Alzheimer’s Society - Analysis
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
Figure 2. PESTLE 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
Figure3. Porter 5 forces
Supplier power- Low
Only 3.8% of
charitable donations
go to Mental Health
charities.
New entrants - High
Low barriers to entry
Crowded marketplace.
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.
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.
Threat of substitutes – Medium
The 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.
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 needed
Figure 5 - Portfolio Analysis
Star
Question mark
6
Don
atio
ns
£m
Cancer/
hearth
5
4
Dog
3
2
Heritage
Children
Animal
Cash cow
More people are donating to charities;
with the top 5 charities taking 2/3rd of
market. Overall the voluntary income has
Internationa remained the same between 2004 – 2006
l aid
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.
1
-10%
0%
25%
% change in voluntary income 2004/5 – 2005/6
ALZ held up well and saw a small
increase though overall receiving 1% of
voluntary income so very small
Figure 6. Branding
Personality improve quality of old age, find cure Big brands have greater fund raising power.
Awareness of brand is important so potential
Values
integrity, passion
donors know what ALZ stands for. Currently
ALZ brand awareness limited. Memorable
Emotional Reward feel doing something to help
campaigns such as Cancer Research I
shouldn’t be here key to driving
Rational Benefits
small amount., won't miss support/donations.
Functional benefits
easy to donate
Figure 7. Value Chain
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.
Support 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 policies
Manage relationships with suppliers, high net worth supporters and all other donors.
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.
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.
Inbound Logistics
Sufficient number
of distribution
points to
maximise income
potential.
Operations
Ensuring that
staff and
volunteers/
supporters are
proactive.
Outbound
Logistics
Centralising
donor
acquisition and
processing.
Marketing
& Sales
Brand positioning
Promote ethical
trading
Maj. of income is
spent on finding a
cure.
Service
Excellent customer
service at all times
in person/
Online/helpline.
Customer intimacy
– B2B and B2C
Primary Activities
Figure 8. 7S framework
Strategy Growing pressure internationally
Grow value from new and existing donors
Increase 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 presence
25,000 members with voting rights and liable
Committees for remuneration, nominations, audit (risk) and investment - Is too bureaucratic?.
Systems Internet site
Web forum with 130,000 posts
DVD training
Phone helpline
Usual HR, Finance systems.
Shared Published values (Passion, Quality, Integrity, Inclusion, Mutual respect)
Values
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 members
Branch managers are salaried
Rely 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 , transparent
ethical and caring.
Figure 9 SWOT
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
Figure 10 – Ansoff Matrix
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
organisations
Form 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 11. Business Portfolio Matrix (Harrell & Keifer (1993))
Country attractiveness
High
Medium
ALZ compatibility with
each country
Italy Germany USA
High France
Sweden
Spain
Medium
Japan
Low
= Primary
= Secondary
= Tertiary
Low
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
= Very unattractive
Figure 12. Balanced Scorecard
Financial
Internal
Objectives
Donations in each country– UK, ROI & overseas
Return on capital
Cash flow
Profitability
Donor lifetime value
Effectiveness of services offered
CRM database
Penetrate new donors
Increase value from existing donors
Increase website traffic
Increase education
Control costs
Customer
Value for money & donor satisfaction
Donor loyalty
Donor endorsements
Brand awareness
Learning &
Innovation
Innovate ways of targeting new donors
Empowered workforce
Figure 13 – Loyalty Ladder
Price
+
-
Value Ladder
To create sustainable comp adv, and
Believe the
max. donations , long term
cause – willing to
invest time/effort
relationships must be cultivated. By
moving donors up the value / loyalty
Start to want to
ladder, they become more loyal to
do more
this charity. This can be achieved Added
Value
through social marketing; message
Fund raising
driven, change behaviours.
