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