A sound plan: Beats by Dr Dre's Asia invasion

At Last Friday's Mnet Asian Music Awards (MAMA)—a K-pop event broadcast across 85 countries—US rapper B.o.B (Bobby Ray Simmons) appeared alongside Korean balladeer K.Will in front of a prominent red DJ station that very much resembled the newest product from Beats by Dr. Dre. (Please see the image above, and the associated gallery.)

The mashup moment typified the marketing approach that has helped make Beats Electronics, which sells headphones and portable speakers, an enormous consumer-electronics success well beyond its roots in North America.

The company, founded in 2006 by legendary rap artist Dr. Dre and equally legendary record magnate Jimmy Iovine, relies on a relatively simple but effective approach. Beats places its headphones atop the recognisable heads of music stars (both established and up-and-coming), sports figures, and celebrities. It integrates the brand into cultural events such as the MAMAs and partners with other hot brands, such as clothing labels popular with its target demographics. It orchestrates events that encourage consumer engagement. It amplifies everything through social media. And it tops it all off with tactical media buys of ebullient advertising.

These tactics combine to create powerful word of mouth. And that, coupled with high-ish prices (US$200 for the flagship headphone model), makes cash registers ring to the tune of a reported $500 million a year (the company is privately held). In fact, the brand's success just landed Dre atop the Forbes list of the world's highest-paid musicians, with an estimated income of $110 million.

Luke Wood

In Asia, the company has been racking up triple-digit growth each year, and is the No. 1 headphone brand in some markets, including South Korea and Hong Kong, according to Luke Wood, president and COO, who sat down with Campaign Asia-Pacific a few hours before the awards show. The company has an "extremely aggressive" plan to build on that growth in Asia, he adds.

"For us it’s really about being here," Wood says. "In the past year, Dre's been here [in Asia] with me twice, which is unusual. That shows the commitment. And now, going forward, we're building a marketing team out of Shanghai, which we'll be staffing starting next year, and we really plan to build a significant foothold in North and South China."

Wood, also a musician and former record executive, makes a convincing case that the brand's marketing is less a calculated approach than an authentic way of life for a company that truly believes in its product and has been steeped in a tradition of "pushing culture" in the music business.

The founders started Beats not only because they were smart enough to look for additional revenue streams when they saw the record business crumbling, but also because they wanted to strike back against what Wood calls the "ghettoisation" of sound: inferior earbuds and poor playback technology in mobile devices, PCs, TVs and even vehicles.

"There were really two things that mattered to us when we came out with the headphone," Wood says. "First and foremost, design. Because we wanted it to look cool, because we care about that—we're vain. And second, the sound. It needed to make records sound the way we felt, in the studio, that they sounded. They needed to replicate that feeling, that emotion."

Though some audiophiles beg to differ on the question of sound quality, you can't deny that the company's products are a significant upgrade from the ubiquitous white earbuds. Nor can you argue with the brand equity and pricing power the company has built around the world.

"When we go to market with a record, we think globally," Wood says. "There's no concept of a border." The company used the same approach for the marketing of its headphones and subsequent products, including the one featured on the MAMA stage: the Beats Pill, a $200 Bluetooth-enabled portable speaker. "We just said, if it's big here [in North America], there's no reason why it wouldn't be as big in France, in Hong Kong, in Cape Town," Wood says.

Wood is quick to emphasise that the company's marketing is not just about celebrity and athlete endorsements, because those only get you so far. "It's hard to talk about marketing without sounding like a cliche," he says. "But we want people to have a personal experience with our product, and hopefully it's memorable, and it resonates, and there's a reason they want it in their life, and then it becomes part of their identity."

That explains why the letter ''b", which also serves as the brand's logo, is now the centerpiece of its marketing platform. An event staged in New York City's Times Square—which will be repeated in Asia, according to Woods—is a case in point. The company set up a photo booth where consumers could try the headphones, have their picture taken and label the picture with their own "b…" statement, such as "b wild" or "b happy". The resulting photos were displayed in real time on giant billboards around the square.

 

The company then took the campaign social with a global contest. From those submissions, Dre and Iovine selected 10 "real people" from diverse countries, who now appear alongside the usual musicians and atheletes in a new TVC with music by will.i.am and Britney Spears.

 

"It's not just about, 'I'm going to give you a picture of a celebrity or an influencer, and they're holding our product, and now you go do it'," Wood says. "We want to be much more inclusive, because it's the collective subconscious of all the people using our stuff that makes it important and powerful. When you see it walking around, that's what matters."

In Asia, the company first found success in South Korea, thanks to the founders' relationships with retailers and entertainment companies, including CJ Entertainment (parent company of MAMA organizer Mnet). Wood says that Asia provided something of a learning curve for the company, which found that the levers it pulls to move culture may not work as expected. For example, in South Korea, Beats found that sports figures tend to be less effective than they are in North America. The company is working patiently to find the best tactics and then scale its approach of "integrating into music, videos, culture and events", as Wood summarises it.  

Wood, Dre, Iovine

The brand works with agencies, but in a somewhat limited fashion. "We work with agencies as creative partners," Wood says. "We also have a very strong creative point of view. We can't help ourselves, because we come from a business where we make our own videos, you know? We make culture. So we don't have four agencies come and do agency reviews."

Beats does, however, look for agencies that have "great executional reach and good local knowledge", he says. For example, Beats is working with Weiden+Kennedy in Shanghai as it hatches its plans for giving mainland consumers personal experience with the Beats brand.

As for Southeast Asia, the company has had some success due to the resonance of its ties with K-pop and Western stars such as LeBron James. And of course Singapore, with its plugged-in populace and strong retail channel, is a strong market. As for other Southeast Asia nations, Wood is focusing his attention on channel presentation, making sure the right partners are in place with the proper understanding of how to present the products. Demand creation will come later, he says.