| > | | | | larger recording company. |
| CCM, Colorado Creative Music, is music recording | | | | Competitive strategy: company's strategy primarily |
| studio, founded in 1995 by Darren Curtis Skanson, | | | | focused on differentiation rather than cost leadership |
| primarily established as vanity label for producing, | | | | strategy, through internet distribution allows making the |
| promoting and selling his own records, and | | | | products of CCM cheaper than those of competitors. |
| consequently developed into microlabel with 4 product | | | | Market segmentation, targeting, positioningThe music |
| lines and 11 different albums. In 2000, the company sold | | | | recording industry has 4 clearly identifiable segments: |
| 30,000 of Darren Curtis Skanson CDs and received | | | | major recording studios, independent labels, micro-labels |
| net profit of $4,292.00. The company aims at | | | | and vanity labels. Major companies have large |
| expanding its customer base, acquire more popularity, | | | | quantities of artists under contracts, reaching the |
| and develop the company from microlabel to the | | | | number of 100, specialize on multiple types of music - |
| independent one. History, development and growth of | | | | rock, country, jazz, classical, traditional and other, and |
| CCM over timeCCM, Colorado Creative Music, is | | | | have formal and reliable national and international |
| music recording studio, founded in 1995 by Darren | | | | channels of distribution. Independent labels have 10-100 |
| Curtis Skanson, primarily established as vanity label for | | | | artists under contract, focus on recording of one or |
| producing, promoting and selling his own records, and | | | | two major music styles and have either national or |
| consequently developed into microlabel with 4 product | | | | most often regional distribution channels. Micro-labels |
| lines and 11 different albums. In 2000, the company sold | | | | have less then 10 artists under contract and are tightly |
| 30,000 of Darren Curtis Skanson CDs and received | | | | focused on definite style of music. They are |
| net profit of $4,292. | | | | characterized by small staff and manager performing |
| 00. The company aims at expanding its customer | | | | as the leading artist of the studio. Micro-labels have |
| base, acquire more popularity, and develop the | | | | rarely formal distribution system and heavily rely on |
| company from microlabel to the independent one. | | | | direct sales to fans and wholesale to clubs and |
| Vision/objectivesThe business vision of Colorado | | | | specialty retailers. Vanity labels segment is the fourth, |
| Creative Music consists of three components - Core | | | | the last and the most specialized segment of the |
| Value, Core Purpose and Visionary Goals (Thompson, | | | | music recording industry. They are founded by |
| Strickland, 2003). Core values of CCM are quality, | | | | independent artists for recording and selling their |
| creativity, and excellent customer service. The core | | | | products (Darren& Winn, 2003). At present, CCM |
| purpose of this organization is to make more people | | | | is the micro-label that strives to convert into |
| listen to classical and light acoustic music and admire it. | | | | independent label. Therefore, CCM currently occupies |
| As for the visionary goals, the strategic dilemma of the | | | | rather narrow market niche of classic and traditional |
| business arises. Thus, one of the visionary goal is to | | | | acoustic music admirers within the age of 40-60, |
| make the music produced, played and recorded by | | | | predominantly white, middle class females throughout |
| CCM musicians, heard by larger audience. The other | | | | the territory of the United States, though the major |
| visionary goal that doesn't completely go in line with the | | | | part of the customers is focused in Colorado region. |
| first one is to win the large custom market for the | | | | This is the result of market targeting, when the studio |
| company's products and services. The collision here is | | | | developed the measure of segment attractiveness - |
| in the primary value and target of the business: in the | | | | loyal customers and fans of performers; music, and |
| first case the attention is attached to the product, | | | | selected appropriate target segment. Today, the |
| music, while the second one is focused on the | | | | company wishes to change the segment it operates |
| development of the organization. This dilemma is the | | | | into. To expand the company's market segment it |
| subject of strategic choice of the organization, which | | | | should develop product differentiation aimed at selling |
| will be outlined and discussed later. At the present | | | | various products with different characteristics to |
| moment, the main objectives of the company are: | | | | different market segments. So far such differentiation |
| positioning the business against its rivals, development | | | | is not developed. On the basis thereof, the positioning |
| of distribution channels, development of the products | | | | approach now applied by the firm is differentiation |
| and enhancement of the product line, anticipating | | | | positioning, which lies in filling less competitive, smaller |
| changes in demand and adjusting the firm's strategy to | | | | market niche in which the firm locates its brand and |
| respond to them. Operating environmentThe firm | | | | attracts its customers. ProductsAt present, the |
