In just seven years Interscope records head honcho Jimmy Iovine and hip-hop tastemaker Dr Dre have turned a seemingly simple headphone branding exercise into a $1 billion-plus business – and here is how they did it.
Together with newish President and former Interscope exec Luke Wood, the trio took a hot product and made it scorching; taking a 70% share in the headphone market along the way.
And while the headphones cost you the customer between $100 and $500 a pair, it costs Beats a mere $14 to make according to some experts. It may be in line with other types of tech, which have similarly high profit margins, but coupled with the marketing tactics employed, Beats by Dre had consumers over a barrel from the very beginning.
Just last month, Beats headphones were ranked second worst in a list of 18 products based on sound quality with industry standard bits from Sony, Audio-Technica, Sennheiser and Pioneer all placing much higher. Even ABC got in on the act releasing this damning video: