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Sonance

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Major Issues
The major issues facing Sonance are decreased sales and market share, caused by compromised brand identity and brand dilution. Formerly an industry leader, the company is suffering from a continued decline in revenues stemming from damaged relationships with installation dealers. By attempting to service two dissonant market segments –mass retail outlets and the luxury home custom installation market, Sonance entered the B2C market while continuing to be in the B2B distribution channel, focusing on neither and sacrificing the benefits of economies of scale. They are forced to decide which product to produce and distribute as well as which distribution channel(s) will be the most appropriate.
Strategic Alternatives
Focusing exclusively on the viable alternatives for launching the Architectural Series, the strategic alternatives include; dropping the mass merchandising distribution channel as well as the production builders and solely distribution the AS speakers through custom dealers at a price of $750, distribution the AS speakers through a mix of custom dealers and high end retail at a price of $750, distributing the AS speakers exclusively through custom dealers at a price of $2500. Per Professor Rao’s instruction we do not analyze the iPort or Original Series product lines in this paper.
Recommendation
We recommend launching the Architectural Series at a price of $2,500 and distributing exclusively through custom installation dealers. This is a strategically sound option for the following reasons. The AS product is unique and innovative, which is precisely what the high-end user will prefer over SpeakerCraft’s product. This helps to reposition the brand as a leader in bringing to market high-quality technology with cutting edge design technology. We also recommend offering dealers a 65% gross margin which is 10% lower than

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