Marketing Case

Sonance at a Turning Point

Rong Fan
 I. Firm Summary
a. What is the firm’s current mission/vision?
The firm’s current mission is reassess the company’s position and strategy.
b. Describe the firm’s current brand.
Sonance Company was founded in 1982. Now, Sonance has become the most
recognized and highly awarded manufacturer in the architectural speaker and
outdoor audio categories worldwide.
c. What is the firm’s current unique selling proposition (i.e. what is it that they
do that their competition doesn’t do)?
In-ceiling home theater, high-end audio.
II. Firm Marketing Mix Summary
a. What are the firm’s current products?
Home theater, distributed audio, A/V, Lighting Control, Distributed Video,
Home networking, Telecommunications, Security.
b. What are the firm’s current prices for those products?
N/A
c. What are the channels in which the firm currently distributes those products?
Dealers, Mass Merchandisers, other retail, production housing builders.
d. What are the current forms of communication the firm uses to promote those
products?
Internet, advertisements, newspapers.
e. What are the firm’s proposed products?
IPort and the new in-wall Architectural Series speakers.
f. What are the firm’s proposed prices for those products?
$330-350 and $750-2500.
g. What are the proposed channels in which the firm might distribute those
products?
Dealers, Mass Merchandisers, other retail, production housing builders.
h. What are the proposed forms of communication the firm might use to
promote those products?
Internet, advertisements, newspapers.
III. Market Conditions Summary
a. Who is the firm’s current target market? (There could be more than one.)
Describe the target market and their buying behavior
The target market is affluent families.
Their buying behavior is they want to buy high-end luxury products with a
lowered sensitivity to price.
b. How big is the firm’s current target market and is it increasing or decreasing?
The greatest challenge Supran and Sugarman faced going into 2006 was
concern about the slow growth in Sonance’s core product line of in-wall
speakers.
 c. Identify any political, legal, or societal factors that may impact the firm’s
target market
Cost rise
d. Identify any supplier or distribution factors that may impact the firm
Custom installation dealers. From 2000 through 2004, in an attempt to take
advantage of the residential construction boom and strong retail sales growth,
Chip Brown took the Sonance brand directly to new production home
developers, as well as to the mass-market consumer through big-box retailers
like Best Buy and Lowe’s.
e. How much competition does the firm have currently? Is the competition
powerful? List the firm and the competition’s market share if given in the
case.
Yamaha, Bose, Polk, Klipsch, and Boston Acoustic.
f. How is the firm’s brand currently positioned relative to the competition? (i.e.
How is their image/reputation different than their competition’s
image/reputation? Is it different?).
Sonance has good brand recognition in the high-end market
g. Is the firm’s current brand or unique selling proposition a sustainable
competitive advantage (i.e. can it be copied by the competitors or new
entrants)?
Sonance has good brand recognition in the high-end market and better
product perception compare with low-end market.
IV. Case Summary
a. Briefly summarize the events and facts in the case
Sonance began in 1982 when Scott Struthers and Geoff Spencer recognized
the need for an audio solution that could deliver unsurpassed performance
combined with minimal visual intrusion. It was this revelation that led them
to invent the world’s first architectural speaker. At 2006 September,
Sonance’s R&D department had two new products, a modified iPort and the
new in-wall “Architectural Series” speakers. The company have 4 decisions
need to choose.

V. SWOT analysis
a. Using Part I though Part IV and information found in the case, please
compete the following table:
Internal Strengths Internal Weaknesses
 good brand recognition in the  pricing compare with competitors
high-end market  bad relationship with custom
 better product perception installers

External Opportunities External Threats

 Foreigner markets  consolidation and acquisitions
 Lower cost  declining industry growth

VI. Primary Case Decision(s) (There could be more than one decision.)
Should Sonance try to mend its relationships with and recommit to its historical base
of high-end custom installers?
Should it introduce the Architectural Series and at what price point, $750 or $2,500?
Should it more aggressively pursue the large-scale new production construction with
the Original Series?
Should the company focus on the retail consumer markets and put full support behind
the iPort redesign and marketing?
VII. Firm’s Alternatives
a. List the alternatives the firm must decide from

 Mend its relationships with and recommit to its historical base of high-end custom
installers
 The price of Architectural Series will be $750 or $2,500
 Large-scale new production construction with original series
 Focus on the retail consumer markets and put full support behind the iPort redesign
and marketing

VIII. Qualitative Evaluation of Alternatives

 Mend its relationships with and recommit to its historical base of high-end custom
installers
Diversification had led to fast overall growth, but resentment among custom installers
had eroded sales and market share in the high-end custom installation business. If the
company wants to rebuild the relationships with high-end custom installers, they need
to rebuild the relationships with custom installation dealers. Custom installers are an
important market segment that could provide the next growth opportunity for
Sonance.
 The price of Architectural Series will be $750 or $2,500
The marketing team, in particular, argued that the high-end luxury market was too
small, and that dealers would not accept a $2,500 ticket price after Speaker Craft had
driven consumer prices for in-wall speakers to the mid-$300 level and was offering
75% gross margins and easy installation to the dealers. If the company choose $2,500,
the sales might be not achieve the goals.
  Large-scale new production construction with original series
The company can think about outsourcing production at China to developing the
Original Series. That will reduce the cost. The cost to Sonance’s profitability as the
average selling price per pair of the Original Series speakers was reduced to $120 to
acquire these accounts. If the company use outsourcing this way, the cost will be
reduce more.
 Focus on the retail consumer markets and put full support behind the iPort redesign
and marketing
Depending on in 2004, Apple’s iPod accounted for about half of all MP3 sales. Apple
announced that it sold 22.5 million iPods in fiscal year 2005, an increase of 409
percent from the 4.4 million iPods sold in 2004. We assume that the company can sale
5% of iPod’s number that is 1,125,000 units of iPort, which mean we can make a
sales projection of 11,250. Sonance could get a great benefit from Apple’s products.

IX. Quantitative Evaluation of Alternatives

Price set Manufacture cost Installer cost Gross profit per unit sale

$750 $200 $200 $100

Price set Manufacture cost Installer cost Gross profit per unit sale

$2500 $200 $200 $675

However, if the company sales price get 2500, that will lost a lot of market shares
since the price too far above the competitors.
X. Recommendations

We recommendation the company put all support on iPort since the apple’s products
are highly recognized by customers. Large-scale original series use outsourcing can
reduce the cost and regaining market share. Set $750 per unit for Architectural Series
to open the market first. The most important is rebuilt the relationships with custom
installation dealers.