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Promotional activities

HMV has been building its brand for over 80 years and the company has built this successful brand name by stocking the widest possible range of titles, based on trading experience and an appreciation of customer requirements. The company also builds a relationship with its customers and it is always seeking to be the first to offer new products, releases and ‘added-value’ wherever possible. The company recruits and trains knowledgeable staff, dedicated to providing the best possible service.

HMV reinforces its positive brand image through advertising and other promotional activities. The company currently uses the advertising strapline ‘Top Dog for Music, DVD & Games’. This clever play on words is simple, versatile, and immediately conveys its offer to the public. Customers are likely to be loyal to a brand in which past experience has built trust. John Lennon was a frequent visitor to HMV’s Oxford Street store, whilst Michael Jackson is also a regular shopper. Brand loyalty is important because, as with many other sectors of retailing, there is fierce competition between rival stores.

It is also necessary to analyse the market that HMV is trading in as it is vital for their success to know what the markets trends are and what

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their competitors are doing. The market for pre-recorded music is becoming increasingly polarised. At one end are ‘discount’ retailers who may use products as loss leaders to gain share from each other. At the other end are specialist stores like HMV, which focus on providing a quality service based on added-value, product knowledge and range.

HMV believes in providing music, DVD’s and games for people in whatever format they require. HMV customers are broadly based and have a wide range of ‘eclectic’ tastes rather than being confined to a particular niche market – many modern consumers want to dip into several different types of music. While HMV has to meet the requirements of a broad market place, it also has to keep the dedicated enthusiast, who may have specific interests, happy. HMV communicates with its target audience through advertising in appropriate specialist media, and supports this in-store with effective merchandising and expert staff.

Not all cities can support stores of similar size. Electronic stock control and ordering systems help overcome this problem. If the local smaller-town HMV does not have what you want in stock, it can rapidly find an HMV store that has the item and will arrange for you to receive it as soon as possible. The brand image is thereby sustained. Part of a brand’s image relates to store design and operation; an HMV store needs to look, feel and sound just how its loyal customers have come to expect. Consistency brings with it recognition and reassurance, the kinds of feeling that cause many people who are ‘out shopping’ to drift into music stores rather than walk on by.

Buying music, DVD’s or games is often a shared experience. It is something to be enjoyed and then talked about with friends. Like other enlightened retailers, HMV seeks to make the purchasing experience as intimate and enjoyable as possible. That is all part of the brand. HMV is committed to the retail experience and believes that record stores will remain central to the way the majority of buyers will seek to purchase their music and home entertainment products for the foreseeable future. However, HMV has also embraced new technologies and other shopping channels, such as the Internet in order to broaden the choice available to its customers. Indeed, in 1997 HMV was one of the first music retailers to launch a website – www.hmv.co.uk. Just one year later it became transactional and by 2001 it had passed the break-even point and registered a profit. A significant development in 2002 saw it tie up with content provider OD2, to make more than 125,000 songs available on-line for paid-for downloads.

Theory One of the most famous writers in business strategies was Igor Ansoff and in his book Corporate Strategies he outlines the Ansoff matrix which is a tool that helps businesses decide their product and market growth strategy. The Ansoff matrix provides for different growth strategies and is shown simply in the diagram below: The first strategy is market penetration which is when the firm seeks to achieve growth with existing products in their current market segments by aiming to increase its market share. This can be achieved by a combination of competitive pricing strategies, advertising sales promotion and perhaps more resources dedicated to personal selling.

This could also be achieved by restructuring a mature market by driving out competitors which would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors. Another possible was that market penetration could be achieved would be by trying to induce increased usage by existing customers – for example by introducing loyalty schemes.

This strategy focus’s on markets and products that the firm know well and therefore it is unlikely that it will require much investment – for example through market research. This strategy is also the least risky since in leverages many of the firm’s existing resources and capabilities. In a growing market, simply maintaining market share will result in growth, and there may exist opportunities to increase market share if competitors reach capacity limits. However market penetration has limits and once the market approaches saturation, another strategy must be pursued if the firm is to continue to grow.

The second strategy is market development and is when the business seeks to sell its existing products into new markets. There are many possible ways of approaching this strategy including finding new geographical markets – for example exporting the product to a new country. Another approach would be to create some new packaging for the product that may attract new customers – for example, trying to appeal to the younger market by having a fresh, fun feel to the packaging. New distribution channels and different pricing policies to attract different customers could also help a company in their quest for market development.

The development of new markets for the product may be a good strategy if the firms core competencies are related much more to the specific product than to its experience with a specific market segment. Because the firm is expanding into a new market, a market development strategy typically has more risk than a market penetration strategy. The third strategy is product development and it achieves growth by developing new products targeted to its existing market segments. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets. It is very difficult to dream up a wonderful new idea that will be profitable. However, there are several different ways in which a strategy of product development can be pursued.

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