Major Competitors of Music Retailing in the United Kingdom - Case Study Example

MAJOR MUSIC RETAILERS IN UNITED KINGDOM (UK) BY FOUNDATION – ARTIST: OF DEPARTMENT OF Introduction Music industry is comprised of many shareholders right from musician who compose music, producer who does the recording and sales agent who sell the recording. Other stakeholder in the industry consists of: music publishers, recording studios, record labels, physical retail and online music stores, performance rights organizations who create and sell recorded music. Those who present live music performances: booking agents, promoters, and music venues. Talent managers and business managers, on the other hand, are professionals who assist musicians with their music careers. Those who broadcast music includes: internet, satellite and broadcast radio. In our study, we will base our discussion on music retailer in the United Kingdom to see how they compete, the challenges they face, the innovation that has emerged, measures in place to enhance quality services and application of technology to improve on their services Major competitors of music retailing in United Kingdom (UK) According to” Kantar World panel” American online retailer Amazon increased sales by almost 5% to take 25.6% of the entertainment market in 2014 to beat its closest rival, Tesco with a 15% market share.HMV, which is hoping to overtake Amazon and music retailer, was only able hold 13.5% of the entertainment market.DVD and Blu-ray sales rose to 3% FIRM Amazon Tesco HMV OTHERS GAME GROUP ASDA SANSBURYS MORRISONS PLAY Sales 2014% 25.6 14.4 13.5 12.8 11.2 10.3 6.8 2.7 2.5 Challenges in music retailing as a service Intangibility –music seller cannot be patented, hence creating problems for new product development (Zeithaml et al., 1985). Act of music sell cannot be easily displayed, communicated or priced. According to Edgett and Parkinson, (1993, p 73-80) marketers use tangible clues, e.g. Physical facilities; employees, to help customers evaluate the service before purchase .Marketers also use word-of-mouth communication to create a strong organizational Perishability-music do not appreciate, when in market, it have a span that it will stay on demand and when it expire, selling it become problematic. Predicting what stock to produce is a problem since it is known for what period a music will stay in demand. When service is not used when available, then it capacity is lost (Edgett and Parkinson, 1993, p. 34-43). Heterogeneity: according to Zeithaml (1985:27-60), heterogeneity is variability Associated with services It is difficult to achieve uniform output in music. This is particularly problematic when service is labor-intensive since its performance and quality vary depending on the producer. Also different quality can be delivered by the same producer depending on the customer. This leads to difficulty in achieving standardization and quality control in services, and results in a greater perceived risk by customers when purchasing. Inseparability: services involve the simultaneous production and consumption. Goods are first produced, then sold and finally consumed on the other hand, services are often sold, and produced and consumed simultaneously .Thus, production and consumption are inseparable. The customer should be present during the production of many services and play an active role in the service development process (Keh and Pang 2010, p. 60-65). The service provider is involved in the production process and plays an important role for the satisfaction of the customer. This makes it expensive for this sales point as they have to pay producer to make considerable sales Non-ownership: secure ownership of the service, to the consumer is unlikely as compared to physical product. This makes it difficult for customers to go purchasing music services. This forces music marketing firm to spend a lot before making a single sale. Performance of music industry using servuction model and the service triangle, Components of the Servuction Model include: service providers, services cape, other customers, organization systems, rules, regulations that affect the customer service experience. The model attempts to explain several benefits received by the consumers’. It the experience created for the customer by the service firm since service customers are involved in the production process of the service firm. The firms service strategy must be communicated to its customers and employees, the systems should flow logically from the firms service strategies, enhance the service experience for customers, facilitate employee efforts to do their jobs, critical incidents created by customer &employee Interactions. Both service Triangle and Servuction Model aims at benefitting each and every stakeholder in the service industry. To achieve this, the music industry engages in external marketing, interactive marketing, and internal marketing. In external marketing, firm engages with its customers to fulfill expectations and make promises to customers regarding what is to be delivered. In Interactive marketing promises are kept or Broken by the firm’s employees, technology, subcontractors or agents. If promises are not kept, customers become dissatisfied and