Mini Evidence Analysis #2

INTRODUCTION

This analysis argues that despite Spotify’s free basic offering, it can build Consumer-Based Brand Equity (CBBE) (Keller, 2012) as effectively as QANTAS, one of Australia’s most trusted brands (Rose, 2019).

THE COST OF “FREE”

Marketing orthodoxy holds that price discounting negatively impacts brand equity (Villarejo-Ramos & Sánchez-Franco, 2005). But Spotify’s free basic offering does not seem to dissuade consumers from subscribing. Indeed, hit its 100th million paid subscriber in the past week (Jolly & Sweney, 2019). Therefore, if Spotify’s free basic offering is harming its brand equity, other aspects of its brand strategy are successfully compensating for this. But how?

CBBE FRAMEWORK

Brand Salience

Spotify is aggressively promoting recognition and awareness of its brand. Its free basic offering is the most obvious example. Furthermore, Spotify contracted with Samsung to pre-install the app on their phones (Jolly & Sweney, 2019), thereby promoting the brand to every Samsung purchaser.

Brand Meaning

Spotify delivers performance by reliably streaming a vast library of music with high sound quality (Goode, 2019). By embracing a bright, flashy and bold colour scheme, Spotify curates unique and appealing imagery (Pantelić, 2015). Through these avenues, Spotify competently delivers brand meaning.

Brand Response

In 2016 the app crashed, but Spotify immediately acknowledged customers’ concerns across all channels and engaged with them long after the app was fixed (Beuly, 2016). Spotify even complied bespoke playlists for affected customers (Skinbjerg, 2016), leading to this tweet of delight:

“I’m genuinely speechless@SpotifyCares. Never have I ever met such an amazing (human) support team. You’ve got me hooked for life. Cheers!”

Sophia Skinbjerg (@sophiaskinbjerg) June 26, 2016

This is a perfect example of the Service Recovery Paradox (Krishna, Dangayach & Sharma, 2014) in action. Such deft crisis management inspired consumer judgements of credibility and consideration. Moreover, Spotify’s tailored replies evinced consumers’ feelings warmth, fun and excitement towards the brand.

Resonance

Spotify resonates with consumers because it fosters active engagement. 55% of Spotify subscribers connect to the app through Facebook (Fowler, 2016), which bests QANTAS’s social media engagement (Talkwalker, 2019). Spotify encourages its users to collaboratively build playlists via Facebook Messenger group chats (McCormick, 2017).

Spotify collects its users’ data and leverages it to improve playlists, recommendations and special offers (Beuly, 2016). Spotify develops meaningful relationships with consumers so effectively because it knows what makes them tick. Similarly, QANTAS has had success in leveraging consumer data from its Frequent Flyer program (Cameron, 2017).

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CONCLUSION

Spotify’s free basic offering builds brand salience. Spotify then capitalises on this salience by engaging with consumers on a meaningful level, thereby resonating with them. This analysis shows that Spotify can and does build CBBE as effectively as QANTAS, despite the orthodox hostility towards the use of discounting to develop brand equity.

Reference List:

Beuly, C. (2016). The Key To Spotify’s Brand Relevance: Customer Obsession. [online] Prophet.com. Available at: https://www.prophet.com/2016/07/key-to-spotifys-brand-relevance/ [Accessed 4 May 2019].

Cameron, N. (2017). Qantas reports solid financials; highlights customer data and digital as competitive advantage. [online] Cmo.com.au. Available at: https://www.cmo.com.au/article/614712/qantas-reports-solid-financials-highlights-customer-data-digital-competitive-advantage/ [Accessed 4 May 2019].

Fowler, L. (2016). 5 Things Spotify Can Teach You About Content Curation – ScribbleLive. [online] ScribbleLive. Available at: https://www.scribblelive.com/blog/2016/02/08/5-things-spotify-can-teach-content-curation/ [Accessed 4 May 2019].

Gartenberg, C. (2018). Samsung is partnering with Spotify across its devices. [online] The Verge. Available at: https://www.theverge.com/2018/8/9/17671162/samsung-spotify-bixby-home-speaker-hardware-devices-galaxy [Accessed 4 May 2019].

Goode, L. (2019). Tips for Getting the Most Out of Your Spotify Experience. [online] WIRED. Available at: https://www.wired.com/story/spotify-tips-and-tricks/ [Accessed 4 May 2019].

Jolly, J. and Sweney, M. (2019). Spotify reaches 100m paying subscribers worldwide. [online] The Guardian. Available at: https://www.theguardian.com/technology/2019/apr/29/spotify-paying-subscribers-streaming-us-canada [Accessed 4 May 2019].

Keller, K. L. (2012). Strategic Brand Management. 4th ed. Boston: Pearson.

Krishna, A., Dangayach, G. and Sharma, S. (2014). Service Recovery Paradox: The Success Parameters. Global Business Review, 15(2), pp.263-277.

Lowery, D. (2018). Spotify Is Deeply Integrated With Facebook: How Safe is Your Streaming Data?. [online] The Trichordist. Available at: https://thetrichordist.com/2018/03/26/spotify-is-deeply-integrated-with-facebook-how-safe-is-your-streaming-data/ [Accessed 6 May 2019].

McCormick, R. (2017). Now you can build shared Spotify playlists with your friends in Facebook Messenger. [online] The Verge. Available at: https://www.theverge.com/2017/6/21/15844838/spotify-shared-playlists-facebook-messenger [Accessed 6 May 2019].

Pantelić, T. (2015). Spotify Presents a New Brand Identity Targeting Millennials | Brandingmag. [online] Brandingmag. Available at: https://www.brandingmag.com/2015/03/19/spotify-presents-a-new-brand-identity-targeting-millennials/ [Accessed 4 May 2019].

Richter, F. (2019). Infographic: Spotify Is Pulling Away From Apple Music. [online] Statista Infographics. Available at: https://www.statista.com/chart/8399/spotify-apple-music-paid-subscribers/ [Accessed 4 May 2019].

Rose, D. (2019). Australia’s most-trusted brand isn’t Australian. [online] Australian Financial Review. Available at: https://www.afr.com/business/media-and-marketing/public-relations/australia-s-most-trusted-brand-isn-t-australian-20190417-p51ewx [Accessed 4 May 2019].

Skinbjerg, S. (2016). A lesson in exceptional customer experience | Ungapped. [online] Ungapped. Available at: https://ungapped.com/a-lesson-in-exceptional-customer-experience/ [Accessed 4 May 2019].

Talkwalker (2019). Social media analytics for Qantas. [online] Available at: https://www.talkwalker.com/industry-research/airlines/qantas-social-media-analytics [Accessed 4 May 2019].

Villarejo-Ramos, A. and Sánchez-Franco, M. (2005). The impact of marketing communication and price promotion on brand equity. Journal of Brand Management, 12(6), pp.431-444.