International Strategic Management

ASSIGNMENT SUBBMITTED BY Priyank Mehta

Roll No: L0243KMKM1010

BA 5

SUBMITTED TO Terry Johnson

International strategic management L0243kmkm1010

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Table of content Title Introduction Marketing Audit and its Importance Research Result of Research Finding PEST SWOT Proposal of 4Ps Conclusion and recommendation References Timeline page 3 3 4 4 6 7 8 9 10 11

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Introduction
HMV (His master voice) is one of the best retailers of music/Video (CD and DVD), Computer games in United Kingdom and Ireland Market. It has been establish in UK market for more than 90 years and have spread globally. HMV has more than 250 retail stores in UK and has started online store at hmv.com, for downloading music. HMV is the 2 largest company in operating live music in UK. For making their business more significant, they are moving fast and increasing their product and service variety for their customer needs. These days the music industry has been changed completely by downloading music from internet. Due to technology, customer can download its best music for very little price and sometime for free by downloading it from internet or by sharing a file. Because of free download pre-recorded music has lost its market share. For the music artist internet is one of the best forms to distribute their music around the globe. http://www.hmvgroup.com/ http://2010hmvgroup.ry.com/

Marketing Audit and its Importance

Marketing audit is an approach of analyzing the market condition of an organization. It is very important for an organization because it can tell weakness and opportunities for further improvement of marketing activities done by organization. It is also a strategic management and marketing assessment and it tells more than focusing on advertising or marketing, and it can be used as overall organizational approach to analyze marketing and selling of product and services. The Marketing audit help organization to know there position in marketplace, for instance targeting the right market at right time, competitive offering of product and services, offering right price for the product and improving your competitive advantage in the marketplace. Market audit help internally to assess your organization has capabilities, structure and resources, to improve market opportunities and market position.

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Research
Both primary and secondary data has been used to make this report. The data has been collect by following recourses: o o o o o HMV official website Books, Journals, newspapers and Ebsco business source. Evaluating research carried out by others on HMV. Panel survey Blog

Result of research findings

The Impact of illegal downloading on music markets

UK music industry revenues

(figures in pounds thousands)
1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 2004 2005 2006 2007 2008

PRS revenue Live revenue (to artists) Recorded revenue (to labels)

Live revenue (to promoters) Recorded revenue (to artists)

UK music industry revenue from 2004 to 2008

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 Illegal file sharing became popular

Spending money on different sources of entertainment

figures in pounds billions
10 8 6 4 2 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Games total Music DVD sales DVD rentals

People spending more money on different sources of entertainment other than music

HMV responding to market change

Games Other and 2% technolo gy 14% Games Other 3% and technolo gy 24%

2007

2009
Music 28%

Music 37% Visual 47%

Visual 45%

Sales of HMV growth from 2007 to 2009

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Internal and external marketing environment audit of HMV

PEST Political Factor
Political factors are government rules, regulations, law and plans, which have the great influence on the business. In music industry free downloading has been a big evolution because of the legal gap in internet guidelines; illegal downloading has developed a lot. This downloading was one of the biggest threats to music retailers and to overcome this British government has decided to pass the digital economic bill in 2010.

Economic Factor
Before the recession or financial crisis the UK was one of the most powerful economies in the world. But after recession the buying power of consumer has reduced and the retailer are suffering the effect of financial crisis around the country. The decline in UK economy and changing customers habit will be upcoming challenges for HMV.

Social Factors
Modern music and traditional music is always a part of UK society. UK has the large variety of films, regarding their film industry. Entertainment business has changed the people lifestyle constantly. Customers are more concern about their enjoyment, fun, laughter needs.

Technological Factors
Mp3 players, Androids, apple and tablets have completely redefined how music, movies, games and news are worn in customers lives (Jennifer L., 2007). In this modern world technology HMV should target to increase their sales by improving their technology (Oxford University Press, 2008).

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SWOT Strength
HMV is a well known brand and has a strong image. Has a large range of product and services (music, video, games, live tickets and other related entertainment products) on the high street. HMV is multichannel distributer they sells there goods offline as well as online. Free delivery and wide range of product available online. HMV promote their product and services by different and innovative ideas for example t-shirt, mug and poster of upcoming movies. Having stores in different location around the globe can be strength to hmv. HMV Group Annual report and accounts 2010 (Online) available at: http://2010hmvgroup.ry.com/

Weakness
In store sales reduced due to new technology and downloading of music, bad referencing on search engine likes Google and other. Late arrival on online retailing, Competitors has lower price as compared. HMV shares have been fallen down from 282.00 per share (21/02/2005) to 3.91 (16/04/2012). http://www.bbc.co.uk/news/business-11956003 http://www.hmvgroup.com/investors/share-information/share-price-data.aspx

Opportunities
Government strong will to fight against illegal downloading by passing digital economic bill in 2010. New technology is growing tremendously and has brought new perspectives of innovation and development like 3D and wireless consoles. HMV has open its first cinema last year in London. http://www.bbc.co.uk/newsbeat/10002517

