1

NICE AUDIO HEADPHONES: OPPORTUNITY OVERVIEW

Name

Course
Instructor
Institution
City

Date

2
The Opportunity
The growth in the use of headphones use is dependent on the growth of associated
technology. Since 2003, there has been a consistent growth in the use of MP3 players and
smartphones. Between 2007 and 2009, there were sales of about 340 million mp3 players.1 This
is only a singular market, not putting into consideration the equally strong growth of the mobile
phone market. 95% of American teenagers own mp3 players, reflecting a probable trend in
global growth.2 Consequently, the targeting for this product is on young adults and teenagers as
they represent the greatest point of interest.
The special feature of this product lies in its wireless capability. Market surveys indicate
the hindrance of earpieces with cords in usage and conduct of normal business.3 The headphones
also come with the capability for direct downloads and control, without the need for using the
smartphone or mp3 player. They are enabled with Wi-Fi connection capabilities, as well as
Bluetooth reachability to enhance their capacity for access.
The Customer
The main feature of Nice Audio Smart Headphones is the provision of access to unlimited
music on the internet and other virtual networks. As such, the product seeks to serve the young
customer who is inclined towards new music and remains tech-savvy. From this perspective, the
target customers for the product will feature people aged between 12 and 24. At this age, the
customer is more likely to possess technological curiosity as well as preferences for exploring
new market products.4 This group will also preferably dwell in urban and suburban settings,
increasing the probability of their having access to modern technological know-how.

Book, Christopher. Audio Era: Business Plan. Concord: Digital Safari, 2011, p.3
Ibid 1
3
Durisin, Megan. Here's Where Teens Spend All Their Money
4
Hatten, Timothy S. Small Business Management: Entrepreneurship and Beyond, p.244
2

3
Recognizing the target customer is vital for the development of appropriate decisions on
the marketing approach. The customer will also facilitate identification of current competitors,
and their market behavior.5 The competition influences decisions on product design and pricing.
These decisions, in turn, have an impact on the costs of start-up and operation that the firm will
incur in the short and long term.6 Marketing decisions also determine the capability of the firm to
break even from the income they receive from the product.
The Competition
Assessing the competition is crucial for the determination of final decisions on market
entry and positioning. Competitors bring different product features into the market, influencing
the ease of entry or exit for the product.7 In this case, the assessment seeks to establish the
features of the competing dominant products in the market. It will also review their prices and
the possible application of price leadership as a strategy for Nice Audio Headphones.
Some of the current firms in the market include Beats by Dre and Sennheiser. Both
products offer unique capabilities, enabling the respective brands to become dominant market
names. Sennheiser, for instance, is one of the open air headphones that allow listening to classic
and jazz music best.8 Beats by Dre, on the other hand, offers a closed system that is characteristic
of many headphones. Sennheiser also offers lower pricing, and some of its products come
uniquely made of wood.9 These features have enabled the product to maintain an edge in the
ever-competitive technology market.
Beats by Dre come with a cable, but this cable is detachable to enable wireless use. In
addition, the headphones have enabled remote control as well as inline playback controls. These
5

Hatten, Timothy S. Small Business Management: Entrepreneurship and Beyond, p.244

Ibid Hatten, p.211
7
Hatten, Timothy S. Small Business Management: Entrepreneurship and Beyond, p. 192
8
Specout. Beats by Dre Pro vs Sennheiser
9
Ibid 8
6

4
features enable the listener to manipulate music without needing to use the primary source.
Further aspects of the products include sound isolation capabilities and a microphone. The
headphones cost a minimum of $350 while new, while Sennheiser offers its products for a
minimum of $150.10
Regardless, some of the competitor products have encountered market criticism for being
too pricey and offering little to justify the cost. Beats by Dre, for instance, have been criticized
for exaggerating the bass content to the point of muddying the original sound.11 Despite the
complaints, the products remain some of the most dominant in the market to suggest their
continued viability.
Start Up Costs
The estimate for the initial cost of start-up is 2.7 million dollars. This investment may
appear large for a new venture, but the costs go towards accomplishing the unique aspects of
design and the anticipated benefits. The expenses will be distributed along research and
development, promotional efforts, and actual product development. These costs are only for the
first year of production, by the end of which it is expected the sales will adequately compensate
production costs.12
Rough Cost Estimate
Cost
Amount
Research and Development
$600,000
Promotion
$300,000
Actual Product Development
$1.5 million
Administrative Costs
$300,000
Total
2.7 million
The costs also account for administrative functions such as the hiring of additional staff
to execute the production process. These costs, however, will continue shifting over the years
10

