Figure 1 - Charities industry• Crowded marketplace – 190,500 charities though lots are schools. Small number of established

strong key players.• Charities have adopted technology in support of fund raising – facility to provide online donations• Donors tend to favour the big, high profile charities e.g cancer research• Medium sized charities such as ALZ tend to get squeezed out• Income is increasing, 2002 – 2007 increase of 51.18%• Hierarchy – Cancer research donations represent 50%,Children’s charities represent 32%, Poppy

Day appeal 25%, Animal welfare 20% and Mental Health a mere 3.8% of charitable donations.• Charity Commission acts as watchdog

Alzheimer’s Society - Analysis

Political

• Governments and regulatory bodies need to find a way to increase support for carers, and fund more research to find a cure for Alzheimer’s. Doesn’t seem to be high priority for government today (only spend 13% of that on cancer research).

• Time bomb waiting to happen as population is ageing especially 85*. 100,000 people develop dementia annually and set to increase

• Increasing strain on NHS where mental health is not as well understood

•Economic

• Global credit crunch has dampened consumer spending – has hit all industries. What will be the impact on donations? Likely to see people cutting back here as well though no evidence ye

• Consumer confidence has hit rock bottom• Difficult times ahead as potential for unemployment to increase

•Social

• People understand the need to give – increasing use of Comic Relief, personalities to raise profile• Cause related marketing increasingly popular• Ageing population; older people living longer, divorce rates high so more single households – this will

result in less carers and puts more pressure on medical services• Greater interest in environmental issues, ethical trading, reputation of companies and organisations• Amounts bequeathed in wills to rise fourfold between 2010 – 2050 though may be used to fund

children/their own care• Social sigma associated with mental illness

•Technological

• Utilise to find a cure• Brain games e.g Nintendo DS a useful way to prevent Alzheimers• Opportunities are endless in terms of marketing • Sophisticated database marketing techniques now possible • More and more activity on internet and people willing to donate on line

•Legal

• Legal action can be taken against companies who are unethical, flaunt I.P, non compliance offences Power of bodies like NICE can impact ALZ and use of drugs – requires court action to fight

•Environmental

• C.S.R.- drug companies have to be more transparent, ethical sourcing and testing • Growing need for companies to target environmentally aware and cause related target segments

Figure 2. PESTLE Analysis

New entrants - HighLow barriers to entryCrowded marketplace. Buyer power – High

Consumers today have so much choice in deciding whether to donate, and if so which causes to donate to. They can buy online, set up a DD, run a marathon for a charity of their choice, and engage in sponsorship events. Using broadband they can surf 24/7 on web sites to compare Charities and their ethical trading stance. They can donate to UNICEF whilst travelling on airlines or send a donation whilst watching a heart rending appeal on television.

Supplier power- LowOnly 3.8% of charitable donations go to Mental Health charities.

Industry rivalry - Intense Competition in the UK is increasing. Competitors use sophisticated marketing. The strongest have developed their business by merging e.g Cancer Research UK and Imperial Cancer research.

Threat of substitutes – MediumThe number of charities is increasing as is the amount of conflicting monetary pressures on the public who are bombarded daily by sophisticated marketing techniques to tug at the heart (and purse) strings.

Figure3. Porter 5 forces

Figure 4 - Financial Review

Implications

Income Increased by £4.2m 10%; 11% grants, 23% sales and fee income 19% legacies and 2% donations and subscriptions (120,000 people) though this plus grants makes up 68% income. Need to focus on increasing income from donations

Expenditure Fairly consistent with care homes taking 78% and fundraising costs 13%. Spent £1.7m marketing activity - 4%

Reserves ALZ has some reserves which I could use if neededFigure 5 - Portfolio Analysis

More people are donating to charities; with the top 5 charities taking 2/3rd of market. Overall the voluntary income has remained the same between 2004 – 2006 with international aid seeing a large increase – may have been a disaster that rallied the nation but this has impacted on the income of other charities.

