Is Standardization Below the Standard? A study of a highly standardized company adapting to the developing market of Kenya
LINDQVIST, KASPER OTIENO, RACHEL
School of Business, Society & Engineering
Course: Master Thesis in Business Administration Supervisor: Edward Gillmore Course code: FOA403 Date: 2021-06-02 15 cr ABSTRACT
Date: 2021-06-02
Level: Master Thesis in Business Administration, 15 cr
Institution: School of Business, Society and Engineering, Mälardalen University
Authors: Kasper Lindqvist Rachel Otieno (96/04/13) (89/08/28)
Title: Is Standardization Below The Standard?
Tutor: Edward Gillmore
Keywords: Standardization, Adaptation, Emerging Markets, Spotify, Kenya
Research What challenges could Spotify encounter when marketing its questions: services in the developing market of Kenya?
How can Spotify adapt to the Kenyan market?
Purpose: Investigate how Spotify, a highly standardized company joining an emerging market could make adaptations while penetrating the market and what kind of challenges Spotify could face.
Method: A mixed method approach has been used in this study. A survey and interview was conducted following an abductive study approach.
Conclusion: Highly standardized companies need to adapt in volatile emerging markets and the challenges they will face beyond their control. As for Spotify, some adaptations required were how they reach their consumers, adapting to the preferences of these consumers and understanding the culture of the Kenyan market.
Abstract
The goal of this study is to increase the knowledge surrounding the adaptation of highly standardized companies when it comes to entering developing markets from an already developed market. This study uses Spotify as an example when researching this topic. The research has been conducted using a mixed method where a case story about Spotify in Sweden has been built based on an interview with Spotify. This case was then compared with responses from Kenyan consumers about their perceptions of Spotify, generated through a survey.
Furthermore, the current actions taken by Spotify in Kenya were also taken into consideration when analyzing the gathered data. The analysis showed that there are several opportunities for
Spotify to adapt in regard to the Kenyan market. The analysis also shows that Spotify already made some changes since entering the new market in regard to how they operate. These suggested and implemented adaptations have also been compared to relevant theories in which they were supported.
Table of Contents
1. Introduction……………………………………….………………………………….……1 1.1 Background……………………………….………………………………….……1 1.2 Problem Discussion………………………………………………...….……….…5 1.3 Purpose………………………………………………………...….………….…...7 1.4 Research Questions………………….…………………………….….……….….8
2. Theories………………………………………………………………………...…………9 2.1 Marketing Styles………………………….……………………….………………9 2.2 Brand Communication……………………………………………………...……10 2.2.1 Brand legitimacy……………………………………………………....13 2.2.2 Brand perception…………………………………………………...….14 2.3 Country Characteristics………………………………….………………….……15 2.3.1 Institutions…………………………………………...………....……...15 2.3.2 Hofstede…………………………………………………………...…...20
3. Methodology…………………………………………………………………………...…23 3.1 Research design………………………………………………………………….23 3.2 Research philosophy……………………………………………………………..26 3.3 Data collection…………………………………………………………………...27 3.3.1 Primary data…………………………………………………………....27 3.3.2 Secondary data………………………………………………………....33 3.4 Data analysis……………………………………………………………………..35 3.5 Triangulation……………………………………………………………….…….35 3.6 Validity & Reliability…………………………………………...………………..36 3.7 Ethical Considerations………………………………….………………………...37 3.8 Limitations…………………………………….………………………………….38 3.9 Method criticism…………………………….…………………………………....39
4. Findings……………………………………………………………………...…………40 4.1 History and Evolution of Spotify………….………………………...……...……40 4.2 Contemporary views of Spotify…………….……………………………...…….41 4.3 Spotify in the Kenyan Market……………………………………………...…….43 4.3 Survey Findings……………………………………………………....………….47 4.3.1 Control Question……………………………………………………….47 4.3.2 Country Characteristics………….…………………………….……….47 4.3.3 Marketing Styles…………………………………………....………….49 4.3.4 Brand Legitimacy…………………………………………….………...52 4.3.5 Brand Perception………………………………………….……………53
5. Analysis…………………………………………………………………………….…….55 5.1 Marketing Styles………………………………………………….……....……...55 5.2 Brand Communication…………………………………………………...………56 5.3 Country Characteristics………………………………….………………….……58
6. Theoretical Discussion………………………………………………………………...…60 6.1 Marketing Styles…………………………………………………………...…….60 6.2 Brand Communication……………………………………………………...……61 6.3 Country Characteristics………………………………….……………….………64
7. Conclusion…………………………………………………………………………...……66 7.1 Management Implications………………….…………………………………….68 7.2 Future Research…………………………….…………………………………….69
References………………………………………….…………………………....….….……70
Appendix…………………………………………………………………………………….76
1. Introduction
1.1 Background
The term globalization basically refers to homogenizing on a global scale (Robertson & White,
2007). With the increasing globalization trend, the difference from one country to the other is increasingly getting smaller but still exists. Business globalization and internationalization trends have had major impacts on the business strategies employed by different companies. In order to survive and thrive, multinational corporations have had to adapt to the dramatic dynamics and heightened complexity in the global competitive landscape over the past decades
(Robertson & White, 2007). Globalization has not only heightened the competition between countries and their economies but has further led to an increase in their dependency on each other, especially in the trading of goods and services (Hartungi, 2006). Besides, it comes into play when looking at the movement of capital, environment, labor, and thus also employment.
Globalization has further contributed to a lot of improvements to countries, especially in developing countries in terms of acceleration of technological development as well as improved productivity and efficiency in many areas of life. Besides, most developing nations have been experiencing changes where they are now witnessing an effect based on global policies, rather than only being affected by domestic ones, as they traditionally were (Hartungi,
2006).
Companies have increasingly pursued global strategies to standardize their business operations in order to improve coordination, reduce operating costs and enhance better control. However, given the diverse environment that multinational firms operate in, there have been some challenges in the implementation of global strategies that the current study seeks to identify.
(He, Eden & Hitt, 2016).
1
Furthermore, due to the increased globalization and the worldwide business competition, multinational corporations have been faced with a very important business marketing decision between standardization and adaptation, which are the two different perspectives on the international business marketing issue (Dimitrova & Rosenbloom, 2010). On the one hand, followers of the idea of standardization argue that businesses should use a single and standardized marketing strategy in the global market to minimize their total operating costs and promote their global corporate image. On the other hand, those who support the adaptation process contend that it is vital for a business to adapt to different markets in order to fit the unique dimension of each local market (Dimitrova & Rosenbloom, 2010).
Morgan (2009) posits that the market is increasingly becoming more similar and universal in terms of preferences, tastes, and price-mindedness, and thus the key to surviving in the current highly competitive business arena is by globalizing. However, multinational corporations that have pursued global strategies are normally frustrated in their implementation strategies and usually do not get the results they desire. Owing to the complex and diverse context of enacting global strategy, it has become synonymous with big challenges. Different countries have diverse cultures, languages, infrastructures, economic situations, rules, and regulations, which have remained potent challenges. Such challenges have brought forth high uncertainty levels for firms forcing them to modify their global strategy implementation challenges to help them make informed strategic plans for international business (McCann & Acs, 2011). Therefore, considering the increased globalization, global competition, and their significance on international business marketing strategy, a business needs to choose the right strategy to expand their operations to other territories in terms of the standardization versus the adaptation issue (McCann & Acs, 2011).
2
Research and development have always been a focus for corporations in their effort to drive growth. What happened in the last decade or so is that international companies have chosen to be more geographically diverse in these efforts as an effect of the globalization that's been happening. The decision between standardization and adaptation of international business operating strategy is also vital in doing business in developing countries. The developing countries of the world look to have a bright future ahead, as the global economy continues to grow (Dunning & Lundan, 2009). The high growth rate usually witnessed in the markets of emerging countries makes them very lucrative markets for multinational corporations (Jones,
2017).
Jansson (2007) defines developing countries as those in the mid-stream of development and refers to an amorphous and heterogeneous group of countries mostly found in Africa, Asia,
Latin America, the Middle East, and Oceania. Developing markets are described as growing markets that are transitioning from a pre-market stage to the market stage of the mature Western capitalistic economy, through integrated and successfully structured reforms of markets, companies, and society (Maxfield & Schneider, 2019). One of the downsides of the rapidly developing and emerging markets is that they are notoriously volatile, as they run the risk of economic liberalization and transformation (Hoskisson et al., 2000). The markets present a tremendous opportunity for international corporations, as of their rapid growth. Some of the multinational companies that have managed to expand their operations to emerging markets include luxury car manufacturers BMW, Vodafone (one of the largest communication companies in the world), Volkswagen, the Standard Bank Group, General Electric, newcomers like Jumia among others. The opportunity is however not without the financial risk involved, as the fast pace the markets are moving in also provides structural uncertainty and an increased
3 risk of regulatory interference. For example, Leonidou (2004) states that having the right services and prices does not exempt global companies entering other countries from obstacles beyond their control.
Noteworthy, in a global and technology-driven world, most industries, and in particular the music industry has become more innovative in the manner in which music is relayed and accessed by consumers. From vinyl, cassettes, CDs, digital mp3s and now streaming services, the industry has generally gone through some radical changes that have been largely made possible by technological advancements. Music artists and labels have in turn been forced to follow the changes enabled by technological advancement. Currently, the music industry is in the middle of a cycle where streaming has become commoditized and music listeners expect to have access to all music in the world for free whenever they want and wherever they are
(Lindblom, 2015). Compared to the past where a person who bought a record owned that music for as long as the record itself was not broken or damaged, in today's world, the consumer of a streaming service only has access to the music as long as he or she pays for the subscription.
(Hiller & Walter 2017).
One entrepreneurial venture in the music streaming business that has been able to recognize the opportunity for growth through globalization, and has grown into a well-functioning company since its founding is Spotify, which is the case study company for the current study.
Having grown at a fast pace since its discovery in 2006, Spotify provides streaming services for consumers by enabling them to listen to an extensive library of music with millions of songs without downloading them. The company aims to be a part of the digital ecosystem by providing the best music service in the world and with the most users (Lindblom, 2015). Spotify is currently a thriving firm that has successfully gone through its initial entrepreneurial steps in the business cycle, and just like other more established organizations, is facing the problems
4 of expanding its business to international markets, especially those in developing countries
(Lozic, 2020). The company recently announced its plan to continue expanding its already broad market by having its streaming service accessible in at least 80 new markets and reach a total of one billion users. In its expansion efforts, the company launched its platform in Kenya in February 2021 (Spotify Newsroom, 2021). To sum up the changing dynamics in today’s business world, it is important to research how highly standardized multinational corporations like Spotify can adapt and modify their business strategies in developing countries. This study, therefore, aims to investigate how Spotify could successfully market itself in Kenya which is an emerging market and what challenges and adaptations Spotify would encounter.
1.2 Problem Discussion
One debate that has remained dominant in international marketing literature, concerns the globalization of markets and the extent that standardized multinational companies can standardize their marketing strategy and operations across national borders. The broad perspective of standardization insists on the homogenization of all business operations including products, markets, and consumer behavior, as well as the extensive standardization benefits. (Tregear, 2015). This is in comparison to the idea of total adaptation that emphasizes the insistent differences among countries and the competitive regulatory compulsion to customize business operations to fit individual markets. It is worth appreciating the fact that standardized multinational firms like Spotify mostly formulate their business operation strategies at their headquarters before rolling them out to global markets for implementation.
(Nair, 2014). In most cases, the parent company leads the multinational corporations depending on the perceived understanding of the parent company to the international markets (Tregear,
2015). Therefore, standardization faces resistance since there are bound to be differences
5 caused by local factors such as local styles of business management, skills, structure, shared values, and systems that may not be consistent with the parent organization.
Furthermore, since standardized companies form their global strategies through the parent company, they normally experience limited participation and input from local operations which can result in behavioral and systematic resistance of implementation (Zellner & Laumann,
2013). For instance, the political, technological, economic, cultural, social, and economic environment of Kenya is turbulent, thus posing a big challenge to the implementation of standardization strategy. Organizations from developing nations play a vital role in global business competition because most of the world’s fastest rising economies can be found in developing countries. Besides, considering that developing nations are usually culturally different compared to the developed ones, they give an excellent context for examining the generalizability of the existing knowledge in the standardization literature (Romero et al.,
2015).
Therefore, the research problem lies in the identification of standardization implementation challenges and establishing a wide strategic plan that takes into consideration both the international and local environmental factors that standardized multinational corporations like
Spotify are operating. The main research gap is whether current knowledge can be generalized to multinational corporations in other countries, and to a greater degree in the developing world.
Besides, standardization is a relatively new field of management, and apart from the lack of consensus about its dimensions, it has not been fully understood in comparison to total adaptation. There is a need to increase the existing knowledge, besides, current literature is more biased towards developed markets, further creating a gap in the rising economies and their distinctive needs (Zellner & Laumann, 2013). Subsequently, it is of great interest to
6 researchers, academia, and practitioners dealing with global marketing to understand the perspective of multinational corporations from developing nations regarding the standardization of marketing strategy. Therefore, this study investigates how a highly standardized company like Spotify can stay standardized but also adapt to a new developing market.
1.3 Purpose
Research has noted that standardized companies face a lot of resistance and challenges in an attempt to penetrate and successfully operate in new markets especially in developing markets.
Such resistance has been attributed to local business operating factors. Besides, owing to the fact that standardized companies develop their global strategies through their parent company, they are bound to face limited input and participation resulting in behavioral and systematic resistance of implementation. Since the business operation styles vary appreciably in different regions, an understanding of the political, cultural, legal systems, and linguistic barriers among other complexities related to global trade is vital for commercial success. (Birnik & Bowman,
2007). The research gap thus arises where the existing knowledge on the standardization of global markets may not be effective for countries in the developing world.
Studies on this topic were mainly conducted from the perspective of developed nations, and while a few studies tackled this issue in the context of developing markets, the issues tackled were viewed from the perspective of firms in the United States who were operating in those markets (Birnik & Bowman, 2007). The purpose of this study is therefore to determine how a highly standardized multinational corporation, in particular Spotify, can adapt in Kenya, a key developing country in the African market, as well as identify the potential challenges faced by
7 such a corporation in implementing global strategies and the strategies of responding to arising global strategy implementation challenges. The study will be performed by utilizing a mixed- method approach. Firstly, by gathering data via an interview from a Spotify employee that will be used to build a case story about Spotify as a company in Sweden. A survey will then be sent out to Kenyan consumers, asking about their perceptions of Spotify. As a minor extension, additional data will be gathered about Spotify’s marketing practices in Kenya.
