demo bose full report

Bose Customer for Life

id 592-038, Research and Demonstration | Fall 2006Advisor: Jeremy Alexis

Seungho ChungDan GreeneDavid McGawRishabh SinghWaewwan Sitthisathainchai

sub title

Project Background Customer for Life | Introduction

Project Background

1.1 introductiontobose

Bose CorporationBose Corporation provides a range of home and personal audio equipment, with a goal of using innovative technology to drive great customer experiences. Since its founding in 1964, it has grown to become one of the most recognized names in audio technology.

Bose has firmly established its reputation with an audience of millions of music lovers. And like many brands, the company was started by a member of that audience: Dr. Amar G. Bose, an electrical engineering professor at mit. Bose, who was unhappy with the quality of the stereos available during the 1950s, founded the company in 1964 with the goal of creating a stereo that could replicate the sound of a live concert performance.

In 1968, the company introduced the Direct/Reflecting speaker system, which made long strides toward lifelike sound. Music lovers realized what they were missing when listening through conventional stereos, and Bose was on its way to 34 years of developing sound equipment. In 1972, the company moved beyond the general consumer market and created speakers specifically for professional musicians. Later Bose developed its acoustic waveguide speaker technology, which formed the foundation of the popular Wave radios and Acoustic Wave stereos; its Acoustimass speaker technology led to the creation of smaller speakers that are comparable to the more traditional large speakers.

Now, Bose sellings more than forty items in 6 product categories, including Lifestyle home audio/home theatre systems, Wave Systems,

Research & Demonstration | Fall 2006 �


IIT Institute of Design

2.4 boseProductPortfolio

Home Theater & Speaker Systems

Lifestyle® DVD Systems 3·2·1™ DVD SystemsSpeaker Systems

Wave SystemsAcoustic Wave® Music SystemAcoustic Wave® Music System IIWave® Radio System

Stereo SpeakersBookshelf Speakers Floor Standing SpeakersVirtually Invisible® Speakers

Multimedia Sound SoundDock Companion®Triport® Headphones

Outdoor and Marine Speakers

Outdoor SpeakersMarine Speakers

Headphones and Headsets

Headphones Headsets

Speakers, Multimedia sound, Outdoor & Marine speakers and Headphone and headset. Bose also develops high-end audio systems customized for particular high-end automobiles. Bose is active in several audio technology market segments, including

Home systems: home theatre, home musicPersonal audio: headphones, iPod accessoriesMobile audio: high-end systems tailored to specific manufacturer modelsProfessional audio: speakers, control systems, and other equipment for auditoriums

This project will focus primarily on the Bose Lifestyle home theatre/home audio systems,

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which range in price from $2,000 to $4,500, plus add-on components that can bring a multi-room system well above $8,000.

Bose Consumer AudioBose’s product price ranges are higher than not only technology-driven competitors such as Harman-Kardon but also stylish audio maker , Sony and Panasonic.

Bose consumer

products for

home use, By

category

Research & Demonstration | Fall 2006 2



2.0 boselifestylesystems

The Bose Lifestyle 48 Home Theatre System

Features

�. Media center

2. Cube speakers

3. Center Channel speaker

4. Acoustimass® module

5. Remote control

Color variation

Black / White

Price

$3,999

The Lifestyle® 48 DVD system is Bose’s premier home theatre system. In addition to providing excellent sound quality, it digitally stores and organizes up to 340 hours of music on an internal hard drive. Setup is designed to be easy, with Bose’s proprietary ADAPTiQ® system which adjusts sound settings to fit the acoustics of the room. Key selling features include:

Media center with integrated progressive scan DVD player. This sleek center unit is visually unobtrusive, and contains all the electronics needed to play popular audio and video formats, including DVD video, CD, MP3 files, etc.

uMusic. Digitally storing thousands of songs in the media center, the Lifestyle system frees the user from managing a cumbersome CD collection. uMusic learns the user’s

preferences to select tracks based on what he or she likes, requiring no menus, no playlists, and no computer.

AdaptIQ. This audio caliberation systemanalyses room dimensions and other variables affecting sound, then automatically adjusts the sound of the system to the acoustics of the room.

Bose Link. Wireless connectivity makes it possible to add speakers in other rooms without the hassles of room to room wires, while presevering independent control of each audio stream.

Jewel Cube speakers. Just 4½ inches high, the small direct/reflecting speakers combine over 40 different innovations and breakthrough Bose technologies. Users appreciate the lack of visual clutter, compared

1

2

3

4

5

Adapted from Bose sales literature, online

at bose.com.

Research & Demonstration | Fall 2006 3IIT Institute of Design


with typical stereo speakers—sometimes five feet tall or more.

Integrated controls. The Lifestyle system’s radio-frequency remote permits operation of most popular functions on other infrared-receiving equipment in a home entertainment system: TV, VCR, PVR, cable box or satellite receiver.

Acoustimass module. Working in concert with Bose’s signature Jewel speakers, the bass module helps deliver a full range of sound. The module delivers the clarity of pure low-frequency reproduction down to the lowest frequencies, even at the loudest levels. When placed behind a curtain or chair, all of the sound seems to come directly from the small cube speakers.



sub title

Customer for Life | Section 1

Reframing the Opportunity

1.1 reframingtheoPPortunity

Initial Project MotivationEarly in of 2005, the Bose Customer Relationship Marketing Group launched a project called Bose Customer for Life, which sought to maintain the company’s industry-leading profile among its customers. Objectives included:

Developing a post-sale customer education program to create stronger, life-long relationships with Bose;Reaching out to anticipate customer needs; and Helping customers successfully experience the benefits of owning Bose products

Bose’s primary motivation was an alarming survey result: customer advocacy of their Lifestyle System — the company’s flagship product line — had declined 6% from 2004 to 2005, indicating that customers were significantly less inclined to recommend their Bose equipment to friends. The company believed this was due to shortcomings in the ownership experience, after the sale had been completed.

Questions Bose Was AskingBose asked a team from the Institute of Design to study customer behavior, and answer four primary questions:

What are the dissatisfiers in the post purchase experience?What features are customers most utilizing and not utilizing at all?What support would customers like from Bose after the purchase.What new communications and service concepts can Bose develop that will differentiate the Bose experience and deliver maximum benefit to the customer?

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These questions are straightforward, and well within the scope of Institute of Design methods. However, in the early stages of researching the project the team came to believe that Bose was basing their queries on the presumption that post-sale communication and support problems were at the heart of their advocacy issues. The Lifestyle Systems survey had, after all, yielded a number of post-sale oriented recommendations from customers, including more setup help, system usage tips, improved customer support, improved uMusic usability, and better documentation. Naturally then, an effective customer loyalty effort would have to focus on support in order to restore high product advocacy levels.

Bose may have overlooked or at least understated a key finding of the aforementioned survey, however. More specifically, the company had speculated that an increase in the complexity of successive generations of Lifestyle products may have been responsible, in part, for some erosion of satisfaction, advocacy of systems, and the overall perceived value of the Bose brand.

In light of this supposition, in addition to the reported usage issues, we believe the driver of many of the problems Bose is experiencing is not the lack of post-sale communications, important though they are. Rather, it is more likely the gap between the masterful sales presentation, in which Bose products are touted as both state-of-the-art and hassle-free, and the actual post-sales experience, where the cutting-edge technology proves somewhat problematic for the average user. Furthermore, Bose’s attempts to compensate for the deficiencies of its overpromised offerings have likely fallen short with Lifestyle customers, accounting for some of their rising dissatisfaction.

Bose Corporation, Annual Report, 2005.

U.S. Bose Brand & Audio Market Tracking

Study, 2005. In May 2004, 56% of custom-

ers “have recommended Bose in last �2

months”; in May 2005, just 48% have.



It may be beyond the scope of this project to prescribe significant changes to the design of Lifestyle products or sales strategy. However, in addition to answering the four post-purchase related questions posed by Bose, we intend to identify opportunities and develop tools which will help assess the product support strategies and ease-of-use remedies Bose currently uses to maintain a high perception of value among its customers.

Customers don’t register

Manual hard tounderstand

Delivery experiencenot smooth

Customers don’t use update discs

Failure to meet ease-of-use expectations after sales pitch

Hard to addcomponents

New music hard to add

LowerAdvocacy

Less FrequentRepurchase

Frequent frustration w/ Call center,

other support options

Lower usage means perceived lower value

Turning to substitutes

INFLUENCES

PROBLEM DRIVER

OUTCOMES

U-Music hard to use




Loyalty Programs as StrategyBuilding on core product values, loyalty programs offer additional benefits to customers, and tie them more closely to the brand and product. We think it worthwhile, however, to ask what other strategic approaches can also improve post-sale perceptions. For example, the product itself could improve—since the Lifestyle system is software-driven, upgrades could add new features, even after the product is already in use. Or, the product features could be increased pre-sale.

We also are interested in exploring the relationship of pre-sale promises: what

expectations are set in the mind of the Bose customer as they are shown the features of the Lifestyle system? If expectations are higher than the product can reasonably fulfill, then a loyalty program is placed in the awkward position of trying to compensate for these unmet expectations.

Ideally, a combination of strategies would work in harmony to ensure that customers are continually delighted with their purchase, finding valuable experiences built on a solid core of product performance.

AT SALE AFTER SALE

PRODUCT

LOYALTYPROGRAM

PRODUCT

PROMISE

loyalty programs

in the strategic

context

Customer loyalty programs add value by providing benefits to the customer after the sale. Another post-sale benefit would be feature upgrades (possible with software-based systems). Or, adjusting the product benefit / pre-sale promise balance may also have a positive effect on perceptions.




sub title


Ecosystem Overview

ContentS

IntroduCtIon to the eCoSyStem 1.0 TheHigh-EndHomeAudioEcosystem

BoSe & home entertaInment2.1 ErasinHomeEntertainment2.2 IndustryLayers2.3 TechnologyMatrix2.4 TheCompetitiveLandscape2.5 BoseRetailStrategies2.6 Bose’sPositionintheAudioIndustry

CuStomer LoyaLty3.1 BuildingCustomerLoyalty3.2 CustomerLoyaltyModels3.3 Uservs.Technology:AnAnalogue3.4 LoyaltyImplicationsforBose

the eCoSyStem 4.1 Contextsystem

References

PreparedaspartofIITInstituteofDesignclassid592-038,ResearchandDemonstrationAdvisor:JeremyAlexis

SeunghoChungDanGreeneDavidMcGawRishabhSinghWaewwanSitthisathainchai

Fall2006


1.0 thehigh-endhomeaudioecosystem

Understanding an EcosystemAcomprehensiveunderstandingoftheecosysteminwhichacompanyoperatesisessentialtothedevelopmentofnewstrategiesandinnovations.Inordertomaximizeeffectiveideagenerationandfacilitatedecision-making,usergoalsmustfirstbeidentified.Thesubsequentanalysisshouldidentifyandinvestigatetheoutsideforcesshapingtheproductsandservicescurrentlyinhabitingthemarketspaceinquestion,andappropriateframeworksshouldbechosentohelpresolveanyunansweredquestionsthatmayarisefromtheinitialresearchandbrainstorming.Ultimately,theecosystempaperhelpsdesignplannerstoavoidrehashingestablishedideas,evaluatetherelevanceandusefulnessofnewideas,identifyandpredictindustrytrends,anddevelopappropriateplansforprimaryresearch.

High-End Home AudioThefirstEdisonphonographstartledandevenfrightenedthosewhohearditbyeerilyreproducing“lifelike”sound.Inmorethan100yearsoftechnologicalandmarketingdevelopment,standardshaverisenconsiderably,andtodayamere$10canbuyaradiowithquiteaccuratesoundreproduction.Butcustomerexpectationshaverisenaswell.Anupper-middle-classconsumerismorethanwillingtopayseveralthousanddollarsforawell-designedsystemthatproducescrystal-clearsound,andBosehastappedintoarichveinofdemandwithitsLifestylesystem.

WebeginourlookattheenvironmentsurroundingtheBoseLifestylesystemwithalookathowin-homeentertainmentsystemshavedevelopedsinceWorldWarII.

Research & Demonstration | Fall 2006 �IIT Institute of Design


2.1 erasinhomeentertainment

Take it HomePostwar to 1967

Stay at Home1968–1979

Play Alone1980–1992

Play From Home1992–2000

Mix It at Home2000s

Cultural Context Boomer children Antiwar fallout Morning in America Internet boom Social balkanization, polarization

Primary Mode Piano/organ, slides, radio Family television Personal television Personal gaming Connectivity

New Tech LP record, FM radio VCR CD, Cable TV DVD, Integrated home theatre TiVo, PC entertainment hubs

Content Sheet music, slides, American Bandstand, Life (game)

TV Sports, Saturday Night Live, rental movies, Star Raider

MTV, Dallas, Super Mario Bros. Seinfeld, home movies, Doom Survivor, Your iMovies, YouTube, World of Warcraft

Business model Selling components Selling components Selling access Selling content Selling connection

Game changer Home version of formerly collective entertainments

VCR: user-controlled content Walkman & cheap TVs: personal entertainment

Gaming & Internet: home-based worldwide connectivity

iPod, YouTube: digital content sharing & manipulation

Expectations Enjoying family time Not having to leave home Not having to share Connecting with the world Control of content

Typical Choices

5 radio stationssmall library of recordsshelf of board games

10 radio stationssmall library of records5 television channelsrental movies5 pong game cartridges

10 radio stationslibrary of records & CD & VHS40 cable channelsrental movies15 arcade game cartridgescassettes (for each Walkman)

10 radio stationslibrary of CDs80 cable channelslibrary of DVD moviesrental movies15 adventure game cartridgesCD WalkmanHome computer + AOL account

100 XM radio stationslibrary of CDs120 cable channelslibrary of DVD moviesNetflix rental movies15 adventure game cartridgesiPod + iTunesHome computer + DSLMMORPGs (World of Warcraft)

StereosystemsofthekindBosesellsarejustoneaspectofhome-basedentertainment.SincetheburstofAmericanprosperityinthepost-WorldWarIIyears,therewasbeenadramaticincreaseinrangeofoptionspeoplehavebeenabletochoosefrom.Inthechartabove,weshowhowexpectationsandcomplexityhavealsogrown,beingfedbyenormoustechnologicaladvances.