ALZ held up well and saw a small increase though overall receiving 1% of voluntary income so very small

% change in voluntary income 2004/5 – 2005/6

5

4

3

2

1

International aid

StarQuestion mark

Cash cowDog

6Cancer/hearth

Heritage

ChildrenAnimal

-10% 0% 25%

Figure 6. Branding

Functional benefits easy to donate

Rational Benefits small amount., won't miss

Emotional Reward feel doing something to help

Values integrity, passion

Personality improve quality of old age, find cure Big brands have greater fund raising power.Awareness of brand is important so potential donors know what ALZ stands for. Currently ALZ brand awareness limited. Memorable campaigns such as Cancer Research I shouldn’t be here key to driving support/donations.

Donations£m

Figure 7. Value Chain

S

uppo

rt A

ctiv

ities

Firm’s Infrastructure - Use of strong management teams to maximise effectiveness , use of strategic alliances/collaborations to strengthen buying power ,and maintain lean structure and tight control of costs.

OperationsEnsuring that staff and volunteers/supporters are proactive.

Procurement – identify the right partners to work with, affinity partnerships, investigate possible mergers and international acquisitions. Get best deals on purchases to minimise expenditure and drive profit.

Technology Development - The Charity industry is highly competitive so ALZ need s to keep abreast of developments and continually maintain their focus on new technology.Maximise new technologies (mobile and internet), build database of high net worth individuals /donors to target for marketing campaigns.

Inbound LogisticsSufficient number of distribution points to maximise income potential.

Outbound LogisticsCentralising donor acquisition and processing.

Marketing & SalesBrand positioningPromote ethical tradingMaj. of income is spent on finding a cure.

ServiceExcellent customer service at all times in person/Online/helpline.Customer intimacy – B2B and B2C

Primary Activities

HR Management - Important to hire astute, adaptable people who share the company’s core values. Need to manage part time volunteers and have flexible HR policiesManage relationships with suppliers, high net worth supporters and all other donors.

Figure 8. 7S framework

Strategy Growing pressure internationally Grow value from new and existing donorsIncrease awareness of Alzheimer's and mental illness generally; ideally identify ways of early prevention. Lead research effort to find a cure Lobby government to put more resources into research and care. National Dementia Strategy launched (opportunity?). Need to decide what primary role is and what is core offering plus also measure the impact of services.

Structure Board of 12 trustees 230 branches 5000 volunteers UK based but intl presence25,000 members with voting rights and liableCommittees for remuneration, nominations, audit (risk) and investment - Is too bureaucratic?.

Systems Internet site Web forum with 130,000 posts DVD trainingPhone helpline Usual HR, Finance systems.

Shared Values

Published values (Passion, Quality, Integrity, Inclusion, Mutual respect)

Skills Improving skills/education of carers/donors. Strong in care and education. Innovation and change will be important skills. Exam for carers and training programme – ‘tomorrow is another day’Internal audit skills Small marketing team only 3 years old. Need to be innovative in marketing/PR as competitive market. Do they have the skills to grow the business internally?

Staff 5000 volunteers – great advocates for the charity. Have 25,000 membersBranch managers are salariedRely on volunteers – is this enough? Do need to consider employed roles – what is the ROI?

Style Nothing specific in case study but assume local autonomy, open and collaborative , transparentethical and caring.

Strengths

Income increasing year on year and sector

growing

Individuals will donate to causes they believe in

Strong in care and education

30 years old

Weaknesses

Fragmented market

Me too product

Charity is medium size so not receiving enough

share of donations

1700 services – what is core competence?

Opportunities

International exposure especially in research

Could merge/form partnership with other charities

Licensing products

Raise awareness and get momentum like Cancer

Research did

Gift aid awareness – if more donors claimed could

significantly increase charity income

Utilise National Dementia Strategy and align

Winning NICE appeal

Threats

Crowded marketplace – very competitive

Barriers to switching charity is low

Recession impacting donations

Loyalty of donors is questionable

People will need to fund their own care/pensions

so may impact legacy income/large donations

Legacy income expected to fall (currently 38%)

Losing NICE appeal

Italy has largest oldest population though pays the least. Sweden/Scandinavian countries spends the most on LTC. ADI has an annual conference – opportunity to expand/grow presence.Germany, France, USA spend more on research than UK

Existing products New products

Market penetration strategy Product development strategy

Existing markets

Need to drive increased revenue from existing donors across all product categories – high net worth individuals, groups, companies and organisationsForm partnerships with similar charities

Develop new products e.g internal audit function for other charities, Franchising branded products. Develop licensing and patenting products e.g Brain games to help prevent onset.