All the data gathered will then be discussed and analyzed to reach a conclusion of how Spotify has adapted to this new market. Considering the current shortage of studies on standardization in developing economies, the findings from this study will hopefully add to the literature and increase the understanding of the conflict between standardized multinational corporations’ decisions and difficulties experienced at the local company implementation level. Such insight will enable Spotify and similar organizations to formulate implementable global strategies by acquiring a better understanding of the business operating environment in Kenya and other developing markets. Besides, governments will benefit from the study by gaining more insight into local business environmental challenges for improvements of policy framework to improve foreign direct investment.
1.4 Research Questions
What challenges could Spotify encounter when marketing its services in the developing market of Kenya?
How can Spotify adapt to the Kenyan market?
8
2. Theories
2.1 Marketing Styles
According to Kotler (1972), marketing is a customer orientation aimed at generating customer satisfaction and long run consumer welfare as the key to satisfying organizational goals.
Competitive pricing in marketing is part of the value a brand can offer, however, the existing market price is a determinant of what consumers think is a competitive and attractive price
(Janiszewski & Lichtenstein 1999). In such a global environment, multinational corporations have been forced to develop their marketing strategy around the different global marketing dimensions, mainly standardization or adaptation of marketing strategy across regions
(Laroche, et al., 2001).
Considering the current digital age, companies and in particular multinational corporations in the music streaming industry have adopted more digital marketing strategies including email marketing, analytics, and reporting, paid advertising, social media, blogs, website design, and search engine optimization. (Charlesworth, 2014). Email marketing is one of the most effective digital marketing strategies for sending emails to consumers and prospects. (Charlesworth,
2014). Charlesworth (2014) notes that this method is effective in converting one-time buyers into loyal customers and prospects into customers. Social media marketing is another common marketing strategy where brands utilize social media and social networks to market themselves.
This method enables companies to reach and engage existing customers and new ones while enabling them to promote their mission and culture. (Charlesworth, 2014). Social media pages have proven to be successful in creating a desirable relationship between the consumer and the company. This could for example be seen in the brand awareness of the consumers who choose to interact with the company’s social media pages. (Hutter et al. 2013).
9
Social media influencers have become an impactful force in the marketing field, brands are collaborating to utilize the influencers online audience and credibility to communicate to bigger markets and attract consumers. (Chang, Wang & Kuo, 2020). Website marketing is another marketing strategy used by companies and involves the strategic promotion of a website to attract relevant traffic. Another popular marketing strategy is paid advertising which refers to any strategy used by a brand to target potential consumers based on their interest, intention to buy, or previous interactions with the brand. Brands also utilize search engine optimization marketing strategies. This method involves the planning, outlining, and implementation of processes designed to improve search engine rankings in order to get more organic traffic.
Finally, analytics and reporting in digital marketing involve the translation of consumer traits into actionable business data. With the increased tendency of digital marketing among consumers, companies utilized digital analytics tools to examine the numerous channels that their consumers interact with and identify more revenue opportunities for the business.
(Chaffey & Ellis-Chadwick, 2019).
2.2 Brand Communication
A company’s brand is a vital part of its marketing strategy. However, the premise of brand communication in business standardization has not received its deserved attention in the early literature. The main goal of a standardized brand is to give the potential global consumer an idea of the products or services that the company offers. Companies aim to ensure the distinctiveness of their brand to make it easily recognizable to the global market. As such, brand communication refers to how a company communicates to or with the end customer. On one hand, brand communication is indirect communication and, on the other hand, is either one-on-one or direct communication. The latter description of brand communication mainly
10 focuses on the direct impact that brand communication has on the prevailing buying habits of consumers and is mainly focused on transactions. (Low & Lamb, 2000; Sahin, Zehir, &
Kitapci., 2011).
Since branding is to a large extent based on value, the purpose of brand communication is to influence the consumer’s perception of value (Holm, 2006). This means that brand communication plays a significant function in creating brand awareness and positive brand perception, which is a precondition of brand loyalty, and thus a vital factor in developing brand strategy for standardized companies. Apart from creating brand recognition, the goal of such tools is also to communicate the values and standards that the company strives to live by. (Sahin et al. 2011) The success of this type of communication and its ability to influence consumer brand satisfaction has been portrayed by a number of past studies (Zehir Sahin, & Kitapci.,
Özşahin., 2011; Sahin et al., 2011).
According to Alashban et al. (2002), communication standardization means that a service or product is communicated using a universal advertising approach: for instance, having a similar brand message communicated across international markets. Furthermore, when using a standardized communication approach, a company can employ a similar communications approach across borders, eventually cutting costs. However, it might be necessary to have language alterations in order to reach a wider audience. In turn, Alashban et al. (2002), point out that international advertising adaptation refers to the extent to which a given communication program varies across global markets. This approach would instead employ different campaigns across global markets and a contingency approach shows that there are different adaptation levels where adaptation is adjusted according to a given situation
(Alashban et al., 2002).
11
According to Melin's (1999) argument, the quantity of communication standardization is vital in creating worthy attention, a position in the minds of consumers, and increasing the market share globally. However, when it comes to brand development through communication, quality is also important. Communication quality in this context is the ability of a standardized company to develop a unique and distinctive brand communication strategy. (Melin, 1999).
Brand communication strategies aimed at developing global brands need to enhance the competitive advantage of the brand, and the brand message should be consistent in every region to create a synergy effect. All the thematic, verbal, audio, and visual elements employed in brand communication should be connected to create an integrated unit, which if correctly handled can create a competitive advantage for standardized companies against the local ones.
While a single element of brand communication might be prominent as compared to the others, all the elements provide the brand with an added value (Melin, 1999).
Brand communication consists of a myriad of channels including advertisements, visual merchandising, and public relations (Aaker & Joachimsthaler, 2000). For instance, the internet has proved to be a powerful promotional tool to directly reach consumers around the globe and is therefore a powerful brand-building tool for standardized companies (Aaker &
Joachimsthaler, 2000). Besides, standardized companies are provided with the chance to supply their consumers with current brand information through the internet. Advertising is also another strong tool of communication where ad campaigns are created to portray and communicate the brand personality (Jackson & Shaw, 2009). Social media pages have also been effective in creating a desirable relationship between the company and its consumers (Zehir et al., 2011).
The goal of such types of communication is diverse. In particular, they are vital for enhancing brand legitimacy and brand perception, which are vital to brand communication as discussed below (Hutter et al., 2013).
12
2.2.1 Brand Legitimacy
Brand communication has been widely reported as a great enhancer of brand legitimacy (Kates,
2004). Despite globalization making it flexible for more multinational organizations to solve business standardization and adaptation issues, their long-term capacity to deliver is conditioned on their legitimacy in the eyes of their potential consumers (Buchanan & Keohane,
2006). Brand legitimacy refers to the generalized assumption or perception that the actions of a given business brand are desirable, appropriate or proper within some socially constructed system of values, norms, beliefs, and definitions (Zehir et al., 2011). In a general context, the process of brand legitimacy occurs when an organization is faced with problems of credibility
(Zehir et al., 2011).
Brand legitimacy influences whether a brand remains relevant at the focal stages for the states’ efforts to coordinate policies and solve issues. In a global market characterized by forum shopping and turf battles between organizations, legitimacy has become a crucial resource for multinational firms intending to fend off unilateral action and multilateral competitors (Zelli,
2018). Besides, legitimacy impacts the capacity of standardized multinational organizations to integrate their rules and norms in new markets. When such organizations suffer from poor legitimacies among consumers and elites, it becomes more difficult to gain support from governments and relevant business entities to secure the ratification of new agreements
(Sommerer & Agne, 2018). Furthermore, brand legitimacy impacts the ability of multinational organizations to secure compliance with global business norms and rules. As such brand legitimacy presents a better and much cheaper option for securing compliance than coercion.
The legitimacy of multinational brands further speaks to vital normative concerns regarding its global operations and governance. Brands that lack legitimacy in the global market suffer a major democratic deficit in their global operations and governance (Sommerer & Agne, 2018).
13
Brand legitimacy is based on the brand’s core values, and which are a part of the product attributes and brand identity that a company communicated to its consumers. Therefore, it is vital for multinational corporations to communicate core values to their consumers: failure to do so might lead to the loss of benefits that a company holds on the consumers.
2.2.2 Brand Perception
Literature has consistently placed positive brand perception as the most important goals of brand communication for standardized companies (Keller & Lehmann, 2006). As such, developing a strong brand communication has been widely associated with the development of a good brand relationship with consumers thus contributing to strong brand perception and attitude that is positive and that the consumers associate with satisfaction and trust (Runyan &
Droge, 2008; Sahin et al., 2011). Smudde and Courtright (2011), contend that brand communication is vital to companies and their stakeholders. What a company communicates and the manner in which the communication is handled is vital since stakeholders’ perceptions are interconnected. Stakeholders learn from the narratives being told by the company. This is not only limited to what is said from the performance reports but also how as demonstrated in the style, the tone, the values of the company, and its stakeholders' interactions. (Smudde &
Courtright, 2011).
According to Hoeffler & Keller (2002), brand perception is related to the brand-consumer relationship, therefore, achieving a positive consumer perception is the final step in establishing a brand asset. This is the stage in the branding process where consumers engage in brand loyalty behaviors, brand immersion, active participation and community spirit (Batra, Ahuvia &
Bagozzi, 2012). Past studies have shown that a positive brand perception boosts brand loyalty
(Park & Maclnnis, 2006). According to an argument posed by Aggarwal (2004), brand
14 perception necessarily impacts the financial exchange and performance of a brand, therefore, differentiating it from interpersonal relationships. Consumers who perceive a brand positively usually form a unilateral effective relationship with the brand (Aggarwal, 2004). Therefore, the consequent goal of any standardized brand is to establish a positive brand perception because of its potential of promoting consumer brand loyalty (Park & Maclnnis, 2006).
Past findings have revealed that the perceived brand quality does not only positively influence brand loyalty but also customer commitment and satisfaction (Pavlou, Liang & Xue, 2007).
The perceived brand quality drives consumers to develop trust and identify more with a brand.
Besides, it is closely related to consumer satisfaction since people who hold higher quality perceptions about a brand further exhibit greater consumer satisfaction (Pavlou et al., 2007). If consumers have a positive brand perception, for example, that a certain brand he or she has confidence in satisfies his or her desire, they are willing to rely on the brand he or she has confidence in the benefits (Carroll and Ahuvia, 2006). According to Pavlou et al. (2007), positive brand perception can facilitate trust that hence allows consumers to rely on the ability of the brand to perform its stated function. The extant marketing literature reveals that trust is more prominent in situations of uncertainty. Thus, how a brand is perceived has an effect on how certain consumers feel towards the brand (Pavlou et al., 2007).
2.3 Country Characteristics
2.3.1 Institutions
North (1990) described institutions by comparing them to rules of a game in society where they help explain the interactions between people and the incentives that drive their behavior. A more current view describes institutions as shared systems that consist of written and unwritten
15 rules that help structure the behavior, expectations and social interactions within a given community (Hodgson, 2015). Institutions help people within a society by giving them structure and order in which they can act according to the expectations set by the people within this group. This allows them to act in a way that is efficient within the given context since the perception and understanding are implicitly shared among the people, and thus, does not need to be explained. (David, 1994).
Institutions also allow people to act in cooperative ways without needing to be told to do so, since the norms of the institution help guide the appropriate behavior. This structure, created by the institutions, provides a familiar structure for the people that they can rely on with ease and spare them cognitive efforts. (Hall & Taylor, 1996). However, this makes the changing of an institution that much harder to influence. Since institutions are so heavily relied on, the altercation of them is very difficult and occurs slowly under longer periods of time, even if the change is more efficient and more beneficial to the people. (Pierson, 2000). Institutions consist of three different systems, regulative systems, normative systems and cultural-cognitive systems (Scott, 2008). These three elements together contribute to what makes an institution and the social structures that they involve. By examining institutions from the different views of these elements, different interpretations and understanding can be made of how institutions function (Scott, 2008). To fully grasp the concept of institutions each individual element will be examined individually.
The first element, regulative systems, can be explained as formal rules. These rules are set in place in an attempt to shape desired behavior. The behavior is then monitored by an authority with the capabilities of enforcing this behavior, either by rewarding the behavior if it aligns with the rules, or by punishment if the behavior violates the set rules. Through these sanctions, future behavior can be conformed to the established rules. (Scott, 2008). The rules established
16 in regulative systems are generally written such as laws, where the police and courts act as the authority that executes judgment when violated. Therefore, the political structure and jurisdiction of a country are large parts of what is included in the regulative systems. However, there can also occur rules that are unwritten that still underlie and supplement written rules in some way. In the case that these unwritten codes of conduct were to be disrupted, the acting authority would be other people who would then punish the offender in the form of social shaming or shunning. (Scott, 2008). The way that the rules influence behavior can be explained by three different aspects.
The first one is obligation, which explains to what extent people need to follow the rules due to the fact that their behavior is being monitored and can be judged by others. The second one is precision, which explains the extent of how specified the rules are so that the required conduct can be executed without uncertainties. The third and last one is delegation, which explains to what extent the authorities are able to execute accurate punishment in an attempt to uphold the rules. (Scott, 2008). Scott (2008) also states that regulative systems show high values concerning these three aspects of rules compared to the other elements of institutions, normative systems seem to show lower values when it comes to these three aspects of rules.
Scott (2008) also mentions how the logic behind regulative systems, and the reason for the creation of laws and rules all comes down to individual gain. People believe that the rules they have created will allow them to reap rewards if they follow them and also avoid unnecessary punishment. Because of this, regulative systems are based upon rational choices made by individuals within the institution. (Scott, 2008).
The second element of institutions is referred to as normative systems and just like regulative systems, it consists of different sets of rules. However, these rules differ from those of the regulative systems in the sense that they are more informal. This means that they act more as
17 codes of which to behave rather than strict rules and laws. (Freil, 2017). Normative systems consist of different forms of values and norms. Values concerning institutions are being described by Scott (2008) as “conceptions of the preferred or the desirable together with the construction of standards to which existing structures or behaviors can be compared and assessed”. In other words, values are the force that motivates individual behavior towards something that is desired. Norms on the other hand are defined as the entity that specify the way things should be done and define the rightful means to pursue something of value (Scott,
2008).
Blake and Davis (1964) describe normative systems as the structures that help define the goals or objectives of the situation. Whether it be winning a game or making a profit for a business.
