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Hifi Case Essay

1375 words - 6 pages


Industry dynamics in the hi-fi sector

Q1. Perform a SWOT analysis and use this to help think through the industry dynamics in the hi-fi sector.
i. What are the opportunities and threats facing these specialist hi-fi firms?

* Internal diagnotic
Marketing criteria |
Product | Sound system at highest quality | |
Price | Prenium prices can be a proof of quality | Premium prices are only dedicated to a small segment of customers |
Promotion | | High costs of advertising |
Place | Prime location: factories are ...view middle of the document...

| It’s a market hit by fashion trends.Affordable technology is in demand.People focus more on quantity and fashion than quality. |
Technological | | Internet : online music sales increaseInnovation: digital (Mp3, Mp4) vs. CD’s |
Ecological | | |
Legal | Illegal downloading of music andIntellectual property rights-patents generate opportunities for this market. | |
Micro-environment (Porter’s 5 forces) |
Competitive rivalry(HIGH) | The 3 competitors for the same niche called audiophiles are Meridian, Linn and Naim. They are very similar in terms of structure, missions, capital (£10 to £35m of turnover) and they use a strategy of differentiation (high quality product). | They are (under consideration) small compared competitors of the market for audio and video products as Apple, Phillips, Sony (many billions pounds of turnover). |
Supplier power(HIGH) | | A low number of suppliers, a strong brand, and differentiated products increase the switching cost and the bargaining power of suppliers. |
Substitutes(LOW) | There is a lot of substitutes but it doesn’t deal with the same quality of product:-Products from Apple, Sony, Phillips-MP3 market -Docking stations as Bose (able to turn portable products into the basis for a home hi-fi system)-Online retailing of music (Apple with iTunes) | |
Buyer power(LOW) | As specialists sell high quality products at high prices (from £1000 to £50 000) and they are only 3 on the audiophile market compared to their extensive retailers network, customers influence is low. | |
New entrants(MODERATE) | Audio and video products is a saturated market by Apple, Phillips, Sony, Samsung, Thomson,…And the barriers for high brands as Meridian, Linn and Naim are higher because of a need of notoriety, links with good suppliers, patents, a large investment in R&D/advertising… | As factories have low capital requirements they are susceptible to new entrants especially if Apple decides to produce specialist system. |

ii. Do these firms have the right strengths to take advantage of the opportunities in the market?
These factories have to react quickly to take advantage of the opportunities in the market. They provide high quality hi-fi products to their customers and they have excellent competencies but they face to external threats as new technology (and if they do nothing they may go to the same way as Polaroid, a high competitive rivalry (Phillips, Apple, Sony…), and new entrants because of their low capital requirements. Also they don’t use fully their resources (brand image, expertise, financial) what could send them to their doom.

Q2. Identify some strategic options which the specialist hi-fi manufacturers could pursue.

Partnerships with popular music group
These companies could also develop partnerships with popular music group that believe in great sound. Indeed, the fans usually go to the concerts to listen to their favorites groups but they can’t...

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