Competitive strength Analysis.
BMG is one of the businesses that are eager to embrace new technology. Due to the use of new technology has given them a competitive advantage. The company has decided to adopt the technology although it has threats that it poses. Conroy and Zelnick spearheaded the embracement of technologyZelnick, and it allowed BMG to be the first major record company to create a set of branded websites tailored to a particular genre of music for the attraction of customers. BMG also become the first recording company to use the downloading technology in the promotion of the sales of conventional, prerecorded CDs and Cassettes through an agreement with America Online where customers were linked to automatically to relevant websites on their computers.
The use of technology has allowed BMG to access digital Customers. CDNow, an online retailer, has been used to distribute the shipped CDs and tapes to the consumers. There has also been the establishment of online storefronts which allows the consumers to download music directly from the web mostly the BMG’s website. The company has thus enhanced its competition with the creation of a new class of customers through the use of technology.
The embracing of technology has brought up issues such as whether the loyalty of the customers would be affected, how strong will be the eagerness to pursue other retailers and consumers? The customers to focus on? Whether to continue with the nonexclusive partnerships with the technology vendors or whether to focus on the smaller number of exclusive relationships.
Business Model. (How does the company make Money?)
Strauss Zelnick leads BMG since the year 1998 when he took over after leading BMG’s North America operation for three years. The business activity of BMG takes place in more than 200 labels, which include Arista Records, Ariola, and RCA Records, Windham Hill Group, Buddha Records, and BMG Classics, Manufacturing, distribution, music – publishing and some sales and marketing activities which are centralized. Individual labels manage marketing.
The company makes its income through the sales of the music and also manufacturing of other product such as compact disks, cassettes and related packages which are then distributed to the labels who then link up with the retailers. They also have clubs that have enrolled millions of consumers where the members can get the original CDs and cassettes at a meager price.
What is happening now, today?
BMG is currently maximizing on the use of the internet to maximize its sales. Music being affected by the internet since the 1990s and accounting to the 0.3% sales of music product in 1997 has worked as a mechanism toward the use of the internet. BMG has thus taken to sell its merchandise through the internet. There is increased download of music, the sale of the physical product online and also an advertisement. There are also music shows that have been set up to entertain the fans.
The retail value of sales in US dollars is in the range of 38.5 billion. This means that the unit sold is 3.6 billion units as per the year 1999. The deals are then divided into the local region like North America, Europe, Asia, Latin America and Rest of world. BMG has sold its sales through the division into various genres, and each one has a different sales value.
During the launch of the first online effort in 1995, which coincided with the arrival of the Zelnick, Conroy convinced him to invest $1 billion on the Internet. The company’s revenue comes from an advertisement placed on its sites.
The income statement as by 1999 saw the company make a sales of 38.9 billion US Dollars. There were sales of albums after the EMusic.com secured exclusive rights for sales of the digital downloads. A record would be purchased between $0.99 to download, and an entire collection was $8.99.