Report Marketing MIX 4Ps Spotify VS JOOX PDF

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Report MKT420 MARKETING MIX 4P'S SPOTIFY AND JOOX COMPARISON BETWEEN TWO MUSIC COMPANY...

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FACULTY OF BUSINESS AND MANAGEMENT BACHELOR OF BUSINESS ADMINISTRATION (HONS) BUSINESS ECONOMICS AND BACHELOR OF SCIENCE (HONS) MANAGEMENT MATHEMATICS (BA290) BA 2332A FUNDAMENTALS OF MARKETING MKT 420

REPORT ON MARKETING MIX 4P’s SPOTIFY and JOOX

PREPARED FOR: NOR SARA NADIA MUHAMAD YUNUS

PREPARED BY: AINI AQILAH BINTI ADNAN (2020352131)

DATE OF SUBMISSION 18 JUN 2020

TABLE OF CONTENTS CONTENTS 1.0

2.0

PAGES

INTRODUCTION

1

1.1 Spotify

2

1.2 Spotify in Malaysia

2

1.3 Competitor

2

ONLINE MARKETING MIX

3

2.1 Product/Services

3-4

2.2 Price

4-5

2.3 Place

5

2.4 Promotion

6-7

3.0

COMPARISON

8

4.0

CONCLUSION

9

5.0

REFERENCES

9-11

1.0 INTRODUCTION Music is increasingly used these days to enhance the quality of our lives. Research indicates that making music leads to improvements in general health and improvements in some specific health related conditions. Music surrounds us in our everyday lives, and we listen to it whenever we are. Music has the power to influence people's mood and behavior. In fact, music has been introduced by our mother since we are in the womb. It is utilized to sooth, to publicity up, to instruct, for diversion, as a memorable medium data, for clinical purposes, thus substantially more. Music is used from various perspectives to improve and upgrade the lives of individuals. It is intended to be expended, regardless of whether it is by the audience, entertainer, or author. It is an approach to decipher sentiments and wants that are at times hard to communicate utilizing language. Digitization especially in the music industry is the fastest digital adopter and has a high level of digital penetration among the other sectors such as film, book, magazine, and newspaper sectors. Digitization has brought radical changes to the music industry. The music business keeps attracting more users as it continues to grow into new markets and create new business models. It also brings impacts to artists to a broader global audience. In 2017, IFPI, an organization that represents the interests of the recording industry worldwide, concludes that digital revenues, especially paid subscription audio streaming, now make for more than half (54%) of the global recorded music market. (Arias & Kabbas, 2016) The objective of this report is to make a comparison of the marketing mix, 4P’s, between the two company, Spotify, and JOOX. The results also would help to determine the which company has a superior online marketing mix. The data used for this analysis are from secondary data.

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1.1 Spotify Spotify Technology S.A. is a Swedish international media services provider. The headquarters are located in Stockholm, Sweden. It was founded by Daniel ek in 2006 and later officially launched in 2008. The company provide an audio streaming platform, the Spotify platform, that provides DRM-restricted musics, videos and podcasts from record labels and media companies. For a freemium service, the basic features are free with advertisements or automatic music videos. As for paid subscriptions, there are additional features offered such as offline listening and commercial-free listening. (Wikipedia, 2020) 1.2 Spotify in Malaysia Popular music-streaming service Spotify was launched in Malaysia, Singapore, and Hong Kong on April 2013. The service comes in two options - a free, ad-supported version for desktops; and a Premium version with enhanced quality for RM14.90 per month that allows user to listen wherever they go, across multiple devices and offline too. According to Sriram Krishnan, head of New Markets, Asia Pacific, in a prelaunch interview with Digital News Asia (DNA) 2013, Malaysia, Singapore and Hong Kong are great stepping stones to the rest of Asia for obvious reasons - the indie scenes are very healthy and Facebook penetration is very high. (Asohan, 2013) 1.3 Competitor Spotify is a fast-growing streaming services and a world’s biggest music streaming platform by number of subscribers. It is fast becoming very popular in markets as far away as Europe to Asia. Spotify had an almost 5% growth in paid subscribers to its service quarter-over-quarter from July 2018’s 83 million to 87 million. According to Forbes story, it is due to solid growth in regions such as Europe, North America, and Latin America, meanwhile rest of the world such as Australia, Africa, and Asia, only contributed 11% combined. (Trefis Team from Forbes , 2018)