Also, normative systems include how these goals and objectives are to be achieved. For instance, if the goal is to win the game, normative systems define the rules that are necessary to follow concerning this game, and if the objective is to earn a profit through means of business, normative rules define fair business practices. (Blake and Davis, 1964). There are certain values and norms that can be applied to all members within a society, however, there are also certain values and norms that are only applicable to certain individuals with distinct positions. This is referred to as roles, and the people with these roles have different expectations set upon them of what their goals are and the way they should behave when working towards them. These expectations are not mere thoughts of appropriate behavior but rather, the way a role should behave according to the normative expectations within the institution. Some professions for example, are able to act in certain ways that would otherwise be unacceptable, due to the fact that they possess the role connected to that profession. An example of this could be a doctor who is able to ask very private questions about a person that would be deemed as inappropriate, would they not possess their given role. (Blau & Scott, 2003).
18
Casile and Davis-Blake (2002) describe the difference between regulative and normative systems, as normative systems being more guided towards self-interest where the individual is deciding which option is most beneficial to them. While normative systems on the other hand reflect the thought process of how one should behave in regard to the situation and how this is affected by their given role. The third element of institutions is the cultural-cognitive systems.
These systems can be explained as the behavior performed by people based on the environment surrounding them. Everyone interprets the world differently and depending on how the world is interpreted will affect how people behave. Cultural-cognitive systems are a structure where people interpret the world similar to each other within the system. (D’Andrade, 1984).
Different stimuli in the environment such as symbols, words, signs and gestures are examples of elements that can be interpreted differently by different individuals and cultures. Languages are a major difference between cultures not only by the words used but also sometimes the letters or symbols they consist of as well. Even the same language can have different meanings for the same word depending on where it is spoken. The same can be said of gestures where the same gesture may have different meanings depending on the culture and the surrounding context. Even the meaning of colors can differ vastly between different cultures. (Sewell,
2005). How these stimuli are interpreted will then affect the outcome of a person’s behavior regarding that stimuli. People will experience a stimulus from their surrounding environment and then process it internally according to the cognitive structures created around it that ultimately cultivates into a behavior that matches the beliefs of the cultural-cognitive system.
(Weber, 1968). However, every individual interprets the world subjectively and even if individuals of the same culture often share cognitive processes by being part of the same institution, ultimately every individual is different, actions and beliefs can therefore still differ a lot from individuals in the same institution. (Fiol & O’Connor, 2002). The same can be said
19 of the culture of countries. Every individual is different but from a general perspective there is an overall pattern to the culture that exists within a nation. These national cultures can be broken down into dimensions.
2.3.2 Hofstede’s National Culture Dimensions
Hofstede’s national culture dimensions are a framework which categorizes the culture of a specific country. These dimensions can then be used to better understand the culture of a country as a whole, be it how people within the country behave or how they can be compared to other countries. This can be a useful tool for companies when operating in markets in different countries. There are a total of six different dimensions that are rated on a scale from
0 to 100 where 100 is a very high correspondence of that dimension. The six dimensions are power distance, individualism/collectivism, masculinity/femininity, uncertainty avoidance, long/short term orientation and indulgence/restraint. (De Mooij & Hofstede, 2010). However, for this study, the last two dimensions of long/short term orientation and indulgence/restraint will not be covered nor used due to the fact that they have yet to be measured for Kenya and can therefore not be applied in this study.
Power distance is defined as to what extent the power in organizations and in society is distributed unequally and accepted. Not only by the people in power but also by those who are less powerful accept this inequality in power. This means that both leaders and followers agree upon the distribution of power being uneven. For a country with large power distance, a large inequality would be accepted, while a country with small power distance would want people to have more equal amounts of power. One aspect of large powers distance includes how parents teach their children obedience and children are expected to behave according to what they are told. On the contrary, small power distance cultures differ from these aspects in the
20 sense that children are being treated more like equals by their parents rather than blindly following their demands. (Hofstede, 2011).
Individualism and its opposite, collectivism, is used to describe the state of a society when it comes to the integration of groups. In an individualistic culture, individuals are independent from each other and mainly focus on oneself and the immediate family. In collectivistic cultures on the other hand, people are born and integrated into strong and cohesive in-groups which includes extended families which share a strong bond of conformity and might even oppose other in-groups. Some of the characteristics for individualistic cultures include how people are
“I” conscious and value the right of privacy as well as speaking one’s mind when surrounded by other people. These characteristics differ from those of collectivistic cultures. These do instead have a “We” consciousness and put high emphasis on belonging with others as well as constantly maintaining a sense of harmony within the group, free from conflict. (Hofstede,
2011).
Masculinity and its opposite femininity, help explain the difference in values held by the different genders as well as the view of life and what is important. For masculinity, competition is highly valued, and it is important to be successful and be the best at what you do while in a feministic culture there is more emphasis on quality of life and it is more important to enjoy what you do than being the best. In a masculine culture there are large differences in emotional and social roles between the genders. Men should strive for success and some women might as well. Work is seen as more important than family and there is admiration for the strong.
Comparing this to a feministic culture, there are small differences in emotional and social roles between the genders and men and women should both be modest and caring people. One should
21 strive to find balance between family and work and there should be sympathy shown for the weak. (Hofstede, 2011).
The future is unknown and uncertain, some cultures feel more threatened by this than others.
This dimension helps to explain to what extent the people of the culture feel either comfortable or threatened by the future and how they prepare for unknown occurrences. Cultures with strong uncertainty avoidance build their societies around strict rules and norms in order to try and control the future. Weak uncertainty avoidance cultures do not worry to the same extent and take every day as it comes and live more lax and stress free lives. Strong uncertainty avoidance cultures can be characterized by the constant feeling that the future is threatening and brings with it higher levels of stress and anxiety which leads to lower scores in mental well-being and overall health. Weak uncertainty avoidance cultures on the other hand have a different outlook on life and accept the uncertainties of the future and embrace everyday as it comes which leads to lower levels of stress and less anxiety, which has a positive impact on their mental health and overall well-being. (Hofstede, 2011).
22
3. Methodology
3.1 Research Design
The motivation behind this study is to investigate and get a better understanding of how highly standardized companies can adapt when entering a developing market from a previously developed market. The knowledge surrounding adaptation into developing markets is lacking and mostly comes from an American business perspective. There are many aspects of culture and infrastructure that vastly differ from developing markets, making it difficult to predict how a company may need to adapt when entering such markets. Therefore, it is of high interest to add to the knowledge concerning this topic and make the approach to adaptation clearer. This research paper seeks to pursue this goal of which the following research design has been applied.
The working design for this thesis is a mixed method. First an interview was conducted qualitatively to investigate the general operations of Spotify. Later on, a survey was conducted to find descriptives on Kenyan consumers and the Kenyan consumer environment. These two methods were then used to build a case story about Spotify as a company and the new market of Kenya. Secondly an abductive study was conducted to find out the research gap and allow the researcher to freely alternate between theory and empirical data. The approach followed
Denzin’s (2017) multiple triangulation approach that encourages the use of more than one method to collect data from participants with varied expertise. This triangulation model in research is vital in mitigating weaknesses that are prone to single methodology research designs.
23
First, it is important to consider the methodological facet of deductive inductive and abductive studies. In brief, deductive studies present general ideas on the correlation between practice and theory. Depending on existing facts on a given field of theory, different hypotheses can be developed and examined through a systematic empirical study (Bell, Bryman, & Harley, 2018).
Contrarily, inductive studies relate empirical results with a given theory and findings from the given field. In recap, while a deductive design exploits an existing theory to direct and develop results and observations, an inductive research creates a new theory using findings and observations. Most inductive studies do not create new theories but instead use them to develop a study background. In most cases, the researcher is forced to gather more data through interviews and surveys in order to determine the significance of a given theory. (Bell et al.,
2018). According to (Blaikie, 2009; Bryman, 2012; Dubois & Gadde, 2002; Saunders, Lewis,
& Thornhill 2012), an abductive approach is the middle ground between the polarizing deductive and inductive studies since it enables researchers to contribute to theory as it entails comparing existing theory to data. Aliseda (2007) furthermore describes abduction as the logical judgement from how an observation has been explained.
Secondly, it is vital to discuss the different strategies involved in conducting a quantitative or qualitative study. According to Bell et al. (2018), it is vital to make this distinction because it relates to the varied approaches or methods used to classify business research. To explain this succinctly but clearly, quantitative study involves a research method that concentrates on quantifying collected and analyzed data. Qualitative study, on the other hand, concentrates on the words and behaviors in the collection and analysis of data, as opposed to quantification
(Bell et al, 2018). Notably, both methods focus on creating further understanding and knowledge about the society and peoples’ behavior. However, qualitative research is in particular concerned with how the researcher interprets given information according to
24 motives, frames of reference, context and social processes. Gog (2015) points out that qualitative data cannot be relayed in numbers or figures.
Bell et al. (2018) posit that the most important aspect to consider when choosing between a qualitative or quantitative study is the purpose of the study. In the case of the current study, the purpose is to investigate how highly standardized companies can adapt when transitioning from a developed market to a developing market, using Spotify in Kenya as an example. Therefore, it is impractical to carry out the current study using a quantitative method because the study topic touches on an intangible subject. For this reason, the study utilized qualitative research since the data was interpreted using a theoretical approach to aid in identifying the motive, context and social process. A quantitative tool in the form of a survey has however been utilized as well as a method of finding descriptives of the Kenyan consumers and the Kenyan market environment.
According to Pluye & Hong (2014), mixed methods research is a distinctive research approach that has been used by researchers as a way to integrate different research methods. The reason for taking a mixed method approach in this study, is because it was necessary to gain the understanding of both Spotify as a company and the Kenyan market. Since these sources of information are different in many regards, it was necessary to apply different method approaches when gathering data from the two sources. The choice was then made to utilize an interview with an employee from Spotify, to gain a deep and thorough understanding of the inner workings of the company which was ultimately achieved through this interview.
Additionally, in order to understand the new consumer environment of Kenya and gain knowledge of the potential consumer perceptions of Spotify in Kenya, a method was required where a large number of consumers from far away could be reached. This led to the conclusion
25 of using an online survey to investigate the preferences and perceptions towards Spotify and their actions in Kenya. This is the reasoning for this study being a mixed method between an interview and an online survey.
3.2 Research Philosophy The research philosophy behind this research follows the epistemological position of interpretivism. Interpretivism stands in contrast to positivism and can be explained simply as the belief that research findings' meaningfulness depends on the researcher’s interpretation of the findings (Levy, 2006). Positivism on the other hand, claims that the findings should be something that can be experienced directly and is objective in nature, through the use of a scientific method (Comte, 1880). In addition to these philosophies, there is also critical realism and constructivism. Critical realism is the belief that the world consists of the real world and the observable world, where only the observable world can be understood by human perception and theories (Archer, 1998). As for constructionism, it is the theory that states that people learn by taking in information that then gets constructed into knowledge based on that person’s previous experience which leads to people possessing different knowledge and therefore different representations of the world (Burr, 2015).
The reason for using interpretivism in this study is due to the fact that this study investigates several social aspects regarding people and their intuitions, and according to Bryman & Bell
(2017), interpretivism is better suited for social sciences since they cannot be explained through natural science methods. This study also uses an abductive research approach. This type of approach is described by Bryman & Bell (2017) as a way of finding the most suitable explanation to the occurrence of something puzzling or surprising. In this study, that would be the research gap of how a highly standardized company could adapt when entering a developing
26 market from a developed market. Therefore, this approach is fitting for this study since this research paper is trying to find suitable explanations to this research gap where different aspects are being investigated, such as perceptions of consumers and adaptations already made by
Spotify in Kenya.
3.3 Data Collection This study is conducted through a mixed method approach. The data collected consists of primary data in the form of an interview to get a deep understanding of the company. In addition, a survey approach was also utilized to understand the context of the consumer environment in Kenya. Various secondary data was also collected to further expand the knowledge regarding the subject of the study.
3.3.1 Primary Data Primary data is used to collect information about a specific topic that is connected to the research question or where secondary data is not enough or does not cover the specific research area. (Hox & Boeije, 2005). In this study, both an interview and a survey were used as means of gathering primary data. An interview was conducted with an employee of the company
Spotify which became the foundation of the case story presented in findings where Spotify as a company is explained. According to Rosenthal (2016), in-depth interviews are conducted to get a rich understanding of the participants' experiences, feelings, opinions, perceptions, and overall knowledge of the given research topic, through the use of open-ended questions. The reason for conducting an interview was so that a case story could be built, based on detailed and broad information, provided by the company itself.
27
When creating the questions used in the interview thought was put into making them exploratory and open ended. The reason for this is according to Bryman & Bell (2017), a way to ask questions without any bias and allow the person in the interview to fully explain their response without interference from the interviewer. Also, since the interviewee is not limited by the question being too narrow, this allows them to share information that might be of use that the interviewer had not thought to ask about previously.
There was a total of 12 questions created for the interview based on the three theory sections used in this study. The questions were created to try and build a picture of Spotify as a company and are therefore quite general and asks about the perspective of Spotify. The first set of questions were based on brand communication and asks about the self-perceived image of the company as well as their product and adaptation to different consumers. The second set of questions focuses on country characteristics and different ways Spotify might need to adapt when entering foreign markets. The third set of questions are based on the theory of marketing styles and focuses on which channels Spotify use when communicating with their consumers and which ones they believe are the most effective ones.
28
Table 1
The questions were sent to the interviewee one day before the interview, to give them time to go through all of the questions and organize their thoughts, so that they would be better prepared for the interview the coming day (Kara, 2015). The interview was held in Zoom with two interviewers and one interviewee. Video cameras were on to make it possible for the involved parties to see each other when communicating. The Zoom call was recorded with permission by the interviewee and the interviewers took turns asking questions and follow up
29 questions to the interviewee. The time it took to conduct the interview is approximately one hour which then got transcribed into text (see appendix).
The second source of primary data gathered in this study comes from a survey. Surveys are used in order to get a large number of answers from respondents compared to the use of interviews and will lead to an understanding of a group of people rather than a more detailed understanding from one person (Bryman & Bell, 2017). This survey was sent to Kenyan consumers in order to gather their perceptions about music streaming services and Spotify specifically. The survey is made up of 23 questions (see appendix) divided into different sections.
