in addition to data gathered from the national statistics about the audio industry and specifically the headphone market. This report presents a market analysis of headphones in Australia by doing a market analysis of both audio industry and competitive environment (Ratten 2015, p. 445). Besides, the report identifies headphone market segmentation and provides strategies that will create competitive advantage for Skullcandy. This key limitation encountered in the collection of data and accessing information that was up to date from the company and competitors. The scope of this report covers Skullcandy’s business segmentation, and how it can improve headphone business. It also provides a comprehensive analysis of findings, strategies, and recommendations that the marketing manager of Skullcandy should adopt in order to establish and maintain a competitive advantage (Andrews and Shimp 2017, p.5).
1. The Marketplace and Influencing Factors
1.1. Micro
1.1.1. What industry are we in? (400 words)
The chosen Skullcandy Headphones are in the audio industry branded as over ear headphones, sub branded as Bluetooth and noise canceling. Figure 1 displays how this chosen product fits into the overall audio industry.
Figure 1 – Industry Definition
As the audio industry is so broad, it is important to identify the products brand + sub-brand to develop an appropriate marketing strategy. Although Skullcandy sells a few small speakers, they are in the audio industry for their wide variety of headphones/earphones. As Skullcandy does not have a wide variety of the types of products they market, concentrating on headphones allows them to more specifically market their product and engineer the best quality product possible (Pride 2013, p.10).
According to Andrews and Shimp (2017, p.5), the Australia market has an increasing market size for headphones. The present hype persisting in the headphones’ market is not a fad; it is the future of the audio industry. The increasing demand and adoption of headphones are attributed to the fact that various people are tethered to their electronic devices such as mobiles, tablets and music players for a substantial portion of daily activities. The primary goal is to listen to music, play games and watch videos.
Within the industry, the team has selected three competitors to analyze with similar products and strategies, but not the same. For example, Beats by Dre is similar to Skullcandy as they are primarily a headphones/earphone company (Beats 2018). Bose, on the other hand, is strong through the entire audio industry as they not only sell headphones but produce a high-quality variety of stereo products too. Furthermore, Sony expands further than this with a “passion for technology, content, and services” (Sony, 2018), thus producing the broadest variety of products out of 3 competitors.
Skullcandy was founded by extreme sports product designer Rick Alden (SkullCandy, 2018). Necessity for a new headphone brand came to Alden during a day of snowboarding, which during the struggle of removing earphones just to receive a phone call gave him the idea to design headphones that could not only simply switch between phone calls and music; but also look as good as they sounded and be “used and abused” (SkullCandy, 2018). Because of this, within the audio industry, Skullcandy has built a product for sport, youth, and those who share the values of the company of going for life at 100% with music by their side (Bose 2018).
1.1.2. Competitor Analysis (200 words)
Moving from their founding days of the initial struggle, Skullcandy has achieved their desired quality and trendy headphones. With their promotions, style, level of success and product specifications, three appropriate significant competitors and their relative products have been selected to analyze and compare: Bose, Sony, and Beats by Dr. Dre (beats).
Table 1 – Competitor Analysis
| P | Skullcandy Venue Noise Canceling Headphones | Bose Quiet Comfort 35 wireless headphones II | Sony WH-CH700N Wireless Noise Canceling Headphones | Beats Studio 3 Wireless |
| Brand + Sub-Brand | Over-ear headphone, wireless and noise-canceling | Over-ear headphone, wireless | Over-ear headphone, wireless and noise-canceling | Over-ear headphone, wireless |
| Brand Positioning | “For people like you—like all of us” | “new technologies that would truly benefit people” | “Everything we do is to move you emotionally” | “premium consumer headphones” |
| Product Specifications | Noise-canceling, wireless, a fast charge, Tile (find my headphones) | Noise canceling, wireless, fast charge | Noise canceling, wireless, fast charge | Noise canceling, wireless, fast charge |
| Place | Skullcandy online, Tech Stores (JB HI FI, Harvey Norman, ect.) | Bose online, Tech Stores (JB HI FI, Harvey Norman, ect.) | Sony online, Tech Stores (JB HI FI, Harvey Norman, ect.) | Beats onlineTech Stores (JB HI FI, Harvey Norman, ect.)Apple Store |
| Price | $179.99 | $499.95 | $299.95 | $449.95 |
| Promotion | Targeted Niché market of action sports people. | Product placement such as athletes and musicians | ||
| Advantages & Disadv c/w our Brand and Sub-Brand | The company has the advantage of a leading market and product targeting | |||
| Other factors important to prospective buyers | Differentiation off product and imitation and quality headphones | |||
| Data was current as of 28/09/2018.Sources; https://www.sony.com.au/electronics/about-sony https://www.bose.com.au/en_au/about_bose.html https://www.beatsbydre.com/au/company/aboutus https://www.skullcandy.com/our-story https://www.skullcandy.com/shop/headphones/bluetooth-headphones/venue https://www.beatsbydre.com/au/headphones/studio3-wireless https://www.sony.com.au/electronics/headband-headphones/wh-ch700n https://www.bose.com.au/en_au/products/headphones/over_ear_headphones/quietcomfort-35-wireless-ii.html#v=qc35_ii_triple_midnight https://www.cbsnews.com/news/skullcandy-how-a-small-company-reaches-a-big-market/ |
The competitor analysis shows that the companies have almost similar marketing mix strategies, similar to Skullcandy’s brand strategies. This shows that the three competitors are indeed in the strategic group. This is because they have similar strategies for Skullcandy’s strategies. This indicates that it will be essential to establish differentiation strategies for the headphone marketing in order to position Skullcandy’s as the leading provider of headphones in Australia (Sony 2018). The company will target new branding strategies that will differentiate its products from competitors. The company will critically look into technology and promotional strategies that will capture the market niche for headphones in Australia (Rynderman 2016, p.12). This should include noise cancellation and increased partnerships in order to improve the selling point of the company.
