Managing Markets Research report on EMI Music Group

Submitted by : 13619 Course Name: MBA Batch : April, 2010 Submitted on : 15/06/2010

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Report on EMI Music Group 2010 Class ID: 13619

Table of Contents

Exclusive summery........................................................................................... .3

Introduction.......................................................................................................... ....4 A. Environmental scanning and its importance.......................... 5

A.1 A.2 A.3 A.4

Methods........................................................................6 Example........................................................................................ 6 Environmental scanning and marketing planners.........................7 Features of Environmental scanning............................................ 7 MACRO Analysis......................................................................... 8 MICRO Analysis.........................................................................10 SWOT Analysis...........................................................................11 SWOT MATRIX FOR EMI...........................................................13 Marketing strategy..................................................................... 14 Ansoff¶s product / market matrix for EMI.....................................14 Recommendations and justifications.......................................... 16

B. MACRO, MICRO and SWOT analysis of EMI..................................... 8
B.1

B.2 B.3 B.4 C.1 C.2 C.3

C. Recommendations and justifications to EMI......................14

Conclusion............................................................................................................. .....19 Bibliography.......................................................................................................... ....20 Table of figures
Fig.1: Business environment............................................................................. .5 Fig.2: Internal environment................................................................................ .5 Fig.3: Internal, Macro and Micro environment.................................................... 8 Fig.4: Macro environment ................................................................................. .8
Fig.5 : Micro environment ................................................ .............................. .10

..................8: Ansoff¶s matrix for EMI ......13 Fig..7: SWOT MATRIX of EMI.................6: SWOT Analysis............... ............. This report is a research study done on EMI music group to find the problems faced by the company...14 Exclusive summery EMI music group has been one of the leading music industries in theworld.................................................... EMI had the advantage of being the first music recording company which was established in early 1990¶s............................... ....... But now it faces intense competition in the music industry market and struggles to produce quality music........................12 Fig.......... ....... Through this report I have found some opportunities and have provided appropriate recommendations for improving its performance in the future............................ ..Report on EMI Music Group 2010 Class ID: 13619 Fig.........

. EMI will be made by appraising its resources and capabilities to emphasize company¶s strengths and weaknesses EMI¶s present strategy will be analysed to . During these days company was fully capable of concentrate on new trends and invented new techn ologies like compact disc and stereo recording. EMI music group is the 4th largest music giant in the world with operations in 19 countries with headquarters in London. Recommendations and justifications will be provided to enhance the organizations approach for future progress. EMI (Electronic & Music Industries) which is the 4th biggest music recording and publishing industry in the world. identify its efficiency with regards to its abilities and resources. This report is a strategic analysis done on such a British music industry. In 2007 without any digital rights management software EMI was the first company to produce music with high clarity and quality. Later EMI¶s strategy was downright which resulted in accusation of EMI by private equity firm Terra Firma in 2007. For this an explanation on environmental scanning and its Following this MACRO. Since music is provided free on some internet web sites people are prone to illegal downloading. MICRO & SWOT analysis of importance will be provided. During 1990¶s EMI produced fantastic music and showed massive growth by buying Virgin Music Group and its artists (largest sovereign music group at that time).Report on EMI Music Group 2010 Class ID: 13619 Introduction Music industry which was one of the most profitable businesses in UK faces different intimidation mainly because of the illegal use of new technologies.

1 A. while delivering the financial performance needed to build a sustainablebusiness´. Business environment is divided as shown in the figure below. y Identifying current and needed competencies (nformation. Terra firma annual review 2008 A Unique Perspective [online]. Environment within the frontier is called internal The internal environment of a business plays a crucial role in the Terra firma. y Unfolding the current workforce. It should also be lively enough to adjust its strategies and tactics when necessary. skills and i behaviours). To grow or uphold a sustainable competitive advantage. 1. y Projecting workforce demand and supply. y Performing internal and external scans. Environmental scanning Environmental scanning is a tool for analysing and evaluating internal and external factors that influence the business. An ample Environmental Scan includes: y Predicting or estimating business trends.com/ar09/AR09. it should be alert and surveillance of changing business environment. 1 . environment.terrafirma.Report on EMI Music Group 2010 Class ID: 13619 Mission Statement of EMI: ³The goal is for EMI to become the most innovative. artist-friendly and consumer-focused music company in the world. abilities.pdf> [Accessed 21 May 2010]. 2009. Available at: URL: <http://www. Internal Environment: Every organization has a frontier that differentiates entities from external environment.

materials. Available at: URL: <http://www.´ environment is otherwise called as opportunities and threats analysis. Continuous scanning/ continues learning ± collecting and analyzing of structured data up on verity of environmental factors.1 External Micro: explains the connection between firms and the driving forces that have power over this rapport.marketingteacher.2 Example: EMI music recording industry is operating in a shrinking market .Report on EMI Music Group 2010 Class ID: 13619 strategic management. It is normally audited by analyzing the '5 Ms' i.htm> [Accessed 21 May 2010].2 External Macro: ³The factors that are unable to control by an organization but affects the organization´3.e. markets and machinery. yearly. 2. A. A. directly.here scanning will be regularly done i. money. what is the External Environment? [online]. ³According to International Federation of the Phonographic Industry published in June 2008the 2 Yahoo answers.this scanning is performed typically when a crises arises. Available at: URL: <http://answers.e. . These factors may change regularly and the business should be adaptive to these changes. External Environment: Duncan (1972) defined ³business external environment as factors that are considered by a firm for its future decision making 2 External . 2. Regular scanning .com/Lessons/lesson_marketing_environment.yahoo. 2. > 3 Marketing environment [online].1 Methods : This environment influences the business y y y Ad-hoc scanning . men.com/question/index?qid=20071018023912AAMlDH8 [Accessed 21 May 2010].

A. Napster etc that provide music free of cost which badly hit the music industry. Indication of existing problems in the organization will be provided. CD which is the traditional product of EMI has diminished its market through retail channels in terms of price and volume . It helps to foresee developments to avoid costly mistakes. It also helps t to improve the reputation of the business and projects it is receptive to its environment and approachable to it.5).4 billion in 2007. There is a number of music downloading sites like 123music. Times online. their lowest level in at least 10 years´ . EMI has recently changed their strategy by analysing and understanding the external environment i. Available at: URL: <http://business. Customers changing needs and trends can be identified at proper times.e. [online].co. A. It helps to identify strengths and weakness of competitors and consumer behaviour which helps the company to decide the appropriate effective strategy and producs. 4 One of the main reasons for this declivity is illegal file sharing through the internet.e. they have embraced the new technology by making tie up with these downloading sites and turns out the external threats in to massive opportunities. Uncountable environment. iTunes.com. which can be identified and solved early than from becoming worse. 4 . More over it helps marketing planners to identify weakness and threats and convert these in to strengths and opportunities respectively and finally convert its strength to opportunities (as shown in fig.uk/tol/business/industry_sectors/media/article4160553. $19.ece [Accessed > 21 May 2010]. It helps to gain strategic direction.Report on EMI Music Group 2010 Class ID: 13619 global music sales dropped 8% i.4 Features of Environmental scanning: y y y y Complexity of the environment. It also helps to take advantage of opportunities. Dynamic and multifaceted environment Impact is very high.timesonline.3 Environmental scanning and marketing planners: It helps an organization to obtain competitive advantage.

marketingteacher. and Legal. Available at: URL: <http://www. Economical. but cannot be controlled by the organization. Technological. MACRO.htm> [Accessed 27-052010]. .Report on EMI Music Group 2010 Class ID: 13619 B. The external macro-environment forces include: Political.) B.1 MACRO Analysis: Analysis of external environmental forces that influences the organization d irectly which has a high impact on the business. The macro environmental factors might change continually and the business should be adaptive with the change in order to survive. Environmental. MICRO and SWOT analysis of EMI (The Marketing Environment [online]. Social.com/Lessons/lesson_marketing_environment.

