Demo Bose Full Report

Bose Customer for Life
id 592-038, Research and Demonstration | Fall 2006

Advisor: Jeremy Alexis
Seungho Chung
Dan Greene
David McGaw
Rishabh Singh
Waewwan Sitthisathainchai
sub ti tle
Project Background
Customer for Life | Introduction
Project Background
1. 1 i ntroducti ontobose
Bose Corporation
Bose 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 frmly 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/
Refecting 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 specifcally 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
Bose Customer for Li fe
IIT Institute of Design
2. 4 boseProductPortfoli o
Home Theater
& Speaker Systems
Lifestyle DVD Systems
321 DVD Systems
Speaker Systems
Wave Systems
Acoustic Wave Music System
Acoustic Wave Music System II
Wave Radio System
Stereo Speakers
Bookshelf Speakers
Floor Standing Speakers
Virtually Invisible Speakers
Multimedia Sound
SoundDock
Companion
Triport Headphones
Outdoor and
Marine Speakers
Outdoor Speakers
Marine 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
music
Personal audio: headphones, iPod
accessories
Mobile audio: high-end systems
tailored to specifc manufacturer
models
Professional audio: speakers, control
systems, and other equipment for
auditoriums
Tis project will focus primarily on the Bose
Lifestyle home theatre/home audio systems,
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 Audio
Boses 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 boseli festylesystems
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
Te Lifestyle 48 DVD system is Boses
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 Boses proprietary ADAPTiQ
system which adjusts sound settings to ft the
acoustics of the room. Key selling features
include:
Media center with integrated progressive
scan DVD player. Tis sleek center unit is
visually unobtrusive, and contains all the
electronics needed to play popular audio and
video formats, including DVD video, CD,
MP3 fles, 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 users
preferences to select tracks based on what he
or she likes, requiring no menus, no playlists,
and no computer.
AdaptIQ. Tis audio caliberation system
analyses room dimensions and other
variables afecting 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 4 inches
high, the small direct/refecting speakers
combine over 40 diferent 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 3 IIT Institute of Design
with typical stereo speakerssometimes fve
feet tall or more.
Integrated controls. Te Lifestyle systems
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 Boses signature Jewel speakers, the bass
module helps deliver a full range of sound.
Te 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 ti tle
Customer for Life | Section 1
Reframing the Opportunity
1. 1 reframi ngtheoPPortuni ty
Initial Project Motivation
Early in of 2005, the Bose Customer
Relationship Marketing Group launched
a project called Bose Customer for Life,
which sought to maintain the companys
industry-leading profle 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 benefts of owning
Bose products
Boses primary motivation was an alarming
survey result: customer advocacy of their
Lifestyle System the companys fagship
product line had declined 6% from 2004
to 2005, indicating that customers were
signifcantly less inclined to recommend their
Bose equipment to friends. Te company
believed this was due to shortcomings in the
ownership experience, afer the sale had been
completed.
Questions Bose Was Asking
Bose asked a team from the Institute of
Design to study customer behavior, and
answer four primary questions:
What are the dissatisfers 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
beneft to the customer?

Tese 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.
Te Lifestyle Systems survey had, afer 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 efective customer loyalty
efort would have to focus on support in
order to restore high product advocacy levels.
Bose may have overlooked or at
least understated a key fnding of the
aforementioned survey, however. More
specifcally, 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, Boses attempts to compensate
for the defciencies of its overpromised
oferings 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 signifcant 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 dont
register
Manual hard to
understand
Delivery experience
not smooth
Customers dont
use update discs
Failure to meet
ease-of-use
expectations
after sales pitch
Hard to add
components
New music hard
to add