The first question in the survey is a control question, which is the question about whether the respondent lives in Kenya or not. This is used to measure if the respondent is a Kenyan consumer or not. Even if a respondent might come from Kenya, if they no longer live in Kenya, they are no longer Kenyan consumers. The same can be said for the people who are not Kenyan but still live in Kenya, they will be seen as Kenyan consumers. If the respondent answers no to this question, they will be asked to send in their survey without answering any further questions. This way the survey is only answered by Kenyan consumers. This meant that there were a lot of respondents that got taken out of the survey since they were not seen as Kenyan consumers. The reason for non-Kenyan consumers being sent the survey is that the survey was distributed through social media where respondents were also encouraged to keep spreading the survey. This in turn led to the survey being spread to people not living in Kenya which is the reason for the large loss of respondents after the first question in the survey.
30
The following six questions, question 2-7, are all questions that are in some form connected to the theories of country characteristics. Question 2 asks the respondent of their age which can be related to institutions of different age groups and how they might behave differently. The next question, question 3, asks about their gender which can also be connected to different institutions around different gender groups but also to the level of masculinity in Kenya. The following question is number 4 and asks the consumer where in Kenya they live, which can, among others, be connected to the level of power distance in Kenya where the location in which they live can have an impact on their role in society. Question 5 asks if they at all use online streaming services which can be connected to institutional theory and how it affects behaviors such as the use of streaming services. The next two questions, 6 and 7, ask about different preferences in payment options and which kind of devices they use. These questions were asked to see what the norms for these aspects which are based on institutional theory.
The next six questions in the survey, 8-13, are questions about marketing styles and how these affect the consumers. The first question in this section, question 8, asks the consumer through which channels they receive information from companies which links back to the theory of different marketing styles. Question 9 to 12 then asks which channels they use the most, which one they believe to be the most effective on them and which channel they trust the most and least. All of which are also connected to the theory of marketing styles. The last question in this section, question 13, asks the consumers if influencers play a helping role in conveying information from companies towards the consumers. This question is meant to find out the effect of influencers specifically, since they can influence in several different channels. This is based on the theory of using influencers as a way of marketing.
31
After the section about marketing styles comes the section about brand communication which includes question 14 to 17. These questions cover aspects about brand communication and are based on said theory. Question 14 and 15 are both questions about brand trust which relates back to the theory of brand legitimacy. Question 14 asks about the importance of brand trust while 15 asks about the trust for international brands entering Kenya, which is a category
Spotify falls under. The next question is question 16 which asks about which aspects make consumers listen to a brand. This question is based on different aspects of brand communication theory where every answer is a different form of communicating and strengthening the brand.
Question 17 is the last question in this specific section and asks the consumers if the brand takes responsibility in society. This question is asked to confirm if this aspect is of importance for the brand to build a relationship with the consumers, based on the theory of brand consumer relationships.
Finally, the last six questions, 18 to 23, are questions that are Spotify specific. These questions ask about the consumers’ perception of Spotify which is why they are connected to the theory of brand perception. The first question of this section, question 18, is more of a general question where the respondents are asked if they stream music online. This is used to see if they are a potential consumer for Spotify. The next two questions, 19 and 20, ask if they first, have heard about Spotify being in Kenya, and secondly if they at all know about Spotify. If they answered
No on question 20, do you know what Spotify is, they get asked to send in the survey without answering the remaining questions. The reason for this is that they would not have been able to answer the last three questions if they did not know about Spotify. The last three questions of the survey, 21, 22 and 23, asked the consumers if they use Spotify, trust Spotify and if they have seen any advertisements from Spotify. These questions are used to measure their overall perception of Spotify in regard to the theory of brand perception.
32
The survey was shared on one of the author’s social media platforms since they have a large gathering of Kenyan followers. One platform was Facebook where to survey had the potential to reach 1467 respondents. How many the survey reached is however not possible to measure.
The second platform was Instagram with 14 400 potential respondents, where 6 300 were reached by the survey. Out of all of these there were 267 responses to the survey where 153 were Kenyan consumers.
3.3.2 Secondary Data
Secondary data are the opposite of primary data in the sense that it is data that is not gathered by the researchers themselves. According to Vartanian (2010) secondary data is a good way to be economical with one's resources, since there is no need to research topics and collect information which has already been researched. By utilizing secondary data, a larger scope of data can be accessed compared to sticking with strictly primary data. In this study secondary data was used to build the theory section of this research paper and also to add information about the people in Kenya as well as Spotify’s actions in Kenya. The first part of the collected secondary data is a literature review where existing theories were examined and then added to this research paper. Bryman & Bell (2017) states that a literature review is necessary to conduct in order to get the understanding of what has already been discovered and reduce unnecessary data gathering. The method used to find this data was to utilize different databases and search for relevant research.
Electronic databases are the primary source for the collection of secondary data in this study since the amount of information that can be accessed through the internet is invaluable when it comes to academic journals and articles (Bryman & Bell, 2017). The specific databases used
33 were ABI/INFORM Global, Emerald Insights and Google Scholar. The first two aforementioned databases were used since they provide a large selection of peer reviewed articles published in business journals while Google Scholar was used to find a wider array of different articles. The databases were accessed through Mälardalen University which granted permission to most articles which would otherwise have had limited access. Different search words were used to narrow down the number of articles and find the most relevant ones. The search words most used were “Brand communication”, “Brand legitimacy”, “Brand perception”, “Marketing styles”, “Market communication”, “Institutions” and “Hofstede”.
These search terms allowed for adequate findings in regard to the theory section in this study.
Secondary data was also used to build the case story of the history and evolution of Spotify, as well as the section of Spotify in the Kenyan market. When creating the case story of the history and evolution of Spotify, the main source of information comes from the official Spotify website itself as well as different press releases. Different academic articles were also used when writing about the history of Spotify as it was used to explain past environments in which
Spotify operated within as well as some of Spotify’s own strategic actions. Additional secondary data was also collected when describing the Kenyan environment and some of
Spotify’s activities there. Several different websites were used to gain information, such as news articles, blog posts, governmental websites and the Kenyan website for Spotify. All these sources contributed to building the case story of the Kenyan environment and Spotify’s place within it. Lastly, the website of Hofstede insights was used as a tool to measure the scores of
Kenya in regard to its cultural dimensions and how this can describe the people of Kenya.
34
3.4 Data Analysis
When the data had been collected, it was first processed through various methods. The interview was processed first where the recording was utilized in order to transcribe the whole interview into text so that it could later on be viewed in its entirety. This text was then decoded and interpreted, where the most important and relevant information was compiled, which then led into the creation of the contemporary case story. The secondary data about the evolution and history of Spotify was also included into the first part of the case story. After this, the survey was interpreted, and the responses were described in the findings section. When the findings section was complete, a comparative analysis was made. The main themes of the survey responses were being compared and analyzed which was in turn used in a comparative analysis with the case story. Different aspects between the survey and the case story were compared to find similarities and discrepancies. The reflections of these comparisons were then connected back to the theories in a theoretical discussion.
3.5 Triangulation
Triangulation is the implication of using different methods and sources of data in regard to the same topic when researching social phenomena. This is a strategy for testing the validity of the collected data from the different used methods to see if there are any similarities between the individual sources. Different forms of triangulation could be to use multiple observers, multiple theoretical perspectives, multiple data sources or multiple methodologies. (Bryman & Bell,
2017). Patton (1999) divides triangulation into four types of triangulation, method triangulation, investigator triangulation, theory triangulation and data source triangulation. The first type, method triangulation means, to utilize different methods such as interviews,
35 observations or surveys when researching the same phenomena and then see if these methods all find any similarities (Polit & Beck, 2012). The second mentioned type is investigator triangulation. This is according to Denzin (1978) when there is more than one researcher who works together in the study but gathers information separately to later be compared to each other. This allows for different perspectives towards the same phenomena.
The third type is theory triangulation and just like the name might suggest it is the triangulation done by comparing different theories, but also hypotheses, towards the same research phenomena to support connections between the findings (Ma & Northwich, 2007). The fourth and final type of triangulation is data source triangulation which is used to compare data that has been collected from several different sources, for instance by interviewing different people or different groups of people (Patton, 1999). This study utilizes data source triangulation type in validating the findings. This study gathers data through a mixed method in the forms of interview, survey and secondary data. Therefore, one might suspect that a method triangulation is suitable. However, what is of importance for this study is not particularly how these findings were obtained but rather what was obtained, and therefore a data source triangulation is suitable for this study. The findings between the interview, the survey and the secondary data is being triangulated in this research paper in order to find connections and improve on its validity.
3.6 Validity & Reliability To do this study, the search for information on the internet was used. According to Hewson, &
Laurent (2008) internet-mediated research involves the gathering of novel, original data to be subjected to analysis in order to provide new evidence in relation to a particular research question. This allowed a broad access to information that is used to conduct this study. This is in accordance with Coomber (1997), who says that the use of the internet as a medium for conducting both primary and secondary research is relatively new but is demanding increasing
36 attention across a diverse range of academic disciplines, as more and more researchers, students, and professionals begin to make use of the approach. (Hewson et al., 2003).
Coomber (1997) adds that secondary internet research involves techniques and procedures for locating and accessing bibliographic materials available online, such as journals, newspapers, official documents, library databases. To ensure credibility of the information collected in this study, protocols were followed while collecting data. The school library and databases were used for theories. Journals, books, and articles used are peer reviewed. Relevant search terms were applied to get the required information. Gathering information is the first step in research and choosing the best source for that information is vital. Because online publication is open to anyone, checking source credibility and reliability is necessary. Authoritative and trustworthy sources should always be authenticated. (Coomber, 1997). Although Coomber
(1997) argues that the use of the internet can be biased since it is only limited to people who can access the internet, Spotify users need the internet to access the services, therefore, an online survey suits this study and allows a less biased representation of the targeted audience.
3.7 Ethical Considerations
According to Fowler, (2009) a researchers’ duty is to ensure the research involving humans as a subject is conducted in an ethical way. Fowler (2009) explains that participants should not bear negative repercussions as a result of the research. Although this study is done during a global COVID -19 pandemic, heath guidelines were followed to ensure safety. All interviews were conducted through Zoom at the comfort of the respondents and surveys were done online.
Individuals who choose to participate in any research project must do so on the basis of informed consent, where the individual understands what the goal of the research is and what they are agreeing to do, the potential risks (Hewson et al., 2003). This is put into consideration
37 in this study. The survey respondents were informed that their responses would be used purely for research purposes. Moreover, before the interview, the interviewers informed the interviewee the content of the interview by sending the questions beforehand. This was not only to allow the interviewee to be prepared, but also to ensure the interviewee was comfortable answering the questions. Hewson et al. (2003) imply that consent is not only required but also supposed to be done the right way. This can be through ensuring transparency and making sure there is anonymity if the participants need it. In addition, there should be trust in confidentiality of the respondents. This was implemented by doing both survey and interview. Before participating in the survey, the respondents got a brief description of what the survey was about and also the fact that their response was completely anonymous. The interviewee also had the option to choose between a video or audio only interview.
3.8 Limitation
The main limitation for this study is the fact that only a single market was evaluated. The results found in this study may be similar to other markets but since Kenya was the sole market investigated in this study, there can be no generalizations and the evidence found will remain specific to the market of Kenya. In addition, this study was done during the COVID-19 global pandemic. This set uncontrollable limitations to what could or could not be done in the study.
Although conducting interviews to collect data was part of the study, it had to be done with restrictions. The face-to-face interaction was not a possibility. According to Eynon, Fry &
Schroeder (2008), face to face context gives the researchers a better ability to illuminate the participants about the study which is not the case in an online setting. Eynon et al. (2008) further expounds that in an online setting it is a challenge for the researchers to verify participants' suitability. For instance, know whether or not the participant is mentally stable or belongs to a vulnerable group.
38
3.9 Method Criticism
There is no particular single research method that is not subject to criticism. Most research concur that every research method cannot accurately reflect reality as it is subjective and complex. (Freshwater, 2007). With this in mind, the study methods used in this study can be critiqued. Fowler (2009) claims that having a perfect sample of the demographic intended for study survey is close to impossible. This put using surveys as a method to gather data questionable. In this study, this is evident as the gender distribution is skewed. The response rate is not only low from other genders, being able to distinguish who answered what in the end of the survey is not clear. Low response rate is not an uncommon compromise that surveys have in general. Fowler (2009) further explains that surveys do have biased samples that in most cases are relevant directly to the subject under survey. In this study, the survey questions are distributed on the internet. This in turn puts a bias as the respondents who get to participate already are limited to internet users or the people who are able to access the internet at the time the survey is distributed.
Open ended interviews are used as part of this study. According to Poindexter (2010), open ended questions are vastly used in qualitative study to give a depth understanding of a subject in research, however, in many cases certain aspects of a subject that cannot be expired by answering questions. Poindexter (2010) further explains that interviews can be ambiguous, and misunderstandings happen. Although the research interview is recorded to avoid missing out on important points.
39
4. Findings
4.1 History and Evolution of Spotify
Spotify is a Swedish audio streaming and media service providing company that was developed in 2006 by two Swedish men, Martin Lorentzon and Daniel Ek. Both men were already very active in the information and technology sector before they started developing Spotify (Suh,
2019). After two years, in 2008, the founders decided to launch the software on the market for public access. The platform was launched following a convergence of various factors, especially the bulging concern of piracy that faced the music industry at that time (Briggs et al., 2014). Prior to the discovery of Spotify, people used controversial file sharing sites like
The Pirate Bay LimeWire, and Napster to illegally download music. This practice cost the music industry in general millions every year since musicians were not getting credit for their content ((Briggs, Eiermann, Hodgson, & McNamara, 2014).). Therefore, the best way to solve the issue of piracy was through the creation of a service that was better than piracy and at the same time compensated artists for their creation (Briggs et al., 2014).
During the software launch in October 2008, Ek and Lorentzon offered music lovers a free service with advertising in the hopes that they would upgrade in the near future to charge roughly $10 per month for an advert free subscription. While their intention to give back to the public music in an attractive manner was a wise strategy, the creators realized that for the platform to be successful and gainful they had to adapt more strategic approaches including attracting partners (Skog, Wimelius & Sandberg, 2018). Therefore, the company proceeded to make arrangements with big labels who gave them permission to have their music on their platform and relay it to their end users. In order to push demand to a certain level while further
40 optimizing the platform, the company had paying users and invited-free users at the beginning which saw them suffer a loss of $4.4 million by the end of 2008 (Spotify, 2021).