Homeentertainmenthasbeenincreasinglyprovidedbyelectronicdevices,bringingwiththemaseriesofuserinterfacechallenges.Increasingchoiceseemsinextricablytiedtoincreasingcomplexity.Today,wearenolongercontenttoflipontheamradioandlistentomainstreammusic,with

advertisements—weknowthere’sabetteroption,andwe’rewillingtopayintimeand/orefforttogetjusttheparticularkindofmusicwewant,commercialfree.Isthatmorerelaxing?It’snotclear.

Againstthebackdropofsomanyoptions,itiseasytoseewhyhomeentertainment,andhomeentertainmentelectronicsinparticular,hasbecomeamassivebusiness,worthanestimated$135.4billionatthewholesalelevelin2006.

Inthesectionsthatfollow,wedisussthestructureoftheindustry,andkeyplayersrelevanttothepresentprojectforBose.Consumer Electronics Association, 2006

Industry Forecast, January 2006.

eraanalysis

Increasing options and complexity




2.2 industrylayers

Industrylayeranalysishelpsshowhowthehomeaudioindustryisorganized,andwherevalueiscreatedindifferentportions.ThechartonthefollowingpageshowsthedifferencesbetweenUsers,R&D,Manufacturers,Retailers,andMedia Content layers.

Severalplayersoperateinmorethanonelayer.Apple,forexample,engagesinR&DaswellasmanufacturingandretailingitsiPoddevice—andwhileitdoesnotcreatecontent,isasignificantcontentsaleschannelthroughitsiTunesonlinestore.BosesimilarlyisinvolvedinR&D,manufacture,andretail,andisarguablyexpertatallthree.

Oneofthequestionsthisanalysisraisesiswhetheritprovidesacompetitiveadvantageforacompanytomoveintoanewlayer.Not

allaudiocompanieswillbesuccessfulinretail,butApplehasfoundthatitcanbettercontrolitsbrandstorythroughacarefully-shapedenvironment;Bose’sapproachissimilar.SamsungandSonyhavelaunchedflagshipstorestobuildbrandandshowcasetheirproducts.Inmostcases,theapproachistocomplement,notreplace,existingretailchannels.

FewhomeaudiomanufacturershaveintegratedMediaContentdistributionintotheirofferings.SonyleverageditssizetosimplyacquirecontentcreatorslikemajorHollywoodmoviestudios,andBMG’srecordlabels;Appletookadvantageoftheiruniquecontrolofnewtechnologyintegrationbetweenportableaudioandconsumercomputerdesktopstoforgepartnershipswithaudiocontentcreators.



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sub title

Name Product Examples Description Application Implications Trade-Offs

Ha

rdw

are

Surround Sound 3Space® Audio System; Dolby Surround Systems; THX Certified Systems

“3D sound” or 360-degree sound generating speaker system

Home theater systems; Movie theater sound systems; Museum exhibit sound systems

Affordable consumer versions; Highly immersive

May require pricey complimentary hardware (large video screens) to take full advantage of effect

Compact Speakers Bose Articulated Array® Speakers; Employ speaker driver configuration in small enclosures to faithfully represent recorded sound, minimize acoustical dead spots, and maximize frequency range of music and speech

Home theater systems Enable placement of speakers virtually anywhere due to small footprint

Not scaleable to larger spaces

Waveguide Technology Bose Wave Radio; JBL Speakers (various)

Faithfully replicates recorded audio using speakers mounted inside a convoluted tube.

Compact/portable stereo systems; speakers

Big sound in a small package; brings quality sound anywhere

Necessarily bulky

Noise-Reduction Technology Products Bose QuietComfort® 3 Headphones; Bose Autopilot Noise Compensation Technology (Bose Car Stereos)

Use built in microphones to detect and reduce unwanted ambient noise, enabling a cleaner listening experience

Airplane, train, noisy venue Facilitates immersion, relaxation Generally effective with repetitive ambient noise only

Electromagnetic Car Suspension System Bose Automotive Suspension System (Bose sSuspension®)

Uses linear electromagnetic motors, power amplification, and computer algorithm to reduce rolls and pitches during turning and braking in order to provide a superior driving experience

Replacement for traditional spring and hydraulic suspension systems in cars

Reduction in spilled drinks / food-involved accidents; help reduce accidents

Much costlier than current systems

Direct/Reflecting Sound Speakers Bose Lifestyle and Acoustimass home entertainment systems

Reflects and directs sound from speakers to recreate qualities of concert halls, movie theaters, and auditoriums in the home

Home theater (surround sound) Make efficient use of architectural features of venue to disperse sound

Not scaleable to larger spaces; cannot be made flat

Long Throw Speakers Bose Panaray® LT Systems; Peavey Sanctuary Series™; Meyer Sound Stadium Speakers;

Speaker arrays optimized for large venues that minimize reverb and maximize clarity speech and music at all volumes. Helps resolve speaker to audience distance issues.

Stadiums, conference halls, theaters Enable similar experience for all Expensive; requires pricey complimentary hardware (amplification)

Materials Testing Systems Bose ElectroForce® Systems; Instron Systems; MTS Systems

Materials testing equipment utilizing motors and servos

Medical equipment manufacturers, R&D departments, engineers firms, universities

Tests the strength of equipment materials and components

For commercial and research use only

Optical Digital Audio Input/Output Toslink Optical fiber used to transmit digital audio signals in the form of light

DVD and CD players, stereo receivers, computer sound cards

High quality transmission; low signal degradation

Expensive cables must be used

Digital Audio Input/Output S/PDIF (present in some Bose products)

Ports that enable transmission of digital audio signals between devices/components

DVD and CD players, stereo receivers, computer sound cards

High quality transmission; low signal degradation

Expensive cables must be used

Digital Data Input/Output USB 2.0; Firewire; Ethernet Ports that enable transmission of digital data between devices/components

Computers, set-top TV boxes, stereo components, televisions, PVRs

Fast data transmission Wired

HD Radio Panasonic CQ-CB9900U HD Radio Receiver; Boston Acoustics Receptor HD Radio; JVC KD-HDR1

Converts analog AM/FM signals to digital

AM/FM radio Improves conventional radio sound quality

Improved sound quality debatable

Wireless Audio Transmission RF (Radio Frequency) trasmitters; wireless headphones

Wireless transmission of analog signals between devices

Wireless speakers; short-range audio broadcasting; remote controls that can penetrate walls

Eliminates wires when transmitting analog signals (audio included) from one device to another

Interference can severely degrade signal; short range

Wireless Data Transmision Bluetooth, WIFI (802.11x) radio chips; Bluetooth headphones; Apple Airport Express; Sonos

Wireless transmission of digital data between devices

Digital filesharing, wireless device connection; media streaming

Eliminates need for wires in tranferring data

May be hampered by interference; greater speed/bandwidth limitations than wired connections; relatively short range

HomePlug HomePlug Networking gear (Netgear) Uses home wiring to transmit data and network hardware (PC)

Streaming audio/video No new wiring required Need power outlet

Room Adaptive Sound Technology Bose ADAPTiQ® Audio calibration system in Bse Lifestyle® systems that analyzes a room and adjusts for optimal performance

Home stereo/theater

audiotechnologymatrixTechnologies unique to Bose in red.




2.3 technologymatrix

AnauditoftechnologiescurrentlyemployedbyBoseinitsproductsinadditiontothoseavailabletoitscustomersrevealsanumberofkeyinsights.Whilethecompanyappearstohaveitsbasescoveredwithrespecttospeakertechnologies,soundcalibrationandautomaticmusiccustomization,itisremarkablydeficientinareasthatarevirtuallycommonplacewithintheconsumerelectronicsrealm.Theeseincludedigitaldataports(usb2.0,Firewire)thatenableall-in-oneconnectionsbetweencomponentsandfastdatatransfer,digitalwirelesstechnologies(WiFi,Bluetooth)thatallow

sharingandstreamingofmediacontentbetweendevices,andcompressedaudioformats(mp3,wma,aac)thatmaximizestoragespaceandfacilitatequicktransfer.

WhileBosedoesinfactsupportmp3audiofiles,thegenerallackofnetworkingcapabilitiesinitshardwareprecludesmanyofthebenefitsthattheformatandotherslikeitoffer,suchasauto-recognitionbyonlinedatabaseslikecddb(CompactDiscDatabase)andtransferbetweendifferentdevices—includingthewidelypopulariPod.

Name Product Examples Description Application Implications Trade-Offs

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Speaker System Modeling Applications Modeler® Sound System Suggests speaker configurations based on venue architecture

Used to design optimal sound systems for large public venues, large spaces

Saves time and expense For commercial and research use only

Venue Sound Simulation Software Auditioner®Playback System; Yamaha Sound System Simulator

Produces sound simulations of virtual environments (models of real venues)

Used to determine optimal equipment/configuration for larger spaces like cathedrals, theaters and stadiums

Saves time and money by simulating proposed sound systems before installation

For corporate and commercial clients only

Audio Codecs/Decoders MP3, WMA, Ogg Vorbis, FLAC, AAC (digital audio formats)

Digital audio formats that allow music to be compressed and played back at high quality

Portable audio, digital jukeboxes, compressed digital video (audio track)

Small file sizes enable quick transfer, portability, and massive storage possibilities

Compression may affect sound quality

Music Playback Customization Bose uMusic™ Application that selects music for user based on preference for certain types of songs, artists, and genres

Home stereo Enables users to hear more of what they like and less of what they don’t

Not completely reliable, may weed out some desired music

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Standards that enable wireless communication and interoperability between devices

Link home theater components, computers, handheld, phones

Seemless communication between devices

All components must be standards compliant

One-Wire Component Connection HDMI, USB 2.0, Firewire; Ethernet Daisy chains all stereo / home theater components with single wire between components

Link TV, receiver, and DVD player with one wire each

Elimates tangle of wires associated with home theater systems

All components must have same ports with identical specs

Sonic Cleaning Systems New Canon Digital Rebel Components vibrate rapidly to shake dust loose

Clean camera lenses after changing (becomes exposed to dusty air)

Reduces maintenance, increases performance

Expensive, fragile

Anti-Noise Generation None Microphones take in sound, speakers eject anti-noise “opposite”, canceling sound

Augment existing sound-proofing Render noisy environments quiet Largely theoretical

Sound Beams Audio Spotlight Focused beams of sound provide private listening without use of headphones

Home theater, museum exhibits, cars, trains, airplanes, computer speakers

Create personal listening areas without disturbing those in close proximity

Line-of-sight dependent




Home THeATre

comPeTiTorS

Bose competes not only against other home theatre manufacturers, but against substitutes—those activities that consumers may choose instead of home theatre.

2.4 thecompetitivelandscape

The Home Theatre IndustryThehometheatreindustryhashadasuddengrowthpartlyduetotheon-demandentertainmentandsomeduetothedevelopmentoftechnologyreducingthecostofownershipofahometheatre.Thishasledtoalotofnewmanufacturestofocusonthissegmentintheconsumerelectronicsindustry.Themarketiswellsegmentedandthereareofferingatallpricepointsandallfeatures.Butessentiallytheproductofferingisdividedintotwotypes:SystemsandHome Theatre in a Box(htb).Thesystemsareaudiounits(speakerandcontroller)thatcanbepurchasedseparatelyandbeintegrated/assembledwiththehardware(tv/dvdplayers)fromothermanufacturers.Thehometheatresinaboxarecompletesystemsofferingsthatincludeamediaunit(dvdplayer)acentralcontrollerandaaudiosystem(tweetersandwoofers).

Thenewplayersarefocusingmoreonthehighlycompetitiveunder$1,200hometheatremarketandseemtoemphasizethequantityoftheexperienceratherthanthequalityoftheexperience.Thetraditionalplayershavelongprovidedtopqualityhifidelityexperiencesandattempttoattractmorediscerninganddeep-pocketedconsumerswiththeirstateoftheartsystemssellingfromanywherebetween$1,500to$4,000.ThoughthisrangedoesnotincludeboutiquemanufacturerslikeBang&Olufsenwhichsellsiconicdesignicons,suchastheNautilusspeakers,forasmuchas$20,000.

Eventhoughtheindustrysegmentsseemdistinct,theregapbetweenthemisfastclosing.Mostlybecausethetechnologyisgettingstandardized.BarringafewcompanieslikeBose,mostbigcompanieshaveanequalfootingwithregardsto

InternetSocial interaction

iPod or other headphone device

d

IreCt ComPetItorS

Reading

IndIr

eCt C

omPetItorS / SuBStItuteS

Out-of- homeconcerts

TWICE: This Week in Consumer Electronics,

July �7, 2006, Vol. 2� Issue ��, �–8.




technologyandfeatures,hencearenowfacingthechallengedifferentiatethemselvesbyprovidinginnovativefeaturesandexperiences.Anotherinterestingdevelopment,istheconvergenceofmediaandoffloadingprocessingfromthefrontendtothebackend,atrendimportantlyobservedinotherindustriestoo.Theconvergenceisnotonlyinthehardwarepartofproductsbutincreasinglyinservices,content;thewholeexperience.

ThecompetitionspaceforthehometheatreofferingofBosecorporationismarkedmycompetitorslikeCambridgesoundworks,BostonAcoustics,HarmonKardon,KlipschAudio,NakamichiCorp.Someofthesecompaniesarepartoflargercoporations,withtremendousresources.Forexample,Bose’s$1.6billioninrevenues(2004)isdwarfedbySony’s$72billion.WhileSonyshowsnosignsofconcentratingitsmightontheHomeTheatreinaBoxsegment,thescaleofitsoperationsmeanstherearemoreresourcestodrawupon,andmorepotentialsourcesofinternalinnovation.Bycontrast,thecompanythatownsbothDenonandBostonAcousticshas2004revenuesof$0.7billion,whichsuggestsatleastsomerelativedisadvantagetoBoseinitsabilitytoinvestinR&D.

Substitutes: Indirect CompetitionBosealsocompetes,inasense,withallthepossiblealternativestousingahometheatresystem.Apersonmight,forexample,choosetoread,orinteractwithothersthrough

conversation,insteadoflisteningtomusic.Or,musicmightbethemodeofactivity,butitcouldbeprovidedbyapersonalmusicdevicelikeaniPod,usingheadphones.TheInternet—email,websurfing,networkedgaming—aretakinganincreasingportionofuserattention,evenwithintheLifestylesystem’sprimaryagetarget,40to65years.Andwhileweareconsideringprimarilythoseactivitesthattakeplacewithinthehome,attendingconcertsoutofthehomeareindeedanotheralternativetousingahometheatredevice.

