Name

Professor
Music Industry
Course Code
14 Oct 2019
Price Assignment

Price: Research + Strategy Assessment, Part 1 (Goods)

I selected Bose QuietComfort 35 II Bluetooth Wireless Headphones (QC25ii) and chose

2 physical stores and 4 websites as a variety of resellers which included Bose, Focus Camera,

Amazon, Guitar Center, Electronic Express and 4 Electronic Warehouse. All resellers for

QC525ii are in the United States.

QUANTIFY AND ANALYZE

Comparing the prices along with 6 resellers, the range for the total price as $ 349.00 to $390.88,

a difference of approximately 11%. It is a $50 difference. Based on the market's reponsiveness

to price, popular resellers such as Amazon and Guitar Center established a fixed price of

$349.00, which is a competitive price based on both sites' target audiences, consisting of both

avid music consumers and musicians. When put against production costs, based on Bose's

production price at $399, resellers skimming the price at a 11% difference is positive considering

the large traffic they could draw to the websites, which translates into more potential buyers.

Even when Bose's headphones are expensive when compared to similar products, the company

offer valuable and unique features justifying the price, such as: Alexa built-in cappability, noise
cancellation and being an Amazon certified product, which validates Bose's headphones as a

quality product.

PRICING STRATEGY

Bose's pricing strategy is based on value pricing. Features as the Alexa integration represent

what Magretta (2012) identifies as a good strategy, as it offers a distinctive value proposition that

cannot be found in similar products, there justifying the pricing difference among similar

products and Bose's headphones. The strategy's success could be evidenced by the 4-5 stars

rating on both Amazon and Guitar Center's websites and positive buyer's reviews, which

constitute another validating resource in order to justify the $349 price. Also, by implementing

the Alexa voice control, Bose made sure that their product would create a synergy with

Amazon's popular device, which makes it easy for customers to create a bundle price that would

lead to major sales (Bose's headphones and Alexa combined).

According to Porter, as cited by Magretta (2012), Bose's headphones are offering a value

proposition that answers Porter's three questions: targeting at music lovers and musicians (which

customers?) in need of high-quality headphones integrating with Alexa's features (which needs?)

at a premium price at which those needs are met (what relative price?).

By giving them to resellers at a 11% discount price, Bose's pricing strategy becomes sucessful by

relying on the resellers' daily website traffic to get more potential buyers. The pricing strategy

was to create a penetration price that allowed them to break into the wireless audio market by

teaming with Amazon's top featured product: Alexa. In this manner, the 11% discount is an

acceptable strategy, as the difference would be supplied by increasing selling potential. The

success of the pricing strategy, again, could be evidenced in buyer's reviews found at resellers'

websites.
EVALUATION OF THE MANUFACTURER'S PRICING STRATEGY

By clearly defining a unique value proposition with the QuietComfort 35 II headphones and

performing a segmentation process that oriented their product to music lovers and musicians,

Bose established the base of the Nagle & Hogan Pyramid. In terms of the price structure, the

distribution chain to resellersallowed the product to reach larger audiences, something that would

not have been possible by direct selling on the manufacturer's website. In this manner, Bose

pulled a value pricing strategy that allowed them to become both competitive and accessible to

their target customers. However, in terms of Nagel & Hogan's value communication, the Alexa

integration aspect could have been transformed into a powerful experience that allowed

customers to emotionally resonate with the product; but Bose have not implemented a marketing

strategy that relies on value communication yet.

In terms of pricing policy, the value pricing strategy used to get resellers to position the product

was successful thanks to the core values of the product. Also, Bose managed to meet sales and

share objectives by reaching a price value that allowed them to cover production costs and

remain both accessible and profitable. This pricing strategy seems adequate, as it allowed a

product that costs six times more than similar ones to become a top-selling article by teaming

with another top-selling item from a major reseller.

SKULLCANDY AND BOSE (RETAILERS)}

Skullcandy and Bose share the same pricing strategy in terms of offering discounts to resellers in

order to attract potential buyers and reach a larger audience. However, Skullcandy's Crusher

ANC Personalized Noise Cancelling Wireless Headphones do not offer a distinctive value

proposition, which leaves their $320 price at a disadvantage against Bose's Queit Comfort

Headphones $350 price, but offering the Alexa-integration bonus. The strategy however, is
equally successful for both companies, as both enjoy a great reputation in resellers such as

Amazon, which translates into more sales.

AMAZON AND GUITAR CENTER (RESELLERS)

When comparing Bose's headphones with similar categories, such as "wired headphones",

"gaming headset" and "portable bluetooth speakers", there is a difference in terms of price

strategy. The aforementioned categories offer products at a much lower cost, however, their

retailers aim to skimming the prices instead of value pricing in order to become competitive.

This strategy would turn potential buyers to products that meets their needs for the lowest price,

which is effective on a different level than that of value pricing.