Case Study – KVG Europe

KVG Europe is a traditional high-street music retailer based in Amsterdam. This company is composed of 12 stores, 8 megastores in Netherlands and 65 medium-sized store and 8 megastores into the rest of Europe. Today, this company has many difficulties: over the last three years, profits have steadily fallen, from 450m Euros to 290m Euros. Several reasons can account for that situation:

- fierce competition - a narrow product range - Lack of innovation (the management are concerned that they are not exploiting the opportunities offered by selling through the internet).

After reviewing the various options available, we have agreed to keep some stores but sell 50% of our goods through the internet. We decide to close stores have the less numbers of visits but we keep open all megastores and profitable medium-sized stores.

The whole new plan is based on a new distribution through internet, a new communication and news products.

It is estimated that in five year’s time, 50% of all music products will be bought though the internet. KVG Europe made an error to haven’t website. Moreover, 65% of consumers under the age of 30 prefer to do their shopping of the internet and it is important to target his new segments of customers to continue the company’s development.

Let us see what advantages to develop a website for our company are.

First of all, there is no need for as much space as with a shop. With this solution we can close many no profitables stores, to explain it was is possible for customers to do their purchases in our website and it is easier and simpler. Whereas we keep open profitables megastores.

Secondly, in the field of the communication. These last years, KVG Europe spend more and more money for develop a good communication (advertising and promotion) but with a website we can contact directly customers (Pull strategy). For example customers who buy through the internet,