- Mission Statement
Harman is the global leader producing audio and infotainment systems. Approximately 80% of the luxury cars of the world are equipped by its audio systems of premium quality. The Company operates in three segments of the industry including Consumer, Professional, and Automotive.
There were several main principles indicated in the mission statement of the company, namely: dedication to global excellence in the market of audio and infotainment markets, fostering a culture of creativity and empowerment, and implementing innovations. The Company stated the commitment to customer satisfaction, superior value, and delivering solution of excellent quality to customers. The Company declared leading sustainable business aiming to be responsible to world and local communities. Harman is also committed to constant excellence of improvement of environmental performance maintaining Environmental Management System, ensuring activities and products that comply with environmental laws, and preventing pollution on the Company level. The Company promotes the values of leadership, teamwork, people appreciation, corporate culture, cost effectiveness, and integrity.
- Analysis of Distinctive Competencies and Marketing Mix
One of the most important distinctive features of the Company is commitment to innovation. Harman emphasizes implementing innovations in the area of navigation, system integration, connectivity, acoustics, and embedded systems. In 2010, Harman started partnership with the largest Chinese technological solutions provider Neusoft Corporation aiming to gain access to advanced technologies and strengthen technological basement of the Company. Harman has significant potential in developing expertize in HMI, multimedia and voice-activated control systems.
Another core competency of Harman is talented professionals contributing to long-term success. The Company senior management empowers employees with the help of innovative programs, emphasizes team work, and appreciates individual and group goals setting and achievement. One of the core strength of the Company is talented team governance and multinational leadership aiming to seize emerging opportunities.
Currently, Harman is implementing green strategies that include reduction of energy consumption and emissions of greenhouse gas; support of communities’ initiatives, and extending environment protection programs globally across Harman facilities.
Harman manufactures electronic and audio products for vehicle applications and for home use of premium quality. The products of the Company are popular among customers. The price for the products meets quality expectations. The combination of the product and price form a distinctive competency in the market of audio products offered by competitors providing core competitive advantage for the Company. Harman distributes its products through specialty audio stores and retail stores (mainly mass-market stores). The Company markets the products under such brands as Harman/Kardon, Mark Levinson, JBL, Lexicon, Logic 7, Infinity, and Becker. Harman promotes its products through popular magazines and specialized automotive editions such as Fortune, The Economist, Time, and Rolling Stone in the US using international editions of these magazines for global promotion as well. Recently, Harman emphasizes increasing brand awareness across all marketing segments.
- PESTEL Analysis
The main concern in political sphere is changes in ecological legislation in the US, Europe, and worldwide. Ecological legislation becomes tougher requiring from companies to comply with environmental laws. Also, the changes in taxation and accounting standards may affect selling price of Harman products (Harman Industries, 2013). The state of the US economy is characterized by decline in business and labor freedom because of being affected by consequences of the world crisis lowering customer confidence. European economy is also affected by the crisis of European bonds. It makes a significant impact on the Company business because Harman heavily relies on European business: 59% of sales come from Europe. Currently, Harman emphasize on Chinese market (Bloomberg, 2013). Currently, Harman has 20 brands offering products for consumers of different ages leading different styles of life. Thus, its products can be called universal giving the Company broad opportunities in positioning its products. Harman is using advanced innovative technologies when manufacturing and advertising its products. Recent developments of television, internet, and other media help arrange attractive look of products increasing sales. Implementation of newest innovations helps saving costs on materials used for products manufacturing. Currently, Harman emphasizes on improving environmental sustainability of its products and the Company in whole. Harman pays particular attention to reduction of consumption of water and energy. Changes in legal environment can make an impact on Harman’s business by increasing costs, undesirable litigation or demand reduction. The processes of production, marketing, packaging, sales, advertising, labeling, and transportation are subject to various US and European laws and regulations. Being worldwide known producer of audio solutions, Harman aims to meet the highest standards of manufacturing and promoting its products (Harman Industries, 2013).