Happily,theLifestylesystemiscondusivetobothforegroundandbackground uses,broadeningitsusage.Itcanbeaprimarymodeofactivity,withusersdeciding,I really want to sit and listen to a particular piece of music.Or,itcanserveasamood-setterforaparty,orsimplyforhouseholdtaskslikecooking,withusersthinking,I want a soundtrack to inspire me in (or distract me from) what I am doing.

WhileitmightbeassumedthatsomeonepurchasingaBosesystemactuallyintendstouseit,ifitseemstohardtouse,ortakesjustenoughextrastepstobementallydistantfromthetaskathand,theLifestylesystemcouldendupgettinglessusethanintended.Andpurchasersdobecomeawareofgapslikethis—andtheirdissatisfactioninthevaluegainedfromtheirownershipofaBoseproductcanhavesignificantnegativeimpactontheirperceptionofBoseoverall.



Bra

nd

Pro

du

ct R

an

ge

Sys

tem

s S

elli

ng F

eatu

res

Pri

ce

Ch

an

nels

P

art

ners

hip

s O

ther

Featu

res

Rev

enue

s: $

1.6

billi

on (2

004)

Radio

s, Sp

eake

rs, H

eadp

hone

s, Ho

me

Thea

tre S

yste

ms,

Mobil

e an

d Ma

rine

Audio

, Pro

fess

ional

Audio

Lifes

tyle

28, 3

5, 28

, 48;

Life

style

3•2•

1

Ease

of s

etup

, awa

rd-

winn

ing so

und,

lifelik

e pe

rform

ance

Dire

ct: C

ompa

ny st

ores

, W

ebsit

e, Ca

talog

sRe

tail:

Big

Box (

Best

Buy)

On

line:

Amaz

on.co

m, F

rys.

com

, oth

ers

Rev

enue

s: $

1.2

billi

on (2

005)

Incl

udes

par

ent c

ompa

ny, C

reat

ive

Radio

s, Pe

rsona

l Digi

tal P

layer

s, Sp

eake

rs, H

eadp

hone

s, Ho

me

Thea

tre S

yste

ms A

nd A

cces

sorie

s.

Mega

thea

ter

60, 6

1, an

d 62

(5.1

hom

e th

eate

r sy

stem

s)

1 inc

h sil

k-fa

bric

twee

ter

in an

“MTM

.” Mu

ltiPole

ra

diatin

g su

rroun

d sp

eake

rs.

8 inc

h lon

g-th

row

down

-fir

ing su

bwoo

fer

$80

0–$2

,500

Dire

ct: C

atalo

gs, C

ompa

ny

store

s, W

ebsit

eRe

tail:

Big

Box (

Best

Buy)

On

line:

Amaz

on.co

m, F

rys.

com

, oth

ers

Impo

rtant

par

tner

ships

wi

th IB

M an

d Ga

tewa

y (m

ultim

edia

cate

gory

)

Free

shipp

ing &

fina

ncing

Risk

-Fre

e In-

Hom

e Tr

ial.

10-Y

ear W

arra

nty o

n No

n-Po

were

d Sp

eake

rs.

Custo

mer

supp

ort t

hrou

gh e

mail

& p

hone

.

Rev

enue

s: $

0.7

billi

on (2

004)

Incl

udes

par

ent c

ompa

ny, D

&M

Hol

ding

s,

whi

ch a

lso

owns

Den

on.

Spea

kers

for H

ome

Audio

& V

ideo

Syste

ms,

Built-

in an

d Af

term

arke

t Au

tom

otive

Aud

io

Aved

ia 61

0 (5

.1 su

rroun

d Sy

stem

)

Choic

e of

subw

oofe

rs.

“Asto

nishin

gly si

mple

” to

use.

Spea

kers

DTS

and

THX

certi

fied.

$800

Di

rect

: Com

pany

Web

site

Reta

il: Sp

ecial

ty Au

dio/V

ideo

Stor

es, B

ig Bo

x (C

ircuit

City

) On

line:

Vario

us

celeb

rities

, and

Mus

ic ev

ents/

conc

erts

Inter

activ

e we

bsite

with

dow

nload

able

cont

ent,

a m

usic

artis

t sho

wcas

e, lis

tenin

g su

gges

tions

from

Bos

ton

acou

stic

staff,

ot

her c

onte

nt, a

nd p

odca

sts. N

ewsle

tters

with

tech

nolog

y and

soun

d tip

s, an

d sn

eak

prev

iews o

f new

pro

duct

s

jpy

Rev

enue

s: $

3 bi

llion

(200

5)

Audio

Elec

tronic

s, Sp

eake

rs,

CD/D

VD P

layer

s, Pe

rsona

l Med

ia Pl

ayer

s, Ho

me

Thea

ter S

yste

ms

and

Acce

ssor

ies

CP 1

5, CP

25,

CP

35, H

S 10

0 (7

.1 su

rroun

d so

und

syste

ms)

simult

aneo

us p

layba

ck o

f JP

EG im

ages

with

MP3

or

WMA

aud

io file

s, vid

eo

test

scre

en fo

r full

-sys

tem

ca

libra

tion

$700

–$2,0

00Di

rect

: Com

pany

Web

site

Reta

il: Bi

g Bo

x (Be

st Bu

y),

Regio

nal A

udio

Chain

s On

line:

Vario

us

exclu

sive

circu

it cit

y co

ntra

cts

Inter

activ

e we

bsite

that

show

case

s mus

ic by

an

arti

st th

at is

play

ed vi

a on

onli

ne p

layer

, wh

ich c

an a

lso b

e pu

rcha

sed

by a

link

to th

e Ap

ple’s

iTune

s mus

ic sto

re.

Rev

enue

s: N

A

High

-end

Am

plifie

rs, P

roce

ssor

s, Co

mpu

ter S

peak

ers,

Hom

e Th

eate

r

Book

shelf

sy

stem

s, Flo

orsta

nding

sy

stem

s, Fla

t sc

reen

syste

ms,

THX

syste

ms

cont

empo

rary

des

ign, h

igh

perfo

rman

ce so

und

syste

m

mod

els c

anbe

ass

ebled

in a

va

riety

of c

ombin

ation

s,

$1,30

0–$1

1,000

Dire

ct: C

ompa

ny W

ebsit

eRe

tail:

Spec

ialty

Stor

esOn

line:

eBay

Klips

ch e

Bay s

tore

Inter

activ

e we

bsite

feat

uring

mus

ic an

d vid

eos f

rom

inde

pend

ent b

ands

.

Rev

enue

s: $

0.7

billi

on (2

004)

Incl

udes

par

ent c

ompa

ny, D

&M

Hol

ding

s,

whi

ch a

lso

owns

Bos

ton

Aco

ustic

s.

Hom

e Th

eate

r Sys

tem

s, CD

/DVD

Pl

ayer

s and

Rec

orde

rs, S

tere

o Re

ceive

rs, T

urnt

ables

, Cas

sette

De

cks,

Aces

sorie

s

7.1, 5

.1 ho

me

thea

ter,

DHT

and

S se

ries

HDMI

out

put,

Supe

r Aud

io CD

form

at (S

CAD)

$550

–$1,6

00Di

rect

: Com

pany

Web

site

Reta

il: Bi

g Bo

x (Be

st Bu

y),

Spec

ialty

Audio

Sto

res

Onlin

e: Va

rious

Circ

uit C

ityDe

dicat

ed iP

od in

put,

with

on-

scre

en d

isplay

an

d re

mot

e co

ntro

l. USB

inpu

t for

por

table

pla

yers

and

Flash

mem

ory d

evice

s; ca

n be

sy

nche

d wi

th a

com

pute

r.

Rev

enue

s: N

A

Hom

e Th

eate

r, DV

D Pl

ayer

s, Au

tom

otive

Aud

io Sy

stem

s, LC

D An

d Pl

asm

a TV

s, Lis

tenin

g St

ation

s, Sa

mpli

ng C

hang

er

Soun

dspa

ce

8.5, 1

0, 12

MKI,

2181

/2

slot l

oadin

g dis

c, co

ntem

pora

ry

desig

n,por

table

aud

io en

hanc

er, 2

HDM

I inp

uts

read

y con

nect

ibility

with

XM

radio

$900

–$12

,000

Reta

il: Sp

ecial

ty Au

dio

Stor

esOn

line:

Vario

us

local

and

natio

nal

cultu

ral c

ounc

ilsCa

n als

o ru

n ph

oto

slide

show

s.

Rev

enue

s: $

72 b

illio

n (2

004

TVs,

Audio

Equ

ipmen

t, DV

D Pl

ayer

s, Ga

ming

Dev

ices,

Hom

e Au

dio E

quipm

ent,

Auto

mot

ive A

udio

Syste

ms,

Media

Co

nten

t

Plat

inum

, Dr

eam

syste

ms

$300

–$1,5

00Di

rect

: Com

pany

Web

site

Reta

il: Bi

g Bo

xOn

line:

Vario

us

Cont

ent p

rovid

ers,

Mobil

e Me

dia

Com

panie

s

conn

ectio

n fo

r por

table

med

ia de

vices

Ho

me

Thea

tre

in a

Bo

x

co

mp

et

ito

rs

in

th

eh

om

et

he

at

re

-in

-a-B

ox

se

gm

en

t




2.5 Boseretailstrategies

Bosehasusedmultiplebusinessstrategiesinrisingtothetopofitsmarketsegment.Chiefamongtheseare:

Eliminate the middleperson.WhileBoseproductsareavailablethroughmanyhomeelectronicsretailers,themajorityoftheirsalescomethroughcompany-ownedstoresandviadirectchannelssuchastheInternet,mailorder,andtelephoneorder—oftensupportedbyexpensive,full-pageadsinleadingpublicationsliketheWall Street Journal.

Geography.Boseretaillocationsareinhigh-traffic,high-demographicshoppingareas,suchasChicago’s“MagnificentMile,”thusattractingtheaffluentconsumer.

Image Marketing.Bosehassucceededinpositioningitselfasmorethanjustahomeaudioretailer—theysellacompletemedia

experience.RecentmarketsurveysindicatemorepeoplethinkhighlyofBosethanofApple.

However,notallBosestrategieshavemaintainedtheireffectiveness.Webelievethattwopaststrategieshaveplayedout:

High Performance Image.Bosehassoughttoportrayitselfastheindustryleaderinsound.Othermanufacturers,however,arenearlyasgoodtotheaverageear,andmayofferabetterperformance/priceratiothanBose’sexpensivesystems.

New Technology.WhileBosecontinuestodevelopnewhomeentertainmenttechnologies,theaverageconsumermaynotperceivetheretobethatmuchdifferencebetweenBoseandotherhomeentertainmentelectronicsmanufacturers.

reTAil PreSence

Bose stores can be found in many higher-end shopping areas, where affluent customers in the 40 to 65 age range often walk in—and walk out having purchased a Lifestyle system.

Research & Demonstration | Fall 2006 �0



2.6 Bose’spositionintheaudioindustry

Bosefindsitselfinanenviableposition,commandingsignificantprofitsandhugebrandpresenceamongconsumers.Andyet,thenicheitoccupiesisrelativelysmall.WhileBosesellsHomeTheatreWithinaBoxpackages,theydonotcurrentlyhavetheirownvideodisplay,whichlimitstheconvenienceandseamlessnessoftheiroffering.Perhaps,too,itspeakstoBose’srootswithin“pure”audio,muchlikeNakamichiandotheraudiophilebrands.Meanwhile,manyotherhomeelectronicsbrandsarepursuingintegratedmedia

productsystems.WhiletheBoseconsumeroftodaymaybeaudio-focused,tomorrow’smayexpectacompletesolution.

Thehigh-endhomeaudiomarketalsoseestremendouscompetition,andrapidinnovation.Bose’stremendousresourcesanddepthinR&Dhavekeptitintheforefront,butifacompanylikeSony,withseventytimesBose’srevenuesin2004,shouldchoosetoinvestindevelopingnewfeaturesinhometheatresystems,theywouldbeabletoallocatesignificantlymorecapital.

on THe Fence?

Bose is balancing between mass-market consumer home audio, and esoteric audiophile products. At present, it has found a profitable niche.

Research & Demonstration | Fall 2006 ��



3.1 Buildingcustomerloyalty

Effectively Promoting Customer LoyaltyInthenever-endingquesttoincreaseprofits,corporationsaroundtheglobeinvestbillionsofdollarseveryyearonconventionalloyaltyprogramsandcustomerrelationshipmanagement.Unfortunately,manyaredoomedtofailintheireffortsthankstoafundamentalmisunderstandingoftherelationshipbetweencustomerloyaltyandprofitability,namelytheassumptionthatitisalwaysadirectone.Unrestrainedloyaltyefforts,however,oftenputsuchastrainonacompany’sresourcesthattheveryoppositeofaprogram’sintendedgoalmayoccur–profitdecreasesandlosses.

Tohelpengenderfiercecustomerloyalty,businessesmustfocusoncustomerneeds,employinganewapproachthatandexploitsacompany’sdesign,sales,andmarketing

capabilities.Incateringtocustomers,theyshouldseektoaligntheirbrandsandtouchpointswiththeircustomers’valuesandbeliefs,creatingcompellingproductandserviceexperiencesthatforgeemotionalconnectionsandofferimproved,unique,anddesirablesolutions.Keyoperatingprinciplescanhelpcompaniesattainfierceloyalty,includingtheavoidanceof“lock-in”contractsinfavorofcompellingofferingsthat

“lockout”competitors,therigorousdiagnosisofloyaltytoolsincurrentusebythecompanyaswellasitsrivals,theidentificationandrankingofcustomersintermsofsatisfaction,andtheselectionofamixoftoolsthatareinlinewiththecompany’scapabilities.

Loyalty LessonsWhenpursuinganaggressiveloyaltygenerationplan,companiesneedtobewaryofthepitfallsarisingfromanumberof

reTHinKing BelieFS

ABouT loyAl

cuSTomerS

Companies’ attitudes towards loyalty strategies have changed drastically since the halcyon days of bloated incentive programs. As illustrated in the chart at right, the “old logic” takes loyal customers for granted, whereas a more realistic view acknowledges the need to keep them satisfied.