Lower
Advocacy
Less Frequent
Repurchase
Frequent frustration
w/ Call center,
other support options
Lower usage means
perceived lower value
Turning to
substitutes
I NFLUENCES
PROBLEM DRI VER
OUTCOMES
U-Music hard to use
Loyalty Programs as Strategy
Building on core product values, loyalty
programs ofer additional benefts 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 improvesince the Lifestyle system
is sofware-driven, upgrades could add new
features, even afer 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
fulfll, 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,
fnding valuable experiences built on a solid
core of product performance.
AT SALE AFTER SALE
PRODUCT
LOYALTY
PROGRAM
PRODUCT
PROMISE
loyalty programs
in the strategic
context
Customer loyalty programs
add value by providing
benefts to the customer after
the sale. Another post-sale
beneft would be feature
upgrades (possible with
software-based systems). Or,
adjusting the product beneft /
pre-sale promise balance may
also have a positive effect on
perceptions.
sub ti tle
Ecosystem Overview
ContentS
I ntroduCtI on to the eCoSyStem
1.0 TeHigh-EndHomeAudioEcosystem
BoSe & home entertaI nment
2.1 ErasinHomeEntertainment
2.2 IndustryLayers
2.3 TechnologyMatrix
2.4 TeCompetitiveLandscape
2.5 BoseRetailStrategies
2.6 BosesPositionintheAudioIndustry
CuStomer LoyaLty
3.1 BuildingCustomerLoyalty
3.2 CustomerLoyaltyModels
3.3 Uservs.Technology:AnAnalogue
3.4 LoyaltyImplicationsforBose
the eCoSyStem
4.1 Contextsystem
References
PreparedaspartofIITInstituteofDesignclassid592-038,ResearchandDemonstration
Advisor:JeremyAlexis
SeunghoChung
DanGreene
DavidMcGaw
RishabhSingh
WaewwanSitthisathainchai
Fall2006
1. 0 thehi gh-endhomeaudi oecosystem
Understanding an Ecosystem
Acomprehensiveunderstandingofthe
ecosysteminwhichacompanyoperates
isessentialtothedevelopmentofnew
strategiesandinnovations.Inorderto
maximizeefectiveideagenerationand
facilitatedecision-making,usergoalsmust
frstbeidentifed.Tesubsequentanalysis
shouldidentifyandinvestigatetheoutside
forcesshapingtheproductsandservices
currentlyinhabitingthemarketspacein
question,andappropriateframeworksshould
bechosentohelpresolveanyunanswered
questionsthatmayarisefromtheinitial
researchandbrainstorming.Ultimately,the
ecosystempaperhelpsdesignplannersto
avoidrehashingestablishedideas,evaluate
therelevanceandusefulnessofnewideas,
identifyandpredictindustrytrends,and
developappropriateplansforprimary
research.
High-End Home Audio
TefrstEdisonphonographstartledand
evenfrightenedthosewhohearditby
eerilyreproducinglifelikesound.In
morethan100yearsoftechnologicaland
marketingdevelopment,standardshave
risenconsiderably,andtodayamere$10
canbuyaradiowithquiteaccuratesound
reproduction.Butcustomerexpectations
haverisenaswell.Anupper-middle-class
consumerismorethanwillingtopayseveral
thousanddollarsforawell-designedsystem
thatproducescrystal-clearsound,andBose
hastappedintoarichveinofdemandwith
itsLifestylesystem.
Webeginourlookattheenvironment
surroundingtheBoseLifestylesystemwitha
lookathowin-homeentertainmentsystems
havedevelopedsinceWorldWarII.
Research & Demonstration | Fall 2006 IIT Institute of Design
2. 1 erasi nhomeentertai nment
Take it Home
Postwar to 1967
Stay at Home
19681979
Play Alone
19801992
Play From Home
19922000
Mix It at Home
2000s
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 stations
small library of records
shelf of board games
10 radio stations
small library of records
5 television channels
rental movies
5 pong game cartridges
10 radio stations
library of records & CD & VHS
40 cable channels
rental movies
15 arcade game cartridges
cassettes (for each Walkman)
10 radio stations
library of CDs
80 cable channels
library of DVD movies
rental movies
15 adventure game cartridges
CD Walkman
Home computer + AOL account
100 XM radio stations
library of CDs
120 cable channels
library of DVD movies
Netfix rental movies
15 adventure game cartridges
iPod + iTunes
Home computer + DSL
MMORPGs (World of Warcraft)
StereosystemsofthekindBosesellsarejust
oneaspectofhome-basedentertainment.
SincetheburstofAmericanprosperityin
thepost-WorldWarIIyears,therewasbeen
adramaticincreaseinrangeofoptions
peoplehavebeenabletochoosefrom.Inthe
chartabove,weshowhowexpectationsand
complexityhavealsogrown,beingfedby
enormoustechnologicaladvances.
Homeentertainmenthasbeenincreasingly
providedbyelectronicdevices,bringingwith
themaseriesofuserinterfacechallenges.
Increasingchoiceseemsinextricablytied
toincreasingcomplexity.Today,weare
nolongercontenttofipontheamradio
andlistentomainstreammusic,with
advertisementsweknowtheresabetter
option,andwerewillingtopayintime
and/oreforttogetjusttheparticularkindof
musicwewant,commercialfree.Isthatmore
relaxing?Itsnotclear.
Againstthebackdropofsomanyoptions,it
iseasytoseewhyhomeentertainment,and
homeentertainmentelectronicsinparticular,
hasbecomeamassivebusiness,worthan
estimated$135.4billionatthewholesalelevel
in2006.
Inthesectionsthatfollow,wedisussthe
structureoftheindustry,andkeyplayers
relevanttothepresentprojectforBose.
Consumer Electronics Association, 2006
Industry Forecast, January 2006.
eraanalysi s
I n
cre
a
si n
g
o
p
ti o
n
s a
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d
co
m
p
l e
x
i ty
2. 2 i ndustrylayers
Industrylayeranalysishelpsshowhow
thehomeaudioindustryisorganized,
andwherevalueiscreatedindiferent
portions.Techartonthefollowingpage
showsthediferencesbetweenUsers,R&D,
Manufacturers,Retailers,andMedia
Content layers.
Severalplayersoperateinmorethanone
layer.Apple,forexample,engagesinR&Das
wellasmanufacturingandretailingitsiPod
deviceandwhileitdoesnotcreatecontent,
isasignifcantcontentsaleschannelthrough
itsiTunesonlinestore.Bosesimilarlyis
involvedinR&D,manufacture,andretail,
andisarguablyexpertatallthree.
Oneofthequestionsthisanalysisraisesis
whetheritprovidesacompetitiveadvantage
foracompanytomoveintoanewlayer.Not
allaudiocompanieswillbesuccessfulin
retail,butApplehasfoundthatitcanbetter
controlitsbrandstorythroughacarefully-
shapedenvironment;Bosesapproachis
similar.SamsungandSonyhavelaunched
fagshipstorestobuildbrandandshowcase
theirproducts.Inmostcases,theapproach
istocomplement,notreplace,existingretail
channels.
Fewhomeaudiomanufacturershave
integratedMediaContentdistributioninto
theiroferings.Sonyleverageditssizeto
simplyacquirecontentcreatorslikemajor
Hollywoodmoviestudios,andBMGsrecord
labels;Appletookadvantageoftheirunique
controlofnewtechnologyintegration
betweenportableaudioandconsumer
computerdesktopstoforgepartnershipswith
audiocontentcreators.
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sub ti tle
Name Product Examples Description Application Implications Trade-Offs
H
a
r
d
w
a
r
e
Surround Sound 3Space Audio System; Dolby
Surround Systems; THX Certifed
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 confguration 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 amplifcation, 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/Refecting Sound Speakers Bose Lifestyle and Acoustimass home
entertainment systems
Refects and directs sound from
speakers to recreate qualities of concert
halls, movie theaters, and auditoriums
in the home
Home theater (surround sound) Make effcient use of architectural
features of venue to disperse sound
Not scaleable to larger spaces; cannot
be made fat
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 (amplifcation)
Materials Testing Systems Bose ElectroForce Systems; Instron
Systems; MTS Systems
Materials testing equipment utilizing
motors and servos
Medical equipment manufacturers,
R&D departments, engineers frms,
universities
Tests the strength of equipment
materials and components
For commercial and research use only
Optical Digital Audio Input/Output Toslink Optical fber 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 flesharing, 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
audi otechnologymatri xTechnologies unique to Bose in red.
2. 3 technologymatri x
Anauditoftechnologiescurrentlyemployed
byBoseinitsproductsinadditiontothose
availabletoitscustomersrevealsanumber
ofkeyinsights.Whilethecompanyappears
tohaveitsbasescoveredwithrespectto
speakertechnologies,soundcalibrationand
automaticmusiccustomization,itis
remarkablydefcientinareasthatare
virtuallycommonplacewithintheconsumer
electronicsrealm.Teeseincludedigitaldata
ports(usb2.0,Firewire)thatenable
all-in-oneconnectionsbetweencomponents
andfastdatatransfer,digitalwireless
technologies(WiFi,Bluetooth)thatallow
sharingandstreamingofmediacontent
betweendevices,andcompressedaudio
formats(mp3,wma,aac)thatmaximize
storagespaceandfacilitatequicktransfer.
WhileBosedoesinfactsupportmp3
audiofles,thegenerallackofnetworking
capabilitiesinitshardwareprecludesmany
ofthebeneftsthattheformatandothers
likeitofer,suchasauto-recognitionby
onlinedatabaseslikecddb(CompactDisc
Database)andtransferbetweendiferent
devicesincludingthewidelypopulariPod.
Name Product Examples Description Application Implications Trade-Offs
S
o
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t
w
a
r
e
Speaker System Modeling Applications Modeler Sound System Suggests speaker confgurations 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 AuditionerPlayback System;
Yamaha Sound System Simulator
Produces sound simulations of virtual
environments (models of real venues)
Used to determine optimal equipment/
confguration 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 fle 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 dont
Not completely reliable, may weed out
some desired music
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Wireless Component Connection (DLNA
/ UPnP)
WIFI / Bluetooth in media streaming
devices (DMAs)
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-proofng 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
substitutesthose activities
that consumers may choose
instead of home theatre.
2. 4 thecompeti ti velandscape
The Home Theatre Industry
Tehometheatreindustryhashada
suddengrowthpartlyduetotheon-demand
entertainmentandsomeduetothe
developmentoftechnologyreducingthe
costofownershipofahometheatre.Tis
hasledtoalotofnewmanufacturestofocus
onthissegmentintheconsumerelectronics
industry.Temarketiswellsegmentedand
thereareoferingatallpricepointsandall
features.Butessentiallytheproductofering
isdividedintotwotypes:Systemsand
Home Theatre in a Box(htb).Tesystems
areaudiounits(speakerandcontroller)
thatcanbepurchasedseparatelyandbe
integrated/assembledwiththehardware
(tv/dvdplayers)fromothermanufacturers.
Tehometheatresinaboxarecomplete
systemsoferingsthatincludeamediaunit
(dvdplayer)acentralcontrollerandaaudio
system(tweetersandwoofers).
Tenewplayersarefocusingmoreonthe
highlycompetitiveunder$1,200home
theatremarketandseemtoemphasizethe
quantityoftheexperienceratherthanthe
qualityoftheexperience.Tetraditional
playershavelongprovidedtopqualityhi
fdelityexperiencesandattempttoattract
morediscerninganddeep-pocketed
consumerswiththeirstateoftheartsystems
sellingfromanywherebetween$1,500to
$4,000.Toughthisrangedoesnotinclude
boutiquemanufacturerslikeBang&Olufsen
whichsellsiconicdesignicons,suchasthe
Nautilusspeakers,forasmuchas$20,000.
Eventhoughtheindustrysegmentsseem
distinct,theregapbetweenthemisfast
closing.Mostlybecausethetechnology
isgettingstandardized.Barringafew
companieslikeBose,mostbigcompanies
haveanequalfootingwithregardsto
Internet
Social
interaction
iPod or other
headphone device
d
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Out-of-
home
concerts
TWICE: This Week in Consumer Electronics,
July 7, 2006, Vol. 2 Issue , 8.
technologyandfeatures,henceare
nowfacingthechallengediferentiate
themselvesbyprovidinginnovativefeatures
andexperiences.Anotherinteresting
development,istheconvergenceofmedia
andofoadingprocessingfromthefront
endtothebackend,atrendimportantly
observedinotherindustriestoo.Te
convergenceisnotonlyinthehardware
partofproductsbutincreasinglyinservices,
content;thewholeexperience.
Tecompetitionspaceforthehometheatre
oferingofBosecorporationismarkedmy
competitorslikeCambridgesoundworks,
BostonAcoustics,HarmonKardon,Klipsch
Audio,NakamichiCorp.Someofthese
companiesarepartoflargercoporations,
withtremendousresources.Forexample,
Boses$1.6billioninrevenues(2004)is
dwarfedbySonys$72billion.WhileSony
showsnosignsofconcentratingitsmight
ontheHomeTeatreinaBoxsegment,the
scaleofitsoperationsmeanstherearemore
resourcestodrawupon,andmorepotential
sourcesofinternalinnovation.Bycontrast,
thecompanythatownsbothDenonand
BostonAcousticshas2004revenuesof$0.7
billion,whichsuggestsatleastsomerelative
disadvantagetoBoseinitsabilitytoinvestin
R&D.
Substitutes: Indirect Competition
Bosealsocompetes,inasense,withallthe
possiblealternativestousingahometheatre
system.Apersonmight,forexample,choose
toread,orinteractwithothersthrough
conversation,insteadoflisteningtomusic.
Or,musicmightbethemodeofactivity,but
itcouldbeprovidedbyapersonalmusic
devicelikeaniPod,usingheadphones.Te
Internetemail,websurfng,networked
gamingaretakinganincreasingportion
ofuserattention,evenwithintheLifestyle
systemsprimaryagetarget,40to65years.
Andwhileweareconsideringprimarily
thoseactivitesthattakeplacewithinthe
home,attendingconcertsoutofthehomeare
indeedanotheralternativetousingahome
theatredevice.
Happily,theLifestylesystemiscondusive
tobothforegroundandbackground uses,
broadeningitsusage.Itcanbeaprimary
modeofactivity,withusersdeciding,I really
want to sit and listen to a particular piece
of music.Or,itcanserveasamood-setter
foraparty,orsimplyforhouseholdtasks
likecooking,withusersthinking,I want a
soundtrack to inspire me in (or distract me
from) what I am doing.
Whileitmightbeassumedthatsomeone
purchasingaBosesystemactuallyintends
touseit,ifitseemstohardtouse,ortakes
justenoughextrastepstobementallydistant
fromthetaskathand,theLifestylesystem
couldendupgettinglessusethanintended.
Andpurchasersdobecomeawareofgaps
likethisandtheirdissatisfactioninthe
valuegainedfromtheirownershipofaBose
productcanhavesignifcantnegativeimpact
ontheirperceptionofBoseoverall.
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2. 5 Boseretai lstrategi es
Bosehasusedmultiplebusinessstrategiesin
risingtothetopofitsmarketsegment.Chief
amongtheseare:
Eliminate the middleperson.WhileBose
productsareavailablethroughmanyhome
electronicsretailers,themajorityoftheirsales
comethroughcompany-ownedstoresand
viadirectchannelssuchastheInternet,mail
order,andtelephoneorderofensupportedby
expensive,full-pageadsinleadingpublications
liketheWall Street Journal.
Geography.Boseretaillocationsareinhigh-
trafc,high-demographicshoppingareas,
suchasChicagosMagnifcentMile,thus
attractingtheafuentconsumer.
Image Marketing.Bosehassucceededin
positioningitselfasmorethanjustahome
audioretailertheysellacompletemedia
experience.Recentmarketsurveysindicate
morepeoplethinkhighlyofBosethanofApple.
However,notallBosestrategieshave
maintainedtheirefectiveness.Webelieve
thattwopaststrategieshaveplayedout:
High Performance Image.Bosehassought
toportrayitselfastheindustryleaderin
sound.Othermanufacturers,however,are
nearlyasgoodtotheaverageear,andmay
oferabetterperformance/priceratiothan
Bosesexpensivesystems.
New Technology.WhileBosecontinues
todevelopnewhomeentertainment
technologies,theaverageconsumermaynot
perceivetheretobethatmuchdiference
betweenBoseandotherhomeentertainment
electronicsmanufacturers.
reTAil PreSence
Bose stores can be found in
many higher-end shopping
areas, where affuent
customers in the 40 to 65
age range often walk inand
walk out having purchased a
Lifestyle system.
2. 6 Bose sposi ti oni ntheaudi oi ndustry
Bosefndsitselfinanenviableposition,
commandingsignifcantproftsandhuge
brandpresenceamongconsumers.And
yet,thenicheitoccupiesisrelativelysmall.
WhileBosesellsHomeTeatreWithina
Boxpackages,theydonotcurrentlyhave
theirownvideodisplay,whichlimitsthe
convenienceandseamlessnessoftheir
ofering.Perhaps,too,itspeakstoBoses
rootswithinpureaudio,muchlike
Nakamichiandotheraudiophilebrands.
Meanwhile,manyotherhomeelectronics
brandsarepursuingintegratedmedia
productsystems.WhiletheBoseconsumer
oftodaymaybeaudio-focused,tomorrows
mayexpectacompletesolution.
Tehigh-endhomeaudiomarketalso
seestremendouscompetition,andrapid
innovation.Bosestremendousresourcesand
depthinR&Dhavekeptitintheforefront,
butifacompanylikeSony,withseventy
timesBosesrevenuesin2004,shouldchoose
toinvestindevelopingnewfeaturesin
hometheatresystems,theywouldbeableto
allocatesignifcantlymorecapital.
on THe Fence?
Bose is balancing between
mass-market consumer home
audio, and esoteric audiophile
products. At present, it has
found a proftable niche.
3. 1 Bui ldi ngcustomerloyalty
Effectively Promoting
Customer Loyalty
Inthenever-endingquesttoincrease
profts,corporationsaroundtheglobeinvest
billionsofdollarseveryyearonconventional
loyaltyprogramsandcustomerrelationship
management.Unfortunately,manyare
doomedtofailintheirefortsthanksto
afundamentalmisunderstandingofthe
relationshipbetweencustomerloyaltyand
proftability,namelytheassumptionthatit
isalwaysadirectone.Unrestrainedloyalty
eforts,however,ofenputsuchastrainona
companysresourcesthattheveryoppositeof
aprogramsintendedgoalmayoccurproft
decreasesandlosses.
Tohelpengenderfercecustomerloyalty,
businessesmustfocusoncustomerneeds,
employinganewapproachthatandexploits
acompanysdesign,sales,andmarketing
capabilities.Incateringtocustomers,they
shouldseektoaligntheirbrandsand
touchpointswiththeircustomersvalues
andbeliefs,creatingcompellingproductand
serviceexperiencesthatforgeemotional
connectionsandoferimproved,unique,
anddesirablesolutions.Keyoperating
principlescanhelpcompaniesattainferce
loyalty,includingtheavoidanceoflock-in
contractsinfavorofcompellingoferingsthat
lockoutcompetitors,therigorousdiagnosis
ofloyaltytoolsincurrentusebythecompany
aswellasitsrivals,theidentifcationand
rankingofcustomersintermsofsatisfaction,
andtheselectionofamixoftoolsthatarein
linewiththecompanyscapabilities.
Loyalty Lessons
Whenpursuinganaggressiveloyalty
generationplan,companiesneedtobewary
ofthepitfallsarisingfromanumberof
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 satisfed.
Alexis, J. Using Design to Create Fiercely
Loyal Customers. Rotman Magazine, Fall
2006, .
oLd LogI C I n reaLI ty
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 selling
are 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
profts. More importantly, the
customer segment formerly
described as a break-even
customer may today result in
negative profts.
Other Insights:
More customers does not
mean more proft
Attempting to keep all
existing customer is
sometimes a strategic
mistake
commonmisconceptions.Morespecifcally
theyshouldbearinmindthefollowing:
Customerloyaltyshouldneverbesought
attheexpenseofaproft.Withonly20%
ofacompanyscustomersprovidingan
acceptablerateofreturn,mostshouldnot
betargetedforloyaltyincreases.
Acquisitionefortsshouldbefavored
duringtheintroductoryandgrowthphases
oftheproductlifecycle,withretention
efortsgainingprecedenceduringthe
maturityanddeclinephases.
Marketshareandloyaltyhaveadirect
relationshiponlyinhomogeneousmarkets,
wherecustomerneedsarenarrowand
similar.
Varietyseekersanddealseekersare
notoriouslydifculttoretain,andefortsto
dosomayhaveanegativeimpactonloyal
customers.
RFM(recency,frequency,andmonetary
value)programsoperateunderthe
assumptionthatrecent,highspending
purchaserswillcontinuetobuya
companysproducts.
Keiningham, T, Vavra, T., Aksoy, L, and