duties. recession. health and safety. rules and regulations. export controls are upsetting EMI¶s business.indiatimes. Apple iTunes is only compatible withthe The Economic Times.shtml> [Accessed 27-05-2010].com/news/international-business/Britain-threatens-to-blockweb-access-in-piracy-fight/articleshow/5174104.economictimes. 3 Social factors: Differences and unforeseen changes in regulatory environment. including ecological. Available at: URL: <http://www. .cbsnews. local planning.com/stories/2009/03/10/tech/main4855546.cms> [Accessed 21 May 2010]. 2009 [online].com/ftp/OC-EMI. ³Longer accounts receivable settlement cycles and difficulties in collecting accounts receivable´7 Higher interest rates. 7 6 5 EMI OFFERING CIRCULAR 30 September 2003 [online]. Available at: URL: <http://www.vernimmen. Political instability is another factor affecting EMI since it has business around the world. Music¶s incompatibility in new devices e.Report on EMI Music Group 2010 Class ID: 13619 1. In some countries music videos containing sexual contents are prohibited especially in most of the Arab nations and in some Asian countries. Illicit downloading and CD-R piracy of music from the web which are obtained free of cost is a critical problem faced by the industry .g. Political factors: ³The British government has planned to pass a bill to clamp down on illegal file sharing´ 5and ³Some of the nations like Turkey are banning video sharing web site µYouTube¶´6 Factors like tariffs. labour laws and zoning. 4 Technological factors: Physical piracy (unauthorised physical copies made for sale) is one of the most important threats faced by EMI. CBSNEWS [online]. instability and inflation of the financial markets are other major economic factors which had a direct impact over the organization. 2 Economic factors: Economic recession is major factor that affected EMI which caused all the industries economic position in the market.pdf> [Accessed 27-05-2010]. Available at: URL: <http://widget.

Legal factor affects the efficiency of the firm since it always affects its employees mentally. Environmental factors: Terrorist activities around the world have a major influence in music industry e. rather their interest has changed to download from the net. Any failure to do so will output failure of business strategy. absence of superstar release etc will affect the financial performance of the company. 5. local stakeholders and customers and buyers. Legal factors: Most of the legal factors in EMI are based on loyalty.g. B. Legal chances can affect firms cost and demand. needs and providing advantage to their clients. .Report on EMI Music Group 2010 Class ID: 13619 iPod. after the incident of September 11 in America the music industry also has gone down. 6. The failure in retaining popular and customerinterested artist and songwriters. The popularity of CD format reduced so new trends in technologies like super audio CD (SACD). The Micro Environmental forces include: 1 Customers: The organisations survival is based on meeting the wants.2 MICRO Analysis: It is analysis of internal factors of an organization which directly impact on its business strategy. This environment describes the relation linking the business and the powerful forces that control this relationship. For example Pink Floyd (Rock band in England) took EMI to Court over Online Royalties. Blu Ray discs should be introduced. y Customers around the world are showing less interest in buying music CDs. The micro environment of any business consists of suppliers that deal directly or indirectly.

The organizations marketing mix is affected by the ncrease in scrap i supplies and prices. Share holders have the right to vote on matters of corporate policy and are the members in director board. y Emi has cut up to 2000 employees as part of restructuring in 2008 which is against the organizational goal and which have also created confusion between other employees. 2 Employees: Organizations success lies on the key factor employees Identifying . y Manufacturing. and selecting the right staffs and retaining them are key aspect in creating an efficient work culture. Even though the company did this for improving . Since it has high influence among the public any bad news about the organization will negatively affect the image of the company. 3 Suppliers: Suppliers is another vital element which decides the triumph of any business. y In 2008 most of the media reported that EMI has reduced their w orkforce to one third in a negative manner. y Emi was not able to retain its famous artist and song writers. 5 Media: Media is a major role as a micro factor. Employing such staffs will make a good relation with the customers which can help the organization to receive loyal customers.Report on EMI Music Group 2010 Class ID: 13619 y Consumers are not interested in brand name of the organization rather their interest is on the artists and band name. 4 Shareholders: They are always under cumulative pressure to transform from private to public ownership since organization requests better inward investment in the growth. supply. y Emi failed to introduce new trends (music) by their existing artist in to the music industry. digital supply or distribution activities will be affected by highly depending on one supplier .

opportunities. branches over 50 countries. 12 edition. SWOT stands for strengths. Internal factors are evaluated by strengths and weaknesses. y Biggest independent music publisher globally. B. y Impacted by diligence of global music piracy. External factors:- . KEVIN LANE KELLER. y Strong global presence. Marketing Management. (PHILIP KOTLER. and threats. y Both digital and physical music has been fashion driven. So company should maintain good terms and condition with media. pp 54) th 1. weaknesses. Weaknesses (W):- y Product cost. It is the primary stage of planning and helps marketers to concentrate on core issues. B. 2.Report on EMI Music Group 2010 Class ID: 13619 their performance.3 SWOT Analysis: It is a tool for analysing business and its environment. y Emi has a assortment of over 1m music tracks in Australia and Asia. y No patent protection. External factors are evaluated by opportunities and threats. Internal factors:The internal factors of EMI group are listed below: A. the media report will project that company is in large dept which will made a huge fall in share holders and customers strength. Strengths (S):- y Brand name (EMI).

