Introduction
The need for quality music has necessitated the emergence of firms that concentrate on the production of good music and the manufacture of hi-fi systems for sound reproduction. Although there have been advanced developments in as far as the compression of sound devices to portable sizes, nonetheless, there remains a gap that can only be addressed by hi-fi systems. The competition in the marketing of music has witnessed a dramatic change owing to varying consumer needs and preferences. In this regard, a majority of the firms specializing in the manufacturer of Hi-fi systems have been the main culprits. The big brands are also a threat owing to their financial stability and market penetration, thereby posing stiff competition. This discussion examines the threats and opportunities facing hi-fi firms. In addition, the research paper examines the ability of these firms to utilise their strengths and take advantage of the opportunities available to them, and the possible strategic options that these small-scale hi-fi firms can pursue in order to remain competitive. It is however worthy of noting that the paper mainly concentrates on three small-scale hi-fi manufacturers namely, Linn, Naim, and Meridian.
Opportunities and threats facing Hi-fi firms
Some opportunities and threats face the three small-scale hi-fi manufacturers (Linn, Naim and, Meridian) that are the point of discussion for this research paper. On the one hand, there are enormous opportunities available to these firms. Firstly, the hi-fi firms have concentrated on the production of the numerous components that are connected to the world of music which offer a good basis for diversification. These range from turntables to high-quality speakers to compact disks (CDs) and finally, to CD players and home theatres. All of these present the hi-fi manufacturing firms with a wide range of differentiated products that contribute to the achievement of a wide range of customers’ tastes and preferences. Due to the fact that many customers have different needs for the hi-fis, it is a good opportunity for the firms involved to develop sophisticated systems that will serve the purpose of their customers according to their needs.
Secondly, the recording of music for some of the firms like Linn and Meridian offers another niche in the marketing of music. This comes as an added advantage to the high-quality sound systems that are manufactured by these firms. Recording music is a thriving business, especially in the present age. The people who form the customer base demand high quality and differentiated genres of music, making the recording firms a desirable option as they produce different genres and at the same time produce good music that is of high-quality standards. Firms like Meridian have embraced the technology of recording good music that is of lossless retrieval standards. Linn is also not left behind as it owns a production label for the sole purpose of recording and producing music. It is, therefore, possible and easy to sell and/or market music using their own hi-fi products and they introduce the two as joint venture products in the market which complement one another too well.
Thirdly, the already established customer base (which is large) by these firms is yet another opportunity as these customers highly esteem and regard the products from these hi-fi firms. The opportunity that presents itself here is that of continued support from the customers and in this way the hi-fi firms have an opportunity to continually gather the expectations and views of their customers to continually serve them well and in better ways. The close link they have with their customers puts them in a better position as far as meeting the customers’ expectations is concerned. As a result, they maintain their respective market shares and their sale capacities.
On the other hand, these hi-fi firms do face a number of challenges that are considered threats. Firstly, there is stiff competition from big brands that are doing excellently in the market. Brands such as Sony, Panasonic and, Philips have a long history of good quality and high performance. They can also afford to operate competitively on a global scale unlike the small scale hi-fi firms (Linn, Naim and Meridian). They can be able to subsidize their products’ prices and still operate at a profit. Their customer base in the market is so diverse and bigger in terms of market share as compared to the small firms that can only operate in the U.K.
Secondly, the emergence of portable devices like the Apple’s iPod which has the capability to store huge amounts of data, music files, movies, and are very cheap compared to the hi-fi systems makes them a desirable option for the consumers as they can carry them around and have their music all the time. For the hi-fi systems, they are not portable like the smaller gadgets. The fact that they too can be connected to external speakers and still produce good quality sounds makes them an option for many people who may not be in a position to afford the expensive hi-fis. Again, they are highly selling hence offering competition for the hi-fi firms.
