Recommendation: Target the record labels for promotion of HSS reports. Start with the initial enthusiasts like Ken Bunt of Hollywood Records and use their testimonials to win other record labels. Make use of the business connections of the advisory board at Polyphonic to get better reach to decision makers at record labels. Offer free trial reports to convince record labels and an initial lower cost for buyers along with discounts for high volumes ordered over a fiscal year. In the long run, promote Human Music Interface as a complement for Hit Song Science to maximize the revenue earning capability of a song (by ensuring better listener penetration) that is marked as a winner by HSS. Rationale:
Target segment rationalization: The record labels constitute the segment with the biggest budget (deepest pocket and hence least price sensitive), highest influence in the music industry and positioned to obtain the greatest benefit out of HSS’s accuracy in music selection suggestions. There are initial enthusiasts in this segment who are already impressed with HSS’s capabilities. The market pie can be restricted to the USA (Exhibit 1) Value for the segment: The HSS program will enable record labels to select only those songs for promotion and advertising that has 80% chances of being successful compared to the 10% success rate offered by the tradition ways of selecting a song. Thus, the labels will considerably reduce the amount spent on marketing (Exhibit 2) and as a result will increase profit margins (Exhibit 3). Thus tremendous cost savings and considerable improvement of profit margins are the primary aspects that should be promoted to the record labels. Pricing: Initially price the reports at $7000 per song or 60,000 per album of 10 songs for the first one year of the contract and then go for a $10,000 per song or $80,000 per album. The discounting on album cost over single cost is to encourage buyers to buy in bulk. Also, offer discounts on high volume of orders – price beyond the 100th single is $6000 and price beyond the 10th album is $55,000. (Exhibit 4 describes the break-even with initial pricing and exhibit 5 describes the profit margin with the post-one year pricing strategies) Promotion or selling approach: The advisory board at Polyphonic comprises of big names in the music industry such as Thomas D. Mottola and Ric Wake along with the initial enthusiasts like Ken Bunt (executive of Hollywood Records). While Thomas is one of the most highly regarded and influential executives in the music business and has obvious strong connections with Sony Music Entertainment (a major record label), Rick is a highly successful producer and strong influence on a musical empire that has top successes and recognitions under its belt. Polyphonic should use these strong industry connections to target Sony, Universal and Warner for their initial promotion.
Additional inclusion in the long run: Polyphonic should promote the Human Music Interface as a complement to its Hit Song Science. The science that forms the back bone of music selection for the record labels will also recommend songs for the listeners thus increasing the reach or penetration of a song to the listener market. It is the record labels who will find the maximum value out of the availability of the complement. Hence, they can partner with Polyphonic to find a suitable hardware partner and get the machines in the retail music outlets.
Why the alternate market segments are less preferred? The producers and unsigned artists are not considered as the primary target segment because these groups are going to show the maximum resistant against adoption of the new technology. Members of these groups consider themselves as artists and hence are mostly not open to the idea of scientific analysis making a musical judgment on their behalf. Artists have soft skills that are supposedly not quantifiable and hence the idea of a software application being capable of judging an...
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