Successful strategies for small music venues

Successful strategies for small music venues This study will analyse what successful marketing strategies for small music venues are. The topic is of special interest due to different factors. According to different surveys among them the Mintel Live Entertainment and Music Concert study, there is a growing interest in live music acts (Music Week, 20.10.2007). People are increasingly interested to catch a band rather than going to a club or watching a comedy acts, so says Keith Ames, member of the Musicians Union (Music Week 17, 25.07.09). On the other hand, one can read more often about the closure of smaller live music venues, venues that can host around 200 people. A number of venues were forced to close down, among them The Point in Cardiff and The Charlotte in Leicester. These venues have hosted big named artists. The venues, especially Leicesters legendary Charlotte, were symbolic for their traditional public house environment. Many promoters are complaining that festivals, stadiums and arenas are dominating the market and drawing the money away from the smaller gigs and tours. That might be in favour for the bands itself but smaller operating venues are not in favour of that concept. The promoter Rupert Dell mentions to Music Week, that it is almost impossible to make money if venues are operating under a capacity below the 300-500 mark, though, there are places that do well, mostly be relying on the bar. It is up to the small live music venues to find a way to successfully compete against the bigger venues. They have to basically think outside the box to attract people on the venues. Many venues around the UK have become very successful in viral marketing, also knows as word-of-mouth, and targeting the right fan base. Social networking became an essential part of the venues marketing approaches. Mintels research also indicates that social networking sites and downloading have promoted, rather than damaged, the live music industry, with the result that regular internet users are more likely to go to gigs. Though, Dell believes that social networking sites can hinder as well as help and says venues have to be prepared to work harder than ever to attract the crowds. Many local venues around the UK still follow their concept that they have been there for ages and doing a good job. There venues include The Ruby Lounge and Night Day in Manchester, Sheffields Leadmill or the Brudenell Social Club in Leeds, on which the focus will rely on in this study. There are many more factors that make it difficult for smaller music venues to compete against the bigger ones. One of them used is the Licensing Act 2003: An Act to make provision about the regulation of the sale and supply of alcohol, the provision of entertainment and the provision of late night refreshment, about offences relating to alcohol and for connected purposes. (Legislation.gov.uk) The license requirements cost too much money for the venues. The benefits for the venues itself are too little. Though, it has put into question of the Licensing Act 2003 really harms or encourages the small live music venues. The Licensing Act 2003 has been changed in favour for the small venues (FAQ Licensing Act 2003). Since small venues were still struggling so much, the Parliamentary Select Committee allows certain premises to operate without an entertainment licence. The so-called Two-in-a-bar rule, allows venues that host a capacity up to 200 people can operate without an entertainment license when only one or even two artists are performing in the venue (The Independent, 16.02.2000). There have been many approached to expand that rule since the venues are still struggling. That is only one factor the venues have to deal with. Therefore it is the venues task to find a way to stay competitive and solvent. In order to do so, the venues have to find a successful marketing strategy. To evaluate that, different study aims and objectives have arise which will be exemplified in the following excerpt. Study aims The aim of this study is to investigate what marketing strategies are adopted by small and private owned live music venues in order to compete against the bigger ones. In order to achieve this aim the following objectives were devised. Study objectives The objectives of this study are as followed: understand how live music entertainment is successfully marketed understand the marketing approaches that are available for implementation and taken by managers of live music venues understand the problems faced by the organisations marketing a service like that investigate how small music venues market themselves using the Leeds area for a study case. 1.4 Choice of topic This paper is an investigation in the marketing approaches of live indoor music venues and which strategies are most appropriate for promoting the venue and the staging event. As mentioned above, there has been an immense increase in the live music during the recent years. But even though that is the case, many live music venues are forced to close down. That effects especially smaller venues. Besides of frequent concert visits, the author is genuinely interested in the marketing action provided by those venues in the events industry. And after reading an article about the struggle of small live music venues, it was of great personal interest to see what can be done to compete against the wide range of live music venues. Chapter 2 2. Music performances in the event context In attempting to explain music performances in the events nature, the author finds that music events are classed as fairs and festivals (Goldblatt, 1997) and art festivals/events (Getz, 1997). These events need a lot of support and technical back up and therefore have the potential bring the spectators and performers together. According to this statement Goldblatt (1997, p7) also quotes: Fairs and festivals provide unlimited opportunities for organisations to celebrate their culture while providing deep meaning for those who participate and attend. Gretz on the other hand describes entertainment events as followed: Art