Advocates will act as ambassadors
and help actively promote charity
recruiting new donors
Buys the
message
Measures
Sales vs targets in each sector
ROCE
Cash flow
Net margin
Donor LV calculation
Return/take up per service
No of donors on database and % change (new)
Value of donations from new donors
Increase in existing donations
Income per donor
Number of website hits/hits on knowledge centre
Frequency of donations
Donor acquisition /retention costs
Donor satisfaction and perception surveys
Donor retention levels
Web based
Level of brand recall
Market share
Return per campaign
No of new campaigns offered/ROI
Staff attitude surveys
Advertising as % donations
Marketing spend per donor
Loyalty Ladder
Partner/
champion
Advocate/
member
Offering
Customise web page,
personal thank you
messages,
Offer more social,
personal (emails, news
updates,
Supporter/
volunteer
Provide methods for
donor feedback/give
time/increase donations
Perhaps paying by DD as
more loyal customer
First time
Donor maybe
one off
Easy to donate –
different methods;
maybe cash. Newsletter
Figure 15 – ALZ Assets/Competencies
• ALZ has a strong ethical trading stance Knowledge of
Awareness of charity
Awareness
• Starting to gain brand recognition
charity
• ALZ supports the carers as well as the
Awareness of illness
Knowledge of
Prospect
sufferers of dementia
ALZ illness
• ALZ offers wide variety of ways to
Figure 14 – Critical Success Factors
donate
• Maintaining a good reputation
• Socially responsible
• Cares about the environment- recycles • Moving dementia up the government agenda and therefore
the public agenda
clothing, Oxfam/M&S scheme
• Making it easy to donate e.g text, red button,
-
+
Figure 16. Segmentation, Targeting and Positioning
B2B
Segmentation
Similar companies /affinities where synergies e.g
financial service companies, SAGA, care homes,
retirement homes, garden centres, post office
Be aware of grants available and large fund
raising opportunities
Links to gyms for prevention – healthy mind/body
Targeting
Work in partnership e.g Help the Aged – use
shops to raise awareness/identify new donors
Consider campaign like Oxfam one with M&S
Awareness raising/donors with SAGA
Link with universities/research to drive thought
leadership/awareness
B2C
Developed society/more affluent
ABC female age 65* Time rich community
minded, time to donate, no family
Men and women aged 30* ABC1 concerned
dependents
Couples aged 60* - potential carers
Existing sufferers and carers
Understand profile of lapsed donors and
current donors and target similar segments
Target and penetrate existing and new
donors in the U.K. and also new markets
internationally
Buy database and use to target selected
Segments
Positionin
g
Socially responsible
Number 1 in the UK and internationally for
Proactively working to find a cure
research into and treatment of dementia
Leading the way in dementia research, prevention related illness
and cure
Figure 17 7P Analysis
Product
Price
Place
What is the product? Not clearly defined as offer 1700 services includes training and
development. Medical research. Information services Care support services
Lobbying Thought leadership Training and education for GPs. Internal audit to other
charities
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
Offer 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
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
Promotion
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’
Skilled staff Donors and volunteers,
People
Process
Staff 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 18 - Key stakeholders/partners
Other charities (Age Concern and Help the Aged), professional and public health bodies, pharmaceutical
companies, Government, supporters, Universities, academia, industry, international research
Vision
Recognised 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
Mission
Strengthening 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
Values
Passion
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
Segmentation
Targeting
B2B
B2C
Similar companies /affinities where synergies e.g
financial service companies, SAGA, care homes,
retirement homes, garden centres, post office
Be aware of grants available and large fund
raising opportunities
Links to gyms for prevention – healthy
mind/body
Developed society
ABC female age 60-65 Time rich community
minded, time to donate
Men and women aged 30* ABC1 concerned
dependents
Couples aged 60* - potential carers
Existing sufferers and carers
Understand profile of lapsed donors and
current donors and target similar segments
Target and penetrate existing and new
donors in the U.K. and also new markets
internationally
Buy database and use to target selected
Segments
Work in partnership e.g Help the Aged – use
shops to raise awareness/identify new donors
Consider campaign like Oxfam one with M&S
Awareness raising/donors with SAGA
Link with universities/research to drive thought
leadership/awareness
Positionin
g
Socially responsible
Proactively working to find a cure
Leading the way in dementia research,
prevention and cure
Number 1 in the UK and internationally for
research into and treatment of dementia
related illness
Figure 4. SWOT
Strategic Fit
•Key Opportunities
Strengths
Weaknesses
•Access song codes
•Bureaucratic
•Harness the size and flexibility of the label to adapt to
embrace the digital era in an ethical manner
•Finance
•Radio monopolies
•Build upon the digital capability to increase customer
•Access to ‘pluggers’ •Risk averse due to costs
loyalty and exploit new income stream
•Expertise
•Inhibit creativity
•Exploit current networks to contract an online plugger
•Infrastructure
•Reliance on CDs
•Use existing commercial ability to develop new financial
•Commercial prowess •Expensive / poor quality
models to benefit artist and label
•Control
•Inertia towards technology
•Use existing infrastructure to develop strategic
•Digital presence
•Financial constraints
partnerships across the industry
•Multi service
•Access to mass market
•Sustain multi platform / service offering to spread risk
•Adapting to market •Dependent on key people
when considering global markets
•Nimble
•Growth capacity
•Develop expertise to offer new services to the industry
Threats
Opportunities
•Problem Zones
•Global reach of digital
•ICT explosion
•Bureaucracy can delay decision-making and lose
momentum in a fast paced industry
•Piracy
•CRM
•Legalizing file-sharing
•Online pluggers
•Inertia towards technology will inhibit reaching and
tapping into global audience
•International markets •Reaching audience
•Artists are gaining more control and will not except
•Strategic partnerships •Receiving royalties
previous terms
•New economic models •New technology
•Cost focus has stifled creativity by considering it as a risk
•New income streams •More control to artists
and market now demands creative approach
•Horiz/Vert integration
•Diversify
•Reliance on CD’s when digital is the preferred audience
•CSR
•Competition emerging from across the supply chain
Figure 5. Arthur D. Little Matrix
Stage of industry maturity
Embryonic
Growth
Mature
Ageing
Recommendations
•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 Matrix
Short term
Dominant
Strong
Competitive position
Although well placed to
continue to serve all
platforms, market demand
indicates that label should:
Mobile phones - ?
