STRATEGIC MARKETING PLAN

Marketing Degree.

Universidad Rey Juan Carlos

Campus de Vicálvaro

Ivanna Caniego Martos

Lucía García Sureda
Ana Mª Isasa Torroja
Guillemo Lamo Senra
Paula Rojo Serrano
INDEX
1. General description of the company service
2. External environment analysis
2.1. Macroenvironment
a) PESTLE
2.2. Microenvironment
a) External factors that influence the market and impact
b) Competitors definition (competitors, substitutive products, potential
competitors)
c) Demand (PINS)
i) Market share of each competitor (€ and %)
ii) Sales of each competitor (units)
d) Distribution channels
3. Internal environment analysis
3.1. Mission & vision
3.2. SWOT and CAME analysis
3.3. Market share
3.4. Segmentation
3.5. Client/target analysis
a) Consumer profile
b) Factors that influence consumer behaviour
3.6. Positioning
4. Competitive advantages and strategies
5. Marketing plan objectives
6. Operative marketing
6.1. Product
6.2. Price
6.3. Place
6.4. Promotion
7. Bibliography

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1. GENERAL DESCRIPTION OF THE COMPANY SERVICE

Spotify is the world’s largest music player app. In 2022, it had almost 500 million users
(205 million premium accounts). This means that it has got the largest market share at
34%, and includes 200 years' worth of songs.
This platform appeared 15 years ago, in 2008, thanks to Martin Lorentzon and Daniel Ek,
as a substitute for Napster, another music player app forced to stop their activity. Spotify’s
success comes from the fact that it was the first company to offer this service legally,
making it profitable for both music consumers and the industry.
Spotify knows the importance of keeping updated and keeps satisfying the market’s
desires, with new and unique features that are going to be explained:

It initially focused on offering music, but now that’s not the only thing we can find. There
are audiobooks, podcasts about different topics, storytelling for kids, and any other form of
audio entertainment you can think about. For content creators, one of the latest features
Spotify has added is the possibility of inserting a video into their content, so that users can
watch the video of whatever they are listening to (song, podcast, etc.)

It has got two main different plans which are the Free Plan and the Premium Plan. The first
one has some limitations: ads, the need for an active Internet connection, and doesn’t
have the option of on-demand playback. Not any of the Premium plans have these
limitations and they have different budgets and features. Organised from the cheapest to
the most expensive:
- The student plan (4,99€/month) works for students. It gives you access to one
account, and the only requirement you have to fulfil is having an email with a
university, college, or school domain. Users of this plan won’t listen to ads, nor they
will need an internet connection to listen to music, and of course, they can enjoy
on-demand playback
- The individual plan (9,99€/month) gives access to one account. It includes the three
main features of premium accounts (ad-free; play anywhere, even offline;
on-demand playback)
- Duo (12,99€/month) gives you access to two accounts under the same roof. It
counts with the regular characteristics of the other premium accounts, plus Duo Mix,
which is a playlist for two, regularly updated with music they both enjoy
- Family (16,99€/month) gives access to 6 accounts, which means 6 people living
under the same roof. Apart from the three common features of premium accounts, it
creates a Family Mix, which is a playlist for the family, regularly updated with music
they all enjoy. Another add-on it has is thought for the youngest of the house:
blocking explicit music and Spotify Kids, which is a separate app made just for kids
with no explicit content.

Another characteristic that makes Spotify unique is that users can not only play the music
they want to but discover new songs thanks to their customised playlists in the section
“Done for username” which is constantly updating. Here you can find “Daily mixes”, which

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take groups of similar artists and choose their similar songs in a playlist. “Weekly
discovery” shows songs you haven’t listened to and that you may like. “Novelty radar”
groups together the latest launches of your favourite artists. This is a special characteristic
of Spotify that makes it a different music player and makes the experience of using it the
best for every user.

One of Spotify’s most distinctive features is the well-known “Spotify Wrapped” that comes
out at the end of every year. It offers a brief summary of the user’s activity during the last
year (total minutes played, most listened to songs, artists, podcasts…) and it is very
popular to share this on social media, which has made Spotify want to act a little bit as a
social media platform too, and here comes the other side of the company’s services.
Spotify has tried to make its use a shared experience. You can follow your friends and play
their playlists and see what they are listening to, make shared playlists, and even let
Spotify do all this work for you and automatically create a custom playlist for two people
with all the tastes that they share.

2. EXTERNAL ENVIRONMENT ANALYSIS

2.1. Macroenvironment
a) PESTLE analysis

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 POLITICAL
Political factors are one of the most impactful aspects that surround any organisation,
especially in the tech industry. Spotify is not the exception; it has suffered the damage of
dramatic political external factors such as the war between Russia and Ukraine. The audio
streaming platform has seen itself forced to suspend its operations in Russia, resulting in
the loss of revenue. The company foresees a drop of 1.5 million dollars in their profits after
blocking Russian premium users from their accounts.
Another aspect related to global politics is the presence of corrupt governments that have
enough power to act as barriers between Spotify and potential users, trying to hamper the
widespread expansion and increase profits.

