All posts in February 2018

Building A Record Label

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Record labels continue to consolidate and internal departments continue to merge. However, it is important for future record industry executives to have some idea of the internal mechanisms that exist within a major label. In fact, independent labels have to incorporate many of the same responsibilities within their infrastructure in order to compete in todays marketplace.

Some of the departments may seem obvious to some of the more experienced readers. However, even you can benefit from knowing what tasks need to be tackled and accomplished in order to be a fully functional recording labelindependent or major.

It is important to remember that a record company is defined by foundational concepts:
1. Equity in the copyright of the sound recording
2. An ability to promote
3. An ability to distribute

Keeping these underlying concepts in mind, a label can then be about anything the owners want it to be about. Many people hate to concede to the idea that a record label is ultimately about making money, then hopefully about making great music. Although, the latter has been falling farther and farther behind in todays marketplace.
Suffice it to say, the labels departments must also be working toward the common goal in their own ways. Below is a general list of departments within a record label and the responsibilities of each department. Remember with smaller labels, departments are smaller and therefore, many tasks are accomplished by fewer people.

CEO
1. Crafts strategy and implements agenda of corporate parent company
2. May not be involved in day-to-day operations
3. May be responsible for the business affairs of all affiliated labels under the corporate umbrella
4. Reports to executive at corporate parent company

PRESIDENT
1. Responsible for entire record label
2. Reports to CEO
3. Less removed than CEO and may be involved in day-to-day operations and high profile signings

BUSINESS AFFAIRS
Responsible for all contract negotiations and legal affairs

FINANCE/ACCOUNTING
Responsible for all financial functions, payroll, royalty accounting and financial reporting

LABEL LIAISON
1. One person or a small group of people
2. Serves as liaison between record companys distribution company and the record company
3. Helps decide when to release an album and makes sure it doesnt conflict with any other labels the record company owns

A&R
1. Finds new artists (works with a research team to uncover important market research statistics/numbers)
2. Finding artists material
3. Liaison between artist and all other departments of the record company
4. Coordinates across departments for projects
5. Product Manager (your manager within the label)

PROMOTIONS
1. Primary function is to service radio stations with product and secure airplay
2. Manages independent promoters and contractors
3. Works closely with radio stations on contests, concerts, giveaways, etc.
4. Works closely with new media and marketing

SALES
1. Primary function is to service retail with product and oversee retail initiatives
2. Services national and independent accounts
3. Instrumental in planning release schedule, initial unit volume, and solicitation strategies
4. Works closely with marketing and promotion to track radio airplay

MARKETING
1. Creates strategic marketing plan for the company as well as, specific artists and their releases
2. Instrumental in seeking strategic alliances for the label (Consumer Products, advertising, radio/tv/film)

PUBLICITY
1. Gets the word out
2. Writes press releases
3. Helps secure personal appearances radio interviews, television exposure, featured articles
4. Works with artists independent publicist if applicable

NEW MEDIA
1. Responsible for dealing with some of the newer aspects of the music business
2. Creates Online Presence social networks, online reviews and feature, blogs, website, streaming music, etc.
3. Responsible for producing and creating music videos for the artist

MANUFACTURING AND DISTRIBUTION
1. Coordinates
2. Pressing
3. Packaging
4. Shipping
5. Warehousing and Inventory Management
6. Digital Distribution
7. Rack Jobbers, One Stops, Record Clubs

The aforementioned departments and their tasks are for general reference only. Each specific label has their own way of accomplishing tasks, assigning names to departments, and ultimately selling product. However, note the information, use it to perhaps build your labels infrastructure or to possibly look for a position in the music business, and then build upon it for further success in the music business.

Benefits Of Commercialization To An Innovation Driven Business

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The best way for a business to thrive is either through expanding its product line, or through product innovation/ invention. Innovation-driven businesses-especially- must constantly innovate or upgrade their products in order to stay competitive. Innovation-driven businesses are entities known for their diligent entrepreneurial and pioneering activities, founded on new product/s (NPD) or service inventions.

Of the industries that fall into the category “innovators”- office equipment, cosmetics, computer software, food technology, telecommunications, customer service upgrades, gaming technology, and pharmaceuticals- are just a few.

Business leaders, within innovation-driven industries, understand all too well how important it is to have systematic methods of consumer intelligence gathering, and also a timely method of responding to the ever-changing needs of the customer-base, effectively preempting the competition. Therefore industry leaders have implemented “Commercialization” within their organizations, as they have determined that the traditional “Marketing” frame-work ‘does not fit’ a core business strategy dependent on New Product Development or emerging technologies.