festivals are universal, but with considerable diversity on form and type of art featured Gretz (1997) sees it as essential put art festivals in three different categories: Visual (e.g. handicraft, sculpture, painting) Performing (e.g. music, dance, drama, cinema, poetry; usually involving performers in from of the audience) Participation (no separation of audience and performer) In the context of this study, one can say that live music performances can be categorised under art and festival events, more precisely they can be defined as performing arts. After having music events categorised, the next chapter will deal with the wide field of marketing and marketing of small music venues. Chapter 3: Marketing 3.1 Introduction In order to satisfy the study objectives one and two of this dissertation, the author will explain the terms of the marketing concepts and explains as well as marketing strategies which can also be implemented in businesses such as music venues. 3.2. What is Marketing? Marketing is an essential and indispensable part for all sorts of businesses, including the events industry. The complexity of marketing is also seen in the wide range of literature that exists. Marketing is an always changing topic. Definitions are steadily renewed and expanded. Dibb, Simkin, Pride and Ferrell (2006) are defining marketing as followed: Marketing consists of individual and organisational activities that facilitate and expedite satisfying exchange relationships on a dynamic environment through the creation, distribution, promotion and pricing of good, services and ideas. Kotler (1997) states: Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with offers. Blythe (1998) declares: Marketing is the management process which identifies, anticipates and satisfies customer requirements efficiently and profitably. The author finds these definitions mentioned above appealing because it succeeds in addressing the importance of management and profit in relation to marketing, and the modern day of business. As one can tell from the definitions above, the focus of marketing is on satisfying human needs in return of benefits for the business. A business need to satisfy their customers in order to succeed. That is the major concept of marketing. When the customers a kept happy, they will return to the business to provide additional custom. For the business itself, marketing should provide a financial benefit and a greater understanding of the organisation. Therefore it is extremely important for marketers to understand their markets customer, competitors and market trends and also the businesss capabilities. Understanding general market trends is also very relevant for a business. That includes all those that include the market environment: social trends, technological enhancements, economic patterns, changes in the legal and regulatory arena, political influences (Dibb, Simkin, Pride and Ferrell, 2006). The product or service offered must be in line with the customer needs and also the service level must clearly be determined. Furthermore pricing and payment issues must be decided, channels of distribution establishes in order to make the product or service available and the promotional strategies need to be devised and executed to communicate with the targeted customers. Is that the case, marketers can develop their marketing strategies and programmes. According to Dibb et al. (2006) marketing consists of the ASP approach: Analyses first, then Strategy decisions with, finally, the formulation of marketing Programmes. This approach consists of basics like satisfying customers and stakeholders, target the right customer group, facilitating exchange relationships, staying ahead in a dynamic environment, increasing the market share and one of the most important facts enhancing the profitability or income. For marketing live entertainment events, marketers use a slightly different kind of marketing which is classified as service marketing. This will be explained in the following chapter. 3.4 Service Marketing 3.4.1 Introduction Relating to study objective number one which covers the questions how music entertainment is successfully marketed, the author sees it as inevitable to give an understanding of service marketing. Service marketing is the most appropriate kind of marketing in the context of entertainment. The author sees it for necessary to define first what exactly is meant by the word service and characteristics service has. Berry (1990) defines service as followed and at the same time shows the distinction to the word good: In general, good can be defined as objects, devises, or things, whereas service can be defined as deeds, efforts, or performances. Hoffman et al. (2006) lists four main characteristics for services: intangibility, inseparability, heterogeneity and perishability. Due to the importance of these terms, they will be briefly explained in the following sub-chapters. 3.4.2 Intangibility Hoffman et al. (2006) defines intangibility as followed: A distinguishing characteristic of services that makes them unable to be touched or sensed in the same manner as physical goods. An example of intangibility could be a concert to be enjoyed at a music venue. The customer purchases a concert ticket, which entitles the customer to an experience. Since the concert experience is intangible, it is subjectively evaluated; that is, customer of services must rely on the judgements of others who have previously experienced the service for pre-purchase information. The customer will return with the experience of the concert and his memories, the physical ownership that he retains is only the ticket stub. An importing part of a service marketing programme involves to reduce the customers perceived risk by adding physical evidence and the development of strong brands. 