Marketing Strategy for Spotify - Marketing Report Writing Assessment Answers

Executive Summary

Spotify is a music streaming application that can only be digitally accessed. It is only available in the United States and Europe. The application has been in competition with other applications in the virtual music industry. It is a marketing tool for the musicians but is also used for the purpose of profit. Spotify shows a great deal of competitive advantages over the top known music streaming applications. It is a creation that is bound to be beneficial for both staff and the relevant musicians. The musicians featured in Spotify are mostly those that have established a career in music and retained their growth in the same. The same application uses personalized strategies to spread the variety of music that it has to those that are supportive of the unique project (Marshall, 2015). Spotify uses the music industry’s statistics to market music and also seek for the most compelling artists in order for there to be a competitive advantage from other applications. The musical application has increased in terms of the music that it features. The genres are mostly what exist in the United States and Europe which are the number one producers of good music genres in the world. The application is successful due to its unique features and the range of music that it has covered. This does not however mean that the company does not face challenges from time to time.

The challenges faced are mostly their ability to get contractual or permanent deals from musicians. The main challenge for Spotify was and still is getting to have established international musicians and/or singers trust the application. The reason for this is because the copyrighted music may be of more use to a musician while not being shared by a virtual stakeholder. This is believed to create more benefits in terms of revenue and profit margins. The report in this case discusses the history, purpose and goals of the Spotify application and also creates a mental picture of what their vision and mission has been (Aguiar & Waldfogel, 2015). This is followed by how the company has managed to achieve the goals and what strategic plans have been used. The report will however, create a strategic plan for the company that ensures that all the goals have been met accordingly, and trust can be maintained by each musician and/or singer. The reason for this report is to create a marketing strategy for Spotify that will see to its globalization towards South Africa and other neighboring countries with a renowned musical preference in order to experience growth. The strategy will focus on growing the diversity of the company to create a popular and unique brand internationally (Swanson, 2013). It will therefore be focused on the marketing skills required to grow the brand towards creating a preferential musical platform for those in other continents such as Africa. There are several opportunities to grow the brand and ensure that it becomes a well known and supported brand.

Company Description, Purpose and goals

Spotify is a company that was first introduced in Sweden. It was founded in 2006 by Daniel Ek and Martin Lorentzon with Daniel Ek being the Chief Executive Officer of the company. It was officially launched in 2008 and gives access o millions of songs all over Europe and the United States of America. The music is based on the agreements that have been made between the company and the musicians. Spotify has competitors like Deezer but struggles to maintain a competitive balance that ensures that the various targets are reached. Like in every other company, Spotify experienced challenges when it was new in the industry. Musicians like Taylor Swift and Beyoncé did not trust the brand to market their music (Zhang et al, 2013). These are the most listened to artists and meant a lucrative advantage to Spotify. This would have paved way for the growth of the application in line with what the company requires. Spotify’s mission is to give music to people for as long as they want and as much as they wanted. Their vision on the other hand is to have music moments everywhere. The purpose of spotify is to make people happy by helping them get legal access to music at any given time for all the right purposes.

Two Opportunities and a Justified Choice

Opportunity 1

The company Spotify has no presence in Africa. The only way that it has been accessible to people or rather music lovers in Africa is via a proxy site that converts the original into an illegal service. The proxy site is similar to spotify in terms of the music that it offers. Spotify’s proxy site in South Africa has caused the creation of its clone. The clone site functions the same as Spotify only with less policies regarding what not to do and what to do. The clone portal is known as Simfy and gives each person a two week free session before they are fully committed to having a full account worth R60 per month. The clone Simfy is a clear sign of how much the virtual music service is appreciated in South Africa (Ansell & Barnard, 2013). This therefore creates an opportunity for globalization of Spotify starting with South Africa. The reason for this is because it shows the most potential in terms of how much the application can be appreciated in the place. The spotify application being a legal site and fully accessible in places where the music industry is highly successful would benefit international and local musicians and/or singers.

The connection made through spotify would grow the music industry by merging all the beautiful international and upcoming musicians together, growing in terms of ideas and also being able to create a new feature in the spotify application as being all round. The application has mostly supported music from outside Africa and the discovery of South African music came as a result of Simfy. The German-based clone Simfy is highly reliable even with the illegal presence in South Africa. Simfy being the first international paid-for service in South Africa shows the potential that Spotify has over supporting South Africa’s artists. The reason South Africa is the option in this case is its evident high development status in comparison to other countries in Africa. The music industry in South Africa is also very influential and lucrative when compared to that of other countries. Globalization for Spotify would mean that they will have to change into becoming a diverse portal for each and every listener worldwide. The provision of opportunities for South Africa’s music industry is what will make it as reliable as their most popular competitor, Deezer (Brown, 2014). The competitor is present in an international scale including the looked-down-upon continent, Africa. Spotify will greatly benefit from its integration with Facebook where all social music sharing and discovery happens. The reason as to why this will be beneficial is because Facebook is global and very effective when it comes to marketing.

Opportunity 2

The second opportunity that the company has is glocalizing the product which is music. Glocalizing means that the company will have to consider the preferences of the locals within South Africa. This means that spotify will have to consider the local music industry, which in this case is South Africa and ensure that they have a list of several musicians and/or singers within their portal. The platform will create an opportunity for the first Africa’s country to be on the company’s consideration list to work on several issues. The most outstanding issue is that they will be able to create their own applications according to their tastes and preferences by use of the open music library API meant for third party developers. This move will transform the way Spotify is viewed by non-users in other continents far from Europe and the United States (Zhao, 2016). This will make it a completely true music platform and make it possible for other businesses and partners to leverage it. The clients or those in charge will be able to enrich every person’s music experience in new and unique ways. The chance to glocalize will increase the company’s positive reputation and ensure that the competitors are not at a higher scale than spotify.

