Bose Ride

Published: 2021-07-08 12:20:05
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Introduction of Group Project Bose Corporation Founded in 1964 by Dr. Amar Bose, Bose Corporation is a company pioneering in perfecting the quality of sound heard through speakers. Through the years, Bose has become an industry leader by developing innovative products such as the Bookshelf Speaker, Wave Music System, and Bose Suspension System. In 2008, Dr. Amar Bose was inducted into the National Inventors Hall of Fame for “significantly influenced influencing the quality of how we live. ” Bose’s product line ranges from products for pilots, electroforce test instruments, homebuilding/remodeling solutions. Its main products are in professional sound solutions. Bose is a private company headquartered in Framingham, MA, and is continuously discovering breakthrough products to improve the consumers’ quality of life all over the world. Industry, Offerings, & Target Market The Bose Ride System is a one of a kind product. However, mMost people would probably try to compare it to Air Ride, a suspension system that offers a smoother ride for truckers. The NAICS code that would fit particular to the Bose Ride System is 336630: Motor Vehicle Seating and Interior Trim Manufacturing. Because the Bose Ride System is a seat, it is quite obvious that the NAICS code would be motor vehicle seating. The Automobile Seating Industry segment for Air Ride seats comprises of about 8 key companies: Bostrom Seating, Comfort Ride USA, Knoedler Manufacturers, National Seating, Recaro, Sears Seating, Seats, Inc. , and Wise Seating. Total industry revenue in 2009 totaled $15. 039 billion. Bose Corporation is generally known for its impeccable speaker systems and surround sound units, however, it is currently trying to penetrate different markets and the auto market is one of them. Their Automotive Systems Division is constantly innovating and researching to improve upon their current suspension system for vehicles. Because consumer comfort and quality of life is are what Bose tries to improve, they have minimized this suspension unit to introduce the Bose Ride System. It is a seat suspension unit designed to reduce the soreness and fatigue experienced by long-haul drivers. The Bose Ride System will be available beginning March, 2010. Currently it will be available only through a special sales team. Due to the newness of the product, Bose will only allow the Ride System to be sold as an after-market product. The seat is designed to help lessen the feel of bumps and vibrations in the road and to relieve fatigue that comes on when after driving for long periods of time. For the long term, this product will help those who have occupations in driving thus to have lessening back pain and boy wear than when using the common Air Ride system. Bose has specifically targeted the trucking fleet market where they can sell the seat to trucking companies such as freighters and FedEx, etc, and thus the end user would be the consumer. In the future, the seat may be available for small cars, consumers, and maybe even the airline industry; however, for now, Bose is limiting the availability to truck fleets. Mission and Long-Term Goals Bose Corporation’s mission is “Committed to encouraging innovation, creating value for customers, and having passion for what we do. ” Over the years, the accolades that Bose has attained, such as Inventor of the Year (1987) and Product of the Year (1998), further exemplify the company’s mission. Bose is privately held with a goal of reinvesting profits into the corporation for R&D, so there is not necessarily a corporate goal. Based on this, it is safe to assume that the company’s long term goals are in line with researching and developing products that will facilitate the lifestyles of consumers. The Bose Ride System will help meet Bose’s mission of creating value for customers through the lessening of back pain and fatigue of the end user. Through interviews with professional drivers, Bose found that many over-the-road drivers accept feeling sore and tired as part of the job. Many drivers who participated in a trial of the Bose Ride system reported that they felt more comfortable, less sore and less fatigued—all factors that can improve job performance and quality of life. In addition, the value this will add to businesses is even greater. Because drivers will be feeling less fatigue, and thus be in better shape (less back pain, etc), drivers will be more efficient and willwould be willing to drive for longer periods. In addition, employee turnover may not be as high due to the fact that the Bose Ride System can improve a drivers’ quality of life. Bose is continuously researching ways to improve and better the lives of consumers, and the Bose Ride System is a great way for the company to contribute to its Mission. Industry Analysis Product Life Cycle The motor vehicle seating manufacturing industry launched simultaneously with the automobile industry of the early 20th century. The industries expanded together over the following 100 years, but the seating industry began to become specialized towards the end of the century delivering customized solutions for particular needs. Traditional seats used in long haul truck driving began to lose favor within the industry in the 1970s when doctors found that seasoned truck operators were exposed to whole-body vibrations leading to back and organ damage over time. At the same time, suspension and compression technology enabled seat manufacturers to attempt to counteract some of the vibrations by adding technology found in an automobile’s suspension tire system to the base of the seat. In doing so, some of the associated risk was mitigated, but the passive suspension system only responded to some of the whole-body vibrations and did not have sufficient useful life. The entire industry is quite mature in the United States, but in growth mode in emerging markets such as India and China, where citizens are beginning to buy their first automobiles