Alexis, J. Using Design to Create Fiercely

Loyal Customers. Rotman Magazine, Fall

2006, ��.




oLd LogIC In reaLIty

Loyal customers…

cost less to serve have higher expectations from your organization and your offering

will pay more for your offering experience helps them to get the best price from your organization

are receptive to cross sellingare very sensitive about your organization talking advantage of their loyalty for marketing and price increases

will create positive word-of-mouth buzz for your brand—

they will market it for you

are not reliable markets, and do not always present accurate and positive messages

noT All

cuSTomerS Are

equAlly vAluABle

The Pareto Principle says just 20% of customers generate 50% of the profits. More importantly, the customer segment formerly described as a “break-even” customer may today result in negative profits.

Other Insights:More customers does not mean more profit

Attempting to keep all existing customer is sometimes a strategic mistake

›

›

commonmisconceptions.Morespecificallytheyshouldbearinmindthefollowing:

Customerloyaltyshouldneverbesoughtattheexpenseofaprofit.Withonly20%ofacompany’scustomersprovidinganacceptablerateofreturn,mostshouldnotbetargetedforloyaltyincreases.Acquisitioneffortsshouldbefavoredduringtheintroductoryandgrowthphasesoftheproductlifecycle,withretentioneffortsgainingprecedenceduringthematurityanddeclinephases.

»

»

Marketshareandloyaltyhaveadirectrelationshiponlyinhomogeneousmarkets,wherecustomerneedsarenarrowandsimilar.

“Varietyseekers”and“dealseekers”arenotoriouslydifficulttoretain,andeffortstodosomayhaveanegativeimpactonloyalcustomers.RFM(recency,frequency,andmonetaryvalue)programsoperateundertheassumptionthatrecent,highspendingpurchaserswillcontinuetobuyacompany’sproducts.

»

»

»

Keiningham, T, Vavra, T., Aksoy, L, and

Wallard, H. Loyalty Myths: Hyped Strategies

That Will Put You Out of Business—and

Proven Tactics That Really Work (John

Wiley & Sons, 200�), �.

Desired Customers(profitable)

Break-Even Customers(Belowrequired

rateofreturn)

Costly customers(unprofitable)

60%

20%

35%

50%

15%

% of Customer % of Profits

20%




Six leverS

For BuilDing

cuSTomer loyAlTy

Table redrawn from Alexis (2006).

Inseekingtoelevatecustomerloyaltycompanieshaveanumberofadifferenttoolsor“levers”theycanusecollectively.Inthechartabove,thefirstthreeleversconstitutethemoretraditionalvarietyandhelpto“lockin”customers,severelylimitingloyalty.Theremainingthreemaximizeloyaltybyhelpingcompaniestoaligntheirbrandswiththecorevaluesortheircustomers,leadingtoattractiveandcompellingproductsthathelp“lockout”competitors.Toselecttheoptimalcombinationoflevers,companiesshouldfavoronesthatliewithintheircurrentcapabilitiesandconsiderthosethatcompetitorsareusingeffectively.

Ofthreemosteffectiveleversinpromotingcustomerloyalty,eachhasauniquesetofactivitiesorinterventionsthatmaybeemployedaspartofagreaterloyaltyeffort.Asdescribedabove,theDistinctiveSolutionsleversuggestsdesigninterventionsthatexploreuserneedsandusability,theEmotionalConnectionsleverencouragesactivitiesthatareusefulforinstillingvalueandconveyingemotioninproducts,andtheFavorableEconomicsleverinspirescost-savingstudies.

Loyalty Programs

Contracts Limited Choice

DistinctiveSolution

Emotional Connection

FavorableEconomics

Source of Loyalty

Repeat purchasebuilds reward

Obligated, early termination results in fee

Other choice is nothing

Best solutionfor customer needs

Customers are aligned with & buy into brand

Best economic proposition

Challenge ExpensiveEasy to copyCustomer is loyal to program, not brand

›››

Can create adversarial relationship with customersCan lead to complex accountion

›

›

Subject to privatization and monopoly regulation

› Complex to manageRequires constant updating

›

›

Requires deep customer knowled tge

› Hard to manageCan lead to low profits

››

Examples

These levers Modify customer behaviorCan easily be copiedCreate marginal, temporary loyalty

›››

Build on/ leverage existing behaviorAre difficult to copyCreate sustained loyalty

›››

Design Interventions

Conduct design research to understand unarticulated and unmet needs

Develop product platforms that address a comprehensive needs set

Conduct usability testing to ensure offerings are best in class for usability and usefulness

›

›

›

Conduct design research to understand customer values, aspirations, and passions

Develop brands that communicate emotion and feeling, not just functional value

Develop products and communications that customers covet and desire

›

›

›

Conduct usability design studio to understand which elements of the current offering can be shifted to customers, reducing cost and complexity

Seek innovation fabrication and sourcing models

Assess products and service design with intent to reduce unnecessary components and complexity

›

›

›




Consideringthefactthatonly20%ofatypicalcompany’scustomersyieldmorethan50%ofitsprofits,itisincumbentuponstrategiststorespondappropriatelytoflaggingsatisfactionwithinthisessentialsegmentinordertomaintainandpromotegreaterloyalty(and,thus,higherprofits).Thechartabovesuggestsaspecificcourse

ofactionforeachlevelofsatisfaction.Whilegreaterloyaltyamong“Breakeven”and“Unprofitable”customersshouldnotnecessarilybysought,appropriateresponsestotheirvariouslevelsofsatisfactioncangreatlycurblossesandpreserveessentialfunds.

Table adapted from Alexis (2006).

DeSign

inTervenTionS

THAT cAn BuilD

cuSTomer loyAlTy

Not Satisfied Somewhat Satisfied

Highly Satisfied

Profitable Customer

Start by getting the basics right to build initial loyalty

Conduct research and apply appropriate levels to build satisfaction and loyalty

Monitor and adjust efficacy of level to ensure ongoing satisfaction and profitability.

Breakeven Customer

Provide incentives for customers to become more profitable and satisfied or to exit

Apply appopriate levels and pilot alternative business model

Shift cost / service burden to customer

Unprofitable Customer

Develop incentives to steer these customers to different offerings and service

Prototype and pilot alternative business models.

Shift cost / service burden to customer




3.2 customerloyaltymodels

Customer Loyalty at Harrah’sTaskedwithraisingprofitsofanalreadysuccessfulcasinochainintheincreasinglycompetitivegamingindustry,GaryLovemanassumedtheroleofceoofHarrah’sEntertainmentin1998andproceededtotransformthecompanyviaaboldnewcustomer-centricstrategy.AlthoughHarrah’salreadyledtheindustryincustomerserviceatthetimeofhisarrival,Lovemanwasconvincedthatitneededtobeelevatedsignificantlyinordertoinspireloyaltyamongcurrentcustomersandthus,hepostulated,increasegambling.

Althoughrigidanti-corruptionlawsthatlimitedcontactbetweencasinoworkersandcustomersseemedaninsurmountablehurdle,Lovemanpushedforwardwithasweepingnewtrainingregimenaimedcurbingemployeeturnover,engenderinginnovativethinking,andrewardingworkers’successfuleffortstoimprovecustomerservice.Onlybyproducingdedicated,highlymotivatedemployeeswouldtheopportunitytoimpresscustomersbeapossibility,heasserted.Furthermore,Lovemanheldthoseaccountablewhodidnotproperlyimplementhisdesignatedmarketingtools.

Inordertogaugecustomersatisfaction,healsoinstitutedahighlyadvancedtrackingandsurveysystemwhichwouldalsoofferHarrah’sawealthofessentialdataontheircustomers’gaminghabits.Finally,Lovemanreplacedthecasinochain’sgenericrewardsprogramwithamulti-tieredincentivedrivenclubthatrewardedcustomersforfrequencyofvisitsinadditiontotheamounttheyspentgambling.

Loveman’sstrategyultimatelyprovedenormouslysuccessfulforHarrah’s,helpingtostrengthenthebrand,encourageloyaltyandspending,andincreaseprofitswithoutexpandingtheexisting26Americancasinositoperated.

Association of Yale AlumniFormorethan200years,graduatesofYalehavebeeninvolvedincontributingtoandkeepingalivetheirconnectionswiththeiralmamater—longerthanatanyotherAmericanuniversity.ThebenefitstobothYaleanditsgraduateshavebeenimpressive:billionsofdollarsindonations,fuelinggrowthoftheschool’s$15.2billionendowment.

TheprimaryconnectionmostYalealumnihavewiththeuniversityaftertheygraduateiswiththeYaleAlumniMagazine,“theoldestindependentalumnimagazineinAmerica,founded1891.”Eachmonth,almostallgraduatesreceivethismagazine,whichincludesnewsofeventsoncampus,articleswrittenbyfacultyandalumni—manyofwhomplayinfluentialrolesintheacademic,political,andbusinesslifeofthenationandworld.ReadingthemagazinethusreinforcesasenseofthevalueofaYaleeducation,andtheconnectionsitprovidestoalargercommunity.Alargesectioninthebackprovidesupdatesontheactivitiesofmembersofeachgraduatingclass,anditisnotuncommonforanalumnusreceivingthemagazinetofliptothebackfirstandscanforfriends’names.AlumnimayusetheCareerCenter,athleticfacilities,libraries(oneofthelargestintheworld),dininghalls,museums,andotheron-campusresources,eitherfreeorforanominalfee.Alumniarealsopermittedtoauditcoursesforsemesteratatime,withoutpayingtuition.

Alumnireunionsareheldeveryyear,withthefive-andten-yearanniversariesholdingparticularattraction.ThousandsofalumnireturntoNewHaven,Conn.,torelivetheir

“brightcollegeyears”andmarvelathowthecampus,andeachotherhavechanged.Reunionsareplannedbyclasscommittees,butalsofeatureameetingoftheAssemblyof

Alexis (2006).

Becker, D.O. Gambling on customers The

McKinsey Quarterly, No. 2, 200�, �8-��.

Research & Demonstration | Fall 2006 �6IIT Institute of Design


YaleAlumni,whovoteontheleadershipandmajoractivitiesoftheassociation.

Theuniversityalsoreachesouttoalumni—mostnotably,askingfortheirnominations,andlater,theirvotesfor,trusteestobeappointedtotheYaleCorporation(Yale’sgoverningboard).Alumnifeeltheyhaveaveryrealinfluenceontheongoingleadershipoftheschoolitself.

AnotherverysignificantpointofcontactwithYalearethefrequentappealsforfunds—atleastfourtimesayear,andoftenmoreoften.Whileatmanycolleges,thegraduatingclasspledgesdonationstomakea“seniorgift,”atYale,seniorspledgetomakedonationsoverthecourseofthenext25years,resultinginasubstantiallylargergiftpresentedtotheuniversityatthe25thclassreunion.Somefundappealsarebydirectmail(eitherinsimpleletterandenvelopepackages,ormoreelaboratemailings),andsomearebytelephone.

Manyspecialinterestgroupsallowalumnitocontinueinvolvementintheactivitiesandclubstheytookpartinasundergraduates,rangingfromathleticteams,ethnicclubs,religiousandpoliticalclubs,andmusicgroups.

AnextensivearrayofeducationtravelopportunitiesincludelecturesbyYalefacultymemberson-locationwithvariousculturalandhistoricalsitesaroundtheworld.TheseprogramsareattractiveenoughtohavebeenprofiledintheNewYorkTimesasanoutstandingvacationopportunity.

Inadditiontotheactivitiesdescribedabove,sponsoredbytheNewHaven-basedAssociationofYaleAlumni,regionalandlocalYaleClubs(mostnotably,theYaleClubofNewYork)sponsortheirownevents,oftenheldintheclub’sownbuilding;theNewYorkclubincludesahotelandbanquetfacilities,andislocatednexttoGrandCentralTerminalinNewYorkCity.PeriodicvisitsbyprominentYalefacultyandtopleaders“rally

Keiningham, T, Vavra, T., and Aksoy, L, and

Wallard, H. Loyalty Myths. Rotman Magazine,

Fall 2006, pp 2�-28

HArrAH’S, lAS vegAS




thetroops.”Onealumnusvividlyremembersaspeechgivenbythen-PresidentBennoSchmidt,whicharticulatedthevalueofaYaleeducationinsuchgrandtermsthatitcementedadeeployaltytotheinstitution,resultinginannualgivingandnearlyadozenvisitstothecampusintheyearssince.

ThepracticalvalueofthefrequentandmultivalentcommunicationsfromtheAlumniAssociation(andtheuniversityitself)iseminentlyapplicabletotherelationshipbetweenBoseanditscustomers.EachtouchpointhelpsalumniseethevalueoftheirYaleconnections,andtheninfactmakesitvaluablebystrengtheningthenumberofnodesinthealumninetwork,andthestrengthofthetiesbetweenthem.

However,researchhasalsoshownthattheinitialvalueanalumnus/aplacesontheircollegeconnectionismoststronglyrelatedtotheirexperiencewhilestudents.Ifthatexperienceislacking,effortsbyanalumni

associationarelikelytobeineffective(Mael&Ashforth,1992).ThemostdirectanalogstotheBoseexperiencearethesalesexperience,andtheexperienceofactuallyusingtheBoseequipment.Inotherwords,startingaBoseownersmagazinemaydolittleifBoseownersdon’talreadyfeeltheyactuallyenjoyusingtheirBoseproduct,andthattheycanreasonablydependonBoseCorporation’slevelofservicewhentheyneedhelp.

Louis VuittonLVMHMoëtHennessyLouisVuittonisapowerfulholdingcompanyandinternationalproducerofluxurygoods.Withauniqueportfolioofmorethanfiftyprestigiousbrands,thecompanycontinuestoprosperthankstothepreservationofastellarreputation,thesuccessfulaligningtheirexistingproductarsenalwiththoseofcompaniestheyacquire,theeffectivesharingofresourcesamongbrands,andtheidentificationofhigh-endmarkets.Tobroadentheappealoftheirbrandacross

Yale Alumni Association information based

on personal experience of one of the au-

thors, a member of the Yale Class of ��0.

Mael, F. & Ashforth, B.E. Alumni and their

alma mater: A partial test of the reformu-

lated model of organizational identification.

Journal of Organizational Behavior Vol ��,

��2. �0�–�2�.

