Spotify Marketing Plan PDF

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Running head: MARKETING PLAN – SPOTIFY

Marketing Plan – Spotify

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MARKETING PLAN – SPOTIFY

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EXECUTIVE SUMMARY PROJECT FORMULATION Core Competencies MARKETING OBJECTIVES Spotify’s Background Value Proposition SPOTIFY MISSION, VISION & VALUES Mission Statement Vision Statement Values Social Responsibility ENVIRONMENTAL ANALYSIS Legal and regulatory Economic Social and cultural Environmental Technological SWOT ANALYSIS Strengths Weaknesses Opportunities Threats TARGET MARKET STP Analysis - Segmentation Targeting Positioning Strategy MARKETING MIX AND BRANDING Spotify Branding Strategy Marketing Mix Product Price MARKETING IMPLEMENTATION

MARKETING PLAN – SPOTIFY Global Market Share Growth Conversion of freemium customers to premium customers Advertising on the Freemium service Increasing customer awareness CONCLUSION References

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EXECUTIVE SUMMARY Users of services from music streaming are allowed to access millions from the web-connected computers in a legal way and free of charge. The music industry now vies the device as the window to its future (Swanson, 2013). The largest growing music streaming service in the world is Spotify where it has over 24 million active users in the entire world. There are around 6 million people who use the streaming service by paying a monthly charge of 5 or 10 dollars. Spotify firm reported about 8000 subscribers’ growth in a day and currently the company is valued at $3 billion. Last year, there was over 700 percent music streaming indicating that people currently listen to music more than they ever did before. Nonetheless, the music industry is surrounded by a lot of disputation of the service. In this document entirely discusses the marketing plan of Spotify company that it will use when it tries to operate in the hospitality sector specifically reaching the travelers.

MARKETING PLAN – SPOTIFY PROJECT FORMULATION Core Competencies One of Spotify’s key core competencies is their agile engineering culture. The driving force of this culture is their high levels of autonomy throughout each sub-team within the company. Another core competency of Spotify is its ability to excel in legal negotiations. This core competency is rooted in Sean Parker, one of the board members of Spotify and a veteran in the music streaming industry. MARKETING OBJECTIVES The first goal is to launch a new product of hospitality to travelers. Secondly, the company looks at creating awareness to the customers about the new venture and thus aiming to increase its global market share to 41% by June 6th, 2021. Thirdly, the company aims at targeting new customers in the transporter sector for their music streaming. The fourth goal is to increase its revenues by 10% through advertising on a premium model by June 6th, 2021. Spotify’s Background Spotify is a Swedish music streaming on-demand media that was founded on April 23, 2006, by Martin Lorentzon and Daniel Ek. Spotify is a combination of the words "Spot" and "identify." Spotify is a freemium service, meaning that you can utilize the service for free, but to use additional features, consumers need to pay for a monthly subscription. Spotify is headquartered in Sweden, but they have 20 offices around the world. They also have over 3,000 employees. Although Spotify was founded in Sweden, they have expanded to larger areas in Australia, North America, New Zealand, South America, Europe, as well as some Asian

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MARKETING PLAN – SPOTIFY regions. Spotify is made accessible for most smartphones and desktops through Apps and the Spotify Web Player. Protected digital rights management content is provided by Spotify from record labels and media companies. Spotify differs from physical CD sales and online download sales. While artists earn a fixed price per album or song sold for physical CD Sales and Online Download sales, Spotify pays the artists a royalty based on how many times the song was streamed. Since June 2017, Spotify has monthly active users of over 140 million. Out of the 140 million monthly active users, Spotify has over 70 million paying subscribers. Value Proposition My proposition to Spotify today is to create a new branch of Entertaining branch using their successful platform and bring a new form of streamers and subscribers to their platform and to help to grow their platform to a newer group of streamers. SPOTIFY MISSION, VISION & VALUES Mission Statement To give people access to all the music they want all the time - in an entirely legal and accessible way. Vision Statement Having 'music moments everywhere.' Values Innovative, Collaborative, Sincere, Passionate, Playful