and companies require trucks to meet the supply chain needs of their growing organizations. The active suspension seat industry is in the early adopters phase with only a few manufacturers introducing products and transportation companies contemplating the costs and benefits of implementing them in their fleets. The Bose Ride system is due to be launched in March of 2010. Currently reaching the end of its development period, the introduction phase is now looming over it. After its launch in March 2010 a lot of growth and an idea as to its potential will be seen. The introductory phase is a time of huge growth, a potential for a lot of technical change in product design and most likely a time for limited or negative profitability. It is also a time when others in the market begin to gauge the product and future competitors start out on making their own versions. As a result of this, by the time the product reaches its growth stage, there will be a lot more competitors on the stage. A lot more aggressive marketing will be seen in this ‘growth’ stage and also a potential for branching from the scene of heavy duty truck fleets to other systems, like off-road vehicles, construction equipment, airplanes, boats, etc. Also, at this stage, Bose will probably tap into their immense strength with regards to sound technology and incorporate speakers and other sound systems in their seats. More and more competitors will also probably show up on the scene with comparable products. Profitability at this stage though, is projected to be high. As the product gets into the more mature phase, improvised, probable lighter versions of the seat that are adaptable to individual consumers also will probably make the rounds. Also, newer versions will take much shorter periods of time to be introduced and prove to be more profitable. Bose has already invested years of research, all of which will payback as they implement newer versions. Profitability at this stage will also be at a high. Also, currently the product is only due for a US launch. As the product establishes itself locally, international markets will provide huge potential. Concentration on features and quality improvement become the prime focus after the initial launch. Maintaining effective distribution channels and good communication channels and customer care support also will become top priorities. Overall, because the product is in the introductory phase, Bose will have to put in a lot of effort to market and distribute the product. In addition, because the Ride System is unique to the seating industry, it is expected to be very profitable for the company. Competitor Analysis As stated earlier, the car seating industry is in the maturity stage. Many companies have already penetrated the market and have become leaders in innovative seating designs that not only help the driver ergonomically, but also are stylish accessories for the vehicle. The Bose Ride System’s major competitors include Recaro Group, Bostrom Seating, Sears Seating, and Seats Inc. Recaro Group The Keiper Recaro Group is a German based company that specializes in mobile seating. They have three companies under their umbrella: Keiper, Recaro, and Recaro Aircraft Seating. Each company specializes in seating that will enhance the end user’s comfort. Their product line ranges from economy and business class seating for aircrafts, all the way to ergonomic seats for the end consumer. Keiper Recaro Group’s sales figures for 2008 top €1. 8 billion. Already a global company, Keiper plans to further expand the company to Dubai and Shanghai in the next few years, in order to have a greater reach. The Keiper Recaro Group has diversified seating options through multiple industries: regular automotive, commercial vehicles, aircrafts, and public seating. Since Bose has only targeted the commercial vehicles, this analysis will focus on just the commercial vehicle offerings of Recaro North America. Recaro North America’s main product line includes 4 groups: Motorsports, Tuning, Ergonomics, and Child Safety. Each sub-category has attuned its products to comfort and well-being of the end user. The Ergonomics seats are the ones that are mostly targeted towards commercial vehicles such as busses and trucks. These seats focus on reducing the stress of the road, and help to seat the driver in an ergonomically correct position, therefore reducing any strain felt on legs and back due to long periods of seating. Recaro Group has a long list of customers which include BMW, Ford, Chevy, McLaren, Toyota, Mercedes, etc. Their reach for customers is global, and this will be a big threat to Bose. Their Marketing Strategy and website are great tools for customers who are interested in this company’s products. Recaro is a recognized brand in many industries such as Motor Racing, Car Seating, etc. With such great brand awareness, it is easy for Recaro to reach customers, and to establish itself as a good company. Recaro’s main product is mobile seating and they are able to focus all of their efforts into one main product. Due to the seating industry’s maturity, Recaro will have to form alliances with other companies to enhance their product offerings. Bostrom Seating Bostrom Seating is a leading supplier of air suspension and static seating systems for the heavy-truck, agricultural, construction, bus, and specialty vehicle market. In 2005, Bostrom Seating became a subsidiary of Accuride Corporation who is one of the largest and most diversified manufacturers and suppliers of commercial vehicle components in North America. Bostrom Seating is focused on Quality Assurance and has achieved ISO 9001:2000, ISO/TS 16949:2002 and ISO 14001 certification. They have also fine tuned their manufacturing processes through years of experience to create an efficient process. Bostrom Seating is 100% focused on developing and manufacturing truck seating as they sell no other products. Bose will be hard pressed to be able to compete with Bostrom Seating; at least in the beginning. Bostrom Seating offers about 