Stutler, D. & Calvario, D. (��6). In alumni

support, satisfaction matters. Fund Raising

Management, Vol. 27, ��6. �2.

yAle univerSiTy

Yale’s website includes a large section devoted to alumni issues, including recent news, reunions, career networking, and information about clubs and ongoing activites alumni can participate in locally.




generationsandculturesandtoincreaserelevance,LVMHfrequentlyrecruitsdesignersfromavariednumberofregionsandstaysattunedtothelatestglobaltrends.

OfallLVMH’sholdings,LouisVuittonisamongthemostprestigiousandsuccessful.With15productionworkshops,aninternationallogisticscenter,andmorethan350exclusiveshopsin51countriesthroughouttheworld(66%outsideFrance),thecompanyhasawideglobalreach.Whilehighlyvisibleadsandsponsorshipofinternationaleventskeepsitontheculturalradar,therealrecipeforsuccessisembodiedinitsbrandloyaltystrategy,whichemployshighqualitystandardsinitsproducts,uniqueproductarchitecture,andapowerfulbrandimage.Inordertokeepthebrandalignedtothevaluesofitshigh-endcustomers,LouisVuittonmaintainstightcontroloverproductretail,sellingthebrandexclusivelyatitsownboutiques,whichareonlylocatedinwealthyareas.Usinglocaldesigners,thestore’satmosphere,architecture,anddesignareallcarefullytweakedtoaddressculturalpreferences.Theabilityforcustomerstohaveproductsrepairedattheseboutiquesisauniquepost-purchasefeature,onehighlyrepresentativeofLouisVuittion’sloyaltypromotingmeasures.

CitibankInthehighlycompetitivebankingindustry,wherecustomerloyaltyiscrucialingainingacompetitiveedge,Citigrouphasdemonstratedconsiderableprowessintakingstepstobuildlifetimerelationshipswithitspatrons.Withmorethan200millionaccountsinover100countriesworldwide,Citigroup’sCitibanktailorsitsservicestoanalmostimpossiblydiversecustomerbase,offeringanarrayofproductsspecifictosegmentswithdifferentgeographic,economic,andculturalattributes.

Thecompanyhassucceededinbuildingloyaltyandbrandrecognitionlargelyduetoitsabilitytoaddressspecificneedsandidentifyunderservedmarkets.Ithasbeenparticularlyadeptinrecentyearsatbuildingloyaltybyleveragingemergingtechnologiestoitsbenefit.Forexample,its1997introductionofafulllineofWeb-basedbankingservicesrevolutionizedtheindustry,providingcustomerswitheasyaccessonlinetoaccountsandfulfillingtheunmetneedsofanalreadyburgeoninginternetcommunity.

AwardedtheBestGlobalInternetBankawardbyGlobal Financemagazinein2005,Citibankcontinuestothriveandholdacommandingleadovercompetitorsonline.Muchofitssuccessinthisarenaisduetoitsfocusoncollegestudents,whoareattractedtofreeonlinebankingandbillpayfeatures.Whileitsrivalsharanguedstudentswithcreditcardoffers,Citibankaddressedthesegmentsneeds,providingthemwithasuperioronlinebankingexperienceandconsequentlyhelpingthecompanytogarneralargermarketshareoftheonlinebankingsector,whichgrew27percentinthelastyearaccordingtoasurveyreleasedinAprilbyReston,Va.-basedcomScoreNetworks.Fifty-onepercentofCitibankcheckingaccountholdersnowusetheironlinebankingservices,signalingawinningstrategyandatestamenttoaninnovativeloyalty-growthprogram.

Comparison of Customer Loyalty Strategies and Generic StrategiesThechartonthefollowingpageindexescustomerloyaltystrategiesandgenericbusinessstrategiesforthebrandswehavediscussed.Naturally,mostcompaniesusemultiplestrategies.

Davis, J. and Lengel, M. Getting It Right:

Turning Customer Value in to Competitive

Advantage in Retail Banking (video inter-

view). BetterManagement.com webcast,

originally presented October ��, 200�, at

http://www.business-performance.net/semi-

nars/seminar.aspx?l=�2��0

Anderson, S.A. Banking on Students:

Financial Institutions Try to Build Long-

Term Customer Base with Technology,

Flexibility. Washington Post.com, June

2, 2006, at http://www.washingtonpost.

com/wp-dyn/content/article/2006/06/02/

AR200606020078�_pf.html

Research & Demonstration | Fall 2006 ��IIT Institute of Design





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BMW iDrive: A Technological Step BackwardInthelate1990s,BMWdesignersandresearcherswatchedwithconcernasthenumberandcomplexityofdriverinteractionswerepoisedtoincreasedramatically.Inthepast,adrivermightadjusttheradioorairconditioningsettings;themoderncarpermitshundredsofentertainmentchoices,mobilephones,advanceddrivingfeatures,andmore—allwhilethecarishurtlingdowntheroadatbreakneckspeeds.Theybeganworkingonadifferentapproach.

TheiDrivedebutedin2001intheBMW7Series,andreplacedswitches,buttons,andknobswithalargedisplayscreen,andamulti-directionalknobcontrolinthecenterconsole.Bymovingtheknobinoneofeightdirections,orturningit,thedrivercouldselectvariousmenufunctions,including

Climate,Communication,Navigation,andEntertainment.Thesystemletsdriversaccesshundredsoffunctions,allfromonecontrol,simplifyingthedashboardandallowingmuchmorecustomizationthatwouldbepossiblewithbuttonsandswitches.

PerhapsBMW’sfirstmistakewastoallowautomotivewriterstodrivethecarwithoutanyintroductiontothesystem.Itprovedtobesufficientlynon-intuitivetofrustratemostofthem,leadingtoreportsoffrustratingeffortstodobasictasksliketurningontheheat,orchangingtheradiostation.Avoicenavigationcomponentprovidedasecondpathtomostfunctions,butalsorequiredcarefuldiction.AlthoughonesalespersonsuggestedpeoplecouldgetfamiliarwithiDriveintwoweeksofuse,mostpeopledidn’twaitthatlong.“[It]canfrustratesomepeoplewhohavebeendrivingsinceage15

BmW’S iDrive

The product of years of research and careful consumer study, BMW’s iDrive system was both a technological success and a market disaster.

Day, J. Can BMW’s iDrive Pass Its Road

Test Now? Electronic Design, June 2�,

200�. �8–��.

BMW. Business Week, June �, 200�.

Research & Demonstration | Fall 2006 2�



andthinktheyshouldbeabletodriveanycarwithouthavingtotakeaclassorreadamanual,”saidLeMikeLevin,whohelpeddeveloppartoftheinterface.Thenegativefeedbackcontributedtoreducedsalesforthe$75,0007Seriescar.

ThenextcarmodelBMWreleasedwithiDrivesportedastreamlinedsystem,withfeweroptionsandbetterspeechprocessing.Bettertrainingwasprovidedtocarbuyers,too,thoughkiosksindealershipssopeoplecouldpracticebeforehittingtheroad.



cuSTomer-

PerceiveD vAlue

gAP




Value

Additional Features

Ease of Use

PriceBrand Appeal

Sound Quality

Before purchase, customer’s perception of the value they would receive from buying a Lifestyle system consists of several building blocks—adding up to a “fair” value for the price asked.

3.4 loyaltyimplicationsforBose

EarlyuserresearchsuggeststhatakeyproblemdriverforBoseLifestyleusersisthegapbetweenpromisedeaseofuseandtheactualownershipexperience.Whenthesystemturnsoutnottobequiteassimpleasexpected,theperceivedvalueofthesystemdrops,andthe“valuegap”betweenthepricepaidandtheperceivedvaluebecomesamatteroffrustration,leadingtoreducedrecommendationstofriends,andadecreasedlikelinessofrepurchase.Bose’sCustomerforLifeinitiativeseekstoremedythissolutionwithpost-purchasesupportandinteractionthatwillmaintainthevalueofthesystem,byenhancingeaseofuseandotherbenefitsofownership.

Inourinvestigationfocustomerloyaltyprograms,wehaveseenthatpost-purchasemessaginghaslimitedimpactonoverallperceivedvalue.Rather,itisenhancingtheunderlyingvalueinthesystemthatresultsinapositiveownershipexperience.Weseepotentialinusingaloyaltyprogramspecificallytosupporteaseofuse,butcautionthanperhapssomeofthosefeaturesmayneedredesign,andmayalsoneedtobepromotedindifferentwaysthatdon’toverpromisecustomerbenefits.Finally,wealsoseeopportunityinincludinglatentfeaturesthatthecustomercandiscoverpost-purchase,delightingandsurprisingthemwithadditional(andunexpected)value.

before purchase after purchase

Value Gap

After purchase, ease of use fails to live up to expectations…

Actual Ease of Use

…leading to a perceived value gap and frustration.

This could be addressed with new post-service services, or latent features that surprise and delight the customer.

New Post-Purchase Services?

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ardo

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d, bu

t te

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e Ma

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ose

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ap b

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atch

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xpec

tatio

ns to

pe

rform

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by d

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ife” s

trate

gy

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nnec

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h’s (c

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mer

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resp

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to th

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Yale

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(buil

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LVMH

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Citib

ank

(targ

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mer

s with

long

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(don

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.




references

Alexis,Jeremy.“UsingDesigntoCreateFiercelyLoyalCustomers.”RotmanMagazine(2006):19.

Anderson,StacyA.“BankingonStudents:FinancialInstitutionsTrytoBuildLong-TermCustomerBasewithTechnology,Flexibility.”WashingtonPostJune2,2006,Washingtonpost.com.

Aron,CindyS.“LaboringtoPlay:HomeEntertainmentandtheSpectacleofMiddle-ClassCulturalLife,1850-1920.”JournalofAmericanHistory92.4(2006):46-7.

Becker,D.O.“GamblingonCustomers.”McKinseyQuarterly2(2003):48,48–59.BoseCorporationCompanyProfile.,2006.Davis,J.,andM.Lengel.“GettingItRight:TurningCustomerValueintoCompetitive

AdvantageinRetailBanking(videointerview).”BetterManagement.com.October11,20052005.<http://www.business-performance.net/seminars/seminar.aspx?l=12940>.

Jones,ThomasO.,andW.EarlSasserJr.“WhySatisfiedCustomersDefect.”Harvardbusinessreview73.6(1995):88.

Keightley,Keir.“LowTelevision,HighFidelity:TasteandtheGenderingofHomeEntertainmentTechnologies.”JournalofBroadcasting&ElectronicMedia47.2(2003):236-59.

Keiningham,T.,etal.LoyaltyMyths:HypedStrategiesThatWillPutYouOutofBusiness—andProvenTacticsthatReallyWork.JohnWiley&Sons,2005.

Keiningham,T.,T.Vavra,andL.Aksoy.“LoyaltyMyths.”RotmanMagazine(2006):25–28.Kharif,Olga.“SellingSound:BoseKnows.”BusinessWeekOnline(2006):18.Kim,HunShik,andSeowTingLee.“ExploringtheCharacteristicsofDVDHomeTheater

SystemAdopters.”MassCommunication&Society6.3(2003):267-90.Mael,Fred,andBlakeE.Ashforth.“AlumniandtheirAlmaMater:APartialTestofthe

ReformulatedModelofOrganizationalIdentification.”JournalofOrganizationalBehavior13.2(1992):103-23.

Nichols,Michelle.“FiveWaystoBuildCustomerTrust.”BusinessWeekOnline(2006):14.Reichheld,FrederickF.“LeadforLoyalty.”HarvardBusinessReview79.7(2001):76-84.Reinartz,Werner,andV.Kumar.“TheMismanagementofCustomerLoyalty.”Harvardbusiness

review80.7(2002):86.Robinson,JohnP.,andGeoffreyGodbey.“BusynessasUsual.”SocialResearch72.2(2005):407-

26.Stutler,Doug,andDaveCalvario.“InAlumniSupport,SatisfactionMatters.”Fundraising

management27.9(1996):12.“WorkingHard,PlayingHarder.”Economist319.7712(1991):68.

Research & Demonstration | Fall 2006 2�IIT Institute of Design


sub title


User Insights

ContentS

fieLd Study 1.1 ObservingBoseOwnership1.2 TheSokolofskiFamily

inSightS2.1 FindingsfromUserObservation2.2 Insights:TheUserJourney

anaLySiS3.1 NeedsClusterAnalysis3.2 NeedsClustersDescribed

initiaL ConCeptS4.1 InitialInnovationConcepts4.2 ConceptEvaluation4.3 Recommendations

PreparedaspartofIITInstituteofDesignclassid592-038,ResearchandDemonstrationAdvisor:JeremyAlexis

SeunghoChungDanGreeneDavidMcGawRishabhSinghWaewwanSitthisathainchai

Fall2006


BosehasworkedhardtomaketheLifestyleSeriesiiioneoftheeasiestandmostadvancedhometheatresystems.Butwhatisitlikeforthepeoplewhoownit?Theshortanswer:Wonderful!Thelongeranswer:Well, maybe there are one or two things I wish could be different.…

TobetterunderstandtheBoseownershipexperience,weconductedthreeresearchefforts:

Telephone interviewswithLifestylesystemowners(12interviews)In-home interviewswithandobservationsofLifestylesystemowners(5interviews)Adetailedethnographic observationofafamilyoverthecourseofseveralweeks,astheysetupandbecamefamiliarwithaLifestylesystem

Whileoursamplesizewasconstrainedbytheprojectscheduleandbudget,therangeofcustomerresponsesconfirmedanumberofexistingresearchstudiesconducted

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previouslybytheBoseCorporation—whilealsorevealingsomeinterestingissuesthatcouldguidefuturedevelopment.Naturally,finalbusinessdecisionsaboutimplementingconceptsresultingfromthisresearchshouldalsobeinformedbyrigorousqualitativeresearchwherepossible.

Users DefinedMostBoseLifestylesystemownersareinthe40to70agerange,andareupper-middleincomeorabove.Ourtelephoneinterviewsincludedpeopleinurban,suburban,exurban,andruralcommunities,butourin-homeinterviewstookplaceintheChicagoarea,andincludedpeopleofdifferentethnicandpersonallifestylechoices.Allofoursubjectswerecouplesorfamilies;somehadteenageorolderchildrenathome,butwhiletheywereofteninvolvedinsettingupthesystem,theytendednottobeprimaryusersoftheLifestylesystem,preferringothermediasystemsinthehouse,orpersonaldeviceslikeiPods.