Wallard, H. Loyalty Myths: Hyped Strategies
That Will Put You Out of Businessand
Proven Tactics That Really Work (John
Wiley & Sons, 200), .
Desired Customers
(proftable)
Break-Even Customers
(Belowrequired
rateofreturn)
Costly customers
(unproftable)
60%
20%
35%
50%
15%
% of Customer % of Profts
20%
Six leverS
For BuilDing
cuSTomer loyAlTy
Table redrawn from Alexis (2006).
Inseekingtoelevatecustomerloyalty
companieshaveanumberofadiferenttools
orleverstheycanusecollectively.Inthe
chartabove,thefrstthreeleversconstitute
themoretraditionalvarietyandhelptolock
incustomers,severelylimitingloyalty.Te
remainingthreemaximizeloyaltybyhelping
companiestoaligntheirbrandswiththe
corevaluesortheircustomers,leadingto
attractiveandcompellingproductsthat
helplockoutcompetitors.Toselectthe
optimalcombinationoflevers,companies
shouldfavoronesthatliewithintheir
currentcapabilitiesandconsiderthosethat
competitorsareusingefectively.
Ofthreemostefectiveleversinpromoting
customerloyalty,eachhasauniqueset
ofactivitiesorinterventionsthatmay
beemployedaspartofagreaterloyalty
efort.Asdescribedabove,theDistinctive
Solutionsleversuggestsdesigninterventions
thatexploreuserneedsandusability,the
EmotionalConnectionsleverencourages
activitiesthatareusefulforinstillingvalue
andconveyingemotioninproducts,andthe
FavorableEconomicsleverinspirescost-
savingstudies.
Loyalty
Programs
Contracts Limited
Choice
Distinctive
Solution
Emotional
Connection
Favorable
Economics
Source of
Loyalty
Repeat purchase
builds reward
Obligated, early
termination
results in fee
Other choice is
nothing
Best solution
for customer
needs
Customers are
aligned with &
buy into brand
Best economic
proposition
Challenge Expensive
Easy to copy
Customer
is loyal to
program, not
brand
Can create
adversarial
relationship with
customers
Can lead
to complex
accountion
Subject to
privatization
and monopoly
regulation
Complex to
manage
Requires
constant
updating
Requires deep
customer
knowled tge
Hard to manage
Can lead to low
profts
Examples
These levers Modify customer behavior
Can easily be copied
Create marginal, temporary loyalty
Build on/ leverage existing behavior