25 different products to a diverse target market which includes all medium-heavy duty trucks, busses, agricultural and construction vehicles as well as specialty vehicles, while Bose only offers one product to one market. Bostrom Seating has hundreds of distributors all over North America, not to mention the other hundreds of distributors they have in Canada. However, Bostrom Seating also is not an industry leader and has low brand name recognition. Sears Seating Sears Seating Inc. was established in Davenport, Iowa in 1855; they are a leader in the design and manufacture of suspension and non-suspension seating systems. Their target markets include the agricultural, construction, and material handling equipment, and over the road truck markets. Sears Seating is currently the major seat supplier to John Deere & Co. , CNH, Caterpillar, Hyster, Yale, Freightliner, Bobcat, and many others around the world. Sears Seating holds over 60 patents, and utilizes the latest technologies in design and testing to ensure every seat meets or exceeds customer expectations. Sears Seating is ISO 9001 QMI-SAI Global certified. Sears Seating has a variety of product offerings including their top selling lines of Atlas Truck Seats, and Elite 80 Series. Some of the features of these products include ergonomically contoured seat pans and cushions to provide full body support and semi-active and active-suspension technologies that reduce and eliminate vibrations. These products are distributed worldwide with hundreds of suppliers in the continental United Stated and overseas. Sears Seating appeals to their target markets by offering comfort, durability and value as well as an extensive 10 year warranty on all seats that they manufacture. They have maintained a strong relationship with their major buyers over the past decades and this has been their main means of marketing new product offerings. Seats Inc. Seats Inc. is a world class leader in seating products. Product diversification, innovative design and manufacturing combined with advanced technology generate the world class seating of Seats Incorporated. They are a member of Nordic Group of companies and are located in Reedsburg, Wisconsin. Seats Inc. has distributors throughout North America, and offers an extensive product line of highway seating, off highway seating, turf seating, school bus seating, mariner seating, office chair seating and locomotive seating. Seats Inc. is quality certified to ISO 9001:2000. This certification gives customers an added sense of reliability of the products. Due to this certification, customers understand that they have a quality focus, and that customer service and customer satisfaction are their main priorities. Seats Inc has In-House design engineering which constantly works on new designs and modifications. They also have custom/contract seat and suspension system design department that works on development services, compliance testing and certifications for S. A. E and F. M. V. S. S. Seats Inc. markets their products to by focusing on trade shows. This is an advantage to the company as potential customers are able to physically see product offering prior to purchase. SWOT Analysis Strengths |Weaknesses | |Recaro Group |Recaro Group | |Global customer base |Broad customer focus | |Brand recognition |Limited improvement to existing products without extensive research | |All efforts focused on seating industry |Bostrom Seating | |Bostrom Seating |Not an industry leader | |Diverse product mix |Low brand name recognition | |100’s of distributors in both North America and Canada |Poor distribution channels | |Sears Seating |Sears Seating | |Over 150 years of experience in the seating industry |Broad customer focus | |Strong brand recognition |Seats Inc. | |Worldwide distribution channels |Relatively new to automobile seat market | |Seats Inc. | |Diverse product mix | | |Design and engineering innovations | | |Opportunities |Threats | |Expand into international markets |Mobile seating is a mature industry, market led by strong competitors | |Bose has potential to offer better technology enhanced seating |Bose Ride System is only designed for Class 8 over-the-road trucks | |Freight transportation industry has opportunity for growth and |Only offering one product line | |longevity |Bose has limited distribution channels | |Strong brand name in other industries |No major customer base | | |Limited customer service offerings (limited warranty) | | |Low brand name recognition | Customer Analysis Market Segmentation The Bose Ride System is an aftermarket product, meaning trucks will not be sold with the system already installed. Due to this, the main potential customer base for Bose will be large fleet distributors. According to the survey data from Truck Manufactures Association – https://www. truckmfgs. org/SalesData. asp, Class-8 truck has the highest sales in the market followed by Class-7 and finally by class 6. The sales of new trucks have been declining in the past few years due to number of reasons such as poor economy and depreciation of US dollar. What this means to Bose is that they have to target used truck owners, fleet company in the market and concentrate less on brand new truck manufacturers. However, this could be a future potential when the new truck sale picks up. In order to find the potential customers for Bose ride system, the company has to focus on large fleet owners in retail sectors such as Sears, Target, Costco and Sysco. Sear/Kmart has over 1300 store within US and they have their own fleet division to distribute their products across the country. Costco has over 550 locations in America and they are the largest whole sale seller in the country. Their revenue is over 7 billion a year and all their products are carried in fleet/trucking system. Due to this reason, Bose could approach such fleet companies to sell their products. Bose ride system marketing team could also focus on commercial fleet carriers such as Landstar Inc- https://www. landstar. om/. They provide the largest