Advertisement and Promotion: HMV Company Report

Executive Summary

Advertisement plays a key role in business operations. The market position of a given product company will highly be influenced by the company’s ability to expose their products to their customers and how they proves their products to be well above the others in the market.

The medium that is used in the advertisement will affect its effectiveness, as it will reflect on the size of the audience reached. There has been a constant shift on the media that are appropriate for advertisement due to the technological advances that are registered daily.

With the increased technology and the increased competition in the current markets, many companies would want to produce products that have incorporated more than one function.

The convergence enables some kind of flexibility in the products and services that these companies can deliver to the market and will greatly contribute to their high position in the global market.

A key contributor to the current rapid technological advances is the increasing need to do away with the analogue system and adopt digital equipment. The shift from analogue to digital signal systems is set to provide a more relaxed environment to the users in the technology world.

It will also be a basis for competition among various production companies. The conversion to digital technology is also positively influencing the sales of products as it reduces the cost of selling a given music product.

Introduction

Music, movies, and games are liked by a good proportion of the UK population and thus the music industry is one of the major industries in the region. Music, in particular, is viewed not only as a local but also as a global culture (Brown, et al, 2000, p.2).

The rise in the modern technology has increased the individual’s access to these products. A good proportion of the population listens to music from their computers.

There is need by the companies that specialize in these products to find ways through which the products could be accessed easily by their customers. This calls for the service of an advertising agency.

The agency considers the kinds of products that organizations produce and the target group for such products. It then examines the communication medium that is most popular among the identified groups and carries out the advertisements.

The industry has recently suffered great losses resulting from piracy. Despite the copyright acts that prohibit the vice, many users still obtain these entertainment products through illegal procedures. However, more legislation and strategies are being set that are likely to end piracy in the near future.

The Principles Underlying the Roles of the Accounts Manager

The account manager of any organization or agency will be charged with various responsibilities that are geared towards the success of the organization. As the accounts manager of the advertising agency, I had to establish and maintain good business relationship with our clients (Field, 2009, p.106; Ryals & McDonald, 2007, p.225).

There is a need to ensure that all the needs of the clients are understood and are addressed appropriately and as soon as possible. An analysis of the goals and objectives of clients and the strategies that they use in managing their operations are essential in providing ways of meeting the needs of the clients.

The accounts manager is also responsible for managing the accounts that are already in place while working on inventive and innovative approaches to identify other business opportunities that may arise. Preparing budgets and planning for the activities of the agency is also the responsibility of the accounts manager.

The alterations or adjustments that need to be adopted in the future expenditure are also analyzed and provided by the accounts manager.

The execution of the above responsibilities requires some qualities in the manager. The advertising agency works as a team and so the accounts managers should be a team player and have the ambition to attain success.

The management of the existing accounts and generation of new business ideas require an independent person with proper self-motivation. The accounts manager needs to be very creative and have an understanding of sales and marketing principles.

These are essential in helping the clients to develop effective marketing strategies. It is thus required that the accounts manager possesses some professional qualification and experience in sales.

The Advertisement Agency

Advertisement is essential for organizational success and should not be underrated (Cowley, 1949, p.40). As an advertising agency, our company deals with various sectors in the communication industry.

The attention of the targets of our clients shifts more to the digital world and as such, much of our operations sail towards the use of internet.

The sales and marketing department helps our clients in developing the most appropriate marketing strategies that could be used having identified the competitors and their marketing strategies.

This department carries out research on the media that are appropriate for the advertisement of a given product depending on the target group.

For instance, a product that targets mostly the old group like the traditional music should mainly advertised over the media like radio and TV that are popular among this category of consumers.

It is the desire of the advertisement agency that the needs of our clients are met and that we work collectively as a team to ensure that the clients meet their objectives.

The Communications Industry

Sectors in the Industry

The communication industry is one that has experienced the effect of the technological advances is it relies more on technology. The products in the industry are aimed at informing and entertaining the consumers.

The introduction of digital technology has darkened the difference that used to be visible among the different players in the industry. The sectors like television, telephony, radio and even the mobile phone sector have been seen to converge due to the common means of data transmission and storage.

The effect that has been seen is a merger or acquisition of different companies within the industry as organizations attempt to consolidate the products and services. Even the broad distinction that used to be visible between print and electronic media becomes blurred in the current communication industry.