ECONOMIC
To perform successfully and lead their operations to the right path, businesses need
favourable and stable economic conditions. Given that Spotify requires the presence of
financial tools (development), sudden changes in economic factors can harm its
functioning. When we refer to financial instruments we allude to the payment process:
premium users have to pay through online banking. In those countries where such tools
are not developed enough (third-world countries), the platform will not be able to operate,
leading to a decrease in potential clients. (Not developed countries).
Moreover, business cycles play an important role. When there is a recession (which also
involves an increase in unemployment), households tend to decrease their consumption
and prefer to save their money for the future. In contrast, when the economy works well,
people can enjoy a higher standard of living and their lifestyle changes, being able to
spend money on more luxurious services and products. When this is the case, Spotify
sees itself benefiting from the situation.
Increases in interest rates by central banks are also related to the saving-expenditure
activity by the population. When they are increased, people tend to deposit their money in
their bank account to get a return instead of spending, leading to financial losses for the
streaming platform.
However, the company has in its hands a pricing strategy to counteract the negative
impact of economic factors on the business. This strategy consists in offering two versions
of the platforms: a premium one which involves paying a monthly fee that depends on the
selected plan (individual, student, and familiar account), and the free one for those that do
not have the same purchasing power.

SOCIAL
Spotify provides its services across 184 countries and territories, therefore, it has to adapt
to each social group and deal with a wide variety of cultures, religions, and ethical values.
In some societies music is considered taboo as it contradicts religious and social values,
hindering Spotisy´s activity. Before starting its operations and penetrating a market, the
platform has to meticulously analyse all the social aspects that are present in that territory
to avoid bans and losses. Moreover, demographic factors such as age play a meaningful
role. Societies with a high rate of young population represent a perfect market opportunity
for the music platform as youngsters tend to consume more music and art in comparison

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to older people. Regarding consuming behaviour patterns, as mentioned before in the
economic section, the expenditure-saving activity impacts the company. Countries like
Switzerland which have a high saving-to-income ratio (people tend to save almost 19% of
their total income) are not the best option for Spotify, preferring societies with low
saving-to-income ratios because countries that save more will be reluctant to spend on the
platform. To sum up, this will impact negatively and cause revenue to drop.

TECHNOLOGICAL
Technology is constantly evolving and adapting to consumers´ necessities. To not be left
apart, companies have to evolve at the same speed or even faster in order to understand
the new needs of their potential clients to satisfy them. During the last decades,
technology has changed consumer behaviour patterns and has influenced the
decision-making process; however, it has been during the pandemic situation that the gap
between sellers and buyers has been narrowed and facilitated by the Internet and
communication developments.
Spotify itself finds its reason for being in technology. For that reason, it is greatly impacted
by technological factors. As mentioned above, the scope and spread of technology, digital
platforms, and social networks among the population have benefited all the companies
involved in these industries. Spotify has significantly increased the number of users thanks
to marketing on social media. Moreover, online paying transactions can be developed in
more countries as technology evolves, leading to growth in the people with the possibility
of enjoying the premium version (financial tools mentioned in the economic section). The
wrong side of this aspect can arise when cyberattacks or piracy come to the scene, which
can jeopardise users' data.

LEGAL
Following the law that exists in all different societies where a company operates is a must
to avoid paying penalties. Therefore, legal factors significantly impact the operations of a
business. Spotify puts a lot of concern in caring for the protection of its users´ data,
emphasizing consumer protection laws. Furthermore, their clients are not their only
preoccupation but their employees also. The company has to adapt to each different
country where it operates to establish laws that protect their workers´ rights and keep in
contact with employee unions to ensure that employees enjoy their rights with no
exception (fair wages, no discrimination regardless of gender or ethnicity).

ENVIRONMENT
The arising awareness about climate change has shifted consumers´ preferences to more
concerned companies. Those are being pushed by social pressure and governments to
become more environmentally friendly, which also benefits the company's CSR actions
and practices (competitive advantage and better relationships with stakeholders). Spotify´s
offices require a considerable amount of electricity which should have its origin in
renewable energies for its benefit and social. However, accomplishing this environmental
action represents an economic challenge as well as time and infrastructure. The music
platform will have to do this shift to avoid facing media and consumer attacks. Related to

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climate change and natural disasters, the company has to face the lack of internet supply
in areas that suffer bad weather conditions (floods, earthquakes, tsunamis).

After this deep and complete analysis, we can conclude that a company is surrounded and
affected by a huge amount of factors that escape from its control. The only solution to
prevent the brand from irreversible damage is anticipating changes and being as quick as
possible when it comes to overcoming any obstacle, as well as developing its strengths.

2.2. Microenvironment

a) External factors that influence the market and impact

Spotify's success also depend on external factors that may have a positive or negative
impact on the microenvironment and hence, on the brand itself. It is of great importance to
have knowledge of these factors in order to be able to identify them and act accordingly.

CUSTOMERS
It is beyond dispute that the customers are the essence of every company, making it
revolve around the client in hopes to give them satisfaction. This is crucial for the earning
of revenues and the survival of the firm.
Customers have the most economic impact on a firm, for this reason, they are the greatest
external factor affecting the businesses, therefore, the adoption of strategies to attract and
keep them.

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Among the strategies we can find the offer of loyalty programs, urging users to stay faithful
to the firm after their first purchase; the differentiation of the company, staying unique by
launching distinctive goods or services; the offering of promotions and discounts, to attract
price-sensitive consumers; and excellent customer service.