Are diffcult to copy
Create 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%ofa
typicalcompanyscustomersyieldmore
than50%ofitsprofts,itisincumbent
uponstrategiststorespondappropriately
tofaggingsatisfactionwithinthisessential
segmentinordertomaintainandpromote
greaterloyalty(and,thus,higherprofts).
Techartabovesuggestsaspecifccourse
ofactionforeachlevelofsatisfaction.
WhilegreaterloyaltyamongBreakeven
andUnproftablecustomersshouldnot
necessarilybysought,appropriateresponses
totheirvariouslevelsofsatisfactioncan
greatlycurblossesandpreserveessential
funds.
Table adapted from Alexis (2006).
DeSign
inTervenTionS
THAT cAn BuilD
cuSTomer loyAlTy
Not Satisfed Somewhat
Satisfed
Highly Satisfed
Proftable
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
effcacy of level to ensure
ongoing satisfaction and
proftability.
Breakeven
Customer
Provide incentives for
customers to become
more proftable and
satisfed or to exit
Apply appopriate levels and
pilot alternative business
model
Shift cost / service burden
to customer
Unproftable
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 Harrahs
Taskedwithraisingproftsofanalready
successfulcasinochainintheincreasingly
competitivegamingindustry,GaryLoveman
assumedtheroleofceoofHarrahs
Entertainmentin1998andproceededto
transformthecompanyviaaboldnew
customer-centricstrategy.AlthoughHarrahs
alreadyledtheindustryincustomerservice
atthetimeofhisarrival,Lovemanwas
convincedthatitneededtobeelevated
signifcantlyinordertoinspireloyaltyamong
currentcustomersandthus,hepostulated,
increasegambling.
Althoughrigidanti-corruptionlawsthat
limitedcontactbetweencasinoworkers
andcustomersseemedaninsurmountable
hurdle,Lovemanpushedforwardwith
asweepingnewtrainingregimenaimed
curbingemployeeturnover,engendering
innovativethinking,andrewardingworkers
successfulefortstoimprovecustomer
service.Onlybyproducingdedicated,highly
motivatedemployeeswouldtheopportunity
toimpresscustomersbeapossibility,he
asserted.Furthermore,Lovemanheldthose
accountablewhodidnotproperlyimplement
hisdesignatedmarketingtools.
Inordertogaugecustomersatisfaction,he
alsoinstitutedahighlyadvancedtracking
andsurveysystemwhichwouldalsoofer
Harrahsawealthofessentialdataontheir
customersgaminghabits.Finally,Loveman
replacedthecasinochainsgenericrewards
programwithamulti-tieredincentivedriven
clubthatrewardedcustomersforfrequency
ofvisitsinadditiontotheamounttheyspent
gambling.
Lovemansstrategyultimatelyproved
enormouslysuccessfulforHarrahs,helping
tostrengthenthebrand,encourageloyalty
andspending,andincreaseproftswithout
expandingtheexisting26Americancasinos
itoperated.
Association of Yale Alumni
Formorethan200years,graduatesof
Yalehavebeeninvolvedincontributing
toandkeepingalivetheirconnections
withtheiralmamaterlongerthanatany
otherAmericanuniversity.Tebenefts
tobothYaleanditsgraduateshavebeen
impressive:billionsofdollarsindonations,
fuelinggrowthoftheschools$15.2billion
endowment.
TeprimaryconnectionmostYalealumni
havewiththeuniversityafertheygraduate
iswiththeYaleAlumniMagazine,the
oldestindependentalumnimagazinein
America,founded1891.Eachmonth,almost
allgraduatesreceivethismagazine,which
includesnewsofeventsoncampus,articles
writtenbyfacultyandalumnimanyof
whomplayinfuentialrolesintheacademic,
political,andbusinesslifeofthenation
andworld.Readingthemagazinethus
reinforcesasenseofthevalueofaYale
education,andtheconnectionsitprovides
toalargercommunity.Alargesectioninthe
backprovidesupdatesontheactivitiesof
membersofeachgraduatingclass,anditis
notuncommonforanalumnusreceivingthe
magazinetofiptothebackfrstandscanfor
friendsnames.
AlumnimayusetheCareerCenter,athletic
facilities,libraries(oneofthelargestinthe
world),dininghalls,museums,andother
on-campusresources,eitherfreeorfora
nominalfee.Alumniarealsopermittedto
auditcoursesforsemesteratatime,without
payingtuition.
Alumnireunionsareheldeveryyear,with
thefve-andten-yearanniversariesholding
particularattraction.Tousandsofalumni
returntoNewHaven,Conn.,torelivetheir
brightcollegeyearsandmarvelathow
thecampus,andeachotherhavechanged.
Reunionsareplannedbyclasscommittees,
butalsofeatureameetingoftheAssemblyof
Alexis (2006).
Becker, D.O. Gambling on customers The
McKinsey Quarterly, No. 2, 200, 8-.
YaleAlumni,whovoteontheleadershipand
majoractivitiesoftheassociation.
Teuniversityalsoreachesouttoalumni
mostnotably,askingfortheirnominations,
andlater,theirvotesfor,trusteestobe
appointedtotheYaleCorporation(Yales
governingboard).Alumnifeeltheyhavea
veryrealinfuenceontheongoingleadership
oftheschoolitself.
Anotherverysignifcantpointofcontactwith
Yalearethefrequentappealsforfundsat
leastfourtimesayear,andofenmoreofen.
Whileatmanycolleges,thegraduatingclass
pledgesdonationstomakeaseniorgif,at
Yale,seniorspledgetomakedonationsover
thecourseofthenext25years,resultingin
asubstantiallylargergifpresentedtothe
universityatthe25thclassreunion.Some
fundappealsarebydirectmail(eitherin
simpleletterandenvelopepackages,or
moreelaboratemailings),andsomeareby
telephone.
Manyspecialinterestgroupsallowalumni
tocontinueinvolvementintheactivitiesand
clubstheytookpartinasundergraduates,
rangingfromathleticteams,ethnicclubs,
religiousandpoliticalclubs,andmusic
groups.
Anextensivearrayofeducationtravel
opportunitiesincludelecturesbyYalefaculty
memberson-locationwithvariouscultural
andhistoricalsitesaroundtheworld.Tese
programsareattractiveenoughtohave
beenprofledintheNewYorkTimesasan
outstandingvacationopportunity.
Inadditiontotheactivitiesdescribed
above,sponsoredbytheNewHaven-based
AssociationofYaleAlumni,regionaland
localYaleClubs(mostnotably,theYaleClub
ofNewYork)sponsortheirownevents,ofen
heldintheclubsownbuilding;theNewYork
clubincludesahotelandbanquetfacilities,
andislocatednexttoGrandCentral
TerminalinNewYorkCity.Periodicvisitsby
prominentYalefacultyandtopleadersrally
Keiningham, T, Vavra, T., and Aksoy, L, and
Wallard, H. Loyalty Myths. Rotman Magazine,
Fall 2006, pp 2-28
HArrAH S, lAS vegAS
thetroops.Onealumnusvividlyremembers
aspeechgivenbythen-PresidentBenno
Schmidt,whicharticulatedthevalueofa
Yaleeducationinsuchgrandtermsthatit
cementedadeeployaltytotheinstitution,
resultinginannualgivingandnearlyadozen
visitstothecampusintheyearssince.
Tepracticalvalueofthefrequentand
multivalentcommunicationsfromthe
AlumniAssociation(andtheuniversityitself)
iseminentlyapplicabletotherelationship
betweenBoseanditscustomers.Each
touchpointhelpsalumniseethevalueof
theirYaleconnections,andtheninfact
makesitvaluablebystrengtheningthe
numberofnodesinthealumninetwork,and
thestrengthofthetiesbetweenthem.
However,researchhasalsoshownthatthe
initialvalueanalumnus/aplacesontheir
collegeconnectionismoststronglyrelated
totheirexperiencewhilestudents.Ifthat
experienceislacking,efortsbyanalumni
associationarelikelytobeinefective(Mael
&Ashforth,1992).Temostdirectanalogsto
theBoseexperiencearethesalesexperience,
andtheexperienceofactuallyusingthe
Boseequipment.Inotherwords,startinga
BoseownersmagazinemaydolittleifBose
ownersdontalreadyfeeltheyactuallyenjoy
usingtheirBoseproduct,andthattheycan
reasonablydependonBoseCorporations
levelofservicewhentheyneedhelp.
Louis Vuitton
LVMHMotHennessyLouisVuitton
isapowerfulholdingcompanyand
internationalproducerofluxurygoods.
Withauniqueportfolioofmorethanffy
prestigiousbrands,thecompanycontinues
toprosperthankstothepreservationofa
stellarreputation,thesuccessfulaligning
theirexistingproductarsenalwiththose
ofcompaniestheyacquire,theefective
sharingofresourcesamongbrands,and
theidentifcationofhigh-endmarkets.To
broadentheappealoftheirbrandacross
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 identifcation.
Journal of Organizational Behavior Vol ,
2. 02.
Stutler, D. & Calvario, D. (6). In alumni
support, satisfaction matters. Fund Raising
Management, Vol. 27, 6. 2.
yAle univerSiTy
Yales 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.
generationsandculturesandtoincrease
relevance,LVMHfrequentlyrecruits
designersfromavariednumberofregions
andstaysattunedtothelatestglobaltrends.
OfallLVMHsholdings,LouisVuitton
isamongthemostprestigiousand
successful.With15productionworkshops,
aninternationallogisticscenter,andmore
than350exclusiveshopsin51countries
throughouttheworld(66%outsideFrance),
thecompanyhasawideglobalreach.While
highlyvisibleadsandsponsorshipof
internationaleventskeepsitonthecultural
radar,therealrecipeforsuccessisembodied
initsbrandloyaltystrategy,whichemploys
highqualitystandardsinitsproducts,unique
productarchitecture,andapowerfulbrand
image.Inordertokeepthebrandaligned
tothevaluesofitshigh-endcustomers,
LouisVuittonmaintainstightcontrolover
productretail,sellingthebrandexclusively
atitsownboutiques,whichareonlylocated
inwealthyareas.Usinglocaldesigners,the
storesatmosphere,architecture,anddesign
areallcarefullytweakedtoaddresscultural
preferences.Teabilityforcustomersto
haveproductsrepairedattheseboutiquesis
auniquepost-purchasefeature,onehighly
representativeofLouisVuittionsloyalty
promotingmeasures.
Citibank
Inthehighlycompetitivebankingindustry,
wherecustomerloyaltyiscrucialin
gainingacompetitiveedge,Citigrouphas
demonstratedconsiderableprowessintaking
stepstobuildlifetimerelationshipswith
itspatrons.Withmorethan200million
accountsinover100countriesworldwide,
CitigroupsCitibanktailorsitsservicesto
analmostimpossiblydiversecustomer
base,oferinganarrayofproductsspecifc
tosegmentswithdiferentgeographic,
economic,andculturalattributes.
Tecompanyhassucceededinbuilding
loyaltyandbrandrecognitionlargelydue
toitsabilitytoaddressspecifcneeds
andidentifyunderservedmarkets.Ithas
beenparticularlyadeptinrecentyearsat
buildingloyaltybyleveragingemerging
technologiestoitsbeneft.Forexample,its
1997introductionofafulllineofWeb-based
bankingservicesrevolutionizedtheindustry,
providingcustomerswitheasyaccessonline
toaccountsandfulfllingtheunmetneedsof
analreadyburgeoninginternetcommunity.
AwardedtheBestGlobalInternetBank
awardbyGlobal Financemagazinein2005,
Citibankcontinuestothriveandholda
commandingleadovercompetitorsonline.
Muchofitssuccessinthisarenaisdue
toitsfocusoncollegestudents,whoare
attractedtofreeonlinebankingandbillpay
features.Whileitsrivalsharanguedstudents
withcreditcardofers,Citibankaddressed
thesegmentsneeds,providingthemwith
asuperioronlinebankingexperienceand
consequentlyhelpingthecompanytogarner
alargermarketshareoftheonlinebanking
sector,whichgrew27percentinthelastyear
accordingtoasurveyreleasedinAprilby
Reston,Va.-basedcomScoreNetworks.Fify-
onepercentofCitibankcheckingaccount
holdersnowusetheironlinebanking
services,signalingawinningstrategyanda
testamenttoaninnovativeloyalty-growth
program.
Comparison of Customer Loyalty
Strategies and Generic Strategies
Techartonthefollowingpageindexes
customerloyaltystrategiesandgeneric
businessstrategiesforthebrandswehave
discussed.Naturally,mostcompaniesuse
multiplestrategies.
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=20
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
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3. 3 usersvs. technology: ananalogue
BMW iDrive: A Technological
Step Backward
Inthelate1990s,BMWdesignersand
researcherswatchedwithconcernasthe
numberandcomplexityofdriverinteractions
werepoisedtoincreasedramatically.In
thepast,adrivermightadjusttheradioor
airconditioningsettings;themoderncar
permitshundredsofentertainmentchoices,
mobilephones,advanceddrivingfeatures,
andmoreallwhilethecarishurtlingdown
theroadatbreakneckspeeds.Teybegan
workingonadiferentapproach.
TeiDrivedebutedin2001intheBMW7
Series,andreplacedswitches,buttons,and
knobswithalargedisplayscreen,anda
multi-directionalknobcontrolinthecenter
console.Bymovingtheknobinoneofeight
directions,orturningit,thedrivercould
selectvariousmenufunctions,including
Climate,Communication,Navigation,and
Entertainment.Tesystemletsdriversaccess
hundredsoffunctions,allfromonecontrol,
simplifyingthedashboardandallowing
muchmorecustomizationthatwouldbe
possiblewithbuttonsandswitches.
PerhapsBMWsfrstmistakewastoallow
automotivewriterstodrivethecarwithout
anyintroductiontothesystem.Itprovedto
besufcientlynon-intuitivetofrustratemost
ofthem,leadingtoreportsoffrustrating
efortstodobasictasksliketurningonthe
heat,orchangingtheradiostation.Avoice
navigationcomponentprovidedasecond
pathtomostfunctions,butalsorequired
carefuldiction.Althoughonesalesperson
suggestedpeoplecouldgetfamiliarwith
iDriveintwoweeksofuse,mostpeople
didntwaitthatlong.[It]canfrustratesome
peoplewhohavebeendrivingsinceage15
BmW S i Drive
The product of years
of research and careful
consumer study, BMWs
iDrive system was both a
technological success and a
market disaster.
Day, J. Can BMWs iDrive Pass Its Road
Test Now? Electronic Design, June 2,
200. 8.
BMW. Business Week, June , 200.
andthinktheyshouldbeabletodriveany
carwithouthavingtotakeaclassorread
amanual,saidLeMikeLevin,whohelped
developpartoftheinterface.Tenegative
feedbackcontributedtoreducedsalesforthe
$75,0007Seriescar.
TenextcarmodelBMWreleasedwith
iDrivesportedastreamlinedsystem,with
feweroptionsandbetterspeechprocessing.
Bettertrainingwasprovidedtocarbuyers,
too,thoughkiosksindealershipssopeople
couldpracticebeforehittingtheroad.
cuSTomer-
PerceiveD vAlue
gAP
Value
Additional
Features
Ease
of Use
Price Brand
Appeal
Sound
Quality
Before purchase, customers perception of the value they
would receive from buying a Lifestyle system consists of
several building blocksadding up to a fair value for the
price asked.
3. 4 loyaltyi mpli cati onsforBose
Earlyuserresearchsuggeststhatakey
problemdriverforBoseLifestyleusersis
thegapbetweenpromisedeaseofuseand
theactualownershipexperience.Whenthe
systemturnsoutnottobequiteassimpleas
expected,theperceivedvalueofthesystem
drops,andthevaluegapbetweenthe
pricepaidandtheperceivedvaluebecomes
amatteroffrustration,leadingtoreduced
recommendationstofriends,andadecreased
likelinessofrepurchase.BosesCustomerfor
Lifeinitiativeseekstoremedythissolution
withpost-purchasesupportandinteraction
thatwillmaintainthevalueofthesystem,by
enhancingeaseofuseandotherbeneftsof
ownership.
Inourinvestigationfocustomerloyalty
programs,wehaveseenthatpost-purchase
messaginghaslimitedimpactonoverall
perceivedvalue.Rather,itisenhancingthe
underlyingvalueinthesystemthatresults
inapositiveownershipexperience.We
seepotentialinusingaloyaltyprogram
specifcallytosupporteaseofuse,but
cautionthanperhapssomeofthosefeatures
mayneedredesign,andmayalsoneedto
bepromotedindiferentwaysthatdont
overpromisecustomerbenefts.Finally,we
alsoseeopportunityinincludinglatent
featuresthatthecustomercandiscoverpost-
purchase,delightingandsurprisingthem
withadditional(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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references
Alexis,Jeremy.UsingDesigntoCreateFiercelyLoyalCustomers.RotmanMagazine(2006):
19.
Anderson,StacyA.BankingonStudents:FinancialInstitutionsTrytoBuildLong-Term
CustomerBasewithTechnology,Flexibility.WashingtonPostJune2,2006,Washingtonpost.
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Aron,CindyS.LaboringtoPlay:HomeEntertainmentandtheSpectacleofMiddle-Class
CulturalLife,1850-1920.JournalofAmericanHistory92.4(2006):46-7.
Becker,D.O.GamblingonCustomers.McKinseyQuarterly2(2003):48,4859.
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Davis,J.,andM.Lengel.GettingItRight:TurningCustomerValueintoCompetitive
AdvantageinRetailBanking(videointerview).BetterManagement.com.October11,2005
2005.<http://www.business-performance.net/seminars/seminar.aspx?l=12940>.
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Keightley,Keir.LowTelevision,HighFidelity:TasteandtheGenderingofHome
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ProvenTacticsthatReallyWork.JohnWiley&Sons,2005.
Keiningham,T.,T.Vavra,andL.Aksoy.LoyaltyMyths.RotmanMagazine(2006):2528.
Kharif,Olga.SellingSound:BoseKnows.BusinessWeekOnline(2006):18.
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SystemAdopters.MassCommunication&Society6.3(2003):267-90.
Mael,Fred,andBlakeE.Ashforth.AlumniandtheirAlmaMater:APartialTestofthe
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sub ti tle
User Insights
ContentS
fi eLd Study
1.1 ObservingBoseOwnership
1.2 TeSokolofskiFamily
i nSi ghtS
2.1 FindingsfromUserObservation
2.2 Insights:TeUserJourney
anaLySi S
3.1 NeedsClusterAnalysis
3.2 NeedsClustersDescribed
i ni ti aL ConCeptS
4.1 InitialInnovationConcepts
4.2 ConceptEvaluation
4.3 Recommendations
PreparedaspartofIITInstituteofDesignclassid592-038,ResearchandDemonstration
Advisor:JeremyAlexis
SeunghoChung
DanGreene
DavidMcGaw
RishabhSingh
WaewwanSitthisathainchai
Fall2006
BosehasworkedhardtomaketheLifestyle
Seriesiiioneoftheeasiestandmost
advancedhometheatresystems.Butwhatis
itlikeforthepeoplewhoownit?Teshort
answer:Wonderful!Telongeranswer:Well,
maybe there are one or two things I wish could
be diferent.
TobetterunderstandtheBoseownership
experience,weconductedthreeresearch
eforts:
Telephone interviewswithLifestyle
systemowners(12interviews)
In-home interviewswithand
observationsofLifestylesystemowners(5
interviews)
Adetailedethnographic observationof
afamilyoverthecourseofseveralweeks,
astheysetupandbecamefamiliarwitha
Lifestylesystem
Whileoursamplesizewasconstrainedby
theprojectscheduleandbudget,therange
ofcustomerresponsesconfrmedanumber
ofexistingresearchstudiesconducted
previouslybytheBoseCorporationwhile
alsorevealingsomeinterestingissuesthat
couldguidefuturedevelopment.Naturally,
fnalbusinessdecisionsaboutimplementing
conceptsresultingfromthisresearchshould
alsobeinformedbyrigorousqualitative
researchwherepossible.
Users Defned
MostBoseLifestylesystemownersarein
the40to70agerange,andareupper-middle
incomeorabove.Ourtelephoneinterviews
includedpeopleinurban,suburban,exurban,
andruralcommunities,butourin-home
interviewstookplaceintheChicagoarea,
andincludedpeopleofdiferentethnicand
personallifestylechoices.Allofoursubjects
werecouplesorfamilies;somehadteenage
orolderchildrenathome,butwhilethey
wereofeninvolvedinsettingupthesystem,
theytendednottobeprimaryusersofthe
Lifestylesystem,preferringothermedia
systemsinthehouse,orpersonaldeviceslike
iPods.
1. 1 Observi ngbOseOwnershi p
Rosourch & Domonslrul|on | Fu|| 2CC6 1 llT lnsl|lulo o Dos|gn
1. 2 UserObservati On: thesOkOlOfski s
Research Initiative
Teresearchstudywasdesignedto
understandthepurchaseandpostpurchase
experiencefortheLifestyle48systemwhile
observingasimulatedBoseownership
experience.
Participants
UrbanprofessionalEdwardandDiane
Sokolofskiliveinamulti-levelcityhouse,
alsosharedbytheiryoungerdaughter
Rachel(23years).Havingrecentlymoved
fromthesuburbs,theywereinaprocessof
refurnishingtheirnewcityhomeatthestart
ofthestudy.
Research Methodology
Adisposablecamerastudywasemployedas
partoftheprojectsprimaryresearch.Te
methodrequiredparticipantstocapture
photosoftheiractivitiesandexperiences
withtheLifestyle48HomeTeaterSystem
fortwoweeks,culminatinginanin-depth
interviewwiththeresearchteam.
WeaskedtheSokolofskistocompletethe
followsequenceofactivities:
Browseandresearchinformationonline
(Bosewebsite)pertainingtotheBose
Lifestyleline.
VisittotheBosestoretoexperience
anofcialproductdemo,askrelevant
questionsofsalesstaf,obtainaquote
fortheirpreferredsystem,andretrievea
brochure.
Setupthesystem.
Adaptthesystemtofttheirdailylifestyle.
Exploresystemfeatures.
Usethesystemtohelpentertainguests.
Rosourch & Domonslrul|on | Fu|| 2CC6 2