Lastly, the fact that recorded music is slowly being replaced by mp3s which are downloaded in singular and are cheap, poses a major threat for these hi-fi firms. People are now in a position to purchase single tracks from an album(s), which they may not be wanting or able to purchase. The recording business, therefore, is being threatened by the availability and affordability of the mp3 players, iTunes, and the fact that they can be stored by the mp3 players and the iPods. On the same note, the possibility of purchasing, downloading television series into these small iPods eliminates the need for having big hi-fi systems for cinemas in homes as individuals can have them in their iPods.
Do these firms have the strength to take advantage of these opportunities in the markets?
The hi-fi firms have a good potential of strength to take full advantage of these opportunities (discussed earlier) in the market. For example, the fact that the portable mp3 players and iPods can be connected to external speakers, and the hi-fi firms have the technology to manufacture high-quality speakers, they could take advantage and manufacture compatible speakers which can range from low to high prices to exploit this gap. High-quality earphones which create a surround effect in music can be a viable option too since the technology is available.
Another strategy is that these firms can have a joint venture with companies like Apple and Creative to manufacture portable mp3 players and iPods. The fact that they (Apple and Creative) need speakers and amplifiers, which the hi-fi firms have the strength, in terms of high technology, to produce/manufacture, can be a good way to take advantage of the opportunity.
The fact that these firms do record music, they can also offer their music to customers in a way that they can be able to download it in singular according to their conveniences and tastes. This is a good niche for them to offer downloadable music and at affordable prices. They would be in a better position as they would also offer hi-fi systems to be used with the same music. This would be advantageous and profitable if they could venture into the production of portable mp3 players, as they would offer it at lower prices due to their less cost in the production of both as they have the equipment and technology to produce both.
Strategic options that can be pursued by these firms
These firms can pursue a number of options to be able to operate competitively amid the competition that they face. They could pursue options like market development, diversification and, merging. These are good strategies to cope with the competition and to increase their share of the market too. Firstly, market development is where the already existing products in the market are leveraged or opened to venture into new markets, preferably international markets (Ansoff, 1957, p.115). This is a cost-effective strategy and involves redirecting the efforts of advertisements and/or marketing. The firm has to do exploration to find new markets, geographically, and/or look for new uses for the same products/services with the aim of enticing and therefore acquiring new customers (Bowie and Francis, 2004, p.329).
Secondly, they could think of diversifying to less expensive products that are of high quality to check the threat from mp3 players, iPods and, products of big brands like Sony. It involves the creation of new products for new markets. In the short term, it can involve all of the risks and expenses that are often associated with entering a new market or category. In the long run, however, the diversification strategy can help the firm to lower its risk(s) through the spreading of products (differentiation) and markets. The concerned firms (Linn, Naim and, Meridian) have a choice in the type of diversification they may wish to engage in. This is a good strategy that will ensure that the small-scale firms compete efficiently as they offer a wide range of related products, which even though used together, present a good platform for increased development and turnover.
Lastly, the firms can consider merging, which is the combining of competing interests (Haney, 2009, p.238). This would lead to the formation of stronger entities and domination of the market. Linn, Naim and, Meridian can merge to overpower the stronger brands like Sony, Philips and, Panasonic. At the same time they can be able to stand against the pressure of emerging entities like Apple and Creative, or better yet merge with them.
Conclusion
Marketing music is a tough job for the involved stakeholders, especially the small-scale hi-fi firms. Some opportunities can make the stakeholders realize enormous growth and profits. The threats, on the other hand, that mainly result from competition, are a major impediment for the small stakeholders in the music industry. The way the involved stakeholders (Linn, Naim and, Meridian) utilize the opportunities to take advantage of the situation may vary and may result in positive results in terms of countering competition and increasing their market share.
Reference list
- Ansoff, I., 1957. “Strategies for Diversification”. Harvard Business Review, 35(5), 113-124.
- Bowie, D., & Francis, B., 2004. Hospitality Marketing: An Introduction. Oxford: Butterworth-Heinemann.
- Haney, L. H., 2009. Business Organisation and Combination. New York: BiblioBazaar, LLC.