Electronics was formally founded in 2006 by the rapper and hip-hop producer DRP Drew and Jimmy love, the Interstice-Gaffe-A&M Records chairman. Its headquarter Is In Culver City, California, USA. It Is a company which produces high quality audio products such as headphones, earphones or speakers but also a software called Beats Audio as well as a streaming music service called Beats Music. DRP Drew came with the fact that listeners, with most headphones, were not able to listen properly to music.
He stated that Beats audio product would allow a much better way of listening “hear what the artists hear, and listen to the music the way you should: the way I do. ” Porters five forces analysis: Rivalry among industry: The headphone market is a very competitive market in which we can’t even name all the brands when we talk about all categories headphones. However when we talk about high quality headphones such as beats the number of companies competing Is reduced, the most known between them are Beats, Bose,
Sony or Senseless, but there also are some of them emerging with the same way that Beats did for example famous rappers Jay-Z and Ludicrous each have their own line of headphones called respectively Skullcap’s and Soul. Despite the competition Beats was able to conquer 64% of the market of SASS-an-more headphones. Threat of new entrants: During the last years many celebrities, following DRP Drew and loving formula, launched their own brand of headphones (Susan Bolt, Tim Taboo, 50 cent in partnership with Timberland, Demon… ).
Also, the technology to produce headphones is quiet simple and does not require lot of efforts. From this we deduce that the threat of new entrants is an important fact to take in consideration . Bargaining power of Buyers: Beats target young buyers. It is true to say that young people are the one who enjoyed music the most, but Beats headphones have another characteristic : it is a fashion accessory. The competition among the industry Is high, but beats products are not the same as Sony, Bose or Senseless products. That’s why bargaining power of buyers Is low.
Customers will not find the fashion side that Beats products have In other brands, so they are prepared to pay the price to be satisfied. Bargaining power of suppliers: Being opposite to the low bargaining power of buyers, the bargaining power of suppliers is high because they are producing an unique product which combines high audio quality and fashion. Another point is the switching cost, changing from a brand to another in this category of headphones could be expansive. Substitutes: there are not other ways to listen to music. So the treat of substitutes is low.