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Mojo Music

Market Analysis Summary

It is estimated that the university student community spends over $75 million with local businesses each year.  Approximately 50% of these sales are for entertainment including music and movies.   The university’s commercial/retail area borders the east side of the campus and it is the main entrance onto campus.  Each day, thousands of students shop and eat on Taylor Street before, after, and between classes.

Currently, if a student wanted to purchase a used CD, he/she would have to take a ten minute drive to reach the only used CD store in town.  Similarly, he/she would also have to drive to reach the closest video rental store to the campus community.

Mojo Music offers the student the ability to buy a CD or rent a DVD during the day while on campus.

4.1 Market Segmentation

Mojo Music will focus on three significant customer groups:

  • Used CD buyer/seller:  The shelf life for music is very short with young adults.  What was popular three months ago can quickly become boring.  The music industry is aware of this trend and is constantly releasing the next great hit to satisfy this hunger for the new.  But what does the buyer do with old CDs that are no longer being rotating into the CD player? Mojo Music will be uniquely designed to attract and retain this important customer group.
  • CD/DVD recording media buyer: This customer group is very significant. They have already embraced the technology that gives them the freedom to create their own CDs and DVDs.  The purchase/sell turnaround on a CD/DVD is very quick with this group. They will be a great source for used popular CDs and DVDs.  Mojo Music will set up an in-house credit system that will bring this customer group into the store.
  • DVD renters: As stated before, the student population represents a unique group of DVD users.  Many manufacturers now make cheap CD/DVD players that are targeted at young adults.  So DVD rentals are much higher with this customer group than the population as a whole.  Mojo Music’s location is perfect to capture the walk-in business for DVD rentals.
Music retail business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Used CD Buyer/Seller 15% 10,000 11,500 13,225 15,209 17,490 15.00%
CD/DVD Recording Media Buyer 10% 4,000 4,400 4,840 5,324 5,856 10.00%
DVD Renters 15% 10,000 11,500 13,225 15,209 17,490 15.00%
Other 0% 0 0 0 0 0 0.00%
Total 14.21% 24,000 27,400 31,290 35,742 40,836 14.21%

4.2 Target Market Segment Strategy

The advancement of CD recording equipment, Internet technology, and new recording formats like MP3, has turned young adults into a new type of music and movie consumer.  This trend has already depressed CD sales nationwide and many CD stores have gone out of business in last five years.

To be successful, a store must respond to the market opportunity the target consumer is providing. Though the game has changed, there is still tremendous opportunity if a CD store can read the market needs and trends correctly.

The student population that Mojo Music is targeting is very comfortable with the newest technology and has easy access to CD/DVD recording equipment. This creates a new expectation in the consumer’s mind concerning what is an affordable price for music.  Most college-aged adults have reported in numerous industry polls that the price of new CDs should be lower.  This search for a lower price led to the explosion of MP3 on the Internet. Consequently, CD recording media has increased in sales.

Quality used CDs fill the niche that this concern creates by offering a lower price for popular music.

Another area where the college-age consumers is leading the market is in the use of DVDs.  At most video rental shops, DVDs are small subsection of available rentals. Currently, these shops primarily serve consumers who prefer video cassettes. Though this trend is changing, DVD owners find the selection limited.