Interactive and Internet Marketing: Napster Brand of Products - Case Study Example

 Contents The original Napster---------------------------------------------------------------------------------3 Introduction ------------------------------------------------------------------------------------------3 New Napster in 2008 ------------------------------------------------------------------------------- 3 Marketing mix evaluation in Napster--------------------------------------------------------------4 Product Decisions------------------------------------------------------------------------------------4 The Napster online music service----------------------------------------------------------------- 4 Price Decision-----------------------------------------------------------------------------------------5 Napster Strategy------------------------------------------------------------------------------------- 5 Distribution (Place) Decisions: Placement----------------------------------------------------- --6 Napster's Customers---------------------------------------------------------------------------------6 Promotion Decisions---------------------------------------------------------------------------------7 Napster distribution----------------------------------------------------------------------------------7 Napster Competition--------------------------------------------------------------------------------8 Intellectual Property---------------------------------------------------------------------------------8 Napster Risk factors---------------------------------------------------------------------------------8 Recommendation ------------------------------------------------------------------------------------9 Conclusion-------------------------------------------------------------------------------------------10 Reference--------------------------------------------------------------------------------------------11 Interactive and Internet Marketing The original Napster Executive summary The Napster case study is real testimony on how technology can actually change the sale output of the business strategies. This is so given the fact that the old Napster was really running at a loss due to the low revenues it was generating. The low revenue generated was as a result of was as a result by the law enforcement officers to stop Napster from more production. Napster had to comply with the regulation of not producing copyrighted materials. It is a normal offence to produce a copyrighted music; this can only be allowed only if the original producer of the music gives the go a head to do so. In addition to the issue of copyright, other music production companies had employed the high technology of the online music production, thus the new Napster had to employ the same. In this case the employment of effective modes of producing the music led to the new Napster gaining ground in the production as it would therefore produce cheaply and of high quality. In the case again, the Napster strategy also improved on its ways of marketing its product which made it to the realization of an increase in the customer base. it employed the necessary online advertisement which was then reaching a wider number of customers. It is therefore important to note that technology played a major role in shaping the new business strategy of the new Napster. Introduction The original Napster was at the outset created amid 1998 as well as 1999 with 19 year aged known as Shawn Fanning. This original Napster which was facing several challenges as in the line of doing its business was already obsolete. This was made even worse by the fact that the music producing companies were doing it through the online mode. This was therefore forcing this original Napster to be revived so as to fit in the current method of doing the same business so that high revenues could be realized. The new Napster therefore had to come in place to make sure that it becomes at per with the potential competitors. This was why the new Napster had to employ the online music technology in which improved on the volume of sales and the revenue also shot up. The quality of the music produced also immensely improved thus winning the consumer confidence. New Napster in 2008 The new Napster case study gains a lot of momentum in the year 2008. at this juncture the older version had passed under several changes to make to the objective of increasing the revenue out put and to effectively compete with other major players in the same line of production. By this year 830,000 users in the United States, Canada and United Kingdom paid in the tune of £14.95 each month to gain admittance to about 1.5 million songs. After realizing successful trade and customer base, The Company was seeking to initiate in extra countries such as Japan in form of partnerships. The company had high hopes in Revenue for financial year 2008 which surpassed $125 million, representing escalation of 17%. Napster gained its major revenues mainly from music online subscription and stable music downloads. The service offered by Napster presents subscribers with an on-demand contact to in more than 1 million tracks to facilitate being streamed or even downloaded not to mention the aptitude to buy personality tracks or the albums on the basis of la carte. Marketing mix evaluation in Napster Napster has continuously applied and is continuing to apply the facet of marketing which is concerned wit the actualization of goods and/or services, as related to the customers needs. It was previous argued that a good product or service will sell itself. But in the highly competitive markets of today, there may be no bad products .Therefore the obvious questions regarding product include: Do the products meet the customer’s needs? And if so then what are the features of the products or services tat meet the needs of our clients? These questions are best answered by the management as well as the relevant committees assigned with Napster land’s strategic planning (Charles & Geisler, 2000) Napster has to maximize the use the four P's which are parameters which the control of marketing, on condition of inner as well as outer constraints related to marketing environment. The goal here is to make decisions that center the four P's on the customers in the target market in