Napsters Marketing Mix - Case Study Example

Executive Summary This report aims at conducting an evaluation of Napster’s Marketing Mix, a Company created initially in 1998-1999 and meant to be a peer-to-peer program for downloading music with the main target being for college students. It will look into the 4Ps of a Marketing Mix in detail covering their strengths and weaknesses. It will also report on the main findings of the evaluation of the company as well as how it is fairing in its marketing mix model. The major findings of the report are that Napster has relied on its marketing mix to separate itself and create a competitive advantage over its competitors. The evaluation also found that the unique once a month payment, product compatibility and many website features are just some of the great approaches that the company is using to build its name recognition. However, the company faces a monumental challenge in streamlining itself with the advancing technologies that are growing exceptionally fast by day and the pressure from the users of its services in need of the latest in the market. Some of the recommendations coming from the report is that is Napster is to remain competitive in this field of music where many other parties are coming in with great force, it has to continually reexamine and engage the modification of its marketing mix. This is to help the company streamline with the changes in the broad and developing market. The fast-paced Niche that Napster operates in is changing drastically and if the company can adapt and follow the new and advancing trends of the industry, surely it will tremendous reap from the same and succeed in the future. Table of Contents Introduction …………………………………………………………………..……… p.3 Marketing Mix Evaluation ………………………………………………….……….. p. 4 Product …………………………………………………………....………….. p. 4 Price ……………………………………………………………...…………… p. 6 Place ………………………………………………………………………….. p. 7 Promotion …………………………………………………..………………… p. 8 Additional Marketing mix People …………………………………………………...………...………… p. 10 Process …………………………………………………………...………….. p. 11 Physical Evidence …………………………………………….…..…………. p. 11 Conclusion ………………………………………………………….……………….. p. 12 References ……………………………………………………..…….………………. p. 13 Introduction Napster was created initially in 1998-1999. It was designed as a peer-2-peer site for downloading music with the main target being for college students. It hit fast and was on the record as the most used program across many countries (Green 2002, p. 799). However, the record companies had mounted a challenge legally to Napster because of the lost revenues on sales in their music (Evangelista 2002, p.5), eventually forcing some companies to close (Jack 2006, p. 105–125). It was a horrifying experience for many recording companies who vowed to take Napster to court. On March 5, 2001, Napster received an order from the U.S. courts to immediately, terminate all trading of copyrighted material (Evangelista 2002, p.5). Within just a period of one year, Napster was stressed up financially (Chaffey et al 2006, p.98). The company filed for bankruptcy and later bought out by Roxio, Inc. Napster since then, reopened its online doors for routine business. This second incarnation offers a legal music download service in direct competition with Apple’s iTunes and hits in the market hugely with innovations and better quality service. It now operates and does business in three main regions including the U.S., Canada, and the United Kingdom, with estimated 410,000 customers, which pay an estimated ₤14.95 per month each to get the rights of using the 1.5 million songs in the website (Green 2002, p. 799). With the technological advances in this global world and in the modern days, Napster has had to start focusing on new approaches of attracting an elephantine mass of customers and keeping up with the aggressive competitors in the same field for instance Apple. Because of this fast growing environment and opening up of more and newly developed programs, the company has strategically set its marketing mix in an attempt of placing itself in a growth position and seeing off the competitive advantage over its competitors. This marketing mix will look into the marketing mix as planned by Napster. It will in deal evaluate its strengths and weaknesses and make some recommendations on the same. The evaluation if noteworthy as it will help Napster build and strengthen its marketing mix, which is absolute and critical in its survival, in the global market. As an online music sharing service, the evaluation will be critical in strategizing on how to deal with the competitive nature of the field. It will also be of value in putting across strategies of the way to increase the company profits from sales as well as increase the number of consumers of its services preferably attracting more and new users. The evaluation will detail the four main Ps of a marketing mix being product, price, place and promotion and later look into some additional Ps that might be of value to Napster in strategizing its future marketing mix. Marketing Mix Evaluation for Napster This section will explain a Marketing Mix for Napster in general looking into the 4ps as with the strategy of the company. The four main Ps in the discussion are Price, Promotion, Place and Product. The section will, however also look into the additional Ps, as per what Napster has in store for the marketing mix. Product Napster’s main product is music where users engage in music sharing, in the peer 2 peer network. The company offers readily available and unlimited access to at least 1.5 million songs to its global subscribers. This is offered at a fixed price every month for each subscriber (Green 2002, p. 799). The company also offers mass customization via the radio stations based on specifically and strategically chosen artists and the most recent downloads, along with page-listing recommendations that would help Napster. The additional features (which are part of the company’s extended product) give Napster an edge and a competitive advantage over its competitors upcoming with force, and who offer music downloads only in their websites (Markus and Mali 2003a, p.23). The Napster name deeply ties in with its main product. This has also given it a stronghold among many other upcoming service providers. The Napster’s objective is continuing to build the consumer brand for the company and relatively increasing the awareness of the brand identity offered by Napster (Chaffey et al 2006, p.98). Napster has a sizeable reputation holding as an “all you can eat service offering music which is affordable and fun (Chaffey et al 2006, p.98)”. The branding characteristics of Napster assist customers to recognize Napster well over other retailers of music upcoming recently and with varying approaches. The company name has also a lot of brand equity carrying with it meaning that it gives Napster a strong hold in the market. Napster executives and leaders of all departments said in their report done annually for the company that they rely on the value of the brand heavily. They said that if this Napster band is not maintained at the best, and on a high level of recognition, revenues for the companies could seriously suffer and it would be a case of closure for the company. Napster provides the best choice and value to customers with a need for their electronic devices and music to be compatible. It provides a generated humongous list of all devices that are compatible with its services particularly on the company website. Additional to the product, Napster subscribers are free to listen to as many tracks as possible contained within the selected catalogue of at least 1 million ready tracks. Napster users also can access and listen to tracks on compatible device including Windows software of Digital Rights Management; these are among others PDAs, MP3 players, computers, and mobile phones (Markus and Mali 2003a, p.23). This provides a pleasurable experience for the users and adds to the list of preferences for the broad niche of user and to its rankings. Price When it comes to price, Napster has been offering and continues to offer different pricing model in comparison to its competitors. Apple and other gargantuan competitors in the same field allow “users of their stores to purchase songs using the per-track basis or even in the latest introduction as a form of albums (Chaffey et al 2006, p.98)”. Conversely, Napster offers simplicity and deals with a monthly fee allowing all its category of users to download as many tracks of music as possible depending on their interest. This has seen Napster as the leading company in providing music sharing services and beating all its competitors who work out differently and not as per what users demand (Markus and Mali 2003b, p.67). There are also many and different ways, which a customer is able to pay Napster its service. Such diverse means are excellent and offer an impressive choice for users of which this is what they desire. Napster’s payments can be made in advance using the “credit card, redemption of pre-paid cards, online payment systems, and promotional codes or via gift certificates (Chaffey et al 2006, p.98).” The named payment services are extraordinarily common and highly acceptable to many users of Napster services rendering it the competitive advantage over competitors and fairing better than others in the competition for new users. Place When it comes to place, Napster carries out its business online with all transactions carried out there. The Napster’s strategy is becoming the best and “the global provider leading in services related to consumer digital music (Chaffey et al 2006, p.98).” As of now, the company has seen success in its approach and has beaten many of its competitors on the same (Raymond 2001, p.28). The service from Napster currently is in offer, in three main regions including United States, United Kingdom and Canada. The three regions are superb and rich niche full of users of such services and increased introduction of new users in the global era. The company looks forward to expanding its service business into “other huge countries for instance Japan that have also a great crave for such services and with a huge market demand for the same (Chaffey et al 2006, p.98).” There is no doubt that if Napster will stay competitive and hold its position with a guarantee, leading among other music retailers, the company needs to put a serious focus on localization. This is the best approach that will see through and extremely promising for the future of the company. Localization in this case means, “Tailoring web site information by the administrators for individual countries or respective regions in which the company operates (Chaffey et al 2006, p.98).” Offering a global product for the company is terrific but can bring about diverse concerns and outcomes not particularly promising for the company in the future. The respective issues range from varying product needs, cultural differences and language differences, which might pose as a challenge for the company to handle (Raymond 2001, p.28). It might be the begging of disappointments for many local users, who have been satisfied so far, and this is not recommended for such a company requiring sustaining its position. Localization will be resplendent in addressing the named issues through “converting the local web side to suit the characteristics, as well as the values of the other countries or regions interested in the service (Chaffey et al 2006, p.98).” Promotion For the promotion, the primary way Napster does its promotion is via strategic partnerships. This is the way it promotes its services to respective consumers and reaches for the potential users of the service. One of the company’s key focuses in the promotion of its services is “continuing in the persuasion and execution of its strategic partnerships (Chaffey et al 2006, p.98)”. Napster has a strong belief in that it must always strive to add and maintain their strategic relationships in the broader marketing in order to succeed and hail over all the competitors (Markus and Mali 2003b, p.67). Napster has gotten involved in strategic partnerships online and other attachments offline, which is what, propels its promotions of the service business. Some of the partnerships are among others Blockbuster, Target, Microsoft and Best Buy (McCourt and Patrick 2003, p. 333–350). As a service company, Napster has the ability of using the established partnerships in its operations in innovating more ideas into the business and investing the same in the new technologies and services, which the other companies develop and come up with in every day’s operations. These partnerships for Napster separate the company from its competitors for instance Apple. Its competitor, Apple in a way “are locking people into purchasing hardware from Apple” because its online services are compatible only with its own products making it