transportation services to North America and targeting such fleet company will help boost sales and increase customer base. As the lifeblood of the U. S. economy, the trucking industry employs millions of professional drivers to deliver approximately 95% of the nation’s goods. Wal-Mart is the world’s largest retailer, and has one of the largest private trucking fleets in the world with over 6,800 units in its fleet. These vehicles are the backbone of Wal-Mart’s distribution network; they crisscross the country collectively traveling 900 million miles a year to deliver goods to the retailer’s nearly 4,000 stores. Wal-Mart is currently undergoing a green initiative and is looking to transition a majority of the fleet to hybrid trucks. This initiative could be an excellent opportunity for Bose to market the Bose Ride System to Wal-Mart and have them installed into their new hybrid fleet. Market segments include: (a)Private trucking fleets (b)Contracted distributors (c)Owner- operators Bose ride system marketing team has three market segments to focus on. These market segments have great potential in trucking industry. Bose can find these markets to be a potential for huge sales in the early stages of the product. Segmentation of market is done according to buyer’s potential of purchase. We will see in detail as to who are these buyers. Customer Attractiveness 1=Low 5=High |Enterprise Fleet |Corporate Fleet |Owner Operators | |Size |  |  |350,000 | |Growth (5 years) |(4) Increases in Supply Chain |(2) Low |(3) Flat | | |leverage throughout nation due to | | | | |focus on finding efficiencies. | | |Price Sensitivity |(4) Understand the significance of |(2) Highly sensitive to price and |(4) Understand the significance of | | |reducing vibrations throughout the |often not interested in long term |reducing vibrations throughout the | | |drivers body during trips. Willing |benefits of product. |drivers body during trips. Willing | | |to spend. | |to spend. | |Capability Fit |(4) Fleet managers have large |(3) Significant range in vehicles |(3) Significant range in vehicles | | |quantities of common vehicles. |throughout segment. Though peaks in|throughout segment. Though peaks in| | | |common fit. common fit. | |Channel Marketing Reach |(3) Strong corporate reporting |(4) Limited corporate reporting |(3) Individual owners read | | |structure. Bose can arrange time |structure. Bose can arrange time |periodicals and study industry | | |with management. |with management. Management would |forums closely. | | | |like this level of attention – | | | | |though very busy. | |Willingness to try new brand |(4) Interested in the bottom-line |(3) Interested in the bottom-line |(2) Very focused on tried and true | | |and understands the level of |and understands the level of | | | |innovation |innovation | | |Overall Attractiveness |19 |14 |15 | Sales Goals and Demand Estimations For the Bose Ride System, which is in its early stages of the product life cycle, it is expected that it will take some time for sales to pick up. Because the Automobile Seating market is already saturated with providers of seats such as Bostrom, Recaro, etc. , it will be hard for Bose to penetrate the market. In addition, the growth rate since 2008 for the market has declined by almost 15%; however it looks like the truck freight sector has grown by nearly 4% in 2008. Due to the maturity of the car seat manufacturing industry, it looks like the growth rates are trending down. The Ride System will first target the enterprise fleet segment as that seemingly will offer the most sales in the beginning. In addition, by taking lead from industry sales trends, we can successfully depict similar sales trends for the Ride System for the next few years. Three scenarios can possibly happen, and they are depicted below. Per the NAICS code 33636, the Bose Ride System falls under Automobile Seating & Interior Manufacturing. Per Ibis World’s industry analysis, it looks like the seat manufacturing takes up about 50% of the industry totals. When applying that to the sales figures from 2009, it looks like revenue can be estimated to be about $7,000 million. That includes sales from the top seat manufacturers as well as the little companies. Sales trending for Bose’s top competitors are listed as below (in thousands): Sales Trending for the past 4 years (in Thousands) | | | | | | | | | | | |2005 |2006 |2007 |2008 | | |Competitors |Sales |Sales |Sales |Sales | | |Recaro |234 |265 |270 |270 | | |Bostrom |70 |78 |52 |47 | | |Total |304 |343 |322 |317 | | |Growth rate | |12. 90% |-6. 09% |-1. 55% | Through the Time Series Method, if Bose applies this trending to its 2010 – 2014 sales projections, the figures may look like this: |2010 |2011 |2012 |2013 |2014 | |Sales in Units |200 |226 |212 |209 |206 | |Sales in Dollars |200,000 |225,798 |212,048 |208,758 |205,520 | Market Entry, Branding & Positioning Strategy Though the Bose Ride System is a new product from a new category player, the overarching Bose brand is widely known and accepted across North America. Considered a household name, Bose is most recognized for its high-quality speaker system. According to JD Power and Associates, Bose is the strongest brand power not only in the US, but worldwide. In addition, 88 percent of men and women between 18 and 65 recognize the brand and attribute it to quality, excellence and trust. While this is overwhelmingly associated with audio products, the root essence of these three attributes can be leveraged to capture a new audience in the transportation industry. Many auto manufacturers are already familiar with the Bose Ride System and already talking with Bose about incorporating them into their vehicles. With the brand’s essence and values demonstrated, the new product can be positioned properly in the transportation industry. Next, Bose already has connections in the auto manufacturing industry, so it may not be too hard for Bose to enter the enterprise fleet market. Bose will have to ensure that its product is viewed as being