9-18 Based on concepts discussed in this chapter, describe the factors that have contributed to Bose's new product success.

9-19 Is Bose's product development process customer centered? Explain.

9-20 How is Bose unique with respect to product life-cycle management?

9-21 With respect to the product life cycle, what challenges does Bose face in managing its product portfolio? 9-22 Can Bose continue to maintain its innovative culture without Amar Bose?

In a recent survey by brand strategy firm Lippincott, the most trusted brand in consumer electronics was not Apple. Nor was it Samsung, Sony, or Microsoft. It was Bose, the still relatively small, privately held corporation that has been making innovative audio devices for more than 50 years. Despite putting more than 30 million new sets of headphones alone on or in customers' ears last year, Bose rang up only about $4 billion in revenues versus Apple's $234 billion. But when it comes to the passion customers feel for their brands, the Massachusetts-based technology company outshines even Apple. Bose forges that deep consumer connection based on the brand's design simplicity and brilliant functionality. Bose adheres religiously to a set of values that have guided the company since its origins. Most companies today focus heavily on building revenues, profits, and stock prices. They try to outdo competitors by differentiating product lines with features and attributes that other companies don't have. Although Bose doesn't ignore such factors, its competitive advantage is rooted in its unique corporate philosophy. "We are not in it strictly to make money," says CEO Bob Maresca. Given the company's focus on research and product innovation, he points out that "the business is almost a secondary consideration." The Bose Philosophy To understand Bose the company, you must first look at Bose the man. In the 1950s, founder Amar Bose was working on his third degree at the Massachusetts Institute of Technology. He had a keen interest in research and studied various areas of electrical engineering. He also had a strong interest in music. When he purchased his first hi-fi systema model that he believed had the best specificationshe was disappointed in the system's ability to reproduce realistic sound. So he began heavily researching the problem to find his own solution. Thus began a stream of research that would ultimately lead to the founding of the Bose Corporation in 1964. It also led to the development of the long-standing Bose slogan "Better Sound Through Research." From those early days, Amar Bose worked around certain core principles that have guided the philosophy of the company. In conducting his first research on speakers and sound, he did something that has since been repeated time and time again at Bose. He ignored existing technologies and started entirely from scratch, something not common in product development strategies. In another departure from typical corporate strategies, Amar Bose put all of the privately held company's profits back into With the population aging and patients who dread sitting in a sterile dental office, dentists are finding an opportunity in dental house calls. The Blende Dental Group has taken its service on the road in San Francisco and New York City, performing everything from routine exams and cleanings to root canals. Some patients are wealthy and prefer the personal service, whereas others are elderly homebounds who cannot get out to the dentist's office. Recreating a dental office in a home requires additional equipment, such as a portable X-ray machine that looks like a ray gun, sterile water tanks, a dental drill, lights, and a laptop. A portable X-ray machine alone costs $8,000. Refer to Appendix 2: Marketing by the Numbers to answer the following questions. 9-13 What types of fixed costs are associated with this service? Estimate total fixed costs for this additional service, and assuming a contribution margin of 40 percent, determine the amount of sales necessary to break even on this increase in fixed costs to offer this additional service. (AACSB: Communication; Analytical Thinking) 9-14 What other factors must a dentist consider before offering this service in addition to his or her in-office service? (AACSB: Communication; Reflective Thinking) Marketing by the Numbers Dental House Calls ChApter 9 | Developing New Products and Managing the Product Life Cycle 303 hiding the woofer?' I said to him, 'There is no woofer.' So he said, 'You're a liar,' and he walked out." To resolve this credibility problem, Bose developed another core competencyidentifying and targeting the right customer with the products it was confident were superior to even the best offerings. For Bose, this has generally meant targeting higher-income customers who aren't audio buffs but want a good product and are willing to pay a premium price for it. For the 901, this included using innovative display and demonstration tactics. This approach has served Bose well. Although even today hardcore audiophiles scoff at Bose products as little more than smoke and mirrors, customers whose expectations haven't been shaped by preconceived specifications perceive Bose products to be exceptional. So far as the 901 is concerned, the