This report proposes a new marketing plan for HMV Canada and incorporates proposals on new profit streams detailed examination of the marketing environment, swot analysis, provides information on SMART objectives, gives a clear segmentation targeting and positioning report, proposals for 7P’s and control and evaluation will be provided in the end.
This report has been created in close teamwork , using primary information through interviewing some of the HMV managers and secondary information available in HMV annual reports.
HMV group is a leading specialist entertainment retailer operating through different stores in the UK, Canada, Hong Kong and Singapore and transactional local territory websites, which include digital, download. It operates a small specialist chain of entertainment shops in the UK trading as Fopp. In Live entertainment, the group operates 12 venues, summer festivals and ticketing in-store and online. The group is extending to high-quality cinema and pay-to-play games. Hmv is also the UK’s leading bookseller, operating as, In-store, Online & digital Waterstone’s.
Profit /loss 2010
- HMV UK & Ireland: Total sales of 1,242£m increased by 7.6%.
- HMV International: Total sales of 253£m decreased by 8.5%.
- Hmv Live: The Group’s result includes 0.9£m of profit after tax making an operating loss of 0.2£m.
- Waterstone’s: Waterstone’s total sales decreased by 6.5%, making total sales of 513.6£m.
- Joint venture – 7digital Inc: The Group acquired 50% of 7digital Inc, a digital media services company, The cash paid for it was £8.1m.
- Acquisition of MAMA Group Plc: The acquisition of MAMA Group Plc for £47.0m in cash, This was to achieve control over the Mean Fiddler Group, Net assets acquired was a total of 20£m.
- HMV UK & Ireland: The business now trades from 285 stores, following the integration of 32 ex-Zavvi [ex-specialist competitor] stores.
- HMV International: 125 HMV stores in Canada, 7 stores in Hong Kong, Singapore and local territory websites.
Total of 314 stores.
The group’s strategies: The company has successfully delivered most of the strategic objectives in the three-year plan commencing March 2007; The new strategies will be discussed later.
Competitive Rivalry: [strong competitiveness]
In general, supermarkets are not considered effective competitors to Large Range Retailers, as they stock a narrower range of titles, predominately best sellers and do not provide the browsing experience or pre-sales service offered by the others.
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Hmv competes with Amazon, iTunes, Play.com and other generalist and mass merchant retailers; Amazon offers a superior browsing experience as they have the ability to generate recommendations based on past purchases, as well as huge range of products.
HMV Canada competes with Future Shop/Best Buy and Wal*Mart.
The threat of entry: [high]
The barriers to entry are low at all levels, with the increasing number of New competitors entering the internet sector to market their product directly to consumers, and also the use of technology that makes small companies, they face low barriers to entry with investments usually being recovered in short time, the threat is high .
The power of buyers: [high]
Because of the strong market position of Hmv as main routes to market, and as important marketing vehicles, Hmv are able to negotiate significant discounts with suppliers for the volume they sell, so the suppliers will have no option but to agree to higher discount terms.
The power of suppliers: [low]
In this market, the power of high street retailers like Hmv controls suppliers and as a result make their power very low, as discussed before, the buyers are very powerful and can incredibly threaten the suppliers to agree on important discount rates. So, the power of suppliers in this market is low.
The threat of substitutes: [high]
As discussed above, the technologic development and the growth of new digital market has made it easy for new substitute’s products to compete with the high street retailers, and the threat of new substitutes in the market has become greater.
SWOT analysis internal
- Market leading specialist in music, DVD and books
- Waterstone’s, member of HMV group is UK’s largest high street bookseller
- Ottakars takeover- specialist book portfolio
- Fopp Stores [the group operates as a small specialist trading as Fopp.]
- Operations in seven territories Connections in film industry and events and festival ticketing.
- Few loss-making stores
- important Sales growth every year
- 100% of all packaging used in deliveries is either Re-used or recycled.
- outstanding product range across all genres
- Vibrant and stimulating store environments in key shopping locations.
- The use of in-store radio and listening posts and the latest plasma screen video walls.
- in-store personal appearances (PAs) :[album signings, and also live performances]
- Group synergies [Hmv and Waterstone’s have key operational features in common, example: the management of stock and inventory].
- Strong internal communication with head office and employee in stores
SWOT analysis + PESTEL external
- Strategic alliances with media distributors/producers.