beneficial for the end user, and not just an accessory. Therefore, Bose must position the Bose Ride System as a unique approach to eliminating long-term stress on drivers’ bodies as they transport goods across the US. The goal of Perceptual Positioning is to create enough interest or buzz in a product that it will demand the attention of consumers. It is also a communications campaign that it designed to instill in the prospect’s mind a vivid picture of product and its brand. In our case, the Bose Ride System. Due to the fact that Bose already has great brand recognition with consumers, this shouldn’t be too difficult. A successful communications campaign guides potential customers through a series of attitudes and effects: Awareness leads to comprehension, comprehension leads to favorable attitude, a favorable attitude leads to interest, interest leads to intention, and intention leads to purchase. Positioning Statement: For Long-Haul Truckers, the Bose Ride System is the smoothest ride around because it uses state of the art technology that senses, analyzes, and counteracts forces from the road. Product positioning process for Bose Ride System: Perceptual Positioning Map: [pic] The truck seating market is currently a hostile environment with many leading industry competitors. The combined market share of the leading competitors indicates how much of the market may be left over for a new entrant. Market hostility may increase with the entrance of the Bose Ride System and Bose must be prepared for this. Majority of the main competitors are highly dependent on the sales of their truck seating and will likely put up a fight upon the introduction of a new product into the market place. This strategy could include aggressive pricing incentive, deals, or patent challenges. Bose will be using the Bowling Alley Strategy when entering the market. This approach uses a low-key calculated entry into a narrowly defined market. Once successful entry into one segment is completed the firm can move on to other segments in hopes that the momentum will carry over. In Bose’s case they have chosen Class 8 trucks in the commercial truck fleet as their target segment to enter first. This method is appropriate for Bose so that it can quietly enter the market and establish itself in the truck seat industry without alarming competitors. Once Bose is a trusted brand name, they can expand into other markets such as individual owner-operators and OEM manufacturers. Next, in terms of a market entry strategy for the Bose Ride System, it falls somewhere between being a pioneer and follower. The product would be considered a pioneer for taking air ride seating one step further with state of the art technology. This provides Bose with the distinct advantages that are associated with pioneering such as (a) to determine the industry standard or rule of the game in the market when it comes to such air ride seating (b) select the best positioning, suppliers and distributors for such a system c) capitalize on the economies of scales and learning curve effects that result in cost advantages over followers, and (d) build the reputation of innovativeness and brand loyalty among the customers. Bose does face a challenge though, in that there are already other forms of air ride seating options available in the market and when taken in terms of truck seating in general, it would be considered a follower that has developed over existing products. In such a case it has the advantage of capitalizing over mistakes of previous seating manufacturers in terms of technology, product positioning, channel selection, promotion and pricing. Also, it is bound to face competition from existing products that already have a hold on the market. Because of its unique position Bose has to address a few key issues to ensure longevity, these include high product quality, heavy scale advertising and superior customer service. Product and Service Strategy Research suggests that out of the four strategic factors marketing synergy, technical synergy, product advantage and international orientation; product advantage is the most important. This tells us that customers first and foremost want to know what the core benefit is of any product, or in our case, the Bose Ride System. The core benefit or “product advantage” that the Bose Ride System offers is that it improves ride quality for long-haul truckers. Potential consumers will need to make a decision whether they believe Bose will follow through on this claimed benefit. To by or not to buy, that is the question. The BoseRide™ system’s marketing strategy in addition varies by customer segment. As indicated in the customer matrix, the enterprise fleet management segmentation is initially the primary focus. In this situation, the product strategy revolves around the benefit of reducing whole-body vibrations of the employees. This customer is accountable to their employee and their shareholders. Consumers make decisions based on brand name, features, design, quality and after sale service. First up is brand name. Bose has an excellent brand image and reputation, but much of that reputation stems from the audio side of Bose, not truck seating. Consumers will need to develop the vision of Bose as a brand that can be trusted. Moving on to features, The Bose Ride System features state of the art design and technology that improves ride quality by intelligently responding to changing conditions. It continuously senses, analyzes and counteracts forces from the road instead of just damping them. Bose speakers are considered to be among the best quality speakers on the market. Bose needs consumers to link these two sides together and put their faith in Bose to create high quality truck seating, just like they create high quality speakers. The Bose ride system weighs approximately 180 lbs and will be shipped as one single package from its plant in MA. Bose ride system is designed in such a way that a Bose certified trained mechanic can fit it in approximately two hours. Currently the Bose ride