Bma610 : Digital And Social Assessment Answers
Question:
Assess how Spotify competes with Traditional and online music providers by reviewing the approaches it uses for different elements of the marketing mix.
The workshop presentation is a group assessment, to be done in groups of two members. The number of group members may be modified depending on the number of students in the class so all the cases will be covered. The workshop presentation requires that each group analyses a case, answers the case questions (if applicable) and presents their solutions/answers to the class. Students are required to support their solutions and answers with appropriate referencing to academic literature. At least one(1) peer-reviewed journal article should be used in the solution/answers, highlighting the key message/finding of the paper that is relevant to the focus of the case (and topic of the week). Coursework from other universities or from nonacademic websites, e.g. Wikipedia, should not be used as references.
Answer:
Introduction:
The Spotify Company was developed back in 2006 and launched two years later. The company provides online music streaming to its customers and operates on a freemium model so that those using their application from web browser or mobiles. This model is based on the fact that after every 6 songs, the users will be receiving 3 minutes of advertisement (Businesstoday.in. 2018). The given report will be discussing the manner in which the organization competes with traditional as well as online music providers by reviewing the problems which have been faced by it which will be followed by recommendations for the same.
Major issues being identified
As seen from the case study, the organization is competing in a highly competitive business environment and hence, the following problems can be outlined:
Competition from free music services
There are various music platforms present which provide free musical services to the customers. An example of this can be given with respect to the policy of YouTube. YouTube allows free download and music streaming to its customers (Spotify.com. 2018). Moreover, the geographical spread of YouTube is very large and is available in most major countries around the globe.
Poor advertisement
Spotify only makes use of social media advertising and other related video advertisements to attract the audience. However, they need to ensure indulging in other mediums as well like the Billboard, newspaper and television advertising.
Poor payment for artists
Spotify follows a generalized approached for the artists irrespective of their background and their popularity. The small artists as well as the large ones like Taylor Swift were provided the same pricing rate like $0.006 to $0.0084 which is very low.
Pricing scheme
Lastly, the pricing and the revenue earning model scheme of the company is not as per the standards of the competitors whereby the different companies like Apple music and Amazon prime offer free music service to its users , moreover its pricing for different market groups is comparatively lower than that of $7.99 of Spotify (Coombes and Nicholson 2013).
Even Amazon prime allows free music for 1 month and then a monthly plan of around $4 which is even lower than Apple Music.
Recommendations for the improvement of the shortcoming being faced by Spotify
- For the competitionbeing faced, Spotify can collaborate with various platforms like Optus and provide free music to the customers and offer lowest premium services during specific hours. Moreover, the company can also provide coupons for online shopping in Alibaba, eBay and others.
- With respect to the pricing scheme,the company needs to formulate different pricing schemes for different target markets and the kind of music which they listen to (Malhotra and Peterson 2014).
- Moreover, for the payment made to the artists, the Spotify music company needs to make different offers to different artists based on their popularity.
- Lastly, the firm can make use of mainstream mediain order to develop different strategies and spread their operations extensively by purchasing certain slots and space on billboards, Television and radio to have a pro-founding impact on the potential as well as existing users.
References:
Businesstoday.in. 2018. Business Today. Retrieved from: https://www.businesstoday.in/magazine/lbs-case-study/london-case-study-how-spotify-evolved-its-use-of-marketing-tools/story/200269.html
Coombes, P.H. and Nicholson, J.D., 2013. Business models and their relationship with marketing: A systematic literature review. Industrial Marketing Management, 42(5), pp.656-664.
Malhotra, N.K. and Peterson, M., 2014. Basic marketing research. Pearson.
Spotify.com. 2018. Spotify: Music for everyone. Retrieved from: https://www.spotify.com/int/about-us/contact/
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