- Live music and entertainment
- evolve the product mix in stores and online
- Invest in cinema screens
- Online social networking
- Loyalty card scheme
- develop store atmosphere (increase footfall)
- Sufficient disposable income
- Internet /digital downloads
- Pay-to-play services.
- Digital products
- E-books/e-readers and related accessories
- Mobile phone digital media
- In-store instant digital product purchase.
- Decrease Carbon footprint
- Reduce energy usage in stores.
- reduce water usage in stores:
- Waste management /recycling.
- green build [energy efficient …]
Concentration on increase of revenue and profitability of business in 2011 through implementing new profit streams detailed in 7P proposals below, and monitoring the performance and execution of these business plans .
The renaissance of stores of Hmv Group by reducing marketing expenses.
Developing online music download portlal for affrortable pricing in first quarter of 2011.
Pay more attention to the internet free illegal file sharing by finding new solutions how to ban or stop these type of anti-copyright issues by working with government in order to come up with new actions against those issues. Because an illegal file sharing causes much problems to financial, political and social ways for the Hmv Group Plc.
Market segmentation, targeting and positioning strategies
Through this part of the report, it will be focused on the methods in which a well-built strategy of market segmentation, targeting and positioning factors to successful marketing planning.
It is generally suggested that, a market segment is made of a group of consumers who have similar set of needs and desires. There are a number of effective methods, which Hmv Group management should approach to segment HMV in competitive market:
- Geographic – country, cities, population destiny, climate.
- Psychographic – lifestyle, characteristics, personality.
- Demographic – family life cycle, income and occupation , race, nationality, religion, education, age, sex.
- Behavioural – knowledge, attitudes, readiness to purchase, occasions, benefits, loyalty status.
From these concepts, it will be more convenient to apply to market segmentation of Hmv Group Plc. From the research it has been proven that, the geographic strategies of Hmv stores in Canada are basically located in every high street of the cities and towns. This is a successful way to open the Hmv stores in busy places where more consumers visit to purchase the products.
If we look at psychographic strategies of Hmv Group Plc, it aims to change or effect positively to consumer lifestyles and personalities. Therefore, the Hmv concerns these terms into consumer views and commitments as to keep existent consumers and also new consumers by supplying with quality and brand new products.
Demographic strategies, which Hmv that should be chosen with reasonable and profitable decisions. For that reason, several stages in the family life cycle which will be the most effective factors that should be concentrated:
Bachelor stage: Young and single people who aged between 16-25 years old and they have few financial obligations which means they are able to spend money for new products. The classification of this group segment in occupation and income is normally semi skilled or unskilled (Group D) and casual workers, students or unemployed individuals (Group F). Usually, they are most likely to show their interests in buying entertainment products such as games, movies, music albums, books and new technologies such as mobile phones, computers and other brand new products.
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Newly married couples: In addition, another segment of people who are newly married couples without children and they aged between 20-30 years old. They have higher purchase rate of consumer desirables. This target group has disposable income available, therefore being valuable consumer group. The social grades for newly married people are basically, professional, intermediate managerial skilled (Group B) and junior managerial skilled, supervisory or skilled individuals (Group C1/C2).
Hmv Group Plc should apply market targeting in order to make decisions how those certain segment groups can be targeted. Differentiated market when an organisation targets numerous groups of segments. It would be effective decision for the Hmv Group Plc to choose differentiated market, for the reasons of having several pointed segments for their products. Because, it develops different products and services with separate marketing mix strategies targeted at the changing groups in competitive market.
It is widely proven that, the most usual customers of Hmv are perceptive devotees who observe each purchase as a high priority. However, one of the visions of Hmv is to make their discerning shoppers and casual browsers satisfied by providing trusted and valuable brands.
Product positioning determines on the position within the market that product is to inhabit. In this way of strategy, Hmv should do product positioning by appealing product income and how it varies from present and possible competing products.
According to Wilson and Gilligan (2005, p.354), there are several influences on product positioning and it would be good decision for Hmv Group Plc to pay attention to these suggestions of authors:
- Product variety
- Distribution network
- Advertising and promotion
- Consumer profiles
- Word of mouth
- Customers’ experiences
- Media used
By analyzing these suggestions of authors, the product positioning strategy that Hmv can come with by attracting consumers by offering promotional, quality and price discounted products that might change consumers buying behaviour.
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