EMI Music Marketing Strategy - Case Study Example

EMI Music Marketing Strategy EMI MUSIC MARKETING STRATEGY Introduction EMI music group is a private music company headquartered inthe UK, publishing and recording for such music labels as Capitol Records, Virgin, and Blue Note. The company was founded in 1972 by its parent company EMI Group as a flagship label, after which it was launched as a fully fledged music company in 1973 to succeed the failing Columbia Records (EMI Group LTD, 2014: p1). The music group has branches in fifty countries, as well as distribution and licensees agreements in another twenty countries. Its main branches are in the UK, the US, and Japan where they have established various artists with global recognition. The company operates through identification of potentially successful music artists, after which it signs them to contracts, collaborates to produce work recordings, markets the recordings to radio and consumers, and markets releases to retail stores in various formats (EMI Group LTD, 2014: p1). Some of the record labels marketed by EMI music group include Virgin, Parlophone, Narada, EMI CMG, EMI Classics, Capitol Nashville, Angel Records, among many others. The music company is also home to over 1,000 artists from an array of musical genres, including dance music, Hip Hop, and rock, all of whom are marketed by the company. However, the recent decline in physical album sales has necessitated the company to look towards digital online marketing. EMI’s Customer Revolution Campaign EMI music has found itself beset by a transition period in which record companies in the music industry have to adapt to the digital era of music streaming and iTunes. In order to remain competitive, EMI has created a customer-based, multi-channel marketing strategy that seeks to reach the consumer using personalized and relevant messages through social media and email messages through the Customer Revolution Campaign (Jennings, 2012: p33). This is meant to allow the consumer to take part in the artist’s creative process, involving artists like Robbie Williams, Katy Perry, and Coldplay. By doing this, the company, is seeking to improve consumer knowledge on their favorite artists, while also giving the company information about the preferences of the consumer. Past EMI campaigns were aimed at marketing to retailers in the mass market who interacted with the consumers during their purchases. Therefore, the music retailers carried the marketing message for EMI to the consumer. However, by working with Neo-lane, a marketing software vendor, the company has created customer database, which is centralized and gives consumers the choice to opt-in, allowing them to interact directly with the consumer (Jennings, 2012: p33). In this marketing strategy, EMI Music uses mobile channels, websites, print ads, and social media to hold promotions, surveys, and contests, while also requesting the consumer to become a member of the campaign in order to get new music from artists at the company (Martland, 2012: p40). The campaign also involves sending messages through the Facebook and MySpace accounts of various artists at EMI, which is targeted at encouraging the consumer to become a member. In addition, the company also integrates its Open-Disc program into its albums; these open as a pop-up screen when the album is played on a computer and encourages consumers to register. According to Martland (2012: p40), at least 6,000 customers opt-in to the EMI Music database every month, after which the marketers at EMI are able to access their information and data in real time, creating customer-specific profiles. These profiles are based on the consumer’s socio-demographics, shopping habits, online behavior, musical tastes, and media preferences and habits. The marketers then send promotions, surveys, and artist information through each of the customer’s preferred channel, including social media accounts, e-mail, or print, which totals at least a hundred targeted campaigns every week. In addition, the channels are also used to offer the consumers ringtones, downloads, coupons, and new music pre-sale offers to boost revenue. Another goal of this marketing campaign is that EMI Music can learn from a dynamic consumer base, especially as the easy access to numerous genres of music means that tastes in music change and evolve regularly (Southall, 2013: p62). The Customer Revolution Campaign has been successful in getting consumers to give opinions about music and artists, as well as to be part of the music industry. One example was the cross-channel campaign for over 100,000 Coldplay fans that promoted a giveaway for digital video players as part of completing surveys online. The Customer Revolution campaign witnessed an open rate of approximately 45%, while the company also achieved a response rate of around 30%, as well as 60,000 click-throughs to the company’s official website (Southall, 2013: p62). Moreover, for the latter part of 2014, EMI Music has expanded its social media channel by creating apps as they gathered from their surveys that this was the preferred channel for most of the consumers. The Customer Revolution Campaign has ensured that they personalize and segment the messages they send through these channels, as the channels can be intrusive (EMI LTD, 2013: p43). EMI uses text messages and social media links on Facebook and Twitter in order to alert their fans concerning future releases and live events, as well as, to avail the consumer with links to artist sites. Here, the consumer can download wallpapers and ringtones. In the last eighteen months following the launching of the campaign and the consumer database, the company’s digital revenues have gone some way in offsetting physical album sale declines. In fact, according to Martland (2012: p418), EMI Music will meet their target fro the campaign, which is to make sure that at least 40% of its revenues are from legitimate downloads of music by the year 2015, particularly as their database is growing, while the rate of opt-out is low. The Customer Revolution