HMV Company in the UK - Essay Example

? An Industry Analysis of HMV Company in the UK AN INDUSTRY ANALYSIS OF HMV COMPANY IN THE UK HMV (His Master’s Voice) is a company with chain outlets based in the UK, stores and outlets in Singapore, Ireland and Hong Kong. Founded in 1921, HMV has been a leading retailer of music, portable digital technology products, filmed entertainment and games. HMV provides products and services in the UK market and beyond, in the entertainment arena. Games, movies and music in audio and video, are in digital form so as to suit the growing demand of digital products in the market. Consumers have various products to choose from, either purchasing in blu-ray disc formats or on-line music downloads in MP3. Challenges of piracy and illegal downloading in the market have been playing a great role in the physical sale of music. Plans for dealing with piracy and illegal downloads would be to increase growth of live entertainment and ticketing, as stated on the HMV group website. As stated on Complete Music Update (2012) home page, HMV competitively shared the market for music entertainment with Amazon, with HMV having 19.9% and Amazon, 19.2%, though HMV’s percentage growth of its market share has faced considerable challenges from play.com, iTunes and supermarkets. Like any other company going through the various stages of growth which are market introduction, growth, maturity and saturation and decline, HMV has gone through different growth stages since its opening in 1921, which marked its market introduction stage. The company progressively grew, expanding its markets and consequently increasing sales, human resources and advertising, competition being minimal at the time (Reynolds et al., 2004). In the 1960s, HMV experienced tremendous growth. It expanded and doubled in size so that by 1976, HMV was the leading retailer in the UK, specializing in music and other entertainment products. Despite the completion which was slowly arising in the market at the time from the likes of Virgin Megastores and Our Price, HMV was more popular and somewhat unbeatable compared to its competitors. HMV purchased Waterstone’s book store chains in 1998 and joined it with Dillons. HMV saw its floatation in the London Stock Exchange in 2002, which was a significant indication of its maturity. However, it started trading poorly from 2003. Other competitors in the market arose, more so online music stores which competed with HMV for the same market share and saw its decline in the market share. This eventually led to low sales, low profits and closure of some HMV outlets. HMV still bought some book store chains and music retailers, for example, Ottakar’s and Zawi. HMV’s performance in the market deteriorated progressively, some of its shares were up for sale so as to purchase other outlets, but its sales kept going down up to the selling of most of its outlets in London, including Waterstone’s chains. This marked HMV’s decline stage due to high costs of running, low sales and minimal profit margins. See the appended map of HMV Product Life Cycle. The main competitors of HMV, who offer a similar line of products, are Amazon.com, iTunes, supermarkets and Play.com, which have online music stores besides other online retail products. Amazon has a wide range of music and digital products and has been a stiff competitor of HMV, competing for the same market share but more so doing it online. iTunes by Apple Inc. also provides products along the same lines. HMV’s move to digitizing their music and video clips has helped to catch up with the market trends and technology as its competitors in the market. Play.com deals in online retail of similar products as HMV and Amazon.com. With the tremendous innovation in technology and online trading, HMV’s competitors’ venture into online trading put them ahead of HMV which is embracing online trading. Supermarkets also offer competitive products though HMV provides a considerable wider product range than supermarkets, which would often offer the top latest tracks in the market. HMV has had a considerably high positive consumer perception but lower than that of its online competitors, and more so in comparison to Amazon’s which has a comparatively higher consumer perception, (City, 2012). Most music purchases made from the supermarkets would be hit tracks, as opposed to the wider range of products available at the likes of iTunes, play.com and Amazon. Consumers would ordinarily go for high quality products with affordable prices. This brings about comparison of product prices among the competing retailers, on-line or otherwise. The perceptual mapping of these competitors in this case for instance, will be based on the product quality, against price. Often, there are price differences from one retailer to another for a specific product, although in some cases, one would find similar prices among the different retailers. Consumers would thereby have different perceptions toward different competing retailers, these perceptions would in one way or another, inform the choices of which products the consumer chooses to purchase from which retailer. Using a perceptual map of, for instance price against quality or reliability against features in the UK entertainment market, places HMV competitors at various strategic market positions. The competitors will fall in specific positions on the map depending on their performance on the criteria under use, (Learn Marketing.com, n.d). The respective market strategic positions of these competing retailers will be a result of consumers’ perception of these retailers, bearing in mind that different consumers have different perceptions (one consumer’s perception of reliability may not be the same for another’s). If a retailer wants to gauge its position in the market with regards to that of its competitors, for instance iTunes against Amazon and Play.com, basing its criteria on the consumers’ perception of the product quality and price, a perceptual map of high accuracy would be carried out to determine its strategic market position in comparison to its competitors. See the HMV competitors’ perceptual map appended below. This helps in decision-making on which way to go so as to march-up to its competitors and head towards the ideal, or should there be a gap in the market, then strategizes on how to fill it (Sawtooth technologies, n.d). References Market data, HMV Group PLC, viewed 29 October 2012, Financial markets, n.d, financial, markets data, viewed 31 October 2012, Complete Music Update, 1May 2012, complete music update home page, viewed on 31 October 2012, < http://cmuwebsite.com/article/hmv-increases-entertainment-retail-market-share-slightly/> HMV group n.d, our markets, viewed on 31 October 2012, Reynolds, J, Cuthbertson, C & Bell, R 2004, Retail strategy the view from the bridge, Amsterdam, Elsevier Butterworth-Heinemann, Viewed 29 October 2012, City A.M, 11January 2012, home page, viewed on 31October 2012, Learn Marketing.com, n.d, market positioning/positioning map, viewed on 31 October 2012, Sawtooth technologies, n.d, homepage, perceptual mapping, viewed on 31 October 2012, Smartkpls, 16 September 2010, perceptual maps, viewed on 31 October 2012 Appendix Figure 1 Graph of HMV Product Life Cycle. Period 1D 3D 5D 10D 1M 3M 6M 1Y 3Y 5Y Financial markets, n.d, markets data, viewed 31 October 2012 Figure 2 Perceptual Map of HMV competitors of price against quality. An example of comparison of prices of various music albums on CD and mp3 at Lovemoney.com shows HMV as having comparatively higher prices than its competitors, for a number of albums on CD, while Amazon.com shows comparatively lower prices than the other retailers. Amazon’s mp3 had lower prices compared to iTunes, Play.com and supermarkets, which have slight price differences from one album to another. The consumers considered HMV to be having highest quality products but competitively so with Amazon. The other competitors had almost similar quality products as shown below. Product Quality A B C D E Price Price Product Quality A- Amazon E-Supermarkets B- HMV C- iTunes D- Play.com Read More