Invest in new techno
Favor’ble
and improve sound
quality
CD’s – Cash cow
Differentiate ‘recycled’ packaging,
new artwork and add
on’s. Plan for exit.
Vinyl - Dog
Fulfil existing
order and
implement exit
plan
Tenable
Weak
Existing products
•Increase loyalty and value by
developing a CRM approach
•Develop innovative new ways
to engage, reach and delight cust.
Existing
markets
•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
Digital (DRM) – Star
Differentiate through
innovation
New
markets
Market penetration strategy
•Increase customer loyalty
•Cross and up-sell
•CRM
•Innovation
Market development strategy
•Target different age groups
•Dev. dist channels
•International markets
New products
Product development strategy
•Recruit new bands
•Video clips, podcasts, interactive
comics, video games with music
•Merchandise
Diversification strategy
•Move into publishing, promoting
•Offer recoding, production and
distribution as consultancy services
•Develop new financial model
•Brand consultancy
Segmentation
Projected Market Value for U.S by Segment
10-14
25-39
15-24
20
12
20
10
20
08
20
06
20
04
20
02
10-14
20
00
15-24
Tweenies
•Social network
•Live online
•Text addicts
•Share info
•Info = free
•Fashionable
•Trendy
•Emotional
•Innovators
•Impulsive
•Cash conscious
•Environmental
•Leisure time
40+
19
98
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
19
96
Value ($Bn)
Figure 7. Segmentation and Targeting
Year
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
25-39
40+
Silver Surfers
•Young at heart
•Technophobs
•Private
•Sceptical
•Art v entertainment
•Quality
•Value
•Rational
•Late majority
•Wealthy
•Good knowledge of this sector and key to short term earnings Long term – 40+
•E’literate and comfortable with sharing info through digital
•Growing e’literacy but more acquired taste
means
•Develop research programme to understand this sector
•More impulsive buyers and easier to target
•Evolve a proposition for this sector through targeted
A&R
•Develop relationship to increase lifetime value
•Increasing segment so key to sustainable growth (SVA)
•Declining segment
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 8. Positioning
Figure 9. Branding
Brand Evolution
Personality Improve quality and access to music globally
Values
honesty, collaboration, winning, fun
Emotional Reward artist and environmentally friendly
Rational Benefits
Functional benefits
audio stimulation
availability, format
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
Figure 10. Product
The Furze
•Core- Quality indie music
The Label - Consumer
•Actual- Furze brand,
sleeve design, wed design,
sales channels, platforms
available
•Core- Portfolio of artists
•Actual- Individual artist brands, style
of music, image, various channels and
formats, web design, sleeve design
•Augmented- interactive
website, cartoon
serialisation, comics
designed, merchandise,
games
•Augmented- CRM, merchandise,
interaction with fans, videos, blogs,
games, ‘green’, fair to artists
The Label - Industry
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
•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 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 12. Promotion
Value Ladder
Loyalty Ladder
Customer Offering
Partner
Customise web page,
personal messages, access
to live podcasts, instant
messaging, access to pro
tools, exclusive
competitions, DIY album
Deliver Emotional
Value
Comp
Advocate
Offer more social, personal
or psycho benefits (emails,
news updates, exclusive
offers, song previews,
competitions)
Quality Product /
Service
Supporter
Provide methods for
feedback and registr’n
Customer
Innovation
Added
Weaknesses
Strengths
•Successfully rebranded •Generating profit
•Innovative brand name •Access to unique
•Tacit knowledge- Kid G identifying song codes
•Difficult to get
•Interactive website
royalties
•Global dist. (iTunes)
•Synchronisation - ads, •Difficult to break into
charts
films, games
•Create awareness
•Operating at less than
•Celebrity endorsements break even at present
•No bank loans
•Radio presence
Opportunities
Threats
•Relationships with fans •Low barriers to entry
•Artists more powerful •Competition
•Existing contacts
•Lack of resource
•Loss of control
•Global reach of web
•New financial models •Band falls out of
fashion
•Signing with label
•Meteoric rise could
•Radio playlists
create resource
problem
•Digital platforms
•Gigs/concerts
Value
- +
High quality
product
Client
Improve CD offering
(recycled packaging,
videos), DRM free high
quality single downloads
Product meets
requirement
Customer
Music available in right
format and channel
Product
knowledge
Prospect
Awareness
Communications Strategy
•Push
•Pull
Label
Retailer
•Target consumers
•Target channel intermediaries
•Comms focus on product/service
•Comms focus on product/service
•Goal – purchase (direct/indirect)
•Goal – dev. relationships and dist.
