Media Plan Recommendation for Solar Energy Company
Advanced Strategic Management: Midterm
1. Alexandra Glazer
October 18, 2011
ASM 3300|Professor Gertz
Take Home Midterm
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Mr. Irving Azoff
CEO, Ticketmaster
Ticketmaster Headquarters
RE: Strategic Analysis, Ticketmaster Acquiring Live Nation
Dear Mr. Azoff,
Thank you for choosing Beaver Solutions to assist you in your decision to acquire
Live Nation as an additional asset toTicketmaster. My name is Alex and I will be your
strategic consultant throughout this process.
First I would like to address what your company is currently doing well.I have
identified specific factors to the success of Ticketmaster in response to the areas the
company feels they do well. In correlation to primary ticketing, because ofTicketmaster’s
large share in the market, then naturally becomes the face of the industry, (or “go-to” for
most ticket purchasing consumers). Holding this position while maintaining the high
quality of service and meeting consumer preferences is no easy feat for a company with a
very specific niche. Additionally, your company has mastered the technology needed to
operate a nearly flawless commerce website, providing easy ticket distribution, a trade
secret that takes time and experience to develop. Both of these competencies contribute to
the large success of Ticketmaster.
However, Ticketmaster needs improvement in some areas that limit profitability.
The company has an inconsistent relationship with valuable vendors, largely related to
region. Although the presence of Ticketmaster is strong in the states, there is potential for
large global expansion. In order to expand, company revenue must continue to increase
annually. Annual revenue is being largely affected by the complex value chain, directly
influencing the pricing strategy of tickets.In addition, Ticketmaster’s competition continues
to increase due to the continued launch of websites offering a similar service.
I have identified 3 core issues that Ticketmaster is facing: need for more
international exposure and vendor relationships, growing revenue base, and the rising rivalry
in the specific industry. Due to the areas Ticketmaster needs to improve on, Beaver
Solutions believes that acquiring Live Nation would only benefit your company. Upon
buying the company, Live Nation would satisfy the following primary company goals:
1. Global Expansion – Live Nation’s large vendor base & reputation
2. Increasing Profitability –simplified value network& additional revenue
3. Competitive Advantage–Exclusive rights, shared fan base, sponsors
In the following pages you will find a detailed analysis explaining the development
of this decision with supporting evidence. Please let me know if you have any concerns. I
am at your disposal for the remainder of this process. Enjoy your report!
Sincerely,
Alexandra Glazer
Beaver Solutions
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Industry Analysis
Ticketmaster is the leader of the ticket-service provider industry dominating a large
portion of the market sharewith $1.399 million (Cohan 26) of revenue, by selling both
primary ticketing and ticket resale services (Cohan 12). This industry is very competitive as
they compete on dominance in market, access to the most popular venues, and highest
financial stability allowing them a larger pool of funding (Cohan 6). When Ticketmaster
acquiredFront Line, an artist management companyor booking agent, steps were being
made toward dominating the entire value chain for this industry, something most
companies would want to eventually obtain. The challenges in the value chain will be
analyzed in the following section. Frontline was a valuable decision for Ticketmaster,
guaranteeing cohesiveness to that segment of the chain. It is important to remember when
looking at Ticketmaster’s industry, that the company operates in 20 global markets, with
distribution through 3 sources, the online site, 6,700 retail outlets and 19 worldwide call
centers (Cohan 11).Know this kind of information can alter a company strategy. For
example here, Ticketmaster is well known with a good reputation, and therefore the
business model can includecharging steep prices knowing there is still a demand for
tickets. Currently the main approaches being executed are high pricing as well as catering
to a wide audience to achieve success.
This industry has been affected over the recent years due to the recession and the
nature that tickets are purchased for leisure activities, which consumers typically cut back
on first. Although many people cut down on frivolous purchases, all of the concerts with the
main stream popular artists continued to sell out. Consumer preference is a driver of how
successful this service can be, hence why it is crucial that their needs always be satisfied.
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Ticketmaster competes with other substitutes such as the cinema, a sports event, play, or
now with the recession, home entertainment has become increasingly more popular
(Cohan 8).
The barriers to entry for this industry are relatively high considering the vendor
relationships that must be established and trust that comes with the service. One of the
popular competitors at the time who emerged later in the game was Anschutz
Entertainment Group. In 2008, Ticketmaster began to feel threatened when Live Nation
decided to team up with another competitor, SMG, to create an ecommerce feature for
buying tickets. Thankfully the deal did not go through as Ticketmaster would have nearly
lost 24% of their sales to Live Nation when they launched this new arrangement (Cohan
22). This was a large concern for Ticketmaster because of Live Nation’s 46% market share
in their own industry, proving they could be very successful, and started encroaching in to
Ticketmaster’s area of specialization. Although Live Nation seemed to be successful, the
development of effective ticketing software was extremely costly and not easy. Looking at
their financial information, I discovered that ticket sales only accounted for .5% of their
total revenue (Cohan 20). With little to no profit being returned on this operation, it was
not worth it for Live Nation to continue internally and try to enter the crowded industry,
especially when selling tickets, is not a core competency of the company.
