Consumer Behavior

MARKET CHOICE BEHAVIOUR
RESEARCH PROJECT
SELECTED COMPANY : SPOTIFY
[STUDENT NAME]
[COURSE ID]
[INSTRUCTOR]
[INSTITUTIONAL AFFILIATION]
[DATE OF SUBMISSION]
MARKET CHOICE BEHAVIOUR
Section I: Introduction to project
The selected company is Spotify. Spotify AB, is a technology firm that is owned by Spotify Technology S.A. It is a Swedish audio streaming and media streaming service provider located in Luxembourg. The company was founded by Danial Ek and offers an array of audio streaming and media services that are packaged to suit specific market segments (Spotify, 2021).
Description of products
The premium package is an individual monthly subscription package that is priced at $9.99/month. This package has features such as ad-free listening, online and offline playback and on-demand playback among others (Spotify, 2021). One month free trial is offered to premium package users. The second service package is Spotify Duo, which is a monthly paid subscription priced at $12.99/month and comes with 2 premium accounts. Duo mix is popular for its regular music preference updates. The Spotify Family package comes with 6 premium accounts and is priced at 14.99/month (Spotify, 2021). It comes with 6 premium accounts, and has features such as family mix, explicit music blocking, ad-free listening, Spotify kids and comes with one month free trial (Spotify, 2021). The fourth package is Spotify Student package that is priced at just $4.99/month and comes with one account, and has an ad-free supported option.
Problem Identified
The problem identified is that Spotify is losing a significant market share to its dominant competitor, Apple. The user preference is increasingly growing towards paid subscription rather than free subscription. Thus the study of the market and competitive environment is essential to determine choice behavior. The factors that comprise market choice behavior are conditional value, social value, epistemic value, emotional value and functional value. The trend in the music streaming and paid subscription industry is moving away from free subscription, towards paid subscription (Shah, 2018). A survey was conducted among a same population of 30 participants who were randomly selected. The survey was conducted online using Google forms to collect data. The participants comprised of Spotify users and non-users. The sampling rationale was motivated by the need to understand factors that motivate decision to use or not use spotify, or other paid subscription streaming service.
A MODEL OF BRAND CHOICE BEHAVIOR
The research will be analyzed based on the brand choice behavioral model depicted in the diagram below.
Section II: The Questionnaire:
Participants were polled on whether or not they used Spotify. The result was unanimous with 100% of the respondents acknowledging that they used the service. In the 4P model; product and price largely inform market choice behavior. Therefore, Spotify should expand its service offering, and improve service quality. Given high service quality and a wider product range, users will be spoiled for choice.
Participants were asked to specify a preferred Spotify alternative. On this question, participants gave varying responses. A total of 15 responses were analyzed to determine the different Spotify substitutes. Apple music emerged as the leading alternative with 33.3% corresponding to 5 participants, followed closely by Apple music in second and third positions with 20% and 13.3% respectively. From the results, we can deduce that user’s preferred Spotify alternatives based on perceived functional, emotional, social and epistemic values.
In the third question, Participants were asked how often they used the spotify alternative. Out of the 30 participants, those that used a spotify alternative the most acknowledged to using it at least 5 times a day. Those who used it 3-5 times /day comprised 2 participants. The results showed that those that frequently used a spotify substitute like Apple music did so frequently. Those that used the service 3-5 times in a day comprised a total of 6 responses (20.3%) as compared to 4 participants (13.4%) who used it 3 times and 3-5 times a day respectively. There was a single response from those who used an alternative more than 5 times, all day long, at least 10, every day and every day of the month. The frequent choice of a particular alternative was largely determined by the perceived value proposition that was unique to the product or service.
The questionnaire also captured how both users and non-users of spotify located their music content. Statsforspotify.com was used to capture the results. Participants who used spotify indicated to using search to locate favorite songs on spotify. Statsforspotify.com showed 18 responses for the question, ‘find your most played song by searching’. When a search was conducted in statsforspotify.com, 18 responses were received from the poll. The top results showed SpotemGottem, Top-Fredo, 3,2, 1 24k golden, lcy girl by saweetie and palmar by Caloncho as the top 5 results for the most played songs on spotify. The results of the search indicate that spotify most played songs by search could be the ones driving traffic to this platform.