product became so successful that Amar Bose was known for crediting the speaker series with building the company. The list of major speaker innovations at Bose is a long one. In the 1970s, the company introduced concert-like sound in the bookshelf-size 301 Direct/Reflecting speaker system. Fourteen years of research led to the development of acoustic waveguide speaker technology, a technology today found in the awardwinning Wave radio, Wave music system, and Acoustic Wave music system. In the 1980s, the company again changed conventional thinking about the relationship between speaker size and sound. The Acoustimass system enabled palm-size speakers to produce audio quality equivalent to that of high-end systems many times their sizea design so popular it also remains in the current Bose portfolio of speakers. Recently, Bose again introduced the state of the art with the MusicMonitor, a pair of compact computer speakers that rival the sound of three-piece subwoofer systems. And Bose has led the way in developing wireless speaker systems, a move that was quickly followed by all competitors. Not only was each of these speaker systems groundbreaking at the time it was introduced, each was so technologically advanced that Bose still sells it today, even the original 901 series. headphones. Maresca recalls that "Bose invested tens of million of dollars over 19 years developing headset technology before making a profit. Now, headsets are a major part of the business." Initially, Bose focused on noise reduction technologies to make headphones for pilots that would block out the high levels of noise interference generated by aircraft. Bose headphones didn't just muffle noise, they electronically canceled ambient noise so that pilots wearing them heard nothing but the intended sound coming through the phones. Bose quickly discovered that airline passengers could benefit as much as pilots from its headphone technology. Today, the Bose QuietComfort series, used in a variety of consumer applications, sets the benchmark in noise-canceling headphones. One journalist considers this product to be so significant that it made his list of "101 gadgets that changed the world"right up there with aspirin, paper, and the lightbulb. Automotive suspensions. Since 1980, the inquisitively innovative culture at Bose has even led the company down the path of developing automotive suspensions. Amar Bose's interest in suspensions dates back to the 1950s when he bought both a Citroen and a Pontiac, each riding on unconventional air suspension systems. Thereafter, he was obsessed with the research and development, a practice that reflected his avid love of research and his drive to produce the highest-quality products. In doing so, he also bypassed the process of figuring out what customers wanted, instead keeping his research confined to the laboratory and centered on the technical specifications of creating a superior product. Today, this approach is considered heresy in the innovation world. Amar pursued this approach because he could. He often pointed out that publicly held companies have long lists of constraints that don't apply to privately held companies, noting that "if I worked for another company, I would have been fired a long time ago," For this reason, Bose always vowed that he would never take the company public. "Going public for me would have been the equivalent of losing the company. My real interest is researchthat's the excitementand I wouldn't have been able to do long-term projects with Wall Street breathing down my neck." Innovating the Bose Way The company that started so humbly now has a breadth of product lines beyond its core home audio line. Additional lines target a variety of applications that captured Amar Bose's creative attention over the years, including military, automotive, homebuilding/remodeling, aviation, and professional and commercial sound systems. It even has a division that markets testing equipment to research institutions, universities, medical device companies, and engineering companies worldwide. The following are just a few of the products that illustrate the innovative breakthroughs produced by the company. Speakers. Bose's first product was a speaker introduced in 1965. Expecting to sell $1 million worth of speakers that first year, Bose made 60 but sold only 40. The original Bose speaker evolved into the 901 Direct/Reflecting speaker system launched in 1968. That speaker system was designed around the concept that live sound reaches the human ear via direct as well as reflected channels (off walls, ceilings, and other objects). The speakers featured a completely unorthodox configuration. Shaped like one-eighth of a sphere and mounted facing into a room's corner, the audio waves reflected off the walls and filled the room with sound that seemed to be everywhere but some from nowhere in particular. The speakers had no woofers or tweeters, composed instead of eight four-and-a-half-inch midrange drivers. The speakers were also very small compared with the high-end speakers of the day. The design came much closer to the essence and emotional impact of live music than anything else on the market and won immediate industry acclaim. The reflective approach, although