The modern technology has also altered the peoples’ attitudes towards the media. Rather than the contents of the products provided by the media, majority tend to value the kinds of technology adopted by communication agencies.

These technological forms are evaluated against the current technology to determine one’s inclination to a given media agency. There has also been an increasing competition in this industry leading to a reduction in the cost of accessing the products and services.

Radio, television, and print media were the most common communication media in the analogue technology and they dominated the industry. Many people could access radios and television and so they provided a good means of passing information. They were also forms of entertainment.

The introduction of digital technology and the third generation computers has attracted the attention of many users to internet application and becomes a more popular means of communication among the young generation.

Advertisements by Different Media

Organizations resort to advertisement of their products through the media as a way of informing their customers of their products and the quality in them that distinguishes them from others.

Various organizations like HMV and Zavvi have opted to increase expenditure on advertisement as a way of maintaining their position in the market. Different media have had different proportions in the past usage.

In 2007, radio was the most popular medium used for advertisement whereas the print media dominated in the previous two years (See Figure 1).

Television was popular in 2003 and 2004 but was abandoned as the retailers sought to have more audiences from radio and press. Zavvi has been seen to spend more on advertisement than HMV in the past years and is likely to give more competition (See Figure 2).

In general, the expenditure in advertisement was seen to decline significantly between 2003 and 2008. Internet has also been seen to have a good share of the music market (Music and DVD Retailing-UK, 2008b, p.1).

Growth in Digital Music Sales Goes Down

The increasing rates of piracy and the lack of enough legal measures to fight the vice have contributed to a reduction in the sales of digital music. The sales have been seen to saw a downward trend for the last 11 years.

The growth in sales had increased by 25% in 2008, 12% in 2009, and only 6% last year showing a downward trend in the growth rate (Financial Times, 2011).

The decreasing trend in the music sales is caused by the increase in the download market that has contributed to high rates of piracy. A substantial proportion of users, especially the young generation, have been reported to download music and movies from illegal sites.

There was a significant increase in the download market in the UK between 2002 and 2006. The increased use of internet-enabled mobile phones was behind this increase.

However, the increasing number of users of PCs and laptops may help in reducing the vice as more security can be imposed on the broadband data transmission systems that are currently being incorporated.

Another factor that led to decrease in sales in the music industry was the recession that was experienced in the UK. As a result, many users opted for free mobile downloads. Producers of movies, paid-for music, and paid-for podcasts suffered losses due to this move towards free download.

This increased piracy leads to a reduction of sales of products like CDs and DVDs. Download of music and videos from illegal sites has been seen to be rampant among the juniors of between the age of 11 and 18.

Fortunately, most governments are currently working on legislations that are likely to end the practice of piracy and promote sales in the music industry.

HMV’s Market Position, Marketing Objectives and Strategies

Market Position

HMV is the biggest and the most progressive street retailers in London (Industry Insights, 2008, p.1). This high position in the market enables the organization to test new ideas that can lead to creation of new products. As such, the company can take pride in being inventive and innovative pioneer in the market.

The company produces a wide range of products that are of value to different groups of individual. The closest competitor that also specializes in music is Zavvi. HMV has the potential that is needed to compete with the other organizations that provide online sales and advertisements.

The organization is, thus, in better position to outdo Zavvi in this music market. It has been noted that Zavvi produces products that are mainly for males with little attention to females. Identification of such a weakness enables our client to mount a successful strategy against Zavvi.

A survey that was conducted in 2008 by BMRB in behalf of Mintel showed that supermarkets were the dominant players in the CD and DVD retailing (Music and DVD Retailing-UK, 2008a, p.1). Most of the consumers were seen to purchase their CDs from the supermarket having a share of 39%.

Our client, HMV, came second with 27% followed by Woolworths at 15% (Music and DVD Retailing-UK, 2008, p.1). It was also observed that the CD market penetration of individuals between 15 and 19 years of age was quite huge at HMV.

Base: 1,005 adults aged 15+

This calls for a need to widen the range to include older individuals. The organization needs to change the way of advertising for its DVD products.

Our client has a number of weaknesses that needs to be addressed to have a competitive advantage. The organization has few retail outlets and few retail websites as compared to the others like WH Smith and Woolworths.

Their products are also not price competitive as compared to the products of these companies (Retail Competitor Analysis, n.d).

