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