| operates on American market which is characterized | | | | company disposes of 4 product lines and 11 different |
| by political and economical stability, technical | | | | records. The brand names of the Company are: |
| advancements in producing and distribution processes, | | | | Darren Curtis Skanson, Acoustictherapy, Andrew |
| large number of potential customers, broad demand | | | | Thomas Harling and Music for Candles. The style of |
| and intense competition. Business modelBusiness | | | | the music offered is the same throughout all the |
| model is the mechanism for the company to generate | | | | brands: light classical guitar. Distribution channelsThe |
| the revenues and profits. It includes strategy and | | | | distribution channels of CCM are predominantly direct |
| implementation thereof and should answer such | | | | sales. These include sales in the gig, shopping mall |
| questions as how the firm selects its customers, how it | | | | distribution and in the back end (which includes CD |
| differentiates its products from those or rivals, how it | | | | order through 800 number, website sales, mail order). In |
| creates utility for the customers, how it acquires and | | | | 2000 CCM sold 30,000 Darren Curtis Skanson CDs, |
| preserves them, promotion and distribution strategies, | | | | predominantly through direct sales. Though, traditional |
| how it allocates its resources and derives profit. As for | | | | chains of distribution are more effective and they |
| promotion and distribution techniques for Colorado | | | | include major distributors, one-stop distributors, |
| Creative Music, the particular attention is attached to | | | | independent record stores and major chain record |
| Internet aspect of the distribution and its capabilities. | | | | stores. Developing traditional distribution methods is one |
| Internet is not only alternative way to traditional | | | | of CCM's primary tasks. Financial positionsCCM is a |
| methods of music distribution, but also a great | | | | micro-label, the third of the four segments in music |
| opportunity for artists and music-recording companies | | | | recording industry. Therefore, in contrast to the premier |
| to expose these products to broad public. The | | | | recording studios as Columbia, Sony Music, EMI and |
| advantages of such means are low cost of entrance | | | | BMG, which possess enormous financial actives, |
| and enormous size of potential customers market. | | | | financial position of CCM is rather modest. In 2000, the |
| Traditional chain of music distribution includes such | | | | company reached total income number of $216,614.05 |
| components as writer/performer, publisher, musical | | | | and net income of $4,292.00, which, though, was 4 |
| instruments company, live performances, venue | | | | times less than net income in 1998 (amounting to |
| equipment and services, recording, studio equipment | | | | 20,626.70) and nearly the same as in 1997 and 1999. |
| and services, recorded performances such as night | | | | Major strategic issuesMajor strategic issues of the |
| clubs, bars, business music, broadcast, film and music | | | | company are formulated by the manager of the |
| videos, and retail. These are traditional stages through | | | | company, Darren Skanson, in the Case Study for |
| which the song or other musical product must pass to | | | | Colorado Creative Music (Darren & Winn, 2003) |
| get to the final customer. Internet makes this chain of | | | | and include the following: |
| distribution shorter and simpler, and therefore | | | | - create a profitable music recording label with |
| internet-based promotion, advertisement and distribution | | | | expanded range of artists and performers;- position |
| can be considered a new business model to base the | | | | Darren Curtis Skanson label to compete with major |
| business on. Further information on virtual distribution will | | | | artists who have contracts to Sony Classical. For this, |
| be discussed in relevant section. | | | | acquiring traditional distribution methods is necessary; - |
| CCM business model includes following components: | | | | create new product line similar to Acoustcitherpay |
| Value Proposition: satisfaction of customers' needs in | | | | which would be saleable and provide funds for the |
| quality classic music;Market Segment: white females | | | | previous two goals. The strategic tasks and ways of |
| (predominantly) and males of 40-60 age range. The | | | | their implementation are not uniform and completely |
| market segment needs to be further expanded. | | | | complementary. Thus, the first aim of growing the |
| Value Chain Structure: structure of the firm to be | | | | company contradicts the easiest and most possible |
| described belowRevenue generation: through sales, | | | | way of accomplishing the second goal - promote the |
| direct sales in particular; revenue generation roots need | | | | music by selling CCM's product lines to recording studio |
| to be expanded. | | | | larger then CCM, independent of major label with |
| Position in the value network: enters the most | | | | access to traditional outlets. Thus, the company has to |
| specialized industry segment. A large number of | | | | define its prerogative - develop the recording label or |
| competitors from all 4 segments of the industry; | | | | promote the music by means other than within CCM |
| business may be complemented through alliance with | | | | capabilities. |