Introduction
Any organization that provides services faces a lot of competition from other organizations. This circumstance creates a need to create value and uniqueness, contributing to the greatest attraction of customers. For this work, the globally famous Spotify company, a digital music service that provides access to many musical compositions and other services, was chosen. Determining the extent and nature of a given organization’s competitive advantage and how this has been created is critical in determining how sustainable it is likely to be in the long term.
Organization’s Competitive Advantage
First, it is necessary to define the nature, distinctiveness, and relevance of Spotify’s competitive advantage over its direct competitors. In this context, it is valuable to refer to the concept of differentiation, which implies the separation of services from those provided by other companies in the market (Laja, 2023). Research stated that “Spotify operates with a broad differentiation generic strategy by offering a wide range of music that appeals to a large market of listeners” (Sletten, 2021, p. 2).
In addition, uniqueness and value are created by the fact that the service provides users with the ability to create personal playlists. Based on this data, Spotify also issues recommendations to users, which increases their engagement (Spotify, 2021). This aspect is of particular importance because it meets the requirements of value, which are necessary to retain and increase the loyalty of individuals toward the company.
The Value Propositions
Another aspect worth considering is the value propositions provided by Spotify. This criterion consists of a proposal that will meet customers’ needs and provide additional benefits (Nenonen et al., 2020). The company’s most apparent values under study are accessibility, low subscription cost, customization, and performance. This aspect directly meets the needs of consumers who engage with this company. In other words, listeners expect to receive high-quality service due to the availability of music and a positive experience from using the company’s app. In addition, it is worth noting that Spotify also creates value by expanding its services and introducing aspects such as podcasts, watching videos, or creating exclusive playlists in collaboration with stars.
Consumers ‘ perceptions are an essential component of how different a company is from its competitors. It reflects the attitude of emotions that this or that the company appeals to customers (Indeed, 2023). The research highlighted that “Spotify came in first place among US consumers when it comes to “brand intimacy” (Reyes, 2020, para. 1). This information shows the positive attitude of consumers towards the company and the high level of loyalty that it has created throughout its work. This aspect helps to distinguish Spotify from the rest of its competitors.
Strategic Marketing Decisions and Actions
Particular attention should be paid to how Spotify created its competitive advantage using strategic marketing decisions and actions. In this case, an effective tool can be the application of the 7P concept. This approach involves the study of such aspects as “product, price, place and promotion and additional elements that help meet the challenges of marketing services, people, process and physical evidence” (Oxford College of Marketing, n.d., para. 2). Thus, the company has created a product that allows you to listen to music on various devices at any time. Regarding the price, the subscription for using the service is $ 9.99 per month, which is affordable and valuable for users of different economic statuses. Due to the fact that the service is a digital development, it can be accessed using a website or an app that was developed by a large number of developers and managers.
Promotion Company
Spotify has a reasonably large promotion company that constantly attracts consumers. It advertises its services on various online platforms and social networks and directly in the application (Aguiar and Waldfogel, 2021). Moreover, the company invests quite a large amount in partnerships with stars and other organizations in the media industry (Byun, n.d.). This aspect is especially relevant in modern society, which uses social networks and relies on the authoritative opinion of influencers. To ensure the legality of the company’s activities, Spotify acquires the necessary rights to distribute musical compositions and record labels. The organization providing music services does not have physical evidence, as it is digital.
Brand identity and brand image have an equally important role in the development and strategic advantage of the company. Spotify highlights that “adaptable, diverse, quality driven, warm & friendly, human-centered” are the main attributes of an organization’s identity and broadcasts them to consumers (Spotify, 2020). Regarding the brand image, the company emphasizes encouraging the opinions and experiences of its customers and attaches great importance to their contribution to its development. Relationship marketing also promotes this aspect, which focuses on creating a close connection with users. To do this, we use user data and surveys that allow us to improve the operation of the service.
Sustainability of Competitive Advantage
A study of the company’s strategy and policy has shown that it has a high degree of stability and strategic advantage. It is worth noting that the company adapts well to the ever-changing marketing environment at the macro and micro levels by researching its target audience, needs, and preferences. Despite the new and emerging competition, Spotify continues to hold a leading position in the market due to its brand identity, affordable prices, and broad access to services. Therefore, the entry of new competition does not threaten this music service. Based on the analysis of the company’s differentiation, it can also be argued that it conducts an effective policy to distinguish itself from competitors.
Conclusion
Thus, the main factor that can affect the sustainability of the competitive advantage is relationship-building with consumers. This is because the company directly depends on the preferences of the audience that uses its services. In case of any transformation in relations with consumers, the company may experience shifts in its strategy to maintain its loyalty and engagement.
Reference List
Aguiar, L. and Waldfogel, J. (2021) ‘Platforms, power, and promotion: Evidence from Spotify playlists,’ The Journal of Industrial Economics, 69(3), pp.653-691.
Byun, B. The rise of Spotify influencer marketing (n.d.). Web.
Customer perception: Definition and how to improve it (2023). Web.
Get perfect song recommendations in the playlists you create with enhance (2021). Web.
Get Premium free for 1 month (n.d.) Web.
Laja, P. (2023) Differentiation strategy: what it is, why it’s critical, and how to get it right. Web.
Making the brand: Redesigning Spotify design (2020). Web.
Nenonen, S., et al. (2020) ‘Value propositions as market-shaping devices: A qualitative comparative analysis,’ Industrial Marketing Management, 87, pp. 276-290.
Reyes, M. S. (2020) Spotify took first place in brand intimacy among US consumers. Web.
Sletten, R.T. (2021) Spotify: strategic plan and analysis. Undergraduate Theses, Professional Papers, and Capstone Artifacts, 325.