llT lnsl|lulo o Dos|gn
Key Insights from the Sokolofskis
1. High service expectations
TeSokolofskisfoundthein-storeproduct
demotobeoutstandingandveryefective
incommunicatingthesuperiorvalueand
brandpositionofBoseproducts.Temost
appealingproductsforthefamilywerethe
wirelessspeakerssincetheywouldallow
themtoavoiddamagingtheirnewwalls
withinvasivewiring.Terewere,however,a
numberadissatisfers:
Havingtopurchaseallaccessoriesandthe
fxturesseparatelyforeachroomandnot
asalump-somepackage
Teextrachargesfortheconciergeor
customersupportservice,whichthe
Sokolofskisfeltshouldbecomplimentary
inlightofthesystemshighpricetag(they
alsosuggestedthata$99markupshould
covertheseservices)
Waitingseveralminutesforabrochure
printedoutwithaninkjetprinteronlow-
qualitypaper,whichtheyfoundsurprising
andcompletelyincongruentwithBoses
inherentpromiseofexclusivityandquality.
2. Communication issues box and
manual
Testepprocesswassimpleandwas
completedbythehusbandandwifeteamin
aboutanhour.Althoughtherewereissues
withthecommunicationandinformation
designinthemanualandthebox.Some
ofthemwerethemismatchbetweenthe
iconography(colorofthesystems,box
orientation)inthemanualandthedetails
ontheboxortheusersenvironment.
Furthermore,itwasalsodifculttolocate
theusersmanualintheboxasitlaidat
thebottomoftheboxhiddenunderthe
equipment.
3. Integrating the system with home
decor
Otherthanperformanceandsize,theability
ofthesystemtoblendinwiththeirliving
roomsdecorwasalsoanimportantconcern
forthefamily,whofoundthetestsystems
whitecolordisappointingasitclashedwith
theircolorscheme.
4. Sense of accomplishment and self
reliance (taming the technology monster)
TeSokolofskisfoundthecalibration(Adapt
IQ)processtobehighlyengaging.Tey
feltthattheabilitytosetupthesystemby
themselvesandoptimizeitsperformance
gavethemasenseofsatisfactionandself-
relianceratherthanreinforcingtheirfearsof
technology.
BOSE CSTOMER FOR Ll FE
5. Adapting the system to the familys
habits
TefamilyinstalledtheirLifestylesystem
intheirlivingroomonhomesthirdfoor,
connectingittotheirnewlypurchasedLCD
televisioninordertocreateanoptimal
entertainmentexperience.Resultsofthe
study,however,showedthattheSokolofskis
spentmostoftheirtimeinthefamilyroom
adjacenttothekitchen,aroomtypicallyused
forsocializingandentertainingandwhich
alsohousedaTVandamediacenter.Te
entertainmentroomwasusedonlyforspecial
occasionsandforwatchingspecialmoviesor
programs.
Withover-busylives,mostofthefamilies
listentomusic,TVormovieswhiledoing
otherthingsintheotherroomsofthehouse.
Henceeventhoughthefamilyinvestsina
highendsystemforentertainmentdesires,
theyendupusingitonlyonafewoccasion
therebyleavinglittlerecalloftheexperience
whichalsoafectsadvocacy.
2. 1 fi ndi ngsfrOmUserObservati Ons