- Analysis of Organizational Objectives
At the present time Harman aims to expand its business to new markets, such as China and India. The targeted worldwide revenue from China is 25% by 2018 (Bloomberg, 2013). In 2013, Harman’s sales in China made up $400 million in comparison to $20 million in 2008. The Company is heavily investing in China plants. In 2013, it invested $200 million to develop manufacturing in this region. Investing in Chinese plants, Harman expects to triple its business within the next few years. Also, the Company is shifting from manufacturing audio solutions for luxury vehicles towards mid-end models aiming to focus on expanding sector. In 2012, Harman launched a $200 million repurchase program thus improving its corporate credit rating. For the next year, the Company plans to double its annual dividends (Harman Industries, 2013).
Sales growth of infotainment division is planned on the level of 15% within the next year. Operating income of this division is expected to be doubled. The increase in the Lifestyle Division sales is expected on the level of 20% thus growing operating income by one-third. The planned growth of sales for the Professional Division is 7% based on Chinese capacities and cooperation with famous brands like Toyota and Ferrari. Net sales are supposed to grow by 20% from the prior year. The increase in sales is expected in all three divisions. An increase of operating income is planned on the level of 65% compared to the prior year.
- Strategic Business Units
Harman has three strategic units that include twenty brands. According to Hargrave (2013), there are three operating segments including Lifestyle, Infotainment, and Professional. Among Harman’s brand are Aha, AKG, Becker, BSS, Crown, dbx, DigiTech, Harman Kardon, Infinity, JBL Synthesis, Mark Levinson, Martin, Revel, Selenium, Soundcraft, and Studer. JBL and Lexicon brands are represented in Lifestyle and Professional divisions. Lifestyle segment contributes 50% of Harman’s profit. The growth of in the audio and Infotainment market made up 8% CAGR in 2013 (Hargrave, 2013). Harman’s products are diversified.
Aha division offers solutions that allow a customer listening podcasts without synchronizing smart phone, hear Tweets, or listen to audio reports about fashionable restaurants. The Becker is a famous European brand offering advanced infotainment systems, navigation systems, and automotive audio solutions. Harman Kardon offers pure sound solutions with smart and simple design. This brand also provides customers with portable navigation devices and ultrawide two-channels systems for navigation. The Infinity is famous for its home theater solutions, audio and automotive loudspeakers, subwoofers, and amplifiers. The JBL is usually associated with naturally articulated sound that could be found in concert halls and stadiums, clubs, cinemas, recording studios, and other prestigious locations. The products of Mark Levinson brand define high performance for the most demanding consumers of theater electronics extending tradition into the visual realm (Harman, 2013).
- Boston Consulting Group Matrix
Boston Consulting Group Matrix is composed on the basement of analysis of the market share occupied by each division and contribution to the operating profit. According to the results of 2012 financial year, growth market share of Harman’s divisions made up the following figures: Lifestyle Division (+6.2%), Infotainment Division (+4.1%), Mark Levinson Brand (+2.2%), Professional Division (+1.9%) (Harman, 2013).
Net sales of the Infotainment Division made up 15% more compared to the previous year that doubled operating income for 2012. The contribution to net sales of the Lifestyle Division made up 22% thus increasing operating income by one-third. The growth of net sales made up by the Professional Division was 6% that strengthened competitive position of the Company in China.
Mark Levinson brand is characterized with high growth and low share. Therefore, the Company requires creating new product frequently in this market segment. For example, Mark Levinson is permitted to R&D more than other brands. Thus, Mark Levinson brand is question marks for Harman.
The Lifestyle Division possesses with high growth and high share, so that Harman serves the products of this division as “stars”. The Lifestyle Division produces consumer products for mass market. This division provides a high profit to Harman.
The Infotainment Division is characterized with low growth and high market share. They are cash cows in the Boston Matrix. Professional Division has low market share and low market growth because this is a specialized segment that requires special promotion approach. Harman Professional Division provides the products for large world leaders manufacturing luxury vehicles. This strategic approach of promoting this division is to provide continuing consumption of these products. Thus, Harman can defend these products.
