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  • 1. Task 5: SWOT Analysis (LO3) Background Information on Spotify itself: Spotify is a commercial music streaming service providing digital rights managementrestrictedcontent from record labels including Sony, EMI, Warner Music Group and Universal.Launched in October 2008 by Swedish startup Spotify AB, the service had approximately 10 million users as of 15 September 2010,about 2.5 million of whom were paying users. ¹ Music can be browsed by artist, album, record label, genre or playlist as well as by direct searches. On computers, a link allows the listener to purchase selected material via partner retailers. ¹ A six-month free trial period is activated upon account registration or first login with a Facebook account, allowing the user to listen to an unlimited amount of music supported by visual and radiostyle advertising. After the trial, Spotify has a listening limit of 10 hours per month, divided into 2.5 hour weekly portions (unused hours carry over). ¹ Strengths of the MP3 product: This particular MP3 player is unique in the sense that it streams music from the internet through means of Spotify, which will prove effective in attracting the attention of the consumer who are categorised in the age group of 10+, as music has no age limit. Another strength would be that it is linked to Spotify which means that the consumer can obtain music instantly through this programme at any time of the day. The fast streaming programme is embedded into the MP3 player, which makes it even easier for the audience to download music as they do not have to go to the effort of downloading the app. Apple devices also have a similar feature where iTunes is already installed on the device. However, they do not have Spotify unless you download it from the App store, which is rather inconvenient and time consuming for the audience of the product itself. However, some consumers may not like the fact that they do not own the music which is why they may choose iTunes over Spotify, as once the subscription to Spotify has been cancelled, the music will be immediately removed from their music playlistwhich some people may find frustrating, as their ability to listen to their favourite songs will be diminished. Censorship could also be an issue with both the device as well as Spotifydue to the fact that the music that can be accessed may not be suitable for a younger audience who may purchase a song and be completely unaware of its explicit nature. This may cause problems as the music is not monitored and the parents or guardians are likely to disapprove of this and possibly complain to the company giving them a bad reputation. In order to solve this problem, the guardian of the consumer could check the content that features in the music is if they are concerned about what their child is downloading.
  • 2. Weaknesses: A weakness to the MP3 player could be that without internet access, the Spotify linked to the product will become difficult to use, as the consumer will not be able to download any music and will have to rely on the music they already have in their library. Another weakness could be that the MP3 player could be a distraction as the consumer may have other tasks that they have to fulfil and if they are listening to music, they may defer from these tasks which may be important. Also, if there are weather problems occurring it may interfere with the internet and therefore, the audience will not be able to stream any new music until the connection has been fixed. This may irritate those who are paying £10 a month for the premium subscription of Spotify. In order to resolve the issue of an internet connection error, the consumer could contactSpotify headquarters, where they could ask to freeze theirSpotify so that they don’t have to pay the bill when there connection isn’t working. Once this connection problem has been solved, the consumer can continue paying for their subscription. Another way this issue could be solved is that Spotify could offer vouchers for a music store such as HMV , where the consumer can purchase the songs that they wanted to listen to while there subscription has been frozen as a way of providing good customer service and showing that they value the needs of the customer. Opportunities: Certain opportunities may arise that could potentially make the product more successful in the long run as Spotify may introduce a seasonal aspect to the programme such as Christmas songs, Valentines songs, as well as music from films and musicals that are popular at the time, making Spotify a modern and up to date platform. The consumer would appreciate this element and it may convince them to purchase the MP3 player solely on this aspect. The target market of the MP3 player ranges from 10+, which means that the product is marketed towards a wide range of individuals, as opposed to a select group, which is a good selling point and is also an opportunity for the company to expand their profit region and increase their sales of the stated product. Apple products also have a universal target market, so it may be challenging to go against this multi-million dollar company, but a marketing strategy would have to be put into place before the product would be promoted. The development in technology is also another great opportunity for the MP3 to become an instant success, as sales and offers could be included with the purchase of the product, for example, ‘20% off of the MP3 player if you sign up to Spotify Premium’. This is an incentive for the consumer to buy the product; therefore, more sales will be initiated and in turn, the popularity of the product will increase, which will put it on the competitive market with Apple. The company of Spotify, have the opportunity to market and promote their brand to the audience of the product by creating merchandise such as; tote bags, stickers, wristbands, t-shirts and mugs. This would initially be a form
  • 3. of ‘free’ advertising for the company, as their merchandise will be worn or presented in the public with their logo on, which may convince other people to research the company and therefore, the brand of Spotify will initially become more renowned as an institution. Apple are an existing company that are known for their use of merchandising in order to promote their company, as they issue stickers in the box of the item that you purchase from them, which is a free marketing tool for the company to subliminally utilise, in order for the consumer to place this sticker somewhere where it could be viewed by others, therefore, making the company more well-known and therefore more popular. Threats: It is clear that this product (MP3 player) may face certain threats posed by existing competitors in the market, including Apple that target a similar audience with a similar product range. However, competition can be a good thing as it keeps the companies on their toes, constantly coming up with new ideas regarding how they can be the most popular company in the technology market. Also another threat could be that other companies may issue products that are cheaper than this particular MP3 player, which may put the profits down and will result in consumers choosing the cheaper option as they see it as value for money. Also, there may be a music streaming website that may be less money than using Spotify, which means that the ethos behind the product will become obsolete if a new music streaming app becomes more popular, which will put the company out of business. Another threat could be that the MP3 player may need regular software updates in order for it to run efficiently, however, if this is done frequently, the consumer may get irritated by it and from this; they may become disinterested in the product. In order to overcome the threat of competition on the market, the company could initiate a strategy where they create an influential advertising campaign that draws in the attention of the consumer of the product, which features persuasive language as well as ‘money-off’ offers in order to get the majority of the market on their side, beating their competitors such as Apple. Also, if the company build up a good set of customer service skills, the consumer will be obliged to purchase from the company in the future and become a regular customer, if they are treated well by the members of staff hired by the company that is Spotify. ¹ http://en.wikipedia.org/wiki/Spotify