difficult for the many customers to get into terms with the same (Chaffey et al 2006, p.98). Because of its appropriate partnerships, Napster increases its ability of bundling its services in the music industry with hardware manufacturers through the creation of a more widespread campaign in its marketing. The partnerships Napster agree to involve and participate in help in ensuring that the company services are compatible and work well with the newest technology advancing and growing fast within the market. Napster also engages in traditional, online and offline marketing an excellent way of building more links for the company (McCourt and Patrick 2003, p. 333–350). As a service company, Napster markets offline using the print advertisements, television, as well as the radio some common mediums of marketing extremely popular with the majority of the user’s population. The company’s advertising structured online consists of advertisements placing “on several websites (including partners) as well as the use of the efficient search engines in increasing its reach to many users around the regions of operation (Chaffey et al 2006, p.98).” Both of these advertising forms for Napster follow the company’s mission and objective of marketing “directly to users through an integrated approach using both online and offline marketing program consistent particularly with the existing perception and strong awareness of the Napster Brand (Chaffey et al 2006, p.98).” Additional Marketing Mix Evaluation People Napster as a service company offers its services to everyone wishing to use them provided he or she is within the region of its operation. In 2005, Napster as a service company had “an estimated 410,000 subscribers across the United States, United Kingdom and Canada (Chaffey et al 2006, p.98)”. In that same year, the company, reports indicated that “approximately 80% of its subscribers in these regions were at least over the age of 25, with half of the same users being females with kids” and “at least three-quarters of the users were male (Chaffey et al 2006, p.98).” These statistics indicate either that many women in the regions that had kids had the passion of downloading music or many kids in the same region used their parent’s accounts for purchasing their music online, and this is what increased the number. The case does not generate enough information to make such conclusions. However, it would be helpful for the company in knowing, so that Napster can reflect on this market accordingly. Napster executives and the board of directors also stated “users especially the new subscribers bought and downloaded more music online compared to folk who only bought one-off downloads” and “that at least one in five of the subscribers no longer buy music in the form of CD’s (Chaffey et al 2006, p.98).” This indicated that the company’s strategy of a once a month payment was excellent and helpful in retaining more customers compared to their competitors, who had different offers involving pay as you go rate. Process For the process, Napster does not participate directly in development of new product since it does not sell such products, which it can develop. However, the major focus for the company in on being innovative particularly with its file formats through making investments in new technologies and services in helping “encourage a variety of platforms from MP3 players that are portable, mobile phones, PC’s cars, among many others, which are favorites for the majority of the users (Chaffey et al 2006, p.98).” This was an excellent way of ensuring that Napster in its operations will continue holding its top most position and hold its competitiveness because it is in the growth stage constantly in the product life cycle. Physical Evidence Looking in the physical evidence, Napster provides an excellent online experience to its users across the regions. The web site of Napster is tailored to make the company’s customer has a positive experience, do it easily, and free of stress when using the website (Rune 2001, p.45). Napster with the once a month payment in gaining unlimited downloading access for all types of music in the database, saves the user so much time and reduces the extreme stress through the elimination of a payment for each purchase, which is cumbersome and undesirable for many users (McCourt and Patrick 2003, p. 333–350). The actual website developed by Napster also happens to be extremely easy in terms of navigation. This, therefore, makes it easy for all users and most importantly for the young who do not have considerable experience in using the web (McCourt and Patrick 2003, p. 333–350). The top of the page for the web includes a list of tabs helping the customer in easily finding their way around the website and doing what they feel comfortable (Rune 2001, p.45). This list of tabs is resplendent in preventing the customer from cumbersome searching all over the site in an attempt to find their field of interest and succeed in obtaining what they were looking for. Napster has also a high-quality selection of available features on the website. These features are among others, “Napster radio based on songs by specific artists, Napster recommendations, and Napster radio play lists and swapping play lists (Chaffey et al 2006, p.98).” Such guidelines are excellent in making work easier for the user. The respective features that are only available to users who have subscribed provide a personal touch helping the user to connect easily with his or her favorites and interests (Barrack 2008, p. 409–461). Conclusion Generally, Napster has been using its marketing mix tremendously in separating itself from its competitors. Napster, with its unique once a month payment, makes it the best and a preference for many. Its website features, as well as product compatibility, are also among the better ways that the company uses in building its name and increasing its recognition among many global users. In order for the company to perfect its services and remain competitive, there is an urgent need for it to continually reexamine as well as engage modifications to its marketing mix. The fast-paced environment, which Napster is operating in is changing constantly, and the company has to think and strategize fast to change with the same. If Napster follows this route and adapts such trends, for sure, it will be emerging as one of the leading companies in sales, in the industry. 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