order to produce perceived value and generate a positive response. They include: Product Decisions Product refers to tangible, physical products as well as services. The decisions to be made here are in the line of: • Brand name which should be very unique and most applicable as with the usage of the product • Functionality of the product should be critically monitored to meet the expected customers end usage. • Styling is also another important aspect which should be considered here. • Quality is another very important aspect here to make sure that what is produced is actually the best • Others here are Safety, Packaging, Repairs and Support, Warranty, Accessories and services (Vance, 2003). Napster was therefore at a greater position to be able to chose it products which in this case was music which it could sell very much easily using the online technology. The Napster online music service It is possible that Napster subscribers are able to listen to as many loads of tracks as they desire. All these are contained within the catalogue in excess of 1 million tracks. This has made the service to be sometimes described as ‘all you can eat’ rather than ‘a la carte’. Napster users can therefore listen to tracks on whichever compatible device that comprises Windows Digital Rights Management software; here we have MP3 players, computers, PDAs and mobile phones. Duea then describes Napster an "experience" rather than a merchant. He arrived at this conclusion due to a number of features existing such as: The Napster references, the Napster radio based around songs by particular artists, the Napster radio play lists based on the songs you have downloaded, the swapping play lists and recommendations with other users (Johnston, 2009). Price Decisions This is a process that involves making decision on the prices of goods and/or services together with the preferred discounts on the products. The objective is to work on a pricing strategy best suited for both the clients and the business firm. This strategy begs to ask the questions: • What is the amount of money that the client may pay for the shipping services? • How much profit are we intending to gain as Napster? (Johnston, 2009). They also need to make price decisions, some case samples of decisions of pricing to be arrived at include: • The Pricing approach • The recommended retail price • The quantity discounts and wholesale pricing • The Cash and early payment discounts • Seasonal pricing, Bundling, Price flexibility, Price discrimination. ITunes in addition to Napster are almost certainly the two major achievements in its services, even though they have dissimilar form of operating. There exists no subscribers for iTunes, the users pay for songs either per track basis or may be in the form of music albums. By the mid 2005, close to half a billion music tracks had already been purchased on Napster. Some may have the feeling that iTunes locks people into buying Apple hardware, as one would imagine Duea of Napster; he says that Steve Jobs of Apple “has lured people into buying a hardware trap” (Johnston, 2009). In addition the Napster's subscription model has faced numerous criticism in view of the fact that it is a service where subscribers do not ‘own’ the music but have to purchase it at extra cost, a case at hand here is to burn it to CD. We can’t deny the fact that the music is theirs to play either on a PC or on a portable player, but they must continue to subscribe to Napster. This can generate an argument that Napster accomplishes lock-in in another form and necessitates a different method to music rights than some of its contenders (Vance, 2003). The price decisions chosen therefore should be the price that will be managed by the end users and that can beat the other prices in the local market. Napster Strategy Napster (2005) illustrates their strategy as shown. The general objective here is to turn out to be the “leading universal supplier of consumer digital music services”. To realize their above mentioned strategy they see these tactical approaches as being crucial to attaining this: They planned to continue to build the Napster Consumer Brand – as well as carrying extensive campaigns to increasing awareness of the Napster brand identity, here also includes promoting the subscription service which supports innovation of new music. Napster (2005) also says ‘We promote our Napster service straightforwardly to consumers all the way through an incorporated offline and online marketing program consistent with the existing well-built awareness and sensitivity of the Napster brand. The marketing message is therefore focused on our subscription service, which makes a distinction of our offering from those of many of our challengers. The Offline marketing channels include television (including direct response TV), radio and print advertising. The Napster online marketing program consists of advertising placements on a number of web sites (this also includes associate partners) and exploration engines’ (White, 2006). They also planned the Continuation to create through investing in the innovative Services in addition to Technologies – the initiative of this nature gives confidence to support of extensive choices of choices from moveable MP3 players, the PCs, the cars, the mobile phones, among others. The large technical team in Napster has given the idea about the importance of this strategy. In the long run, access to other forms of content for example video may be obtainable. Napster sees their capacity to compete depending on substantially upon our intellectual property. They have numeral patents issued, even though they are also in difference of opinion with other organizations in concern with their patents (White, 2006). A plan to Continue Pursuing and Executing Strategic joint ventures – Napster had previously gone into premeditated partnerships in the company of technology companies a case here is Microsoft and Intel, hardware companies include iRiver, Dell, the Toshiba along with IBM), Creative, while retailers here were Best Buy, the Currys, Radio Shack, Dixons Group, The Link, the Blockbuster, the PC World, Target, and others like Molson, Miller, Energizer, Nestle (Hessaldahl, 2006). The final plan was also to carry on to Pursing Strategic Acquisitions and Complementary