E-Marketing Plan for Noyes Records - Case Study Example

E- Marketing Plan Competitive strategy is the base for any marketing or business strategy. There are 3 generic strategies at various levels which includes Corporate level Business level Functional or departmental level (Porter’s Five Forces- Strategic Management) The sixth largest music market in the world is Canada which only accounts to 2% of the total music sales. Michael Porter had created a portal with the details of a framework for an industry which is influenced by 5 forces namely- 1. Supplier power 2. Barriers to Entry 3. Threat of substitutes 4. Buyer Power 5. Degree of Rivalry (Porter’s Five Forces- Strategic Management) (Porter’s Five Forces- Strategic Management) 1. Supplier power: Supplier power is the buyer supplier relationship in the industry. In the last decade, there has been number of changes in the music industry. The competitive force model for this industry has considerably changed. The bargaining powers of suppliers were very high as the recording companies have an upper hand than the individual artists. In the recent past, after the launch of new technologies such as MP3 coding and the internet, the artists are less dependent on the recording units as they can now record, distribute and promote their own videos and songs through internet and websites. The artists have acquired more power as they have even started selling their music without the recording company. (Porter’s Five Forces- Strategic Management) 2. Barriers to Entry: Building a successful profession requires network, money and resources. Money is required to invest into finance marketing and music videos. Network is also very essential in order to sell products, markets and advertisements. Contacts and networking are required at venues and concerts everywhere the artists perform. It is very difficult to be successful and receive sufficient market share especially for a new player. With the help of the internet, people have more contacts, networks and it has become easier to sell music online. (Porter’s Five Forces- Strategic Management) 3. Threat to substitutes: Until some years back, there threat of substitutes was very low as the music was available in only one common channel. But in the recent past, there have been numerous cases of piracy which is becoming a major threat to the music industry and the recording company. (Porter’s Five Forces- Strategic Management) 4. Buyer Power: The format by which music is made available, the channel and the source of the music are predetermined. There are no alternate sources available for the buyers to buy the music other than purchasing them at stores. But in the recent past, there have been several cases of music privacy which provides buyers to acquire the music through other channels paying very minimal amounts o nothing at all. Information regarding the artists, purchasing of song directly from iTunes can be made directly. The song video can also be viewed from YouTube. Online downloading of music has also been a major set back for the recording companies. Consumers now can download music for free with good quality instead of paying for the CD. This means that the recording companies need to reduce their prices and have different channels for promotion, advertising and sales. (Porter’s Five Forces- Strategic Management) 5. Rivalry among competitors: The market share has been quite stable and there has not been much competition apart from the top 5 recording companies. As there are players in the market, there is more competition in the market and the market share is just not pertaining to top 5 recording companies. The graph represents the number of new entrants to the music industry’s leading streaming providers in the last year(Porter’s Five Forces- Strategic Management) PEST Analysis for Noyes Records The external macro environment in which the firm operates can be broadly classified in terms of the following factors- Social Economic Technological Political 1. Social factors Social factors cover demographical and cultural aspects of the external environment. The rates of population growth, focus group, age distribution are also related to the social factors of music recording industry. The age distribution is usually for teenagers and middle age group who are the primary focus groups and this is steady and in favor of the music recording industry. The market share for North America alone is 28% of the total music industry. $126 million market in Canada for Indie Music and $2.26 billion market share in North America for Indie Music. (Matthew, 2009) 2. Economic factors Economic factors greatly affect the purchasing power of the buyers and the company’s cost of capital and profit. The main factors of this are Economic growth Inflation Rates Exchange rates Recession With low cost production and recording equipment available, the bands can afford to develop and record at low costs. There are a number of websites which prove to be a cost effective method for artists and bands to get the music to widen out to their fan base. Noyes Records needs to focus on marketing and promotion rather than distribution of CD’s as the music is now made available for free on the internet. Social networking websites should be used extensively by Noyes Records as it would help in creating close ties between the fans and the artists. (Matthew, 2009) 3. Technological factors Technological factors can lower the barriers of entry, increase the buyer’s purchasing power and reduce the marketing sales for CD’S in the music industry. The technological factors include- R& D activity Rate of technological change There has been vast improvement and advancement in music recording, promotion, distribution, advertising and sales. The disadvantage for the recording company is that the artists are no longer dependent n major recording labels to create and promote their products. MP3 software has replaced the CD just as CD’s replaced Vinyl albums. The digital technology advancement has not only helped in the process of recording music but also made it cheaper and help save several million of dollars. Noyes Records must focus more on sales in association with ITunes and Zunior as most number of the listeners and buyers prefer buying online music rather than CD’s. Technological changes affects economic and political aspects as there will be grips with the tax issues involved. Music industry has not found an effective solution to threats such as Napster (Matthew, 2009) 4. Political Factors Political factors include government regulations and legal issues regarding the music industry, political stability copyright laws and protection of both music writing and recording; copyright legislation regarding the internet promotion and distributions. Protection of copyrights has always been a issue in the music industry. With the arrival of MP3 technology, there has been an increase in the copyright infringement. Recording companies are focused in recovering the sales through legal actions. Forecasts suggest that legal downloading will amount to more than one third of listeners spending on recorded music. (Matthew, 2009) The future of the music industry is unstable, unpredictable as there are changes and advancements in new technology. Noyes Records need to focus more on changing the platform for advertising and promoting new music and artists than on traditional and old methods of music promotion as it is very ineffective. The change is not solely because of technological factors but also political, economic and social factors. Noyes should focus more on networking with people around the world with the help of internet tools such as face book, twitter, my space and other website which helps in increasing the viewers and allow the fan base to widen. This also helps the artists and the music to reach out to broader audience and this will also help in increasing the sales. Noyes Records can also widen the revenue sources by taking advantage of the online services available for promotion. (Matthew Heimal, 2009) Literary References Porter’s Five Forces- Strategic Management, [online] retrieved 12th March 2010 from Quick MBA website http://www.quickmba.com/strategy/porter.shtml Matthew Heimel (2009), PEST analysis of the Music Industry, retrieved 12th March from students.oneonta website http://students.oneonta.edu/heimmj69/mattheimelwebsite/Writing%20Samples/music208finalpaper.pdf Read More