Campaign has become a new revenue stream for EMI Music with a bottom line impact for EMI’s revenues. Analysis of Marketing Campaign Situational Analysis EMI Music has several strengths that enable it to pursue this marketing strategy, especially because it is a large company that has a diverse number of labels of different genres, such as Virgin Music, Capitol Nashville, and EMI CMG that release rock, country, and gospel music respectively (Berlatsky, 2012: p23). This enables them to reach a wider consumer base to collect data and information required for their marketing database. The strong portfolio of artists also gives them growing exposure to global markets, while they have also pursued aggressive positioning in new markets via the digital channels. In addition, using digital channels to market and sell music is cheaper than physical marketing and sales, particularly due to new technologies for digital recording. CD duplication and shipping have also become cheaper, which has made the final product more affordable and less expensive for their consumers, expanding the scope and range of their target market (Krasilovsky et al, 2011: p28). There has also been constant growth in consumer base and increasing loyalty as market segments become narrower, especially due to increased knowledge about consumer preferences. Finally, EMI has had an industry-recognized customer service, which will enable the company interact wisely and productively with their consumers. However, declining sales of physical albums has reduced the opportunities for growth, which, in turn, has made their main product non-excludable and non-profitable. This means that revenues from the digital campaign sales will be diverted to cover losses in CD pressing (Hall & Taylor, 2010: p66). Consumers also have historically low switching costs, making it possible that a large portion of consumers already in their database could opt-out at no cost and join another database. This makes the campaign’s success highly susceptible to dynamics of consumer preferences. Also, while digital distribution that this marketing campaign targets have unlimited potential, they lack traditional and reliable channels of distribution. Moreover, this means of distribution still lacks a clear strategic vision or direction, either towards artist promotion using the capabilities of other companies or development of the record company (Vaccaro & Cohn, 2014: p51). While investing in the artists will also improve the music company’s standing, artists may leave, such as what happened with Sir Paul McCartney and the Rolling Stones, which would negate the achievements of the campaign, as it seems based on artist power. This marketing campaign, however, also raises several opportunities that EMI Music can capitalize on, such as the chance to move totally into marketing digital music, while closing down their physical album production. This would address the losses made by physical album production and marketing. Digital music and marketing also provides increased room for global growth, especially as more technologies become available, which could enhance EMI’s ability to reach a wider consumer base (Dehin, 2010: p224). The ability to unbundle music in CDs into video downloads and ringtones may provide the opportunity for EMI to market their music using more variable pricing, especially through streaming media. EMI Music has the opportunity to acquire or merge with companies that offer new distribution channels, which will increase their campaign’s exposure to a wider base of consumers as stated above. The campaign also provides them with the chance to pursue a more active online presence strategy by expanding their campaign to e-commerce, as well as creating their own streaming service (Dehin, 2010: p225). Finally, collaborations between their artists and artists from other labels offer EMI the opportunity to align its Consumer Revolution Campaign with a wider consumer base. Still, the marketing campaign and overall digital marketing strategy faces several threats, such as the increasing ease of digital music piracy and illegal copying, more specifically given the ubiquitous nature of the internet and computer technology (Tschmuck, 2011: p44). There is also the threat of non-music substitutes like the DVD industry, while the growth anticipated by the marketing campaign and strategy is dependent on complementary markets like music streaming, iTunes, YouTube, and 3G phones. Additionally, a majority of music companies currently run digital market campaigns in one form or another. The ability for independent music companies to access consumers using digital marketing has removed some of the advantages bigger companies like EMI Music had in the industry (Goodrich et al, 2012: p155). Therefore, independent and major music companies could copy EMI’s digital marketing campaign, which would be difficult to counter due to the high costs of digital patent litigation. EMI Marketing Mix Product The results of the EMI campaign are already being put into practical use, particularly with regards to the quality of the services and products that EMI will offer. The product should ensure that the consumer is satisfied, which EMI sets out to achieve by making sure that digital music consumers are able to achieve a similar experience online to that achieved earlier on DVDs and CDs. The product has a critical role to play, especially as more people begin to download digital music from their website due to their campaign. Disruptions in downloading speed could make their product inferior (Espejo, 2009: p42), which EMI has attempted to counter by differentiating their product by sending the music, rather than waiting for consumers to download new music. Price Price is a critical factor in this campaign because most consumers have turned to digital music as a result of its cheaper costs (Styvén, 2007: p59). EMI, therefore, seeks to maintain a competitive advantage by marketing their product through promotions, while ensuring the prices are lower than those of main competitors like Sony BMG. In