Sonance Case Analysis

Case Assignment 1: Sonance

BUSI- 8106 MARKETING

Vijayakumar Ramamoorthy

(201585072)

Executive Summary:

        Sonance is a leader in manufacturing high audio speakers which is mounted in walls. It has lost valuable market share and margins due to brand dilution after entering the mass retail market and poor distribution tactics. In order to grow profits Sonance should either go back to its original way of selling via custom installers or find new channels to sell their product. As a result the company has to choose between launching the detachable “iport” which targets the retail consumers market or the high-end “architectural series” which targets the custom installers and architectural community. If Sonance is deciding to sell the architectural series it has to decide upon the price at which it will be sold. Sonance has to proceed with all the above process keeping in mind the competitors price and its customer margins.

        Based on the breakeven sales volume and customer lifetime value analysis my best recommendation for this case from all the options available will be to proceed with the architectural series. Price the product at 900$ per speaker for the custom installers and 2500$ for the end user who is the house owner. If we proceed with the highly priced iport it further damages the reputation of the company as a high-end brand. On the other hand the uniqueness of the architectural series will re-establish Sonance as the innovative market leader. One more suggestion that I would place here is to reduce the price of the original series speakers to 90$ for the dealers so that they can compete with speaker craft on the low price market. If the above is followed Sonance can regain its market position and gain profits from the blooming industry.

Introduction:

Sonance is a company that has been long established as the leader in high-end speakers systems. The company is at a point of change where the senior management has to decide whether the company will be a high end speaker producer that is served through customized installer channels, or a mass market retail audio systems maker. There has been a rise in the competition since the company was started. The reduction in loyalty of its dealer channel and a highly knowledgeable and choosy customer base hurt the company's future forecasts. 

        At the start of 2000, when the competition in price between speaker craft and other competitors encouraged Sonance to increase consumer variability through mass retail markets, the company sacrificed its identity as a high end brand distributed by specialized dealers. Without proper knowledge in business to customer marketing and poor understanding of the different markets Sonance suffered losses in the mass retail markets. In the same time it also lost trust in the market which they already established.