Increasing Consumption of Home Audio Segment & the Changing Strategies for Marketing & Business Development
Date: Thursday , January 08, 2015
Analog Devices, Inc. (NASDAQ: ADI) is a semiconductor company providing analog bridge to the digital world which offers a range of ground-breaking products by investing 19 percent in R&D. Headquartered in Norwood, Massachusetts, the company has a current market cap of $17.94 billion.
Marketing is always a jigsaw puzzle. One needs to piece together requirements of each age group, gender, cultural and social background, and blend them to visualize a product or service in a form that is appealing to the user and will generate significant and sustained revenues and margins. Home Audio market is no different and the consumer requirements in India to some extent are different from rest of the world. Selling internationally successful audio products in India may not be the only option as they may or not fully meet the local requirements. At the outset, it is important to identify the market requirements and put all the pieces of this puzzle on the table and then piece them together to create a product definition that will find significant volumes in the country.
India is culturally very diverse and rich in music and dance. Take a walk in any colony and you will hear classical music, popular Bollywood songs, folk music or some bhajans or some audio from blaring speakers on roof tops, tractors or small street side hawkers. The audio requirement for these use case scenarios is very different.
There is a segment of population that is extremely rich who can afford to pay for high quality audio equipment and will quite likely select an internationally renowned brand. There is also a huge population of poor for whom cost is an extremely important factor, irrespective of quality of audio and robustness of the product. In between these two categories, there is sizeable population of middle class and is close to 400 million people, who can afford to buy low-end to mid-range products. Within this segment, user requirements are still very diverse.
Religious institutions, political assemblies and audio systems mounted on tractors use systems that essentially generate high decibel levels and don\'t necessarily worry about frequency response characteristics. An Indian classical music listener would like to recollect and revise the beats and ragas or enjoy the melody, oblivious to high quality music as a possibility. Bollywood music lovers often want to give importance to the thump, music and lyrics and recollect the visual that they have seen while watching the movie, rather than a surround sound effect and the spatial spread. Similarly, folk music listeners care about the lyrics instead of the accompanying instruments and fidelity.
Listener requirements of home audio equipment are also closely coupled to content delivery mechanism. Over the last 40 years, this delivery mechanism has been radio or other players that have transitioned from tape recorders to VCD/DVD players to SDCARDs in mobile phones. India has seen significant growth in mobile phones to become the second largest market the world where feature phone and smart phone users have been using FM radio, SDCARDs and to some extent internet music as source for content. So, today the market opportunity for home audio is on the coattails of the exploding growth of portable devices. However, following the principles of physics, the small speaker driver within the portable device limits the quality of audio and user typically tends to use headphones instead of the speaker. With increasing population, the ambient noise is also increasing. People who use headphones in noisy environments have to keep volume levels significantly higher for good audibility, which causes fatigue and decreases sensitivity of the ears.
Most middle class families today purchase flat panel LCD or LED TVs. These again have inherent limitation of good quality audio because the size of the speaker drivers. Brand names and electronic stores try to bundle the TVs with Home Theater in a Box (HTiB) or a soundbar. Wires for the HTiB speakers run across the room and market for HTiBs has been decreasing rapidly world-wide. Soundbars have shown major growth and are in vogue.
To a large extent, these are the various pieces of the jig saw puzzle. Putting these pieces together may result in following focus areas for future Home Audio business:
a)Cost effective, high fidelity speaker systems, soundbars and soundplates, with active sub-woofers to provide the required bass using low cost virtualization algorithms for a good surround effect.
b)Small, low power and low cost wired or wireless speakers that can interface with portable devices like mobile phones and tablets. Lower cost variants should be wired units and more sophisticated versions may use Bluetooth.
c)Noise cancelling headphones with or without virtualization.
Digital Signal processing is very essential in all these products for good equalization and audio performance and there are good cost effective ways to do this.
Currently these products are available from brand names and they are beyond the reach of a common man as they come packed with many features that are not necessary for India. Products designed to meet the local needs will be the right business strategy.