1.1.3. Company Profile and Organizational Structure
Skullcandy produces and distributes headphone products to retailers throughout Australia and other different countries globally. Skullcandy is the “leading worldwide lifestyle and performance audio brand driven by increasing creativity and irreverence of youth culture.” The company has good market segmentation has they distribute headphone products in specialty retailers focused on and youth lifestyle and action sports. Skullcandy has a diverse range of headphones, which come with a diverse range of graphics, colours, and designs. The company offers a diverse range of headphones of high innovative performance that reflect human lifestyles. This has established customer-oriented and uniquely targeted headphones. For instance, Skullcandy offers special “Action Sports” headphones targeting enthusiasts and sportsmen of sports. Skullcandy is one of the main selling headphone companies in Australia and creates audio products as well as technology to catalyze collision of music, sports, and fashion. The company is grounded in youth culture and the spirit of ‘rock n roll’ in order to celebrate independence, individuality, ambition, and creativity. Therefore, the company embodies an exclusive design of headphones using modern celebrities in the state-of-art technology in both form and function (Breebaart 2017, p.526). The company workers are top of consumers of the headphones that make the spirit of each employee to be found in the brand. Employees play hard and work hard. This makes the company staff love the casual work climate. The company has structured its office as a skate park and offers flexible scheduling, medical cover, and cheap-as-dirt ski passes. Besides, the company provides a powder-day policy, gym membership, room for advancement and growth. This creates the feeling of one family that creates a competitive advantage for the company and allows employees to be more creative and innovative.
1.2. Macro
The macro environment is purely external force that influences how a company will operate in a given market. These are factors, which are outside control of the company and comprise of legal, political, technological, economic, environmental and social factors. Skullcandy will be affected mostly be economic, political and technological factors in the audio industry (Benzo, Mohsen and Foural 2017, p.25).
Political Analysis
Considering that Skullcandy will be operating in the retail environment in the audio industry in Australia, political factors will be determining the force on pricing and significant company operations. For instance, an increase in the community tax would effectively increase the price of the headphones. Besides, policies of importing raw materials for making the headphones could impact the retail chain’s sourcing policies. Government policies on environmental aspects such as noise pollution could affect the packaging and marketing of the product. The stable political environment supports a transparent and robust legal system. The rule of law protects property rights and prevents corruption (Benzo, Mohsen and Foural 2017, p.25).
Economic Analysis
The economic freedom of Australia has a score of 80.9. The government spending indicators and integrity offset by decreases in property rights and labor freedom. The country has robust-free market democratic system benefits due to the effective government systems that facilitate vivacious entrepreneurial development. The audio industry is open to global competition and readily available skilled workforce, which provides opportunities to Skullcandy to enhance its creativity and innovativeness (Benzo, Mohsen and Foural 2017, p.25).
Technological Analysis
Social media is changing the way firms interact with their consumers. Online shopping for headphones generates more profits for the audio industry in Australia. The emerging trend such as the new futuristic technology like Hologram is changing the approach retailers store work. The development of RFID technology could impact the audio industry deliverables and tracking. These trends will be essential in determining the marketing mix of headphone products (Breebaart 2017, p.528).
