Hmv Market Environment

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INTRODUCTION
After a rapid development over the past 10 years, the music market is currently undergoing significant changes. These changes are caused not only by marketing competition but also by the challenges from external marketing environment. The entertainment industry kept growing for years and as the business grew, the competition also increased. There has also been an increase in the sales of music online. Selling online made it cheaper for customers and as a result many preferred to buy them online rather than going to the stores and buying music. Secondly, there has been an increase in illegal digital downloading; young people tend to download music of various formats which are easily available from the internet. This has lead to the decrease in the sales of music and is right now a major problem today. We are here to do a marketing audit on HMV which is a UK based international entertainment retail chain. It is listed on the stock exchange and earns millions from selling entertainment to countries around the world.

THE MARKETING ENVIRONMENT
This consists of both Macro and Micro forces which are not fully controllable by the business. These external influences can be kept under certain limits of control by identifying and monitoring these forces that are relevant to the business. This is how HMV can keep control.

THE MACRO ENVIRONMENT: PEST
Political
HMVs decisions are hugely affected by the political and the legal environment. HMV is under the current legislation, any changes in either the government policy Monopolies legislation, Environmental protection laws, Employment laws and Taxation policy will influence on how it makes its decisions. For instance the increase in the VAT to 20% has lead to the decrease in sales of music. As a business HMV will have to make the best decision, they can freeze the VAT so that the price remains low and more customers can buy music cheaply.

Economic
This plays a significant role in determining the likely demand for products and services. Decisions of HMV will be influenced by local, National as well as international economic factors. Some examples are changes in Inflation, Employment, Disposable income, International trading blocs, interest and exchange rates. For instance, there has been increased rate of unemployment in UK at present; this has lead to the reduction in the sales of luxury and other highly priced products. HMV has to make wise decision by reducing its prices to make it more economical to its customers.

Social
This social/cultural environment affects a society's values, perceptions, preferences, and behaviors. People grow up in a cultural environment that shapes their beliefs and values that defines their relationship with others. It is therefore important for HMV managers to understand what is going on in this constantly changing environment and try to adapt to it. They should sell those products that accommodate the social/cultural environment. Some examples of social factors are Demographics, Distribution of income, Lifestyle changes, Levels of education.

Technological
The technological environment is very important today in shaping HMVs destiny and is therefore a very important force. Increase in new electronic and computer technology have generated large number of new products which in turn increases the demand for new markets and opportunities. However, there can also be consequences that are not all the time foreseeable. As a business HMV should update itself so that its opportunities for selling new music products increases. Some of the factors that will affect the HMVs decisions are new discoveries and innovations, Speed of technology transfer, Rates of obsolescence and Internet etc.

THE MICRO ENVIRONMENT
These factors affect HMVs ability to serve its customers. Examples of these factors are the company itself, its suppliers, marketing intermediaries, customer markets, competitors and the general public. If we take the...
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