Top audio, missed opportunities, B&O & new customers

[Mark]

Sorry for the multiple posts, but this topic got me to do some thinking!

What if the somewhat affordable Theatre was a problem for B&O.  Like many people who already have B&O speakers and wanted an update to the Beosystem 4, the Theatre was a dream come true, albeit we had to stretch our budget for it quite a bit.  While the Theatre is a stand-alone product you really benefit from additional speakers.  The current offerings by B&O are expensive probably causing much moaning from people in this budget class.  B&O sees a need for smaller satellites but do they want to put out multiple versions to satisfy all budgets?  That could be a logistical nightmare.

Maybe the initial price of the Theatre were for the B&O fans that were willing to stretch their budget for it, and 10-11 months later they figured we got ours.  Now priced $2000 more they are only attracting people who can easily buy the other speakers in their catalog. I have a 5.1 system, could I upgrade to a 7.1 or 9.1 system??? No!

[Mr10Percent]

From a recently deleted post, it is clear there will be a new loudspeaker, a few other “personal”/beoplay-type products etc..

There is no forecast of a cheaper Theatre and with the Cradle to Cradle philosophy, that might be it, save for a couple of plug-in modules etc.

It has also been cited that there will be no standalone beolabs – all (for the foreseeable) future beolabs will have Mozart and inbuilt Beosounds. It’s a shame as I think an ultra-compact non-intrusive satellite speaker for the Atmos Theatre is what B&O need and not a living room filled with Beolab 28 and that the role for even more compact speakers like the Balance is well covered already.

So sadly, I hate to say it but my feeling says many will be disappointed for at least 12 months or so?

[Sandyb]

Yes, you’ve summarised it pretty well (although doubling of margin is not quite their aim, as that would be unrealistic!).

But otherwise it can be summarised as this : the strategy has changed to target the VHNWI’s, as that is where they think the money is, especially for luxury brands with some halo desirability associated.

This has various implications, be it a comfort with high visibility collaborations, moving some previously standard colours into custom/bespoke, more flagship experience stores, true exclusive luxury pricing etc etc.

There’s also a geographical market focus shift involved too, with a downplaying of China as a growth opportunity, and a re-emphasis of North America.

Additionally, there is some implicit comfort in not trying to expand sales volumes, and an acceptance that selling less for more is not a bad result. It at least ensures that supply / production overhangs won’t occur if the economic environment has a down period.

Both here and on Discord there is much discomfort at this new strategy, though while I don’t like it at all for my tastes / wallet, I wouldn’t be so quick as others to dismiss it as doomed to fail.     They’ve had some success in targeting the wealthier ends of London / Paris (which is having a mini boom) and spots in America.

They will certainly need to raise support levels to satisfy the ultra wealthy clients, who will be less tolerant that we are of software glitches.

But that caveat aside, there is non trivial chance that as a medium term survival strategy, it may work out.

 

[Peter the Biker]

Mark wrote:

Sorry for the multiple posts, but this topic got me to do some thinking! What if the somewhat affordable Theatre was a problem for B&O. Like many people who already have B&O speakers and wanted an update to the Beosystem 4, the Theatre was a dream come true, albeit we had to stretch our budget for it quite a bit.

A dream came true, for me too, as i own the right spekers for a surround system.

But the price increase will be a nightmare coming true for some who just wanted to wait a little bit to see the experiences of us early adopters.

All in all I prefer a brand for people with exquisite taste to a brand for people with extraordinary high income.

(Aunty Edit told me about some typos)

[trackbeo]

Tim wrote:

I had a long conversation with my dealer today and he said he will probably close down his business in the next 12 months.

He must be getting old: a younger dealer would cut bait then re-open multi-brand, and try to build a business on the back of the B&O “installation book” they built up over the years. The Unique Selling Proposition? “Sounds as good, waaay lower price, spend that leftover money with my cabinet-maker to craft truly custom install for you, not a ‘plop-this-icon-down’ living room intrusion. Oh, and my {Control4|Savant} remote won’t keep dying on you.”

Tim wrote:

Every little boy dreams about owning a Porsche, Ferrari, girls dream about owning a Hermes Birkin bag. But I have never seen kids in elementary school playing that they have a b&o.

I’m sure back when B&O made (contracted?) their dollhouse miniatures, some dealers and customers made fun of “wasted marketing money.” But if they were here today and available for every “Barbie” house, they could sow the seeds for the future. B&O even made pink anodizations in recent memory! But movie product placement could have cost as much as a Porsche sponsorship, and children can’t increase next quarter’s revenues — which is what any CEO, and the recapitalization investors, *need* nowadays.

[Tim]

I had a long conversation with my dealer today and he said he will probably close down his business in the next 12 months. He complained that already b&o‘s target group was very limited and this price increase will leave him no other choice. The other problem is that online stores sell some stuff with 30-40% rebate.

As I work a lot with the future clientel B&o has targeted and I know some brands very well that have the same target group as I work daily with them I see two problems for B&o.