SWOT Analysis
The SWOT analysis provides weaknesses, opportunities, strengths, and threats of Skullcandy Corporation.
| Strengths A small team with more interaction with customersFavorite among music industries and DJsInnovative and creative brandHighly profitable and returnHigh growth rate Competitive company cultureLeading market position in the audio industry | WeaknessesLimited music industry focusEasily imitatedInability to maintain growth Mainly focused on a single market nicheHighly competitive audio industry |
| OpportunitiesImprovement of brand loyaltyReward-based on individual metrics.New headphones’ marketsIncrease in house capacityGrowing headphone demandGlobal market expansion opportunitiesDrop in price of materials Market growth beyond expectations | ThreatsEasily imitated with no patentsIncreased production costsPrice changesSmall product development bandwidth |
The SWOT analysis shows that the company has opportunities for growth and sustaining competitive advantage in the audio industry. According to micro and macroclimate analysis, Skullcandy Inc. must change its branding strategies to avoid the increasing product imitation across the audio industry. Growth in headphones will be dependent on new; compelling features feature sets and diverse application, which will allow the company to focus majorly on the youth market segment. The company will also focus on online sales, which are a primary location for consumer headphones. It is vital to apply the brick and mortar business model in order to evolve strategically with changing market trends and sustain the increasing market share.
2. Consumer Segmentation
To explore the potential market, consumers need to be broken into segments based on measurable, identifiable and sizeable traits. Examining demographic segmentation proved to be the most successful way to segment our consumers, specifically through their age and attitudes towards the critical features of our product. The following table explores this in depth.
| Age | Necessity for headphones | Quality importance | Relevance of cost | Brand awareness |
| <13 | Low | Low | Very High | high |
| 13-18 | High | Low-moderate | high | Very high |
| 18-30 | High | Very high | moderate-high | moderate |
| 30> | Moderate | High | low | low |
The demand for headphones is directly related to the music industry and the demand for electronic devices. The Australia market has an increasing market size for headphones. The primary goal is to listen to music, play games and watch videos. The company should focus on the youth market due to its demand for high-quality headphones. The market segmentation shows that Skullcandy should adequately differentiate its headphones to position them as the best in the industry through noise-canceling venue wireless and innovative headphones such as Crusher 360 in order to ensuring its consumers feel the music in a fascinating manner. The youth market segment shows increasing headphones demand as well as in the sports market. The company should effectively focus on new headphone launches and partnerships in with vital other players in the global and domestic headphone market in order to consolidate its position in the headphone market and expands its customer base (Ryan 2016, p.25).
3. Assess the Attractiveness of each Customer Segment
The attractiveness of each market segment is dependent on the headphones’ market size and the future trends in the audio industry. According to the above consumer segmentation, it is important to focus on the youth market segment, which provides increasing demand, and demographics that will enable Skullcandy to differentiate its products to fit the market preferences and tastes. The reasons for selecting the youth market is because it presents the increasing demand and adoption of headphones due to the increasing youths who are tethered to their electronic devices like mobiles, tablets and music players for a substantial part of their day. Therefore, focusing on the youth market will also provide Skullcandy with the opportunity and market niche to focus on skateboarders, snowboarders, and action-sports enthusiasts. The following chart shows the current and expected demand for the headphone in globally.
Australia headphones and earphones’ market, by product, 2014 – 2025 (USD Million)
Source: Grand view research
The growing demand for headphones and quality products provides the company with a market niche to focus on quality and trendy headphones. The future of headphone products is expected to rely on appearance, design, and technology that will fit customers’ preferences, values and promote company individuality. This trendy shows that Skullcandy can penetrate its headphones in all the existing market segments with differentiated products that meet the consumer preferences. The increasing consumer demand for quality headphones may have positive impacts the market growth. Therefore, the increasing attractiveness and adoption of portable music players, tablets and smartphones are anticipated to amplify the headphones’ demand over the future (Dowd 2015, p.9). The advances in technology insights are the crucial factors attributing to increased headphone sales. The most important prolific advancements by Skullcandy in audio industry, specifically consumer segments, are the wireless connectivity and noise-cancellation. Skullcandy should focus on the emerging trends that emphasize developing headphones that ensure quality audio and saves users from hassles of wired devices.
4. Recommendations for Additional Research
The micro and macro analysis provide important insight on the importance of evaluating the market trends in the audio industry that will enable the company to strategically differentiate its products to fit the current and future customer values, and preferences. Having identified the market size, internal and external factors that determine the operations of Skullcandy Corporations, it is important to establish other influential factors that will determine the future profitability of the company. Besides, the company operates in an industry where quality and prices are critical components of marketing mix strategies. Therefore, it is essential to establishing consumer preferences, values, and how culture affects the demand for headphones in the youth market segment. Also, as the marketing manager, it is essential to construct an online survey that will gather information from esteemed customers about the critical features of headphones that effectively meet their preferences. The company focuses on strategies that will meet segment demands; it is vital to establish the size of each market segment and the critical market drivers, restraints, and future opportunities in each segment (Keenan 2014, p.13). This is because these factors will impact the market dynamics and subsequent analysis of related trends.
