The Maney Continuum states that successful companies always make a strategic choice between providing convenience and fidelity. Domino’s Pizza and Amazon deliver convenience, Le Bernardin and Strand deliver fidelity. There is a significant different in how you can price your product or service based in which direction you pursue.
Another way to look at this is is to determine whether your company is a transaction-driven business, or a relationship-driven business, and again you have to make a choice. One could argue the Dave Matthews Band operates a relationship-driven business, whereas Rihanna is more of a transaction-driven artist. Either model is a valid one and gives you a certain edge the other side cannot offer, but you have to choose which one you want to be in because it alters the way you do business, the way you determine your price, and the way you deliver your product.
The transaction-driven business has the ability to act and grow/fail fast, whereas the relationship-driven business is a slower animal that needs to develop for a while before one can reap the benefits. Price is more flexible in the relationship-driven market where a premium price will be accepted, versus the constant pressure to lower prices in the convenience and transaction-driven markets.
Examples:
Rihanna needs convenience on her side, as it facilitates an easy transaction, which is necessary in her business model as a pop/r&b singer. Her music needs to be available up front and center at every retail location people might look for it. Big box retailers, iTunes, Rhapsody, Verizon, etc. Her tickets need to be sold on Ticketmaster. Her label pays for premium placement at all of these locations, because it contributes to the necessary convenience.
Dave Matthews offers a wide range of products only through their fan club and their own website, to compliment their major label album releases every few years. They have developed close relationship with their customers over the course of many years and conditioned them to know that they can purchase directly from the band. It’s not convenient to the mainstream, but it provides a high amount of fidelity to those that are tuned in at the core of the fan community.
The nature of your genre and style of music is a factor in determining which model works best for you, but in the end it’s still your choice. There are examples of rock bands in the transaction/convenience business (Matchbox 20, The Killers), and pop/r&b singers in the relationship-driven/fidelity business (Sade, Maxwell).
Question:
Did you make a choice to focus your business model, or are you trying to be everything to everyone?