- Organizational Strategy for Growth
7.1 Market Penetration
Harman occupies the marketplace of audio and infotainment products worldwide. At the present time, Harman is expanding globally being focused on Asian and Pacific regions, Russia and Brazil. At the same time, Harman is promoting the costumer products. Furthermore, penetrating to the market share of navigation systems is a priority.
7.2 Product Development
Aiming to satisfy customers’ needs, Harman is paying attention to the improvement of existing products and the development of the new options. Harman has many of the research and development centers in many areas such as solutions for new smart phones, home theaters, and tablet computers. Currently, the Company developed new branded audio systems for global automakers including Hyundai, Kia, BMW, Ferrari, Mercedes, SsangYong, and MINI. Aha brand launched a new cloud-based service combining in-car infotainment and personal multimedia.
7.3 Market Development
Harman is currently emphasize the development of cooperation with Asian leading automakers such as Toyota Motor Corp. and Hyundai Co. aiming to promote existing professional products to Asian market. Similar strategy is supposed to be used in Russian market because Chinese mass market vehicles are popular in this market (Bloomberg, 2013)
7.4 Diversification
In 2012, Harman added 700 new patents and introduced its innovative products to Toyota and Ferrari. Also, the Company formed new partnerships with Texas Instruments, Sierra Wireless, Freescale, NXP, and Broadcom.
8. Analysis of Sales Volumes
There were three years net sales analyzed (2010-2012) showing stable increase. The percentage difference in net sales between 2012 and 2011 made up more than 4% while difference between 2011 and 2010 made up 9.67%. These are good results taking into account highly competitive market.
- Elements of Marketing Strategy
Harman offers products to the wide circle of customers of different ages, preferences, and life styles. Harman enjoys skimming price strategy when selling audio solutions for luxury cars. Penetration pricing strategy will be good for expanding to Chinese market in order to attract as much new customers as possible. This strategy is useful when aiming to expand into new mass market. Harman distributes its products with the help of specialty and retail audio stores. Also, the Company cooperates with the leading automotive manufacturers. Harman successfully combines two different strategies in this way: the first one supports offering limited assortment of products to demanding VIP customers owning luxury cars (Professional Division) and mass market audio solutions for everyday use (Lifestyle Division). The age of VIP customer ranges between 40-60 years while Lifestyle Division consumers are aged 20-40 years. At the present time Harman emphasize promotion of brand awareness with the help of specialty magazines.
- Elements of Marketing Planning
In the Table 2 SWOT Analysis of Harman Industries is represented.
Among the strength Harman enjoys the most important is high level of R&D and innovation development. This is the main competitive advantage of the Company. Also, the Company succeeded to develop strong brand identity. Currently, Harman misses the opportunity of developing economies of scale advantage (Hargrave, 2013). The Company needs to improve its supply chain management to be able to expand more effectively to emerging markets. Among the most promising opportunities is new acquisition – a strategy that proved to be efficient in previous years. Also, Harman has the opportunity of asset leverage to develop more capacities to expand its business. Harman should take into consideration the threats connected with increasing competition in global markets to protect its market share. Besides, competitors may enjoy the benefits offered by cheaper technologies helping develop economies of scale. Another threat is product substitution and manufacturing new cheaper products. These items should be considered when developing new market penetration strategies in emerging markets (Harman, 2013).
References
Harman International Industries (2013). Harman International Industries. Retrieved from
http://www.harman.com/EN-US/OurCompany/Pages/ExperienceHarman.aspx#.UhwvquVQGrc
Bloomberg. (2013). Harman Considers Third Factory in China Amid Europe Auto Slump. Retrieved from
http://www.bloomberg.com/news/2013-06-06/harman-considers-third-factory-in-china-amid-europe-auto-slump.html
Marshall Hargrave. (2013). Harman International: 75% Upside Left Even After 22% Run. Aug 26 2013. Retrieved from
http://seekingalpha.com/article/1658042-harman-international-75-upside-left-even-after-22-run