We can find some of these strategies applied to Spotify, for instance, the free version that
allows price-sensitive consumers the chance to use the platform, with the only difference
of having ads every now and then. Another example is the uniqueness of Spotify
Wrapped, as at the end of every year Instagram and TikTok users tend to post their
personalised Wrapped, unconsciously appealing to new customers

SUPPLIERS
The suppliers are often the intermediaries between the seller and the producer. They are
the ones that provide products or services necessary for the final product. Moreover, if
there are few suppliers in a field, the largest can control the price and availability of
resources along with the quality. All in all, they have a great impact on the environment,
and for this reason, it is crucial to maintain a good relationship with them.

As Spotify is one of the biggest streaming platforms worldwide, they have different
suppliers and need to take care of them. On one hand, we have music labels and
publishers, as their main product is music, and they need their suppliers to achieve a vast
library of songs. On the other hand, we can find hardware manufacturers, technology
partners, and cloud service providers.
Summing up, Spotify’s suppliers are essential for the company’s worldwide distribution of
music and they are the reason behind the high quality that the platform provides.

MARKETING INTERMEDIARIES
Unless customers buy the products directly from the supplier, they will go through
marketing intermediaries such as wholesalers, retailers, or distributing agencies, also
known as “middlemen”. They are in charge of giving customers easier access to products
as a lot of companies find it difficult to reach the consumers.
In Spotify's case, we may find advertising agencies to promote their campaigns through
different channels; social media influencers and music labels.

COMPETITORS
Competitors are going to be present come what may. There are two types of competitors:
direct and indirect.
- Direct competitors:
They are those whose offering is similar, if not the same as yours. Among some of
Spotify’s direct competitors, we can find: Apple Music, Amazon Music, and
Soundcloud. All music streaming platforms with slight changes such as the price,
the songs availability, or the podcast service
- Indirect competitors:

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 They are the businesses that offer a substitute good or service. In this category we
can find Youtube, TikTok, Instagram, Netflix, or the traditional radio

Both, direct and indirect competitors directly affect the brand, and for this reason, it is
needed to take into account their competitive advantages in order to boost Spotify’s.

GENERAL PUBLIC
The public is any group of potential customers, it has an impact on the company’s ability to
achieve its goals. As with the customers, the brand must focus its efforts to achieve a
positive view of the company for the approval of the general public.

A way to attain the positive image that Spotify is looking for is through its reputation, this
can be improved through CSR campaigns such as the open support for minorities through
internal campaigns such as “Equal”, which supports equity for women; “Glow” supporting
LBTQ+ community or “Frequency” supporting black creators.

b) Competitors definition (competitors, substitutive products, potential competitors)

The music industry has a lot of history, that's why there are a lot of ways of listening to
music. During the years there have been a lot of modernizations but nowadays all these
different accesses are competing to become the market leader. All have substitutive
products because mainly, all have the rights to the same artists and songs. But even
though we are talking about listening to music other platforms have enlarged their content
becoming more complete than other competitors. We are going to explain the advantages
and disadvantages of Spotify’s competitors.

- Apple Music: it doesn’t have a free plan. In the beginning, was only available for
Apple users, and although now is also working with Android devices, hasn’t
achieved that target.
On the other hand, we have that it is cheaper than Spotify (the familiar plan is 9.99€
competing with the 15.99€ that Spotify has), and never had a legal payment
problem regarding Royalties.

- Youtube: users cannot download music, but is a wider platform with films, and
streaming interviews... The free subscription is very well-positioned, with it you can
choose the song you want to listen to.

- Amazon Music: it is not positioned in the music industry as an important platform

and doesn’t have a free plan to engage the new public. But as it is included with the
Amazon Prime subscription where they are well positioned can attract new
audiences.

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 - Soundcloud: neither is positioned in the music industry as an important platform.
Are qualified as a platform with bad audio quality. This explains their price, is
cheaper than Spotify (4.99€ compared with 9.99€ - individual plan)

- Radio: you can’t listen to the song you want to, create your own playlists. Is free but
you will have to listen to lots of ads. At the same time, there are a vast variety of
channels and a radio announcer that stimulates you.

- CDs y vinyl: they are much more expensive, there is less variety regarding artists
and they're not instantly. You won’t be able to use it with your phone or laptop
whenever you are not at home with the required cassette and record player except
if you are in the car. Has better audio quality.

- Descarga pirata: Is not instantly, the download requires more time and an internet
connection. Also takes up more space on the device. You are not supporting the
artists you are listening to and helping them to produce more music.

After this analysis, we can affirm that Spotify is doing well in the market, being the leader
of its industry and preventing competitors from becoming real substitutive services.

c) Demand (PINS)
i) Market share of each competitor (€ and %)
- Spotify: 30% market share / 11,73 billion €,
- Apple Music: 14%/ 7 billion € ( double than 2018)
- Tencent: 13,4%/ 8.7 billion €
- Amazon Music: 13%/ 50 million €
- Youtube Music: 8,9%/ 6 billion €
- Netease: 6,10% / 14 billion €
ii) Sales of each competitor (units)
- Spotify: 205 million subscribers
- Apple Music: 95 million subscribers
- Amazon Music: 82 million subscribers
- Youtube Music: 80 million subscribers
- Netease: 40 million subscribers

d) Distribution channels
Spotify is reachable through any device. It is available on download apps such as Apple
Store for all Apple devices, and Play Store for Android. Anyways, if your chosen device
doesn’t count with these systems (computers, laptops, etc.), it is easily accessible through
any search engine by typing www.spotify.com, where you can use Spotify Web, or
download the app and use it in the same way.