channels
•Profile
Digital
Consumer
•Raise awareness with stakeholders
•Project image into industry
Figure 12. Promotion (cont)
Low Involvement Decision Making Process
Awareness
Short Internal
Trial /
Attitude / Future
Info Search
Experimentation
Intentions
•Ads – low info,
emotional appeal
•Websites (artist
•Free online sample
•Product Usage
/ label)
•Retail store demo
•Artist success
•Volunteer marketers
•Packaging
/
web
•3rd Party Support
•Social
•Peer 2 Peer web
networking sites
design
•Viral marketing
(artist / label)
•Promos (added
•Radio / press PR
value)
•Price
•Opinion formers /
leaders (celebs, shop)
Benchmarking – The Furze
In the first instance, the challenge for labels is to raise
•Personal selling
awareness of artists. The internet represents a cost effective
opportunity for raising awareness through word of mouth.
•Plugger
Social networking sites are accessed by 150m people and they
have democratised A&R.
•Concert / gigs / festivals
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.
•Advertising
•Own website, MySpace,
YouTube, iTunes
•Music press (NME,
Kerrang)
•Online fanzines (Kid G)
•Celebrity endorsements
•Sponsorship
•Sales Promotion
When a purchase is made, efforts should be made to turn the
•Radio
customer into a client. By shaping attitude and developing
relationships, future intentions can be influenced and long run
•Direct Marketing
behaviour can be shaped to generate profitability.
•Online videos / song
samples
2005 Music Sales by Formats (USA)
Music Sales by Channel (%)
1%
Record store
60
Full-length CDs
Full-length cassettes
3%
Other store
50
30
TV, Press, Ads or
Telesales
Internet
20
10
1%
1%
Tape/record club
40
%
•PR
•Adverts, films and games
•MTV (Kid G)
Figure 13. Place
Long-run
Behaviour
•Develop
relationship
•Music quality
•Regular comms
•Special promos
1%
8%
1%
6%
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
Year
Concert
•Record stores still a key channel for full length CD’s
SACD
Vinyl LPs
Av. Digital Sales by Form at in Europe (%)
14%
23%
Other
•CD sales dropped 20%+ from peak in 1999/2000
Mobile Single
•Internet, digital and concerts growing channels
•Global portable player sales120m in 2006 (+43%)
22%
13%
•795m single track downloads in 2006 (globally)
•3 sell 1m music video and audio tracks a month
•Digital format is environmentally friendlier
Mastertone
Online Album
Online Single
•Broadband household penetration rising (Europe)
•Digital sales doubled to $2bn in 2006 (globally)
Music videos/Video
DVD’s
DVD audio
Digital Dowload
86%
Digital Download
0
Singles (all types)
28%
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)
SOFT
HARD
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
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 issues
Hard – 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
Figure 15. Balanced Scorecard
Financial Perspective
•Return on Capital invstd
•Differential pricing
•Reliability of performance
Customer Perspective
•Awareness
•Relationship
•Satisfaction
•Loyalty
Internal Bus. Perspective
•A&R
-Invest £200k per artist p/a
•Marketing
-commercially priced service
•Recording/Producing
offering
•Procurement
-sales forecast v actual
•Distribution
Innovation & Learning
-Web hits
•Technology
-No. registered subscribers
-Top 40 hit
•Marketing
-Purchase behaviour
investment
•Continuous improvement
•Distribution
-New artist recruitment
-New products / services
-Improve quality, pro-tools
-Socially responsible
-Trees for travel
-No DRM, mastertone
tracks
-Strategic plans, CRM
-Employee suggestions
-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.
Figure 16. International Markets
Compatibility/capability
Characteristics of Mature Markets:
•High GDP, advanced economies,
Country attractiveness/priority (%3G subscribers)
wealthy consumers
•Higher propensity to listen to English
High
High
Medium
Low
language music
Mature
Mature
•Established music industries with
U.K (14%)
Italy (24%)
multinational orgs
USA (8%)
Spain (11%)
•Low rates of piracy (<10%)
•High levels of hardware penetration,
Medium
Mature
Emerging
broadband access, etc
Germany(9%)
Russia
Example – Germany
Australia (9%)
Eastern Europe
France (8%)
•Largest Euro market for UK
Canada
•435,000 airplays for 320m audience
•3G penetration – 9%
Low
Mature
Emerging
Developing
•Digital sales- 39% online single, 25%
Japan (53%)
China
Countries
online album, 20% mastertone, 5%
South Korea (35%) India
mobile single
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.