Custom «Marketing Environment for HMV» Essay Paper

Introduction

HMV is among the largest global music stores based in the United Kingdom. It was founded in 1921 and is currently listed on London Stock exchange. It was established by Gramophone Company, but the name HMV came into use in 1930s. It started its retail ventures in 1960s and expanded into other countries in the world. The company has many acquisitions some of which it has already sold (Roland & Ruddick 2013). Over the last few years, the company has been experiencing problems with sales, which have been brought about by the increasing cases of Internet downloads (Roland & Ruddick 2013). After very low sales in December 2012, the company started to look for an interested investor who would buy it off, but there have not been interested parties, especially considering that the company has not been performing well, and its technology is running outdated (Murphy 2013). The company has faced numerous challenges in the recent past, including rent issues and poor sales, and has even decided to close most of its stores. This led to the loss of employment by its many employees (Murphy 2013).

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This paper aims to describe turbulence in the market and attempts to provide workable solutions that marketing manager in the company should put in place to improve the position of the company.

Turbulence

Pun (2002) states that the changing nature in current business environment is unprecedented in history. UK economy is currently facing slowdowns that result from changes in political leadership as well as rapid change in technologies resulting from innovations and competition in the field. Turbulence refers to the changes that affect performance of goods and other products in the market (Doyle & Stern 2006; Goldsmith 2009). These changes are manifested by the changes in preferences of customers that are mainly engineered by technological changes. These changes are changing the expectations of customers from their suppliers, since technology is making the supply chain easier and faster. Firms are therefore under pressure to satisfy their customers competitively. The competition from different firms to satisfy customers is the major cause for the turbulence (Ott 2009).

Efficiency and Effectiveness

Efficiency refers to the extent to which a process takes up resources, mainly time and money from an economy (Helms 2009). Helms (2009) further define effectiveness on the other hand refers to the extent through which a certain process meets the desired objective as reported by the customer. In a nonprofessional’s language, efficiency refers to the usage of the correct procedures to perform a task, while effectiveness refers to undertaking the correct procedures within a firm (Le Serre, Legohérel & Weber 2012).

As Arnett (2010) states, there is a need for any company operating in a turbulent environment to have a compass and not a detailed roadmap. The latter will not be useful in a market where the next event would be hard to predict (Pun 2002). At this point, the most important tool for a manager is a compass that would show the direction of the firm and its decisions (Grant 2007) in order to enhance efficiency and effectiveness. A turbulent environment undermines the competitiveness of the firm as well as its profitability thus affecting the level of customers' satisfaction.

Marketing environment refers to factors that affect the producer in the provision of a given service or product to a customer. It is divided into three types namely: internal, micro, and macro environment (Le Serre, Legohérel & Weber 2012). Internal environment consists of internal factors that run a firm. Such factors include employees within the organization, machinery, investment, and materials among others (Melton 2004). These factors are fully controlled by the firm (Ferguson 2010; Golden, White & Leslie 1998). Micro environment is the other interacting factor that directly affects operations of a firm. It includes suppliers, competitors, and customers among others. They are controllable and their negative effects can be mitigated. Macro environment refers to factors that cannot be controlled by the firm. These include technological innovations, government policies, culture, and demographics among others (Ferguson 2010). Firms must align their operations to fit in these factors because they are beyond the control of the firm. They cause turbulence in a marketing environment, and create many specific forces that affect the general performance of a firm thus affecting the effectiveness and efficiency within the firm.

Environmental Scanning

Environmental scanning refers to the approach used by managers to examine external environment, then make decisions that are in line with the external environment (Doyle 2002; Strydom & Jooste 2009). This is important to ensure that the firm remains competitive despite the changes that might be experienced in the external environment. The microenvironment can be analyzed through the use of stakeholder analysis while tools such as PESTEL and SWOT analysis are also used (Golden, White & Leslie 1998). The scan ensures that the firm adapts to turbulent market it faces, thus mitigating the effects of turbulence. A diagram showing some of the macro-environmental issues is shown below.

After a successful environmental scan, managers may determine that the marketing environment has several forces that push it to take a given direction, thus making the market turbulent (Ferguson 2010). Customer choices and preferences are continually changing, while standards of service are equally increasing. Some of these forces are discussed further.