3.4.3 Inseparability Hoffman et al. (2006) offers following definition: A distinguishing characteristic of services that reflects the interconnection among the service provider, the customer involved in receiving the service, and other customers sharing the service experience. An example for inseparability could be a musical performance that is created (produced) as it is experienced (consumed) by the audience. The interaction between customer and service provider defines a critical incident. Critical incidents represent the greatest opportunity for both gains and losses in regard to customer satisfaction and retention. 3.4.4. Heterogeneity A distinguishing characteristic of services that reflects the variation on consistency from one service transaction to the next. (Hoffmann et al, 2006) Heterogeneity makes it impossible for a service operation to achieve perfect quality on an ongoing basis. Many errors in service operations are one-time events. Another challenge that heterogeneity defines is that the consistency can vary from firm to firm, it also varies when interacting with the same service provider on a daily basis. 3.4.5 Perishability A distinguishing characteristic of services in that they cannot be saved, their unused capacity cannot be reserved and they cannot be inventoried. (Hoffmann et al, 2006) The customer is usually involved in the production process of a service at the same time as it is produced. Therefore it can be difficult to control and monitor and ensure stable standards. It is not possible with services to pre-deliver an inspection that is open to manufacturers of goods. These explanations provide a brief overview about the characteristics of services which include music performances. Following it will be explained how a service like that can be marketed and brought to the target customer. 3.5 Communication in Service Marketing Introduction With the focus on the second study objective where is was questioned which marketing approached are available, there will be an investigation of the field of service marketing. Marketing within events is based on communication. This can be done by directly informing the customer of a service that is offered, though customer feedback or market research. The main role of a communication strategy is to inform or remind a customer about a service that is offered. The organisation has to create customer awareness and also position an offered service in the customers evoked set of alternatives. Keeping the customer updated with the services is an essential part of the communication service, since people forget quickly and easily (Bateson, 1992). There are two ways in which communication of services may be handled: non-personal sources and personal sources. Non-personal sources are mediums such as television advertising or printed information in newspapers or magazines. Personal sources are on face-to-face basis. It is though all individuals who are in contact with the consumer of purchase, consumption and postpurchase stages. The objectives and strategies of communications can differ, depending on the nature of the target group (Hoffmann et all., 2009). Therefore communication strategies and objectives will be closer described in the following sections. 3.5.1 Communication Strategy in service marketing The development of a service marketing strategy has similarities to the regular marketing strategy which includes the identification of the target market, selection of a positioning strategy and tailoring a communication mix to the targeted audience that reinforces the desired positioning strategy. The three objectives of a communication strategy in general are to inform, to persuade and to remind. It is possible that these objectives can change over the course of the products life circle, depending whether the organisation would like to target current users or nonusers (Hoffman et all., 2009). 3.5.2. Determining a target market In order to meet the general communication objectives, the service organisation must analyse the need of consumers and then categorise consumers with similar needs into market segment (Masterman and Wood, 2006). The segmentation can be applied on a very simple level. A differentiation can simply be implemented by categories such as consumer/organisational markets or male/female segment or local/national/international market. Often segmentation can be a little more sophisticated by using lifestyle, attitudes or opinions and interest. An example of a music event is be a concert production. Of interest here for determining the target group is firstly the music taste of the targeted audience, lifestyle and also reference groups. Age, gender or economic situation are less relevant here (Cottle and Ratneshwar, 2003). Once the target audience has been evaluated, objectives can be developed for each identified target group, as each group may have different communication preferences. 3.5.3. Organisations positioning strategy After having selected the target group, it is necessary to establish a positioning strategy. A positioning strategy is a plan for differentiating the organisation from its competitors in consumers eyes (Hoffman et all, 2009). But there is also the competitive position, which determines the position among the competitive environment. Positioning involves a strategic manipulation of the organisations marketing mix variables: product, price, promotion, place, physical evidence, people and processes. Every single of the components is controllable. When these are effectively combined, the organisation can balance the factors that are uncontrollable and which exist in every organisations environment like technological advances, customer needs, new and existing competitors, government regulations, economic conditions and the effects or seasonability. Kotler (1997) states that companies that fail to alter their positioning strategy to reflect environmental changes in order to differentiate themselves from competitors often falter in the long term. 3.5.4. Competitive position When identifying the current position, the process uses market share trends to determine whether the organisation is a market leader, market challenger, market follower or market nicher. A market leader will have different strategic options to an organisation on a niche market or a smaller player in the field. In relation to the study objectives one and two, the authors finds it relevant to explain the characteristics of a market nicher since small music venues feature characteristics of a market nicher. Often market nicher tend to be very successful with their strategy by avoiding direct conflicts with the larger competitors. In order to achieve this success, the organisation created a kind of specialism in a particular area. This can be the a product itself, the service level or the market that they operate in. The professional competence protects them from attacks and provides enough space for growth of the right target market was selected. Growth in this context does not necessarily mean market expansion but more through market penetration (Hoffman et al, 2009). 