system is sold only as an aftermarket product and hence it has to be installed separately by a trained mechanic. It is designed specifically for Class 8 over-the-road trucks. Bose does not recommend installation in other vehicles. It also comes with a 1 year manufacturing warranty. Bose takes pride in providing high quality products to its customers; that will not change when they begin selling truck seating. Bose currently offers a 30-day performance guarantee on all of their products. If for any reason you are unhappy with a Bose product, simply return it within the 30 days for a full refund, no questions asked. Consumers love knowing that they can “test” products out for a few weeks before they decide to keep it. If Bose offers that same performance guarantee with truck seating, consumers will feel 100% confident in purchasing the Bose Ride System and putting their trust in the Bose name brand. These features of warranty and installation are especially important to enterprise customers as they are interested in large production quantities to gain economies of scale for purchasing and maintain low transaction costs with fewer suppliers. For the future looking towards expansion Bose needs to focus its strategy on offering more viable options for installation and warranty so that the consumer feels like he is being offered more choice. This is largely in contrast to the owner operator customer segment. OO’s are just as cognizant of their health, however research shows they are more brand conscience and less focused on installation. A 2009 LandLine magazine survey indicates 56. 4% of OO’s perform their own maintenance, and when it comes to purchasing oil and tires more than 70% of drivers prefer trusted names. Knowing this, the messaging hierarchy changes to lead with the brand and how its technology background enables this breakthrough performance in the industry. Messaging Hierarchy Grid: | |Enterprise Fleet |Corporate Fleet |Owner Operators | |Lead Message |Reduced Health Risks. Studies show the |Reduced Health Risks. Studies show the |Reduced Health Risks. Studies show the | | |exposure to whole-body vibrations causes|exposure to whole-body vibrations causes|exposure to whole-body vibrations causes| | |health problems. This product mitigates |health problems. This product mitigates |health problems. This product mitigates | | |this risk, thus reducing health |this risk, thus reducing health |this risk, thus enabling them to be | | |premiums. |premiums. |healthier. | |Message 2 |Reduced Health Risks. Studies show the |Brand. technology background enables |Brand. technology background enables | | |exposure to hole-body vibrations causes|this breakthrough performance in the |this breakthrough performance in the | | |health problems. This product mitigates |industry |industry | | |this risk, thus enabling employees to be| | | | |happier. | | | |Message 3 |Economies of Scale. Bose understands the|Installation. With a varying fleet of |Robust Warranty. OO’s operate their own | | |importance of purshasing hundreds of |vehicles it is important to Corporate |business and want the security of | | |units at a time and can support large |Fleet managers that this product fit |knowing their investment is protected. | | |accounts from a supply chain |their entire line. | | | |perspective. | | | |Message 4 |Brand. technology background enables |Robust Warranty. OO’s operate their own |  | | |this breakthrough performance in the |business and want the security of | | | |industry |knowing their investment is protected. | | Channel Strategy Channel objectives define the relationship between the manufacturers and customers. Bose has already determined the channel of distribution for the Bose Ride System. Bose handles all the tasks necessary to make a sale and deliver the product to the customer. These tasks include making contact with potential buyers, negotiating, marketing, servicing the products, transportation and storage. This should come as no surprise but Bose has chosen to use a direct channel of distribution. Starting in March, the Bose Ride System is being sold and distributed directly by Bose, via a specialized sales team out of Framingham, Massachusetts. As stated before, Bose is currently only selling seats to fleet owners who are purchasing in bulk. Down the road, Bose will begin selling directly to individual owner-operators as well as aftermarket distributors. One of the main reasons Bose has chosen to sell direct is due to the complexity of the product. Bose needed an expert sales team to demonstrate products, provide detailed pre-sale information and lastly provide after-sales service. Direct marketing means selling products by dealing directly with consumers rather than through intermediaries. The main advantage of selling direct is that there is no need to share profits with the intermediaries, since they have been excluded from the process. However, direct selling does have its constraints and limitations. Bose may be giving up more cost efficient distribution logistics that intermediaries have available because they have chosen to sell and distribute directly from a centralized sales team in Massachusetts. Intermediaries may also have sophisticated Customer Relationship Management System (CRM) at their disposal that Bose simply does not have. Finally, the biggest constraint that selling direct has on Bose is the time and money constraint. Direct distribution is not easy work, especially for companies that do not specialize in it. This is why it will take a lot more time and effort for Bose to effectively sell the Bose Ride System directly. Bose has to use a highly specialized sales team to handle the complex selling situations, which does not come cheap. The Bose sales team requires a high degree of market knowledge and selling skills to effectively sell the Bose Ride System. As stated previously, Bose has chosen to sell the Bose Ride System directly. So Bose will be performing all the necessary tasks involved from assembly to delivery. These tasks include