Noteworthy, once the music was there and consumers were bulging in, the company was able to attract business partners and companies who wanted to advertise through the platform to attract Spotify’s users (Sun, 2019). In 2009, Spotify opened its free accounts without invitation and managed to gain more than 10 million users by September 2010, with 2.5 million of these users being paying ones (Sun, 2019). Following its huge client database, the company adapted three packages namely Spotify Premium, Spotify Unlimited, and Spotify Freemium (Sun,
2019). The Premium and Unlimited packages enabled users to listen to music non-stop without advertisements, with Premium users further enjoying all features of Spotify. Users under the
Spotify Freemium package could listen to music for 20 hours per month but with advertisements. By 2013, the platform had registered more than 20 million customers all over the world, with 25 percent of these being paying customers (Sun, 2019). The company was aggressive in transforming users from free to paying packages by making the free package less attractive (Sun, 2019).
4.2 Contemporary Views of Spotify
According to the interview with Spotify, Spotify as a brand can be looked at from different angles. First is the globally known music streaming service platform. However, as a company, it is a bold innovative company that brought an innovative way for consumers to stream music legally. The interview expounds that Spotify is a progressive company that is involved actively in social justice, equality and supports social responsibility. The interviewee further says,
“Spotify sees where there is injustice and things need to be improved and actually pushing for improvements and making things better through the lens of the music and audio etc.”.
41
According to the interview, an example was how Spotify created music and content in solidarity with the black community during the Black Lives Matter movement in 2020. RAK-
Random Acts of kindness is a principle the company uses to deal with customers by sending playlists to a person they just helped. The interview confirms that Spotify offers a highly standardized product. However, how it is provided is less standardized and curated to fit individual’s needs. The company uses machine learning to personalize its services to consumers.
The interview reveals that in Sweden, 80+% of the population have a smart phone with internet connection, brand awareness is close to 90% and the offerings being given are adapted to their life. However, when it comes to countries with low brand awareness, where the infrastructure is not as profound as in Sweden, questions like whether they like to pay with credit/debit cards or whether they prefer to pay monthly or weekly are put into consideration. The interview revealed that in certain countries Spotify collaborates with cell phone providers to allow customers to add their subscriptions to their cell phone providers. Payment through vouchers are options too in some countries. According to interviewee, “Spotify goes to lengths in trying to see how we can shift the product that we offer and how the people would pay for it in ways that are more attuned to the everyday life that the people have.” This allows Spotify to not worry about whether or not the consumers have credit or debit cards. There are countries with less developed networks, whereby 4G or 3G internet is not accessible and the phones are less powerful, from an Engineering perspective Spotify slims down the features allowing less powerful phones to process. However, these engineering investments are costly and are done with a projection of how that particular market will look in 3 to 4 years.
42
According to the interview, Spotify puts cultural aspects of counties into consideration. This is done by providing locally adaptive customer experience that is relevant to that environment.
This includes working with local artists, however the challenge that exists in this dynamic is
Spotify is not the only party deciding on the content component. Rights holders of local music markets are involved too. According to the interviewee, “There is an interest from Spotify to provide a product experience as well as good content experience in the local market.” Spotify uses all media to pass their marketing information. However, social media is the most powerful one, therefore Spotify leverages virality as much as possible. For instance, end of year campaigns when Spotify sends an analysis to customers on their top played artists or playlists has been greatly impactful. Interviewee says, “These sort of campaigns go out to everybody and give opportunities for the users to interact and to share their story.” When it comes to influencers, artists are the primary focus Spotify uses. An example is in 2019, back in Los
Angeles a physical appearance of Billie Eillish in a pop-up event organized by Spotify.
4.3 Spotify in the Kenyan Market
On February 22nd, 2021, Spotify joined the Kenyan Music Industry as part of 80+ countries with over 1 Billion people. According to a press release on Spotify newsroom (2021) Spotify is dedicated to international artists and listeners. Not only does Spotify work with local artists, but Spotify is aware that each market is unique in terms of its needs and how it operates. In this press release Spotify says, “We’ll deliver a Spotify experience that meets the unique needs of each market, with scaled language translations and specialized payment formats.” According to the Spotify head of music Sub-Sahara Africa Phiona Okumu (2021), the Swedish music streaming platform offers an incredible opportunity for African creators to access a global
43 audience, this makes Kenya part of the 354 million monthly listeners of Spotify for music and podcasts.
Otieno (2021) says that currently Spotify joined the market that is dominated by Boomplay that is endorsed by many local artists, Deezer, Mdundo and Apple Music. Spotify is available in
Swahili the national language and English the official language in Kenya, Spotify offers a free version, where listeners can access music without paying, but Spotify gets to play advertisements and have limited functions for instance, one has limited skips while playing music. However, for those who prefer to not listen to advertisements and want more freedom,
Spotify offers 4 payment plans for users. The first is the individual plan which allows an individual user to listen to music ad-free, be able to play music anywhere both online and offline and also the ability to playback. This individual plan costs 2.8 US dollars. The second plan is the Duo plan at 3.67 US dollars. In addition to the individual plan benefits, Spotify offers 2 Premium accounts for a couple under one roof, a duo mix, which is a playlist for two, that is regularly updated with music. The third is the Family plan at 4.52 US dollars This includes all the benefits of the individual plan and allows 6 Premium accounts for family members living under one roof, family mix, which is a playlist for family that is regularly updated with music with additional benefit of blocking explicit music. Lastly is the Student plan, which allows only 1 account for university students at 0.463 US dollars with the perks of an individual plan account.
The prices Spotify is offering is competitive compared to their competitor Apple music that had prior to Spotify joining Kenya reduced their pricing by 50% (Otieno 2021). In addition,
Spotify has allowed users to have a prepaid payment option with M-Pesa, Credit/Debit card and PayPal as payment options (Spotify 2021). The Kenyan market heavily relies on M-Pesa,
44 a mobile money payment system in Kenya that allows users to store, send and receive money through their mobile phones (Kagan 2020). All that is needed to use M-Pesa is a Kenyan ID and a phone with a sim-card. Users can then visit one of their local agents and give them cash to top up their own account or send to someone else. (Safaricom, 2021). Although Spotify offers a legal way to stream music online, piracy is a challenge. (Otieno 2021). According to director Dr. Ouma (2021) from The Kenya Copyright Board, approximately 98% of music sold in Kenya is pirated and the government is working with rights holders and authorities to lower the piracy level. Spotify now in Africa is an advertisement on YouTube that highlights afropop, gengetone and hip hop. African culture is the theme in the advertisement from the people to the lifestyle being displayed. Spotify Kenya does have a website, a verified Facebook page and a verified Instagram account that displays predominantly African artists. It is notable that some captions under the images are in Swahili the Kenyan national language.
To say that the people of a specific country are all the same is far from the truth and not at all realistic. However, when looking at the population of a country as a whole, there are some general characteristics that are true for the majority of the country in comparison with other countries. By utilizing the website Hofstede Insights (2021), different countries can be seen as how they have been measured according to Hofstede's theory of national culture dimensions.
If used to look at the country of Kenya, the following findings can be made. According to the measurements of Hofstede Insights as of 2021, Kenya scores 70 on power distance. This score is seen as a high and therefore describes Kenya as a high power distance culture. This means that Kenya consists of a hierarchical society where the people all have different class roles which do not require any sort of justification. In an organizational setting this translates into subordinates expecting to be told what to do and the boss is making the decisions. (Hofstede
Insights, 2021).
45
On the next dimension of individualism Kenya scores 25 which is a low score, making Kenya a collectivistic society. Loyalty is of great importance in these types of cultures and may even override societal norms and regulations. This loyalty also extends into the groups the people find themselves in, be it immediate or extended family or other relationships. Relationships are built to be strong where one is supposed to take care of the others in their group. Failure in taking responsibility for their group or for other offences will lead to shame and to be shunned by the people in the group. Furthermore, in an organizational setting the interactions between employees are more personal and a person’s group belonging can be taken into account in business decisions. (Hofstede Insights, 2021). The third dimension of masculinity, Kenya scores 60 which is high on this dimension, making Kenya a masculine society. This gives
Kenya the shared drive of wanting to be the very best. Success can be seen as the equivalent of competition where winning is the goal, and success in life is measured by one’s achievements.
(Hofstede Insights, 2021).
The last measured dimension is the dimension of uncertainty avoidance where Kenya scores a plain 50, meaning that there is no clear preference either way for this dimension and can therefore not be used in any particular way to describe the culture of Kenya in this regard. As for the two remaining dimensions of long-term orientation and indulgence, their scores have yet to be measured and can therefore not be used either to explain Kenyan culture. (Hofstede
Insights, 2021).
46
4.4 Survey Findings
4.4.1 Control Question
The first question asked in the survey was if they live in Kenya. This was used to see if they qualify as a Kenyan consumer, and therefore can take part in the survey. The survey got a total of 267 responses of which 42,7% responded No on the first question, taking them out of the survey. The remaining 57,3% of the 267 responses, responded with Yes, allowing them to keep answering further questions.
Figure 1
4.4.2 Country Characteristics
Question 2 and 3 both got 153 responses. Question number 2 asked about the age of the respondents and show that 58,2% are between 18 to 29 years of age while 39,2% are between
30 to 49 years of age. The remaining 2,6% are either 50 years or older. The following question number 3, asked for the respondents identified gender. The majority of the respondents of 85% answered that they are women while 14,4% answered that they are men.
47
Figure 2
Questions 4 and 5 asked about where in Kenya the respondents live and if they use streaming services. For question 4, 58,8% of the respondents answered that they live in a city while 32,7% answered that they live in a town and the other 8,5% live in a rural area. When asked if they use streaming services, all except for one respondent answered Yes.
Figure 3
For question 6 the respondents got the choice of selecting multiple answers of how they prefer to pay when making a purchase online. The majority of 85,6% preferred different forms of mobile payments and 34,6% preferred to use debit or credit card. The remaining 15,7% preferred to pay with cash.
48
Figure 4
Question 7 asked the respondents what type of devices they use, and allowed them to select multiple choices. The majority of 81,7% answered that they use an Android smartphone device and 23,5% use an Apple smartphone device. For computers 36,6% use a PC while 10,5% use a Mac. A total of 39,2% use a smart TV and 5,2% use some form of smart device not listed in the survey.
Figure 5
4.4.3 Marketing Styles
Question 8 asked the respondents from which type of channel they receive information about companies. The largest number of responses was regarding social media which was answered
49 by 80,4%. The next largest answer was email which was answered by 73,9%. Half of the respondents, 50,3% answered websites. The least answered channel was public posters which was answered by 17%.
Figure 6
For question 9 and 10 the respondents were asked which channel they use the most and which one they believe to be the most effective on them. When answering which one they use the most, the majority of 72,5% answered social media and the second largest number of answers was for e-mail by 15,7%. The answers regarding which channel they think is the most effective on them, the majority of 59,5%, answered social media and 24,8% answered e-mail.
Figure 7
50
Question 11 and 12 asked the respondents which marketing channel they trust the most and which one they trust the least. For the most trusted channels, the majority of 32,7% answered e-mail followed by 19,6% who answered both websites and social media followed by word of mouth which was answered by 15,7%. As for the channels they trust the least, the majority,
32,7%, answered public posters. Then word of mouth was answered by 26,1% and social media by 24,2%.
Figure 8
Question 13 asked the consumers whether influencers play a part in helping them receive information from companies. The majority of the responses, 79,1%, answered Yes to this question while the remaining 20,9% answered No.
Figure 9
51
4.4.4 Brand Legitimacy
Question 14 and 15 asked the respondents how important brand trust is and also their general trust towards brands entering from outside of Kenya. For brand trust 75,2% of the respondents answered that they think it is very important while 19% answered that it is important, and the rest stated that it is not important. For the question about trusting international brands entering
Kenya, the majority answered that they do trust them as 85,6% answered Yes.
Figure 10
Question 16 asked the respondents which aspects they believe are important in order for them to listen to a brand. The highest number of responses, 58,2%, was towards Brand Values, followed by 50,3% for Brand Association and 49% for Price. There were 44,4% of respondents who answered Brand is Recognizable and Uniqueness. The least answered alternative was
Trust which was answered by 24,2%.
52
Figure 11
Question 17 asks the consumers about their opinion on how much they believe it matters that companies take responsibility in society. Most consumers thought that it matters a lot since
69,3% of respondents answered this. Of the remaining consumers 27,5% answered that it matters somewhat, and the rest do not think that it matters.
Figure 12
4.4.5 Brand Perception
Question 18, 19 and 20 cover the consumers' awareness of Spotify. Question 18 asked the consumers if they stream music online and the responses received show that 90,2% do. The following question 19 asked if they have heard of Spotify in Kenya. The responses show that
87,6% have heard of Spotify in Kenya. Question 20 asked if the consumers know what Spotify is, where 79,1% responded yes.
53
Figure 13
For the final questions of 21, 22 and 23 there are a total of 121 responses. The respondents that did not know what Spotify is from the previous question, were removed from further questions.
The reason for this is that they cannot answer the remaining questions if they do not know about Spotify. Question 21 asked the consumers if they use Spotify and 52,1% stated that they do. When asked if they trust Spotify, 80,2% responded that they do trust Spotify. The last question in the survey asked the consumers if they have seen any advertisements from Spotify where 64,5% have.
Figure 14
54
5. Analysis
5.1 Marketing Styles
The responses from the survey show that the channels which Kenyan consumers receive information from companies are quite similar to the channels that consumers use the most. For both of these questions the Kenyan consumers responded that they use social media the most and that social media is the channel that they receive the most information from companies.
The consumers also believe that social media is the channel that is the most effective on them by quite a large margin. Further findings from the survey show that social media, along with websites, is the second most trusted channel after e-mail. However, social media is also the third least trusted channel according to the survey. This may be explained by the fact that the content that is shown in social media is extremely broad in which it can be difficult to decipher what can and cannot be trusted. Lastly, four out of five Kenyan consumers responded that influencers play a large role in helping them receive information from companies.
In the interview with Spotify, when asked which channels they use the most or which one they believe to be the most effective, they answered that they do not have one specific channel that they use the most nor do they have one that is the most effective. They said that they use all channels and have the shared goal of creating a good relationship with their customers through all of these channels. This relationship would then hopefully lead into positive word of mouth between the customers which would benefit Spotify as a company in the end. However, according to the survey of the Kenyan consumers, it appears that word of mouth is not used very much in Kenya and is not as effective according to the consumers. As for how trusted word of mouth is, the survey shows that three out of twenty consumers trust word of mouth the
55 most but one out of four trust it the least. Word of mouth is the second least trusted channel when it comes to information from companies.
