Business-Level Strategy Recommendations for Spotify Analysis

This report analyzes Spotify's current business strategy and provides recommendations for its future direction. It begins with an introduction outlining the report's objectives: to assess Spotify's competitive advantage in the global streaming market. The analysis delves into the internal environment, examining Spotify's strengths, such as its user-friendly platform, vast music library, and personalized playlists, and identifies areas for improvement, including the need for original content and enhanced user experiences. The report suggests adding new features like banking on song lyrics and karaoke, expanding into podcasts, and offering differentiated payment options, especially in developing markets. Furthermore, it emphasizes the importance of cost leadership and differentiation strategies to maintain a competitive edge against rivals like Netflix. The report concludes with recommendations for Spotify to introduce first-party content, potentially becoming a social media platform for music, and integrating streaming video services to stay ahead in the market. The report utilizes several academic references to support its arguments and recommendations.

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Recommendations for Spotify
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RECOMMENDATIONS FOR SPOTIFY
Business-level Recommendation
It has been seen that the generic strategy of the company has been quiet prudent in the past
yet looking at the competitiveness of the market certain recommendations can be drawn for
improving the existing strategy of the company.
Adding new functions in the app
The strategy which has been followed by the company so far has attracted a lot of customers
yet there are certain instances in which the company can improve in the future. Drawing
knowledge from the analysis of the in the internal and external environment it can be said that
customer experience is the main thing in the 21st century which has been achieved so far by
Spotify. There are instances in which the company can improve in the future which will be
helping them to grow. Marketing campaign is not considered to be the epitome of business
anymore. Customers know what product they want and what kind of functions they expect from
the product. Although the user base of Spotify is huge yet there are places in which the user
experiences can be improved (Johnson 2014). The company can cut its costs from the huge
campaigning it does and invest that money in changing their freemium users to premium users
by giving them better options in the app. For starters services like Banking on different song
lyrics and doing karaoke might be a good start for the company (Fleischer and Snickars 2017).
Apart from the various playlists which are available in the app the company might start doing
podcasts which will be a good option for attracting more user. People are looking for changes in
music apps apart from only listening to music. Curation and playlist appeal are great option for
attracting users but this might not be the best option for sustaining in the 21st century.
Differentiation strategy

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Differentiation strategy can be used by the company to get past against its competitors
who are existing in the market as well as the new entrants in the market. The same options which
has been existing in the app needs to be changed so that the customers will have a better user
experience (Dumay, Rooney and Marini 2013). Varying the payment option is one of the main
aspect which the company might take into account for increasing its user base. At present the
company uses credit card as its payment option but in the future the company might give the
users with the option of mobile contracts which will be helping the customers to have an
alternate option of becoming a premium customer (Kamehkhosh, Jannach and Bonnin 2018).
The different kinds of strategies which might be adopted by the company might not be working
for the company since there are a presence of a lot of similar apps present in the current market.
In developing countries the company can introduce these option which will be helping it to
gather new customers. Some of the differentiation factors which will be helping the company to
stay ahead in the market is an effective cost leadership quality and making a strong presence all
around the world. The company has already gained a lot of reliable customers in all parts of the
world and people have praised the company a lot but the company needs to take the extra edge
which will be making it the best music app in the world. In developing countries like Russia,
China or Brazil the company can introduce the payment option of mobile contracts and also add
some different payment option which will be helping it attract it more customers (Pichl, Zangerle
and Specht 2015). The customers who are freemium customers will be becoming the premium
users of the company by the help of this step. The company can apply cost leadership method in
this aspect which will be helping it gain the competitive advantage from the newer entrants in the
market (Banker, Mashruwala and Tripathy 2014). By the application of the cost leadership
practice the company will be able to keep the price of its premium service low and gather more

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customers than its consumers. The company must look for the market which are untapped and is
growing at the moment so that they can increase their revenue and attract more customers.
Adding original content in the app
Spotify needs to introduce some first party content which will be enabling it to gather more
customers. The company already has a great algorithm based playlist which adapts itself to the
quality of the listener. Spotify has identified the fact that content is the main priority which
attracts users. Spotify has been creating great customized playlists for its users over the time and
has received a lot of praises regarding the creation of the various playlists. But the company
needs to create more content for its user which will be helping them to get more engaged in the
apps (Millecamp, Htun, Jin and Verbert 2018). The company can contact directly with the artists
and the studies which will be streaming the content directly through Spotify which will not only
cut costs for the company but also help them in acquiring premium content to its users (Pichl,
Zangerle and Specht 2015). The main priority for Spotify in this aspect might be to look forward
to provide streaming services to its users so that they can share their thought with other people.
In the present context it can be said that Spotify can work as a social media platform for the users
who are looking to showcase their music talents to others (Millecamp, Htun, Jin and Verbert
2018). The application of installing podcasts and confession stories in the app might be a main
target for the company at present. This will be giving the company the edge over other music
apps.
Getting edge over Netflix
Looking at the present scenario of the market one of the main competitors of Spotify in the
present time is Netflix. It is far ahead of Spotify and is providing its customers with original

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contents in a regular basis. This is keeping the company ahead of its competitors. Only listening
to different does not pay the bills but streaming of original content does (Millecamp, Htun, Jin
and Verbert 2018). The main point in which Netflix is ahead of Spotify is that the company is
providing the users with unlimited access to original content which is only first available in the
app. Streaming video and original content might be the next big step for Spotify and the
company must look forwards for implementing it in the near future (Snickars 2017).
All these combination of the different strategies will be helping the company to focus on
their future target to stay ahead in the market and gather more customer base.

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Reference list
Banker, R.D., Mashruwala, R. and Tripathy, A., 2014. Does a differentiation strategy lead to
more sustainable financial performance than a cost leadership strategy?. Management
Decision.
Dumay, J., Rooney, J. and Marini, L., 2013. An intellectual capital-based differentiation
theory of innovation practice. Journal of Intellectual Capital.
Fleischer, R. and Snickars, P., 2017. Discovering Spotify-A thematic introduction. Culture
Unbound: Journal of Current Cultural Research, 9(2), pp.130-145.
Johnson, C., 2014. Music recommendations at scale with Spark. Spark Summit.
Kamehkhosh, I., Jannach, D. and Bonnin, G., 2018, March. How Automated
Recommendations Affect the Playlist Creation Behavior of Users. In IUI Workshops.
Millecamp, M., Htun, N.N., Jin, Y. and Verbert, K., 2018, July. Controlling Spotify
recommendations: effects of personal characteristics on music recommender user Interfaces.
In Proceedings of the 26th Conference on User Modeling, Adaptation and
Personalization (pp. 101-109).
Pichl, M., Zangerle, E. and Specht, G., 2015, June. # nowplaying on# spotify: leveraging
Spotify information on Twitter for artist recommendations. In International Conference on
Web Engineering (pp. 163-174). Springer, Cham.
Snickars, P., 2017. More of the Same–On Spotify Radio. Culture Unbound. Journal of
Current Cultural Research, 9(2), pp.184-211.