3.5.5 Positioning According to Ries and Trout (1992), positioning refers to the position that a product has in the consumers mind in comparison to the competing product. It is important to determined the desired position for each target market. The marketing mix can change according to the target market since the focus has to be changed according the preferences of the target audience. For changing the existing position of a product or brand, marketing communications are often used. By repositioning, the organisation has the chance to gain market share, attract a new market, or recondition an offered product that is coming to the end of their life cycle. Marketing communication helps to change existing approached of a service by using new information, imagery and comparisons. When positioning, it is necessary to have a good understanding of the current position. In order to see how a product is perceived when comparing it with the competitors, it requires a good market research in each target market. Depending on the organisation, there are several criteria on which a product is evaluated. For a concert venue, the ease of access, atmosphere or performance may be of major interest. It is important to identify which is the most relevant criteria for each target group. When having evaluated that, positioning can be made a lot easier, also by using different tool like a positioning map. These maps are very useful for evaluating the competitors offerings and also to advise future strategic actions (Masterman and Wood, 2006). Positioning is an essential aspect of a marketing plan and often leads to a so called positioning statement. These positioning statements shows how an organisation wishes to perceive their products and brand and created consistency, clarity and continuity in how it addresses to target market (Kanzler, 2003; Davidson and Rogers, 2006). 3.6 Communication Mix Introduction In an attempt to satisfy study objective one and two of this dissertation, the author within this chapter explains the concept of the communication mix, also known as promotional mix, and as well explains what tools are available to marketing personnel to marketing a service like live music performances. 3.6.1 What is the communication mix? The communication mix is a set of communication tools which marketers use to communication with their target market. The major tools that are used are media advertising, public relations, sales promotion and the personal selling. This promotion mix has been extended to word-of-mouth, corporate identity, sponsorship and corporate hospitality, e-marketing, exhibitions and events and merchandising (Masterman and Wood, 2006). Wigram (2004) states, when utilising these different methods, the organisation can deliver experiences and information which are relevant to the different target audiences and which collectively deliver the brand vision. When staying in subsequent contact with the customer, it is also important to consider the communication budget (Boone and Kurtz, 1993). Especially for small firm that is very important due to the limited budget that is available. When the budget has been determined, the target audience, objectives and budgets are divided among the different areas of the communication mix. Following there will be different communication tools explained that are relevant and most appropriate for small businesses such as live music venues. Public Relations Due to the complexity of PR, the topic be briefly explained and explained why PR is appropriate for small organisations including music venues. In the following sub-chapter, there will be an explanation of PR as well as how it is relevant to an organisation like a music venue. What is PR? Public relations is a wide field and there a different definitions for this term. Palmer (2008) states that PR is the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organisation and its public. Masterman and Wood (2006) write that PR is used to raise the success of an organisation. It covers a corporate, financial, marketing, community and internal activity. As mentioned before, PR aims to change the opinions of the parties that have a certain influence on the success of an event. PR should also focus on credibility and reputation and therefore with the external perception. Yeshin (1998), Pickton and Broderick (2001) and Fill (2002) agree that PR has a very wide role, not only to support the marketing act. It engages managing communications with every group of the organisation that are considered an important factor in the successful implementation of an event. Uses of public relations Following there are listed a few ways of how to use PR. They are adopted by Masterman and Wood (2006, p88) and can be categorised as follows: Customer retention: using PR activity such as events, launches and media liaison to support marketing push to retain customer, grow sales and market share. Investment: using PR activities such as corporate hospitality to encourage new and further investment via the development of investor relations. Bargaining status: using PR to build brand in order to achieve better relationships with supplier and customers Staff relations: using PR to portray a healthy organisation in order to attract and maintain a desired quality of staff. Business development: initiating and building new business through PR activity such as events, corporate hospitality and business-to-business