In the interview with Spotify it was also revealed that they do indeed use influencers in their marketing but mainly artists who are already cooperinting with Spotify since they are in the music industry. With all this information it can be seen that there is an opportunity for Spotify to adapt in the Kenyan market. According to the survey findings, the Kenyan consumers use social media the most and believe that it is the most effective channel while they have a general distrust towards word of mouth. Influencers also seem to be very impactful in the communication process but Spotify mainly uses artists. An adaptation that could then be made is to utilize a more varied array of influencers in their social media marketing channels rather than putting efforts towards all channels to create positive word of mouth through customer relations, as suggested by the interview.
5.2 Brand Communication
According to the survey, three out of four Kenyan consumers believe that trusting a brand is very important. It is also evident that international brands coming to Kenya are trusted by
Kenyans, as shown in the survey where 85% of Kenyan consumers responded that they trust international brands coming to Kenya. However, further survey findings show that it is important to note that the Kenyan consumers consider brand values to be the most important factor when it comes to what makes them listen to a brand. These values entail what the brand stands for and whether or not the brand is socially responsible. From the interview, Spotify is a socially responsible brand that is well aware of societal issues worldwide. Spotify demonstrates this by being part of global movements through music and also incorporating
56 local music to relate to the local culture environment. Although Spotify as a brand considers itself to be socially responsible, it would be of a greater impact if Spotify extends its philanthropic work to what matters to the Kenyan people. For instance, being involved in movements that would be beneficial to the Kenyan people.
Another important factor that makes Kenyan people listen to a brand is pricing. This is the second most important factor to the consumers after brand values according to the survey. In addition, secondary data shows that Spotify has joined a market that piracy is a big challenge as people are able to listen to music for free although it is illegal. Offering a service at a fee that people can have for free can be a challenge. However, from secondary data, it is apparent that Spotify is offering prices that are significantly low compared to what Spotify offers to the
Swedish market as an example. In addition, secondary data shows that Spotify has more flexible subscription plans with options of having non-recurring subscription plans. The interview highlighted that Spotify adjusts subscription plans of the premium services in accordance to what the consumers need. This price and subscription plans adaptations is congruent to what the in interview revealed Spotify does in emerging markets and what the
Kenyan consumers need.
Lastly, there is a market for streaming services in Kenya. From the survey, nine out of ten people stream music online. Majority have also heard of Spotify nine out of ten to be exact, but also eight out of ten people have not only heard of Spotify and seen Spotify advertisements but also know what Spotify is and what it does. This shows that for a brand that has just joined an emerging market, at the point of the survey for only two months the brand awareness is high from the survey. From the interview, Spotify has dominated the Swedish market with brand awareness of almost 90%. In addition, there is positive brand perception according to the survey
57 as well. four out of five people from the survey trust Spotify, although this can be attributed to
Kenyan consumers generally trust international brands, it further reveals that the majority trust
Spotify as well which is an important factor for the Kenyan consumers in order to listen to a brand from the previous analysis.
Looking at the marketing and positioning of Spotify through advertisements in Kenya, Spotify is highlighting the local artists on the Spotify Kenyan Instagram page with some captions in
Swahili. In the advertisement for instance, Kenyan tunes like genge tones and Afropop music has been used which shows Spotify is putting emphasis on Kenya and the Kenyan culture. This is in accordance with what the interview shows that Spotify collaborates with local artists and tries to highlight the local culture in the music selection that is offered. This is an adaptation
Spotify has made in Kenya that brings inclusivity and could be of great advantage to Spotify in Kenya.
5.3 Country Characteristics
The data from the Kenyan consumers survey show that the respondents are in the ages between
18 and 49 with a few respondents being above 50. The ratio between men and women is 15% men and 85% women. This means that this study is primarily from the perspective of Kenyan women consumers. Essentially everyone who responded also claimed that they are using streaming services already where everyone except one person answered yes to using streaming services, which shows that there is a market for streaming services in Kenya. The respondents are also distributed across all of Kenya as the survey shows that a bit more than half of the respondents live in a city, a third live in a town and the remaining live in a rural area. When asked about their preferred online payment methods, an overwhelming amount of 85% of the
58 consumers answered that they preferred mobile payments compared to the other options. Every
Kenyan consumer in the survey also responded that they all have at least one smartphone each.
In the interview with Spotify, they explained that depending on the country Spotify is operating in, they will take into consideration the infrastructure of the country and make adaptations if needed, such as payment methods, allowing the consumers to pay for their services in different ways. This claim can also be backed up and supported by secondary data that shows how
Spotify in Kenya have adapted in this regard and have implemented prepaid options when signing up for a subscription for Spotify, of which one of the options is the mobile payment service M-Pesa. The choice to adapt is then clear where Spotify has adapted their operations when entering Kenya and has changed their payment methods which is also in alignment with the claims from Spotify themselves as well as the preferences from the consumers according to the survey.
59
6. Theoretical Discussion
6.1 Marketing Styles
From the analysis, it is evident that social media is effective on Kenyan consumers and they use it the most. Spotify is established on social media and is using it as a way to connect and market itself to consumers. This is in accordance with Charlesworth (2014) theory that social media can be used by companies to reach, engage, share culture and mission in order to market themselves. This further agrees with Hutter’s et al. (2013) theory that to create a relationship with consumers, the use of social media has proven to be successful in this regard. From the analysis, it is clear that although Spotify uses influencers, there is an opportunity to diversify the categories of influencers used and not only limit the influencers to artists who Spotify is promoting. In order to expand the reach to Kenyan consumers, this is an adaptation that Spotify could make which is in alignment with Chang et.al (2020) theory that influencers have a great impact on consumers and if a brand takes advantage of their online credibility and big audience, they are able to reach a greater market and acquire more customers.
This claim for adaptation is also supported by Hofstede’s theory of national cultural dimensions. According to Hofstede Insights (2021), Kenya scores 70 on the dimension of power distance, making it a high power distance culture. One of the characteristics for a high power distance culture is the tendency to accept what is being said by authorities or people in high power. This would allow for the consumers to listen to what is being said by an influencer since they can be seen as people in high power due to the size of their followings combined with a platform to express themselves. This dimension could also help explain why the Kenyan consumers responded with low trust in regard to word of mouth. Word of mouth is exchanged
60 among consumers and generally this exchange is done between friends and family. It can then be assumed that they would all share the same level of power since they would live together in similar conditions. The trust amongst these people would then not be very high since the trust increases in higher levels of power and these people share the same power level and can therefore not be trusted as much. Furthermore, the use of influencers in social media could then also increase the trust towards social media since the trust for the influencer would carry over to the platform in which they express themselves, making social media a more trusted channel by the Kenyan consumers.
6.2 Brand Communication
According to Smudde and Courtright (2011), consumers learn from the narrative brands communicate, and what is communicated is interconnected to what consumers perceive of a brand. From the analysis, it has been found that Spotify communicates itself as a socially responsible brand. What a company communicates can create brand legitimacy. According to
Kates (2004) theory, brand communication enhances the brand legitimacy. Although Spotify communicates as an aware and socially responsible brand, the matters that Spotify has highlighted for instance Black Lives Matter was a global movement. According to Brand Zehir et al. (2011), legitimacy is seen in actions. Actions that a society considers to be in alignment with its values, beliefs and norms. The adaptation that Spotify could make is to extend their philanthropy to societal issues that are specific to the communities in Kenya, these activities should involve Kenyans and be communicated to them.
In addition, this adaptation can be further supported by one of the dimensions in Hofstede’s theory of national cultural dimensions. Kenya scores 25 on the dimension of individuality,
61 according to Hofstede Insights (2021), which makes Kenya a collectivistic society. In collectivistic societies there is a lot of importance put into fitting in with the group as well as doing what is considered to be the best for the group. These groups also highly value loyalty and have a strong sense of community. In order for a foreign company to gain the trust of these groups, they need to appeal to the culture and the society of the Kenyan people. If Spotify wants the people of Kenya to think highly of the company, they need to show the people that they value societal issues in order to be considered part of their group and ultimately gain their trust.
The analysis reveals that there is not only price adaptation, but also there is flexibility of services offered by Spotify. This adaptation aligns with Janiszewski’s & Lichtenstein’s (1999) theory that to survive in an emerging market, offering competitive prices and a good product is not enough and multinational companies entering emerging markets need to make adaptations to suit consumers' needs. Janiszewski’s & Lichtenstein’s (1999) theory further explains that the prices that consumers find attractive is determined by what is already in the market, in Kenya for instance, there is the possibility to stream music for free although it is illegal. This can be a challenge for Spotify, however, Spotify on the other hand offers a free music streaming version but also has adjusted the premium prices accordingly and given a flexible option for the consumers by allowing consumers to have shorter subscription options for instance.
The adaptation of changing Spotify’s pricing in Kenya can be supported by the existing institutions that exist in Kenya. The theory of institutions is described by North (1990) as a structure where rules dictate the interactions of people and what incentives drive the behavior of those interactions. If applied to Kenya in this context, it can be seen that there is an extremely high amount of music being pirated by the people in Kenya. Of all the music being sold, 98% of it is being pirated illegally. The behavior of pirating music is then built on the incentive of
62 not having to pay for music. This means that Spotify is competing with a method of acquiring music that allows the consumers to substitute their services at no cost. If Spotify wants to be able to compete against this, they may need to lower their prices to stay competitive.
Additional findings from the analysis show that Spotify is trusted by the Kenyan consumers which is an important factor for the consumers. The fact that Spotify is highlighting local artists and using tunes that are familiar with Kenyans in their advertisement positions Spotify as a brand that Kenyan consumers can relate to and trust. This agrees with Runyan & Droge, (2008);
Sahin et al., 2011) theory that strong brand communication can develop a positive brand perception and a strong brand relationship with consumers. This also leads to consumers satisfaction and trust that is demonstrated in the analysis. This adaptation that Spotify has made brings a togetherness feeling when one gets to see what Spotify is communicating through the advertisement, hence creating a positive brand perception that is demonstrated in trust. What is communicated is interconnected to what consumers perceive according to Smudde and
Courtright (2011). This also concurs with (Park & Maclnnis, 2006) theory that this positive brand perception, brand loyalty would be increased.
This adaptation can also be supported by Hofstede’s dimension of individualism. As previously mentioned, Kenya is a collectivistic society due to their low score of 25 on the dimension of individuality (Hofstede Insights, 2021). This means that when Spotify is trying to build a positive brand perception with the people of Kenya, they need to act in ways that appeal to them in order to be recognized. What Spotify is currently doing is using local music artists in combination with their local language Swahili to build a connection with the people of Kenya.
Spotify also puts emphasis on Kenya in their advertisements and makes it clear to the Kenyan consumers that they are trying to be part of Kenya when it comes to music. In this way they
63 may get recognized as part of the group of the Kenyan people and also part of their collectivistic culture.
6.3 Country Characteristics
In the analysis it was found that Spotify has made adaptations in regard to their payment methods where they have added prepayment options when signing up for a subscription, of which one option include mobile payment using M-Pesa. In regard to theory, what could have driven this adaptation may be the institutions surrounding the use of M-Pesa as mobile payment in Kenya. The theory of institutions states that an institution is a structure made up of rules which guide the social interactions between people as well as the incentives that drive the behavior of these interactions (North, 1990). If applied to the context of M-Pesa in Kenya it can be explained as the people of Kenya choose to use mobile payments as their primary way of paying since it is far more convenient compared to other methods. Anyone can use M-Pesa without having the need for a bank account, as long as they have a Kenyan ID, an available sim-card and a phone. The institution is then that the rules in Kenya is that one should use M-
Pesa as mobile payment since most people do so, due to the incentives of it being the most convenient method of payment.
This type of institutional system can be described as a structure consisting of unwritten rules as explained by Hodgeson (2015). Hodgeson means that institutions either consist of written or unwritten rules which can be clearly seen in this case. These unwritten rules also correspond to a normative system which is one of three systems which make up an institution (Scott, 2008).
Furthermore, Freil (2017) describes normative systems as being informal and acts as codes which directs the behavior of people in a social setting which can be seen in this instance for
64 mobile payment. Finally, David (1994) states that institutions help people by giving them a structure in how to act according to expectations set by society to fit in with the group and the behavior of others. This parallel can be clearly visible in regard to how the Kenyans prefer to pay as this is a structure, they all agree is the one to follow.
This adaptation is then in alignment with the pre-existing institutions already set in Kenya as well as being supported by the preferences of the Kenyan people according to the survey. This form of adaptation is also supported by the theory of adapting marketing practices to the digital age. Mobile services is part of these digital marketing practices where companies adapt their activities when communicating with consumers (Chaffey & Ellis-Chadwick, 2019). This can be clearly seen in this case where Spotify has chosen to adapt into utilizing mobile payment services in their business structure in Kenya.
65
7. Conclusion
In conclusion, the aim of this study was to investigate how a standardized multinational company like Spotify could adapt to a developing market like Kenya and the possible challenges Spotify could face in the process of establishing itself in the market. The study was based on the theory that Standardized companies joining new markets should make adaptations when joining emerging markets as these markets are significantly different from parent companies' markets and a homogenized approach would not be suitable. The study is conducted through a mixed method approach. An interview to get a deep understanding of Spotify as a company was conducted. A survey on Kenyan consumers was done to get insight on how consumers perceive Spotify, the level of brand awareness and to investigate the possible adaptations Spotify could make. In addition, secondary data and theories were used too and with that, a comparison of the adaptations Spotify has made to what Kenyan consumers need was done and recommendations of possible adaptations Spotify could have done were made.
Following an abductive study approach, triangulations were made to verify the validity of the study.
In this study two research questions were constructed at the beginning of the study and were used throughout the whole research process as a means to help guide the investigation and finally answer in an attempt to gain more clarity regarding this subject. The first research question reads as follows.
What challenges could Spotify encounter when marketing its services in the developing
market of Kenya?
66
Several remarks regarding this research question were discovered during the span of this research. One of the challenges found in this study, that is specific to Kenya, is that the amount of piracy regarding music is extremely high. Music is being downloaded and streamed illegally by the majority of the users in Kenya where 98% of all sold music is being accessed without payment. This is a major challenge for Spotify since they compete against a substitute that provides the same content at no cost. Another challenge that was found in this study is the many cultural differences that exist in Kenya. The high level of power distance in Kenya means that the consumers rather listen to people in power rather than friends and family which is different compared to the home country of Spotify, Sweden. There is also a larger emphasis on appealing to the collective people of Kenya rather than individuals due to the collectivistic nature that resides in Kenya. The consumers in Kenya also have different preferences when it comes to payment options compared to other markets, where Kenyans prefer mobile payment as their number one payment method. However, all these challenges also create opportunities to adapt, which leads into the second research question.