New markets

Market development strategy Diversification strategy

New distribution channels – additional online development – blogs, social networking, increase direct debits.Develop compelling messages- shock tactics, Use cinema, television, celebrity culture.

Consider different approach such as providing consultancy services for new charities

Figure 10 – Ansoff Matrix

Country attractiveness

High Medium LowALZ

compatibility w

ith each country

HighItaly Germany

France Sweden

USA

MediumSpain

Japan

Low

Figure 11. Business Portfolio Matrix (Harrell & Keifer (1993))

= Primary = Secondary = Tertiary = Very unattractive

Figure 9 SWOT

Objectives Measures

Fin

ancial

Donations in each country– UK, ROI & overseasReturn on capitalCash flowProfitabilityDonor lifetime valueEffectiveness of services offered

Sales vs targets in each sectorROCECash flowNet marginDonor LV calculationReturn/take up per service

Intern

al

CRM databasePenetrate new donorsIncrease value from existing donorsIncrease website trafficIncrease educationControl costs

No of donors on database and % change (new)Value of donations from new donorsIncrease in existing donationsIncome per donorNumber of website hits/hits on knowledge centreFrequency of donationsDonor acquisition /retention costs

Cu

stom

er

Value for money & donor satisfactionDonor loyaltyDonor endorsementsBrand awareness

Donor satisfaction and perception surveysDonor retention levelsWeb basedLevel of brand recallMarket shareL

earnin

g &

Inn

ovatio

n

Innovate ways of targeting new donorsEmpowered workforce

Return per campaignNo of new campaigns offered/ROIStaff attitude surveysAdvertising as % donationsMarketing spend per donor

Figure 12. Balanced Scorecard

+

-+

-

Buys the message

First time Donor maybe

one off

Awareness of charity

Easy to donate – different methods; maybe cash. Newsletter

Loyalty Ladder OfferingValue Ladder

Knowledge of ALZ illness

Knowledge of charity

Fund raising

Start to want to do more

Believe the cause – willing to invest time/effort

Prospect

Awareness

Supporter/volunteer

Advocate/member

Partner/champion

Awareness of illness

Provide methods for donor feedback/give time/increase donationsPerhaps paying by DD as more loyal customer

Offer more social, personal (emails, news updates,

Customise web page, personal thank you messages,

Added Value

Price

To create sustainable comp adv, and max. donations , long term relationships must be cultivated. By moving donors up the value / loyalty ladder, they become more loyal to this charity. This can be achieved through social marketing; message driven, change behaviours.

Advocates will act as ambassadors and help actively promote charity recruiting new donors

Figure 13 – Loyalty Ladder

• Maintaining a good reputation• Moving dementia up the government agenda and therefore

the public agenda• Making it easy to donate e.g text, red button,

Figure 14 – Critical Success Factors

Figure 15 – ALZ Assets/Competencies• ALZ has a strong ethical trading

stance• Starting to gain brand recognition • ALZ supports the carers as well as the

sufferers of dementia• ALZ offers wide variety of ways to

donate• Socially responsible• Cares about the environment- recycles

clothing, Oxfam/M&S scheme

Figure 16. Segmentation, Targeting and Positioning

B2B B2C

Segm

entation

Similar companies /affinities where synergies e.g financial service companies, SAGA, care homes, retirement homes, garden centres, post officeBe aware of grants available and large fund raising opportunitiesLinks to gyms for prevention – healthy mind/body

Developed society/more affluentABC female age 65* Time rich community minded, time to donate, no familyMen and women aged 30* ABC1 concerned dependentsCouples aged 60* - potential carersExisting sufferers and carersUnderstand profile of lapsed donors and current donors and target similar segments

Targeting

Work in partnership e.g Help the Aged – use shops to raise awareness/identify new donorsConsider campaign like Oxfam one with M&SAwareness raising/donors with SAGALink with universities/research to drive thought leadership/awareness

Target and penetrate existing and new

donors in the U.K. and also new markets

internationally

Buy database and use to target selected

Segments

Positioning

Socially responsibleProactively working to find a cureLeading the way in dementia research, prevention and cure

Number 1 in the UK and internationally for research into and treatment of dementia related illness