lastly leave . In internal marketing, the Management engages in activities to aid the providers in their ability to deliver on the service promise e.g. recruiting, training, motivating, rewarding, and providing equipment and technology. Innovation in the music industry using service process matrices The concept of the Service Process Matrix is conceptual and theoretical in nature, according to Rohit Verma (2000, p. 17-3) management challenges do fluctuate across the different types of services represented by the quadrants of the Matrix. He argues that change is not automatic and hence will move along the four quadrants. This is challenged because there is great change in Capital decisions, technological advances and scheduling service delivery, which is challenged in high interaction. Hiring, training, employee, employee scheduling, and loyalty become less important as interaction increases.nowadays it is easy to move diagonally in the matrix since technology is changing to first to complete a process. The interaction of all these bodies has led to a gradual change in the music industry in the way of music content marketing in following ways: Legal and illegal distribution of recordings:Local musicians have access to the broadcasting media that can at least record. Some of this broadcasting media are banned, whereas others are allowed. Music producer will produce and sell for themselves, whereas users tend to duplicate the content sell to earn money. Sponsored,User-Generated Branded Music services:Featuring music videos are selected by the fans through messaging (Chaffey and Smith, 2008). The music retail store exhibited a unique method of offering music to its consumers . They involve them online by asking them question which assist in the decision of where to open additional store branches. Cardew,( 2010) illustrated how digital sector is providing consumers with the structured online facilities to build their own customizable features of music playlist and play the music anywhere they can access the internet. Self & user Content Marketing within the Music Industry:Music business is increasingly shifting to digital formats. The posting of songs on MP3 blogs by music consumers is becoming increasingly accepted by record labels and artists as a positive influence in terms of honest feedback from adoring fans. Norman and Ramirez (1993) argue that music blogs are playing an increasingly important role in the marketing plans of record. Blogs offer a smoother interface for music management and selection. Prosumer Marketing in the Music Industry: This is co-creational factors that involve music fans contributing directly to the actual ‘product’ of the music. This could have intellectual property (IP) implications due to the nature of artistic contributions to a creative project. Though it is there, it raises questions of when fan contributions entitle him/her to a song-writing credit and the associated royalties associated with this hence music it is sparse. However, there are instances where artists attempt to incorporate the prosumer marketing strategy to be part of their song-writing. Some years ago, reports surfaced that British pop band Gabby Young and Other Animals had offered fans the opportunity to actually attend rehearsals and song-writing sessions and contribute to the writing of songs (Parasuraman and Colby 2001, p. 70-73). Quality service mediated by technology for the face-to-face between provider & potential customer. Face –face communication is convincing and innovative since engagement will be higher, and communication will be better understood. many firms are capitalizing on face to face marketing to win more customers by their side.though face to face marketing is effective,to administer it is become very expensive.With technology the cost will be greatly reduced because ,you can meet face-to-face even when you are not in the same place with the customer using platform provided by technology e.g Video meetings , Skype, Go to meeting, teleconferencing, what’sup and telecommuting quality services will be delivered to consumers in following way. Face to face will lead to one convincing prospective customers since one can observe Body Language which plays a major part in our communication and which you can use to convince the client.one can apologize if customer is not happy hence winning their hearts Ensures Engagement- face-to-face ensure that people are “in the conversation and one can easily convince a prospective customer Edvardsson, (2005). Clarifies Meaning – Conference calls lead to misunderstandings due to lack of communication simply because the medium is not conducive to individuals asking for better meaning. Through face-face, one will observe and explain better to win the heart of the customer. Enhance Participation– When you are all in the same room, it encourages one to participate and hence one learns what the other person need. Use of extended marketing mix (8ps) in improving services Product: It deals with the quality and quantity a firm is selling to it customers so that it can curb competition due to substitute products from it rival company in the industry. Amazon has wide range of products both locally and online. Tesco on the other hand had majored a lot