Technologies – This led to extensive and elaborate innovation and developing new services. Distribution (Place) Decisions: Placement This simply refers to the process through the goods in addition to services reach the customers (the market).This facet is sometimes referred to as Place, implying, a channel through which a product or service gets to the targeted clients. It poses questions like: •Is the product or service accessible at the right port? •Is there enough quantity of the product or the service at the reach of customers? This is concerning receiving the goods to customer. The distribution or place strategies they should consider are: •Cheaper Distribution channels •Extensive Market coverage •A given Specific channel members •Others are Inventory of management, Warehousing, centers of distribution, processing of Order, Transportation in addition to Reverse logistics. In considering the distribution, the Napster company shoul therefore device a cheap method of distributing its goods and services and in this case they can make use of the online technology which can be of great help to them. Napster's Customers The Register, 2005 stated the fact to the effect that, in UK, by the middle of the year 2005, Napster in the UK's 750,000 consumers had already downloaded and also streamed about 55m tracks from the time when the service was initiated in 2004. The company understood that 80 % of the total subscribers had already attained the age of above 25,. While other three-quarters of them are male. Its users buy additional music through internet more than the people who buy one-off downloads do and research here also indicates 1/5 never bought CDs, actually (Viega, 2006) Promotion Decisions Promotion is the process or the act of keeping the products or services in the minds of the customers to help stimulate demands for the products or services. The ongoing activities of advertising, public relations and sales have often been considered as aspects of promotion (Viega, 2006). Under this final facet, we are confronted wit questions such as: •How are the target audiences or the customers informed about Napster land’s products and services? •How best can we Napste land makes them not to easily forget about our products and services? Napster should make sure that there is effectiveness of communication of the information concerning the merchandise with the intention of coming up with positive response of the customer. Marketing communication decisions that should be given important considerations include: •Promotional strategy •Advertising •Personal selling & sales force •Sales promotions •Public relations & publicity •Marketing communications budget The Napster should therefore find a way of promoting there goods and services, this they can do well in the online technology in which they can have even there own website where promotion of the same shall take place. Napster distribution Napster’s online music services are sold directly to end users mainly through the website (www.napster.com). Associate networks and universities that have got hold of site licenses. It’s important to note here that In the US, a considerable percentage of subscribers is University users. Prepaid cards are also obtainable through retail partners for example Dixons in the UK, who also promote the service. Napster also packages its online music service through hardware producer’s example as iRiver, Gateway, Dell, Creative Labs and Samsung. Distribution partnerships with mobile phone providers are a major phase of its strategy and Napster has practiced conformity in this area. An example at this particular juncture is In 2008 at the time that Napster initiated the service of Mobile music in the company of Telecom Italia which serve upto above 35 million users; the Entel PCS, the prime operator of Chilean mobile in the company of approximately more than 5.5 million users along with in Napster Mobile of Japan for NTT DoCoMo (Napster, 2004). By Describing it’s marketing line of attack Napster proclaims in the SEC filing: “We first and foremost center our attention to extensive marketing hard work on online promotion, here is where we be capable of a good number cost effectively get in touch with our intended addressees of between 25-40 year, along with premeditated partnerships in which we can promote our service with corresponding products. In the U K in addition to Germany, in addition we also advertise our remunerated service of Napster in a straight line to consumers all the way through a predominately internet program of marketing, this is for all time reliable with accessible sturdy understanding and Napster brand perception. The marketing message is paying attention to our subscription service, which makes a distinction to our submission from many of our contestants. Napster online marketing program encompasses advertising placements on a number of web sites; affiliate partners here are also included and search engines". (Napster, 2004). The above discussed known as the four Ps generally referred as the marketing mix which Napster can apply when strategizing a marketing campaign. These modes were therefore of great benefit to Napster as it enabled it to beat the potential competitions in marketing it products and thus realized a great sale out put as compared to the previous strategy when the four Ps were not effectively employed. Napster Competition Napster perceives their most competitors at online music services in US for example Apple Computer’s iTunes, Yahoo! Unlimited, Amazon, RealNetworks, Inc.’s Rhapsody, Connect, AOL Music, Sony MusicNet and Music Now. While In the UK, in 2005, fresh services with a subscription form were then launched by merchants Virgin and HMV with a view of expecting other expected competitors for example MTV Networks to enter the market soon. (Napster, 2004). It is found out that Napster (2005) consider that the main competitive features affecting their daily market will include programming performance, price and features, quality of purchaser support, compatibility with fashionable hardware devices and brand (Napster, 2004). Intellectual Property "Napster might be fruitless in prosecuting the copyright applications or else patents might never be issued from there patent applications. Even on condition of copyrights issued and