Lady Gaga case

Submitted to: Dr.Amber Gul Rashid

MKT656-Services Marketing

Executive Summary:

The case takes the example of Lady Gaga, an emergent and popular music artist, to explain the

readers about the basic points that one can adopt to market the brand, its promotion and above all

to make it a success. The strategies that one can use to leverage his/her name and the usage of

correct tactics to make something a success in terms of marketing. The passion to excel in the

field of music, her natural talent, sense of fashion designs and uniqueness, all were the

characteristics that Gaga possess and that made her career a success.

There were indeed some issues that this pop star was facing in her early career and in the current

scenario as well. Her manager, Carter and other peers that helped her a lot during her career, all

are endeavoring to get her at the top of fame by making an extremely important decision that

whether to organize the tour or take some other decisions. The decision becomes a bottle neck

when a famous artist, Kanye West, backed out from the tour that is going to take gaga to the

peak of fame. The investment, the costs associated to the tour, the arrangements, the hype etc.

All would be lost if that tour fails.

The case present three alternatives available to the Gaga’s manager Carter out of which he has to

decide that what action he should take so that the brand name of this artist remains safe and the

loss is minimal. For that we suggest that he should take the decision to go to the tour to bear the

costs incurred so far and also the brand name of Gaga is now well enough to make this tour a

success.

Lady Gaga (Written Analysis of Case) Page | 1

INTRODUCTION:

This case is written about the success story of an extremely

popular pop icon Lady Gaga, who conquered the world of

music both recorded and the live music through her vigilant

sense of participation and also the peers she got. The case

describes the journey of this artist and the issues she faced

in her initial career. The way she fought with them with her

sole determination and desperation, the role of other

peoples in her career etc. etc. Her methodology included

the usage of social media networking which she used

proactively and her active participation to listen and to

reply to her fans that there is someone who speaks to them.

Also she won lots of awards that clearly speak a lot about her innate talent and consumer choice

to listen her more and more.


KEY ISSUES:

Gaga has been a successful music icon for more than 3 years but her success is not just

attributed to her own talents but the way whole team marketed her in front of the

audience to gain their support. Gaga when initially entered this market formally, was hit

by a major setback where her first contract was made with Def Jam Recordings and was

rejected by the company three months later. After she joined Herbert and Carter, the

company had issue with marketing her first single song on the radio. Major radio stations

were not willing to play that song because it was too much of a dance song and that Gaga

was not much famous in terms of fan base at that time. After Gaga gained support of

some fan base through social media and small shows, the hurdle was to market Gaga to

the main stream audience in order to create a better brand. The company was not even

making much money out of the sales of the show tickets because Gaga was too much

committed to give her fans a worthwhile experience which cost them dollars.

Gaga and the team were already for their next big move to reach the mass audience in

collaboration with Kanye. Unfortunately, during the MTV’s Video Music Awards

(VMA), Kanye produced a stunt on stage by grabbing the microphone from Taylor Swift

who won an award, and telling the audience that Beyoncé deserved the award. This thing

shocked everyone including his own fan base. A lot of controversy was created and

Kanye later withdrew his name from the upcoming tour which was planned with Gaga.

By doing this, brand image of Kanye was at stake and thus major repercussions can be

faced by Gaga regarding the upcoming tour and $ 4 million of Gaga is at stake.

She was already facing financial challenges, as she quoted” I have gone bankrupt about

four times now. My manager wants to shoot me, every dollar I earn goes to show”

Recorded music industry was also facing new challenges, as emerging trend of digital

music shifting music retailer to accommodate less shelf space to music. For recording

label is use by artist, label deduct wide cost from artist royalties including related to

recording album, producing video covering tours and radio promotion and most artist

never recouped their advances they only received share of sales. Gaga was using label of

Stream Line Records a subsidiary of Universal. Therefore she was not getting much from

this side too.


Lady Gaga has signed agent William Morris Endeavour, who were receiving percentage

of gaga gross profit in return of his services. In case of withdrawing from the tour, Carter

has to consider implication for Gaga’s Partner in the venture, including promoter and

WME agency.

Carter’s job was also in risk as being a manager lady Gaga trusts all of his decision.

AVAILABLE ALTERNATIVES:

The case has given three alternatives that Carter faces at this moment, he could either go ahead

with the concert with Lady Gaga alone, or he could develop a theatre tour and adjust the costs

accordingly and the last option was that he could flat out cancel the concert and save lots of cost

involved.