on local (physical) but now is promoting its international market online to make more sales. Price: Price determines the service’s profit margin a firm will make, it also has a bearing on many overselling decisions, e.g. a value, standard of service and performance of product. Though expensive, Amazon sells more than Tesco due to its goodwill. In the recent past, Tesco have been doing well and its will is at rise, hence amazon should reconsider lowering their prices to remain with great sales. Promotion: It is how the company markets its services. It is the communication that a firm is giving about its product for it to make sales.Amazon gives free gifts as well as Tesco. Tesco of late has allowed another company to market in their product on their website which is projected to promote their sale as it is for amazon and other retailers. Gifts should considerable.offer, warranty among others can also be applied to promote product sale. Place: Services generally are purchased and used at the same time; the location where the service is delivered plays a role a major role in the promotion, price and product. Amazon has capitalized on online marketing to reach their customers when they need the services. On the other hand, Tesco is setting out many outlets worldwide as well as going digital to reach its prospective customer in time. Tesco is likely to overtake amazon as it will create its good will by being at ground as well as online People: How much customers rate the service experience highly rated products get a lot of customers as compared to non-rated products. This is a technique amazon uses to promote its sale online unlike Tesco, which is not highly rated. A company should consider letting people rate them to promote their sales. Process: it is the standard procedure in delivering the service. Depending upon the situation and location, the company should consider the way to handle it customers. Both Tesco and amazon use greeting message and lucrative interface to promote their customer preference among others. On physical platform, companies should improve on their product presentability and customer relation to promote their processes. Positioning: its marketing positioning strategy where the company wants to fit into the industry. It is determined by which generic business strategy the firm employs. It may determine low costs will be its path to profitability. Or it may decide to pursue differentiation, embedding distinctive benefits into its service. Amazon position itself by offering manageable products in its stores; both physical and online so that it reduces on cost. On the other hand, Tesco aims at selling variety of entertainment and other product so as it can increase revenue and pay for the management of sale. The company should way which option give an extra income and benefit and capitalize on it get more revenue and fund its operation or else reduce on its operation and maintain the revenue Performance: Performance /productivity examines how well a company’s services competes in the marketplace. It includes how consistent the service is and how well its features translate to benefits. Amazon has a record of quality product consistently. They sell mostly online on their website as well as in many outlets worldwide. They deal with few products at a time and reap a lot from it.on the other hand, Tesco are known to offer a lot of variety at ago and recently maintaining consistence of quality product hence their gradual rise. For success, companies should be consistent with the quality of product as well as offer variety of products as a measure to curb competition. GENERAL RECOMEDATION: These companies should introduce face to face mechanism to improve on the way they relate with their customers to win their heart using current web technology which allow for face-face connections. Face- to face basis, ensures that meeting are shorter, engagement is higher, and communication is better understood. With technology, you can meet face-to-face even when you aren’t in the same place. Through Video meetings via Skype, Go to meeting, teleconferencing, what’s up and telecommuting quality services can be achieved and hence should be adopted to make more sales. To conclude, marketing strategy is key and music retailers firms should spend time to come up with best way and sales will come automatically. Bibliography Cardew, C, “Treatise” 1963-1967. Colloquium with Sound Installation and Film Screening: Friday, April 9, 2010. Edgett, S. 1994. The traits of successful new service development, Journal of Services Marketing, 8 (3), pp. 40-49. Edvardsson, B. 2005. Service Quality: Beyond Cognitive Assessment, Managing Norman, R. & Ramirez, R. 1993. ‘From Value Chain to Value Constellation: Designing Interactive Strategy’, Harvard Business Review 71 July-August: 65-77. Parasuraman, A. & Colby. C.L. 2001.Techno-Ready Marketing: How and Why Your Customers AdoptTechnology. New York: Free Press. Revolution digital tomorrow report. February 2001 ‘Technologies that will change marketing Revolution’ pp. 51–65. Schemer, Roger W., Englewood Cliffs, and NJ. 1995. Service Operations Management, Prentice Hall. Service Quality (15) 2, pp. 127-131. 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