Marketplace Competition
His Master’s Voice (HMV) Ireland is an entertainment retailer dealing in audio, books, DVD’s, video games, posters, computer hardware and software. HMV has a number of their big league competitors in both the physical and digital platforms; rivalry is especially brutal in the digital media since the development of the internet during the early 2000. Their physical platform includes distribution through mediums such as physical DVD’s or books, while on their digital platform mediums such as the internet are used to distribute merchandise such as ebooks, movie and audio file through downloads. Some of their chief competitors include Amazon and ITunes (BBC, 2013). The entertainment retailing industry is inflicted by very aggressive competing mainly contributed to by, low product differentiation and limited market i.e. consumers of entertainment products are close to constant with little growth given consumption is dependent on preference or taste . The entertainment industry mainly concentrates on the youth and the young at heart with books being the only attracting to the elderly, and since the market is already developed companies have their proportion of market share with the competition only giving opportunity for attracting customers from competitors. Entertainment products are not highly differentiated with only books, music and films as the only products on offer, with the recent introduction of video games therefore; firms have to rely on excellence in product and service delivery in order to gain competitive advancement over their rivals. HMV stores were famous for organizing live performances by trending artists in their stores while Apple used the internet to distribute products through iTunes, as opposed to physical cd’s; both were techniques of offering convenience and hype for their companies to attract a niche of consumers who require such conveniences, therefore gaining customer loyalty in the process. These major player share almost equal numbers of customers with little potential for growth of individual market share, therefore marketing and innovation, is intense in this industry to keep firms current and relevant in order to retain customers (BBC 2013).
Porters 5 Forces Analysis
HMV operates in a market with characteristics such as low product differentiation, almost equal customers for suppliers and small group of major suppliers and difficult entry into the industry (Sengupta, 2005). Entry into the industry requires high startup costs since already existing companies like Apple and Amazon have already taken majority of the market share, therefore conditioning entry into the market to require high initial capital to establish yourself as a relevant player (Hooley & Saunders, 1993 ).HMV for example, required $45m to keep the company liquid when it was in trouble financially in 2013. The high investment costs are contributed to by the cost of setting up inventory since original copyright material is not cheap and, establishing a distribution mechanism e.g. chain stores for physical distribution or websites for digital distribution. In this such an environment, significant market share can only be gained through filing a specific gap in consumer needs that have not been met by the existing players for example; Napster and other torrent sites were able t offer convenience through content download rather than making a trip t the music store. Low product differentiation has ensured that product prices are relatively cheap, and their variance is very small therefore, customers experience good prices from distributors (Sandhusen, 2000).
The most recent innovation in the industry has been the assimilation of the internet into distribution and supply of products. Recently HMV has acquired the company 7Digital which is an online music store in an effort to crack the digital arena where it has had deficient. Although HMV adopted the use of the internet very ate in 2013 unlike pioneers such as Amazon who did this earlier and captured that specific market group, use f the internet has gone as far as providing free or illegal downloads of music and other copyrighted materials which have proven to be costly for entertainment retailers. Customers would prefer downloading free content at the convenience of their homes unlike the costly and inconveniencing substitute of buying from a store, HMV originally was run and operated by mostly music lovers working in their stores however the head office took over selecting music for promoting, the stores were slowly deserted. Customers have confessed to preferring not to support middlemen to supply of music, who are accused of determining what and who influences the public. This has severely affected sales of HMV and their retailers by reducing profits and demand of their services, the reduction of demand has led to them reducing prices in order to attract more customers or addition of value to transacting with them. There is very little organization of buyers compared to suppliers; buyers are spread all over the globe with different buyers having different interests although some organization is sprouting through book clubs and fan bases of different genres of entertainment where people with the fans can interact. Suppliers on the hand are well organized firms who collaborate when need arises for example, Warner Brothers, and Universal all collaborated in keeping HMV afloat.
HMV has several competitors offering its substitutes or similar products. Physical retailer competitors include Tesco and Arena media, while on the digital platform are Apple, Amazon. The key competitors for analysis are Apple, Tesco and Amazon.
Evaluating key attributes
A-excellent B-good C-average D-poor
In the entertainment, retail industry companies such as Amazon and Apple are viewed as the market leaders since they control majority of the market share. While others like Tesco and Arena Media are their competitors as they offer the steepest challenges with a relatively moderate but growing market share.
Blue Ocean Strategy
In this constantly changing industry HMV is operating in, it has to employ blue ocean strategies if it is to survive competing with giants like Amazon. Through such strategies, competition becomes irrelevant since HMV will have created its own market. Understanding the customer is, key, and through innovation uses the organization’s strengths to create their market in HMV’s case, quality customer service and staff product knowledge are their strongholds. Through innovations such as fast delivery of merchandise, book clubs with occasional book signings in their stores or album launches can all work towards bringing back customers into HMV stores.
Conclusion
HMV is trying to expand its market share through introduction of its digital distribution arm in an attempt to catch up with others like Amazon, who has fully utilized the internet. This late introduction of their digital distribution left the flank without remedy that allowed competitors to gain advantage over them. HMV uses several defensive strategies including a counteroffensive strategy as in the above case where the company was catching up to advances made by others. It also uses pre-emptive strikes to deal with competition, for example, when DMV bought off Waterstone in 1998.
References
Sandhusen, R. (2000). Marketing. Hauppauge, N.Y: Barron's.
Sengupta, S. (2005). Brand positioning: Strategies for competitive advantage. New Delhi: Tata McGraw-Hill.
BBC (2013). HMV has smaller loss as competitors collapse. Retrieved frm: http://news.bbc.co.uk/2/hi/business/8407378.stm
Hooley, G. J., & Saunders, J. A. (1993). Competitive positioning: The key to market success. New York: Prentice Hall.
