Sleek by 50 – serious competition for Beats by Dr. Dre?

American rapper 50 Cent has recently announced his line of headphones called Sleek by 50. This was a very bold move by the popular artist, because he's coming to the product segment, which is currently owned by fellow rapper Dr. Dre. Dre introduced his line of headphones Beats by Dr. Dre in 2008 and we could say that Dre created a new segment on the market: celebrity endorsed headphones. This is a very lucrative segment, but to succeed in it you need to have a unique product, a very strong brand or maybe the most important ingredient: a very famous person behind the brand.

I described Dr. Dre’s success with his headphones in the blogpost Beats by Dr. Dre – a success story. For the promotion of the brand he often uses product placement in music videos, but he also convinced/influenced music stars and famous sportsmen to endorse his products. For example: in the recent World Nordic Championship in Oslo we could see members of Austrian ski jumping team with Beats headphones right after they had won the team event.

We could expect 50 Cent to choose the similar way for brand’s promotion, however in the beginning he’ll have to assume to role of the main communicator and endorser. In my opinion he’ll try to put Sleek by 50 in several high profile music videos, but product placement is only one way of promoting your brand.

Let’s check the marketing mix for Sleek by 50.

1. PRODUCT

Sleek by 50 are wireless headphones, produced by Sleek Audio, the company that specialized in high quality headphones and music equipment. The company itself is a guarantee that 50 Cent’s headphones will be very well built and will produce a superb sound. However, it was only a few years that headphones get the proper attention.

It was 10 years ago when Apple launched iPod, the most popular portable media player. It was the golden era of portable media players, when everyone had to have one. Several key players (Sony, Phillips, Creative …) introduced their own models, but eventually the market shrunk. With the development of the mobile phones (or smartphones) portable media players became unnecessary. Today, smartphone is a new media player.

However, during the last decade portable media player manufacturers hadn’t put much emphasis on a small gadget, called headphones. Yes, iPod has beautiful white earphones, but they’re minimalistic and without any visible logo. But gradually there was a change in headphones usage – some people just didn’t want to wear uncomfortable earphones and switched to bigger ones. In 2008 American company Monster introduced their line Beats by Dr. Dre and invented the segment of celebrity endorsed headphones.

As you could see on the picture above, there is heavy competition on the headphones market. I’ve checked brands on Amazon.com (only new products were included) and counted the number of different models they sell. Even though Sleek by 50 will be a part of the small segment, it is still dominated by several models from the Beats by Dr. Dre line (included in the brand Monster).

2. PRICE

Sleek by 50 will be released in April; however the price still remains unknown. There were speculations about the price being in the range between $300 and $400, which wouldn’t be surprising. The most expensive model by Beats by Dr. Dre is positioned at around $350-$400.

A quick analysis of models sold at Amazon.com has shown that there is room for Sleek by 50, even at relatively high price of $350 (let’s assume that the price will be $350).

I’ve checked brands and models with the price above $200 and also counted how many products they sell on Amazon. On the graph above you can see for each brand the number of different products and the average price of those products.

There is a somehow different situation if you consider the products assortment on JunoRecords, a UK website that sells DJ equipment. There is only a small percentage of headphones more expensive than 200 EUR i.e. $280.

Price positioning of the product is extremely important. Sleek by 50 is a very well build, great looking product which is also endorsed by a multi-million dollar selling rapper. The high price of headphones is expected and could be justified.

3. PLACEMENT

Sleek’s main competitor Beats by Dr. Dre has been present in Apple stores and in the largest US electronics retailer Best Buy. It will be very important for 50 Cent & co. that they strike a good deal with national retailers and to be present internationally. As we could see on Sleek Audio’s website they have distributors for UK, EU, Asia and Russia, so we could expect international coverage.

4. PROMOTION

50 Cent announced Sleek by 50 in the beginning of 2011. Since then he was a guest star at Conan O’Brien where he showed headphones and also got into a conflict with Dr. Dre. Perhaps this conflict was staged, even though they will be competitors in the headphones market. We must not forget that Dre produced 50 Cent’s first album Get Rich or Die Trying and 50 Cent was Dr. Dre’s protégé.

On 14^th and 15^th February 50 Cent complained on Twitter that Dr. Dre and Jimmy Iovine (owners of the brand Beats by Dr. Dre) are mad at him because he’ll introduce Sleek by 50. After a few days Dr. Dre responded with a short answer: “I never heard of his headphones.” However, 50 Cent tweeted again: “I don't believe Dre would say anything about me. I love Dre. If he did he must really be mad at me. I'm gonna call Dre when I get out this meeting.”

50 Cent also used American professional boxer Floyd Mayweather to promote the headphones. Here’s a short video.

One of the most important communication channels for Sleek by 50 will definitely be product placement. I expect to see headphones in every 50 Cent’s video and in all videos with him as a guest star or featured artist. He’ll probably wear them at every public event. Product placement is unavoidable, mainly because it has been heavily used for promotion of Beats by Dr. Dre.

I can’t wait for the release and I’m really curious what will happen with Sleek by 50. Can 50 Cent succeed in taking away some market share from Dr. Dre? I’m sure he can, but how? We’ll see very soon.

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EDITED ON OCTOBER 1st:

You have probably heard that 50 Cent's collaboration with Sleek Audio ended in May. 50 Cent has since then bought KonoAudio, headphones production company, and will soon launch his new line of headphones: SMS by 50 (or even Sync by 50). You can read more about his second attempt to enter the headphones market in the blog post SMS by 50 (or Sync by 50) – 50 Cent's second shot at headphones market