but are not limited to marketing, manufacturing, distributing, and after-sales service. An alternative method that Bose could use to distribute the new Bose Ride System is the indirect distribution method. In using this method, Bose would need to hire intermediaries that are responsible for the distribution of goods on the behalf of the Bose. These intermediaries serve as channel partners that ultimately play a vital role in Bose’s strategy and success. However, indirect channels are generally used when the markets are fragmented and widely dispersed and when the products aren’t considered complex; which does not apply to Bose’s situation. Despite Bose using a direct distribution approach, Supply Chain Management is very important. That is why Bose has developed an approach to quality management that is driving the integration of manufacturing and selling across its supply chain. Bose has great business relationships that help make the entire process a little easier. SCM isn’t quite as complex when using direct distribution because you don’t have to deal with any suppliers or intermediaries. However, you do still have to deal with customer relationships, customer service, and order fulfillment. I believe Bose should focus on quality management in order to gain a competitive advantage in the market. Bose has never sold a product like the Bose Ride System before and because of this, customers are going to be weary of purchasing it. If Bose begins selling the Bose Ride System and customers aren’t satisfied with the quality, or keep having to have the product fixed, Bose will lose any respect it had in the automotive seating market. This is why I believe Bose must focus on quality management and make certain that the products that the customers receive are to the highest quality possible. Supply Chain Diagram: [pic] Pricing Strategy Strategic and Tactical Pricing Objectives Although the car seat manufacturing market is saturated with a few companies at the top, Bose’s initial pricing strategy will not be to meet the pricing of competition; however, this may be something to look into when competitors begin to mimic Bose’s technology and begin losing market share. Because the Bose Ride system is a new product that defines a new approach to an old idea, it is important that Bose focus on the following objectives: to achieve a target return on investment, and to achieve a significant market-share. Firstly, Bose’s objective is to reach 100% profits, and the reason its goal is so high is because of the value of the Ride System. The core benefits of the Ride System include reduced stress on the body thus creating more efficiency from the driver, and increased comfort for the driver by reducing vibrations felt on the road. The health improvements offered by the Ride System should be reason enough for many of the fleet transporters to install and switch; however, it will take some time for many of the customers to realize the benefits of the Ride System. In order to recoup the costs of manufacturing products, it is important for Bose to recognize all costs may be incurred. The cost dynamics in any firm change over time. Some of costs change due to the company’s overall strategic objectives, i. e. saving money, changing suppliers, etc; other changes, however, are not subject to the overall goals and objectives of management, and it is key to be prepared for such changes. A firm with insight into cost dynamics may be able to position itself to gain cost advantage by anticipating changes such as industry growth, differential technological change, inflation, and market adjustment. Because the seating industry is very old and saturated, Bose can bring a “breath of fresh air,” and introduce a new product. The most important cost that Bose will have to be prepared for is Market Adjustment where competitors adopt to similar activities as Bose, and thus driving up costs to incur such activities. For example, if Bose uses a specific vendor for seat materials, other companies may follow suit to remain competitive. The supplier, then, has the upper hand and may increase its price in order to increase its profitability. It is necessary for Bose to anticipate its competitors to try to mimic its technology upon introduction. Given the early stage of the lifecycle, the initial pricing strategy assumes a low level of units sold and a unit profit two times the variable costs required to manufacture and install. Effectively this is a 100% product profit margin and is in line with new product pricing requirements of the corporation. The purple shaded area in Exhibit 1 illustrates this notion. Given the exclusive breakthrough technology incorporated in the product, it is difficult to anticipate when competitors will catch up or when demand grows exponentially. In either event, the product will find itself in the green shaded area where the feature/benefit story no longer resonates and customers purchase based on price alone. In this case, product profit is lower requiring only a smaller margin over product costs. The demand of the product depends greatly on outside factors. Healthcare costs continue to stir contention in board rooms with companies like Caterpillar taking million dollar charges in preparation for healthcare costs. Bose is uniquely positioned to offer heavy trucking companies an ability to reduce the risks of back problems with this product, so it is reasonable to conclude that demand could spike due to political factors. Price Relationship to Life Cycle [pic] Pricing Methods & Strategy With the introduction of the new Bose Ride System, Bose has chosen to use a skimming pricing strategy. The Bose Ride System uses state of the art technology and there are currently no other products like it on the market. There are similar products that use similar technology, but Bose is the only manufacturer of truck seating that uses sensors and control algorithms to counteract road disturbances before they reach the driver. These technological advantages give Bose grounds to demand a higher price