It is now the time to research and discuss the market in which your company, your product, your music, your band, finds itself. The purpose of this is to analyze market trends and locate areas for growth within the industry. For this analysis, we will follow Porter’s Five Forces which include Buyer Power, Supplier Power, Competitive Rivalry, and Threat of Substitution, and Threat of New Entry.
Buyer Power looks at the strength of the consumer in determining how a product or service is distributed in terms of cost. In regards to the music industry, the question would be in relation to album sales, ticket sales, merchandise, etc. What we are asking ourselves is how easy it is for a buy to drive the price of a product down. For instance, when there is a large volume of consumers who what your product, your music, prices can be raised to stretch the buyer as much as possible. Conversely, if there are very few people with interest in what you have to offer, prices will need to be attractive to gain those consumers.
Supplier Power investigates the strength of your suppliers. For a material product, a supplier may be providing raw materials. Within the music industry, the suppliers include recording costs, merchandise costs, and opportunity costs. For a new band just starting out, you are looking at options and opportunity to get your music to the consumer. For example, if there are a variety of venues that offer opportunities for a band to play live, you have the power to take the cheapest and most effective route. If these options are limited, the supplier has control over the opportunities you receive.
Competitive Rivalry evaluates the options that consumers have to buy a product or service. From an overall look at the music industry, there may be greater competition for artists that are classified as mainstream pop than there is for ska punk bands. Similarly, a new band seeking local shows should learn about the other bands in the area and what music they are playing. If your band is just another version of the previous, consumers have greater choice in the music they listen to. However, if your band has something so unique and untouchable to offer, you will increase your market power.
Threat of Substitution seeks to understand alternative ways of a consumer to feel fulfilled without a certain product or service. This can be best understood by looking at the ease or difficulty a listener has to finding your music online. If a consumer has to register as a member for a web site in order to listen to your music, whereas a similar band posts music on a variety of websites that are free and available to non-members, the consumer may make the easier choice in music to soundtrack their web-surfing.
Threat of New Entry hypothesizes at the opportunities for similar products or companies to enter the market and challenge you. For a band, the first question to consider is the ease of which another band can make music, develop a team, and start playing shows. Secondly, if your band is unique in the market, how easily can another group emulate the music style and genre? If there is truly unique talent that cannot be imitated, there will be a competitive advantage here.
Image sourced from: http://student.dcu.ie/~slejhad2/porter.htm
After your band has analyzed its position within the market, the groundwork has been laid to find a balance that offers maximum power, exposure and opportunity. Where your band has control, hit the sweet spot. Where your band has little control, find creative ways to increase your power.
View the Sample Market Analysis for Breakthrough Band |