Hatten, Timothy S. Small Business Management: Entrepreneurship and Beyond, p.244

Helm, Burt. How Dr. Dre's Headphones Company Became a Billion-Dollar Business.
12
Based on cost projections for Audio Era
11

5
owing to changes in composition and market demands. For instance, research and development
may demand more costs over time when competitors begin imitating aspects of the product.13
During the first quarter, January 1st to March 31st, the entity intends to produce about
40,000 units of the product. Due to the features of the product and the target market, Nice Audio
Headphones will begin retailing at $150 per unit. At this rate, it is possible to break even within
the first two quarters (1st January to June 30th) of production. The sale of the units is expected to
follow pre-orders, reducing the accumulation of the product along distribution channels.14 The
sales for the first quarter (1st January to March 31st) will display the reception that the target
market has towards the Nice Audio Headphones. These initial sales will follow traditional
distribution methods and channels, enabling the monitoring of points of sale and the dominant
client characteristics.
Following the end of the first quarter, the entity will engage in decisions dependent on the
trends that the product exhibits. In case of positive responses, the product will maintain the same
pricing strategy. However, the product will seek online marketing in order to expand the scope of
the market and possibly seek different pricing segments. Projections indicate a possible growth
of about 50% annually, considering the equal growth in the use of smartphones and mp3 players
at high rates.
Feasibility Studies
The determination of product feasibility is integral to the process of new product
development. This particular product will make use of customer surveys in developing a picture
of the possible reception of the product in the market. Some of the contents of the survey will

13
14

Book, Christopher. Audio Era: Business Plan, p. 7

Ibid 13

6
include determining whether the market is ready for a new product.15 The study will, therefore,
dwell on identifying the degree of satisfaction that customers display towards current products.
Other features that the study addresses include the most valued features in the new
product and the price that people are willing to pay for these features. In addition, the survey will
help gain a deeper understanding of the competition, and decisions on the target market. Aspects
such as first movers and decision makers within the target market are also vital in this area.16
Business Development Plans and Steps towards Realizing Business
The business development plan will be guided by core steps towards conversion of the
idea into an actual product for the market. The process begins with gaining a clear description of
the product. Here, Nice Audio headphones are described, and their special features highlighted.
The next step involves market research in depth. The business must identify the competition and
their strategies, as well as consumer preferences.17 This knowledge will facilitate drafting access
strategies to customers.
The steps that follow relate to an internal analysis of the firm. Here, the owner of Nice
Audio must assess their skills for production and sales processes. In addition, it is important that
the firm recognizes the best pathway for commercialization of the headphones.18 It is important
to consult a commercialization expert in the business development. In addition, the business idea
requires protection by gaining intellectual property. Following this steps, the firm can develop a
full working prototype for the product and create a comprehensive business plan for funding.
The process requires regular expert consultation, ensuring the presence of informed
decisions while introducing Nice Audio to the market.

15

Hatten, Timothy S. Small Business Management: Entrepreneurship and Beyond

Ibid 15
17
Hatten, Timothy S. Small Business Management: Entrepreneurship and Beyond
18
Ibid 15
16

7
Bibliography
Book, Christopher. Audio Era: Business Plan. Concord: Digital Safari, 2011.
Durisin, Megan. "Here's Where Teens Spend All Their Money." Business Insider. April 2013.
http://www.businessinsider.com/heres-where-teens-spend-their-money-2013-4 (accessed
October 15, 2015).
Hatten, Timothy S. Small Business Management: Entrepreneurship and Beyond. Mason:
Cengage, 2015.
Helm, Burt. How Dr. Dre's Headphones Company Became a Billion-Dollar Business. January
2015. http://www.inc.com/alix-stuart/2015-inc5000-how-this-company-overcame-atoxic-disaster.html (accessed October 15, 2015).
Specout. Beats by Dre Pro vs Sennheiser. 2015. http://headphones.specout.com/compare/134357/Beats-by-Dre-Pro-vs-Sennheiser-HD280-Pro (accessed October 15, 2015).