groundbreaking at the time, is commonly found in home theater systems throughout the industry today. Back then, however, Bose had a hard time convincing customers of the merits of these innovative speakers. At a time when woofers, tweeters, and size meant everything, the 901 series initially flopped. In 1968, a retail salesperson explained to Amar Bose why the speakers weren't selling: "Look, I love your speaker but I cannot sell it because it makes me lose all my credibility as a salesman. I can't explain to anyone why the 901 doesn't have any woofers or tweeters. A man came in and saw the small size, and he started looking in the drawers for the speaker cabinets. I walked over to him, and he said, 'Where are you 304 pArt 3 | Designing a Customer Value-Driven Strategy and Mix Amar Bose passed away a few years ago at the age of 83. With the passion of a genuine scientist, he worked every day well into his 80s. "He's got more energy than an 18-year-old," Maresca once said. "Every one of the naysayers only strengthens his resolve." This work ethic illustrates the passion of the man who shaped one of today's most innovative and most trusted companies. His philosophies have produced Bose's long list of groundbreaking innovations. Even today, the company continues to achieve success by following another one of Amar Bose's basic philosophies: "The potential size of the market? We really have no idea. We just know that we have a technology that's so different and so much better that many people will want it." Questions for Discussion 9-18 Based on concepts discussed in this chapter, describe the factors that have contributed to Bose's new product success. 9-19 Is Bose's product development process customer centered? Explain. 9-20 How is Bose unique with respect to product life-cycle management? 9-21 With respect to the product life cycle, what challenges does Bose face in managing its product portfolio? 9-22 Can Bose continue to maintain its innovative culture without Amar Bose? Sources: David Carnoy, "Bose's New Beat," CNet, February 3, 2016, www.cnet.com/news/bose-new-beat-ceo-maresca-profile/; Jeff Berman, "Trying to Beat Beats in the Headphone Category Remains a Challenge," Home Theater Review, March 21, 2016, www.hometheaterreview.com / trying-to-beat-beats-in-the-headphone-category-remains-a-challenge/; Brian Dumaine, "Amar Bose," Fortune Small Business, September 1, 2004, http://money.cnn.com/magazines/fsb/fsb_archive/2004/09/01/8184686/; Olga Kharif, "Selling Sound: Bose Knows," Bloomberg, May 14, 2006, www.bloomberg.com/news/articles/2006-05-14/selling-sound-bose - knows; "The Most Trusted Brands Are Like PeopleOpen, Real, and Even Flawed," January 16, 2014, www.lippincott.com/en/news/the-most - trusted-brands-are-like-people-open-real-and-even-flawed/; and www . bose.com/en_us/about_bose.html, accessed July 2016. engineering challenge of achieving good cornering capabilities without sacrificing a smooth ride. The system Bose developed was based on electromagnetic motors installed at each wheel. Based on inputs from road sensing monitors, the motor could retract and extend almost instantaneously. For a bump in the road, the suspension reacted by "jumping" over it. For a pothole, the suspension allowed the wheel to extend downward, retracting it quickly enough that the pothole wouldn't be felt by passengers. In addition to these comfortproducing capabilities, the wheel motors were designed to keep a car completely level during an aggressive maneuver such as cornering or stopping. The system achieved Amar Bose's vision to provide better handling than any sports car while simultaneously giving vehicle occupants the most comfortable ride imaginable. Bose invested more than $100 million over 30 years in the groundbreaking suspension. In the end, the system was simply too heavy and too expensive for use in passenger cars. Rather than shelf the product, however, Bose did what it has often doneit found a market where the technology could be used to provide genuine customer value. The company now markets a smaller, lighter version of the Bose suspension as the Bose Ride seat system for heavy-duty trucks. Surpassing current air ride and other conventional technologies in performance, its $6,000 price tag also exceeded the going price of a truck seat by five to ten times. Although most companies and drivers were skeptical at first, one Texas driver's reaction drives home the value of this product, even at the substantial price premium: "I had back pains. I used to feel every bump in my back and neck. The truck still bounces down the road, but I don't. It's almost like floating, detached from the truck." Bose's commitment to research and development has produced state-of-the-art products that have contributed to the trust that Bose customers have in the company. Customers know that the company cares more about their interestsabout making the best productsthan about maximizing profits. But for a company not driven by the bottom line, Bose does just fine in that department as well. In the personal headphone market, Bose is second only to Beats (Apple) with 11 percent of the market. And with wireless speakers now dominating speaker sales, Bose leads with a decisive 22 percent share, a full