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3. INTERNAL ENVIRONMENT ANALYSIS.
3.1. Mission and vision

Defining mission and vision is a key element for the success of the marketing campaign as
it enables the company to set an established image. It goes without saying that there is a
clear distinction between the mission and the vision.

Spotify's vision is “We envision a cultural platform where professional creators can break
free of their medium’s constraints and where everyone can enjoy an immersive artistic
experience that enables us to empathise with each other and to feel part of a greater
whole.”
This statement shows clearly the role that Spotify plays in the market, it is not only a
service provider but it also enables creators and users to feel like a part of something
bigger.
Spotify seeks to carry out an important role in society through the bond created between
users, music, and artists; we also make it a point to have a platform free from Medium
restrictions and complaints, enabling artists to explore their creativity. Adding to this the
platform began testing a new service that provides unique experiences to their listeners,
as they added personalised algorithms.

Spotify’s mission is clear, “Our mission is to unlock the potential of human creativity – by
giving a million creative artists the opportunity to live off their art and billions of fans the
opportunity to enjoy and be inspired by it.”
This statement depicts the objectives of the company, it focuses on making a reality out of
their goals which are to “unlock the potential of human creativity” A key feature to
implement this objective is to ensure an updated and interactive platform making it easier
for creators to reach a wider scope of the audience through the platform's criteria of
targeting. Another key element is the globalisation of the app, reaching as many users as
possible no matter the country, culture, or religion. Spotify takes pride in being the leader
of music streaming services worldwide.

3.2. SWOT and CAME analysis

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 STRENGTHS
Spotify is one of the music platform leaders in the market. It has become a reputable brand
due to its stability and consistency through the years.
Has been very important to maintain its status with its free model subscription that has
acquired many new users to know Spotify and then with all its strengths become these
free users in paid-subscription clients. These last have decided on upgrading the version
because of the vast music library they have access to, being improved daily.

Spotify has achieved to be a new social network thanks to the development of differential
features such as the so-called “Wrapped”, allowing the user to know what their friends are
listening to at the moment, having personalised content and predesigned playlists. All
these advantages are enough to differentiate the brand from competitors and, at the same
time, be very well positioned in teenagers and young adult targets. To ensure consumer
subscription, Spotify launched a subscription discount for students.

The last strength to mention is that artists tend to share their new music on social networks
through links that redirect the public to their Spotify profile. As soon as listeners click on
the link, their access to Spotify is fast, efficient, and unlimited. Moreover, Instagram has
the opportunity of making a post including music; if you like that song you can click on it
and it will lead you to Spotify.

WEAKNESSES
Spotify requires Internet connectivity to listen to its content. However, it won’t be necessary
if you have your paid subscription as you will be able to download whatever you want
without limit, despite the fact that you will need the Internet to download such content.
Although all the advantages are explained in the strengths section, Spotify remains a
music platform, which has no exclusivity in its content (except for some Podcasts). As
Spotify doesn’t have its own differentiated and produced content, they are obliged to pay
the artists. The licences and Royalties have high prices that make it difficult for Spotify to
maximise revenues.

OPPORTUNITIES
Spotify has expanded its content through innovations, even though it had to fight since the
beginning to find its place in the market.
Nowadays, the platform includes the lyrics of the songs on the screen when you are
reproducing them and gives you any random and important facts about some songs, and
their video clips.

The brand has also included Podcasts in its library, allowing users to listen to recordings of
more than two hours and download them. To improve this revolutionary service, videos of
such recordings are displayed while listening to the Podcast as if you were watching them
in real life (Youtube style).

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Owned-designed Spotify playlists such as “Pegao”, “Discover
Weekly” or “Release Radar” represent a competitive
advantage. Those tend to go viral and are popularised among
teenagers. These exclusive playlists change daily so users
won’t get bored of them and will be a way of finding new artists
and keeping up with new trends. To make them visible, Spotify
invests in self-advertisement: famous characters at the height
of Ibai have made references to the “Pegao” playlist. With this
type of collaboration and the current one with Football Club
Barcelona, Spotify is getting very well positioned. This last has
also made Playlists of the favourite songs of the most
popular football players as “My Matchday Songs: Pedri”.

THREATS
Despite the company's expansion and implementation of innovations, other platforms
enjoy a higher amount of content for free (interviews, TV shows, films), which represents a
danger for the Sweden brand. Apart from this menace, piracy constitutes a challenging
threat to deal with as it can attack unexpectedly and the damage can be irreparable.

Artists are the core of Spotify, the main elements and the essence of the platform.
However, they can turn into a menacing danger if they are not satisfied with the
established conditions. This threat does not only affect artists but impacts users, which can
refuse the platform if this is harming their idols because of unfair business practices.
Artists such as Prince, Neil Young, Taylor Swift, and Radiohead have had problems with
payment claims.

3.3. Market share

Spotify had 31% of the market share in 2022 and
earned a revenue of 11.7 billion dollars. According
to these numbers, it controls over one-third of the
global market. This percentage is even bigger if we
take into account the share percentage that Spotify
has on Tencent to influence the Asian market,
which is rapidly growing and a core part of the
market. Spotify’s market share is double of Apple
Music and has a bigger market share than Apple
Music and Amazon Music combined.

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On the other hand, Spotify’s market share has shrunk by some units due to the
appearance of music streaming platforms in Asia (Tencent and NetEase), especially in
China, with the Chinese government backing them up.