1.1 ObservingbOseOwnership



1.2 UserObservatiOn:thesOkOlOfskis

Research InitiativeTheresearchstudywasdesignedtounderstandthepurchaseandpostpurchaseexperiencefortheLifestyle48systemwhileobservingasimulatedBoseownershipexperience.

ParticipantsUrbanprofessionalEdwardandDianeSokolofskiliveinamulti-levelcityhouse,alsosharedbytheiryoungerdaughterRachel(23years).Havingrecentlymovedfromthesuburbs,theywereinaprocessofrefurnishingtheirnewcityhomeatthestartofthestudy.

Research Methodology Adisposablecamerastudywasemployedaspartoftheproject’sprimaryresearch.Themethodrequiredparticipantstocapturephotosoftheiractivitiesandexperiences

withtheLifestyle48HomeTheaterSystemfortwoweeks,culminatinginanin-depthinterviewwiththeresearchteam.

WeaskedtheSokolofskistocompletethefollowsequenceofactivities:

Browseandresearchinformationonline(Bosewebsite)pertainingtotheBoseLifestyleline.VisittotheBosestoretoexperienceanofficialproductdemo,askrelevantquestionsofsalesstaff,obtainaquotefortheirpreferredsystem,andretrieveabrochure.Setupthesystem.Adaptthesystemtofittheirdailylifestyle.Exploresystemfeatures.Usethesystemtohelpentertainguests.

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Key Insights from the Sokolofskis1. High service expectationsTheSokolofskisfoundthein-storeproductdemotobeoutstandingandveryeffectiveincommunicatingthesuperiorvalueandbrandpositionofBoseproducts.Themostappealingproductsforthefamilywerethewirelessspeakerssincetheywouldallowthemtoavoiddamagingtheirnewwallswithinvasivewiring.Therewere,however,anumberadissatisfiers:

Havingtopurchaseallaccessoriesandthefixturesseparatelyforeachroomandnotasalump-somepackageTheextrachargesfortheconciergeorcustomersupportservice,whichtheSokolofskisfeltshouldbecomplimentaryinlightofthesystem’shighpricetag(theyalsosuggestedthata$99markupshouldcovertheseservices)Waitingseveralminutesforabrochureprintedoutwithaninkjetprinteronlow-qualitypaper,whichtheyfoundsurprisingandcompletelyincongruentwithBose’sinherentpromiseofexclusivityandquality.

2. Communication issues box and manual

Thestepprocesswassimpleandwascompletedbythehusbandandwifeteamin

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aboutanhour.Althoughtherewereissueswiththecommunicationandinformationdesigninthemanualandthebox.Someofthemwerethemismatchbetweentheiconography(colorofthesystems,boxorientation)inthemanualandthedetailsontheboxortheusersenvironment.Furthermore,itwasalsodifficulttolocatetheuser’smanualintheboxasitlaidatthebottomoftheboxhiddenundertheequipment.

3. Integrating the system with home decor

Otherthanperformanceandsize,theabilityofthesystemtoblendinwiththeirlivingroom’sdecorwasalsoanimportantconcernforthefamily,whofoundthetestsystem’swhitecolordisappointingasitclashedwiththeircolorscheme.

4. Sense of accomplishment and self reliance (taming the technology monster)TheSokolofskisfoundthecalibration(AdaptIQ)processtobehighlyengaging.Theyfeltthattheabilitytosetupthesystembythemselvesandoptimizeitsperformancegavethemasenseofsatisfactionandself-relianceratherthanreinforcingtheirfearsoftechnology.


Bose CusTomeR FoR LIFe

5. Adapting the system to the family’s habits

ThefamilyinstalledtheirLifestylesystemintheirlivingroomonhome’sthirdfloor,connectingittotheirnewlypurchasedLCDtelevisioninordertocreateanoptimalentertainmentexperience.Resultsofthestudy,however,showedthattheSokolofskisspentmostoftheirtimeinthefamilyroomadjacenttothekitchen,aroomtypicallyusedforsocializingandentertainingandwhichalsohousedaTVandamediacenter.Theentertainmentroomwasusedonlyforspecialoccasionsandforwatchingspecialmoviesorprograms.

Withover-busylives,mostofthefamilieslistentomusic,TVormovieswhiledoingotherthingsintheotherroomsofthehouse.Henceeventhoughthefamilyinvestsinahighendsystemforentertainmentdesires,theyendupusingitonlyonafewoccasiontherebyleavinglittlerecalloftheexperiencewhichalsoaffectsadvocacy.



2.1 findingsfrOmUserObservatiOns

Feature usage

& BeneFits

Bose users were asked to talk

about the features of their Lifestyle

system—both the ones they really

liked, and the ones they were less

satisfied with. A composite ranking

of their reactions is shown at right,

revealing a feature appreciation

profile.

OurinteractionwithBoseLifestyleownersrevealedbroadsatisfactionwiththesystem.Bosehasclearlyunderstooditsusers,andhascreatedaproductthat,byandlarge,notonlymeetsbutexceedstheirexpectations.Wedid,howevernoticefourrecurringthemesthatmaysuggestfuturedesignevolutionofsimilarhometheatreofferings:

Theme One | Multimedia vs. MusicMostofourresearchsubjectsspendmoretimeusingtheirBosesystemwithavideodisplay(eitherwatchingbroadcastorcableTV,orDVDs)thanlisteningtomusic.Thismayseemobviousforahometheatreproduct,butitisimportanttonotethatBose’sbackgroundisinsystemsdesignedtofaithfullyandcompellinglyreproducemusic.Thatheritage(combinedwithtechnicalconstraintsandcontentrightsissues)isalsoreflectedintheLifestylesystem’sabilityto

storemusicfromCDs—butlackofstorageabilityformovies.Likewise,muchofthe

“buzz”inmusictechnologytodayisrelatedtopersonaldevicesliketheiPod—yetconnectivitywiththeLifestylesystemissomethingfewownersfelttheyunderstood,andnonehadsuccessfullyaccomplished.

Implications.WithmultimediaLifestyleusegrowing,willfuturesystemsstore(oraccessfromotherstorage)video?Thisthemealsotouchesonemergentconceptsofhomemediahubs(discussedinourRecommendationsattheendofthisreport),whichhaveyettoimpacttheBosetargetaudience—butwillsoon.

Theme Two | Time LimitationsOnepotentialsubjectcontactedforaphoneinterviewlaughedwhenaskedifhewouldbewillingtotalkabouthisownership

Perceived Value Feature Notable reactions

Posit iVe

Compact size of speakers and base unit “I love how they fit anywhere!”

RF remote control The power of the remote to work through walls is amazing—great for answering the phone, entertaining outdoors (with remote speakers), etc.

Sound quality People love how great their TV, movies, and music sound.

800 Number Customer Support Bose representatives have been very helpful, offering to send spare parts (like speaker wire) for free, and answering all questions.

uMusic—CD storage & playback People love how easy it is to store a CD in memory, and the resulting space and clutter savings

Manual The manual seems clear and easy to use.

NeutralBoseLink Nobody currently uses this feature; some respondents indicated they

“might” want to explore wireless expansion in the future

AdaptIQ Ease of setup (and resulting sound quality) was appreciated, but less relevant to ongoing ownership.

Negat iVe

uMusic—custom playlists “Too hard to figure out!” Seems like a chore to go through the manual.

Surround Sound Adjustability The news should sound one way, music another way … and, “Why can’t I simulate stereo for my old mono recordings & movies?”

Connectivity of Audio Sources Difficulty of connecting multiple audio sources was noted—particularly difficulties (or lack of obviousness) with iPods or turntables

Size of Bass Unit “It just sticks out so much!”



experience.“Totellthetruth,”hesaid,“it’sstillinthebox—sixmonthsafterIboughtit!”Bosesystemsappealtopeopleofatleastmoderatewealth,andnotsurprisingly,theyareoftenbusywithbusinessorpersonalactivities.MorethanoneintervieweedescribednothavingenoughtimetositdownandgothroughtheBosemanual—onepersonevensaidshehadearmarkedpartofherChristmasvacationtolearnhowtouseuMusic—ninemonthsafterfirstsettinguphersystem.

Implications.SuccessfuldesigninnovationswillanticipatethebusypaceBoseownersmaintain,andbothaccommodatelimitedfreetime,anddemonstrate sufficient valueintakinguptimethatcouldbespentotherwise.

Theme Three | “It’s My Fault.”Severalofourrespondentsexplainedtheirdifficultywith,orlackoffamiliaritywith,particularBosefeaturesbysaying,“It’smyfault.”Itislikelythattheysaidthistotheinterviewertoclarifytheydidn’tholdagrudgeagainstBose,anddidn’twanttheirlackofknowledgeinorabilitytouseacertainfeaturetoreflectnegativelyuponthecompany—butatthesametime,itsuggestsacertainamountofguiltisinplay.Itmayalsobetiedtothesensethattheypaidmoneyforanexpensivesystem,andrealizetheyaren’ttakingadvantageofit.Whateverthesourceofthesefeelings,theycan’thelpbutcolortherelationshiptheyhavewiththeproduct,andwiththeBosebrand.

Implications.Thetoneofthemanual,800numbersupport,andBosestorestaffinteractionsallshouldreassurecustomersthatthesystemistheretoservethem,andthatitissimpleandeasytouseeventheadvancedfeatures.“Tryitout!”

Theme Four | Appearances CountThisonecaughtusbysurprise.Bosehasclearlyinvestedheavilyinminimizingthe

sizeandvisualimpactofthespeakers,andincraftingapleasingappearanceforthebaseunit.Nevertheless,whenweplacedaLifestylesysteminthehomeofafamily,foron-sitetestingoverthecourseofseveralweeks,theyexpressedstrongdismaythatitwaswhiteinsteadofblack.Itseemsalltheotherdecorativeaccessoriesintheroomwereblack,andthewhitestereodidn’tmatch.Likewise,weunderstandthatthebassunithasbeenmaderemarkablysmallthroughadvancedaudiotechnologydesign.Yetseveralsubjectscomplainedofhowbigitwas,andawkwardinappearance.(Thisperspectivemayalsohavebeencoloredbythefactthatouron-siteobservationswereconductedinanurbanarea,withcorrespondinglytighterlivingquarters,evenforwealthyfamilies.)

Webelievethatbothreactionsdescribedabovestemfromauserdemographicthathastheabilitytoindulgeveryparticularinteriordesigntastes,andwhichevaluatesconsumerelectronicequipmentnotonhowfarithasadvancedfrompreviousmodels(suchaslarge,obtrusivespeakercabinets),butpurelyonitsownaestheticvalue.

Implications.Bosemaywanttoconsiderprovidingmoreflexiblefinishoptionsforboththemainconsoleandthebassunit—forexample,woodfinishes(tomakethemlookmorelikefurniture),or“skins”thatwouldenabletotheconsoletobecustomizedtomatchanydecor.

Clustering Research InsightsInadditiontothebroadthemesdiscussedabove,wedrewmorethan150individualinsightsfromouruserinteraction.WegroupedinsightsintoclustersthatfellnaturallyintoanOwnershipJourney,progressingfrombeforepurchase,throughsetup,use,andextensionslikemaintenanceandrecommendation.TheOwnershipJourneydiagramisshownonthenextpage.



2.2 insights|theOwnershipJOUrney

Wedrewmorethan150individualinsightsfromourinteractionswithBoseowners,eachreflectinganotableaspectoftheirexperiencewiththeLifestylesystemandwithBoseasacompany,orwiththeiruseofmediaintheirhome.Wegroupedinsightsintoaseriesofclusters,whichwerethennamedandorganizedinthediagrambelowintothephasesoftheBoseownership“journey”—theprogresspeoplegothroughfrompre-ownershipthroughtoadvocacy.Ateachstageinthejourney,someoftheinsightclustersrelatedtoactualexperiences,andotherstoexpectations.

Thisdiagramisusefulforseeingthebroadsweepofinteractions,butitisveryimportanttonotethatmanyclustersinclude

bothpositive andnegativeinteractions.Forthisreason,theJourneychartismostvaluablewhencombinedwithanorthogonalviewofuserinsights—foundintheNeeds Clusters discussionwhichfollow.

Raw clusters of insights.

A t t r A c t i o nPre-Purchase

e n t r yPurchase & Initial Setup

e n g A g e m e n tOwning & Using

e x t e n s i o nAdvocacy & Adaptation

E

xp

Er

iE

nc

E

information

Advanced Features

Experience over Technology

Size & Design

Setup confusion

The Manual: Hits & Misses

AdaptiQ

intuitive Functionality

Usability & complexity

Underestimation of Technology

Time constraints

connectivity

Feature Shortcomings

Habitual Use-modes

Learning

Growth & the Future

Keeping Up-to-date

Service Expertise

Ex

pE

cT

AT

io

n Sound Quality

Multiple User Accommodation

product Design & Appearance

Sales relationship

Access to My Music collection

Setup Feedback

Setup Service

Setup Guidance

Transparent Usability

Brand imprimatur

product Design cues Quality

Show-me Learning

Multimedia Dominance

connect with Me

Help me Understand

Evangelizing Friends & Family

Insights are divided into actual experiences, which people really went through, and expectations—the desires people had at various stages.



3.1 needsclUsteranalysis

Intheprevioussection,weshowedclusteredinsightsaboutBoseuserbehavior,mappedtoanownershipjourney.Thisanalysisrevealedthestagesofownershipandtheconcernsthatdominateineachone,butdidnothelpusdistinguishbetweendifferentkindsofusers.

NeedsClusteranalysis,inthissection,isawayofcombiningobserveduserbehaviormodeswithusers’underlyingmotivationsandgoals.TheresultisaseriesofNeeds

ClustersthatcanbeusedtoframedifferentkindsofinteractionsapersonmayhavewiththeBosesystem.Becausewespeakof

“modes”and“goals,”weareabletodescribeuserbehaviorthatchangesovertime,orevenfrommomenttomoment.Apersonmighthaveonesetofgoalswhentheyfirstbuythesystem,andadifferentsetwhenusingit.Or,theymightbeina“fiddling”modewhilesettingupforaparty,butwhenthepartystarts,theyarein“entertaining”mode.




