Marketing Plan: Streaming Services, Spotify
Streaming Services, Spotify
� Report style 1,500 – 2,000 words please do 1650 words please
� Use accurate and frequent Harvard style in text referencing, double line spacing
� Deep research will be evidenced by a substantive bibliography (2-3 pages)
� Use of relevant marketing literature, industry sources and original and customised illustrations are
expected
Executive Summary
Spotify is a music streaming service that provides numerous songs in different genres to
the users (Alasaad, Gopalakrishnan & Leung 2015). The streamlining service allows users to
listen to favorite artists, songs, albums while discovering new releases. With mobile tools, users
can listen to not only artists but also playlists on a shuffle mode; however, they are not in a
position to play songs offline or even on-demand. In addition, users are restricted to a given
songs skips and music is disrupted by an advert after three songs. For computer or tablet users,
they can easily choose songs on-demand, but they should listen to the ads (Anton, Munoz &
Koshutanski 2015). Spotify generates revenue from two tiers including premium subscription
and adverts. Promoters pay Spotify for exposing their ads to users on the free tier and fund
royalties the firm pay artists.
The premium tier costs about USD 9.99 per month, offering users unlimited music on all
devices (Polat & Akgün 2015). Again, users can momentarily download music and play them
without being shown ads. Spotify is purposing to increase its income in the music sector that has
significantly reduced following piracy as well as YouTube streaming services. Spotify can
enhance artists profits by paying them from premium subscription and adverts. Again, Spotify
aims at minimising piracy eliminating piracy by moving users that listen to free and unlawful
music to Spotify’s legal and free music when it comes to increasing profit, Spotify seeks to
switch users to free tier where they will pay premium subscription, however, the firm is still
searching for any effective strategy to achieve this (Tian 2014).
Situation Analysis
The situation analysis involves market analysis- segmentation and customer details;
SWOT analysis; and competitive analysis.
SWOT Analysis
Strengths
Spotify provides more than thirty million songs as well as1.5 billion playlists. Moreover,
the search and select feature allow playing any song on the personal computer of the tablet. The
service is also popularly known for social features to compile and share playlists on social media
platforms. The service protects artists’ revenue by eliminating piracy. The use of ads after every
3 songs attracts promoters (Holliman & Rowley
Weaknesses
Spotify service has limited offline streaming services. Again, it has limited song
availability due to label, artists to have music on the company’s site. The intricate that involve
getting a complete album and the inadequate promotion of the benefits of premium subscription
are the company’s worst undoing.
Opportunities
Spotify has ensured that it meets its user’s needs due to organized music and sharing.
Moreover, it offers discounts on the premium tier to increase popularity among the young
generation. It has also partnered with concern promoters to market Spotify. iTunes provides
more than 43 million songs, complete albums, offline streaming services significantly affect
Spotify’s revenue (Bradshaw 2010).
Threats
The company’s worst threat stems from unlawful music downloads affect its sales. For
instance, Pandora’s free and USD4.99/ per month advert fee also affects Spotify’s revenue. In
the end, the increased availability of artists and music is unpopular genres
Competitive Analysis
The music sector is facing changes from owning songs to purchased downloads at low-
cost streaming. In 2013, the physical music sales reduced by about 13%, while digital music
sales volume declined by 6%, however, the use of streaming music rose by 32% (Mitchell,
Madill & Chreim 2015). Additionally, rising number of the premium subscriptions from online
streaming websites like Spotify, Pandora, and Sound have brought about spirited competition.
Currently, streaming services have more than 28 million users’ premium subscribers and million
free users (Dörr et al. 2013). Spotify’s main business rivals include Pandora, SoundCoud and
iTunes radio as demonstrated in the table below.
Available songs Subscription fee per
month
Users
Spotify More than 30
million
9.99 15 million per 60 million
subscribers
Pandora 1 million 4.99 3 million per 250 million
subscribers
SoundCloud Millions 6 175 million
iTunes 43 million 1,29, 0.99 or 0.69/song 500 million
Market Analysis
Customer Analysis:
Since streaming services are popular, users’ needs are increasing too and sensitive to not
only pricing but also functionalities (Pham 2012). Users prefer complete albums and a variety of
songs based on their preferences, suitable for their mood and connected to their favorite artists.
The majority of music streaming services offer songs in accordance with songs, favorite artists,
and preferences (Peoples 2012). Irrespective, majority of users are not contented with song
selection procedure used by streaming services. Users do not prefer listening to songs and get
impatient especially when they are unable to skip songs as a result of adverts and limited
skipping time. Moreover,
users are migrating from streaming radio to selective songs on Spotify. Users also prefer to not
just play songs but also search and compile into their playlists rather than streaming (Kiryanov,
Lyakhov & Khorov 2014). Again, users prefer simple organization of music selections in their
music libraries. Additionally, users want easy-to-use systems to share as well as create playlists
for each occasion. Basically, users prefer to connect with their favorite artists to discover the
latest music directly. That is, users prefer to make music streaming an emotional aspect of
supporting or connecting with artists.