at the offset. As time passes and competition begins to duplicate the product and competition in the market increases, Bose can and will lower the price accordingly. Due to the use of this patented technology, Bose will initially set the price at a high level in attempt to capture early profits as well as quickly recover some of the high costs of development. In addition, Bose’s CEO, Bob Maresca, stated that although this technology is a breakthrough, the pricing for the seat will be “well under $10,000. ” The skimming pricing strategy will also support the marketing goals of Bose. Bose is marketing the Bose Ride System by saying it’s a “breakthrough” and boasts “unmatched performance. ” These lofty marketing slogans come with a price. It would look bad in the eyes of the consumer if Bose makes these statements about how the Bose Ride System will change the trucking seating industry forever and then places a low price tag on it. The automotive truck seating market isn’t exactly commonplace and is somewhat of a luxury goods product, and luxury goods almost always comes with a high “luxury” price tag. The high price tag on the Bose Ride System is a sign of high quality, and as everyone knows with Bose, they sell very high quality products. Pricing Strategy & Market Penetration Bose will need to consider the competitions response to the introduction of the Bose Ride System when deciding its pricing strategy. It can be assumed that the major competitors will want to preserve their market share. Bose will need to examine the cost structure and strategy of each major competitor while also remaining aware of potential producers in the seating industry. By benchmarking competitors, Bose will be able to determine how well competitors will be able to respond to the new product by offering their own price reductions in the future. However, as Bose has chosen to use a skimming strategy, they will have to consider that some competitors may not offer price reductions. Instead they may offer other incentives to customers such as better warranties, or installation options. Bose must be aware that these types of benefits could take away from potential market share regardless of the price point they choose. Alternately, competitors can react by adjusting their own products to remain competitive and retain their market share. E-Commerce The Bose Ride System is not a product that will be sold via the internet, although other products offered by Bose, i. e. headphones, sound systems, etc are currently available through the website. Bose is selling the Ride System only through contacting sales people in Framingham. However, the Bose website is used primarily as a source of information and goings-on in the company. In the future, Bose may feel that online support for fleet managers who have purchased the chair, may be a good route. The use of the internet for customer service may prove to be a powerful value-added incentive to customers. Works Cited: Bose Corporation. https://www. bose. com/controller? url=/bose_ride_system/index. jsp=AUTO0003 Ibisworld Industry Reports. www. ibisworld. com/industry/default. aspx? indid=835 Skydel, Seth. “Driver Retention: SEATS. ” Fleet Equipment. August 2008. https://www. just-auto. com/article. aspx? id=89314 https://knowledge. wharton. upenn. du/papers/195. pdf Segars, Albert H. , Warren J. Harkness, and William J. Kettinger. “Process Management and Supply-Chain Integration at the Bose Corporation. ” Interfaces 31. 3 (2001): 102-114. Business Source Premier. EBSCO. Web. 13 Mar. 2010. Hutt, Michael D. , and Thomas W. Speth. Business Marketing Managment B2B. 10e ed. Cengage Learning, 2010. Print. Pages (282-289)(331-341) https://www. 12manage. com/description_cost_dynamics. html https://www. investopedia. com/terms/p/priceskimming. asp https://trucktrend. automotive. com/130923/163-news100202-bose-class-8-truck-seat -system-actively-counters-shocks-vibrations/index. html ———————– As first process of identifying competing products, we identify Bostrom seats and Seats Inc as the major competitor. They have been in the market for years and they offer over 25 different seating options. The Bose ride system is the only seating product currently available by Bose, making it difficult for customers to even consider Bose. Attributes of Bose Ride System – customers are well aware of the fact that Bose is an innovative company and their products has better quality than others in the market. Bose Ride System is designed to protect and safe guard the human health by absorbing the vibrations from the vehicle. For some buyers this is important and differentiates them from other competitors. Information about the potential customers such as Walmart, Sears, Costco and other commercial enterprise has been collected. They tend to consider better health of their employees who drive the truck for them and also consider the return of investment with the pricing. Bose Ride System has to address these issues and their pricing should be competitive. The current position of Bose Ride System in the market is very strong. This is mainly due their existing brand name in the industry. Bose has a good brand name in the premium market solely because of their innovative ideas. All the existing loyal customer of Bose will consider Bose Ride System. The preference of the market for such product mainly depends upon cost of the product. Not all consumers are keen towards innovative products mainly because of the cost it comes with. Bose Ride System has to compete with the cost of the product as that of competitors in the market. They may even have to educate the customers for the importance of health and improve awareness. Bose Ride System marketing team has to study customer attributes to such products. They need to improve the awareness about the health among customers and explain the effect of road vibrations on human body. The team should work on pursuing a strategy to increase the importance of this attribute to the customers.

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