The new method therefore is for a Commercialization department to be established; under which the traditional functions of a Marketing department would fall. Some innovators, however, either do not have a Commercialization department, or have not properly integrated the frame-work into the daily operations of their companies.

Paul Patterson, author of:”Beyond the Beaker – How to Achieve Successful Market Adoption for Emerging Technologies”, has experienced this phenomena first hand: “Many research facilities, universities and investors are developing commercialization departments in order to enable more effective market adoption of their emerging technologies. In most cases however, the commercialization system has been incorrectly adapted by these entities, as evidenced by their production flow charts that incorrectly represent commercialization as an arrow pointing to the word “Market”. These organizations are not aware that Commercialization is as equally complex a process as technology development.”

A correctly implemented Commercialization system is based on the following fundamentals:

1. Constantly update knowledge base with customer intelligence and paradigm shifts. Assess if the company has the skills, technology, accumulated experience, and methodologies to respond swiftly with product changes or NPD’s.

2. Companies could investigate how their business customers are creating value, and whether the competencies of the company allow the development of products that would be useful to their customers’ new value-creating direction.

3. The implementation of one of 2 product development approaches: “compression” or “experiential” strategy.

4. Considering off-shore sourcing for supplies and raw materials by setting up a manufacturing plant in the targeted country, could benefit profit margins, as well as relationships “all around”. A company might be able to negotiate tariff barriers by this move: by buying from local suppliers/ producers as well as offering employment opportunities will open the doors to further concessions within that country, and might improve the host country’s relations with the parent country.

Commercialization is truly a complex process as highlighted by Paul Patterson in “Beyond the Beaker – How to Achieve Successful Market Adoption for Emerging Technologies”. However if the process is properly implemented, commercialization could possibly improve the outlook of a global business venture.

Developing A Positioning Marketing Strategy Process

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Developing a Position Marketing Strategy is determining exactly what Positioning is and why it is important. According to Wikipedia, positioning has come to mean the process by which marketers try to create an image or identity in the minds of their target markets for its product, brand, or organization. It is the relative competitive comparison that a company occupies in a given market as perceived by the target market.

Position is the customers overall perception of your business including its products and services. Position is what is in the mindset of your customer. If your positioning takes full advantage of your customers perceptions and you communicate this positioning effectively, it will set you apart from your competition and establish a solid first link in the purchase decision chain, also known as the awareness link. The awareness link shapes your relationship, and often the real purchase is made by the unconscious mind on the basis of awareness long before the actual sales transition is completed. Having good positioning makes for favorable awareness and sets you up for success right from the start.

Position can be very tricky in that its under your control yet it is not. To the extent that your customer may already have perceptions about your business, industry, products and services, those perceptions already are your positioning. You need to identify these perceptions because you can change your positioning. As a result changing customer perceptions with effective communications through your companys sensory package can influence the behavior that is consistent with the image you are trying to project to your customers.

Your positioning has to be genuine. It MUST be consistent with the reality of your business and it has to be consistent with the perceptions of your target markets or it will not be credible or believed. Positioning, based on false claims or a misunderstanding of your target markets, is a liability to your company. It can turn away prospective customers and weaken relationships with existing customers.

Differentiation is more than just simply being different from your competitor. You need to be preferentially differentiated and this is why it is important to be positioning your company in your target markets. I read many articles and blogs that constantly say being able to identify how your product or service is different is one of the factors that will make or break your business. You may ask why? It is because being different AND being able to successfully communicate that difference will secure a welcome niche in the marketplace for your business. To create a differentiation that will not be imitated, you have to think beyond your core benefits of your business. The companies that have succeeded in maintaining their differentiation over the years and werent intimated are those that innovated in qualities beyond the core benefits of their market. Be the innovator of qualities and think ahead and look outside the forest.

There is a systematic process for developing an effective positioning for your overall business. It is a step-by-step process, but it is not automatic and does not happen overnight. It requires careful thinking and insight from you from the inside of your business to position for the outside perception of your business. It requires that you know your target markets (see last weeks blog Your Target Market and the Need to Focus. It takes time, but with proper understanding of your target markets, you will have a foundation in place for building a positioning strategy that will draw your target customers to you. EXHIB-IT! has been working on our position strategy for the last few years after our competitor moved within .2 miles from our showroom where we had been located for a number of years. We took for granted that our competitor was across town and knew we differentiated our businesses and it did not hurt that we were on opposite sides of town. However, when our competitor moved this close to our location where we had been for 7 years at the time, misperception in the community occurred. Our company names are similar (as are about 500 exhibit names in the USA). We focused on position strategy, which has allowed us to grow 122% over a 2.5 year period. It was not an easy process in the beginning, but once we identified our target markets, along with our secondary flanker markets, it made it easy for us to have a position strategy.