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Social Responsibility According to Kerry Steib, the company's team concerned with the social impact bonds both the fans and artists to help in creating transformation socially via music as well as the platform of Spotify. With our new branch of the entertaining platform, our goal is to increase the subscribers by 20% per year and continue supporting Spotify mission, vision and value. With Spotify worldwide platform our new video streaming service will continue giving people access to all the movies and music videos they desire and to connect music, films & video streamers under one incredible platform and increase premium subscribers by over 30% which can increase sales by over $200,000.00. ENVIRONMENTAL ANALYSIS Legal and regulatory Since the content that Spotify streams on their platform are not created by them, Spotify's success heavily depends on copyright laws. If copyright laws were to change, Spotify would have to adjust their processes. Economic Although the music streaming is a newer business, it is rapidly becoming more popular, as this happens the number of competitors is rising. To compete with other competitors such as Apple, Spotify uses a competitive pricing strategy to enter the new market. This pricing strategy may lead to losses to the company as it prices its services lower to have a command of the market share.

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Social and cultural The type of music one listens to can be used to interpret what kind of person they are, "music provides identity and the opportunity to tell others who you are." Music is played during weddings when you're driving by yourself and in every retail store. Environmental The customer's activism where the customers have a greater awareness of the music streaming industry expect that Spotify through its new branch it aims to launch to the travelers to exceed the legal standards for the company to become a stakeholder who is responsible in the community. There is also regular scrutiny from the government, and thus this adds to the cost of the operations of the company.

Technological The success of Spotify depends on the technology adopted. Since everyone is so attached to their phones, having a user-friendly app is critical in the music streaming business. This is also an application to the desktop apps. Another factor that influences the music streaming industry is the new technology of digital assistants such as Google’s Google Home and Amazon’s Alexa.

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SWOT Analysis Strength 



Weaknesses

Strong brand name- thus, a greater



artists as they earn little revenue from

First mover advantage- it will gain

the company’s platform.





There customer complaints on the

large customer base.

technical difficulties of using the

Better service facility.

service.

Competitive advantage from free

service to its customers. Opportunities 

Free service they offer scares away

platform to launch the new branch.

customer loyalty and trust as well as





Threats

there is an opportunity of doing live



Numerous lawsuits from the claims

streaming.

that it failed to pay reasonable

There is an already market from the

royalties

transport

publishers

sector

for

travelers. 

the

songwriters

and

Artists are moving their catalogs from Spotify platform to competitors.



Consumers illegally.

can

download

music

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TARGET MARKET STP Analysis - Segmentation The following table illustrates the three segments delegated to Spotify’s customers using direct segmentation based on benefits sought.

Segment

Casual listeners Explorers value We want to listen to We want

proposition

music

Features and benefits

Continuous

continually discover music exactly how music,

ease of use, free/low

new music we want to. listening Catered playlists, Offline personalized

cost, rounded catalog extensive of favorite music competitors

Pandora, music

Customizers to We want to listen to

Amazon

mixes, capability, broad and catalog, comprehensive

new and fresh music

catalog,

extensive

Apple

personal library music, Apple music

Amazon

Prime,

Pandora

The casual listener is the largest segment listed above. Neilson conducted a study and reported that 45% of people prefer to listen to music for free while only 29% are paid subscribers. Targeting While launching the new branch, it is best for Spotify to target the casual listener and customizer segment. The explorer segment will be ignored because the other two segments have a small

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amount of bleed into it. Spotify is a very large company that can target the two different segments. Positioning Strategy Spotify is portrayed as a platform that allows listeners to make playlists, listen to new offered music, as well as explore any genre due to its positioning in the music streaming industry. Casual listeners are the first segment, and they want to listen to music for continuous time in the background (Lynn, 2011). Pandora is the top competitor for this segment and positions high in the industry for already made playlists. Spotify offers playlists for casual listening as well, but Spotify outperforms Pandora because the playlists are organized in different categories. The next segment is explorers who continuously want to discover new music. The company positions itself in the transport sector by using gathered user information that aid in making unique playlists for the travelers, thus making users’ exploration easy for since Spotify already knows their music taste. The last segment is customizers who want to create their playlists just the way they want. Listeners are allowed by Spotify to create an endless number of playlists in a way that is simple and easy. MARKETING MIX AND BRANDING Spotify Branding Strategy Spotify’s brand is centered on being their customer’s best friend. The brand employs this strategy through the use of customer data to get to know and interact with their customers through the marketing of the brand (Pietrobon & Dai, 2012). Because of Spotify’s Freemium plan,