The Objectives of the Client Organizations

Our client has set a number of objectives to be met and the strategies that are intended to help attain the goals. The organization has purposed to capture more under-25s by redesigning their old physical stores to meet the fashionable standards that have been witnessed at the other competitors’ stores like that of Apple.

The organization has identified the need to increase their online sales for physical products (Music and DVD Retailing-UK, 2008c, p.1). They have increased their advertisement and promotions by expanding on their sales portals. The company is also set to maintain its market share by improving on its brand identity.

Unlike the other organizations that have opted to form partnership with each other, the company has purposed to maintain its brand status. The company has identified competitors like Apple that has established iTunes store. The two companies compete for a larger share on the download market for movies.

Strategies

The client has put in a number of strategies. Its products are largely skewed to under-25s and it has purposed to redesign a store to attract more of this category of consumers.

The organization has also embarked on schemes that are aimed at cutting down the production costs and developing loyalty among the stakeholders. It has also purposed to increase its online sales.

Alternative Objectives and Strategies

The focus that has mainly been given to the young generation of under-25s is likely to affect negatively the sales of HMV products. This category of the consumers is more attracted to the free content. They will walk into the retail stores only to watch what it contains never to buy any product.

The retail stores should be equipped with the favourites of wider category of consumers. The games and other types of music that are liked only by these young people should be regulated so that the older groups also feel the comfort that should be derived from such entertainment.

The company could gain competitive advantage through partnership with other companies that produce products in the music and communication industry. Due to the increasing competition, there is more need for products that have more than one function integrated into a single package.

Partnership with the software production companies and the companies that manufacture the digital equipment will likely improve the sales.

Having identified the needs of our clients, it should be pointed out that the advertisement should be distributed among the different communication media in a way that is proportional to the popularity of the medium.

As such, 40% of the ₤1,000,000 should be spent on advertisement and sales promotion over the internet as the generation Y and a good proportion of the generation X can be reached online. Radio and television should take 30%.

The print media like newspapers and magazine are also still popular and should be allocated the remaining 30%.

The organization needs to increase its expenditure on advertisement, as it is likely to increase sales through affecting the awareness and attitudes of the consumers toward the products (Masterman & Wood, 2006, p.135)

Conclusions and Recommendations

Our client has moved a step in trying to cope with the technological advances by investing in the production of digital equipments. In this way, the planned shift from the analogue to digital electronic system will not pose any threats to its operations but rather provides a good competitive advantage.

In order to improve their market position, the organization needs to review regularly the changes that are recorded in the market. There have been significant changes in the types of media that are more effective in the advertisement of various products.

The number of potential customers that can be reached through a given medium and the value of information that the medium can provide concerning the products have been key determinants of the kind of medium to be used. There has been a significant increase in the number of internet users in the recent past.

More customers can be reached not only within the nation but also across the globe through the internet. Thus, much of the client’s planned expenditure should be channeled to online promotions and advertisements. The online retail store should be expanded to be able to accommodate the demand that is bound to increase.

The organization needs to assist in the fight to end piracy. By decreasing the amount of downloads accessible by mobile phones and strengthening on the security on the download sites, the organization will reduce the losses that are incurred due to piracy.

The company also needs to put more emphasis on the production of DVD than the production CDs due to the increased need for digital technology.

References

Brown, A. et al. 2000. Local music policies within a global music industry: cultural quarters in Manchester and Sheffield. Geoforum, 31, 437-451. Web.

Cowley, D., 1949. Bibliographical description and cataloguing. NY: Ayer Publishing.

Field, S., 2009. Career Opportunities in the Sports Industry. Fourth Ed. New York: InfoBase Publishing.

Financial Times. 2011. Digital music sales growth halves. (Attached material).

Industry Insights. 2008. Who is commercially most successful at the moment and why? (Attached material).

Masterman, G., and Wood, E., 2006. Innovative marketing communications: strategies for the events industry Oxford: Butterworth-Heinemann.

Music and DVD Retailing – UK. 2008a. Where They Buy Music and DVDs (Attached material).

Music and DVD Retailing – UK. 2008b. Market Segmentation. (Attached material).

Music and DVD Retailing – UK. 2008c. Retailer Profiles. (Attached material).

Ryals, L. and McDonald, M. 2007. Key Account Plans: The Practitioner’s Guide to Profitable Planning. Oxford: Butterworth-Heinemann