Both Spotify users and non-users were polled on the question of paid subscription. The participants were asked if they felt that using paid subscription services was the most convenient form of streaming service. The poll results showed that 96.7% were of the view that using a subscription service is the most convenient, while only 3.3% stated otherwise. The results depict a unanimous agreement that paid subscription service is the way to go. The preference for paid subscription might be due to changing consumer preferences.
The questionnaire was also framed to capture how participants felt about the cost of paid subscription services. Out of the 30 participants polled, 73.3% felt that paid subscription services were cheap, while 26.7% thought they were too expensive. Based on the poll outcome, it can be deduced that consumers’ preference for paid subscription is unmistakable. The popularity of paid subscription model could be due to small subscription charges that streaming platforms charge. Spotify can leverage this finding to better its paid subscription business model to attract more clients. The consumer perception that paid subscription services are cheap is an opportunity that Spotify can exploit to penetrate the market with more innovative services. The trend towards paid subscription could be largely driven by packaging strategy.
Poll participants were asked whether they felt that using a paid subscription service has the best variety of music. Out of the 30 respondents polled, only 3 disagreed representing 20% while 24 agreed, comprising 80% of the total participants. This poll result answered the question of why participants preferred paid subscription services as a form of streaming. From this statistic, we can deduce that best music variety is the key driver behind the growing popularity of paid subscription service model.
Based on this finding, we can conclude that Spotify needs to incorporate best music variety into its platform in order to attract more listeners to its streaming service. The concurrence by Spotify users and non-users on best music variety is a key driver for platform preference can help the company better position itself as an Apple competitor.
Spotify users and non-users were further probed on paid subscription. More specifically, participants were asked about the ease of use of paid subscription services. Out of the 3o participants polled, there was 100% acknowledgement that paid subscription services were easy to use. This means that ease of use is another key driver behind the growing popularity of paid subscription other than low prices and best music variety. The unanimous agreement shows that users are attracted to services that simple and easy to use. Spotify should use this finding to re-re-engineer its platform to ensure functional simplicity. High functional value would attract more paid subscribers who are kin on functionality.
Participants were polled on the efficacy of the paid subscription model. Respondents were asked to indicate whether or not, using a paid subscription service has accurate recommendations. There was 100% response from 30 participants polled. The result showed 93.3% concurrence while only 6.7% thought otherwise. The result shows that accurate recommendations are a critical driver for consumer preference for paid subscription. Therefore, Spotify should ensure that its platform is AI and big data analytics driven to offer 100% accurate recommendations in order capture the remaining 6.7%. It also shows that there is a value proposition linked to service recommendations. Spotify should therefore work to ensure that its recommendations are closely aligned to user preferences. Users are likely to buy if they perceive that the product has social value. Thus an individual who perceives that the recommended product is popular is likely to be loyal.
Section III: Marketing Analysis:
Spotify should use market segmentation to better position itself against the competition. The company should use targeted campaigns based on the 4Ps. Based on the survey, Spotify should target the youth aged below 30, focus campaigns in urban centers and create trial packages for college and high school students (Mullin & Steele, 2019).
Market Segmentation: Discussion
Both users and non-users of spotify were polled on the question of if using paid subscription services affected regular updates in new music. Participants from both user groups overwhelmingly agreed at 93.3% against 6.7% who disagreed. Participants’ perception that the use of paid subscription service was directly linked to regular updates in new music suggests that Spotify can utilize this metric to improve service delivery. Regular updates in new music were one of the key drivers behind the growing popularity of paid subscription among both users and non-users. Segmentation strategy is to focus on Product improvement to retain market share. Add automatic new music updates in all subscription packages.
Using paid subscription services slows down while listening
When polled on whether they felt that paid subscription services slows down while listening, both groups comprising of 30 respondents overwhelmingly disagreed at ...