KCB ID: 12128

UNIVERSITY OF WALES

UNIVERSITY STUDENT NO: NO REG

KCB ID: 12128

MODULE NAME: MANAGING MARKETS

ASSIGNMENT TITLE: MARKETING STRATEGY FOR EMI

SUBMISSION DATE: 18th December, 2009

NAME OF MODULE LEADER: MR. KENAN IBRAHIM BHATT

KENSINGTON COLLEGE OF BUSINESS

Wesley House, 4 Wild Court

London, WC2B 4AU

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TABLE OF CONTENTS

S.No TITLE Page

Executive Summary 3

1 INTRODUCTION 4

2 CASE STUDY 4

2. a ENVIRONMENTAL SCANNING 4

2. b MACRO, MICRO AND SWOT ANALYSIS

FOR EMI 5
2. c RECOMMENDED MARKETING STRATEGY
FOR EMI 8
3 Conclusion 9
References 11
Appendix-1
10

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CASE STUDY ON

ELECTRIC AND MUSICAL INDUSTRIES (EMI) GROUP PLC

To,

The Senior Management,

EMI Group Plc.

From,

ID: 12128,

The Marketing Executive,

EMI Group Plc.

18.12.2009

SUBJECT: EMI MARKETING STRATEGY

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EXECUTIVE SUMMARY

Electric & Musical Industries (EMI) Group Plc is one of the world’s largest music companies

based in United Kingdom, which was established in 1931. At present, EMI group plc owns more

than 100 recording labels and one million musical compositions. In 1990s EMI shares were the

marketer’s favorite shares which earned billions of money. But in recent years EMI is facing a

decline in its growth rate because of the influence of various factors.

This report presents a detailed analysis of various factors that affects EMI Group Plc. It

explains ‘what is marketing environment?’ and the significance of environmental scanning of a

marketing environment. The major forces of a marketing environment are Macro and Micro

forces. These forces are explained clearly in the following context and the effects of these forces

on EMI’s marketing environment are analyzed in depth. Finally, the appropriate marketing

strategies for EMI are briefly discussed.

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1. INTORDUCTION:

Electric & Musical Industries (EMI) is one of the world’s largest music companies based in
United Kingdom, which was established in 1931. EMI Music Company consists of two main
functional groups; EMI recorded music and EMI Music publishing.

EMI recorded music has more than 100 recording labels which is featured by some of the
greatest rock and pop stars in the music history. EMI Music publishing possesses the rights to
more than one million musical compositions, which it markets, licenses, and sells.

2. CASE STUDY

2. a) ENVIRONMENTAL SCANNING:

A typical Marketing environment is comprised of various outward forces that instantly or

lately affect the growth rate of a firm in terms of both possession of inputs and production of
outputs.

Marketing environment of a firm can be expressed in many ways. The most popular
definition of marketing environment was given by Kotler (2009),

“A company’s marketing environment consists of the actors and forces external to the
marketing management function of the firm that impinge on the marketing management’s
ability to develop and maintain successful transactions with its target customers”.

There are six important external forces that hardly influence a firms marketing environment.
They are: Political, Economical, Social, Technological, Legal and Regulatory. These forces are
called as Macro forces of the marketing environment as they affect all the company functioning
in a particular market. There are also several other forces in addition to ‘Macro forces’ that are
termed as Micro forces, which affects the internal environment of a company (Lancaster/ Lester,
1993).

However, these forces in a marketing environment tend to vary more randomly resulting into
opportunities or threats to an organization. Hence it is mandatory for a firm to keep track on
these changes in the marketing environment for its success. The process of acquiring information
about these forces in a marketing environment is termed as Environmental scanning, which
involves keen observation of the marketing environment with the aid of various sources of
information such as the government, web, market research, publications, business articles, trade,
or any information that gives some useful data about the marketing environment (Sally et al,
2006).

The significance of environmental scanning can be understood by the following case.