Product

What is the product? Not clearly defined as offer 1700 services includes training and development. Medical research. Information services Care support servicesLobbying Thought leadership Training and education for GPs. Internal audit to other charities

Price

Donation channels and actual donations from individuals and companies, fundraising including initiatives such as Memory Walk. Time/resources of carers/donors, volunteers. 50% people give up time. Could use gift aid more especially with higher rate tax payers. DD most effective as locks donors in

PlaceOffer all channels of donations – increase in payments by cheque. UK and International –Opportunity to expand here. Care homes, GP surgeries, Hospitals/NHS. Website/online/chat room (127,000 messages). Opportunity to affiliate other charity shops. ALZ Café schemes

Promotion

Use logo, brand and strap line in all advertising. Communications – direct marketing most popular (73%) (e.g forget me not campaign) but becoming less effective and 33.7% thrown away..PR /Celebrity endorsement e.g Jim Broadbent. Could target superrich? Publications/on line newsletter . More social marketing (message driven) Links to Twitter etc. Website Opportunity to do mobile marketing No adverts on TV (though expensive). ALZ awareness week, annual Memory walk, books ‘Feelings Matter Most’

People Skilled staff Donors and volunteers,

ProcessStaff training, customer service processes e.g staffing helpline, measuring satisfaction, fundraising processes, marketing processes, knowledge of other charities

Physical Evidence

Won awards (PR Week award Coronation Street story though 2 years ago), press coverage, research papers, website, logo, merchandising, 1700 services offer

Figure 17 7P Analysis

Figure 18 - Key stakeholders/partnersOther charities (Age Concern and Help the Aged), professional and public health bodies, pharmaceutical companies, Government, supporters, Universities, academia, industry, international research

VisionRecognised as the leading UK and international charity for Alzheimers/dementia with a significant

share/value of charitable donations whilst driving the international agenda in research, prevention, cure and improving the quality of life for carers and sufferers profitably

MissionStrengthening brand positioning as global leader in dementia whilst building partnerships internationally

to aid advancement and awareness allowing us to leverage existing and potential new donors

ValuesPassion Quality Integrity Inclusion Mutual respect plus• Transparency to key stakeholders• Ensuring donations are spent directly to benefit those who need it• Foster open and collaborative culture• Thought leadership• Dignity• Innovative in communications campaigns

Figure 16. Segmentation, Targeting and Positioning

B2B B2C

Segm

entation

Similar companies /affinities where synergies e.g financial service companies, SAGA, care homes, retirement homes, garden centres, post officeBe aware of grants available and large fund raising opportunitiesLinks to gyms for prevention – healthy mind/body

Developed societyABC female age 60-65 Time rich community minded, time to donateMen and women aged 30* ABC1 concerned dependentsCouples aged 60* - potential carersExisting sufferers and carersUnderstand profile of lapsed donors and current donors and target similar segments

Targeting

Work in partnership e.g Help the Aged – use shops to raise awareness/identify new donorsConsider campaign like Oxfam one with M&SAwareness raising/donors with SAGALink with universities/research to drive thought leadership/awareness

Target and penetrate existing and new

donors in the U.K. and also new markets

internationally

Buy database and use to target selected

Segments

Positioning

Socially responsibleProactively working to find a cureLeading the way in dementia research, prevention and cure

Number 1 in the UK and internationally for research into and treatment of dementia related illness

Strengths•Access song codes•Finance•Access to ‘pluggers’•Expertise•Infrastructure•Commercial prowess•Control•Digital presence•Multi service•Adapting to market•Nimble

Weaknesses•Bureaucratic•Radio monopolies •Risk averse due to costs•Inhibit creativity•Reliance on CDs•Expensive / poor quality•Inertia towards technology•Financial constraints•Access to mass market•Dependent on key people•Growth capacity

Opportunities•ICT explosion•CRM•Online pluggers•International markets•Strategic partnerships•New economic models•New income streams•Diversify•CSR

Threats•Global reach of digital•Piracy•Legalizing file-sharing•Reaching audience•Receiving royalties•New technology •More control to artists•Horiz/Vert integration

Figure 4. SWOT

Diversification strategyMarket development strategyNew markets

Existing markets

Product development strategy Market penetration strategy

New productsExisting products

•Increase customer loyalty•Cross and up-sell•CRM•Innovation

•Recruit new bands•Video clips, podcasts, interactive comics, video games with music•Merchandise

•Target different age groups•Dev. dist channels•International markets

•Move into publishing, promoting•Offer recoding, production and distribution as consultancy services•Develop new financial model•Brand consultancy

Com

pet

itiv

e p

osit

ion

Stage of industry maturity

Mobile phones - ? Invest in new techno and improve sound quality

Digital (DRM) – Star Differentiate through innovation

CD’s – Cash cow Differentiate -‘recycled’ packaging, new artwork and add on’s. Plan for exit.