y Loosening regulations. B. Opportunities (O):- y Online marketing.4 SWOT MATRIX FOR EMI: . y Online/P2P sharing of music files. Threats (T):- y Internet piracy. y Legal markets for music will be collapsed by the music pirates. B. y Industry structure and competitive environment.Report on EMI Music Group 2010 Class ID: 13619 A. y Through its A&R activities EMI should build up new music talent. y Weak album releases will cause physical product sales . y Unrelenting legal action on pirates enables the legal market to expand.

endorsement.htm> [Accessed 27-05-2010]) C. Marketing strategy must tackle the subsequent elements: position.com/Lessons/lesson_swot. Recommendations and justifications to EMI C. product improvements. and fresh products.Report on EMI Music Group 2010 Class ID: 13619 (SWOT Analysis [online]. Strategy .marketingteacher. sales. price.1 marketing strategy: The initial strategy which helps a business to survives and flourishes for a long time. advertising. supply. Available at: URL: <http://www.

(Ansoff¶s Matrix.net/business/strategy/ansoff_matrix.net/business/strategy/ansoff_matrix.net/business/strategy/ansoff_matrix. y Reduce price of Audio and video CD¶s y Introduce new.htm> [Accessed 27-052010]) 1.2 Ansoff¶s product / market matrix for EMI: It is a means for helping businesses to decide their market and product development plan.htm> [Accessed 27-05-2010]. Market Penetration: is a growth plan ³where the business focuses on selling 9 existing products into existing markets´ .htm> [Accessed 27-05-2010] . ³Ansoff¶s matrix suggests that a business¶ tries to develop depending on whether it markets new or existing products in new or existing markets´8. once it is entirely recognized and accepted via marketing research. [online] <http://tutor2u. C. popular and crowd attracting artists and secure dominance of market 8 Ansoff's product / market matrix. [online] <http://tutor2u.Report on EMI Music Group 2010 Class ID: 13619 should hardly ever diverge. 9 Ansoff¶s product/market matrix [online]< http://tutor2u.

Report on EMI Music Group 2010 Class ID: 13619 y Online advertisements 2.3 Recommendations and justifications: Based on the analysis done on EMI music group the following are the recommendations. form a latest y internet based market. iTunes and online music streaming sites For the MSRP. enhance the endorsement using the innovative means and focus on areas like Asia and Japan. y Introduce Blu ray. 10 Ansoff¶s product/market matrix [online] <http://tutor2u. y Joint ventures with YouTube. EMI has reduced small share price.net/business/strategy/ansoff_matrix.htm> [Accessed 27-05-2010] 11 Ansoff¶s product/market matrix [online] <http://tutor2u.net/business/strategy/ansoff_matrix. super audio CD¶s y New artists like Justin Bieber must be introduced in to the field 4. Product development: is a growth plan ³where a business aims to introduce new products into existing markets´11.htm> [Accessed 27-05-2010] . Diversification: is a growth plan ´where a business aims to introduce markets new products into new markets´12. C.net/business/strategy/ansoff_matrix. y y Music & videos in mobile and iPods Marketing & sales through the internet 3.htm> [Accessed 27-05-2010] 12 Ansoff¶s product/market matrix [online] <http://tutor2u. Market development: is a growth plan ³where the business seeks to sell its existing products into new markets´10.

Competing based on pricing would be very difficult but they can create devoted customers by creating very goodquality albums and good promotion.Report on EMI Music Group 2010 Class ID: 13619  Emi could create a fresh market by internet as a means and boost the endorsement using this recent standard and should spotlight on other areas like Japan and Asia. vendor display space requirements.  EMI should follow the Universal Music Group¶s (UMG) Pricing Strategy which includes retail price reduction. Rolling Stones etc songs should be promoted since they are more popular among the people . EBay. Justifications: Provides a new market share to EMI Group: Marketing through medium can help to get more customers to EMI. since most of the people around the world are adopting internet as a medium for getting music which can also be adopted by Emi. Big artists like Robbie Williams. Joint venture with Internet Company: Like YouTube. iTunes and numerous others which will give EMI new customers and adv ertisements along with regular income. Snoop Dog and young and new generation artists like Justin Bieber and several others could amplify their promotion. A sturdy advertising and promotion: EMI Group can compete with the major competitor like UMG. Justifications: . and abolishment of merchant¶s obliging marketing allowance and reduction. Amazon. Famous bands like Beatles. Using big and crowd gathering artists: also can create a huge and powerful market to EMI.