upheld, these copyright may never be of adequate scope to advantage the company or may be held worthless and unenforceable in opposition to third parties. Whereas Napster relied on patent, copyright, trade secret and trademark law to save from harm their technology, it also considered that developments such as the technological and innovative skills of their personnel, new product innovations, recurrent product enhancements and steadfast product safeguarding are most important to establishing and maintaining a technology headship position. Napster cannot guarantee its subscribers that others will not build up technologies that are analogous or advanced to their technology" (Ross, 2003). Napster Risk factors Even though Napster might be hoping to carry the day in the market line, it’s faced with several challenges and risk factors which if not addressed might led to another downfall. The following are some of the risk factors and the subsequent recommendations on how they actually can be handled to maximize on his profit base and the subsequent customer satisfactions. Napster (2005) summarizes the main risk factors as follows. Low margins Their online music allotment business has very lower margins than the former consumer software products business. The expenses of the major business of music distribution as a proportion of proceeds accrued by business are advanced compared to the ones of former customer software goods business. The third party charge content, in fastidious, is substantial segment of revenues they take delivery from subscribers in addition to ultimate users as well as it is implausible to reduce significantly over moment in time as a percentage of revenue (Dave, 2007). The recommendation to reduce this can be in the form of partnering with other distributors so that they realize an effective and easy less cheap channel where the products can reach the end users. They should also make good use of technology so that they can maximize its use. This is because online distribution of products is far cheaper as compare to other forms of distribution. Traditional retail distributors Napster also faces momentous competition of the conventional retail distributors of music from up-and-coming paid internet music services which are commonly delivered electronically of the nature of “free services of peer-to-peer nature”. The recommendation here to beat the traditional retail music distributors is that they maximize the online distribution mode as there the surety that his traditional distributors can’t maximize on the same. They still can make the extensive use of the up to date technology so that they make sure that there product have a head start as compared to there traditional rivals (Dignan, 2008). Inadequate broadband accessibility In any case broadband technologies do not turn out to be extensively accessible or extensively adopted, Napster internet music supply services might not attain wide market reception, and the business may be harmed. Recommendations: The challenges which still face Napster in the process of trying to accumulate the necessary required revenue should be dealt with in most effective manner. Napster can achieve this by effectively employing the marketing mix. In the first instance Napster should ensure that the production of its music products is of high quality, this can be achieved by employing the recent and high technologies. Napster can also make use of effective promotion techniques, ties can be obtained by Napster making effective use of internet and the broadband technology which will reach many customers. Another technology is to carry out effective price evaluation and thus attaining reasonable price competition to make sure the music produced is purchased at the right price. In order to maximize again on its sale Napster again needs to make an elaborate market research to make sure that the customers chosen are the right ones who would give a stable market. All these will be of great benefit in terms of revenue output and thus good business. Conclusion Napster brand of products even though faced many competition challenges from other market segments in the US has made a wider progress. The online sales it initiated for its music products at a later stage made it have a head start. It realized enormous sales and even the quality of the services it was offering improved a great deal. This online servicing proved more appropriate given the fact that Napster could distribute, advertise and produce its products in the most convincing way possible. The Napster case can therefore cement the idea of the benefits of the present technologies given that it previous methodology of functions was even more slow and involving not forgetting that very minimal sales were obtained. This is not always the goal of any business venture and therefore there was that greater urge to jump into the ship of the online technology and for sure it didn’t let the business down. I can recommend here that Napster carry out an extensive awareness campaign so that the local end users can get to realize the importance of technology usage and also make maximum adoption of the broad band end the technology at large. The broad band technology here also played a very important role in the success story of Napster. Therefore businesses who would want to step into Napster’s shoes have to make use of the online and the broad band technology. Bibliography Dave, C, 2007, E-business and e-commerce management, NY, Praeger. Dignan, L., 2008, "Best Buy acquires Napster; Eyes digital music distribution", Between the Lines, ZDNet. Dignan, P., 2008, "Best Buy acquires Napster; Eyes digital music distribution", Institute of Directors 2005. Hessaldahl, A., 2006, “A Needy Napster Searches for Takers". Business Week. Johnston, K. 2009, Internet Marketing: Strategy, Implementation and Practice, 4th Ed., Brisbane, Prentice Hall. Napster, 2004, “Global Napster Expands University Program with the Addition of Six Schools”. Financial Times Press Release. Ross, D., 2003, Living networks, NY, Praeger. Vance, A, 2003, "Penn State students revolt against Napster", The Register. Viega, A,. 2006, "Napster denies rumors of trouble amid layoffs". San Jose Mercury News. White, M, 2006, "Napster Hires UBS to Evaluate Possible Company Sale". Bloomberg. Read More