3.4. Segmentation
The next tool used for the analysis of the internal environment is segmentation. In order to
get an accurate examination of the market, we need to dissect segmentation into several
categories such as demographic, geographic, behavioural, or psychographic.

DEMOGRAPHIC SEGMENTATION
It is undeniable that Spotify is a popular app among most age groups, however, it is
thriving much more among young audiences. This can be reflected in the fact that in 2020,
Spotify was the most popular music platform within the age range of 12 to 34. Adding to
this, if we focus on percentages we can observe that 29% of the platform's users are
millennials (born between the mid-80s and 90s), 26% are 24 years old or less, followed by
people over 55 years old (19%), individuals between 35 and 44 years old (16) and those
between 25-54 (11%). Not only this, but 71% of Spotify's free subscriptions are people
under 35 years old
Last but not least, we must also take into account the gender demographics, as it shows
that there are more female users (56%) than male (44%).

GEOGRAPHIC SEGMENTATION
Geographically speaking, the Swedish brand is more successful in Europe, with 66 million
users, 18 million more in comparison with America (48 million) surpassing Latin America
(33 million) and the rest of the world (18 million)

BEHAVIOURAL SEGMENTATION
The music service users greatly enjoy the personalised experience offered, as more than a
third of their time on the platform is spent listening to playlists, of which 36% are crafted
and shared by other users.
Adding to this, we can also say that the company's success goes above and beyond as
they recently became the top streaming platform of podcast listeners monthly (32.5 million)
overtaking Apple Podcasts (28.5 million) which has moved to second place.

PSYCHOGRAPHIC SEGMENTATION
The app's success among millennials can be related to this generation's media
consumption in general. Spotify’s massive audio library, which has over 70 million songs
and nearly 3 million podcasts, appeals to younger listeners from ages 14 to 35, as they
tend to swerve from mainstream music, preferring alternative styles such as indie or
K-pop.
Contrary to this, users above 42 years old have a clear tendency to listen to mainstream
pop music.

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3.5. Client/target analysis
a) Consumer profile
Spotify’s main target audience is mainly young adults and teenagers, focusing on the
range between 16 and 35 years old. This profile tends to spend a lot of time on the internet
and using social media. It is very accessible for students as the Premium Student plan is
the cheapest of all of them, and as soon as they get a job they can afford the regular
Premium Plan. Geographically, Spotify has its main focus on America, Europe, and Latin
America, although it is used in every continent.
There are also two secondary targets. New teenagers (12-16), who are just starting to
explore technology and social media, and older adults (older than 40) who may be
influenced by their children who also use Spotify. These two secondary targets use mainly
the free Spotify plan or the familiar one, shared with their relatives

Spotify’s wide range comes from its large variety of content and its easy way of use. You
can find every song and artist independent of the taste you have in music and the genres
you listen to the most. And as has been already mentioned, music is not the only thing you
can find, so it also works for people who are not as fond of music and prefer listening to
podcasts. For those who have no technological abilities, both the app and the web are
highly intuitive, which makes it easier for people of older age who don’t have technology as
embraced as the latest generations.

b) Factors that influence consumer behaviour

Changes in the app would make users consider if they still wanted to choose it. Mainly
changes in price, content, and variety. Spotify works to be the most affordable and gives
the best prices for its Premium options. Anyways, its Freemium plans are the chosen one
for some users, as it still works better than many other apps and websites. This is because
although it has some limitations, the options range you have in Spotify is wider than other
music players.

Regarding the variety of content, Spotify makes it very simple for content creators to
upload their songs or podcasts, which contributes to said variety. This way, users can
access the content they want. But, if they can find all of this on the Internet, why do they
stay loyal to Spotify? Once they choose Spotify they won’t change to a different music
player. This means that their behaviour is influenced positively so they keep using this as
their favourite music app.

This addiction to Spotify has an explanation, the hyper-personalization the app generates
for every user, which has been already mentioned. And how is it achieved? Spotify’s
personalised discovery algorithm is based on the fair assumption that if others with similar
consumer behaviour add certain songs to their playlists, you may be also interested in
them. Moreover, Spotify takes advantage of the fact that it is the go-to music player for
most people when they feel like listening to a certain song because of the mood they are in
or the environment they want to create when they play that song. When you click a song,
the app automatically plays the next suggested tracks based on the original one, using

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context and content-based data to make the suggestion. This way, they keep the customer
using Spotify rather than another app, as it keeps them in the mood they initially wanted to
be in.

3.6. Positioning
Despite its status and prestige, Spotify is a relatively new brand. It was created in 2006
(officially launched in 2008). Since then, it has battled against giants like Pandora,
AmazonMusic, AppleMusic, and YouTube. It has become the preferred option when it
comes to choosing a streaming music platform thanks to the continuous improvement of
its service and the effective marketing strategies that it has been implementing over the
last 15 years.

Spotify has become a successful idea because of its business model: it has been the first
company to supply music legally while compensating the music industry. Moreover, in
recent years it has expanded its scope of business, including podcasts. It allows its users
(free and premium ones) immediate access to all music and audio content, it is an easy
way to share music with others (personal connections) and it represents a source for
discovering new music and audio content to expand users´ interests and experience. This
huge platform is the global audio entertainment platform that best customised content
based on user tastes and recurrent searching and offers its clients a complete experience,
counting on collaboration with many artists. The brand's character fits with its mission and
vision, being innovative, social, modern, effervescent, and friendly. All in all, it has
deservedly earned its place in the industry and in the client's minds.

