Running head: SONANCE CASE STUDY 1

Sonance Case Study

Institution:

Date:
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1. Company’s Overview

Sonance Company

Sonance was established in 1982 by Geoff Spencer and Scott Struthers after realizing the

essence of audio resolution that enables delivery of unmatched services combined with less

visual interruption. Indeed, these investors had noted a big gap in the audio sector and they

decided to capitalize on architectural speakers. The core objective of this company was to

modernize the audio business through taking acoustic off the ground and beyond cabinets hence

trying to search a way into which their devices can be installed directly on walls. This firm has

been embraced by many customers hence making Sonance business to dominate the audio sector

(Kerin & Peterson 2013).

Products and Services

In 1983, Sonance had managed to create the first model of in-wall speaker. The company

also continued to develop many other devices repeatedly, that is, an in-wall subwoofer (1986); in

1988 they built a three-channel amplifier; and multi-room user amplifier (1991). In 2002, this

firm had made an in-ceiling speaker and also in 2003 they designed high-fidelity speakers among

various achievements which ranked them higher in the audio sector. However, this company is

recognized for their glossy and quality products thus attracting many profiled consumers.

Sonance was initially having to manufacture in the USA but it has also opened other branches in

Asia due to higher demand for its products and services (Kerin & Peterson 2013).

Similarly, Sonance shows lots of concerns in view of the services it offers to its

customers. Indeed, this company ensures that the clients are getting served through low prices

possible. For instance, the initial charges of the producer of the speaker in California were $75,
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the final product was distributed to dealers at $195, and sold to the end user at about $550 plus

installation fees. Since the above transaction attracted higher margins for traders, Sonance

decided to lower its prices to ascertain that the user is able to attain the same product with $400.

This company also opted to find outlets for supplying its devices to reach many buyers. At this

point, Sonance spread its operations beyond certified installation and high-end vendors as well as

building direct client stores including Lowes and Best Buy. Conversely, Sonance’s management

has conducted a vital role of depleting middle dealers who have been making the prices of their

goods to be high yet the company is not benefiting from additional charges incurred by end users

(Kerin & Peterson 2013).

2. Situation Analysis

Sonance’s Internal and External Activities

The systems concerning in-home speakers are embraced by many individuals, though

some limits are making customers to get drawn to expensive devices. It is clear that a big number

of these systems are afforded by wealthy individuals with high-end buildings. Otherwise,

Sonance was logical to start dealing with its customers directly since many people were willing

to purchase these products but they got exploited by middlemen. However, the audio industry is

entirely showing progress although this success is accompanied by the fluctuation of revenue as

it is indicated in the MP3 systems. For example, in 2003, the sales of speaker systems are

confirmed to have dropped by 7%. Fortunately, in between 2004- 2005, the revenue obtained

from the sale of MP3 increased to 210%. Correspondingly, Sonance is matching with iPort

though there is emerging some concerns regarding the price of MP3 as well as overpriced audio

accessories (Dawson, 2015).

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To fully understand Sonance Company, it is important to look at different factors such

political/legal factor, economic as well as social and technological elements. In the view of

political/legal issues, this company is taking advantage of stable administrations in the market

sector. This firmness is caused by less governmental barriers in the business environment, hence

indicating that Sonance can expand its operations in different areas in an ease. Moreover, the

aspect of the government offering support on data security shows that this firm has the

opportunity of growing (Razavian & Gordijn, 2015).

Furthermore, economic status of areas where Sonance has opened its business is

supporting the progress of this company. For instance, this firm is operating in markets with

great growth frequencies, an aspect which is reinforcing its revenues. Similarly, the economic

steadiness within the markers is enhancing Sonance activities since it only encounters very few

risks concerning the distribution of products. Also, there is a global increase in disposable

income hence making it possible for revenues of this firm to increase (Ryan, 2016).

The social-cultural factor is favoring the growth and development of Sonance. For

example, the heightening trends of spending leisure time by listening music and increase in

prosperity circulation creates more chances for this firm to make many sales. In particular, the

urge of audio products has increased greatly thus putting Sonance at a point of selling more

speakers. Indeed, the leisureliness is a factor highlighting the importance of marking

entertainment products (Dawson, 2015).

Additionally, Sonance is dealing with scientific goods hence fitting in the technologically

updated market. As a result, this company needs to take advantage of its innovativeness and

manufacture products which its competitors have not yet managed to make. Since a huge number
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of consumers are attracted by newly made devices, Sonance will be able to dominate the entire

audio market without struggling hence attracting extra consumers (Razavian & Gordijn, 2015).