The challenges regarding spotify may be nullified. The most common challenge is the low marginal cost per subscriber. The company has made their portal a cheap one in order to ease access and ensure that there are increased subscribers per month. The increased subscriptions may increase marginal profit which will ensure that Spotify does not pay the labels and publishers the same rate for all the songs that users are allowed to stream on the service. Being able to solve this problem reduces the pressure from the music industry and allows the company to run smoothly without interruptive complaints regarding them being a net negative for the industry.

Holistic and specific Market positioning and SCA

The essence of the company is that it grows the music industry and also eases access of any music on a broader scale. It has grown the rate at which users can interact via music and also use the same musical aspect to create new experiences for new users on a daily basis. The company is a leader in technological aspects but does not show any innovative qualities since it functions within an oligopoly market. The main competitor for this company is Deezer which has a higher profit margin and shows a greater level of innovation when it comes to international music and local music depending on the place where the person subscribes from. Spotify takes the number 2 spot in terms of competing companies and competitiveness. It is however a leader in the musical niche that applies to Europe and the United States of America (Giulianotti & Robertson, 2012). The two strategies that apply for spotify are the Focus and differentiation strategy. The dominant generic strategy in this case is the differentiation strategy since it will allow spotify to offer a uniquely desirable product and services for the subscribers or normal users. The second strategy is the focus strategy which allows the company to offer a specialized service in a niche. The company is the second among its three competitors and maintains its cost leadership strategy in which profits are increased by reducing costs.

The graph above indicates the level at which each competing company is positioned within the industry. Deezer and Spotify are more promising when it comes to competition and show a high level of potential growth in the future. The sustainable competitive advantages for Spotify are the fact that it has very affordable premium rates and is of great quality along with being fully accessible in various places (Potgietter, 2014). The sustainable competitive advantage for Spotify does not indicate enough potential for growth but is changeable if the strategies for globalization and/or glocalization are put in place.

Value Proposition

The company has several positive attributes but most of them do not reach competitor number one’s qualities. The parity points for Spotify are its accessibility via a clone application or proxy server. The other partial point is that it is moderately reliable. The sustainable competitive advantage for spotify will increase as soon as the company finds a way to make their portal legally accessible in South Africa (Dori, Hollerer & Walgenbach, 2013). This will make the competitive advantages increase by a high rate. The value proposition is therefore to glocalize with the first market being South Africa since it shows high potential.

Capabilities

The first strength seen in Spotify’s list of sustainable competitive advantage is that the company learns individual tastes and preferences by following up on the consumer’s social activity in line with the musical application or rather the musical portal. The second strength is the good quality and fast functional capability. This is mostly due to the technological prowess that the company has and uses it to their benefit (Marshall, 2015). The other strength lies on the ability to e reliable when it comes to diverse international music. The capacity to have this quality is enhanced by the marketing skills that the company has adopted and is able to run by on several levels.

The 4Ps

The 4Ps include the product, price; promotion and place for Spotify’s strategy to work out and take place altogether. The 4Ps are what give the strategic plan essence and also create a wider and broader scope through which the company is guided into penetrating the market. The arrangement in this case is in accordance to the level of relevance that each one of them has towards the creation and implementation of the strategy (Resnick et al, 2016). The 4Ps are what initiate a great deal of idealistic prospects for the company.

Product

The first P in this case is the product since this is what determines the penetration of the Spotify Company and its application to the South African music industry. The market requires that spotify consider the inclusion of their music among the international music portal. This will require taking a stunt in Innovation and being able to maintain the same. The innovative part comes when Spotify is able to include South Africa’s music labels and producers in the company as stakeholders. The increase in local ideas will increase the company’s profit margin while promoting South Africa’s music to international levels. The reason for this is because the product is what makes up the most lucrative part of the company’s growth and maintains a balance for the same.

Promotion

Promotion is any personal or non personal presentation of a product. Promotion is meant to create awareness, interests and to also persuade the customers to buying the product. Promotion comes seconds in this case since Spotify has to create awareness on its efficiency and relevance to the South African music industry. The industry is bound to benefit in several ways in that it gets a free marketing portal for music and music labels that are within the music industry in South Africa. Spotify will establish representative offices aimed at only promoting the industry towards their having net positive in the music industry. To increase the promotion levels at this particular market will require that the company staff familiarizes themselves with the specific tastes and preferences of those within target.

Price

The price of the application will remain at a constant since they have to maintain an affordable status for the premium. This means that the promotion level will have to increase in order to have a high number of subscribers from all their accessible places. The only way this can work is by ensuring the full glocalization strategy is adopted in order to gain interest from the locals (Marshall, 2015). The price of the product is determined by the level at which subscription improves and the rate at which growth takes toll over the industry.

Place

The place where all these changes by and from the company are supposed to take place is in South Africa due to its promising consumer base. South Africa is known for its great appreciation for music and is the best pioneer for the company’s innovative strategy.

Implementation

The essence of my strategy is to create a platform that is available for countries that long to grow their music industry and also with a longing for legal access to music with ease. The priorities for this implementation are that the local communities be promoted first within their areas and later on, outside their areas. The implementation priorities are the promotion of products fetched from local ideas and promoted both locally and internationally. The key objectives for this strategy are to create a uniform and non-biased strategic element for all music industries whether renowned or not. This will focus on growth and oneness. It will also limit net negativity for the already established music industry (Ansell & Barnard, 2013). The main resources needed are the marketing teams and virtual marketing skills that can be used on social media for promotional purposes. The special thing about the implementation process in this case is that it personalizes the preferences of each individual in accordance to what they are able to purchase and/or be a part of. The aspect of glocalizing is the most important part since it makes the market exclusively important to the company’s interests.