You assume that sound quality is the only thing that matters in a pair of headphones. A lot of people care more about how they look and the branding then the sound, which is totally fine. I work in a small tech store and I've convinced people to buy better headphones to have them come back a few days later and exchanging them for Beats. Yes, they sound horrible, but different people have different needs and desires. It's not wasted money if they enjoy them, which I believe to a large part people do. Who are we to tell people they should buy headphones they don't want?

Branding and design is a legitimate category for a company to compete in and the people behind the headphones are certainly successful in it. They recognized that most people don't really care how they sound because the vast majority of people are not audiophiles and just want to look cool.