How can Spotify adapt to the Kenyan market?
One of the discoveries made in this study is that there is an apparent opportunity to utilize influencers in a larger regard, especially through the use of social media combined with more varied types of influencers, not only music artists. Additionally, it was found that another adaptation that could benefit Spotify in Kenya would be to engage more in philanthropic activities in Kenya and display their concerns for societal issues. This would improve the image of Spotify amongst the Kenyan consumers. Furthermore, it was discovered that some forms of adaptation had already been made by Spotify since they entered this new market. One example of these adaptations is the implementation of additional services and lower prices compared to
67 their home market. Not only that, but an adaptation in regard to payment options has also been implemented where several prepayment options are now available, one of which is mobile payment, the number one preference of the Kenyan consumers. Lastly, it can be seen that
Spotify has also adapted their marketing in Kenya where they put emphasis on local artists and the native language of Kenya when communicating with the consumers.
Through these findings, this study has contributed to this research topic by discovering aspects that companies need to be aware of when entering developing markets, specifically the Kenyan market. In this study a multinational and highly standardized company was used as a base of view from a Swedish perspective. This adds another perspective to the literature of this subject as it was previously dominated by American perspectives. In addition to challenges and aspects to be aware of, several suggestions and examples of adaptation have also been brought up.
These adaptations and suggestions have been compared to theories to see if they align and can be used to support these claims. The outcome of this shows that both the suggested adaptations and the already implemented adaptations are all supported by various theories and are in alignment with what these theories previously stated.
7.1 Management Implications
For Spotify it can be said that they might need to change some of the way they conduct their operations. The Kenyan consumers do not have any general distrust towards international companies. However, Spotify needs to earn the trust of the people. In Kenya, contributing to society and the community is very important and plays a larger part in Kenya than in developed markets. Spotify would need to be aware of these expectations set by the people and with
Spotify’s already philanthropic mindset, they should be able to adapt with relative ease and
68 please the Kenyan consumers. As for the music market Spotify would need to be aware of the high amount of piracy and the attitude towards it when designing their business model. As for the consumers of Kenya, they should know that Spotify is a company that deeply cares about their customers which is apparent from the interview. Spotify is familiar with working with societal issues and are committed to bringing forth the culture in music.
7.2 Future Research
For future research regarding this subject, the main suggestion would be to look at other markets and extend this study to see if there are similar discoveries there. By applying the same research design to other countries, the results could show if there are similar culture effects found in these markets or if they vastly differ. A start would be to look at other African countries located nearby to see how related the findings are. Alternatively, to look at other emerging markets and see if there is a similarity between cultural aspects of such markets.
Also, there is plenty of room for further research regarding the market of Kenya. In this study there was only a brief and general understanding of how the market of Kenya works. The intricacy of the Kenyan market is very complex and there is an abundance of factors that could be studied in deeper detail. There are still a lot more institutions to find and understand as well as how brand communication needs to adapt in the Kenyan market.
69
References
Aaker, D. A., & Joachimsthaler, E. (2000). The brand relationship spectrum: The key to the brand architecture
challenge. California management review, 42(4), 8-23. https://doi.org/10.1177%2F000812560004200401
Aggarwal, P. The effects of brand relationship norms on consumer attitudes and behavior. J. Consum. Res.
2004, 131, 87–101 https://doi.org/10.1086/383426
Alashban, A. A., Hayes, L. A., Zinkhan, G. M., & Balazs, A. L. (2002). International brand-name
standardization/adaptation: Antecedents and consequences. Journal of international marketing, 10(3), 22-48. https://doi.org/10.1509%2Fjimk.10.3.22.19544
Aliseda, A., (2007), "Abductive reasoning: challenges ahead", THEORIA. Revista de Teoría, Historia y Fundamentos de la Ciencia, Vol. 22 no. 3, pp. 261-270.
Archer, M. S. (1998). Critical realism : Essential readings. London ; New York: Routledge.
Bell, E., Bryman, A., & Harley, B. (2018). Business research methods. Oxford university press.
Birnik, A., & Bowman, C. (2007). Marketing mix standardization in multinational corporations: A review of the
evidence. International Journal of Management Reviews, 9(4), 303-324.
Blake, J., & Davis, K. (1964). Norms, values, and sanctions. In R. E. L. Faris (Ed.), Handbook of modern
sociology (pp. 456–484). Chicago, IL: Rand McNally.
Blaikie, N., (2009), Designing Social Research, Polity, Cambridge.
Blau, P. M., & Scott, W. R. (2003). Formal organizations: A comparative approach. Stanford University Press.
Bryman, A. & Bell, E. (2017) Företagsekonomiska forskningsmetoder. (Upplaga 3). Malmö: Liber.
Buchanan, A., & Keohane, R. O. (2006). The legitimacy of global governance institutions. Ethics &
international affairs, 20(4), 405-437. https://doi.org/10.1111/j.1747-7093.2006.00043.x
Burr, V. (2015). Social constructionism. Routledge.
70
Business Daily (2021) Audio streaming service Spotify launches in Kenya.
Carroll, B. A., & Ahuvia, A. C. (2006). Some antecedents and outcomes of brand love. Marketing letters, 17(2),
79-89. https://doi.org/10.1007/s11002-006-4219-2
Casile, M., & Davis-Blake, A. (2002). When accreditation standards change: Factors affecting differential
responsiveness of public and private organizations. Academy of Management Journal, 45(1), 180-195. https://doi-org.ep.bib.mdh.se/10.5465/3069291
Chakraborty, A., & Holani, U. (2011). International Listing and Stock Returns: Evidence from Emerging
Economies. International Journal of Financial Management, 1(2).Chaffey, D., & Ellis-Chadwick, F. (2019). Digital marketing. Pearson UK.
Charlesworth, A. (2014). Digital marketing: A practical approach. Routledge.
Comte, A. (1880). A general view of positivism. Reeves & Turner.
Coomber, R. (1997a)‘Using the Internet for survey research’,Sociological Research Online, 2 (2). : http://www.socresonline.org.uk.ep.bib.mdh.se/2/2/coomber.htm
Chang, S., Wang, C., & Kuo, C. (2020). SOCIAL MEDIA INFLUENCER RESEARCH: AN BIBLIOMETRIC ANALYSIS. International Journal of Electronic Commerce Studies, 11(2), 75-86. http://dx.doi.org.ep.bib.mdh.se/10.7903/ijecs.1975
D'Andrade, R. G., Shweder, R. A., & Le Vine, R. A. (1984). Cultural meaning systems. Adams, Robert McC, Ed.; And Others Behavioral and Social Science Research: A National, 197.
David, P. A. (1994). Why are institutions the ‘carriers of history’?: Path dependence and the evolution of conventions, organizations and institutions. Structural change and economic dynamics, 5(2), 205-220.
De Mooij, M., & Hofstede, G. (2010). The Hofstede model: Applications to global branding and advertising strategy and research. International Journal of advertising, 29(1), 85-110. https://doi-org.ep.bib.mdh.se/10.2501/S026504870920104X
Denzin, N.K. (1978). Sociological methods: A sourcebook. New York, NY: McGraw-Hill.
Denzin, N. K. (2017). The research act: A theoretical introduction to sociological methods. Transaction
publishers.
71
Dubois, A. and Gadde, L.-E., (2002), "Systematic combining: an abductive approach to case research", Journal of Business Research, Vol. 55 no. 7, pp. 553-560.
Dimitrova, B., & Rosenbloom, B. (2010). Standardization versus adaptation in global markets: is channel
strategy different?. Journal of marketing Channels, 17(2), 157-176. https://doi.org/10.1080/10466691003635127
Dunning, J. H., & Lundan, S. M. (2009). The internationalization of corporate R&D: a review of the evidence
and some policy implications for home countries 1. Review of Policy Research, 26(1‐2), 13-33. https://doi.org/10.1111/j.1541-1338.2008.00367.x
Eynon, R., Fry, J. & Schroeder, R. (2008). The ethics of internet research. In The SAGE handbook of online research methods (pp. 22-41). SAGE Publications, Ltd, https://www-doi-org.ep.bib.mdh.se/10.4135/9780857020055
Fiol, C. M., & O'Connor, E. J. (2002). When hot and cold collide in radical change processes: Lessons from
community development. Organization Science, 13(5), 532-546.
Fowler, F. J. (2009). Survey research methods (4th ed.) (4th ed.). SAGE Publications, Inc. https://www-doi-org.ep.bib.mdh.se/10.4135/9781452230184
Friel, D. (2017). Understanding institutions: different paradigms, different conclusions. Revista de Administração, 52(2), 212-214. https://doi.org/10.1016/j.rausp.2016.12.001
Gog, M. (2015). Case study research. International Journal of Sales, Retailing & Marketing, 4(9), 33-41.
Hall, P. A., & Taylor, R. C. (1996). Political science and the three new institutionalisms. Political studies, 44(5), 936-957.
Hartungi, R. (2006). Could developing countries take the benefit of globalisation?International Journal of Social Economics, 33(11), 728-743. doi:http://dx.doi.org.ep.bib.mdh.se/10.1108/03068290610705652
He, X., Eden, L., & Hitt, M. A. (2016). The renaissance of state‐owned multinationals. Thunderbird International Business Review, 58(2), 117-129. https://doi.org/10.1002/tie.21711
Hewson, C. & Laurent, D. (2008). Research design and tools for internet research. In The SAGE handbook of online research methods (pp. 58-78). SAGE Publications, Ltd, https://www-doi-org.ep.bib.mdh.se/10.4135/9780857020055
72
Hiller, R. S., & Walter, J. M. (2017). The rise of streaming music and implications for music production. Review of Network Economics, 16(4), 351-385. Hodgson, G. M. (2015). On defining institutions: rules versus equilibria. Journal of Institutional Economics, 11(3), 497-505. https://doi.org/10.1017/S1744137415000028
Hoeffler, S., & Keller, K. L. (2002). Building brand equity through corporate societal marketing. Journal of Public Policy & Marketing, 21(1), 78-89. https://journals.sagepub.com/doi/10.1509/jppm.21.1.78.17600
Hofstede Insights, (2021). Country Comparison. https://www.hofstede-insights.com/country-comparison/kenya/
Hofstede, G. (2011). Dimensionalizing cultures: The Hofstede model in context. Online readings in psychology and culture, 2(1), 2307-0919. https://doi.org/10.9707/2307-0919.1014
Holm, O. (2006), "Integrated marketing communication: from tactics to strategy", Corporate Communications: An International Journal, Vol. 11 No. 1, pp. 23-33. https://doi.org/10.1108/13563280610643525
Hoskisson, R. E., Eden, L., Lau, C. M., & Wright, M. (2000). Strategy in emerging economies. Academy of management journal, 43(3), 249-267. https://doi.org/10.5465/1556394
Hutter, K., Hautz, J., Dennhardt, S., & Füller, J. (2013). The impact of user interactions in social media on brand awareness and purchase intention: the case of MINI on Facebook. Journal of Product & Brand Management. Vol, 22 No. 5/6, pp. 342-351. https://doi.org/10.1108/JPBM-05-2013-0299
Janiszewski C., Lichtenstein R., (1999) A Range Theory Account of Price Perception, Journal of Consumer Research, Volume 25, Issue 4, March 1999, Pages 353–368, https://doi.org/10.1086/209544
Hox, J. J., & Boeije, H. R. (2005). Data collection, primary versus secondary.
Kara, H. (2015). Creative research methods in the social sciences: A practical guide. Policy Press.
73
Kates, S. M. (2004). The dynamics of brand legitimacy: An interpretive study in the gay men's community.
Journal of consumer research, 31(2), 455-464. https://doi.org/10.1086/422122
Keller, K. L., & Lehmann, D. R. (2006). Brands and branding: Research findings and future priorities.
Marketing science, 25(6), 740-759. https://doi.org/10.1287/mksc.1050.0153
Kerrigan, F.; Larsen, G.; Hanratty, S.; Korta, K. (2014). “Gimme shelter’: experiencing pleasurable escape through the musicalisation of running”, Marketing Theory, Vol. 14 No. 2, pp. 147-166.
Kotler, P. (1972). A generic concept of marketing. Journal of marketing, 36(2), 46-54. Laroche, M., Kirpalani, V. H., Pons, F., & Zhou, L. (2001). A model of advertising standardization in multinational corporations. Journal of International Business Studies, 32(2), 249-266. https://doi.org/10.1057/palgrave.jibs.8490951
Levy, D. (2006). Qualitative methodology and grounded theory in property research. Pacific Rim Property Research Journal, 12(4), 369-388. https://doi-org.ep.bib.mdh.se/10.1080/14445921.2006.11104216
Low, G. S., & Lamb, C. W. (2000). The measurement and dimensionality of brand associations. Journal of product & brand management, Vol. 9 No. 6, pp. 350-370. https://doi.org/10.1108/10610420010356966
Lozić, J. (2020). Comparison of business models of the streaming platforms Spotify and Netflix.
Ma, A., & Norwich, B. (2007). Triangulation and theoretical understanding. International Journal of Social Research Methodology, 10(3), 211-226.
Melin, F. (1999). Brand strategy: About the art of developing strong brands. Liber ekonomi.
Nair, D. R. (2014). Culture and adaptation: Imperatives, electives, and exclusives.SCMS Journal of Indian Management, 11(4), 4.
North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge university press.
O'Rouke, K.,H., & Williamson, J. G. (2004). Once more: When did globalisation begin? European Review of Economic History, 8(1), 109-117.
74
Otieno D. Tech Ish (2021). Spotify is finally launching in Kenya; How will it affect the music scene?
Ouma M., Kenya Copyright Board (2021) Press releases. https://www.copyright.go.ke/10-press-releases.html
Patton, M.Q. (1999). Enhancing the quality and credibility of qualitative analysis. Health Sciences Research, 34, 1189–1208.
Park, C. W., & MacInnis, D. J. (2006). What's in and what's out: Questions on the boundaries of the attitude construct. Journal of consumer Research, 33(1), 16-18. https://doi.org/10.1086/504122
Pavlou, P. A., Liang, H., & Xue, Y. (2007). Understanding and mitigating uncertainty in online exchange
relationships: A principal-agent perspective. MIS quarterly, 105-136. https://doi.org/10.2307/25148783
Pierson, P. (2000). Increasing returns, path dependence, and the study of politics. American political science
review, 251-267.