It is important to establish both online and hard copy surveys and questionnaires that will specifically provide key information about consumer segmentation, market size, and future trends or drivers, which will affect each market, segment. Using survey and questionnaire as the methodology for data collection, the main questions will be centred in establishing what segment will drive or lead market growth as well as why and how will market constraints, drivers, and future opportunities impact the market dynamics, how is the competitive landscape and the market behaviour of participants as well as what are the critical sustainability strategies adopted by main market players? This information will provide essential data for analysis in order to establish the market size, market growth and an in-depth analysis of sustainability strategies and their impacts on growth and competition. These findings will provide the basis for establishing branding strategies and differentiation opportunities that will guide the way for establishing market positioning (Dowd 2015, p.143). The advantage of an online survey and questionnaire is that they will provide real-time data and accurate information that will enhance the efficiency of selecting right marketing strategies. The other advantage of this data collection methodology will be able to reach a large target audience and can be tailored to specific people easily in consumer segmentation. The data is efficiently transferred to a computer for the easy analysis. The disadvantage is that the survey can get time wasters and ruin the data. The gathered information will be crucial in directing the company marketing strategy. This will inform Skullcandy to strategically differentiate its products to fit in the market segment and position itself as the leading producer and distributor of headphones in Australia (Keenan 2014, p.15). This will also be essential in identifying and tracking key market drivers in the audio industry that can significantly affect the selected business strategy.
5. Conclusion
In summary, the findings of this report have adequately been analyzed to inform the strategy to adopt in the audio industry in Australia. The analysis of micro and the macro environment has ensured that the marketing strategy covers the essential market values and consumer preferences. This report explored potential strategies to create a successful marketing campaign for Skullcandy in the field of noise-canceling wireless headphones. The goal is to improve the sales of the product and create a structured breakdown of the current consumer market, followed by recommendations to achieve strategic positioning. The report has tackled vital areas to inform strategic recommendations and provide insight for future research. The most significant prolific advancement by Skullcandy in audio technology, specifically consumer segment, is the wireless connectivity and noise cancellation. Skullcandy should focus on the emerging trends that emphasize developing headphones that offer quality audio and saves users from challenges of wired products. This will be an essential branding strategy that will allow Skullcandy to differentiate its product perfectly according to consumer preferences and values.
6.0 Recommendations
According to the findings of this report, it is crucial for Skullcandy Corporation to strategically differentiate its products to fit wireless connectivity and noise cancellation. The market manager should ensure a leading position in the production and distribution of high-quality headphones in the audio industry. The need for a more clear definition of the brand and market segment means that Skullcandy should ensure clear messages to excite its customers. The company should amplify differentiation and develop a more disciplined headphone marketing strategy to mitigate product imitation. The company should better align headphones according to market segment and sales team in order to improve customer experience. The company should also segment its retailers by consumers and align its headphones with their preferences and values for improved distribution.
7.0 References
Andrews, J.C. and Shimp, T.A., 2017. Advertising, promotion, and other aspects of integrated marketing communications. Nelson Education, pp.3-25.
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Breebaart, J., 2017. No correlation between headphone frequency response and retail price. The Journal of the Acoustical Society of America, 141(6), pp.EL526-EL530.
Dowd, R.M., 2015. Multi-listener headphone system with luminescent light emissions dependent upon selected channels. U.S. Patent 9,143,595.
Keenan, T.P., 2014. Technocreep: the surrender of privacy and the capitalization of intimacy. Greystone Books Ltd, pp.6-17.
Pride, W.M., 2013. Marketing 2014. Cengage Learning, pp. 2-25.
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Ryan, D., 2016. Understanding digital marketing: marketing strategies for engaging the digital generation. Kogan Page Publishers, pp.25.
Rynderman, B., 2016. The licensing of new recorded music business models in Australia: Current practice, the barriers to entry and an investigation in to the need for legislative reform(Doctoral dissertation, Queensland University of Technology), pp.10-20.
SkullCandy 2018, Our Story, SkullCandy, viewed 1st October 2018, <https://www.skullcandy.com/our-story>
SkullCandy 2018, Venue Active Noise Canceling Wireless Headphone, SkullCandy, viewed 1st October 2018, <https://www.skullcandy.com/shop/headphones/bluetooth-headphones/venue>
Sony 2018, About Sony, Sony, viewed 1st October 2018, <https://www.sony.com.au/electronics/about-sony>
Sony 2018, WH-CH700N Wireless Noise Cancelling Headphones, Sony, viewed 1st October 2018, <https://www.sony.com.au/electronics/headband-headphones/wh-ch700n>