Dominant

Strong

Favor’ble

Tenable

Weak

Embryonic Growth Mature Ageing

Vinyl - Dog

Fulfil existing order and implement exit plan

Strategic Fit•Key Opportunities

•Harness the size and flexibility of the label to adapt to embrace the digital era in an ethical manner•Build upon the digital capability to increase customer loyalty and exploit new income stream•Exploit current networks to contract an online plugger•Use existing commercial ability to develop new financial models to benefit artist and label•Use existing infrastructure to develop strategic partnerships across the industry•Sustain multi platform / service offering to spread risk when considering global markets•Develop expertise to offer new services to the industry

•Problem Zones•Bureaucracy can delay decision-making and lose momentum in a fast paced industry•Inertia towards technology will inhibit reaching and tapping into global audience•Artists are gaining more control and will not except previous terms•Cost focus has stifled creativity by considering it as a risk and market now demands creative approach•Reliance on CD’s when digital is the preferred audience•Competition emerging from across the supply chain

Figure 5. Arthur D. Little Matrix Recommendations

Although well placed to continue to serve all platforms, market demand indicates that label should:

•Divest in vinyl

•Harvest CD’s by differentiating based on ethical approach

•Invest in Digital technologies through innovation and quality (monitor SE Asian dev)

Figure 6. Ansoff MatrixShort term

•Increase loyalty and value by developing a CRM approach

•Develop innovative new ways to engage, reach and delight cust.

•Dev. new finance models to recruit and retain emerging bands

•Go global

Long term

•Recruit new bands to target new segments and spread risk

•Widen service offering

Projected Market Value for U.S by Segment

0.02.0

4.06.0

8.010.0

12.014.0

16.0

Year

Val

ue

($B

n)

40+

25-39

15-24

10-14

Segmentation

15-2410-14 40+25-39

Tweenies•Social network•Live online•Text addicts•Share info•Info = free•Fashionable•Trendy•Emotional•Innovators•Impulsive•Cash conscious•Environmental•Leisure time

Silver Surfers•Young at heart•Technophobs•Private•Sceptical•Art v entertainment•Quality•Value•Rational •Late majority•Wealthy

Figure 7. Segmentation and Targeting

Analysis based on forecasts of market value and age profile of consumers (as %) from 1996-2005.

•Overall market is declining and although the digital explosion has boosted the industry, it has not offset drop in CD sales.

Short term – 15-24

•Good knowledge of this sector and key to short term earnings

•E’literate and comfortable with sharing info through digital means

•More impulsive buyers and easier to target

•Develop relationship to increase lifetime value

•Declining segment

Long term – 40+

•Growing e’literacy but more acquired taste

•Develop research programme to understand this sector

•Evolve a proposition for this sector through targeted A&R

•Increasing segment so key to sustainable growth (SVA)

Figure 8. Positioning Differentiate•Innovation

•New products and services to consumers•Reaching cust. via multiple comms channels•Develop interactive relationships (artists/cust)

•Ethics•Mutually beneficial deals for artists•Stance against illegal piracy•Embrace non DRM tracks•Reduce carbon footprint

•Environmentally friendly products•Plant a tree per co2 emissions from travel and tours

Figure 9. Branding

Functional benefits availability, format

Rational Benefits audio stimulation

Emotional Reward artist and environmentally friendly

Values honesty, collaboration, winning, fun

Personality Improve quality and access to music globally

Brand Evolution

1.Label as industry brand – A&R

2.Artist as consumer brand – Fans 15-24

3.Artist as branded brand -

4.Label as consumer brand – Cross sell

5.Label develop new brands for 40+ artists

6.Label as brand consultant - Diversify

Customer OfferingLoyalty LadderValue Ladder

Product knowledge

Product meets requirement

High quality product

Quality Product / Service

Deliver Emotional Value

Customer Innovation

Prospect

Customer

Client

Supporter

Advocate

Partner

Awareness

Music available in right format and channel

Improve CD offering (recycled packaging, videos), DRM free high quality single downloads