RequirementsThefirststepinNeedsClusteranalysisistoidentifyusergoalsorRequirements.Thesecouldbeanswerstothequestion,“WhyistheuserswitchingontheBosesystemnow?”

Multimedia Thrills TheLifestylesystemprovidesgreatsoundtoaccompanyvideo(TVorDVD).Vibrancymaytrumprealism.Audioisreallyjustpartofalargersensorypackage—someoftheadditionalelementsincludealarge,high-quality(possiblyHighDefinition)videodisplay,properencodingofcontent(DolbyDigital5.1Surround),andtightintegrationforasupremelyimmersiveexperience.

Cultivated Mood Musicshouldeffectivelycomplimentandenhancethemood,whetherforisaparty,afamilydinner,orasolitarypersonreading.Theparticularcontentmaybelessimportantthanthekind ofmusic—andthatminimaleffortisrequired.

Uninterrupted Experience Themusicshouldjustflowcontinuously,freeofunwantedhiccups,delays,interference,andskips,regardlessofthesource(radio,CD,PC,server,etc).

Unfettered Access Alluser-ownedorsubscription-basedcontentshouldbeeasilyaccessiblefrom,regardlessofwhereitresides(CD,harddrive,server,MP3player,PC,etc).Moreover,legacyformatsshouldbeabletobeintegratedintothesystem:LPrecords,reeltoreeltape,etc.

Masterful Control Optionsforcontentrouting,systemexpandabilityandinterconnectivity,playback,inputandoutputselection,EQadjustment,speakerconfiguration,andeffectsmanagementshouldbeabundantandreadilyavailabletotheuser.



Behavioral ModesThenextstepinNeedsClusteranalysisistoderiveaseriesofobservedBehavioralModes,basedonourinterviewsandobservationsof

Boseusers.Ausermightbeinseveralmodesoverthecourseofaninteractionwiththesystem.

Frustrated Interconnector

Whentheprimaryconcernsoftheusershifttowardssoundoptimizationandaccesstoexternalcomponents(hardwareorservices),problemsariseifthesystemdoesnotrespondasanorchestrawouldtoaconductor.Theexperientialassetspreviouslyadmiredbytheuserbegintovanishastechnicalissuesmount.Withstandardscompliance,cablecompatibility,andsignalstrengthtakingcenterstage,theuserbecomesincreasinglyawareofthesystem’slimitations(e.g.shortageofappropriateinputs/outputs,codeccompatibility)andperturbedbythelackadequateguidancetheprintedmanualaffords.

Constant Fiddler Unabletodevoteenoughtimetomastersettingsorfeaturesbycloselyconsultingthemanual,usersseekingspecificcontent,uncommonhardwareconfigurations,orcustomizedsoundmayfindthemselvesconstantlyadjustingand“tweaking”thesoundtogetitjustright.Highexpectations(possiblyencouragedbythesystem’spromotionalmaterials)maygiverisetoaperfectioniststreak,ultimatelyrenderingasatisfyingsolutionelusive.

Proud Papa Theuserderivesmorepleasurefromguests’positivereactionstothesystemthanitsusability,convenientfeatures,orsoundqualitybecausehebelieveshispurchasereflectshisgoodtaste,financialstatus,andcompetentdecision-makingabilities.

Gracious Entertainer Intentonkeepingthefocusonhisguests’pleasure,theuserviewsthesystemmoreasameanstoanend—aneventenjoyedbyall—ratherthanashowcasingofawondrouspossession.Thus,heremainscarefulnotdrawtoomuchattentiontothehardware,aneasytaskconsideringthecompactnessofthesystem.

Contented Novice Blissfullyignorantofthesystem’s“superpowers”,theuseriscontentsimplytohavedecentqualitysoundemergefromthespeakerswhenhepressesplay.Unconcernedwithlimitationsofsystem,herarelyventuresbeyondthebasics,denyinghimselfthebenefits(andhassles)ofusingadvancedfeatures.

Busy Under-user Toopreoccupiedwithothertasksandresponsibilitiestoquenchhisdesiretoexploretheouterreachesofthesystem,helacksthetimerequiredtomasterenoughfeaturestojustifythepurchasecost.



O b s e r v e d b e h a v i O r a l m O d e s

Frustrated interconnector

Constant Fiddler Proud Papa

gracious entertainer

Contented Novice

Busy under-user

re

qU

ire

me

nt

s(

be

ne

fit

fr

Om

Us

e) Multimedia

thrills

Cultivated Mood

uninterrupted experience

unfettered access

Masterful Control

3 Quest for Perfection

2 Total Control

1

Just Want It To Work

4 We’re a Little Lost

needs Clusters

1. Just Want It to Work2. Total Control3. Quest for Perfection4. We’re a Little Lost5. Play On!6. See My Bose

3.2 needsclUstersdescribed

ThefinalstepinNeedsClusteranalysisistofindthenaturalgroupingswhereBehavioralModesandRequirementsintersect.Forexample,wefoundsimilaritiesintheredareaabove,Cluster1:“JustWantIttoWork.”Whetherthesepeopleareunder-usersofthesystem,ornovices,theirinteractionswiththesystem,eitherseekingMultimediaThrillsoraCultivatedMoodweremuchthesame.

Inthefollowingsection,wedescribeeachNeedsClusterindepth,andalsoidentify

criticalDesign Criteria foreachone.DesignCriteriareflectinsightsfrominterviewsandobservations,andframeopportunitiesforinnovation:whatkindsofinteractionsshouldbeencouragedandsupported?Whatkindsoffrustrationsshouldbesimplifiedandimproved?DesignCriteriabecomecriticalbothindevelopinginnovationconcepts,andinevaluatingwhethertheconceptswillbesuccessfulwhenimplemented.

6 See My Bose

5 Play On!5 Play On!




NEEDS CLUSTER DESCR IPT IoNS

Just Want It to Work

DescriptionBasichometheaterneedsmustbemet.Ataminimum,thesystemshouldproduceclean,highfidelity,andundistortedplaybackofTV,DVD,andCDaudiocontent,recognizeallsongsandmoviesfromdisksautomatically,delivergreatimmersivesoundwithlittletonotweaking,andachievethedesiredambiancewithfewbuttonpresses.

Design CriteriaProvideaquick-startguide.Providebasicsystemsetup.Offerpersonalizedsetupandsystemintroduction.Simplifycumbersomefeatures.Offerquickguidance.Makefeaturesintuitivesolittlelearningisrequired.Helpuserconnectothermusicsources.Showmeaccessoriesthataddbenefits.Eliminateneedforupdatediscs.

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Total Control

DescriptionThroughthesystem,theusershouldbeabletoobtaincontentthesystemfromanysourceatanylocationandathisconvenience.Withtheabilitytomanipulateeveryaspectofthesystem—fromcontentaccesstohardwareexpandability,frominterconnectivitytospeakercalibration—theusershouldfeelasthoughheishackingthesystemwithouthavingtodothelegwork,assumingnearlywizard-likepowersoverhissystemwiththeremoteactingashiswand.

Design CriteriaProvideallthedetailsabouteachcontrol.Provideself-setupguide.Allowconnectiontomultipleaudioinputs.Provideaccesstouser’sentiremedialibrary.ProvidebackupofuMusiclibrary.Showmeexpansionoptions.Provideanupgradepath.UpdatesystemviaInternet.

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Quest for Perfection

DescriptionThesystemshouldbeabletoliveuptothehighestexpectationsoftheuserwithrespecttosoundfidelity,immersion,moodmatching,andcontenttransmission(e.g.musicthroughwirelessspeakers).Soundqualityshouldtakeprecedenceovercontentcontrolissues.

Design CriteriaHelpuser“own”thefeaturebyunderstandingwhy&howitworks.Provideself-setupguide.Keepuserawareoffeatureoptionsettings.Allowconnectiontomultipleaudioinputs.Actasacompletemediahub.Offertotalreliability.Showmeexpansionoptions.Provideanupgradepath.UpdatesystemviaInternet.Supportdécormatchingofphysicalsystem.

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We’re a Little Lost

DescriptionUsersneeddirectioninbrowsingavailablecontent,helpaccessingcontentandexternaldevices(andservices),andtheabilitytomanipulateandcustomizecontent.Thecurrentmeansofeducatingandacclimatinguserstouniquefeaturesandhelpingthemtoachieveabeneficiallevelofcontrolistootimeconsumingformanyusers,especiallythosewhoneedtobeconvincedofthevalueofsuchfeatures.

Design CriteriaPointtoquick-fixeswhenusergetsstuck.Makespecialfeaturesfeelaccessibleandfriendlytousers.Showmehowtodothings…don’tjusttellme.Providebasicsystemsetup.Offerpersonalizedsetupandsystemintroduction.Givequickeraccesstomyfavoritefeatures.Simplifycumbersomefeatures.Provideautomatedaccesstouserguides.Providemultiplewaystoansweruserquestions.Alwaysreveallisteningmodeandoptions.Eliminateneedforupdatediscs.

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Play On!

DescriptionVirtuesofthesystemshouldfadeintothebackgroundwithmood-killingglitchesavoidedthroughredundancyandautomaticupdates.Theauralexperienceshouldremainconsistentlyexcellentsoastoavoidproblemsforwhichtheownermaybeheldresponsible.

Design CriteriaClearlywalkmethroughthebasicstepstodothings.Givequickeraccesstomyfavoritefeatures.Playwithoutinterruption.Eliminateneedforupdatediscs..

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See My Bose

DescriptionThesystemshouldallowownerstodemonstratethesystem’scapabilitiestoguestsinwaythatportraysthethemastasteful,competent,andthoughtfulwhileprovidinganumberofcompellingreasonsforgueststopurchasethesystemforthemselves.Ultimately,itshouldenhancethatstatureoftheownerwhileprovidingasatisfyingexperienceforhisguests.

Design CriteriaHelpusershowsystemtoothers.GivemeprideofownershipasItalktoothersShowmeaccessoriesthataddbenefits.Provideanupgradepath.Supportdécormatchingofphysicalsystem.

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The Value of Needs ClustersArmedwiththeseuserdescriptions,wecanproceedtoevaluateearly-stageconcepts,bothtoidentify“quick-hits”forimplementationinearly2007,andtoframefutureconceptgeneration.

Ideally,NeedsClusterswouldbeenrichedbyqualitativedemographicdata,segmentingexistingandpotentialBosecustomersbyincome,geographiclocation,andpotentialtoupgradeormakeadditionalBoseproductpurchases.



4.1 initialinnOvatiOncOncepts

TheBoseCustomerforLifeinitiativehasalreadydevelopedseveralconceptsforimprovinginteractionswithLifestylesystemowners.TheInstituteofDesignteam,meanwhile,sawseveralinnovationconceptsemergethroughdiscussionwithcustomers.Althoughitisstillearlyinthedesignprocess,weseizedtheopportunityofourinteractionswithownerstogettheirreactionstoseveralconceptsalreadyonthetable,tohelprefinethemandsuggestadditionalthemestodrivenewconceptdevelopment.It is important to note that the concepts described in this section do not reflect a complete design process on the part of the Institute of Design team, which anticipates generating, refining, evaluating, and validating new concepts in future phases of the project.

Inthefollowingpages,wepresentinitialconcepts.Eachconceptisdepictedvisually,andinadescription,whichwasofferedtoBoseownersfortheirreactions.Typicalresponsesarerecordedbelow.WehavealsoidentifiedthelikelyNeedsClustersservedbytheconcept,andtheDesignCriteriathatapply.ConsiderationoftheseDesignCriteriamaybehelpfulinrefiningtheconceptsfurther,orinusingthemaspringboardforadditionalconcepts.




heLp button

button for Recording

button for Umusic

HELP

DescriptionAnadditionalbuttonontheremotecontrol,labeled“Help”wouldbringupanon-screendisplaywithexplanationsofhowtousevariousfeatures.Pressingthe“help”buttonandthenanyotherbuttonontheremotecontrolwouldimmediatelytaketheusertoahelpscreenforthatfeature.

Potential User-Cluster AppealJustWantIttoWorkWe’reaLittleLost

Design Criteria AddressedPointtoquick-fixeswhenusergetsstuck.Simplifycumbersomefeatures.Makespecialfeaturesfeelaccessibleandfriendlytousers.Offerquickguidance.Provideautomatedaccesstouserguides.*Providemultiplewaystoansweruserquestions.*

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User Feedback“Thiswouldbegreat—justlikeonthecomputer.”“Thatisverysmart!”

ExtensionsCouldthislinkdirectlytotheBosewebsiteforthemostup-to-dateinformation?



tuCk-a-way mini-manuaL

MINIGUIDE BOOK FORBOSE SYSTEM

DescriptionAsupplementalowner’smanual,inasmallerformat,thatslipsintoaspaceunderthemainLifestyleconsole.Thenewmanualwouldfocusonusabilityissues(notsetup),andwouldcontaineasy-to-understanddiagrams,step-by-stepinstructions,andanindex.

Potential User-Cluster AppealWe’reaLittleLostJustWantIttoWorkQuestforPerfection

Design Criteria AddressedPointtoquick-fixeswhenusergetsstuck.Simplifycumbersomefeatures.Makespecialfeaturesfeelaccessibleandfriendlytousers.Offerquickguidance.Providemultiplewaystoansweruserquestions.*

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User Feedback“Perfect—I’dloveit.ThenIwouldn’thavetogogetthatbigthickmanual.”“Wedohaveaplacetokeepourmanual,butiftherewereaplacetokeepitbythestereo,thatwouldbeuseful.”

ExtensionsSelectingwhichfeaturestodiscuss,andatwhatlength,maybedifficult.



update diSk + newSLetter + SampLe muSiC

BOSE UPDATE CD PACKAGESEASON 4 : CHRISTMAS HOLIDAY

UPDATE CD

NEWS LETTER

MUSIC LIST

are included

DescriptionExpandtheupdatediscpackagetoincludeashortnewsletterinthesamemailer.Sectionsmightincludea“FeatureFocus”thatwouldexplainhowtobenefitfromoneoftheadvancedLifestylesystemfeatures,andshowhowarealBoseownerwasusingthefeature.Musicandvideoreviewswouldbecomplementedbyexclusivenewmusictracks,inavarietyofmusicalgenres,freeofcharge,ontheupdatediscitself.