To perform the first positioning matrix of Spotify we have selected the following variables:
small/large music library and cheap/expensive.

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 - Spotify can brag about having a huge amount of songs available on the platform,
being the preferred one by artists when they release a new hit. It has more than 80
million songs and 4,7 million podcasts. However, it has been surpassed by
SoundCloud (250 million songs) and AmazonMusic (100 million songs). Youtube
Music and AppeMusic are left behind regarding the number of songs (more than 50
million each). Apart from the huge available catalogue, the Sweden company adds
between 20.000 to 24.000 songs in 24 hours, in addition to exclusive content and
newly released singles every Friday that can be found by users in a specific folder
named “New releases” to keep listeners updated on the latest trends.
- Concerning prices, most of the platforms provide their services at a similar price;
however, Spotify counts on special packs for students and families. Moreover, what
differentiates it from the competence is the free option of their service.

For the second matrix the variable “price” stays but, in this case, we are also comparing
the experience provided by the different platforms. Spotify has managed to offer a full
service to its users, adding a special value that makes it stand out from competitors.

4. COMPETITIVE ADVANTAGE AND STRATEGIES

The exponential growth of Spotify is not a coincidence or a stroke of luck. During its 15
years-life-long, the platform has seen all the blank spaces of the market and has taken a
place there, building strong and long-lasting connections and bonds. They have made the
most of every opportunity, taking the leading role in the competitive industry it operates.
The company does not only battle against its direct competitors but against the challenging
world of the Internet and social media.

Spotify implements an audience-centric marketing strategy that creates a valuable

customer experience that leads to a constant increase in conversions and customer

16
engagement. The conversion rate from paid customers achieves 46% and reaches 80% of
the retention rate for all users weekly. On a bigger scale, the platform gets a 15% average
increase in subscribers every year. The most significant strategies are as follows:

USAGE OF DATA

Spotify has used the tool of technology and data like no one. One of the most remarkable
marketing strategies is how the platform adapts to every user. It connects with the target
audience through content that aligns with their lifestyle, providing personalised and unique
service while being loyal to the brand entity, embracing market changes, and following
trends. That is attainable thanks to the configuration of Spotify´s AI interface and collected
data from its listeners.

However, the streaming music platform does not only propose to you your preferences
based on your tastes but also tries to expand and break your limits by recommending new
playlists to engross users' list of songs. The perfect use of the algorithm allows the
platform to do so, which meticulously records listeners' behaviour, interests, and past
actions. In conclusion, the platform works for you effectively to give you the best
experience.

COST LEADERSHIP

Spotify enjoys a privileged position in terms of cost-leadership, allowing the company to

achieve a broader scope of targets. This represents a competitive advantage over its
competitors as it can attract more people to join the app, leading to an increase in
revenues and growth.

Our company is one of the few big platforms in the music streaming industry that continues
to dare to advertise its free modality without worrying that it will affect the growth of its
earnings. This is called “the Freemium Business Model”, meaning that both options, paid
and free, are available: the advertisement-supported free tier (users can access songs for
free but with intermittent advertising integrated) and subscribers who pay for the premium
service (enjoy music without advertisements, along with other premium functions and
features). Despite the availability of a free version, which is the reason for attracting many
clients, premium users exceed free ones.

Another advantage related to prices is the variety of different packs when it comes to
selecting a premium option. Depending on your budget or interests, you can find the
individual account, the familiar pack, a couple account, and a special reduced price for
students.

Moreover, they have a “mantra” that is repeated and appears in banners and headings to
highlight their exclusive characteristics: “Get 3 months of Premium for free” (to catch leads

17
 that can turn into premium users in the future), “Enjoy ad-free music listening, offline
playback, and more. Cancel anytime” (give a sense of no full commitment).

This figure shows how the two models work. In this graph, we can see how premium
membership revenues surpass the ad-supported
ones, almost 7 times more.

The linear graph displays the growth of subscribers over the last 6 years, differentiating the
premium users (leading) from the ad-supported ones.

A COLLABORATION FOR CONTENT

Strategic partnerships with artists, their labels, trending musicians, and podcasters are
another way to keep things refreshed, constituting another remarkable feature of Spotify

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and creating a differential advantage. This increases their audience and gives them
exclusive content (podcasts), making users feel that they are part of something unique that
none else provides. Furthermore, the company allows, apart from known singers, small
artists that are just starting in the business to publish their content on the platform to gain
more visibility and reach a global audience. Every artist has his/her space on Spotify, just
by searching the name of a singer/entertainer you can find all the content in their profile
with all the information and exclusive news. With only one click you can add your favourite
items to your playlists.

SOCIAL MEDIA MARKETING

Spotify has been able to evolve at the same speed as society has done. It has transformed
a simple music platform into a social network, connecting people and knitting a huge
community. It has caught the wave of the new technological era and is now leading in the
music industry thanks to the clever exploitation of the opportunities that have arisen.

Nowadays, people are permanently in touch with others and share their lives online.
Spotify has taken advantage of the situation and has adopted certain modifications to give
consumers what they want: interconnection. The configuration and design of the app are
similar to the typical social network: each user has his/her profile and can follow others
(from friends to artists) while showing his/her playlists (instead of pictures). One of the
latest updates of the platform is the possibility to see what music your friends are listening
to in real-time. Moreover, shared playlists can be created, enforcing the community and
belonging feeling among users.