1. Their future customers need to know B&o. B&O is not well known in that target group and on top they miss an amazing story. Their story is good but it is not that good that people are attracted by it. Good design is not everything 😉

2. with their descision to aim at a new segment they probably lose a big portion of old customers. And their segment is extremely small. Normally luxury brands live from two types of customers. The ones that can easily afford and those who always wanted to be part of that story.

I wish B&o all the best but in my opinion this is the wrong way. They should keep in mind they are not targeting the top 1% of people. Their new target group is the top 0,001% of people and even those only need a tv and speakers from time to time and they are way less attracted to the newest tech than the top 1%. We are mostly talking old money here.

 

p.s. I can‘t see one single German reseller who has applied the new prices 😉

[Mr10Percent]

Tim wrote:

I wish B&o all the best but in my opinion this is the wrong way. They should keep in mind they are not targeting the top 1% of people. Their new target group is the top 0,001% of people and even those only need a tv and speakers from time to time and they are way less attracted to the newest tech than the top 1%.

And that is the most glaring problem I see with B&Os strategy and new demographic. There are two major issues I see……..one is that sales will collapse in the interim as Dealers close due to lack of sales and “affordable” top end products wither away, the Company will be just another Bluetooth gadget and headphone supplier on Amazon and second, when one looks at the net worth and disposable income in the top 5%, 2%, 1%, those numbers and those numbers of who give a damn on high end AV and of those who give a damn of that AV being B&O is going to be very small.

I think this is going to be a classic case of Corporate self-immolation which could only be eclipsed by the likes of Gerald Ratner of “Ratners Jewellers” fame. (A CEO of a big low end jewellery chain who called his own products “a load of cr@p”)

[Tim]

I totally agree @Mr10Percent.
The biggest problem is that b&o has a very bad marketing. Actually it is non existing. The influencer stuff they do is not important for really wealthy people. They need the story and this is missing.

Every little boy dreams about owning a Porsche, Ferrari, girls dream about owning a Hermes Birkin bag. But I have never seen kids in elementary school playing that they have a b&o. This commercial actually describes what b&o needs to have success with this strategy https://www.youtube.com/watch?v=7sWPHKU1XZU

They need kids that dream of owning the damn product.

[Mr10Percent]

Hi Tim,

Thanks for sharing. I agree too with your point on B&O Marketing.

I think another aspect to consider – and it goes to your Birkin Bag is what a lot of us BeoEnthusiasts get drawn into is the slick aluminium, wood and glass of B&O. In a way its quite manly and my wife comments often on this (she “accepts” my brown leather sofas, modern sculptures, Walnut sleek sideboards etc…but only thru our history together).

However, to the chagrin of many BeoWorlders, my view is the Marketing and Design Dept should be looking to enhance room interiors more with their products by getting the WAF right. Get the WAF right and you get far more sales.  Make it seem poor value or too masculine/complicated in terms of interior design/or technical setup (App/software glitches) …..you lose the sale.

[matteventu]

Beosound Emerge up to £799 LMAO.

Anyway, I agree B&O marketing is terrible.

B&O social pages specifically, are absolute shit.

70% stories about those fucking racing partners nobody gives a shit about, 25% about some random “””influencers””” nobody ever heard of, and just 5% about their products.

Literally money flushed down the drain.

[XavierItzmann]

I read the following comment above and it prompted me to find out more:

They should keep in mind they are not targeting the top 1% of people. Their new target group is the top 0,001% of people

Barron’s says North America had 1.05 million VHNWI in 2021, and since population was 332 m, you get 0.32%.  But I believe it is not just VHNWI’s who drive spending, but also their wives and descendants.  There’s a mixup with the Mexican and Canadian VHNWI’s, but we are probably still in the 1% ballpark.

Now in Europe there were 0.67 m VHNWI in 2021, and the EU population was 444 m, so that gives you 0.15% —yeah, maybe more rarified than just 1%, but maybe closer to the 0.5% top families?  I realize there’s also a mixup there between the EU and Europe, so we might be counting British and Russian one-percenters in the EU population numbers.

In Asia, even though the number of VHNWI is analogous that of Europe, there are a lot (a lot) more of the less fortunate, so in that case certainly we are looking at a much more rarified audience than just the tenth-of-one-percenters —but fortunately these types can be found in just a few cities, to wit (in order):

NY, Tokyo, HK, LA, London, Paris, Chicago, San Francisco, Washington, Dallas.

The good news is that B&O can stop doing global advertising, and just focus in oh, maybe fifty cities worldwide.  The bad news is that reaching the headspace of the top 1% to 0.01% can be very expensive.

I must say, the current strategy (here in the US) where their dealers outside the major cities are not even B&O dealers, but dealers-installers of high-end electronics, might be the (sadly and soul-lessly) expeditious approach: you call the high end A/V guy to “update” your house, are willing to cut a check for a significant fraction of a million, and let the A/V guy guide you to whatever is appropriate for the situation… and hopefully B&O can be part of the ticket.

[matteventu]

Just noticed that Beoplay HX have had a price increase, for the first time in their life. From £449 to £549.

Anyone know when exactly it happened?

Also BS A1 2nd Gen went from £239 to £259, and Explore from £169 to £219 lmao.

They’re going absolutely mental.

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