HMV Group’s Segmentation, targeting and positioning analysis
If we look at the way HMV group approaches its target markets, we find that it is trying to position itself as a retail-entertainment store by selling games, DVDs, gaming consoles, electronic items such as DVD players and headphones. Through its online website https://hmvdigital.ie/, it also sells digital content much like the current market leader iTunes.
As per Kotler (2011), marketers can never satisfy everyone in the market. Not everyone likes the same music, artist, movie or director. Therefore, marketers start by dividing the markets into different segments. By identifying different segments, they recognise a specific group of buyers who might opt for different products and services by carefully analysing demographics, behaviour and psychographics among the buyers. The markets can be segmented into demographic, geographic, psychographic and socio economic factors. Speaking of HMV, it has evaluated various segments and has selected those which it can serve best. The factors considered during this selection is the size and attractiveness of the segment and it alignment with the company’s objectives.
The group has stores in Ireland and other European countries, these stores have DVDs, music CDs, games, gaming consoles and other products which can be used by consumers of different age groups. Through its gaming consoles and game collection, HMV is looking at targeting the younger crowd. With its wide range of DVDs and Music CDs, it plans to attract the people form 18- 55 years of age. Apart from this, the company also has a website www.hmv.ie and a music portal www.hmvdigital.ie through which people can purchase the products online through the internet. From these examples, we can infer that the HMV group uses geographic and psychographic segmentation techniques (Schiffman , 2011,p82). Through psychographic segmentation, HMV tries to target different people who have different tastes in music, games and who are of different ethnicities. HMV tries to provide a platform (through its website) by which people from all over the world can purchase its products.
Through these initiatives, HMV also tries to position itself as a classic and a niche brand. They follow the principle of niche marketing as their activities are focused towards developing a specific marketing mix which is directed towards a specific group present in the market, which allows the company to develop a reputation within a specific field. (Dann & Dann, 2004).
Marketing at HMV
- HMV’s stores are its biggest attraction, as per Trevor Moore (2012), the chief executive of HMV group, they must create a business that delivers a proposition that customers can engage in.
- Product: HMV makes money by selling games, CDs, gaming consoles and DVDs. Of late, HMV has also started marketing entertainment related technology products such as headphones, speakers, earphones and tablets.
- Price: The price of its product offerings are at competitive rates, considering competition from online marketers such as iTunes and Amazon. Also, in Ireland, the company sells its products and songs through its websites, where some discounts on songs and products are offered from time to time.
- Place: HMV mainly sells through its 200+ stores offering a range of DVDs, games and CDs. Apart from concentrating on its store sales in Ireland and other locations, the company also started selling products online. With the introduction of iTunes in 2003, the world of music has undergone a tremendous transformation. It has become digitised. According to Retail week (2012), HMV was late to tap this opportunity, and it started its online service only by 2010.
- Promotion: The group mainly promotes through its stores. It tries to attract customers by offering a unique ‘store experience’, with its wide range of products such as tablets, speaker docks and music collection. “Interactive technology features heavily, but the store also has a cafe with internet access and phone recharging points to help increase dwell time. HMV is trying to make its store a hub for its community, with a notice board for posters featuring local bands and gigs and there are plans to develop line event areas in store” ( Retail week, 2012).
If we closely look at HMV group’s marketing strategies, we realise that the company has started heading towards the trend of digitization of music. Although, it still gives a lot of emphasis on in store marketing activities, it has realised that in order to increase its revenues, it needs to compete with the like of Apple and Amazon in the digital space. It has changed its distribution strategy from a physical to digitized form. The company is keen on building a digital business and has made a lot of efforts since 2010. As per HMV group (2010), it wants to create ‘an ultimate entertainment hub’ by also selling third party products on its website.
Branding at HMV
Brand loyalty is something that is desired by all the companies that study and observe its consumers. As per Schiffman (2011), brand loyalty consists of both attitude and actual behaviours towards a brand and it is important to measure both of them. As per Oliver (2009), companies use branding initiatives like Cognitive, Affective, Conative and Action techniques.
In cognitive technique, the marketers stress the role of mental processes in building its brand loyalty over its users. Loyalty is generated by giving and analysing information such as price, features and attractiveness of the offerings. In this process, marketers believe that its users take part in a detailed problem solving behaviour and compare the offered product with other available choices. The brand is perceived to be superior by the customer if the offering is better than other alternatives and based on strong customer satisfaction. Through its wide range of stores and its online website, HMV is trying to develop its brand image and form a positive image in the minds of its customers. These customers would then form loyalties by analyzing the offered services with reference to other players such as Apple, Amazon and other online music stores. By doing this, the group can also revitalise and co-create a new brand identity for itself. Its glory days, which faded away, can return again through these initiatives.
Pricing Analysis of HMV
According to Schiffman (2011), many consumers use a price-quality relationship and the brand value to actually measure the value of the offerings. They consider the price as the indicator of the quality, and sometimes think that the products with lower prices have inferior quality. HMV must not reduce the price of its products in its store and digital space. It must focus on developing better work efficiency in its stores and must offer discounts and coupons to its customers. Instead of reducing costs and hurting its margins, the group must focus on improving its online interface and offer smart discounts on purchases of select albums and artists. It must also focus on trimming its cost by focusing on fewer, bigger and well-located stores (Marketing, 2013).
HMV’s current Market Analysis
As per Kotler (2011) and ICFAI (2011), a porter’s five force model can be effective in understanding the current situation of HMV and its competitive advantage.
Threat of New Entrants: In an industry where major players in the entertainment retail market are Amazon, Apple and EBay, it would be difficult for any new player to enter the market and capture the market share so easily. The threat from New Entrants for HMV is pretty low.
Bargaining Power of Suppliers: In case of HMV, the sales of third party products are given a major emphasis, since they are into retail marketing of entertainment products. Suppliers of HMV include authorised distributors and stockist of games, gaming consoles, DVDs, and headphones. Their bargaining power depends on the volume of their business with the group.
Bargaining Power of Consumers: This factor is pretty moderate, as the pricing of such products are more or less similar for other brands.
Threat of Substitutes: As per Retail Week (2012), Amazon holds a market share of almost 20% in the entertainment sector, followed by HMV’s 16% and iTunes’s 9%. The threat of substitute product is very high in case of HMV, as seen from the argument.
Competitive Rivalry: This is the most important factor that would determine the long term success of HMV group. With players such as Google Store, Apple iTunes and Amazon, it will be a challenge for HMV to gain market share.
The HMV brand still has what it takes to be relevant and it still holds a special place in the hearts of the Irish consumers. If it wants to make the most of its current opportunity, it must place its strategy based on studying its consumer’s behaviour. It needs to focus on aspects by which the brand can connect with the customers in the right way.
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