One of the most famous and viral campaigns that

Spotify has developed is its well-known “Spotify
Wrapped”. This campaign allows users to see a
summary of their annual data, from their most
listened-to song to the total amount of minutes spent
using the platform. At first glance, this action can be
seen as a trivial or insignificant one, but in fact, it
causes a stir among users. Everyone is hoping for their
annual wrapped at the end of the year to share and
comment with others, which is free publicity for the brand
and increases its visibility. Moreover, its design is
inspired by Instagram Stories, achieving a more
appealing appearance and looking like the most famous
social network.

After studying each implemented strategy, we can conclude that the marketing strategy
developed by the Sweden company is not static but it is constantly evolving. Moreover, it
does not only follow the latest trends but creates its own to promote itself and gain more
visibility.

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5. MARKETING PLAN OBJECTIVES

As every business, our firm has a set of objectives that are crucial for our well functioning
as well as for paving a path into the future. “Our objective is becoming the largest empire
of audio consumers in the world”. This quote was said by Federica Tremolada, the Spotify
general manager for southern and eastern Europe, who has gone through corporations
such as YouTube and Google, with more than 15 years of experience in the industry.

Spotify is leading the music business as the platform with more users, achieving what
years ago was an objective for them. Nowadays, Spotify is enlarging its music library in
order to ensure that customers can find whichever song they are looking for, representing
a way to enhance customer loyalty and avoid losing customers.

For the brand to continue being the leader of the market it is not enough to settle for the
security that the user will find what they want, they also require to live an experience in
their app while listening to music. Spotify must achieve having loyal customers who stay
devoted to the app even though competitors may have the same content at a lower price,
because by doing so, Spotify is ensuring that the brand stays leading with the highest
market share for the years to come.

Their main strategy to achieve it is to differentiate themselves, especially through

marketing, with some innovations such as the “Wrapped”, “Your Daily Playlist” or “New
Releases”. People see Spotify not only as a music platform but also as an entertainment
app. The platform gives users the opportunity to see what their friends are listening to,
making it a social media network. With this many people force themselves to use and be
subscribed to the platform that their acquaintance uses.

Objectives most of the time are related to the weaknesses and threats that the company is
facing in order to improve and solve them and change that situation. Looking at the SWOT
analysis we can see that Spotify has to pay high legalities to the artists in exchange for
having their music on the platform. In the same way, the company has to face high
expenses that are very difficult to reduce since artists won’t lower their Royalties. Spotify
has had some payment claims with artists that made their relationship worse. With this
Spotify is running a risk because without their content users won’t be subscribed to their
platform.

A way to finish with this claim is that Spotify becomes a music and podcast producer
owning the rights to everything that they produce.
Spotify will not have to pay artists that high amounts and Spotify won’t have that huge
expenses in terms of Royalties, that both together will make the music platform progress
its relationship with artists bringing to an end the payment claims problems that Spotify has
had.

20
As it has already been mentioned, Spotify is one of the most influential music platforms.
When talking about objectives, we cannot leave behind the one every company seeks:
earning and increasing revenues.

The platform offers several versions in order to be appealing to every segment of the
market. On one hand, we have the premium versions, these plans include a family
premium package, paying 16€/month you can include 6 individual accounts for the
members of your family; individual premium, 9,99€/month for one person; duo premium,
12,99€ for two individuals and last but not least, the premium for students, paying
4,99€/month for college students. This is a great strategy as it offers affordable options. On
the other hand, the brand also offers “Freemium”. This service provides the user with the
same abilities to make and listen to playlists but with the difference that between songs,
the user will listen to an advertisement. In addition to this, freemium users also have the
disadvantage of not being able to download their playlists or choose a specific song to
listen to, settling for listening to whatever songs are on the playlist they are playing. This is
a smart way of attracting and keeping users and increasing profits. Whether it is premium
or freemium, the company will earn money, either from the monthly payments of users or
the payments of brands for their ads to be on the platform. In the last year, Spotify has
increased up to 11,72 billion euros, out of which 87,4% comes from premium
memberships.

Another objective that the brand is looking forward to reach is the implementation of
originally created content, following a path paved by other entertainment brands such as
Netflix or HBO. This strategy ensures differentiation from other brands as the podcasts
produced by Spotify will not be available on other platforms ensuring uniqueness.
Podcasts are a service that is exponentially growing with time, which is the reason why not
only is Spotify going to become an original content creator, but it is also going to introduce
publicity for the podcasts. This decision is linked to the previous objective, earning
revenues. Spain currently has 12 million podcast listeners monthly, which means that 30%
of Spanish internet users listen to these podcasts making them a great target audience for
the publicity that is about to be inserted in them due to the fact that they will already be in
an environment in which they focus their attention to listening to what is playing on their
phone, tablet or computer.

6. OPERATIVE MARKETING

PRODUCT
The main product that Spotify commercialises is a subscription-based service that allows
users to listen to or download music for free or for a fee. Spotify mainly offers music but for
the past years, their service has expanded even to podcasts.

21
Spotify was the first in charging a fixed fee for unlimited music instead of charging per
song so this gave the company a competitive advantage and the majority of the market
share.
Spotify also offers a variety of personalization and individualization options, offering a
weekly playlist made by the app that takes into account the musical tastes of the customer
and other music genres that can result in interesting. Personalization and individualization
can result in more customer happiness and consequently higher revenue.