Market Segmentation:
The target market for Spotify includes people who own or stream music, playlists or
music. In addition, its target consumers are people of all age groups, income and demographic.
Owing to the fact that most of the streaming is done on personal computers, laptops, and tablets,
a significant percentage of Spotify customers spend much time online. These users listen to
roughly 146 minutes per day (Constantinescu 2014). Due to the popular use of tablets, Spotify
can segment its markets based on the demographic patterns- students aged between 15 to 23 and
older employed business experts. Currently, Spotify offers a discount to college students on
premium subscription services, however giving high school learners a discount can significantly
enhance premium subscribers in this market segment (Meiseberg 2014). Since college and high
school learners are sensitive to price, hence providing discounted subscription services is
effective in targeting them.
Giving discounts to high school learners would make them feel that Spotify is offering
them a good deal. High school and college learners spent roughly seven and a half hours per day
online. Therefore, this segment presents Spotify a large market. Spotify can target business
professionals who use laptops for the better part of the day. Since business professionals are
value based, Spotify could promote the benefits of a premium subscription to them. This way
Spotify can increase the number of premium subscribers as they can afford the USD 9.99
(Kiryanov, Lyakhov & Khorov 2014). The two segments can be measured by tracking discount
offers. In other words, Spotify can use zip code details collected during registration on Spotify,
and a number of registered users, age and the number of discounts utilized.
Market strategy
The market strategy comprises of the mission, marketing objectives, target strategy and
product positioning.
Target strategy
Spotify must concentrate on a multi-segment strategy while focusing on two major
customers; high school learners and business professional (Osterwalder 2010). Therefore, this
requires that Spotify modifies its marketing mix because these groups have unique psychological
and functional requirements high school learners and middle-aged business professionals are
associated with active preference for music and spend much time daily online (Li & Lee 2015).
These two groups have a potential to considerably increase premium paid if suitable strategies
are adopted.
Product Positioning
High School Student
Youths want to experience trends as well as popular. In high school students are trying to
look for identity. Some are trendsetters while others are followers. In that case, Spotify should
concentrate on attracting trendsetters convince them to choose its streaming services and
followers will follow suit. Moreover, high school students are continuously looking from
platforms to express themselves. Some of these platforms include Pinterest, Facebook, twitter,
Instagram, Snapchat among others (Simba & Ndlovu 2015). Therefore, Spotify focus on high
school learners’ desire, that is, an up-and-coming, “cool” music and trendy than what it rivals
does. Basically, the positioning statement for this segment can be something like “Spotify
provides fun and social approach of musical expression”. This gives students the ability to create
playlists based on genre or mood and shares with others. The important message to pass across is
that Spotify is suitable music streaming service for learners since it is trendy, fun and allowing
them to express themselves (Weijters, Goedertier & Verstreken 2014). Spotify can also advertise
on sites that promote concerns where students visit to buy tickets.
Business professionals
This market segment is always busy throughout the day. They are goal oriented and when
buying products they look for value. For this segment, Spotify aims at having a user-friendly and
convenient awareness. Unlike, its rivals, Spotify should offer suitable services. For this segment,
the positioning statement can be like “Spotify is convenient and best streaming services allowing
them to access and listen to their favorite music and its value the cost” (Simba & Ndlovu 2015).
Since business professionals are analytical, their decisions are informed by benefits of the
product, efficiency and convenient. Spotify creates playlists with respect to users’ preference; it
is convenient for business professionals since who do not want to scroll through different genres
searching for their favorites. This move would greatly convince business professionals about its
music streaming services.
Marketing Objectives
The company’s major objective is to enhance the number of high school learners’
premium subscribers by giving them discounts. This is the first move Spotify can use to increase
high school students on a premium tier. At the moment it provides a discount of 50% to college
students on their $9.99 /per month making it $4.99 (Ko & Lau 2015). Spotify can significantly
increase the number of premium subscribers by offering discounts to high school learners.
Establishing a trendy presence in music sector; Spotify can market its music streaming services
by partnering with concert organizers (Tanggaard, Nielsen & Jørgensen 2015). During these
events, Spotify can print its logo on wristbands that organizers give to individuals attending
concerts. Such efforts can considerably promote Spotify’s premium services and playlists of
artists performing in those concerts (Kovachev, Cao & Klamma 2014). Individuals who attend
concerts are fanatical music explorers and listeners. Additionally, they like sharing music.
Spotify’s premium service has features for sharing music on social networks. Such features
should be emphasized to these individuals because they are likely to register for premium
service.
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