Business 1220E: Marketing Report 1
Mackenzie Marr & Guitars, a Canadian guitar manufacturer has been operating
successfully since opening in 2009. Though monthly sales have considerably increased
from previous years, the company would like to increase monthly sales to meet their goal
of 100 guitars per month or annual revenue of $1 million. Beyond this, two relative
marketing goals encompass increasing Mackenzie & Marr Guitars’ brand recognition as
an online retailer as well as successfully promoting and launching a new guitar.
Finance: Selling directly to consumers at a significantly lower price than competitors and
with recent brand promotion current monthly sales are an average of 35 guitars.
Mackenzie Marr & Guitars have doubled their sales volume for January and February
2013 from the previous year. However facing the financial restraint of paying the supplier
on order, the company needs to keep enough cash on hand resulting in tight cash flows.
Because of this the promotional budget had been limited to $1000 a month. Aiming to
achieve their sales goal, MMG has increased their promotional budget to a maximum of
$4000. Another financial obstacle to arise in the future is the 1% increased tariffs on
Chinese guitars, which would result in more expensive outsourcing.
Marketing: Being an online retailer MMG has struggled to gain exposure and increase
brand recognition. The key problem derives from struggling to convince customers of the
quality. To overcome this the company offers a 7 day “Love it or Leave it” guarantee,
offering to fully refund the guitar including shipping expenses if the customer is not
satisfied. This is a good start to overcome the evident obstacle of making customers
comfortable purchasing online, however MMG needs to do more to provide a satisfying Business 1220E: Marketing Report 2
purchasing environment on an online interface. MMG has successfully used endorsing
before to gain exposure. Other advertising MMG is currently involved in includes Google
Ad Words with a capped spending of $25.00 and Facebook advertising with a spending
cap of $5.00. Being an online retailer, MMG needs to actively pursue other techniques to
Operations: Located in Montreal, Quebec, MMG operates exclusively as an online
retailer directly to consumers. MMG’s supplier constructed and delivered the guitars to
MMG’s headquarters, where after passing quality control the guitars were kept in
inventor. At a time, inventory held from 25100 guitars, so customer orders are filled
within 10 days. Previously, endorsements with Ian Tyson and Tom Rush have been used;
this is necessary for MMG to remain competitive.
Human Resources: Being an online retailer, MMG does not require a lot of staff or
personnel. Mackenzie and Marr are the founders of the company, both avid guitarists.
Mackenzie however, being a medical doctor in Ottawa, Ontario is not directly involved in
MGM’s management. Marr, has had previous experience in management and business
positions, and is the only partner managing MGM’s daily operations. This lack of
involvement from Mackenzie hampers the business’s potential resulting in not being able
to reach their monthly sales goal.
PEST Analysis: MGM started operations in the summer of 2009 when the Canadian
economy had been weak, recovering from the financial crisis in 2008. The guitar, or
instrumental industry in general is considered nonessential, or leisure purchases and
following the crisis consumer confidence and leisure time had significantly decreased. Business 1220E: Marketing Report 3
Despite that, the projection of a stronger economy by the end of 2014, promises growth
for MGM. Socially, leisure time is important in defining the target market, or who
potential customers might be. With the crisis, all age groups have had decreased leisure
time, however two age groups who prevalently have more leisure time are consumers
ages 1524 and consumers ages 55 and over. Typically the guitar industry’s consumer
profile is of males with an average age of 55, however there is an increasing trend of
young adults interested in playing guitars. These facts could now change how the
company approaches their finances in regards to their decision to remain outsourcing.
The marketing approach could also change in terms of interface as well as style, keeping
in mind the possibility of a redirected target market.
Competitive Analysis: MGM has both direct and indirect competitors in the guitar and
instrumental industry as a whole. Long & McQuade is the largest retail music chain in
Canada with 61 locations in 10 of Canada’s 13 provinces and territories. Carrying a
variety of musical instruments, Long & McQuade’s revenues are six times larger than the
second largest Canadian retail music chain. As a large retailer, Long & McQuade offers a
wide range of guitars from entry level to high end. Consumers appreciate the large
selection as well as advice provided from staff. To compete, MGM should adopt
techniques like providing advice to consumers on their website. MGM could possibly
open a chat service on their website available for consumers to chat at real time with a
real person about the guitars and features to facilitate their decision and make them more
comfortable with their online purchase. Being such a large company, Long & McQuade
would not react at this action, considering MGM is a smaller online retailer. Other
competitors like Tom Lee Music Co. and Groupe Archambault are also retail music Business 1220E: Marketing Report 4
chains, however they only operate with chains in their home province. Specialty guitar
retailers are also competition and operate on a smaller scale, targeting more specific
consumers. These retailers focus solely on guitars and custommade, vintage collections.
MGM could adopt this feature and provide customization and features like engraving to
attract a wider clientele base. Specialty guitar retailers operate on smaller scales and will
possibly notice MGM’s actions, reacting with more aggressive marketing and extended
possibilities of customization. Another competitor is Musician’s Friends, operating as an
online musical instrument retailer. MF is the closest competitor to MGM in terms of their
operations interface. An American company and subsidiary of a large brand name retail
chain Guitar Center, MF offers accessories and competitive prices lower than what is
offered at its retail branches. Though very recognized and established, MF’s lowest prices
are still higher than the competitive prices of MGM. Another positive for MGM is that
Canadian customers purchasing from MF have to wait for two weeks for delivery
whereas MGM is a Canadian based compan