To be effective and create a position strategy, the first step is to determine the general classification of your products and services. They can be classified into one of three ways (1) a true product, (2) a commodity or (3) a brand. Think about what you sell and which category it falls into and how that affects that way you are positioned in the minds of your prospect or customer.
Many companies confuse a solid marketing strategy with pure tactics, also known as a brand juice. Visual identity with clever tag lines and a creative “essence” advertising package through your sensory package are all key ingredients in brand juice creation, but they are only supporting elements. To be effective, such supporting elements must be part of a more comprehensive plan.
After determining your relative standing in the market and how the market sees you compared to your competitors, this will affect how you develop your marketing communications as you decide to either reinforce your current relative standing or try to change it, work on these five steps below.

1.Determine what the dominant gratification mode and purchase preference of your target market segments are. To do this, you look at the psychographic characteristics of your customer – which are the perception and behavior modes. You look at the interpersonal, objective and introverted modes and what the purchase preferences were regarding experimental, performance and value of your products and services and apply these to the way you create your positioning statement.

2.Develop other key psychographic characteristics of your target market. Study your existing customers (as this is your most cost effective approach to studying the characteristics) and look for clues to customer perceptions that will help shape your positioning strategy.

3.Redefine your product or services. Begin setting yourself apart and create a unique place in your customers minds to define your product or service in terms of its features and emotional factors that are important to your prospective customers. Then write your positioning strategy which should be a brief paragraph for each target market segment that provides an overview of your positioning by gathering all of the key positioning elements and pulling them all together.

4.Develop your unique selling proposition also known as an USP. This is your slogan, your tagline, and is an expression that will become closely linked with your business. It should be something catchy and easy to remember and should also contain a basic message about your company that elicits in your prospective customers the emotional gratification that they can expect from your business through its products and services.

5.Develop your positioning statement to be more explicit and an expanded version of your USP that explains and gives the rational justification for it by identifying what your business does, the result customers can expect from doing business with you, and how you are going to achieve that result.

Again, be sure to review this information and update it periodically to keep the information current. Your Position Strategy should be evaluated constantly by using metrics and updated periodically to keep you current with your prospects and customers needs.

Strategy – Probably The Most Overused And Misunderstood Word In Business

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How many times have you heard someone talk about successful business strategies or ‘taking a strategic approach’? What do you think they actually mean by the use of the word strategy? Most often the people using it are trying to convey the fact that they have given the subject a bit more thought than usual, that they have looked a little further ahead than normal. If a consultant uses it be very wary. Strategy costs more than mere ideas or tactics. How much would you pay for consultants who have’ kicked around a few ideas’ or ‘come up with some tactics they think might work’. Depends how good they are. But if they come back with ‘strategic business advice’ you expect it to be very good and of course very expensive.

Why expensive? Because you would hope that a consultant or colleague would have used some kind of intellectually robust framework, that they would have tested their assumptions and developed more than one solution which they evaluate rigorously before making their strategic recommendation. This takes time and expertise and both are expensive. Let’s assume they have done all of this – does that make it strategic business advice rather than tactical advice?

Not according the dictionary. The dictionary definition of strategy is very clear and military. It defines strategy as “the art of war – disposing troops etc in such a way as to impose upon the enemy the conditions for fighting (time and place) preferred by oneself”. If we accept business is in effect a war – you develop successful business strategies because you define success as beating the competition – there is no reason why this definition of the overused word, strategy, is not appropriate for business strategy. It requires all that planning and testing of assumptions discussed already. Some kind of robust intellectual and very honest framework will certainly help to develop and evaluate options. Even the lazy use of the word strategy – giving it a bit more thought and thinking ahead – would be implied by the military, dictionary definition. But there is an extra dimension to real strategy. It requires you to do all this and come up with something that changes the rules in your favour – in other words it requires creativity.

And there is one other aspect to this more demanding kind of strategic thinking. It is about people and their behaviour. In order to ‘deploy the troops’ and change the rules you have to understand how people tick. If being creative involves changing behaviours then you have understand how those behaviours were formed in the first place and how they might be changed if you want a successful business strategy.

Before putting the dictionary away (the definition of strategy above was taken from the Oxford English Dictionary) just go forward to tactics. You will discover that the definition is exactly the same as for strategy with one addition. Tactics involves the all-important stage of implementation, putting the strategy into practice. So it turns out that far from tactics being less weighty and valuable than strategy they are actually the most valuable thing of all. A sound strategic plan that is successfully implemented includes, indeed demands, tactics.