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Threats
Downloading is a great threat and give more power to buyers. As technology is constantly changing, its very hard to keep up with it. Trading condition for HMV is going to be complex in home as well as broad because of recession around the globe. http://2010hmvgroup.ry.com/

Proposal of 4 Ps
Product
From past few years HMV has expand into new and entertainment product areas. This strategy tells them that they must step up HMV product mix, with focus on technology. (Daily mail Reporter, 2010). Giving more importance to visual (blue-ray and DVD), music and games because most of the income come from it. There are launching smart phone gaming offer on HMV website in partnership with orange. HMV should target and launch more technologically advanced products as its a new generation of technology. http://hmv.com/hmvweb/navigate.do?pPageID=4891

Price
Entertainment world is very competitive as some of online and retail competitors offer same products at cheap price. As a result HMV is facing a great competition and challenge in setting their prices. HMV chooses high price for their product and service to generate maximum revenue from high society people who are willing to pay high price, however they should change their pricing strategic and develop new pricing strategy in which they can compete with their competitors and have the competitive advantage.

Place
Distribution channel of HMV is quite simple, they have a warehouse in which they produce high quality product and distribute it to all stores in UK. HMV has more the 400 stores in UK.

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HMV also sell their product online through their website hmv.com. With the aim of expanding their business HMV is working with Waterstones, Curzon, MAMA group and Orange. http://newsroom.orange.co.uk/2009/04/29/orange-and-hmv-sign-high-street-partnershipdeal/ http://www.hmvgroup.com/media-centre/quick-facts.aspx

Promotion
HMV should bring more artists in their business from all over the world to inspire the customer about their product. HMV should host more and more live events and stage show to bring their customer nearer. HMV has introduced a new customer loyalty scheme that offers a lot prizes and discounts. http://www.mcvuk.com/news/read/hmv-launches-new-customer-reward-scheme/012551

Conclusion and Recommendation

In this report Internal and external marketing audit has been done and marketing plans have been recommended to ensure HMV continuous growth. PEST and SWOT analysis has been done to show the clear market position of the company. 4 Ps describe the proposal tool for marketing mix, which focus in developing their product, setting price, distribution channel and promotion of their product. Instead of what we hear on HMV situation, it is not as bad as this. They have good strategic partnership and capabilities. By setting up some strategy like cutting the unnecessary cost and adapting long- term strategies of market penetration, franchising or joint venture in different part of world. Some long term strategy (product development and innovation) and some ideas of implementation that can help company to re-gain its place in the market and even to do better.

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References used in making this report:

Auditing Markets, Products and Marketing Plansby David Parmerlee. Marketing Management International Perspectives by M.S Raju and Dominique Xardel. How to write marketing Plan by Westwood and John. Marketing channels by Bloom B.R. http://www.hmvgroup.com/ http://2010hmvgroup.ry.com/ http://www.scribd.com/doc/59590493/HMV-Analysis http://www.guardian.co.uk/business/2012/jan/09/hmv-insists-survive-despitechristmas-sales http://www.hmvgroup.com/~/media/Files/H/HMVGroup/Annual%20Reports/hmv_annual-report-2011a.pdf http://www.mcvuk.com/news/read/hmv-launches-new-customer-rewardscheme/012551 http://newsroom.orange.co.uk/2009/04/29/orange-and-hmv-sign-high-streetpartnership-deal/ http://www.hmvgroup.com/media-centre/quick-facts.aspx http://hmv.com/hmvweb/navigate.do?pPageID=4891 http://www.bbc.co.uk/newsbeat/10002517 http://www.bbc.co.uk/news/business-11956003 http://www.hmvgroup.com/investors/share-information/share-price-data.aspx http://www.prsformusic.com/aboutus/press/latestpressreleases/Pages/UKMusicInd ustryrevenues.aspx http://books.google.co.uk/books?id=-W1B0VbQOYC&pg=PR12&dq=books+on+marketing+audit&hl=en&sa=X&ei=BMyOT9_lH M238gPa96W9Cw&ved=0CGoQ6AEwBQ#v=onepage&q=books%20on%20marketing %20audit&f=false http://www.enotes.com/hmv-group-plc-reference/hmv-group-plc

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Timeline of HMV
1921 - The Gramophone Company (later EMI) opens first HMV music store in Oxford Street under auspices of Edward Elgar 1966 - EMI begins expansion of HMV retail network 1976 - With 35 stores, HMV is leading music retailer in the United Kingdom. 1986 - HMV becomes autonomous division under Thorn EMI; HMV begins international Expansion with first store in Canada 1990 - HMV enters the United States, Japan, Australia, and later Hong Kong and Singapore 1998 - EMI and Advent Investors create HMV Media Group joint venture, which then acquires HMV, Dillons and, from WH Smith, Waterstone's bookstore chain; Dillons is subsequently rebranded as Waterstone's 2002 - HMV Media goes public on London Stock Exchange and changes name to HMV Group 2003 - Company opens first new Waterstone's in four years 2010 - HMV begins to struggle with poor sales results and shop closures

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