Feature usage
& BeneFits
Bose users were asked to talk
about the features of their Lifestyle
systemboth the ones they really
liked, and the ones they were less
satisfed with. A composite ranking
of their reactions is shown at right,
revealing a feature appreciation
profle.
OurinteractionwithBoseLifestyleowners
revealedbroadsatisfactionwiththesystem.
Bosehasclearlyunderstooditsusers,andhas
createdaproductthat,byandlarge,notonly
meetsbutexceedstheirexpectations.We
did,howevernoticefourrecurringthemes
thatmaysuggestfuturedesignevolutionof
similarhometheatreoferings:
Theme One | Multimedia vs. Music
Mostofourresearchsubjectsspendmore
timeusingtheirBosesystemwithavideo
display(eitherwatchingbroadcastorcable
TV,orDVDs)thanlisteningtomusic.Tis
mayseemobviousforahometheatre
product,butitisimportanttonotethat
Bosesbackgroundisinsystemsdesignedto
faithfullyandcompellinglyreproducemusic.
Tatheritage(combinedwithtechnical
constraintsandcontentrightsissues)isalso
refectedintheLifestylesystemsabilityto
storemusicfromCDsbutlackofstorage
abilityformovies.Likewise,muchofthe
buzzinmusictechnologytodayisrelated
topersonaldevicesliketheiPodyet
connectivitywiththeLifestylesystemis
somethingfewownersfelttheyunderstood,
andnonehadsuccessfullyaccomplished.
Implications.WithmultimediaLifestyle
usegrowing,willfuturesystemsstore(or
accessfromotherstorage)video?Tis
themealsotouchesonemergentconcepts
ofhomemediahubs(discussedinour
Recommendationsattheendofthisreport),
whichhaveyettoimpacttheBosetarget
audiencebutwillsoon.
Theme Two | Time Limitations
Onepotentialsubjectcontactedforaphone
interviewlaughedwhenaskedifhewould
bewillingtotalkabouthisownership
Perceived Value Feature Notable reactions
Posi ti Ve
Compact size of speakers and base unit I love how they ft anywhere!
RF remote control
The power of the remote to work through walls is amazinggreat 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.
uMusicCD 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.
Neutral
BoseLink
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.
Negati Ve
uMusiccustom playlists Too hard to fgure out! Seems like a chore to go through the manual.
Surround Sound Adjustability
The news should sound one way, music another way and, Why
cant I simulate stereo for my old mono recordings & movies?
Connectivity of Audio Sources
Diffculty of connecting multiple audio sources was notedparticularly
diffculties (or lack of obviousness) with iPods or turntables
Size of Bass Unit It just sticks out so much!
experience.Totellthetruth,hesaid,its
stillintheboxsixmonthsaferIbought
it!Bosesystemsappealtopeopleofatleast
moderatewealth,andnotsurprisingly,they
areofenbusywithbusinessorpersonal
activities.Morethanoneinterviewee
describednothavingenoughtimetosit
downandgothroughtheBosemanualone
personevensaidshehadearmarkedpartof
herChristmasvacationtolearnhowtouse
uMusicninemonthsaferfrstsettingup
hersystem.
Implications.Successfuldesigninnovations
willanticipatethebusypaceBoseowners
maintain,andbothaccommodatelimited
freetime,anddemonstrate sufcient valuein
takinguptimethatcouldbespentotherwise.
Theme Three | Its My Fault.
Severalofourrespondentsexplainedtheir
difcultywith,orlackoffamiliaritywith,
particularBosefeaturesbysaying,Itsmy
fault.Itislikelythattheysaidthistothe
interviewertoclarifytheydidntholda
grudgeagainstBose,anddidntwanttheir
lackofknowledgeinorabilitytousea
certainfeaturetorefectnegativelyuponthe
companybutatthesametime,itsuggestsa
certainamountofguiltisinplay.Itmayalso
betiedtothesensethattheypaidmoneyfor
anexpensivesystem,andrealizetheyarent
takingadvantageofit.Whateverthesource
ofthesefeelings,theycanthelpbutcolorthe
relationshiptheyhavewiththeproduct,and
withtheBosebrand.
Implications.Tetoneofthemanual,
800numbersupport,andBosestorestaf
interactionsallshouldreassurecustomers
thatthesystemistheretoservethem,and
thatitissimpleandeasytouseeventhe
advancedfeatures.Tryitout!
Theme Four | Appearances Count
Tisonecaughtusbysurprise.Bosehas
clearlyinvestedheavilyinminimizingthe
sizeandvisualimpactofthespeakers,and
incrafingapleasingappearanceforthe
baseunit.Nevertheless,whenweplaceda
Lifestylesysteminthehomeofafamily,for
on-sitetestingoverthecourseofseveral
weeks,theyexpressedstrongdismaythatit
waswhiteinsteadofblack.Itseemsallthe
otherdecorativeaccessoriesintheroom
wereblack,andthewhitestereodidnt
match.Likewise,weunderstandthatthe
bassunithasbeenmaderemarkablysmall
throughadvancedaudiotechnologydesign.
Yetseveralsubjectscomplainedofhowbig
itwas,andawkwardinappearance.(Tis
perspectivemayalsohavebeencolored
bythefactthatouron-siteobservations
wereconductedinanurbanarea,with
correspondinglytighterlivingquarters,even
forwealthyfamilies.)
Webelievethatbothreactionsdescribed
abovestemfromauserdemographicthathas
theabilitytoindulgeveryparticularinterior
designtastes,andwhichevaluatesconsumer
electronicequipmentnotonhowfarithas
advancedfrompreviousmodels(suchas
large,obtrusivespeakercabinets),butpurely
onitsownaestheticvalue.
Implications.Bosemaywanttoconsider
providingmorefexiblefnishoptionsfor
boththemainconsoleandthebassunitfor
example,woodfnishes(tomakethemlook
morelikefurniture),orskinsthatwould
enabletotheconsoletobecustomizedto
matchanydecor.
Clustering Research Insights
Inadditiontothebroadthemesdiscussed
above,wedrewmorethan150individual
insightsfromouruserinteraction.We
groupedinsightsintoclustersthatfell
naturallyintoanOwnershipJourney,
progressingfrombeforepurchase,through
setup,use,andextensionslikemaintenance
andrecommendation.TeOwnership
Journeydiagramisshownonthenextpage.
2. 2 i nsi ghts| theOwnershi pJOUrney
Wedrewmorethan150individualinsights
fromourinteractionswithBoseowners,
eachrefectinganotableaspectoftheir
experiencewiththeLifestylesystemand
withBoseasacompany,orwiththeiruseof
mediaintheirhome.Wegroupedinsights
intoaseriesofclusters,whichwerethen
namedandorganizedinthediagrambelow
intothephasesoftheBoseownership
journeytheprogresspeoplegothrough
frompre-ownershipthroughtoadvocacy.At
eachstageinthejourney,someoftheinsight
clustersrelatedtoactualexperiences,and
otherstoexpectations.
Tisdiagramisusefulforseeingthe
broadsweepofinteractions,butitisvery
importanttonotethatmanyclustersinclude
bothpositive andnegativeinteractions.
Forthisreason,theJourneychartismost
valuablewhencombinedwithanorthogonal
viewofuserinsightsfoundintheNeeds
Clusters discussionwhichfollow.
Raw clusters of insights.
A t t r A c t i o n
Pre-Purchase
e n t r y
Purchase & Initial Setup
e n g A g e m e n t
Owning & Using
e x t e n s i o n
Advocacy & Adaptation

E
x
p
E
r
i
E
n
c
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
E
x
p
E
c
T
A
T
i
o
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 expectationsthe desires people had
at various stages.
3. 1 needsclUsteranalysi s
Intheprevioussection,weshowedclustered
insightsaboutBoseuserbehavior,mappedto
anownershipjourney.Tisanalysisrevealed
thestagesofownershipandtheconcernsthat
dominateineachone,butdidnothelpus
distinguishbetweendiferentkindsofusers.
NeedsClusteranalysis,inthissection,isa
wayofcombiningobserveduserbehavior
modeswithusersunderlyingmotivations
andgoals.TeresultisaseriesofNeeds
Clustersthatcanbeusedtoframediferent
kindsofinteractionsapersonmayhave
withtheBosesystem.Becausewespeakof
modesandgoals,weareabletodescribe
userbehaviorthatchangesovertime,oreven
frommomenttomoment.Apersonmight
haveonesetofgoalswhentheyfrstbuythe
system,andadiferentsetwhenusingit.Or,
theymightbeinafddlingmodewhile
settingupforaparty,butwhentheparty
starts,theyareinentertainingmode.
Requirements
TefrststepinNeedsClusteranalysisisto
identifyusergoalsorRequirements.Tese
couldbeanswerstothequestion,Whyisthe
userswitchingontheBosesystemnow?
Multimedia Thrills TeLifestylesystemprovidesgreatsoundtoaccompany
video(TVorDVD).Vibrancymaytrumprealism.Audio
isreallyjustpartofalargersensorypackagesomeofthe
additionalelementsincludealarge,high-quality(possibly
HighDefnition)videodisplay,properencodingofcontent
(DolbyDigital5.1Surround),andtightintegrationfora
supremelyimmersiveexperience.
Cultivated Mood Musicshouldefectivelycomplimentandenhancethemood,
whetherforisaparty,afamilydinner,orasolitaryperson
reading.Teparticularcontentmaybelessimportantthan
thekind ofmusicandthatminimalefortisrequired.
Uninterrupted Experience Temusicshouldjustfowcontinuously,freeofunwanted
hiccups,delays,interference,andskips,regardlessofthe
source(radio,CD,PC,server,etc).
Unfettered Access Alluser-ownedorsubscription-basedcontentshouldbe
easilyaccessiblefrom,regardlessofwhereitresides(CD,hard
drive,server,MP3player,PC,etc).Moreover,legacyformats
shouldbeabletobeintegratedintothesystem:LPrecords,
reeltoreeltape,etc.
Masterful Control Optionsforcontentrouting,systemexpandabilityand
interconnectivity,playback,inputandoutputselection,EQ
adjustment,speakerconfguration,andefectsmanagement
shouldbeabundantandreadilyavailabletotheuser.
Behavioral Modes
TenextstepinNeedsClusteranalysisisto
deriveaseriesofobservedBehavioralModes,
basedonourinterviewsandobservationsof
Boseusers.Ausermightbeinseveralmodes
overthecourseofaninteractionwiththe
system.
Frustrated
Interconnector
Whentheprimaryconcernsoftheusershiftowardssoundoptimizationandaccessto
externalcomponents(hardwareorservices),problemsariseifthesystemdoesnotrespond
asanorchestrawouldtoaconductor.Teexperientialassetspreviouslyadmiredbytheuser
begintovanishastechnicalissuesmount.Withstandardscompliance,cablecompatibility,
andsignalstrengthtakingcenterstage,theuserbecomesincreasinglyawareofthesystems
limitations(e.g.shortageofappropriateinputs/outputs,codeccompatibility)andperturbedby
thelackadequateguidancetheprintedmanualafords.
Constant Fiddler Unabletodevoteenoughtimetomastersettingsorfeaturesbycloselyconsultingthemanual,
usersseekingspecifccontent,uncommonhardwareconfgurations,orcustomizedsound
mayfndthemselvesconstantlyadjustingandtweakingthesoundtogetitjustright.High
expectations(possiblyencouragedbythesystemspromotionalmaterials)maygiverisetoa
perfectioniststreak,ultimatelyrenderingasatisfyingsolutionelusive.
Proud Papa Teuserderivesmorepleasurefromguestspositivereactionstothesystemthanitsusability,
convenientfeatures,orsoundqualitybecausehebelieveshispurchaserefectshisgoodtaste,
fnancialstatus,andcompetentdecision-makingabilities.
Gracious Entertainer Intentonkeepingthefocusonhisguestspleasure,theuserviewsthesystemmoreasameans
toanendaneventenjoyedbyallratherthanashowcasingofawondrouspossession.Tus,
heremainscarefulnotdrawtoomuchattentiontothehardware,aneasytaskconsideringthe
compactnessofthesystem.
Contented Novice Blissfullyignorantofthesystemssuperpowers,theuseriscontentsimplytohavedecent
qualitysoundemergefromthespeakerswhenhepressesplay.Unconcernedwithlimitations
ofsystem,herarelyventuresbeyondthebasics,denyinghimselfthebenefts(andhassles)of
usingadvancedfeatures.
Busy Under-user Toopreoccupiedwithothertasksandresponsibilitiestoquenchhisdesiretoexplorethe
outerreachesofthesystem,helacksthetimerequiredtomasterenoughfeaturestojustifythe
purchasecost.
Rosourch & Domonslrul|on | Fu|| 2CC6 1C llT lnsl|lulo o Dos|gn
Observed behavi Oral mOdes
Frustrated
interconnector
Constant
Fiddler Proud Papa
gracious
entertainer
Contented
Novice
Busy
under-user
r
e
q
U
i
r
e
m
e
n
t
s
(
b
e
n
e
f
i
t
f
r
O
m
U
s
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 Were a Little Lost
needs Clusters
1. Just Want It to Work
2. Total Control
3. Quest for Perfection
4. Were a Little Lost
5. Play On!
6. See My Bose
3. 2 needsclUstersdescri bed
TefnalstepinNeedsClusteranalysisisto
fndthenaturalgroupingswhereBehavioral
ModesandRequirementsintersect.For
example,wefoundsimilaritiesinthered
areaabove,Cluster1:JustWantIttoWork.
Whetherthesepeopleareunder-usersofthe
system,ornovices,theirinteractionswiththe
system,eitherseekingMultimediaTrillsor
aCultivatedMoodweremuchthesame.
Inthefollowingsection,wedescribeeach
NeedsClusterindepth,andalsoidentify
criticalDesign Criteria foreachone.Design
Criteriarefectinsightsfrominterviewsand
observations,andframeopportunitiesfor
innovation:whatkindsofinteractionsshould
beencouragedandsupported?Whatkinds
offrustrationsshouldbesimplifedand
improved?DesignCriteriabecomecritical
bothindevelopinginnovationconcepts,and
inevaluatingwhethertheconceptswillbe
successfulwhenimplemented.
6 See My Bose