Consider the UK music industry, which faced a huge drop in its growth rate due to illicit file
sharing on the internet during the beginning of the millennium year 2000. It affected the sales of
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CD albums drastically, so the internet technology appeared as a dreadful threat to the music
industry which could merely kill the music business. Later, the marketing planners discovered
that this internet technology is a massive opportunity to develop the music industry apart from
piracy.

As a result of the environmental analysis, several official music download websites were
launched such as iTunes, Napster, and Amazon. This new marketing strategy made the music
business easier than ever and gradually lifting the drowning music industries by making
remarkable profits. Those companies which failed to adapt to this sudden change faced severe
loss.

This example illustrates that, In order to sustain in a market without heavy loss the
organization must monitor the changes in the marketing environment frequently and should
adapt to the changes in the same (Lancaster/ Lester, 1993). If a company failed to take necessary
action towards the changes in the marketing environment then, soon or later the company will be
thrown out of the market. These environmental changes in the market can be a gradual long term
change or a rapid change as in our example.

In order to perform an effective environmental scanning the market planners should have the
ability to,

 Find out the forces that provide more appropriate opportunities or threats to a
particular organization.
 Observe and predict the forthcoming changes in the market.

 Imply these changes for future marketing strategies.

 Expand and execute proper marketing strategies in order to counter these

environmental changes. (Lancaster / Lester, 1993)

2. b) MACRO, MICRO, and SWOT analyses for EMI :

Macro environment consists of four major forces namely Political, Economical,
Social and Technological; whereas, Macro analysis provides the effects of these forces on the
company. From my analysis on Macro environment for EMI group plc, it has been found
that,
 EMI, as part of its social responsibilities, has established music related charity
called ‘Music Sound Foundation’ (MSF) in 1997. MSF supports music education to
schools, colleges and assists individual students to access music education free of cost.
This action of MSF has produced a positive impact on EMI among the society. MSF also
helps EMI to understand the public opinions on functional issues such as digital
technology, and copyright protection (Anon, 2004).

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 As Compatible Disk approaches the end of product life cycle, music industries are
forced to use digital channels in support of their business. The extra ordinary growth of
Internet technology has made EMI to invest more on digital music. EMI currently
provides access to 30% of its musical products through legal download websites. The
entire music market is badly affected by illegal file sharing, to tackle this effect EMI uses
DRM (Digital Rights Management) technology for its online content copy right
protection. It also uses macrovision’s anti rip CD system to prevent the musical tracks
being ripped from the CD by unauthorized users (Anon, 2008).
 In 2008 the overall physical sales of EMI was declined by 13.4% but the digital
sales faced an overall growth rate of 29.0% (Anon, 2008). As a result of decline in the
physical CD sales, EMI’s CD manufacturing is stopped in few areas of UK. Though
physical CD sales of EMI are declining, there is a considerable increase in Digital
revenue of the company. This shows the impact of decline in the global physical market
due to high CD pricing and also, most of the music tracks are downloaded by the
consumers either from legal or illegal websites on the internet rather than buying a CD.

Micro forces in a marketing environment, generally affect the organization’s internal

environment. The core components of Micro forces include: competitors, customers, distributors,
suppliers, market share and financial aspects. These forces are more company specific and have
its impact only on a particular organization, not on the entire market. As for as EMI is concerned,
the various micro forces which affect its internal environment are discussed below:
 UK music market is one of the biggest music markets in the world. So obviously,
there will be a cut throat competition for EMI in the UK market. The main competitors of
EMI are Warner Music Group, SONY Music Group, BMG Music Service, and Universal
Music Group (Gideon 2008). Since all these four competitors have a good financial
foundation and marketing strategies, it is difficult for EMI group plc to hold its position
in the market.
 Before a decade, everyone was interested in buying CD albums of famous record
labels. Today, most of the consumers are willing to download their favorite songs from
the internet so that they can easily transfer the songs to the iPods, and mp3 players. Also
due to the illegal file sharing websites; where music content is available for free of cost;
few people lost interest in buying musical albums (Gideon 2008). Some people also
prefer live concerts instead of buying music. Thus, the change in customers buying
behavior has hardly affected the EMI’s music business.
 As an impact of cut throat competition, high CD pricing, illegal file sharing and
overall drop in global market share; the EMI market share price has incredibly declined
by a huge rate. In 1996 EMI was at the top of the UK market, having a maximum share
price of 1,045p, but the same EMI group plc reached a very low share price of 78p during
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the year 2004 (see Appendix) (Anon1, 2004). This drop in the market share value of EMI
shows that it has not taken proper action to counter the effects of the environmental
changes in the market.