Apparently, the

Spotify’s market share in Asia is even smaller as it is not an easy market to conquer even for global streaming giant like Spotify. JOOX by Tencent, however, is considered the market leader in Asia. According to the market researcher Ipsos’s March 2018 report “Targetting Millenials Using Music Streaming Apps”, JOOX is now the most downloaded music streaming apps across Google Play and iOS App Store in Malaysia, Indonesia, Hong Kong, and Thailand. (Mulia, 2018)

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2.0 ONLINE MARKETING MIX Marketing mix has vital role in influencing consumers to be able to buy a product or service offered by the company.

Marketing mix are elements of

company organization which can be controlled by the company in communicating with guests and to satisfy guests (Zeithaml, Bitner, & Gremler, 2013). Marketing mix is a good marketing tools which are set of products, pricing, promotion, distribution, combined to produce the desired response of the target market (Kotler & Armstrong, 2018). Hence, marketing mix is a good marketing tool in a company, where the company must be able to control it in order to influence the response of the target market. 2.1 Product/Services Spotify was not the first online entrant to online music services, but it was an innovator in marketing approaches, technology and subscription options that have enabled it to become a market leader in music subscription. Spotify is a digital music and podcast music-streaming service, which gives access to 35 million of songs and other content from artists all over the world in the form of digital music. Spotify’s core product is free or paid service to stream or download music available through a subscription (Spotify, 2020) . Spotify begun with a music streaming service but has since added podcasts, it saw the potential of digital value in the music industry instead of people buying CD’s from stores they instead get access to the music online. Within the streaming service, you have access to their full library this made Spotify a market leader as it was one of the first companies to offer unlimited music rather than pay per song gaining them majority of the market. Since they started, they have always had a competitive edge over other companies as they were the market leader and their name are associated in consumers’ minds with music streaming services. Spotify also use individualization and personalization within its product, it offers discover weekly playlist for subscribers where they make a playlist based on the individual person’s music taste. Personalization can lead to greater customer satisfaction as well as higher profits due to higher customer expenditure (Arora, et al., 2008) and therefore gives Spotify a competitive edge. Spotify’s service can also be linked to social media such as Facebook, Twitter, and Snapchat, it allows users to share their music with friends. This

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gives Spotify a competitive edge as it allows users to interact with friends and family making the experience personal. On the other hand, JOOX is one of these growing entertainment apps that connects music lovers to their favorite artists and albums. Available as an app accessible from mobile and desktop, the platform is a freemium service with a library of about 30m songs that are free, some songs are only available for premium users. There is a wide range of songs available across different languages to cater to the local market, apart from English songs. From millennials to business professionals, JOOX users are music-savvy, with varied interests including art, travel and leisure and sports. Beyond music, JOOX is also an engaging platform that connects brands with its diverse audience. With traditional advertisement like banner ads, audio ads and splash ads, JOOX also provides a unique opportunity for marketers to demonstrate their brands’ character through category playlists and in-app skins. (Staff Writer, 2016)