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converting current users to the premium plan is what the brand focuses most efforts on. The brand's unique advertisements, which uses data-driven content, is also mixed into building a social media platform out of their streaming service (Chaffey & Ellis-Chadwick, 2019). Overall, Spotify focuses on having a close relationship with consumers who are listening for free or paying for premium. Marketing Mix Product Music is Spotify's core product and can be accessed from their platform. The music content is made digitally, and therefore users can access the product using mobile gadgets, and this depends on the account type that the user has; the consumers are also provided with the download option for them to consume it while offline.

Price Spotify gives a free offer to the customers to enable them to listen to their content. They also allow consumers to pay a subscription fee that is cancellable at any point those with a premium account (Goi, 2009). Freemium is the first revenue model where the users can listen to some ads as the song plays; hence Spotify can earn from the ads. Distribution (Place) The company makes use of online platforms to make their users access the type of music they desire easily. This is because most of the users currently have embraced the technology changes and thus it is easier to reach them via online means.

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MARKETING IMPLEMENTATION Global Market Share Growth To implement its global market share growth plan, Spotify needs to target new customers to get them to join their Freemium or Premium service offerings. This is the idea behind the launching of a new branch that can help increase the customer base. New customers can be done with mass media messages (for the large segment of casual listeners) and targeted inbound tactics (for the narrower and specific customizers) (Drummond & Ashford, 2010). Spotify also should continue to create exclusive content for travelers to differentiate themselves from competitors in the market. Spotify also needs to take away points of difference from Apple music to make them points of parity or to ultimately be superior in these particular offerings. One of these is the entire catalog of songs available to users. Conversion of freemium customers to premium customers Educating users about the benefits of Spotify’s premium plan can serve to help the conversion of freemium users. Creating a brand community through the creation of a social network on their platform can serve as a way to differentiate themselves in the market. This can be done by creating an “About Me” section, allowing listeners the ability to add their music taste and past listening history. Another way to do this is through a timeline like Facebook, where a history of posts shows the current music you’re listening to and the tracks you discover. Additionally, featured playlists pinned to the top of your profile that share the favorite track that you’re listening to is available.

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Advertising on the Freemium service The ad-based (Freemium) model involves users paying nothing for the listening of millions of songs. The reason this model is feasible for Spotify is due to the revenues made off advertising to the freemium users. While there is no payment from users, the money is made in advertising, but in the past, this model has not been profitable enough for Spotify to maintain. Increasing customer awareness To penetrate the transport sector worldwide, Spotify needs to focus on tailoring market penetration to specific regions. Spotify can use their abundance of user data to focus on narrow customer segments. CONCLUSION Evaluation and Control To evaluate how well the implementation process went, Spotify can conduct Survey analysis. Spotify can also check their website traffic and track the user’s IP address to see where they are coming from to measure how many users are coming from each specific country. Additionally, financial expenditure comparison with the goals can be included by the company to evaluate the performance standards.

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References Chaffey, D., & Ellis-Chadwick, F. (2019). Digital marketing. Pearson UK. Drummond, G., Ensor, J., & Ashford, R. (2010). Strategic marketing. Routledge. Goi, C. L. (2009). A review of marketing mix: 4Ps or More? International journal of marketing studies, 1(1), 2. Lynn, M. (2011). Segmenting and targeting your market: Strategies and limitations. Swanson, K. (2013). A Case Study on Spotify: Exploring Perceptions of the Music Streaming Service. MEIEA Journal, 13(1). Pietrobon, A., & Dai, Y. (2012). Branding for Start-ups: A case Study of Spotify....