5 Play On! 5 Play On!
NEEDS CLUSTER DESCRI PTI oNS
Just Want It to Work
Description
Basichometheaterneedsmustbemet.Ata
minimum,thesystemshouldproduceclean,
highfdelity,andundistortedplaybackofTV,
DVD,andCDaudiocontent,recognizeall
songsandmoviesfromdisksautomatically,
delivergreatimmersivesoundwithlittletono
tweaking,andachievethedesiredambiance
withfewbuttonpresses.
Design Criteria
Provideaquick-startguide.
Providebasicsystemsetup.
Oferpersonalizedsetupandsystem
introduction.
Simplifycumbersomefeatures.
Oferquickguidance.
Makefeaturesintuitivesolittlelearning
isrequired.
Helpuserconnectothermusicsources.
Showmeaccessoriesthataddbenefts.
Eliminateneedforupdatediscs.
Total Control
Description
Troughthesystem,theusershouldbeable
toobtaincontentthesystemfromanysource
atanylocationandathisconvenience.With
theabilitytomanipulateeveryaspectofthe
systemfromcontentaccesstohardware
expandability,frominterconnectivitytospeaker
calibrationtheusershouldfeelasthoughhe
ishackingthesystemwithouthavingtodothe
legwork,assumingnearlywizard-likepowers
overhissystemwiththeremoteactingashis
wand.
Design Criteria
Provideallthedetailsabouteachcontrol.
Provideself-setupguide.
Allowconnectiontomultipleaudio
inputs.
Provideaccesstousersentiremedia
library.
ProvidebackupofuMusiclibrary.
Showmeexpansionoptions.
Provideanupgradepath.
UpdatesystemviaInternet.


Quest for Perfection
Description
Tesystemshouldbeabletoliveuptothe
highestexpectationsoftheuserwithrespect
tosoundfdelity,immersion,moodmatching,
andcontenttransmission(e.g.musicthrough
wirelessspeakers).Soundqualityshouldtake
precedenceovercontentcontrolissues.
Design Criteria
Helpuserownthefeatureby
understandingwhy&howitworks.
Provideself-setupguide.
Keepuserawareoffeatureoption
settings.
Allowconnectiontomultipleaudio
inputs.
Actasacompletemediahub.
Ofertotalreliability.
UpdatesystemviaInternet.
Supportdcormatchingofphysical
system.
Were a Little Lost

Description
Usersneeddirectioninbrowsingavailable
content,helpaccessingcontentandexternal
devices(andservices),andtheabilityto
manipulateandcustomizecontent.Tecurrent
meansofeducatingandacclimatingusersto
uniquefeaturesandhelpingthemtoachievea
benefciallevelofcontrolistootimeconsuming
formanyusers,especiallythosewhoneedtobe
convincedofthevalueofsuchfeatures.
Design Criteria
Pointtoquick-fxeswhenusergetsstuck.
Makespecialfeaturesfeelaccessibleand
friendlytousers.
Showmehowtodothingsdontjust
tellme.
introduction.
Givequickeraccesstomyfavorite
features.
Provideautomatedaccesstouserguides.
Providemultiplewaystoansweruser
questions.
Alwaysreveallisteningmodeand
options.
Eliminateneedforupdatediscs.


Play On!
Description
Virtuesofthesystemshouldfadeintothe
backgroundwithmood-killingglitchesavoided
throughredundancyandautomaticupdates.
Teauralexperienceshouldremainconsistently
excellentsoastoavoidproblemsforwhichthe
ownermaybeheldresponsible.
Design Criteria
Clearlywalkmethroughthebasicsteps
todothings.
Givequickeraccesstomyfavorite
features.
Playwithoutinterruption.
Eliminateneedforupdatediscs..
See My Bose
Description
Tesystemshouldallowownerstodemonstrate
thesystemscapabilitiestoguestsinwaythat
portraysthethemastasteful,competent,
andthoughtfulwhileprovidinganumberof
compellingreasonsforgueststopurchasethe
systemforthemselves.Ultimately,itshould
enhancethatstatureoftheownerwhile
providingasatisfyingexperienceforhisguests.
Design Criteria
Helpusershowsystemtoothers.
GivemeprideofownershipasItalkto
others
Supportdcormatchingofphysical
system.
The Value of Needs Clusters

