CD Prices in the Recorded Music IndustryCase AnalysisStrategic Marketing ManagementThe EMI Music Group was formed in 1931 when Gramophone Company merged with Columbia Graphophone to form Electric and Musical Industries (EMI 2007). EMI began with operations in nineteen countries and eventually grew to over fifty countries. EMI has the rights to more than one musical composition. Among the Big Five music companies, EMI has the lowest market share in the United States. This market share could now be threatened as Universal Records has decided to lower the price of its CDs in an attempt to generate sales. EMI must determine what it would gain or lose by lowering or not lowering the retail price of its CDs and the price charged to retailers. Case Facts The recording industry is highly competitive and its profits rely on its ability to attract and retain artists who sell hit records. Advertising, promotion and publicity for its artist are central elements of a music company's marketing program and represent a significant portion of the company's costs. Universal has more market share because it has more hit artists and a larger music catalog than any other music recording company. Due to these facts, Universal is the one most likely to suffer the most losses. Universal made the decision to reduce the price of its CDs in the United States by up to 31.5 percent, not to increase its market share but to persuade consumers to start buying CDs again (Universal, 2003). Since the advent of new technology allowing consumers to obtain music through non-traditional means, actual CD sales in the United States had been declining since 2000 (Kerin, 2007). In fact, four of the five largest record labels posted losses in the first half of 2003. Universal is considered a heavyweight in the United States with a 29.4% market share, while EMI ranks at the bottom of the ranking of the five major record companies with only 9.8%. of market share in the United States. EMI was the only company that did not report losses in early 2003 due to significant reorganization efforts. Existing Marketing Problems EMI's main problem is lack of market share in the United States. At first glance, one might think that the major problem EMI faces in its U.S. market is the potential for a decline in its CD sales caused by Universal Music Group's falling CD prices. It is recognized that Universal's price cuts will affect EMI, but Universal's price cuts are not the only or main problem facing EMI..