Strategic Problems
After a careful analysis of Ticketmaster’s financials, operations, future goals and key
competitor information, I have pinpointed three areas the company should focus on to
achieve desired success. My evaluation suggests that Ticketmaster needs to:
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1. Expandboth locally and internationally. Ticketmaster expressed interest in
continuing to grow the audience they reach globally. In addition, Ticketmaster
should continue to set up as many well established vendor relationships as
possible, there is never an end to networking.
2. Condensethe complicated value network. Currently Ticketmaster is at the end of
a 5 vendor supply chain. The chain goes as follows in chronological order
starting with the original source: Performers, Booking Agents, Promoters, Venue
Operators and Ticketing Companies (Cohan 3). In addition to Ticketmaster,
Ticketmaster Entertainment also owns Front Line, which falls under the second
segment, Booking Agent. Ticketmaster made a savvy business move by acquiring
Front Line and beginning to manipulate the chain of command. If Ticketmaster
were able to eliminate other external vendors by purchasing them in house,
operating costs would be less for each company as all companies would be
working under one parent company together sharing profits. The high price of
Ticketmaster services is due to the fact that there is a long supply chain. On a
ticket price of $66.00, Ticketmaster after paying all of the involved vendors, only
earns about $4.75 (Cohan 15); if some of the fees were removed in conjunction
with the value network, profit could increase dramatically.
3. Developnew defense tactics against emerging competitors. Ticketmaster has
many strategies that create a competitive advantage, the largest in my opinion
being the reputation of the brand name. The other strategy your company
implements called 360 deals, where Ticketmaster and Live Nation are able to
give back large proceeds to the performers from merchandise etc. are very
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unique to these companies but trying to be mimicked. Many ticket reseller sites
have surfaced with lower pricing, StubHub for example, and Ticketmaster needs
to have a game plan prepared to get on defense and keep loyal customers.
Solutions
Based upon the primary goals I have recommended with my advanced strategic
management skill set, Ticketmaster should pursue the Live Nation merger. Evidence
demonstrates that Live Nation and Ticketmaster have needs where the other company can
support them in bettering their business plan. As CEO of this multimillion dollar company it
is time to make a choice. Mr. Azoff, please consider the following operations as solutions to
help achieve the previous goals mentioned.
The first step is for Ticketmaster to acquire Live Nation to begin the rejuvenation
process. After the merger and Live Nation becomes the parent company, the following can
be executed. First, with Live Nation’s vendor relationships, monetary base and reputation,
these contacts can be used to help Ticketmaster make more connections. Live Nation puts
together the most concerts in the entire world, totaling around 22,000 concerts on 57
countries (Cohan 18). The next result of the merger would be to simplify the value network.
When Ticketmaster merges with Live Nation there will no longer be a need for an external
promoter as Live Nation is able to promote itself! This means that Ticketmaster will no
longer have to include promoters in the operating expenses, as all of that money will be
under the same roof. Lastly, if Live Nation and Ticketmaster were to become one, both
companies can take advantage of a new network; all of Live Nation’s 57 million fans will
now support Ticketmaster and vice versa. In addition, Ticketmaster would have access to
Live Nation’s sponsors, another resource that can be utilized. If the Live Nation-
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Ticketmaster gets approved, exclusive ticketing opportunities would be granted to
Ticketmaster as its sister company, that other providers would not receive.On the other
hand, Ticketmaster can also offer Live Nation the benefit of getting closer to their
customers through “live events & ticket platforms” like they had hoped for (Cohan 20).
I hope that you will strongly take in to consideration the analysis I have provided for
you and the supporting evidence that backs my decision process. If Ticketmaster were to
purchase Live Nation, you would be enhancing your vertical integration, as well as
increased control in the supply chain, which is very high considering Front Line is also a
company of yours. Although Live Nation would become the parent company to
Ticketmaster, the later will still have a higher share in the company with 50.1% as opposed
to Live Nation with 49.1%. Any concerns you may have regarding legal issues can be
discussed via email or office phone; Ticketmaster will remain a separate entity to avoid
classifying as a monopoly. By merging both companies, you will be improving brand
awareness and financials, while also eliminating unnecessary measures that were
previously in place.
It has been a pleasure working with you.
Sincerely,
Alexandra Glazer
Alexandra Glazer
Strategic Consultant
Beaver Solutions
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Works Cited
Cohan, Peter, and Sam Hariharan."Chokehold on Live Entertainment (A)." (2010): 1-30. Web.