The SWOT (Strength, Weakness, Opportunities, and Threats) analysis is performed

based on various Macro and Micro factors that influence both internal and external marketing
environments of EMI (Rizal et al, 2008).
Strength:
 EMI has established its market in more than 40 countries; it means that EMI is a
physically powerful organization.
 Being the biggest self-governing music company, its huge resources and great
market share helps EMI to gain best artist and staffs.
 EMI owns more than one million albums and has a roster of world’s most
successful artists.
 EMI established social funding charity called Musical Sound Foundation (MSF)
in 1997.
Weakness:
 Since EMI is the largest self-governing company which is not owned by many
corporation, it has to produce its own funds without the assistance of any other larger
organization.
 In the recent years, EMI group plc’s market share price is facing downwards due
to the influence of various internal and external forces of marketing environment.
 EMI has a very few digital distributors and only 30% of its entire musical albums
is digitally available.
Opportunities:
 EMI can increase its market share by having collaboration with other music
company. EMI now has a successful collaboration with Apple iTunes, and Yahoo!
for mutual profit (Rizal et al, 2008).
 Internet technology is a rapidly growing market for music business. The success
of music retailers such as Apple iTunes shows the possibility of selling music
through internet beyond the piracy. EMI can increase its market share through digital
sales of music albums.

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 By liberalizing the M&A regulations in music industry, the EMI’s opportunities

to collaborate with other music companies can be improved resulting in high market
share price.
Threats:
 Illegal file sharing is the biggest threat to the music industry. It is predicted that
due to illegal file sharing the physical sales of music albums will fall by 35% by
2009. Music Company Such as EMI will face huge loss because of this mass
downloading (Rizal et al, 2008).
 Since EMI is a globally operating company, the variations in the interest rates and
exchange rates can put the revenues and profits of the company in a critical position.
 At present there is a cut throat competition in music business. The main
competitors are; Warner Music Group, SONY Music Group, BMG Music Service,
Universal Music Group and EMI Group plc. EMI should have an eye on the
competitor’s activities, because they may affect the company.
2.c RECOMMENDED MARKETING STRATERGIES FOR EMI:
So far we discussed about the influence of different factors that made EMI to
underperform. As a result of the underperformance; EMI’s revenue, market share value, and
profit has declined by a huge rate. Now, it is time for EMI to reconsider its marketing
strategy, so that it can improve its music business. In this section few key points of marketing
strategies are discussed, which may help EMI to increase its growth rate.
 The main reason for the drop in physical sales of EMI is high CD pricing.
Introducing appropriate price cut would attract the customers to buy CD. The reduction
of CD price, should improve the physical sales by increasing the demand in the market.
By this way the retailers can also increase their profit which maximizes the distribution
of CDs (Rizal et al, 2008).
 EMI should monitor the customers buying behavior in order to provide what they
need. The evolution of digital music has gathered the attention of consumers. So EMI
should focus more on digital market to provide music using new technology to the
consumers.
 Using internet as a medium, will give EMI a new market so that it can gain more
customers. The digital sales of music are very flexible for both the company and the
consumers. The digital music reduces the manufacturing and operational costs of
physical CD sales of EMI. Also, it allows the customers to easily access their desired
content of music, just sitting in their home.
 The development of the digital sales has divided the music market. The digital
sales market has got many digital retailers such as iTunes, Napstor, Full audio, Roxio,