Spending more money on advertising will help EMI to popularize among the public and helps to create an eagerness among the customers to know about their artists. The whole sale CD price has been reduced to $9.7m for advertising. Recent pricing strategy of UMG has made customers to buy CD¶s from the store itself. Pirated music available in low quality will make think customers to buy same music from the company if it is available in low price and high quality.98 to $18.09 except for megastar artist titles.98 from $16. Making music and videos around these new technologiescan create a constructive market for EMI.98.000 for advertising UMG has spent $4.Report on EMI Music Group 2010 Class ID: 13619 Increase retailers demand and sales of CD: UMG has reduced its retail prices to $12. Quality a necessity: The new generation is more concerned about the quality of product they are choosing. More money on advertising: When EMI spend $734. So EMI should implement these technologies in new environment. . Blu rays etc like new technologies are now a day¶s getting popular among the customers.  HVD.

Emi could conduct concerts and stage shows which are now a day¶s popular among the public which will be a means of income and publicity to the organization . create EMI popular and earn money. Conducting such activities can help to  Most importantly EMI should practice and give more concentration on loyalty based management. New Environment: Music should be available in mobiles and iPods which are compact and common among the people.Report on EMI Music Group 2010 Class ID: 13619 Justifications: New Technologies: Providing approachable way for the customer to get music with the help of new technologies will help the customers to change to non pirated copies of music. ³Loyalty based management not just give importance to select best customers but also to its employees and investors and working hard to retain them´. Even for videos and movies people are looking for high quality prints in shops or in the internet. year unknown) .( Harvard Business group press.

So they highly depend on new technologies like internet which is some time misused by some group of people tempts others to choose the same way Proper management and id entifying the new . trends and wants of the people helps EMI music industry to reduce their problems to a high extend.indiatimes. R.cms> [Accessed 27-05-2010]. ³profit´ and lasting value etc.com/articleshow/2702311. 2008 [online].pdf> [Accessed 27-05-2010]. music industries like EMI are facing different challenges. Available at: URL: <http://economictimes. (2008) Contemporary Strategy Analysis (6 th Ed) Blackwell Publishing Ltd. .Report on EMI Music Group 2010 Class ID: 13619 Justification: EMI against its mission statement: It states ³ EMI¶s goal is to become the most innovative. artist-friendly and consumer-focused music company in the world´ 13[but] by "2000 job cut in the year 2008´ 14and regular cases against its artist like Pink Floyd proved it has no artist friendly environment. consultants. Improving customer loyalty through employee loyalty: Every company likes to have loyal customers for growth. Oxford. The new generation need music at hand any time anywhere as per their need. enjoy and party But .vernimmen. Mid 1980¶s) Conclusion Music as an entertaining medium helps people to get relaxed. Bibliography TEXT BOOKS: Grant. ³Without loyal employee/ artists EMI cannot improve customer loyalty (Bain and company ´.com/ftp/OC-EMI. Available at: URL: <http://www. 14 The Economic Times. M. 13 EMI OFFERING CIRCULAR 30 September 2003 [online].

Mission Hills. Farese. Philip. Richard J.businessdictionary.com/ar09/AR09. Kotler. Grady. 2d ed. (1995). Gary J.com/ftp/OC-EMI. and Woloszyk. and Peter.Report on EMI Music Group 2010 Class ID: 13619 Principles of Marketing ± Philip Kotler & Kevin Keller (12th Ed) Churchill. (1995)..com/businesscenter/ NEWS PAPERS: The Economic Times CBSNEWS Times online Financial Times Journals: KCBONLINE . Carl (1991).pdf http://www.html http://mystrategicplan.emimusic. Principles of Marketing: A Global Perspective. NJ: Prentice-Hall.Marketing Essentials. Kimbrell.vernimmen. Cincinnati.pcworld. Boston MA: Irwin. Marketing: Creating Value for Customers. Paul J. Semenik.com/definition/internal environment.pdf http://www. OH: South-Western. Marketing: An Introduction. and Bamossy. Gilbert A. Lois.com/ http://www. and Armstrong. (3rd Ed) Englewood Cliffs.com/resources/internal and-external-analysis/#Internal http://www. Gary (1993).terrafirma. CA: Glencoe/McGraw-Hill. ONLINE: http://www..

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