Provide methods for feedback and registr’n

Offer more social, personal or psycho benefits (emails, news updates, exclusive offers, song previews, competitions)

Customise web page, personal messages, access to live podcasts, instant messaging, access to pro tools, exclusive competitions, DIY album

+

-

Comp

+

-

Added

Value

Figure 11. Price

To create sustainable comp adv, and max. shareholder value, long term relationships must be cultivated.

By moving customers up the value / loyalty ladder, comp and prices sensitivity declines.

Loyal cust. will pay premium prices for innovative products and services so to progress cust. up the ladder, added value must be offered.

With comp. and piracy intense at the lower level, margins are low and cost leadership strategies are unsustainable.

Figure 10. Product Weaknesses•Generating profit•Access to unique identifying song codes•Difficult to get royalties•Difficult to break into charts•Operating at less than break even at present•Radio presenceThreats•Low barriers to entry•Competition•Lack of resource•Loss of control•Band falls out of fashion•Meteoric rise could create resource problem

Strengths•Successfully rebranded•Innovative brand name•Tacit knowledge- Kid G•Interactive website•Global dist. (iTunes)•Synchronisation - ads, films, games•Create awareness•Celebrity endorsements•No bank loansOpportunities•Relationships with fans•Artists more powerful•Existing contacts•Global reach of web•New financial models•Signing with label•Radio playlists•Digital platforms•Gigs/concerts

The Furze

•Core- Quality indie music

•Actual- Furze brand, sleeve design, wed design, sales channels, platforms available

•Augmented- interactive website, cartoon serialisation, comics designed, merchandise, games

Although the band have been successful in creating awareness through innovative marketing, they have been unable to generate a significant ROI. Resource and expertise of a suitable label could propel them onto bigger things

The Label - Consumer

•Core- Portfolio of artists

•Actual- Individual artist brands, style of music, image, various channels and formats, web design, sleeve design

•Augmented- CRM, merchandise, interaction with fans, videos, blogs, games, ‘green’, fair to artists

The Label - Industry

•Core- Record, produce, distribute

•Actual- Ability to convert lyrics into musical recordings. Quality of equipment, studios and dist network.

•Augmented- Supporting artists, key account management, managing customers, promoting artist

Figure 12. Promotion

Label

Consumer

Digital

Retailer

Communications Strategy

•Pull

•Target consumers

•Comms focus on product/service

•Goal – purchase (direct/indirect)

•Push

•Target channel intermediaries

•Comms focus on product/service

•Goal – dev. relationships and dist. channels

•Profile

•Raise awareness with stakeholders

•Project image into industry

Benchmarking – The Furze

•Personal selling

•Plugger

•Concert / gigs / festivals

•Advertising

•Own website, MySpace, YouTube, iTunes

•MTV (Kid G)

•Radio

•Direct Marketing

•PR

•Music press (NME, Kerrang)

•Online fanzines (Kid G)

•Celebrity endorsements

•Sponsorship

•Adverts, films and games

•Sales Promotion

•Online videos / song samples

Figure 13. Place 2005 Music Sales by Formats (USA)

3%

1%

1%

1%

1%8%

1%

86%

6%

Full-length CDs

Full-length cassettes

Singles (all types)

Music videos/VideoDVD’s DVD audio

Digital Dowload

SACD

Vinyl LPs

Music Sales by Channel (%)

0

10

20

30

40

50

60

Year

%

Record store

Other store

Tape/record club

TV, Press, Ads orTelesales

Internet

Digital Download

Concert

•Record stores still a key channel for full length CD’s

•CD sales dropped 20%+ from peak in 1999/2000

•Internet, digital and concerts growing channels

•Global portable player sales120m in 2006 (+43%)

•Broadband household penetration rising (Europe)

•Digital sales doubled to $2bn in 2006 (globally)

•795m single track downloads in 2006 (globally)

•3 sell 1m music video and audio tracks a month

•Digital format is environmentally friendlier

Av. Digital Sales by Format in Europe (%)14%

22%

13%

23%

28%

Other

Mobile Single

Mastertone

Online Album

Online Single

Recommended digital formats:

•Mastertone- extract from full length dig. sound recording looped for mob. Phones (com dist recording) (Fra, Esp)

•Mobile singles (fastest growing format U.K, also It, Esp)

•Online singles (UK -78% of all singles, Ger)

In the first instance, the challenge for labels is to raise awareness of artists. The internet represents a cost effective opportunity for raising awareness through word of mouth. Social networking sites are accessed by 150m people and they have democratised A&R.