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etc. In order to compete with competitors EMI should increase the number of digital
distributors to maximize its digital sales (Anon 2002).
 When it comes to digital music, there always arises a problem of incompatibility.
Those music files that can be played on Apple iPods’ do not support other music players
such as Sony and Microsoft. This incompatibility of music files leads to confusion of
customers and creates a bad impression on the company. So EMI should be able provide
digital music that can be played on any music player.
 It is always good to use new technologies; EMI can go ahead by providing the
latest release of songs, available directly on the Mobile phones of the consumers.
Nowadays, most of the mobile phones are 3G supported and EMI can use this
technology to gain more number of customers which also gives a new market share.
 Piracy is the biggest threat to music industry. Though it can’t be eradicated
completely, Music Company such as EMI, UMG, and BMG can force the government
to take severe action against the unauthorized users who runs the illegal download
websites.
 EMI can attract more customers using more promotions, advertising, and by high
quality musical albums. Also, signing contracts with great pop stars and musicians can
help gaining attentions from consumers and retailers. Allowing offers on musical
albums during festive time can improve the sales of musical albums.
 Without efficient managers and employers a company cannot achieve its
objective. The managers should share the same interest as that of investors, if not the
company will have poor performance. So reshaping of organization is also important
whenever necessary, to minimize the loss and maximize the profit.EMI should appoint
efficient managers and do necessary job cuts to minimize the operational cost. EMI
should also end the agreement with artists who underperform during the period of
contract.
3. CONCLUSION:
Thus, the problems of EMI are; piracy of music, high CD price, changes in the customer
buying behavior, cut throat competition, lack in technological development, and poor management.
These are the various factors which affects the growth rate of EMI Group plc. In order to increase its
market share and maximize the profit, EMI should reconsider its marketing strategy. The above
discussed marketing strategies may help EMI to increase the consumer’s loyalty on the company and
may gradually increase its growth in the future.

REFERENCES:
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Anon, (2002), ‘EMI Group signs online distribution deals’, The Independent, Thursday
November 14 2002. Available at: < http://www.independent.co.uk/news/business/news/emi-
group-signs-multiple-online-distribution-deals-604212.html>

Anon, (2004), ‘CBI- CSR case study’, March 2004.

Available at: <
http://www.article13.com/CBI/CBI_CSR_Case_Study_Ford_March_06.pdf>

Anon1, (2004), ‘EMI Group, EMI’, Thursday Nov 25 2004.

Available at:<http://www.fatprophets.co.uk/Member%20Area/Product%20Landing/Report
%20List/Report%20Page/Article%20Page.aspx?id=22639a73-d5f9-4610-96c9-
90916e96d6cc&product=UK%20Equities&pt=paid

Anon, (2008), ‘EMI Group Annual Review Year ended 31 March 2008’. Maltby Capital Ltd.
Available at: < http://www.emigroup.com/NR/rdonlyres/0753D5E3-20C6-433E-A616-
D1BC4482BB42/1662/MaltbyCapitalLimitedAnnualReviewStatements1.pdf>

Gideon, S. (2008), ‘Struggle to get EMI rocking again starts with a few smart recruits’, Evening
Standard, Monday April 21 2008. Available at: < http://www.thisislondon.co.uk/standard-
business/article-23479521-struggle-to-get-emi-rocking-again-starts-with-a-few-smart-
recruits.do>

Kotler, P. (2000), Marketing Management, 3rd Edition (The Millennium Edition), New Jersey:
Prentice Hall.
Lancaster, G. A. / Lester, M. (1993), Marketing Management, Great Britain: McGraw-Hill.
Sally, D. Lyndon, S. William, M.P. Ferrell, O.C. (2006), 5th Edition (Fifth European Edition),
Marketing Concepts and Strategies, Boston: Houghton Mifflin.
Rizal /Azizul / Raof / Syazwan. (2008), ‘Case study: CD pricing in the recorded Music Industry’.
Thursday April 17 2008.

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Appendix

Chart-1 Reproduced from: www.fatprophets.co.uk (Anon1, 2004)

Chart-1 Shows the decline in the Market share price of EMI group plc from 1990-2004.

Chart-2 Reproduced from: www.advfn.com

Chart-2 Shows the decline in the market share price of EMI group plc from 2005-2009.

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