PRICE
Spotify offers various options of pricing, including a free option membership that restricts
what you can do and has ads between songs, or a monthly charge that allows you to skip
infinite tracks, with no ads, and download songs. Spotify employs a freemium approach,
which provides clients with a free trial, but unlike competitors, this free trial is unlimited.
The company uses that to compete in the market because understands that customers
don't want to pay high fees for their product.
Because Spotify was the first big streaming service, they could price their product
wherever they wanted to. Because they have maintained the exact same price since the
beginning, the competitors have been forced to price their products around Spotify.
If competitors want to raise their prices they will have to justify it by providing extra
features.

PLACEMENT
Spotify is available on almost every modern electronic device, from smartphones, tablets,
and laptops to smart TV’s or smartwatches. It is mainly accessed through an internet
connection although premium users may access it offline. Spotify has a seller-controlled
distribution method which entails that the supply firm offers their product in a single digital
way, in this case just through their webpage/ app. This allows the company to have
complete control over its product.
Spotify successfully took off the middle man when purchasing physical music like CDs or
vinyls, and directly went to sell the product to the clients, This allows the company to save
money, and in the end, lowering the price providing a competitive advantage.

PROMOTION
Spotify doesn't spend lump sums of money on advertising. The company relies on word of
mouth and co-marketing strategies.
Spotify has a connection with Meta and allows users to share what they are listening to on
Instagram or Facebook. Because the promotion comes from a trustworthy source (a
friend), it is more memorable. Spotify started using Twitter for similar advertising purposes
and also to keep the customers informed about new features and new music.
Spotify also relies on celebrities for promotion, because when a singer releases a new
song is likely to be on Spotify.
Also, Spotify is primarily targeted at the general public so promotional efforts are lower and
less expensive because they can create a single campaign and attract more than one
segment.

22
Spotify also promotes its service by sponsoring music festivals and more recently Spotify
has penetrated the football sector by sponsoring FC Barcelona in their t-shirts and putting
the name of the company in their stadium.

23
7. BIBLIOGRAPHY
https://bstrategyhub.com/spotify-vision-mission-core-values-a-complete-analysis/#Spotifys
Core Values

https://fourweekmba.com/es/spotify-competidores/#:~:text=Apple%20Music%20 y%20
Amazon%20Music,usuarios%20 existentes%20y%20 marca%20 siguiente

https://iide.co/case-studies/marketing-strategy-of-spotify/

https://mapandfire.com/branding-strategies/spotify/

https://marqueex.com/spotify-marketing-strategy-creating-its-sound-of-success/#Meme_M
arketing

https://midiaresearch.com/blog/music-subscriber-market-shares-2022

https://pestleanalysis.com/spotify-pestle-analysis

https://pestleanalysis.com/spotify-swot-analysis/

https://thesocialgrabber.com/market-segmentation-of-spotify/

https://www.businessofapps.com/data/spotify-statistics/

https://www.edrawmax.com/article/spotify-swot-analysis.html

https://www.globaldata.com/data-insights/technology--media-and-telecom/spotify-targets-r
evenue-of-100-billion-in-next-10-years/

https://www.globenewswire.com/en/news-release/2023/01/31/2598650/0/en/Global-Online
-Music-Streaming-Market-to-Reach-78-5-Billion-by-2030.html

https://www.rancord.org/spotify-business-model-generic-competitive-strategy-intensive-gro
wth-strategies

https://www.simplilearn.com/tutorials/marketing-case-studies-tutorial/spotify-marketing-stra
tegy#marketing_strategy_of_spotify

https://www.start.io/blog/spotify-target-market-segmentation-user-demographics-audience-
targeting-strategy/

https://www.statista.com/statistics/813713/spotify-revenue/#:~:text=In%202022%2C%20
music%20streaming%20 service,subscribers%20 rather%20than%20ad%20 placements.

https://www.xataka.com/basics/comparativa-streaming-musical-diferencias-spotify-tidal-ap
ple-music-amazon-music-qobuz-deezer-youtube-music

24
Executive
Summary

Spotify is the world’s largest music

player app. In 2022, it had almost 500
million users (205 million premium
accounts). Has the largest market share
at 34%, and includes 200 years worth of
songs.
It initially focused on offering music, but
now that’s not the only thing we can
find, as there’s also space for podcasts
or audiobooks.

It's primary target is from 16 to 35 years

old.

Spotify implements an audience-centric marketing

strategy that creates a valuable customer experience
that leads to a constant increase in conversions and
customer engagement. The conversion rate from paid
customers achieves 46% and reaches 80% of the
retention rate for all users weekly. On a bigger scale,
the platform gets a 15% average increase in
subscribers every year.
The music industry has a lot of
history, that's why there are a lot of
ways of listening to music. During the
years there have been a lot of
modernizations but nowadays all
these different accesses are
competing to become the market
leader. All have substitutive products
because mainly, all have the rights to
the same artists and songs. But even
though we are talking about listening
to music other platforms have
enlarged their content becoming
more complete than other
competitors

market
share
34 %

po S itioning
W i-Fi
p O dcasts
royal T ies

Considering that Spotify is a company

one of theirs objectives is to increase
revenues. Their highest expense is to pay
artists for their content. Is known that in
many times Spotify had problems with
payment claims, so this is another threat
that this music platform has to correct.
A solution to this situation could be to
become a music and podcast producer
to own the rights and improve the
economic situation.
Spotify works to continue as the market
leader in the music industry.