Thus there are two key challenges to address: what is the target market ND desired positioning of HAS and what Is the plan for marketing this product to achieve that positioning, given a tight “shoestring” budget. 2 SITUATION ANALYSIS Polyphonic HIM wants to launch, what they consider, a sophisticated, new, revolutionary software product in the music industry, with stringent budget and time constraints and therefore must swiftly define a target market and marketing plan.

This begins by utilizing a framework for performing a situation analysis of the internal, the micro and macro environmental situation, composed of the typical five CSS: customers, Company, collaborators, competition, context. There are three potential target customer segments that have several unique aspects. Firstly, the record labels, that employ artist-and-repertoire (A&R) people, that amongst other activities, decides whether to market a new album and if needed select one or more songs from it to be released as singles.

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This is by far the smallest segment with Just over a thousand representatives, who gain their reputations and therefore wealth, based on their ability to successfully select hit songs. An A&R person has a very high erasure role, always on the lookout for new talents, as they wade through hundreds of demos of new incoming artists, received on a weekly basis, while managing up to 20 artists currently on a recording contract.

Secondly, the producers who can be employed by record labels or are independent, are the second largest target segment, with only a handful that are really successful and thousands of others constantly striving to establish themselves. Producers are similar to A&R people but can also be engaged In many other different aspects of the production chain from editing the song to marketing the artist. Finally, the largest target customer segment is the unsigned artists, comprising tens of thousands of individuals desperately hoping to secure a recording contract with labels, while working on a tight budget.

The Polyphonic HIM Company is a subsidiary of Barcelona based Group AI and was established in 2002 to market a tool that uses a process to “number crunch” music into its constituent mathematical characteristics, such as tempo, harmony, etc. Based on these, a dotted visual representation Is created where songs with similar characteristics are positioned close to each other, thereby creating a mapping of now hit songs, that they call hit clusters (see Exhibit l). The extent to which new releases “fit” those clusters should indicate their hit potential.

While not known to the music industry, Polyphonic HIM has already attempted a market penetration with a music recommendation system (based on the HAS core technology) to be used close to the end of the value chain, the retailers, to support them in Increasing sales to Albeit, the Company works with a small group of scientists and has the ability to borrow specialized resources from the parent Company, keeping running costs low UT specialized relevant competences readily available. Due to this first failure it is difficult to imagine that Polyphonic HIM may have any collaborators of their product offering.

However, there is great potential for them to explore some, as their top management and advisory board comes with a strong background in the music industry. Prominent names such as MET, BMW and Sony Music Entertainment appear Nothing the biographies of some of their key staff and strong consideration should be made to the possibility of establishing collaborations with such influential opinion traders and distribution channels in the industry, as initial sales presentations of HAS have been met with skepticism or little attention by record label executives.

This is mostly due to the fact that it is the first of its kind bearing the advantages of no direct competition. However, HAS will compete indirectly with other market research methods of call-out studies, internet polling and focus groups, used by record companies. Moreover, if it is successful, the low barriers to entry for software products may result in swift competitive reactions and the creation of new direct competitors who could take a share of its targeted market.