the music industry, there are various price mechanisms that are based on the version of downloads and quality differences. The different pricing mix allows the music company to tap into different markets, allowing them to focus on specific target markets. EMI’s pricing is competitive in the industry with digital downloads costing £3.50 for an album and £0.55 for a single (Styvén, 2007: p59). Place The music industry has developed an array of methods for consumers to buy digital music using different applications (Fink, 2010: p52). At EMI Music, they have developed channel management that has eased selling of digital music. By offering direct selling by mobile phone, online selling, and over-the counter sales, EMI has sought to ensure that they can sell their products through various media, particularly by making digital music compatible with the other media. Promotion During the period after 2008/2009 and the effects of the recession, EMI had to give their customers reduced offers, as did other music companies (Kunze & Mai, 2009: p869). EMI has provided an integrated marketing communication system that raises the consumer’s awareness about services, while retaining their loyalty. Advertising is done in newspapers, billboards, radio, TV, online, direct mail, personal selling, and public relations. Technological advances have enabled EMI to customize marketing communication as per consumer requirements. EMI Brand Positioning As one of the leading music companies in the world, EMI has created a visual identity that has sought to enhance its brand recognition, including with business-to-business audiences (Tu & Lu, 2012: p31). Their brand positioning has always sought to reflect the manner in which their business has evolved to being a total music entertainment company from being only a record label. The identity created by EMI was on the basis of a visual matrix that illustrated their involvement in every area of the music business. These include audience insight and research, promotion and marketing, production, and a record label. This positioning sought to work across all internal divisions and brands at EMI, which has allowed them to focus on specific areas of the company, while also remaining part of the wider EMI Music Group brand (Gamble & Gilmore, 2013: p1861). This brand positioning has served EMI in its digital marketing campaign, especially because the marketing department is able to integrate the overall strategy at EMI with the Consumer Revolution Campaign. EMI Consumer Market Segmentation EMI’s music segmentation is similar to that of most music companies. EMI segments its market through regions, especially because the location of consumers has a lot to do with what music they listen to (Callaway, 2010: p211). By using information from their database, EMI is able to determine the location of their fans and target them with relevant music. They also segment their industry according to music genre. As music markets contract, majority of consumers are opening up to different tastes of music and listening to an array of genres. Thus, EMI tries to use the information from their database to re-segment consumers according to the most common combination of genres, such as Hip Hop/jazz/R&B. Segmentation is also done according to age, particularly as the younger consumers have more diverse music tastes and listen to music more (Fogel & Lewis, 2010: p16). Finally, the music consumer is also segmented according to technology use, especially those with and without the ability to download music apps. This is essential if EMI is to keep its older generation of music fans. Conclusion and Recommendations The effective and efficient distribution of music services and products, despite the exciting potential of digital marketing and sales, is still a major problem for the industry. Most music companies are still reliant on secondary companies to carry their digital marketing campaigns and for digital sales. In addition, EMI does not have traditional, reliable distribution channels for their digital music platform, which may hurt market intelligence and penetration, especially in markets with established digital marketing. To counter these drawbacks of its marketing campaign; EMI should seek to increase revenues by using its digital platform to promote live tours and venues, while also expanding merchandising initiatives. Their participation in digital music trade fairs, such as at SXSW technology shows would also increase their customer base outside the music industry (Salo et al, 2013: p28). EMI should also integrate content marketing into its marketing campaign and overall marketing strategy. This can be done by creating valuable, consistent, and relevant content and distributing it in a way to acquire and retain an audience that is clearly defined. This will reduce the risk of consumers opting out of their database when new products come onto the market, while also reducing the amount of funds used on wide-ranging marketing campaigns that make the campaign less profitable. EMI should pursue more music/brand partnerships. This would involve using their associations with artists, as well as their artists’ associations with other artists outside their company, to develop their digital platform and database. Additionally, EMI should look towards a more serious and focused adoption of user and mobile experience, especially since a significant amount of website visits are made from mobile devices. As more consumers become accustomed to buying from mobile devices, it will be essential for EMI to ensure that consumers can buy music on their mobile phones directly from their website, rather than having to rely on secondary service providers. EMI should also work towards info-graphics by taking the visual aspects of their marketing strategy into more focus. For example, they could focus on more crowd-sourced and video content. Finally, EMI Music should seek to either acquire or merge with an internet digital music company, either in streaming or music downloads. 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