Alternative 1 (Go ahead solely):-

Even though the VMA was a disaster for West, it gave much publicity to Lady Gaga and

similarly generated much interest in her upcoming tour. The team could capitalize on this buzz

and use viral marketing for creating a sales generation and make the tour successful. This would

involve 25 arena tours with average seating capacity of 16,000 to 20,000 seats, with price of each

ticket being in between $100 and $150. This would be big financial gamble, but it could lead

Lady Gaga brand to be firmly established with a wider loyal fan base.

Alternative 2 (Proceed with a small theater):-

In order to decrease the financial risks they could develop smaller schedule for smaller venues,

but that would decrease the financial rewards as well. The seating capacity would vary with

maximum 8,000 per theater and pricing the tickets in between $70-$110. Another challenge the

team would face is redesigning a smaller tour in a matter of weeks. If we take a look at her

previous experience, one month circuit called “Fame Ball” did involve small venues and was not

that much profitable. Having said of the economical side, if she proceeds ahead it would also

strengthen her brand as reliable and grow her fan base through which the team could benefit

later.


Alternative 3 (Cancel the tour):-

If the team chooses to cancel the tour they would risk the prospect that Lady Gaga’s star might

fade away without a tour guiding it. But on the other hand they could prevent losses beyond $4

million already spent on “Fame Kills”. The tour choice was a crucial decision for Lady Gaga’s

team because concerts not only provide a great publicity tool but they are also a great source of

income. As income was decreasing from recorded music, revenues from concerts were steadily

rising


ANALYSIS OF ALTERNATIVES:

Pros Cons

OPTION I…

Commitment is very important in every business and she committed to her fans so she will improve her popularity with continuing the arena tour

She will gain confidence performing alone and will take her brand to next level

If she goes on with her plans and it works than she will overcome all the losses incurred

Her fan base will increase if she goes on with this plan since she is now more popular after MTV awards ceremony

Big risks brings big rewards

If she performed with West than west's fan base would raise her fan base and going alone is a risk and if audience strength is not there than she will lose her image

She planned to perform songs with west and without west she cannot perform those titles

Being new in this industry it's a big risk to go alone all along one bad performance in her tour could ruin her image

It's a big risk putting all 12Million in the tour

OPTION II…

With this option she will meet her fans expectations to a certain degree and will increase her popularity

She won't be putting 12 Million in this tour so it’s less risky.

Even if turn-up is not high her events can be a success

She is a risk taker and this option doesn't suits her personality

Her brand cannot go to next level which was the purpose of this tour

Less risks less returns Lesser marketing with lower budget

and coverage Fans would be disappointed if they

cannot attend her concerts due to lack of capacity

OPTION III…

No financial Risk She could reschedule the tour and

meet the expectations of fans with a bigger and better tour in future

Decision doesn't suits her personality

She will disappoint her fans She will lose on confidence No Risk no Reward Fans would think she is depending

on others and will associate with West's image

No solution to her financial problems


RECOMMENDATIONS:

We suggest that Lady Gaga should go with alternative one that is to continue with the solo arena

tour. She already had spent $4 million US in her tour as a sunk cost and now her manager needs

to recover all financials. VMA was great event for Gaga, it gave high publicity to her, she

already had catered large fan base through her social media marketing. Going on tour can help

Gaga to gain confidence of standalone performance, her fans were eager to see her performing

live on stage. Moreover, as she planned to continue with tour they need to spent $12000000 as

startup cost as given in Exhibit 10; but if we further analyze it we can find out each arena has

average capacity of 16000 to 20000 seats with an average ticket price of $100 to $150. If she go

for 25 concert, Lady Gaga can earn about $75000000 that is almost the thrice of the startup cost.

By this option she can prove herself that she is committed to her fan base and she will able to

overcome all the losses incurred.

On the other hand, if we go for option two that is for small theatre it will reduce the cost but

there is a risk of rush which will have negative impact her brand image. Therefore, it is better to

go with option one which is true in respect of high –contact services that is Gaga will able to

meet her fans throughout her tour.

By continue with solo arena tour she will able to satisfy 8 Ps of services. She will able to cater

large amphitheaters for her performance and songs. It will satisfy product and place of services.

Price of ticket also fit with the physical facilities or virtual environment of the theater. Promotion

will be increased by word of mouth as more fans will be accommodating in 20000 seats Capacity

Theater.


GAGA’s SERVICES IN LIGHT OF FLOWER MODEL:

Core: Arenas and Amphitheaters are the core of the services

CONCLUSION:

In the light of above analysis of the case we can say that by adopting some good marketing

strategies with a combination of aggression and some talents surely gives a brand a success. The

timing and nature of the strategies must be coherent and consistent with the main objective and

strategy.


Documents

Lady Gaga case