Creating a world for your customers to live in - Marketing and its direction in the modern environment

Theo Smith

Looking at BMW as an example of cutting-edge marketing tactics, we can see how the emphasis in consumer interaction has shifted from sales orientation into a dynamic, package deal. Today we want to buy into an experience, not just a physical product. We look at different options and think about aspects such as

· What is the environmental impact of the product I am buying?

· What is the company’s approach to business? (a prime example is Apple’s modern youth vs. Microsoft’s cumbersome heritage)

· What do other consumers think?

· How is the product being developed over time to match my needs?

Amongst other things, these aspects of how a company presents itself and its products to its sector are indicative of the change of focus. A brief history of how marketing has come about can help to put into context how some companies work, and more importantly can show us where to place our marketing focus in future projects:

The Production Concept – 1800’s – 1930s

The industrial revolution was retaliation to the lack of supply verses demand present in almost all sectors. Products were hand-made and took time to produce. The factories then made products on a large scale and the demand was catered for. There was no need for anything beyond having the stock ready to sell, because everything was in short supply.

The Product Orientation – c.1920s – 1964

Then because everything was produced to such a large scale, we achieved a surplus. There were too many factories producing the same products and this homogenisation was countered by product differentiation. Now we had an economy of many different products, but the focus for innovation was from the managers and owners themselves; the products were not always relevant to the market, their main remit was to be different, not necessarily functional or relevant.

The Sales Orientation – 1957 – 1998

This is when the clever stuff started happening and marketing as we know it today was invented. Managers began to choose which of the masses of stock they had access to (as a result of the product orientation and varied products) based on what their customers wanted. A good example here is how supermarkets began to develop, basing their stock on what was bought, letting the consumer decide what should be stocked. This rapidly streamlined all the legacy strategies that had been used (production, product concepts) and paved the way for modern retail with extensive consumer data collection. The Tesco Clubcard epitomises this marketing strategy, taking information on where you shop, what you buy, what combinations of items you buy, what you buy based on where things have been placed in the shop, how much you spend, your demographic profile, and many more. This clubcard also marked the beginning of the new era of marketing strategy where consumers are invited to care about the business and be personally involved. Tesco very simply offered clubcard points to tie consumers in, then offered further discounts on alternative services to create a working long-term relationship between business and customer:

The New Era: Marketing Orientation – 1988 – now

Now companies fight to make you care about them. Their PR reflects an interesting back story you can associate with, and they sell you experiences, not products. Using the internet and further data analysis, companies can target their demographics specifically in creating this experience: Disney Land does not sell a stay in a hotel and a trip to a patch of land with some metal frames that throw you around and some pretty scenery, it sells you an experience. Apple does not sell you a small, low-quality sound output versatile playback device, it sells you the iPod brand, it sells you a whole world of iTunes, the new apple library store and the AppStore, it tells you it is cool and you can be part of its club. This is backed up by economic theory, such as Rostow’s Take off Model, and Daniel Bell’s Post-Industrial Society.

Remembering the basics (Product, Price, Place, Promotion) along with the music-industry-specific Hear-Like-Buy mantra, you can work towards creating a world for your customers to live in.

In summary, a successful promotional effort tying in with a marketing effort to target your specific demographic for business is to focus on developing your service aspect of product delivery. Ask yourself the question:

How can my customer-contact be improved so that the customer experience of my service when delivering my product is best in my field?

In the music industry, this will be a compelling back story along with clear aspirations and good quality music, that is delivered professionally and consistently, matching the expectations your target demographic has.

Theo Smith is an occasional contractor to Wood Wind & Reed and a studio musician. He is currently studying Music Industry Management at University of East London, focussing on how the industry is changing and the development of new talent to embrace its ever-changing structures. The views expressed here are personal and do not represent the views of Wood Wind & Reed or its subsidiaries.

Your Guide to understanding the Music Industries today.

Theo Smith

First, I would like to let you know the music industries are the largest they have ever been. Contrary to the doom and gloom predicted by the press, it is only the plastic jewel cases for CDs that are declining in numbers and some very public copyright lawsuits that reflect some archaic business structures in the industries.

Secondly, it might be good news to you that now is the easiest time to enter the music industries as an artist as due to new technologies introduced at exponential rates over the last decade, we have a plethora of mediums through which to present our art.

We have seen some apocalyptic predictions for the recording industry, with articles such as this BBC speculation, ‘Rock Profits and Boogie Woogie Blues’, which suggests that the ‘music industry’ will never be as it was in 1996. This is a misrepresentation of the truth and a misunderstanding of the distinction between ‘music industry’ and ‘recording industry’.

The Recording Industry

The recording industry has seen a change in economic structure from Oligopolistic competition (The 4 big labels) into monopolistic competition, where there are many, much more equal, lower turnover recording labels, studios and artists. This means that the barriers to entry (that elusive record deal we all used to strive for) are lowered and the audience (consumer) decides based on exposure. The music industry is an exception to typical economic structures as there are no substitute goods – if you like one band and another band that you don’t like is cheaper to buy, you will not buy the lower priced band instead. We have seen that audiences instead find cheaper ways of attaining the same product such as the well publicised Napster or more recently Pirate Bay. It is the development of the artist’s fan base that is key in creating any income stream and the consideration of the economics of abundance – use the .mp3s and illegal downloads purely as a marketing sunk cost in the development of a fanbase in order that brand recognition can focus your audience on scarce resources you can then charge for: live events, merch, publishing, etc. More about income streams for artists can be found at Dave Kusek’s Income Streams for Musicians.

Startups and Early Career Development for Artists

There is no longer a lottery as to who will be the next big name, instead it is much more of a focus on the individual musician and their business prowess. The age of the rock star throwing things through hotel windows has finished, in order to survive in the industry today you need a strong marketing mind, good pr outlets, a concrete internet presence and the following formula represents the effective combination of required skills:

In summary, the music industry today has a lower barrier to entry, but is still focussed on the artist’s fan base. Because of new technologies such as social networking, mobile devices and other internet portals, along with the traditional marketing and PR techniques, artists are given a more equal chance of beginning their careers and a much more quantifiable way of measuring their impact through page views, fans and interactions. The new chart shows for each country’s top 40 are shifting from the amount of CDs bought (or even the much reduced .mp3 industry’s statistics) towards who makes the largest impact online which is reflected in live performances long term.

The Recording industry has declined whilst it reforms, but all other areas of music industries are increasing and taking over the focus of success for an artist in today’s climate.

Theo Smith is an occasional contractor to Wood Wind & Reed and a studio musician. He is currently studying Music Industry Management at University of East London, focussing on how the industry is changing and the development of new talent to embrace its ever-changing structures. The views expressed here are personal and do not represent the views of Wood Wind & Reed or its subsidiaries..