Armedwiththeseuserdescriptions,we
canproceedtoevaluateearly-stage
concepts,bothtoidentifyquick-hitsfor
implementationinearly2007,andtoframe
futureconceptgeneration.
Ideally,NeedsClusterswouldbeenrichedby
qualitativedemographicdata,segmenting
existingandpotentialBosecustomersby
income,geographiclocation,andpotential
toupgradeormakeadditionalBoseproduct
purchases.
4. 1 i ni ti ali nnOvati OncOncepts
TeBoseCustomerforLifeinitiative
hasalreadydevelopedseveralconcepts
forimprovinginteractionswithLifestyle
systemowners.TeInstituteofDesignteam,
meanwhile,sawseveralinnovationconcepts
emergethroughdiscussionwithcustomers.
Althoughitisstillearlyinthedesignprocess,
weseizedtheopportunityofourinteractions
withownerstogettheirreactionstoseveral
conceptsalreadyonthetable,tohelprefne
themandsuggestadditionalthemestodrive
newconceptdevelopment.It is important to
note that the concepts described in this
section do not refect a complete design
process on the part of the Institute
of Design team, which anticipates
generating, refning, evaluating, and
validating new concepts in future phases
of the project.
Inthefollowingpages,wepresentinitial
concepts.Eachconceptisdepictedvisually,
andinadescription,whichwasoferedto
Boseownersfortheirreactions.Typical
responsesarerecordedbelow.Wehavealso
identifedthelikelyNeedsClustersserved
bytheconcept,andtheDesignCriteriathat
apply.ConsiderationoftheseDesignCriteria
maybehelpfulinrefningtheconcepts
further,orinusingthemaspringboardfor
additionalconcepts.
heLp button
button for
Recording
button for
Umusic
HELP
Description
Anadditionalbuttonontheremotecontrol,
labeledHelpwouldbringupanon-screen
displaywithexplanationsofhowtouse
variousfeatures.Pressingthehelpbutton
andthenanyotherbuttonontheremote
controlwouldimmediatelytaketheusertoa
helpscreenforthatfeature.
Potential User-Cluster Appeal
JustWantIttoWork
WereaLittleLost
Design Criteria Addressed
friendlytousers.
Oferquickguidance.
Provideautomatedaccesstouserguides.*
questions.*
User Feedback
Tiswouldbegreatjustlikeonthecomputer.
Tatisverysmart!
Extensions
CouldthislinkdirectlytotheBosewebsiteforthemostup-to-dateinformation?
tuCk-a-way mi ni -manuaL
MINI
GUIDE BOOK
FOR
BOSE SYSTEM
Description
Asupplementalownersmanual,inasmaller
format,thatslipsintoaspaceunderthemain
Lifestyleconsole.Tenewmanualwould
focusonusabilityissues(notsetup),and
wouldcontaineasy-to-understanddiagrams,
step-by-stepinstructions,andanindex.
WereaLittleLost
JustWantIttoWork
QuestforPerfection
friendlytousers.
Oferquickguidance.
questions.*
User Feedback
PerfectIdloveit.TenIwouldnthavetogogetthatbigthickmanual.
Wedohaveaplacetokeepourmanual,butiftherewereaplacetokeepitbythestereo,that
wouldbeuseful.
Extensions
Selectingwhichfeaturestodiscuss,andatwhatlength,maybedifcult.
update di Sk + newSLetter + SampLe muSi C
BOSE UPDATE CD PACKAGE
SEASON 4 : CHRISTMAS HOLIDAY
UPDATE CD
NEWS LETTER
MUSIC LIST
are included
Description
Expandtheupdatediscpackagetoincludea
shortnewsletterinthesamemailer.Sections
mightincludeaFeatureFocusthatwould
explainhowtobeneftfromoneofthe
advancedLifestylesystemfeatures,and
showhowarealBoseownerwasusingthe
feature.Musicandvideoreviewswouldbe
complementedbyexclusivenewmusictracks,
inavarietyofmusicalgenres,freeofcharge,
ontheupdatediscitself.
QuestforPerfection
SeeMyBose
Showmehowtodothingsdontjusttell
me.
User Feedback
Iwouldntreadthenewsletter.Newmusicwouldbenicehey,Ispent$4,000onastereo,its
nicetobethrownabonewithabonuslikethat.
Ijustunsubscribedfromthenewsletterwhateverwasoferedwouldneedtobemore
practical,insteadofjustadvertisingforotherproducts.
Extensions
TequestionofhowBosecansupportanentiremusiclifestyleisintriguingandworthfurther
exploration.Atwhatpointisitaboutmusic,morethanjusttheequipmentforplayingit?
whi te-gLove Setup Servi Ce
Bose
Description
Bose-trainedprofessionalswouldcometo
acustomershometosetuptheLifestyle
system,andspenduptoanhourwalking
throughthevariousfeatures,helpingthe
newownerbecomefamiliarwithallitcan
doandgettingallthesettingsjustright.May
beanadditionalchargeitemespeciallyif
physical/wiringsetupisneeded.Because this
could be an expensive service to provide, it
could be ofered only to users who demonstrate
a needperhaps if they respond to a follow-up
call several weeks afer purchase and say they
havent set their system up yet.
JustWantIttoWork,QuestforPerfection
WereaLittleLost,PlayOn!
introduction.
friendlytousers.
Showmehowtodothingsdonttellme.
Clearlywalkmethroughthebasicstepsto
dothings.
User Feedback
Ifitwasfree.
Ifsetupwereincludedintheprice,wedtakeadvantageofittheywouldhavevaluable
knowledgeandcouldtellusabouttheproduct.
IaskedaboutsetupserviceswhenIboughtmysystemtheysaidIdhavetowaitfourtosix
weeks!Idwantanysetupservicetobeavailablewithinafewdays.
Extensions
Cost-efectivenessisthebiggestchallenge.Somecustomersmightgladlypaymore,though.
onLi ne Learni ng moduLeS
WELCOME TO
BOSE ONLINE LEARNING SITE!!!
Instruction
Special Features
FLASH HTML
Description
AspecialareaontheBose.comwebsite
wouldofertutorialsthatshowownershow
tousediferentfeatures.Eachonecould
beself-paced,andrevisitedasdesired.Te
tutorialsmightincludestep-by-stepwritten
instructions,asmallvideoorbriefanimation,
andsomepracticalsuggestionsforways
manyBoseownerstakeadvantageofthe
features.
TotalControl
WereaLittleLost
Provideallthedetailsabouteachcontrol.
friendlytousers.
Showmehowtodothingsdontjusttell
me.
introduction.
Provideautomatedaccesstouserguides.*
User Feedback
Probablywoulduse,butImnotsurehowmanypeoplewould.
IvenevervisitedtheBosewebsite.
Iliketheideaofjustgettingstep-by-stepinstructionsitwouldntevenneedvideo.
Extensions
Howmightthisinteractwithauserforumtodiscusstipsandshortcuts?
Rosourch & Domonslrul|on | Fu|| 2CC6 2C llT lnsl|lulo o Dos|gn
Li feStyLe phone ConCi rge
Id like to ask about
my
Lifestyle system....
Yes, Sir
You can ask anything
Description
Atoll-freetelephoneservice,wouldinstantly
recognizeLifestylesystemowners,and
providepersonal,friendlytelephonehelp
foranyquestionsyoumighthaveabout
yoursystem.Operatorscoulddialintothe
Lifestylesystemfordiagnosis.Addedvalue
includesmusicandvideorecommendations.
WereaLittleLost
QuestforPerfection
friendlytousers.
questions.*
User Feedback
NoImtoobusy.
Iloveitwhenyouhaveaproblemwithsomething,likeacomputer,andyoucallthat800
number,andtheyjustwalkyouthroughit,stepbystep.
Donttheyalreadydothis?
Extensions
Nuancesofservicelevelarekeyforexample,havinginstant,personalrecognitionofthecaller,
ratherthanrequiringidentifcationbyserialnumberorcasenumber.
i n-Store CLaSSeS
Description
Atconvenienteveningand/orweekendtimes,
alocalBosestorehostsabriefseminars
onvarioustopicsrelatedtogettingthe
mostoutofaLifestylesystem.Topicscould
include:howtosetupuMusicplaylists;how
tocustomizesettingsfordiferentkindsof
music;andhowtoconnectotherdeviceslike
iPodstoyourLifestylesystem.Eachseminar
mightalsoincludesamplemusicgiveaways,
andmightalsoincludelightrefreshments.
PlayOn!
SeeMyBose
Clearlywalkmethroughthebasicstepsto
dothings.
Helpusershowsystemtoothers.
GivemeprideofownershipasItalkto
others
User Feedback
NoImtoobusy.(multiple respondents)
Itcouldbenice,ifitwerealways,say,thethirdTursdayofeverymonth,andjusthaveitbean
informal,drop-inevent.
Extensions
Makingthisasocialevent,centeredonanenjoymentofmusicandmedia,wouldbeimportant
tomakingitfeellesslikeachore(aburdenofownership)andmorelikeaperk.
4. 2 cOnceptevalUati On
Weconductedacursoryevaluationofinitial
concepts,usingtwoscorecardstoconsider
thepotentialofsuccesswithcustomers,and
thecommercialviabilityoftheconcept.
TeCustomer Success Scorecard
considersthepotentialvalueforeach
NeedsClusteronascaleofonetofve.We
alsoincludedagenericcriterionderived
fromresearchcitedinourEcosystem
researchpaper,whichplacedahighvalue
onCustomerRelationshipManagement
solutionsthatinspireanemotional
connectionbetweenthecustomerandthe
brand.Finally,weassignedascorebasedon
userfeedback.
Tisevaluationnotonlyshowsthehigh
potentialofCustomerSuccessforconcepts
liketheUpdate Disc + Newsletter +
Music andWhite Glove Setup concepts,
butalsothatthePlay On!andTotal Control
NeedsClustersarerelativelyunderserved
bycurrentconcepts.Futureconcept
developmentmaywanttoexploreadditional
waysofsupportingtheseNeedsClusters.
Customer Success Scorecard Potential value, from 1 (least) to 5 (best)
USER CLUSTER CRI TERI A
GENERI C
CRM
CRI TERI oN
QUALITATIVE
RESEARCh
CoNCEPT
Just Want
it To Work
Total
control
Quest for
perfection
Were a
Little Lost play on!
See My
Bose
Emotional
connection
Direct
User
Feedback
Total
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-Concirge 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
TeBoseCommercialViabilityScorecard
isanestimateofhoweasilyandproftably
Bosecouldexecuteeachconcept.Tecriteria
include:
Targetability.Cantheconceptbe
focusedjustatthegroupofcustomers
thatneedit?Low-scoringconcepts,
suchasthoserequiringachangetothe
productsfunctionality,wouldhavetobe
implementedacrosstheboard.Onthe
otherhand,evenWhiteGloveSetupcould
beoferedfreeonlytothosecustomerswho
haventsetuptheirsystemaferamonthof
ownership,oratanextrachargeforsome
customers.
Cost-effectiveness of implementation.
High-scoringconceptswillcostrelatively
lesstoimplement.
Leverages Brand.Doestheconceptbuild
onrecognizedBosebrandattributes,and
contributetopositiveperceptionsofBose
asacompany?
Increase of Advocacy.Doestheconcept
encourageBoseownerstotakegreater
prideintheirpurchase,andrecommendit
toothers.
Capability Fit.DoesBosehavethe
capabilityin-housetoexecutetheconcept?
Anobservationfromthissuiteofconcepts
isthattheyarerelativelyexpensiveandless
targetable,butseemtoftstronglywith
currentBosecapabilities.Considerationsof
thesefactorsmaybeworthconsideringin
futureconceptdevelopmenthowmightwe
makeconceptsmoretargetableandcost-
efective,evenifitmightrequireoutsourcing
skills?
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-Concirge 4 4 4 4 4 19
In-Store Classes 4 4 2 3 4 17
CLUSTER ToTALS
21 20 24 22 28
14
12
19
16
19
19
17
27
27
30
35
24
27
24
cust success
Help Button
Hide-a-way Mini-Manual
Update Disc + Newsletter + Music
White Glove Setup
Online Learning Modules
Lifestyle Tele-Concirge
In-Store Classes
White Glove Setup
Lifestyle Tele-Concirge
10 15 20
20
25
30
35
White Glove Setup
In-Store Classes
Online Learning
Modules
Lifestyle Tele-Concirge Hide-a-way Mini-Manual
Help Button
C
U
S
T
O
M
E
R

S
U
C
C
E
S
S

S
C
O
R
E
BOSE COMMERCIAL VIABILITY
Teinitialconceptsthatscoredthehighest
forbothpotentialCustomerValueandBose
CommercialViability(thatis,thatBose
couldreasonablyandproftablyexecutethe
concept)included:
WhiteGloveSetup
UpdateDisc+Newsletter+Music
LifestyleTele-Concirge
OnlineLearningModules
Otherconceptsascurrentlyframeddidnot
scoreashigh,butfurtherexploration,guided
bytheDesignCriteriaundertheNeeds
Clusters,couldrefnetheseconceptsfurther.
Indeed,thelogicalnextstep,aferstudying
usersanddrawinginsightsfromthem,isto
holdconceptgenerationworkshops,using
themesfromuserinsightstocreateand
refneinnovationopportunitiesthroughout
theBoseLifestylesystemsvaluechain.
Beyond the Lifestyle System

Becauseofthetightfocusofthisprojecton
howtobuildabetterrelationshipwithBose
Lifestylesystemowners,wehavenotlooked
ascloselyatlargerquestionsoftheroleof
hometheatresystemsinthelivesoftodays
usersandtomorrows.Butourresearch,
andongoingchangesintheconsumer
electronicsspace,showsthiswillbean
importantareatoconsider.Justinthefew
weekssinceitsNovember2006launch,for
example,theNintendoWiihasreshapedhow
peopleofallagesthinkabouthomegaming
systems.Someofthepeoplewhohave
becomeWiienthusiastsarethesameones
targetedbytheLifestylesystemandhow
welldoestheLifestylesystemaccommodate
connectingagamingsystem?Likewise,both
theiPodandtheMicrosofZunecontinue
togainnewcustomerswhowanttocarry
theirmusicwiththemcantheybringtheir
4. 3 recOmmendati Ons
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.
musicintotheirhomeandeasilyintegrate
themintotheLifestylesystem?Perhapsnot
atpresent.
Tehomemediaentertainmenthubconcept
isimminent,accordingtosome.AstheWall
Street Journal recentlynoted,
CompanieslikeAppleandothers
aresettoplayanevenbiggerrolein
livingrooms,potentiallydisplacing
traditionalconsumer-electronics
companies,ashome-entertainment
systemsenterthenetworkederain
whichtheyllplaymusicandmovies
storedonpersonalcomputersandthe
Internet.
WhilethecurrentBoseownerdemographic
issomewhatinsulated,byageandoutlook,
fromtheexplosivechangesinconsumer
electronics,changeisonthehorizon.Bose
hasastutelyfocusedonmakingproducts
easytouse,toutingthebeneftsofaholistic
musicandmediaexperienceovertechnical
functionalitiesandspecifcationsbutthe
targetismoving,asotherarenasofconsumer
electronicsproductsachievenewlevelsof
user-interfacesimplicity.
InthesameWallStreetJournalreport
onhomeentertainmenthubs,Michael
Smith,amarketingmanagerforhome
audioatSony,citedcustomerresearch
indicatingthatthenewstandardisnotjust
tobeeasierthanacompetitorsproduct.
Rather,Sonyishearingtheircustomers
say,Why cant the home-entertainment
experience be more like TiVo?
Inotherwords,whileBosehasmade
incredibleleapsforwardinthesimplicity,
beauty,andeaseofuseofhome
entertainmentsystems,expectationshave
alsoleaptforward.Betterthanallprevious
projectsisnotthesameasThebestIcan
imagine.Bosescommitmenttoongoing
innovationwillbeitsmostimportantally
inremainingontheforefrontofhigh-end
homeaudio.
W|ngo|o, . Musl Consumor E|oclron|cs Bo
So Comp||culoo? Wu|| Slrool Journu|, ov
27, 2CC6, p. r4.

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Bose Customer for Life

id 592-038, Research and Demonstration | Fall 2006

which range in price from $2,000 to $4,500,

Tese questions are straightforward,

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

Build on/ leverage existing behavior

Conduct design research to

Conduct usability design studio to

Research & Demonstration | Fall 2006

Rosourch & Domonslrul|on | Fu|| 2CC6 2

Rosourch & Domonslrul|on | Fu|| 2CC6 12 llT lnsl|lulo o Dos|gn

Were a Little Lost

Rosourch & Domonslrul|on | Fu|| 2CC6 13 llT lnsl|lulo o Dos|gn

The Value of Needs Clusters

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

Beyond the Lifestyle System

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