Blog 4.2 – The concept behind Spotify’s one month free trial

If it’s an advertisement:

1. Describe in detail how the business implemented the four P’s to add value and/or promote the product or service. 

This concept of a free trial isn’t necessarily an advertisement, but more of a promotional strategy that I will discuss. Spotify is a music streaming service that gives the user access to essentially any song on demand at any time. You pay a monthly fee and then have access to the entire service. Something interesting that Spotify offers is a full one month free trial to anyone who has not used their service before. No catch, no strings attached, just one month free, as simple as that. The “p” that this strategy fits into is most likely the promotional “p”. By giving users a free trial, they are able to promote their business by allowing many people to be offered a free service, who would want to turn down a free service? The goal of this is to let users get a taste of what having a Spotify membership is like temporarily. Spotify hopes that after the trail is over, you will se the value of having a membership and want to continue your membership by paying the monthly fee thus giving Spotify more business. What is so genius about this concept is that nobody really loses. Because Spotify is an electronic service, their cost to run the business is really the same irregardless of how many users they have. Although I’m sure this is not true with exponential user growth, I imagine that the cost to run Spotify is the same whether they have a millions users, or a million and one users. Therefore, Spotify is not losing money by offering free trials to potential customers. However, they are drastically increasing their chances of people eventually deciding to use their paid subscription by giving people the chance to try it for themselves.

1. Describe the target market (ie. what segments are being targeted)?  How do you know this is the target market? Did the company make good decisions to reach the target market?

The target market of Spotify is people who are looking for an alternative to outright purchasing musing or simply someone who is looking for a streaming service in addition to owning personal music. The market of streaming music services has exploded in the past years and the majority of young music listeners chose streaming services over other forms of music consumption. I believe this promotional strategy is great decision as Spotify really has nothing to lose and will mostly gain users as a direct result of this promotional strategy. Even if only one out of a hundred free trial users decide to pay for a subscription, Spotify is still making money.

1. Does it work? Why or why not? Any general observations?

I personally believe that this strategy works extremely well. My personal experience is that I myself tried the free trial, just to see if I liked it. After my one month free, I enjoyed it enough that I decided to join the paid subscription service. I am a strong believer that a good product or service will sell itself if it truly meets consumers needs in all aspects. By giving users a free trial to Spotify, which I believe is a great product that meets consumers needs, Spotify is able to greatly increase their paid user base through a very smart promotional program.