Product Focus – Personal Audio

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Despite the economic crisis, the personal audio sector has continued to flourish, helped by innovations such as touch screens and the increasing popularity of social networking and music streaming services. Libby Plummer reports.

Following the monumental success of Apple’s iPod, the MP3 player has become the standard for products in the personal audio sector, to the detriment of more traditional formats such as cassette and CD.

Despite pressure resulting from the current economic climate, the sector has fared surprisingly well over the last year. GfK data shows that between February 2009 and January 2010, 18,118 thousand personal audio products were sold in the UK, showing a decline of just 5.2% compared with the previous year. And despite a slight fall in the number of products sold, the total value of the market increased by 4.6%, largely due to a healthy average price increase of 10.4% to £52.

Despite a 9.1% drop in sales volume since the previous year, MP3 players continued to perform well, with value increasing by a respectable 5.1% and average price going up by 15.6% to £103. Unsurprisingly, personal CD players saw the biggest drop, with sales volume down 31.3% compared to the previous year.

Social networking

The music industry has seen dramatic changes in recent years, with the increase in downloads making a huge impact. The way in which people buy and consume music has been affected by the phenomenal popularity of social networking sites and music streaming services, such as Spotify, which listeners can now link up to their Facebook accounts.

A Sony spokesperson explained how the brand has taken this into account when designing the new Walkman line-up, commenting: “We’ve added support for iTunes across the range this year. That’s a big deal, because it’s driven entirely by feedback from our customers in the UK, via letters, online user reviews, tweets and even posts on forums. For the first time, it doesn’t matter how you manage your music or videos; in all likelihood, Walkman will work with it.

“We were also the first company to support BBC iPlayer downloads on a portable product, so getting TV and radio shows just takes a couple of clicks. On the technology side, we’ve introduced three-minute charging, noise cancelling for commuters and OLED screens for movie fans, all in the last 12 months”.

The focus for Sony has clearly been to make it easier for consumers to get music and video on to their players.

Another result of the increased use of social networking and video sharing sites is the appearance of larger screens on which to view videos. Led by Apple’s iPod Touch and the iPhone, touch screen devices have sold amazingly well over the last year, with more and more manufacturers including them on their products.

The need to view video has also led to the rise of Portable media players (PMPs) which are equipped with large screens and are usually capable of playing several different video file formats. Despite a relatively small decline of 9.1% in sales volume, these products saw their sales value increase by 5.1% since the previous year, with price going up by 15.6% to reach an average of £103. As movie and TV downloads continue to increase in popularity, so does the use of these products, changing the face of the nation’s viewing habits. What’s more, many DVDs now include a digital copy that can be transferred to a portable player for watching on the go.

One of the most important factors for consumers in times like these is affordability. However, while customers are looking for value for money, they are not willing to compromise on performance, illustrated by the fact they are demanding more and more memory capacity on their audio products. MP3 players with a memory of less than 1GB have decreased by a staggering 61.7% in volume and 64.4% in value since the previous year, while products with capacity of between 4GB and 32GB have seen huge growth. In particular, models with a 16-32GB memory have risen in sales volume by an enormous 143.8% and by 98% in value.

Innovation

Following such a meteoric rise over the past few years, many have predicted that the MP3 player market could easily reach saturation point. However, it seems that there’s still plenty of innovation taking place in order to drive sales. One such example is Apple’s most recent version of its iPod nano, which includes a built-in video camera – a first for an MP3 player. Apple has also reacted to the recession by introducing its most affordable model – the latest generation iPod Shuffle, starting at just £45.

But is there a threat to the MP3 player market from multi-functional products such as PMPs and the iPhone? Radio’s sales and marketing director, Owen Watters thinks not, commenting: “At present, the sound quality and reception on convergence products isn’t as good as models that are built specifically for personal audio listening, and so currently audio-only products will remain prominent. Also, the battery life of convergence personal audio products needs to be developed significantly”.

Sony’s spokesperson agrees, pointing out that different products are still required for different needs, commenting: “There is absolutely still a market for dedicated players. Most people probably wouldn’t want to take an expensive smartphone into the gym or out for a run and likewise, if you’re really into your music, there’s nothing worse than having your mobile phone’s battery die half way through a commute. That’s less of a problem with a dedicated player. The biggest reason to keep a dedicated player though, is sound quality”.

DAB

Personal DAB radios continue to benefit from a solid fan base with sales value increasing by 5.1% compared to the previous year. Pure’s director of marketing, Colin Crawford explains why this is still an important sector, stating: “Radio remains incredibly popular for the UK consumer. There are many diversions but none of these replace radio as a ‘companion’. We see these kind of additional features [such as digital downloads and streaming services] as extras that top up the average user’s listening time rather than replacing the amount of time they spend listening to radio”.

Pure’s PocketDAB 1500 has been on the market for some time now, but still proves to be extremely popular.

Roberts Radio recently introduced a white variant of its popular SportsDAB2, which can be used either with headphones or through the speaker and is also available in black. Roberts’ Owen Watters highlights some of the hurdles faced when producing personal DAB products, explaining: “One of the main challenges in recent years has been to reduce the power consumption of DAB radios. At Roberts, we have an ongoing commitment to developing the most power efficient radios possible. Personal audio products need to work well on batteries and on the mains and this is where we stand out versus the market with some of our radios offering five times more battery life than other models. Our sports DAB offers 18 hours of battery life”

Add-on sales

One of the big successes of the personal audio sector, is the headphones market. Sales volume has increased by an impressive 13.3% from the previous year, which is unsurprising as one of the first things that many consumers do when purchasing a new audio player, is to upgrade the headphones. As a result, the range of products available has grown exponentially over recent years with many brands, such as Panasonic and Pioneer, offering everything from high-end noise-cancelling models, to affordable in-ear products. Usually offered in attractive and compact packaging, headphones are ideal for independent retailers, who can advise on the most suitable models for each customer’s needs, making it important to stock a wide choice of products in various price ranges.

Another product that’s proving to be popular with consumers is the docking station. More and more manufacturers are now offering iPod docks, most of which are also equipped with a 35mm socket for use with other MP3 players. These space-saving devices can be used in order to share music on a personal player and are being used by many to replace conventional stereos, or for use in smaller rooms such as the kitchen or bedroom.

It’s clear that despite fears that the personal audio market is nearing saturation point, there is still plenty of innovation taking place to keep customers upgrading and profits rolling in. What’s more, the vast range of ancillary products, such as headphones, means that the sector provides lucrative add-on opportunities.

Sales Tips

• Know the product inside out and demonstrate it in a relevant way

• Ask the customer what their favourite kind of music is and pick a relevant track/radio station

• Explain the products in terms of benefits rather than just listing the features

• Allow sales staff to get to know the products that they are selling

• Ensure that you mention accessories such as headphones, docking stations and cases

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