Price

Selection of Pricing Objectives

Beats by Dre are sold through various chains, both online and at various retails stores where the products are Manufacturer Suggested retail priced. Beats by Dre’s lineup of ear headphones have different list price levels. Beats Studio and the upcoming Beats Spin currently costs $349.00 while its entry level Beats Solo currently costs $199.95. The upcoming entry level for its On-Ear headphone, Beats Solo HD will cost $229.00. Also, Beats by Dre’s lineup of In-ear headphones have different list price levels. Its Tour headphones currently costs $189.95 while its new lines, Diddy and Heart Beats currently costs $149.00 and $119.95 respectively. All these prices are based on their official store where the exchange rate is based on United States dollars.

Beats by Dre uses the one price policy. It’s headphones listed on their official website for sale as well as through other retailers (such as the Apple Store, Best Buy) have the same list price for their prospective customers. Exchange rate do apply if Beats are sold in Canada where price is higher. Since Beats are commonly sold online, Information Technology allows this product to have flexible pricing. Beats by Dre headphones are price matchable in certain stores such as Best Buy or Futureshop where they have price match policies for their retail stores. Beats official website through its manufacturer, Monster use a rewards based system as their own discount system for its consumers called Monster Bucks at their online store. This discount policy explains that “With every purchase of eligible products, you'll receive Monster Bucks equal to 30% of your purchases” ([|__http://www.monstercable.com/monsterbucks/__]). This discount policy program provides discount rewards for their customers “Monster Bucks” to use for any future purchases at their online store. This cash rebate strategy allows Monster to provide incentives for their customers to purchase in the future using their “Monster Bucks”.

Beats have used the Price Skimming strategy on some select headphones where they introduced their various headphone lineups at a high starting price. Beats focuses on promoting the value their listeners will get when using their professional headphones. The creator of Beats, Dr. Dre mentions that “people aren’t hearing all the music and With Beats, people are going to hear what the artists hear, and listen to the music the way they should: the way I do." (beats website). Price Skimming in this example caters to Monster’s demographic where people who desire the product are interested on the quality of the product. Beats promote the high quality of their products to the market to convince its prospective customers that their professional headphones are headphones that artists listen to when making music. These headphones will allow people to hear music the way they were meant to be. The Beats headphones are manufactured for extreme comfort, developed and researched to deliver the best sound quality using special amplifiers that “produce deep bass, undistorted bass and crystal clear vocals” (off website).

Through its strategy of pricing high at its introductory level and maintaining at that price, Monster maintain its high quality status in the market. People who desire these products value quality, its look and are well informed about the sound and quality Monster offers compared to other headphones available in the market. Monster’s Beats promote the exclusivity of owning the product because of its high price point strategy. Using brand recognition through the design and look of the Beats headphone lineup as well as its promotion strategies using various celebrities, it creates an incentive, an exclusive status for the people to purchase it at the high, introductory price level. Similarly with the iPod phenomenon, Apple created an exclusivity status with its iPod line with its distinctive feature, the white headphones, to promote their products. Monster’s Beats manages to create that uniqueness and exclusivity through its product design (sleek designed headphones with the “B” branding and red headphone wiring) where people use it as an indication of being unique and exclusive than other headphone users in the market.

Beats offer similar pricing strategies such as Bose or Sennheiser, its competitors. However, Monster Beats focus on its demographic using popular music to promote its product’s uniqueness and exclusivity. Using its promotion strategies (use of the headphones in various music videos) and brand recognition ( design of black and red and its logo) will appeal with its prospective users.

Beats by Dre have used discount pricing to promote its product line and increase its customer base. They have reduced various Beats products released earlier. Products such as the Heart Beats, Beats Tour and Beats Solo are on the maturity stage of the product life cycle where it uses discount pricing to sell of the remaining inventories in retail and online stores decreasing the list prices to up to $30.00. Also, they have used discount pricing to introduce the new line, Diddy Beats. The current promotion promote the headphone by offering it for $149.00 rather than $179.00 by pre-ordering the product. This particular strategy help promote the product and introduces the product as an entry-level, affordable headphone.

Beats can make some adjustments on its pricing strategies. Beats should consider bundling its products. Recently, they have partnered with various companies and celebrities to promote its products and increase brand awareness. Monster Beats collaborated with Hewlett Packard computers to develop a Monster brand computer with an included set of Beats headphones on every purchase. Beats by Dre will benefit on product bundles with their product endorsers. To promote the endorser’s own Beats line and their album, Beats by Dre can bundle their Beats headphones along with a collector’s edition of their current album. For example, Diddy or Lady Gaga can promote their own Beats line (Diddy Beats and Heart Beats) by selling it with their current album at a listed price. This will add value to the product by making it a collector’s edition for the prospective consumers.

Another recommendation to be priced competitively is to offer trade-in allowances for the Beats lineup. Currently, no retailers or the online store offer discounts for upgrading to Beats headphones. Monster can offer a trade-in by giving consumers a certain type of discount by switching to Beats headphones. Also, Beats by Dre’s official store should also create financing plans for future purchases. Allowing consumers to have a longer period of time to pay for the product can increase the sales from consumers who are price sensitive.