Marketing Essay Example | Topics and Well Written Essays - 1250 words - 2

Marketing - Essay Example 3). E-commerce sites such as Amazon and Play.com are also sources of competitive threat as they provide the facilities for online purchasing. In online purchasing, the consumers have many of the same advantages when it comes to music downloading. Online purchasing offers greater ease of searching and convenience and the consumers can sample the products and read reviews. Online retailers also have the ability to offer a wider selection of titles than it is possible for a high street store like HMV. HMV has a solid platform from which to launch its new drive. As mentioned before, it has a high brand equity in the market. Therefore any initiatives are likely to be welcomed by the market as the consumers have trust in the brand (Kotter & Schlesinger, 2008, p. 138). The management of the company needs to formulate strategies which address the competitive threats from three sources: downloading, online purchasing and supermarkets. The supermarkets which are competing for the same market s hare are Asda, Tesco and Sainsbury. The management of HMV needs to consider the strengths of the competitors and formulate alternative strategies accordingly (Pearlson & Saunders, 2005, p. 19, Wang & Rode, 2010, p. 9). Therefore an industry analysis should be conducted (Pascale & Sternin, 2005, p. 73). The threat of new entrants is minimal because of the high competition. The threat of substitute products comes from online. These two threats combine to create a high threat of competitive rivalry. Buyers do have high bargaining power given the wide choice from online. For the same reasons the artists who provide the content have high bargaining power. Alternative strategic options According to Michael Porter’s theoretical model for strategy formulation, an organization has three competitive strategies available: cost minimization, differentiation and quick focus (Gosling & Mintzberg, 2004, p. 55). In the present context, differentiation is a viable option for HMV. The music an d entertainment retailing company can arrange to maintain a diverse product selection, thus reducing the competitive threat from online companies which are eroding the attractiveness of HMV’s business model by offering a wide selection of titles. Diverse product categories will also help to attract a greater number of market segments, thus enhancing the company’s market exposure (Winfield & Hay, 1997, p. 55). For example, HMV could increase the range of portable digital products. As the popularity of online purchasing grows, so will the demand for portable digital technology. The range of games hardware and software can also be expanded. Nintendo technology has taken the market by storm. Therefore products in this category should be emphasized upon in implementing the differentiation strategy. The pricing structure could be changed to increase demand. HMV is facing competitive pressure from music downloading because downloading facilitates lower prices. However in modi fying the prices, HMV should not forget about maintaining its brand image. If the prices were too low, then it would begin to affect its brand image as the consumers would start to suspect the quality of the products which are priced at such a low level. In pricing its products, HMV has five strategies: skimming pricing, competition pricing, psychological pricing, premium pricing and cost-based pricing (Teece, Pisano & Shuen, 1997, p. 510, Ross & Perry, 2002, p. 121). If HMV were to implement the pricing option, then it would