The Headphones Market

1. The global market
The growing success of portable devices such as smartphones or tablets boosts the selling of associated headphones. Indeed, people started to buy an increasing number of headphones because they were disappointed by the quality of intra-headphones given with their smartphones or tablets.

The global headphones market is expected to increase of 20% in 2012 to reach $6 billion in value (versus $5 billion in 2011).
With an increase in sales from 228 million units in 2011 to 260 million units in 2012, this market will certainly keep growing until 2016 with a possible growth to 330 million units !

2. The French market
Nowadays, in spite of the economic crisis, the headphones market keep growing with record sales : 9.5 million headphones sold in France in 2011 for a global turnover of 286 million euros ! And in 2012, the turnover of the first trimester is already 18% than the one for 2011 (with already 2.3 million headphones sold). This increase is mostly due to the consumer appetite for high-end headphones (over 200 euros).

Our focus :
The sales between the headphones are split between different categories, according to the shape (in-, on- or over-ear) and to the price of the product. Even if the classic cheap in-ear headphones still represent 60% of the total unit sales, the most popular product is the high-end over-ear headphones, with an extraordinary growth in sales. They represent 16% of the overall sales in 2011.

We are going to focus on this precise product and how brands manage to make them so special in order to convince customers to pay that much for it.

3. Value drivers of this market

The market leader a few years ago in Europe was Philips. But, they are now losing market share on the overall electronic market, including in the headphones segment. We are going to see why…

Here are the claims of the brands we are going to study :
– People aren’t hearing all the music for Beats : the goal is to help them to properly hear it. “a superior end-to-end music experience – with headphones, devices and services – so fans feel the emotion and hear the music the way artists intended it to sound from the studio”
– “the greatest and most exciting sound experience for people worldwide” (Sennheiser)
– “developing unique sound solutions to meet virtually any audio challenge in any application, even in the space program” (Bose)
We can see that the common points between those brands (the value drivers on the market) are to deliver the best possible sound to the customers.

Some brands like Audio Technica for instance emphasize the quality of the sound, even explaining how headphones work and why their product is so effective. They even give technical explanations about the driver, the frequency response or even the output sound pressure level… This way they target more audiophiles who will take into account the technological side of the product.

There are other characteristics that consumers consider when buying headphones :

– Battery autonomy

– The quality of bass, medium and highs

– Pressure on the ears

– Nomadism of the headphones (whether they are easy to carry or not)

– The weight

– Size of the earphones

– Noise cancellation features

But, besides this technical and quality of sound that are traditional concerns on this market, a new trend emerges. Indeed, since the creation of Beats by Dr Dre, headphones also have to be fashionable. This is not just about being good quality sound, but also about belonging to a group, conveying specific values. The design and the style associated with the brand.

Considering the segment of nomade headphones, mostly with noise cancellation artifices, here is an overview of the main brands on the market according to two criteria :

– How much they are focused on technical abilities or fashion

– In comparison with the price

Some of these brands clearly have a few different axis of positioning according to their lines.

Constructed from data taken from La Fnac website (see comment below).

4. The job of a brand manager on this market

In addition to dealing with the brand image among consumers, the brand manager also has some other criteria to consider :

• The touch points

In France, the different brands of headphones are sold online or through retailers such as La Fnac, Virgin Mega Store, Carrefour, Darty, Conforama…

When the consumer is in touch with the brand via the website, he can see the whole universe of the brand. The design of the website, the colors, the music, the claim, the visuals… All of this build in the mind of the consumer the brand identity.

• Associated activities & rituals

Brand managers know well that headphones are related to leisure, music permit people to escape from their daily lives. This is something that need to be performant – to deliver a high quality sound, practical – to be carried easily in transportation – and also comfortable – to prevent any inconvenience while wearing it… In addition, it should to some extent reflect the consumer’s personality. Indeed, the music they listen to and the way they use their headphones are easy to guess according to the brand its owner choose.