Question

Case Study: Not Easy Being Indie

Tough time to be in the retail music business. That wasn’t always the case as chains such as

Sam Goody’s and Tower Records competed side by side with thousands of independent record

stores. Back in the day, one of the best independents was Millennium Music in Charleston,

South Carolina—perennially winning awards for best CD store and best store staff. But things

change.

Millennium Music owner Kent Wagner had done everything possible to fight the changing tide

brought on by the rise of digital music: At the apex of the business, Wagner owed seven stores,

but for seven straight years, Millennium had suffered double-digit revenue declines. We always

thought of ourselves as a community center, a meeting place,” says Wagner. “We knew the

industry was in decline, but we thought we were different.”

It turned out Millennium wasn’t different. And Wagner and his business partner, Clayton

Woodson, soon faced a stark choice: fold up the business completely and walk away, or attempt

to transform it into something entirely different. The once-hot business had but one glowing

ember left: a small but growing online trading business that allowed customers to exchange

used CDs, DVDs, and books for electronics—iPods and the like. Millennium was able to make

money by reselling the used merchandise on Amazon, eBay, and other sites.

Millennium was launched by Wagner in 1994 with the focus of creating a thinking person’s

music store. Their competitive advantage was based on an inventory of hard-to-find records

with large classical and jazz sections and stellar customer service. Millennium would make

music connoisseurship friendly and accessible.

In the early years, that philosophy worked well, and revenue grew some 20 percent annually.

At its peak, Millennium generated sales of about $10 million annually. Live bands played

regularly, Millennium hosted a live-jazz happy hour, and they held book readings. Wagner

opened a restaurant and a bar and expanded to book sales and DVD rentals.

But the seismic industry shifts that put Sam Goody’s, Tower Records, and many others out of

business started catching up to Millennium. As the years rolled by, the losses mounted.

Wagner’s empire was hemorrhaging, and he was soon ready to try anything. In 2006, he turned

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for help to his marketing director, Clayton Woodson, whose eclectic background included

making furniture, teaching first grade at a charter school in New York, and teaching acrobatic

yoga. “Clayton tends to see looking at the abyss as a growing experience,” says Wagner. “I’m

the opposite.”

That glowing ember of Millennium’s business—the used-CD section—gave Woodson an idea.

Customers often came in hoping to exchange their old CDs for store credit. What if Millennium

could formalize the process to entice additional customers by offering to trade iPods for used

CDs? In the summer of 2005, he persuaded Wagner to give the idea a try. Woodson soon had

another insight: Buying a used CD online was actually cheaper than buying an MP3 album

through iTunes. If Millennium moved its iPod trading program online, it could collect discs

from across the globe, profitably resell them online, and still undercut iTunes’s prices.

Millennium launched FeedYourPlayer.com in 2006. Traffic soared from a few hundred visitors

per week to more than 15,000. New customers were soon mailing in more than 6,000 items a

week. By 2007, the online exchange brought in $400,000 of Millennium’s $1.7 million

revenue. FeedYourPlayer’s performance was heading in the exact opposite direction of

Millennium’s lone remaining store. In its last full year of operation, the store lost nearly $1

million. In September 2007, Wagner called a company meeting with his 25 or so remaining

employees. He delivered the news that many had already foreseen. The retail business was

dying. The future was online. The store would remain open, but resources would be put toward

building FeedYourPlayer.

Employees were still upset even if they had seen the changes coming. Millennium’s music

buyer quit when he realized the emphasis would be peddling used CDs rather than fresh

releases. Wagner understood his employees’ anguish. He says, “staff members were

accustomed to being tastemakers.” Wagner felt the confliction himself. He clung to the hope

that the huge changes might save the store. “When you spend so much of your energy fighting

against the blindingly obvious,” says Wagner, “you can lose your focus on the big picture.”

Required:

1. Design a marketing plan for Millennium’s FeedYourPlayer
2. Conduct an external environmental analysis to ascertain if a small business in Ghana can adopt the business model of Millennium’s FeedYourPlayer.

Answer 1

1) An Organization's Sucess is always determined by its Marketing Plan as it strategizes on how to move forward in a business. The very first step in the strategic marketing plan is to basically build clarity as to where are we heading to. One should always be clear on what is thier ultimate goal and which can be measured. Here, Millenniums's FeedYourPlayer will have to associate themselves with leading brands and this might help them to gain attention from an increased number of customers visiting thier site. Now, Since Mr Wagner has understood that the future was online, They have to focus on building thier presence online which will add to thier branding.

Secondly, They can work on the pricing part. Most of the customers prefer online purchases due to lower price irrespective of whether they are being physically present at the time of purchase. They can lower down the prices of few of its products sold online. Now, this can be an a sort of experimenting and will definitely attract some customers leading to a bulk sale. This is important as you can attract few customer with low pricing. Once you gain some trust, you can sense some increased business in the near future.

We also have to do some Market research and know which set of customers prefer your business more. Its always suggested, that if we target more on our current potential customers, and extending our business with them further in other new areas will help an organization more which have faced a significant loss in the past. Market Research also demands that an organization needs to understand what is the current preferences of consumers and Focussing on it will lead to profits.

Mr Wagner also has to also work on advertising thier business through various mediums like conducting live events and print ads etc. The idea is to be noticed by the potential customers. Advertising helps in reaching out to the masses.

Lastly, the employees which helps you to build your business has to be rewarded frequently. The salesforce in any company is the people who helps your business grow. So its absolutely vital that the employees are also equally taken care of.

2) A small company in a country like Ghana wont be recommended to use the same business model of Millennium's FeedYourPlayer. The simple reason is that a small company is almost a start up and doesnt hold any previous good experience on how to carry out a business. There are various facets to look at when you are starting a business. Any organization grows gradually and takes times. This small company has to first identify on what thier strength is and what kind of product/services they can offer? Once the strength is identified, You can work your way towards achieving the same. Its suggested, that the company starts on a small scale keeping its expenses to the least. This is important as this forms a part of experimentation. Once a firm grip is achieved on its customer, they can expand further.