The online music market is a highly competitive market which has exploded with a large number of competitors in the recent years. Players such as iTunes, Napster and AmazonMP3 dominate this market with revenues being made by all players in the market exceeding US$4.2 billion in 2009 (http://www.ifpi.org/content/library/DMR2010.pdf). The online digital music download market currently consist of 400 legal music services engaged in providing 260 types of products which include music, videos, mastertones, ringtones, audio tracks, etc. The industry is pushed into more competition and the potential for new entrants are increased by the current trends in the market which includes higher consumer purchases of music online, faster and wider access to internet around the world and the increased ability to download and listen to music on-the-go with the developments in the mobile industry and mobile connections.
EMI music, otherwise known as Electric & Musical Industries was established in 1931 through a merger between Columbia Gramophone company and Gramophone company. It is the fourth-largest business group and family of record labels in the world and also owns EMI music publishing which is their publishing arm. The main competitors for EMI in the Digital music download sphere include brands such as Napster, iTunes, AmazonMP3’s which are more prominent in the market presently. But it is accepted industry-wide that EMI has the largest number of popular music artists under its logo and has the largest database of music of all record labels.
The following analysis attempts to identify the major forces operating in the market for Digital music downloads and aims at making recommendations for EMI to achieve growth in the future.
IMPORTANCE OF ENVIRONMENTAL SCANNING
The marketing planning process must begin with the environmental analysis. It is the process through which a marketer develops his/her understanding about the factors affecting the business as a whole and ultimately decides which decisions must be taken in order to ensure that the organisation is moving towards achieving its specified goals and objectives. It is defined by Brown and Weiner (1985) as "a kind of radar to scan the world systematically and signal the new, the unexpected, the major and the minor".
The environmental scanning process involves understanding factors in 3 environments which are known as MACRO, which includes forces in the wider environment consisting of PESTEL (Political, Economic, Social, Technological, Ecological and Legal) factors and MICRO, which involve forces operating in the closer market including Industry Rivals, Suppliers, Buyers, Substitutes & New entrants and finally the Internal environment which involves considerations of SWOT.
The environmental scanning process is very important in terms of strategy development as it paves the foundation for the company to build & determine its strategy. Without undertaking the environmental scanning, the organisation will be blind in terms of what is expected of it and where it should direct its activities. By undertaking Micro environmental analysis, a company is able to identify a wide range of indirect and direct effects on the market such as political environment, the economy, the technological developments and new trends developing within the society and changes to ways of living. In addition to that, Macro environmental analysis is beneficial in terms of analysing the activities of competitors and the effect on the organisation, development of substitutes which may replace the company’s products in terms of satisfying consumer needs and also the threat of new enterprises invading the market and the barriers to entry which make the entry an uneasy task. Undertaking these analyses is of utmost importance as it enables the company to identify the relative strengths and weaknesses of the company and compare them with the opportunities and threats in the market to...