Matthew Carlton
May 15, 2014

Headphone fad is music to brands’ ears

SECTOR STUDY: The explosion of smartphone sales and the continued rise of ‘prosumers’ has fuelled greater demand for increasingly trendy—and expensive—audio products.

Sound investment? Consumers think so
Sound investment? Consumers think so

Asia’s hipsters and fashion-conscious youngsters now have a new accessory to consider to ensure they look the part—headphones. The market has moved on considerably from when consumers were satisfied with the free earbuds that came with their latest phone or portable music player.

According to GfK, this trend generated sales of more than US$77 million in Singapore, Malaysia, Thailand and Indonesia in 2013. Recent figures for Hong Kong show that more than $10 million was spent on headphones, headsets and mini-speakers in the past 12 months. 

Ng Chee Soon, president of Sennheiser Electronic Asia, credits the growth of the sector to the increasing emergence of the prosumer class of customers—those characterised by their knowledge and sophisticated tastes, who demand more benefits and value from products.  

“The desire to have a high-quality product experience in a home environment brings about opportunities to create audio solutions that extend beyond mere headphones usage,” says Ng. 

This view is supported by statistical evidence. GfK noted a decline in unit sales among low-end products in Hong Kong during 2013. 

“While products with prices over HK$1,000 are increasing their share in the market, more users are looking for better quality, meaning the segment with prices over $3,000 grew most during 2013,” says Sam Yu, account manager for GfK retail and technology in Hong Kong.  

Of course, the explosion in smartphone take-up across the region is fuelling much of the growth, particularly for headphones. This area has become more specialised with distinct products now available to better serve consumers’ lifestyle activities such as sport, travel and entertainment. There’s increased interest in portable wireless headphones and closed-back headphones, while ear canal headphones remain popular among users who travel through noisy metropolitan environments. 

Marketing wise, a number of brands are embarking on collaborative projects with celebrities or fashion lines. The herd effect is especially evident when celebrities with mass appeal trigger the following of a particular brand. Beats by Dre has embraced this tactic, linking with global sports and music stars such as Cesc Fabregas, LeBron James, and Nicole Scherzinger. Associating with events such as the Mnet Asian Music Awards and with clothing labels popular with its target audience, and maintaining a strong social media presence are other promotional strategies. (This article was written prior to news of Apple's supposed acquisition of the Beats brand. - Ed.)

Design, look and feel are key factors in generating a following, says Ng. For Sennheiser, he says, a few things must prevail in a pair of well-built headphones: hi-fidelity audio output, quality of materials, style and lifestyle suitability. 

The growth of the market shows no sign of slowing down, thanks to technological advances and social changes, which will continue to raise consumers’ expectations, increase product differentiation and intensify competition. 

Yu foresees the mid-to-high-end segment being the key growth area this year, as more users replace their existing headphones with higher quality equipment. “People normally don’t buy a poorer quality product to replace an existing one, therefore, there are opportunities for segments such as customised headphones,” he says.

Headphone and mobile stereo sales in Asia-Pacific

  1Q2013 ('000s of units) 1Q20104 ('000s of units) Change (%)
Southeast Asia 950 1,030 8.4
North Asia 9,150 8,400 -8.2
ANZ 1,300 1,450 11.5
Total 11,400 10,880 4.6

Source: GfK

EXPERT OPINION Aspirational motives drive the market

Aaron Rigby, head of insight, Ebiquity

Portable music devices have long been used by consumers — particularly young consumers—to define and shape their identities. This was applied to headphones, a trend that began in the last decade with the white Apple headphones synonymous with iPods being cool to be seen wearing. Now larger, more elaborate headphones are being worn by younger consumers to stand out, or in some cases fit in.

Given the ubiquity of smartphones, consumers are looking for ways to personalise their music devices and there is a trend towards more premium and personalised headphone products from the likes of Beats and Bose. Music lovers are no longer satisfied with the cheap headphones that come free with phones. They realise these products are mass-produced and substandard, so many look to trade up for better quality headphones.

However, while a student can afford to have the same iPhone as a banker, those expensive Bose ’phones are reserved for the elite and, as with everything, top-end luxury products will drive an entire ‘affordable’ luxury category group for the mainstream to buy into.

Growth of the market has been helped by the popularity of tablets and consumers’ desire to enjoy great audio to accompany the films and TV shows they watch on their devices.

In terms of marketing, brands should be looking to do more at the local level. Most of the big players tend to run international activity—with a focus on celebrity endorsers—in Asia and apply a ‘no boundaries’ approach with a Western, aspirational feel.


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