communication on order to develop business from new or existing customers. The author believes that these categories describe very well, how PR can be engaged in a business and what benefits it can bring for the organisation. Media advertising Introduction Advertising is a very suitable tool for reaching various target groups. Individuals are subjected to at least 600 advertisements a day (Clow and Baack, 2004). Mostsly the crucial factor for the choice of media are the costs. Due to a wide range of tools, even small firms can advertise events very favourable. Advertisements are designed to transfer an event message to the customer, inform, persuade and remind him (Boone and Kurtz, 2002). The advantage of media advertising is that one can reach a mass audience, also on a selective basis (Pickton and Broderick, 2001). Shimp (1997) confirms that advertising is a crucial factor for the successful introduction of a brand or event. Greetz (1997) adds that advertising increases the awareness of an events and that it can demand in sales. Following there will be a brief explanation of a few tools that are very suitable for organisations of all kind. Television Television targets a very wide group of people, often on a national level; very suitable for big events like e.g. World-wide sport events. A disadvantage is the cost of production which can be relatively high and therefore not affordable for small businesses. Newspaper Newspapers have a few advantages. One of them is the credibility and also that it offers a great targeted flexibility, from regional and local editions. Boone and Kurtz (2002) also state that local newspaper have a great impact on the local community, since they can be more easily involved. Furthermore, with newspapers, they have the advantage of being relatively inexpensive, especially local papers. Magazines When advertising in consumer magazines, it has the advantage that they are highly segmented. They offer a sophisticated targeting opportunity. Though, promoters often have to plan a long time ahead. During that time, the event plan could might have changed. Cost-wise, it depends on the magazine, whether it is a small more local magazine or a national one. Radio Radio is a very effective mass medium for creating a one-to-one relationship with the customer. It has a great flexibility in advertising locally, regionally or nationally (Clow and Blaack, 2004). As Masterman and Wood (2006) put it: The beauty of local radio for event organisers is its place in the community. Using local radio, can also be relatively inexpensive and target the local listeners. Outdoor Outdoor includes traditionally posters, billboards, transportation and street furniture. This kind of advertising is very low in costs, has a broad reach and long life. Also fly-posting is a very popular medium and often used for music and club promoters (Masterman and Wood, 2006). E-marketing The internet is another mass medium that is nowadays widely used. This mass advertising and e-mail is a cheap ways for direct marketing. Many venues have their own websites which can add longevity to an events. It is a good opportunity for very creative and innovative event marketing strategy. The websites should be updated regularly with information that are of interest to the various target groups. 3.7. Problems arising with the service communication mix Introduction With the focus on the third study aim which focuses on the problems that are faced by the organisations marketing services like live music performances, there will be an investigation on problems that arise within the communication mix. According to Hoffman et al (2009), inseparability and intangibility offer special challenges that have to be followed when implementing and developing a communication strategy. There are different problems that can appear, e.g. mistargeted communication, the management of the consumers expectation, internal marketing communication and selling/operating conflicts (George and Berry, 1981). These problems will now be further explained. 3.7.1. Mistargeted communication Positioning is very important in marketing. It can improve the organisations marketing efficiency when targeting different marketing activities according to the different target group who behave differently towards the organisation. The consequences of mistargeted communication for certain service organisations are clearly more significant than for traditional goods-producing organisations because of the shared consumption experience. Mistargeted communications are communication methods that affect an inappropriate segment of the market. 3.7.2. Managing Expectations Another problem are the customers expectations. An organisations communications are often interpreted as an explicit service promise that consumers use to base their initial expectations. The organisation has the opportunity to direct control the sources of expectation. Though, the organisation cannot influence past experiences and competitors activities. By having that control, the organisation has to define the objectives for the communication mix. One strategy for an organisation including a music venue, would be to reduce consumer expectations as much as possible. That would result in a higher satisfaction level of the customer. On the other hand, in competitive terms, many organisations build up expectations in order to differentiate themselves in the market place and try to attract people to them and not to the competitors. However, there is a risk, that organisations promise too much and increase the customers expectation to an unrealistic level. It would be most effective to match the expectations of the customer to the performance characteristics of the service delivery system (Bateson, 1992). 3.7.3. Internal marketing communications So far, it marketing communications were only mentioned to the external environment. But also internally, marketing communication is extremely important since it can be highly motivated if empathised by the staff. The staff has to have a clear understanding of the communication methods within the organisation. It might raise the