However, this must be supported by press and media promotion to access the mass market.

Label and artist sites must be kept updated and offer options for visitors to sample music before buying. Point of sale material is equally important online as it is in retail outlets.

When a purchase is made, efforts should be made to turn the customer into a client. By shaping attitude and developing relationships, future intentions can be influenced and long run behaviour can be shaped to generate profitability.

Figure 12. Promotion (cont)Awareness

•Ads – low info, emotional appeal•Volunteer marketers•Peer 2 Peer web•Viral marketing•Radio / press PR

•Opinion formers / leaders (celebs, shop)

Short Internal Info Search

•Websites (artist / label)•Social networking sites (artist / label)

Trial / Experimentation

•Free online sample•Retail store demo•Packaging / web design•Promos (added value)•Price

Attitude / Future Intentions

•Product Usage•Artist success•3rd Party Support

Long-run Behaviour

•Develop relationship•Music quality•Regular comms•Special promos

Low Involvement Decision Making Process

Com

patibility/capability

Country attractiveness/priority (%3G subscribers)

High High Medium Low

MatureU.K (14%)USA (8%)

MatureItaly (24%)Spain (11%)

Medium MatureGermany(9%)Australia (9%)France (8%)Canada

EmergingRussiaEastern Europe

Low MatureJapan (53%)South Korea (35%)

EmergingChinaIndia

Developing Countries

Characteristics of Mature Markets:•High GDP, advanced economies, wealthy consumers•Higher propensity to listen to English language music•Established music industries with multinational orgs•Low rates of piracy (<10%)•High levels of hardware penetration, broadband access, etcExample – Germany•Largest Euro market for UK•435,000 airplays for 320m audience•3G penetration – 9%•Digital sales- 39% online single, 25% online album, 20% mastertone, 5% mobile single

Figure 16. International Markets

Figure 15. Balanced Scorecard

Measure in terms of:Suitability - Cultural fit, Screening options and criteria Feasibility- Cash flow, Break-even, resource, capability and capacity Acceptability- Shareholder (esp artist), level of risk involved potential returns.

Figure 14. McKinsey 7 S’

Structure Flat, cross functional teams, empowerment

Systems Develop e-capability, continual improvement, environmentally conscious

Strategy Differentiate based on service propositions which encourage loyalty and long term profitability

Shared Values

Innovative and socially responsible

Skills Train / recruit innovative staff, empathetic

Staff Embrace market led culture to capture info and satisfy needs profitably

Style Achievement, motivation and winning

HA

RD

SO

FT

Financial Perspective•Return on Capital invstd -Invest £200k per artist p/a•Differential pricing -commercially priced service

offering•Reliability of performance -sales forecast v actualCustomer Perspective •Awareness -Web hits•Relationship -No. registered subscribers•Satisfaction -Top 40 hit•Loyalty -Purchase behaviour

Internal Bus. Perspective•A&R -New artist recruitment•Marketing -New products / services•Recording/Producing -Improve quality, pro-tools•Procurement -Socially responsible•Distribution -Trees for travelInnovation & Learning•Technology -No DRM, mastertone

tracks•Marketing -Strategic plans, CRM investment•Continuous improvement -Employee suggestions•Distribution -Increase in digital sales

Use balanced scorecard to clarify and update differentiation strategy based on innovation and ethics. Comm throughout org and conduct regular reviews.

The model shows how the various aspects of the business relate to each other and is a useful way to illustrate the way culture fits into the org.

Soft – human resource issuesHard – process aspects

When implementing strategies the label must focuses on BOTH hard and soft issues. Overcome resistance by:

•Develop market orientation•Project management•Change management•Internal marketing