The use, and overuse, of strategy in business is more often than not pretentious over-claim by people who do not really understand what they are talking about. It certainly does not mean giving something a bit more thought or thinking a bit more long term. It absolutely demands a thorough and honest assessment of your assumptions and your options. At the risk of being melodramatic, sloppy thinking in military strategy costs people their lives. In business it just wastes time and money. Strategic thinkers will of course use frameworks based on their experience. They will break a problem down so they can think about each component of it but they will look to change the rules not just apply them. And the true strategist understands that strategies are aimed at people and changing their behaviour. Their strategic business advice will be based on an understanding of human behaviour. Just as in war, a strategy does not just get the job done, it enables you to beat the competition, to deliver higher returns than ever before, to win and win big for the least expenditure of resources.

So whether you are undertaking a brand planning strategy, a new business launch strategy or any other kind of strategy remember what this really means and remember to include the tactics which are just if not more important. Then you can charge accordingly.

Top Ten Questions To Develop Your Business Strategy

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Yogi Berra once said that “if you don’t know where you are going, you will likely end up somewhere else.” The same is true in business. Unless you have a carefully crafted business strategy, you are essentially flying blind. With a clear business strategy for your firm, you can guide your way through uncharted business waters. A well thought out strategy enables you to properly allocate resources, and communicate direction to employees, customers and other stakeholders.

Former U.S. President and military commander, Dwight D. Eisenhower, remarked that “a finished plan is generally worthless, but careful planning is absolutely essential.” In other words, while a given plan may change based on what happens with your business, taking the time to thoroughly examine where your firm is now and where it is headed gives you the information to make course changes intelligently, against the backdrop of a clear business strategy.

Why Build a Strategic Plan? In a word, the answer to this question is focus. Strategy creates context for operating decisions. It establishes the playing field and provides guidance for decision-making about the types of experience and skills needed by employees, how marketing and advertising should be positioned, the priority of initiatives, how to structure the organization, and a host of other issues. If an organization has unlimited resources, a strategic plan would not be necessary.

Unlimited resources would provide the ability to invest in whatever came along. But most organizations do not have unlimited resources so a plan is necessary to guide decision-making, channel resources and define direction. Because of that, building a strategic plan should be well worth the time it will take to develop it, debate it and secure agreement on its direction.

How do you develop a new strategy? Strategy is the way in which an organization meets the challenges and opportunities of its environment. It is often an overused and misunderstood concept. Strategic thinking does not necessarily imply long term. In some industries, long term is less than one year. It is not tactics, though strategy needs to be supported through tactics. It doesn’t necessarily imply something big. The decision to move across town may have more human impact than the decision to do business in another city.

Strategy is a set of choices that defines the nature, direction and value system of an organization. It is not a document. It is a mindset which should be understood by every person in the organization and used to guide all decision-making. In developing strategy, leaders make conscious and informed choices about who they are and what they stand for:

o What are our core values and beliefs?
o What markets and customer groups will we serve?
o What products or services will, or will we not, deliver?
o What competitive advantages will cause us to succeed?
o What core competencies must we have to fuel our growth?
o What infrastructure, core processes and resources must we have to succeed?
o What financial results will we achieve?
o What should be our planning horizon?
o What is the quality-of-life contribution we want to make to our customers, our employees or the places in which we operate?
o How will we engage, develop and reward our employees?

The hardest step is plan implementation. Without a clear implementation strategy, even excellent business plans hardly stand a chance. In the United States, the average firm only achieves about 63% of its strategic plan. Studies also show that 90% of strategies that fail do so because of lack of execution. Research in the last several years has pinpointed many reasons why business plans fail. Most of the reasons have to do with “operator error” and include the following:

1.Poorly understood strategy.
2.Weak strategy execution.
3.The firm is change resistant.
4.Lack of a systematic approach.
5.People are not engaged.
6.A gap between knowing what to do, and doing it.

For effective implementation to happen, an “execution mentality” must be present in the working environment. In this environment, execution represents a primary value; activities and effort are not enough. There must also be measurable results and a get-it-done attitude. People are expected to step up to challenges. Lackluster performance is not tolerated though the emphasis is on constructive improvement rather than punitive measures.

Execution will not happen if the senior leadership is not out in front of the process. It is essential that leaders be hands-on rather than hands-off, meaning that even if you have delegated full accountability for an assignment, it is important to monitor progress and follow up with people at regular intervals. Being available as a resource, role model and as a coach can go a long way in making sure that plans stay on track and progress is being made. The opposite is also true; if the leadership is not involved, people will believe that what has been planned is really not a priority.