Potential User-Cluster AppealQuestforPerfectionSeeMyBose

Design Criteria AddressedHelpuser“own”thefeaturebyunderstandingwhy&howitworks.Showmehowtodothings…don’tjusttellme.Showmeexpansionoptions.Showmeaccessoriesthataddbenefits.

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User Feedback“Iwouldn’treadthenewsletter.…Newmusicwouldbenice—hey,Ispent$4,000onastereo,it’snicetobe‘thrownabone’withabonuslikethat.”

“Ijustunsubscribedfromthenewsletter…whateverwasofferedwouldneedtobemorepractical,insteadofjustadvertisingforotherproducts.”

ExtensionsThequestionofhowBosecansupportanentiremusiclifestyleisintriguingandworthfurtherexploration.Atwhatpointisitaboutmusic,morethanjusttheequipmentforplayingit?



white-gLove Setup ServiCe

Bose

DescriptionBose-trainedprofessionalswouldcometoacustomer’shometosetuptheLifestylesystem,andspenduptoanhourwalkingthroughthevariousfeatures,helpingthenewownerbecomefamiliarwithallitcandoandgettingallthesettingsjustright.Maybeanadditionalchargeitem—especiallyifphysical/wiringsetupisneeded.Because this could be an expensive service to provide, it could be offered only to users who demonstrate a need—perhaps if they respond to a follow-up call several weeks after purchase and say they haven’t set their system up yet.

Potential User-Cluster AppealJustWantIttoWork,QuestforPerfectionWe’reaLittleLost,PlayOn!

Design Criteria AddressedProvidebasicsystemsetup.Offerpersonalizedsetupandsystemintroduction.Helpuser“own”thefeaturebyunderstandingwhy&howitworks.Makespecialfeaturesfeelaccessibleandfriendlytousers.Showmehowtodothings…don’ttellme.Providebasicsystemsetup.Clearlywalkmethroughthebasicstepstodothings.

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User Feedback“Ifitwasfree.”“Ifsetupwereincludedintheprice,we’dtakeadvantageofit—theywouldhavevaluableknowledgeandcouldtellusabouttheproduct.”

“IaskedaboutsetupserviceswhenIboughtmysystem—theysaidI’dhavetowaitfourtosixweeks!I’dwantanysetupservicetobeavailablewithinafewdays.”

ExtensionsCost-effectivenessisthebiggestchallenge.Somecustomersmightgladlypaymore,though.



onLine Learning moduLeS

WELCOME TO BOSE ONLINE LEARNING SITE!!!

InstructionSpecial Features

FLASH HTML

DescriptionAspecialareaontheBose.comwebsitewouldoffertutorialsthatshowownershowtousedifferentfeatures.Eachonecouldbeself-paced,andrevisitedasdesired.Thetutorialsmightincludestep-by-stepwritteninstructions,asmallvideoorbriefanimation,andsomepracticalsuggestionsforwaysmanyBoseownerstakeadvantageofthefeatures.

Potential User-Cluster AppealTotalControlWe’reaLittleLost

Design Criteria AddressedProvideallthedetailsabouteachcontrol.Makespecialfeaturesfeelaccessibleandfriendlytousers.Showmehowtodothings…don’tjusttellme.Providebasicsystemsetup.Offerpersonalizedsetupandsystemintroduction.Provideautomatedaccesstouserguides.*

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User Feedback“Probablywoulduse,butI’mnotsurehowmanypeoplewould.”“I’venevervisitedtheBosewebsite.”“Iliketheideaofjustgettingstep-by-stepinstructions—itwouldn’tevenneedvideo.”

ExtensionsHowmightthisinteractwithauserforumtodiscusstipsandshortcuts?



LifeStyLe phone ConCièrge

I’d like to ask about my Lifestyle system....

Yes, SirYou can ask anything

DescriptionAtoll-freetelephoneservice,wouldinstantlyrecognizeLifestylesystemowners,andprovidepersonal,friendlytelephonehelpforanyquestionsyoumighthaveaboutyoursystem.Operatorscould“dialin”totheLifestylesystemfordiagnosis.Addedvalueincludesmusicandvideorecommendations.

Potential User-Cluster AppealWe’reaLittleLostQuestforPerfection

Design Criteria AddressedPointtoquick-fixeswhenusergetsstuck.Makespecialfeaturesfeelaccessibleandfriendlytousers.Providemultiplewaystoansweruserquestions.*Helpuser“own”thefeaturebyunderstandingwhy&howitworks.Showmeexpansionoptions.

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“No…I’mtoobusy.”“Iloveitwhenyouhaveaproblemwithsomething,likeacomputer,andyoucallthat800number,andtheyjustwalkyouthroughit,stepbystep.”

“Don’ttheyalreadydothis?”

ExtensionsNuancesofservicelevelarekey—forexample,havinginstant,personalrecognitionofthecaller,ratherthanrequiringidentificationbyserialnumberorcasenumber.



in-Store CLaSSeS

DescriptionAtconvenienteveningand/orweekendtimes,alocalBosestorehostsabriefseminarsonvarioustopicsrelatedtogettingthemostoutofaLifestylesystem.Topicscouldinclude:howtosetupuMusicplaylists;howtocustomizesettingsfordifferentkindsofmusic;andhowtoconnectotherdeviceslikeiPodstoyourLifestylesystem.Eachseminarmightalsoincludesamplemusicgiveaways,andmightalsoincludelightrefreshments.

Potential User-Cluster AppealPlayOn!SeeMyBose

Design Criteria AddressedClearlywalkmethroughthebasicstepstodothings.Helpusershowsystemtoothers.GivemeprideofownershipasItalktoothers

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User Feedback“No…I’mtoobusy.”(multiple respondents)“Itcouldbenice,ifitwerealways,say,thethirdThursdayofeverymonth,andjusthaveitbeaninformal,drop-inevent.”

ExtensionsMakingthisasocialevent,centeredonanenjoymentofmusicandmedia,wouldbeimportanttomakingitfeellesslikeachore(aburdenofownership)andmorelikeaperk.



4.2 cOnceptevalUatiOn

Weconductedacursoryevaluationofinitialconcepts,usingtwoscorecardstoconsiderthepotentialofsuccesswithcustomers,andthecommercialviabilityoftheconcept.

TheCustomer Success ScorecardconsidersthepotentialvalueforeachNeedsClusteronascaleofonetofive.Wealsoincludeda“generic”criterionderivedfromresearchcitedinourEcosystemresearchpaper,whichplacedahighvalueonCustomerRelationshipManagementsolutionsthatinspireanemotionalconnectionbetweenthecustomerandthebrand.Finally,weassignedascorebasedonuserfeedback.

ThisevaluationnotonlyshowsthehighpotentialofCustomerSuccessforconceptsliketheUpdate Disc + Newsletter + Music andWhite Glove Setup concepts,butalsothatthePlay On!andTotal Control NeedsClustersarerelativelyunderservedbycurrentconcepts.FutureconceptdevelopmentmaywanttoexploreadditionalwaysofsupportingtheseNeedsClusters.

Customer Success Scorecard Potential value, from 1 (least) to 5 (best)

USER CLUSTER CR ITER IA

GENER IC CRM CR ITER IoN

QUALITATIVE RESEARCh

CoNCEPTJust Want it To Work

Total control

Quest for perfection

We’re a Little Lost play on!

See My Bose

Emotional connection

Direct User

FeedbackTotal

Scores

help Button 5 3 3 5 2 1 3 5 27

hide-a-way Mini-Manual 4 3 4 5 3 2 2 4 27

Update Disc + Newsletter + Music 3 4 5 4 2 5 4 3 30

White Glove Setup 5 1 5 5 5 4 5 5 35

online Learning Modules 2 4 3 4 2 3 3 3 24

Lifestyle Tele-Concièrge 3 2 4 5 3 4 4 2 27

In-Store Classes 1 2 3 3 4 5 5 1 24

CLUSTER ToTALS 23 20 29 31 21 24 26 5



TheBoseCommercialViabilityScorecardisanestimateofhoweasilyandprofitablyBosecouldexecuteeachconcept.Thecriteriainclude:

Targetability.Cantheconceptbefocusedjustatthegroupofcustomersthatneedit?Low-scoringconcepts,suchasthoserequiringachangetotheproduct’sfunctionality,wouldhavetobeimplementedacrosstheboard.Ontheotherhand,evenWhiteGloveSetupcouldbeofferedfreeonlytothosecustomerswhohaven’tsetuptheirsystemafteramonthofownership,oratanextrachargeforsomecustomers.Cost-effectiveness of implementation.High-scoringconceptswillcostrelativelylesstoimplement.Leverages Brand.DoestheconceptbuildonrecognizedBosebrandattributes,and

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contributetopositiveperceptionsofBoseasacompany?Increase of Advocacy.DoestheconceptencourageBoseownerstotakegreaterprideintheirpurchase,andrecommendittoothers.Capability Fit.DoesBosehavethecapabilityin-housetoexecutetheconcept?

Anobservationfromthissuiteofconceptsisthattheyarerelativelyexpensiveandlesstargetable,butseemtofitstronglywithcurrentBosecapabilities.Considerationsofthesefactorsmaybeworthconsideringinfutureconceptdevelopment—howmightwemakeconceptsmoretargetableandcost-effective,evenifitmightrequireoutsourcingskills?

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Bose Commercial Viability Scorecard Potential value, from 1 (least) to 5 (best)

CoNCEPT Targetable

cost-effective to implement

Leverages Brand

increases Advocacy

capability Fit

Total Scores

help Button 1 2 4 3 4 14

hide-a-way Mini-Manual 1 3 2 1 5 12

Update Disc + Newsletter + Music 3 4 4 3 5 19

White Glove Setup 4 1 5 5 1 16

online Learning Modules 4 4 3 3 5 19

Lifestyle Tele-Concièrge 4 4 4 4 4 19

In-Store Classes 4 4 2 3 4 17

CLUSTER ToTALS 21 20 24 22 28



14121916191917

27273035242724

cust success

Help ButtonHide-a-way Mini-ManualUpdate Disc + Newsletter + MusicWhite Glove SetupOnline Learning ModulesLifestyle Tele-ConcièrgeIn-Store Classes Update Disc + Newsletter + Music

White Glove SetupLifestyle Tele-Concièrge

10 15 2020

25

30

35

Update Disc + Newsletter + Music

White Glove Setup

In-Store Classes

Online LearningModules

Lifestyle Tele-ConcièrgeHide-a-way Mini-Manual

Help Button

CU

ST

OM

ER

SU

CC

ES

S S

CO

RE

BOSE COMMERCIAL VIABILITY

TheinitialconceptsthatscoredthehighestforbothpotentialCustomerValueandBoseCommercialViability(thatis,thatBosecouldreasonablyandprofitablyexecutetheconcept)included:

WhiteGloveSetupUpdateDisc+Newsletter+MusicLifestyleTele-ConcièrgeOnlineLearningModules

Otherconceptsascurrentlyframeddidnotscoreashigh,butfurtherexploration,guidedbytheDesignCriteriaundertheNeedsClusters,couldrefinetheseconceptsfurther.

Indeed,thelogicalnextstep,afterstudyingusersanddrawinginsightsfromthem,istoholdconceptgenerationworkshops,usingthemesfromuserinsightstocreateandrefineinnovationopportunitiesthroughouttheBoseLifestylesystem’svaluechain.

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Beyond the Lifestyle SystemBecauseofthetightfocusofthisprojectonhowtobuildabetterrelationshipwithBoseLifestylesystemowners,wehavenotlookedascloselyatlargerquestionsoftheroleofhometheatresystemsinthelivesoftoday’susers—andtomorrow’s.Butourresearch,andongoingchangesintheconsumerelectronicsspace,showsthiswillbeanimportantareatoconsider.JustinthefewweekssinceitsNovember2006launch,forexample,theNintendoWiihasreshapedhowpeopleofallagesthinkabouthomegamingsystems.SomeofthepeoplewhohavebecomeWiienthusiastsarethesameonestargetedbytheLifestylesystem—andhowwelldoestheLifestylesystemaccommodateconnectingagamingsystem?Likewise,boththeiPodandtheMicrosoftZunecontinuetogainnewcustomerswhowanttocarrytheirmusicwiththem—cantheybringtheir

4.3 recOmmendatiOns

sCoreCard

Composite graph

The concept ratings from the Customer Success Scorecard and the Bose Commercial Viability Scorecard can be graphed together to show which concepts (to the right of the diagonal line) are most likely to be successfully implemented.




musicintotheirhomeandeasilyintegratethemintotheLifestylesystem?Perhapsnotatpresent.

Thehomemediaentertainmenthubconceptisimminent,accordingtosome.AstheWall Street Journal recentlynoted,

CompanieslikeAppleandothersaresettoplayanevenbiggerroleinlivingrooms,potentiallydisplacingtraditionalconsumer-electronicscompanies,ashome-entertainmentsystemsenterthenetworkederainwhichthey’llplaymusicandmoviesstoredonpersonalcomputersandtheInternet.

WhilethecurrentBoseownerdemographicissomewhatinsulated,byageandoutlook,fromtheexplosivechangesinconsumerelectronics,changeisonthehorizon.Bosehasastutelyfocusedonmakingproductseasytouse,toutingthebenefitsofaholisticmusicandmediaexperienceovertechnical

functionalitiesandspecifications—butthetargetismoving,asotherarenasofconsumerelectronicsproductsachievenewlevelsofuser-interfacesimplicity.

InthesameWallStreetJournalreportonhomeentertainmenthubs,MichaelSmith,amarketingmanagerforhomeaudioatSony,citedcustomerresearchindicatingthatthenewstandardisnotjusttobeeasierthanacompetitor’sproduct.Rather,Sonyishearingtheircustomerssay,“Why can’t the home-entertainment experience be more like TiVo?”

Inotherwords,whileBosehasmadeincredibleleapsforwardinthesimplicity,beauty,andeaseofuseofhomeentertainmentsystems,expectationshavealsoleaptforward.“Betterthanallpreviousprojects”isnotthesameas“ThebestIcanimagine.”Bose’scommitmenttoongoinginnovationwillbeitsmostimportantallyinremainingontheforefrontofhigh-endhomeaudio.

Wingfield, N. must Consumer electronics Be

so Complicated? Wall street Journal, Nov

2�, 2006, p. r�.



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