2.2 Price Spotify has different options for price, they have a free subscription that limits what the user can do as well as ads between songs or you are able to pay a monthly fee that allows you to use the service ad free as well as access to additional features such as downloading, and skipping unlimited songs (Spotify, 2020) . Spotify uses a freemium pricing strategy which entails offering customers are free sample (Liu, Au, & Choi, 2014) however there is no limit to the free sample unlike others who use this strategy users can continue the free service for as long as they want. Spotify uses this strategy to compete in the market as it knows users are not willing to pay high prices, instead they use this strategy to attract users to then purchase a monthly subscription to gain access to more features. This strategy can also encourage people who would not normally purchase streaming service subscription to do so. The pricing strategies of Spotify allows it to compete with both free and paid to use services as it is up to the customer to decided what service they will like. Spotify also offers introductory prices an example is 3 months for 99 cents after the 3 months they then charge the regular price. Spotify also offers different prices for different segments such as families, and students allowing it to compete with other music providers by tailoring their service for these segments. The different prices are designed to compete with competitors such as Apple music who also have student prices. Spotify was the first major streaming service and therefore could price their product wherever they wanted and have kept a 4

similar price from the start and then competitors have had to price their services around Spotify giving it an edge. If competitors were to price above, they would have to give additional services for consumers to justify paying the higher price and if they price lower than Spotify consumers will think the services is not as good. Unlike other music services Spotify has a single price and you get access to their whole library rather than pay per song/ album giving it a competitive edge over competitors. (Staff Writer, 2016) JOOX is currently running a special where the first month’s subscription includes an additional five months of free access. JOOX costs much lower than Spotify. JOOX VIP costs around RM12.90 per month, which is equal to $2.95. There are some benefits to enjoy, such as unlimited skips, ad-free, offline listening, high-quality streaming, and play on demand. Much like its competitors, JOOX VIP includes offline listening, which lets you download tracks to your device for listening. It also removes the audio ads that play in its free tier. (JOOX, 2020)

2.3 Place Spotify is available on almost all technological devices such as laptops, tablets, and smartphones, it is mainly accessed by the internet however an offline option is available for paid subscribers. All you need is the application and then you can use the service, this allows Spotify to be available to consumer 24/7. Spotify uses a sellercontrolled distribution strategy this involves a single site from the supplier company which allows them to sell their product/ service (Berryman, Harrington, Layton-Rodin, & Rerolle, 1998). This strategy allows Spotify to have complete control over their service and therefore gives a competitive edge because the service is delivered exactly how they want. Spotify decided to cut out the middle man of buying music (the retailers selling CD’s) and instead distribute them directly to customers, this allows them to cut down on costs and therefore can give products at a lower price than competitors giving them a competitive edge. JOOX only has the mobile apps and web player. But its apps are with perfect customization theme gallery. Both apps support local music playback. 99% of users stream music from JOOX through their phones. On average, JOOX users spend about 80 minutes a day listening to their favorite music on the platform.

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2.4 Promotion Spotify has very limited promotional activities instead of spending large amounts of money on big campaigns it mainly relies on word of mouth, and co-marketing, their overall promotional aim is to increase awareness (Spotify, 2020). While Spotify offers a product for everyone its promotional efforts are aimed at certain segments in their target market. Spotify uses social media as one of their main forms of promotion, it has a partnership with Facebook that allows users to show what songs they are playing as well as connect with friends on Facebook through Spotify. This has led to word of mouth being spread through one of the biggest social media platforms and because the promotion is coming from reliable sources (other friends) it makes it more memorable and reliable (QUOTE). Spotify also started using twitter for a similar promotional activity as well as keeping users up to date with new features and music on Spotify. Spotify also relies of celebrity endorsements for promotion, when a new celebrity releases an album it is very likely that they will also release it on Spotify. When the celebrity or big music labels such as Universal or Warner bros promotes a new album as available on Spotify it also promotes the service to the artist fan base. Spotify is mainly aimed at the mass population which makes their promotional activities easier and cheaper as they can produce one campaign that is likely to attract many people’s attention rather than making multiple campaigns aimed at specific target markets. Often Spotify’s campaigns such as #thatsongwhen (Spotify, 2020) relies on users to do most of the promotion through sharing their experiences with songs but also including Spotify. Spotify also uses sponsorship of events such as music festivals to promote their service which allows attendees of the event to associate Spotify with music and then be in their mind when deciding what music streaming service to use. This has allowed Spotify to compete in the market as it not only targets a specific market but allows non-users to be exposed to their service. The popularity of JOOX with listeners is partly contributed by the seamless integration of ads into the listening and streaming experience that the app provides. Brands looking into advertising on the platform can do so in various formats, from display and content, to performance, branded, and sponsorship campaigns. Advertisements on JOOX come in the form of splash ads, banner ads, campaign-style ads as well as audio ads. Users under a paid subscription service can listen to songs ad-free, skip songs at their discretion, and gain access to offline listening via song 6