3. Sonance’s Problems

Slow Growth

It is clear that the audio industry has greatly changed hence challenging the effective

growth of Sonance. For example, the aspect of producing MP3 is making this company to lack

ready market since the customers consider these systems as outdated. For the above reason,

various audio producers are forced to integrate their sound-system to align with modern

technology. If Sonance will not upgrade its systems there are higher chances that it shall be

wiped away from the market in the near future (Ryan, 2016).

Distribution Channels

The act of custom installation dealers declining Sonance’s attempts to venture into mass-

market retailing is posing a threat to this company. Also, Brown, the former CEO had started

focusing on domestic construction affluent on luxurious places but is unclear whether this

approach will be fruitful. Brown’s action has made this company to undergo losses since

Sonance transacted with only two retailers and one of them has left the market. Though there is

an opportunity for new supply channels, Brown’s action has negatively affected Sonance’s brand

(Dawson, 2015).

Considerations of Alliance

The audio sector has entirely moved to MP3 as well as various avenues regarding home

audio taken over. Because of the above shift, many participants in the audio bazar have
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consolidated as the consumer demand for advanced systems continues to heighten. In fact,

Sugarman may have noted that there is lacking a long-term equity emanating from having a

commerce flooded with major business alterations (Kerin & Peterson 2013).

4. Alternatives

Mass Market

The position of Sonance in the mass-market arena is relatively surprising. For instance,

both Best Buy and Lowes gives revues of $9 million and $6 million respectively. The above

profits indicate that Sonance’s operations are viable though spreading out using direct customer

retail shops should be done cautiously. Similar to Speaker Craft which concentrates on in-wall

audio, Sonance still has the potential to venture into homeowner installation market effortlessly.

This firm should follow footsteps of stores companies such as Target and Wal-Mart that are

trailing Best Buy clients. The above activity will enable Sonance to confine some lucrative

dealers who transact repeatedly. Moreover, this firm may also apply online shopping for it to

prosper in the mass-market (Razavian & Gordijn, 2015).

Advancement Regarding MP3 Market

There are numerous reasons denoting that Sonance has the capability of surviving in the

fast-rising market. First, the growth rate of iPort and heightening sales in the MP3 sector shows

that this company can prosper in the audio sector. Moreover, the costs of R&D are at $1.6

million, an indication that Sonance can recoup its operations through manufacturing the product

having higher demand. On the other hand, the mass-market sales can be challenging because of

prices offered by Apple. However, the application of suitable marketing approach and stores will

make this company flourish. Even if the audio sector is having higher completion, good
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marketing, compatibility, and R&D will make Sonance outweigh its competitors (Razavian &

Gordijn, 2015).

Architectural Series

The drastic fashion of Architectural Series is among the things which Sonance require to

survive in the audio sector. At this point, this firm should focus on R&D as well as research.

Moreover, Sonance should try to maintain its retention potential, turnover margins, and a plea to

high-end suppliers to be able to redirect the brand. Initially, this company is confirmed to have

lost a boundless deal concerning high-end installation merchants by shifting to the mass market.

However, Sonance should avoid putting high prices on architectural series for them not to scare

the potential consumers who are ready to install their products (Kerin & Peterson 2013).

5. Recommendation

Through cautiously analyzing Sonance’s present position, operational strategy, and

marketing environment, it is good for this company to continue with mass marketing and iPort. It

will be risky for this firm to embrace the idea of R&D since the consumers’ buying trend for

these products will end within a short period. Moreover, the whole home audio business has

declined greatly within a single year but the MP3 sector has increased by 181%. Based on the

above changes, it occurs that the audio market needs to be upgraded as far as a mass-market

channel is concerned (Kerin & Peterson 2013).

On the other hand, there are higher chances that Sonance will encounter stiff competition

from mass marketers who might flood the sector with new products. It is clear that the high-end

in-home market for the audio product has significantly dropped and there are possibilities of this

market becoming worse as more people keep on venturing into this business. Additionally, the
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advancement regarding iPort is still taking place and it is costing less capital as compared to

Architectural Series. Likewise, technology is changing at a faster and this is an indication that

investing in newly invented products can make the business owner to encounter losses since the

new good may fail to make in the market. While summing up, Sonance will be on the safe side if

it continues distributing MP3 and iPort (Dawson, 2015).

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References

Dawson, S. (2015). Sonance Visual Performance BPS8 subwoofer and Sonamp A150 subwoofer

amplifier. Connected Home Australia, (Apr 2015), 56.

Kerin, R., & Peterson, R. (2013). Strategic marketing problems: Cases and comments (13th Ed.).

Upper Saddle River, NJ.

Razavian, M., & Gordijn, J. (2015, March). Consonance between economic and IT services:

finding the balance between conflicting requirements. In International Working

Conference on Requirements Engineering: Foundation for Software Quality (pp. 148-

163). Springer, Cham.

Ryan, D. (2016). Understanding digital marketing: marketing strategies for engaging the digital

generation. Kogan Page Publishers.