• Fashion Change - There are many things that are held fancy by different generations (Ferguson 2010). This leads to change in customer satisfaction and makes firms learn about the tastes of their customers to ensure they remain loyal while the firm remains competitive. HMV has been heavily affected by this force because company's main line of products are not fashionable these days. There are more convenient entertainment channels other than the use of CDs. Moreover, most of their materials are not appealing to contemporary youth. This has made their customer base consist of people of older age, thus making the number of potential customers quite small. The company needs to reinvent their products to enhance effectiveness.
• Micro Markets - There are many innovations in the current market that leads to easier economic expansion of firms (Ferguson 2010). There are many types of software that ensure easier management as well as communication with customers in masses. Though HMV has been successful in most of its operations, it has failed to reach its micro environment. Other firms are providing downloadable versions of entertaining applications, which has whisked off the business opportunities for HMV. The firm in this case is failing in its effectiveness because customers are not pleased with the products.
• Increase in Customer Expectations - In recent years, companies have improved the quality of their services, thus the expectations of customers have increased (Ott 2009). Firms have, therefore, been compelled to ensure that they make sufficient effort that would ensure that they continually increase their customers' satisfaction in order to retain their customers (Grant 2007). As music industry and innovations in it have grown, people have always expected that HMV would improve their quality of services and customer satisfaction. For instance, they have been lauded as the biggest entertainment company in the UK, but they have not been able to meet expectations of customers since they look to sell physical music, while their customers have expected them to move to the next level, where they would use Internet and less CDs. The company has failed to ensure effectiveness in their operations as well as their efficiency in resource allocation and use.
• Change in Technology - Improvement in technology has compelled firms to try and catch up with rapid innovations and incorporate them in their supply chains (Arnette 2010). They do this to ensure that they do not retain obsolete technology, which might not create a good image to customers. This has been a vital aspect of the performance of HMV. Firm has continually used obsolete technology and has resolved to have less stock thus scoring very poorly in its effectiveness (Ott 2009). People want more of iPhones, iPods, and other current technology for entertainment, which HMV has failed to deliver.
• Competition - Companies have been trying to ensure that they improve quality of their products in order to ensure they remain competitive among customers (Arnette 2010). Many firms have faced the danger of the emergence of strong competitors, who use better approaches. This has been the case with HMV, where the company has failed to beat smaller firms in the business due to low efficiency.
• Globalization - Increasing economic connectivity has made firms study the needs of a diverse market since they no longer compete locally but globally (Helms 2009). This has been a major blow to HMV group because they have not been able to adequately articulate their operations with global entertainment industry. Their closure of operations in most parts of Eastern Asia, Canada, and the United States shows that they failed to capture a global market outlook. They have now narrowed further to keep their British operations only with those in Ireland closing down recently (Kennedy 2006). Though the process was aimed at increasing efficiency, it is still facing problems due to increase in rent coupled with low sales.
• Service - As advantages of real product become more complex to gain and maintain, companies are turning to differentiation of their products, based on the additional services that go along with their main products (Allen 2003). The fate of organizations is defined by this factor, and HMV group is facing a turbulent market that the company cannot manage because there is little that the company can do to diversify their products. They have even tried to sell their business but no investors are interested because they feel that the company has failed continually, thus is hard to revive, especially with the nature of business they do.
• Commoditization - Successful firms are often facing a threat of new entrants, who produce substitutes to their products (Allen 2003). This makes them come up with new innovations that would ensure that they remain competitive in relation to new entrants. HMV group has failed in this, and new entrants have become more popular than this company because the latter uses obsolete technology that new firms have avoided and embraced new efficient and user-friendly methods to reach the market.
• Brand erosion - Big brands are facing stiff competition from smaller ones that have lower prices but nearly equal quality (Helms 2009). These firms need to ensure that they keep their place and reduce effects of entrants. Market environment continually demands for a representation of a brand. It. however, welcomes other smaller brands that eventually erode the existing brands. HMV group is currently facing threats because it faces the problem of low efficiency as they cannot reduce its costs of maintaining businesses, such as rent, hence is being overtaken by smaller brands that have low prices as they operate from smaller premises, hence lower rent and lower overall cost of running business.
• Legal matters - Legislation issues have resulted in more discipline that has traditionally been in the market (Doyle & Stern 2006). Politics are changing, restrictions are made stronger, and some policies are hurting organizations. Music regulation has been very intense in the world, while the spread of proper material to the public has been emphasized. This has not affected HMV group because they sell goods that are renowned. However, general effects of the market have equally affected them.

Recommendations

After a thorough scan on the HMV group environment, managers needed to first carry out PESTEL and SWOT analyses to determine their position in the market. After this, they need to use their strengths and opportunities to expand their business and then turn their threats into opportunities (Ailawadi, Pavwels, & Harlam 2012). This would be helpful to ensure that they do not fade in the market, but rather keep their brand well respected.

After a thorough analysis of the environment, the company should produce a strategic marketing plan (Doyle 2002). This helps them adapt to the market after learning the situation in the market through the earlier analysis. In this plan, they would be required to closely examine their market segment, interests of their customers, then determine the ways that their competitors have been able to topple them from the top (Galliot et al 2004). Further, managers could develop effective marketing systems that would be used to reach out to customers (Helms 2009). This would be a good guideline to salvage the company and continue with its operations since investors are not willing to buy it in the prevailing conditions.

The management team should consider updating company's products to go in line with the turbulent technological field (Galliot et al 2004). This would be a big stride since it would reduce the amount of stock needed, and more entertainment material would be obtained from their sites. They would also be required to reduce their prices to match those of their competitors, then use their image to attract their customers. These steps would enhance both effectiveness and efficiency to the firm, if not to get back to their business, but appeal to investors.