downloads (JOOX, 2020) . Various consumer brands have leveraged JOOX as an advertising platform, including F&B companies such as Coca-Cola and Tim Tam, as well as retail and lifestyle brands Fendi, Dior and Oppo. JOOX has also turned to gamification to focus its attention to the social and fan economy model, which has started to play a significant role for the platform in terms of user engagement. While other platforms like Spotify and Apple are continuing to offer a better-curated list for Asian markets, JOOX is leading the market and beating the global competition by employing local editorial teams to communicate localised content via local language as well as lyric cards for local karaoke enthusiasts, which has always been a popular demand in Asia. (Music Press Asia Staff, 2017)

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3.0 COMPARISON Based on (Chan & Chee, 2015), the difference between Spotify and JOOX are simplified as the table below.

Company

Spotify

Bitrate



160Kbps

Premium+

Free Subscription

Ad-supported

(Paid subscription) No ads

(Standard quality, desktop) 

96Kbps (Standard quality, mobile



320Kbps

Unlimited skips

Music can be

and music on

downloaded

demand

and

only

Price (per

Associated

month)

platform

RM14.90

Family plan available

per month

for

Premium

subscription,

where

a 50% discount is

played

given for other link

on desktop

offline

On mobile, only

Available as a

Can create custom

albums/playlists

30-day

playlists

are playable

trial

accounts.

free

(Premium quality,

Limited

mobile and

available

skips

desktop JOOX



Unspecified

Yes, with ads,

30-day

free

RM14.90

limited skips on

trial,

high per month

mobile, certain

quality

songs/albums reserved

for

3

months

VIP

RM73.90 for

6

months RM136.90 for months

8

into

WeChat

and

Facebook for easy RM40.90

for

Integrated

12

sharing

4.0 CONCLUSION From the analyses, we know that based on the marketing mix (4P’s) for both companies plays a great marketing strategy to attract consumers. Both Spotify and JOOX has the potential to keep growing and expand in the business. The companies should use social media as a comprehensive strategy which is suitable for both non-user and current user of Spotify to reach Malaysia market more aggressively. In conclusion Spotify company has a superior online marketing mix than the JOOX company because overall, Spotify has been a market leader and continue competing against its competitors in almost all aspects of the marketing mix, it uses new and exciting promotional activities, their pricing strategies are not like any other competitors, and they continue to offer the product and service that customers want. Spotify and JOOX are digital services that offer engaging music streaming experience. Each platform comes with pros and cons so you can choose for the best one to jam out. From music quality and features, Spotify is more prominent. It delivers higher bitrate for better music quality as well as excellent music discovery features. Not to mention it offers myriad music catalogs.

5.0 REFERENCES Arias, A., & Kabbas, C. (2016). A Marketing Analysis. Fairfield University. Arora, N., Dreze, X., Ghose, A., Hess, J., Iyengar, R., Jing, B., . . . Zhang, Z. (2008). Putting one-to-one Marketing to Work: Personalisation, customisation and choice. Market Letters, 305-321. Asohan, A. (2013, April 16). Digital News Asia. Retrieved from SPOTIFY COMES TO MALAYSIA... AND ABOUT TIME TOO!: https://www.digitalnewsasia.com/media/Spotify-comes-to-malaysia-andabout-time-too Berryman, K., Harrington, L., Layton-Rodin, D., & Rerolle, V. (1998). Electronic Commerce: Three emerging strategies. . McKinsey Quarterly, 152-159. Chaffey, D. (2015, Mar 30). Smart Insight. Retrieved from How Spotify built a $5 bill...