Poindexter, C. (2010). The ubiquity of ambiguity in research interviewing: an exemplar. In Atkinson, P., &
Delamont, S. (Eds.), SAGE qualitative research methods (pp. 384-407). SAGE Publications,
Polit, D.F., & Beck, C.T. (2012). Nursing research: Generating and assessing evidence for nursing practice.
Philadelphia, PA: Lippincott Williams and Wilkins
Rosenthal, M. (2016). Qualitative research methods: Why, when, and how to conduct interviews and focus
groups in pharmacy research. Currents in pharmacy teaching and learning, 8(4), 509-516. https://doi.org/10.1016/j.cptl.2016.03.021
Runyan, R., Droge, C., & Swinney, J. (2008). Entrepreneurial orientation versus small business orientation:
what are their relationships to firm performance?. Journal of Small Business Management, 46(4), 567- 588. https://doi.org/10.1111/j.1540-627X.2008.00257.x
Safaricom (2021) Using M-PESA. Retrieved from https://www.safaricom.co.ke/m-pesa/getting-started/using-m-pesa
75
Saunders, M., Lewis, P. and Thornhill, A., (2012), Research Methods for Business Students, 6th ed., Pearson Education Limited, London.
Scott, W. R. (2008). Crafting an Analytic Framework I: Three pillars of institutions. WR Scott, Institutions and Organizations: Ideas and Interests, 47-72. https://us.sagepub.com/sites/default/files/upm-assets/56769_book_item_56769.pdf
Sewell Jr, W. H. (2005). The concept (s) of culture. Practicing history: New directions in historical writing after the linguistic turn, 76-95.
Smudde, P. M., & Courtright, J. L. (2011). A holistic approach to stakeholder management: A rhetorical foundation. Public Relations Review, 37(2), 137-144. https://doi.org/10.1016/j.pubrev.2011.01.008
Sommerer, T., & Agné, H. (2018). Consequences of Legitimacy. Legitimacy in Global Governance: Sources,
Processes, and Consequences, 153.
Sahin, A., Zehir, C., & Kitapçı, H. (2011). The effects of brand experiences, trust and satisfaction on building
brand loyalty; an empirical research on global brands. Procedia-Social and Behavioral Sciences, 24, 1288-1301. https://doi.org/10.1016/j.sbspro.2011.09.143
Spotify (2021) Spotify Expands International Footprint, Bringing Audio to 80+ New Markets
https://newsroom.spotify.com/2021-02-22/spotify-expands-international-footprint-bringing-audio-to- 80-new-markets/
Vartanian, T. P. (2010). Secondary data analysis. Oxford University Press.
Weber, M. (1968). On charisma and institution building (Vol. 322). University of Chicago Press.
Zehir, C., Şahin, A., Kitapçı, H., & Özşahin, M. (2011). The effects of brand communication and service quality
in building brand loyalty through brand trust; the empirical research on global brands. Procedia-Social and Behavioral Sciences, 24, 1218-1231. https://doi.org/10.1016/j.sbspro.2011.09.142
Zelli, F. (2018). Effects of legitimacy crises in complex global governance.
76
Appendix ______
Interview Questions
These questions will be open ended and followed up depending on the respondents answers.
1 How would you describe Spotify as a company? 2 How would you describe Spotify as a brand? 3 Do you consider the product Spotify offers to be highly standardized? 4 Is adaptation required when it comes reaching out to different consumers? 5 What are some of the functional adaptations Spotify needed to make when entering other countries? 6 How has payment options limited or increased consumers' ability to use Spotify in other countries? 7 How can someone who doesn't have card payment options still use Spotify? 8 How does Spotify target different demographics in the Swedish market? 9 Does Spotify consider cultures different within Sweden when it comes to marketing? 10 What are some cultural aspects Spotify considers when entering another market? 11 What communication channels does spotify use to reach consumers? Eg. Email, Social Media, WoM, SEO? 12 Which one do you think is the most effective and why? ______
Survey questions
Control question 1 Question: Do you live in Kenya? Answer: Yes, No If No, gets taken out of the survey
Country characteristics questions 2 Question: What is your age? Answers: 17 and under, 18-29, 30-49, 50+
3 Question: What gender do you identify with? Answers: Male, Female, Other, Prefer not to answer
4 Question: Where in Kenya do you live? Answer: City, Town, Rural
77
5 Question: Do you use streaming services? (Netflix, YouTube) Answer:Yes, No
6 Question: What do you prefer to use when paying for online services? Answer, multi selection: Credit/Debit card, Cash, Mobile Payments, Bank deposit, Prepaid card
7 Question: Which devices do you use? Answer, multi selection: Apple smartphone, Android smartphone, Mac computer, PC, Smart TV, Other
Marketing styles 8 Question: How do you receive information from companies? Answer, multi selection: E-mail, TV, Radio, Public posters, Websites, Social Media, Word of Mouth
9 Question: Which one do you use the most? Answer: E-mail, TV, Radio, Public posters, Websites, Social Media, Word of Mouth
10 Question: Which one is the most effective on you? Answer: E-mail, TV, Radio, Public posters, Websites, Social Media, Word of Mouth
11 Question: Which one do you trust the most? Answer: E-mail, TV, Radio, Public posters, Websites, Social Media, Word of Mouth
12 Question: Which one do you trust the least? Answer: E-mail, TV, Radio, Public posters, Websites, Social Media, Word of Mouth
13 Question: Do influencers help you receive information from companies? Answer:Yes, No
Brand communication 14 Question: How important is it that you trust a brand? Answer: Not important, Important, Very Important
15 Question: In general do you trust international brands coming to Kenya? Answer: Yes, No
16 Question: What makes you listen to a brand? Answers, multi selection: Trust, Price, Brand is recognizable, Uniqueness, Brand values, Brand association
17 Question: Does it matter if brands are responsible in society? Answer: Does not matter, Matters somewhat, Matters a lot
78
Spotify 18 Question: Do you stream music online? Answer: Yes, No
19 Question: Have you heard about Spotify in Kenya? Answer: Yes, No
20 Question: Do you know what Spotify is? Answer: Yes, No If No, gets taken out of survey
21 Question: Do you use Spotify? Answer: Yes, No
22 Question: Do you trust Spotify? Answer: Yes, No
23 Question: Have you seen any advertisements from Spotify? Answer: Yes, No ______
Interview Transcript R = Rachel - Interviewer K = Kasper - Interviewer A = Anonymous - Interviewee
A: Its a great way to interact when we can see each other K: I see that the Spotify hoodie is on as well R: Ooh, nice A: There you go A: And I’m flying my colors today A: Haha, all for you A : I love your background, is that your windows screen? K: Yeah, its the old windows screen A: You are going oldschool today, thats cool K: Yes R: Ah, we are so happy to have you, thank you for taking your time to come and have this interview with us. We just want to let you know that this will be anonymous and we are recording this just so that we can come back to it later A: Yeah, that's quite alright. I figured that was the best way for you to process this as well. R: Yeah.
79
A: Absolutely no problem. And thanks for sharing the questions as well, that was helpful and I had a chance to take a look at them to see where you head are R: Yeah A: From last time we talked and where you want to focus in, so that was nice and was very helpful, much appreciated. R: Alright, thanks. K: Alright, should we get started then? A: Yeah, let’s get this taken care off. K: Do you want to ask the questions Rachel? R: Yeah, our first question for you is, how are you, are you good? A Haha, yeah, I’m doing great, the only thing that's gripping me today is that we have had snow. I’m in the kitchen area and we have had snow coming down. That's the only gripe I have had today. Other than that it’s awesome. R: Oh, okay. Well, we were playing, we don’t have spring so it's okay. A: Well it's like, yeah, spring is getting delayed, yeah, but it's kind of Swedish weather. It’s how that works. R: Okay, my first question is, do you have a limited time, or is it okay? A: No, I’m okay, there is no real constraint for me, I’m thinking we are going to spend about an hour or something around that. K: Yeah, that sounds right. A: Yeah, based on the questions that you have prepared, that's all, but there is no need to rush, so. R: So our first question is, how do you describe Spotify in general as a company? A: So yeah this one is interesting because the way I think about it as being a person who works with it as well as being a music listener as a consumer, there are different angels to it. I will give kind of two angels to it and the brand component, which is what we are going to be talking a bit about later perhaps, I’ll explain a bit more. Spotify as a company is what most people know it for is to provide music in a streaming fashion on mobile devices etc and its known as one of the market leaders globally in doing so and it’s one of the early one to put that concept on the market from the early days, which is now about twelve years ago. Twelve or more years ago. Apple with its ipods allowed people to purchase music and then download it to their devices instead of the old style Sony Walkmans and things of that nature. But Spotify provided a complete native and connected experience there. So Spotify was in that sense from the early days a very bold big company providing streaming music to consumers in a time when music was essentially free if you were willing to not obey the laws of many countries, so you can download music everywhere, it was free, you can spend time download albums from your favorite artists and all that stuff. Spotify decided that we can actually build a service that is free initially and then paid in the future, to provide that for you. So, it was a very very bold move that the founders of the company did when they decided that they wanted to provide music for the masses. That was at a time when music was free but illegally free. And it turns out that just Spotify actually helped the music industry by basically providing a legal way for people to access the music that they wanted to listen to, whenever they wanted to. So from that perspective, Spotyify has been a very innovative and very bold company, as in deciding to provide a service that at the time didn't make sense as the only difference really was if you
80 know wanted to download my favourite music I could find it on the internet and download it to my devices and play it there. Spotify just did that easier and made it more convenient for the consumer. That was kind of the thing that then started to shift away from the legalities of downloading MP3s on Naptser. So from that perspective from its inception it was very bold. That boldness and forward looking thinking has permeated through the company from its founding years. Its now become a company that is perceived globally as a very progressive company when it comes to social justice and equality and also strong penance for the company. That shows in many ways in terms of how content is being provided today by the editorial section of the company in terms of editorializing and music adding to current events to the world. So like Black Lives Matter there was music and content created in support of that and the social responsibility that the company takes is very big across the glove, focusing on equality and equal rights for everybody. There is a huge amount of social concess and dividy from that perspective with the company. It's visible both in terms of marketing towards consumers as well as internally to the people who are actually working with the company. In short I would describe Spotify as a company who is very well aware of the environment in the world today. Where there is injustice and things need to be improved and actually pushing for improvements and making things better through the lens of the music and audio etc. Pushing that out into the world. That’s also reflected in terms of how the company acts towards its employees and the liberties and preferences of whatever it might be are very key. R: Thank you, that was a really well elaborated answer. The next view we have spoken about Spotify as a brand, right Kasper? Or do you want to add something on that? K: Me? R: Yes? Do you have a question that reflects on Spotify as a brand? K: I think we are covered on the brand aspect. We got a lot of information to work on, which is really good. I think we can move on to the next question. A: I can elaborate a bit more on the brand component. K: Please go on. A: Spotify has been projecting itself in the world through many ways and through many channels and many approaches. Some of those approaches are different depending on the market that the company has entered There is a very nice person that's being projected by actions that the company takes as well as any marketing materials and interactions that are happening with a little tongue in cheek, funny, not taking oneself too serious, aware of what's happening in the world and supporting people that needs to be supported is important. The vast majority of times it's done in a little bit of a tongue in cheek fun approach. And there is one example that is happening is if customers are having a problem with the service and are reaching out to the customer support team, they are greeted in a very friendly manner and in a way to say that they want to help you solve your problem. Often there is a concept called a rack or a C or a K, it's a random sign or kindness. It's something that's been a concept within the customer support side as when they solve a problem for a customer, very often the customer's representative can send a playlist to the person they just helped. That playlist often spells out a fun word based on the first letter of the song and that's positive towards the customer and those sort of playlists often gets a very good response from the people that then had a problem and got supported by the customer service and then also received a playlist showing up to them saying that “thanks for reaching out to us, we hope you have a better day tomorrow and then a
81 playlist that's very uniquely focused around that specific issue. So the company in that sense is building a brand by being marketing by being very connected through word of mouth and emerging as having an awesome experience, no matter what they do within the service. So Spotify's brand is very well sort of kept and there is a lot of focus on keeping a certain persona towards the consumers. It's very managed and considered thoughtful in that approach. So Spotify is one of the brands that I think, I worked for many companies with big brands, but in terms of the huge consumer reach that Spotify has, it’s been an amazing place to spend within and to see how the company is focusing on creating awareness and a good experience for customers in a good.It’s a very strong brand and it’s very well known globally. R: Thank you. Just to continue with the brand, we wonder if you consider the product that Spotify is offering to be standardised, highly standardized. A: I think the short answer would be parts of it, yes, but then there is also a key part that Spotify can offer that makes it less standardized. I can explain, so for instance, providing music and content access to a catalogue with many millions of songs that are available under the brand. Just providing access to that music and content is very standardized today, or very commoditized, meaning that there are plenty of other companies that can provide access to the same content. They may have pre-owner or paid offers, but essentially access to content is becoming very comodozied and the sort of idea and concept from within Spotify is that it’s acknowledged and that it’s the baseline, providing access to content. If you are going to be successful you have to be able to do that. That’s not an competitive advantage, the competitive advantage then has been evolved from the early days of providing access to content, like we talked about earlier in the call, now in to something that is more and more sophisticated, which is more about providing curated access to content, meaning based on what you as a person and individual, what you like and what you listen to and then having the service providing insight into “maybe you like this song, because you like that song”, so adding in those type of personalization components in to the ting, This personalization done at scale is very complex, the company is using a lot of machine learning and human editorial touches to provide content suggestion back to the consumers of the service today. So that is also getting more standardized, but Spotify is doing a really really good job in providing the right content back to consumers. So the baseline is highly standardized access to content, but how it is being presented and how the user experience is when you as a user wants to listen to some types of music or some type of podcast. That is sort of the key part where Spotify is doing great, in tuning that specifically to use as an individual. R: Nice. And maybe you have partially answered this, but just for the sake of that we want to know. Is there any adaptation that is required when it comes to reaching out to different consumers. Maybe Kasper will tell you what he means by this? K: Yes, so basically, if you change the way you do things based on who you want to reach? So it could be if you look at different demographics in Sweden? Or if you try to move into a different country, is there anything you focus on that you need to change in order to reach the new demographic? A: Yes, there is a lot of consideration that goes into that. So far we talked more about the content itself and how to tweak and tune the experience that the individual has as the user of the service, which is done on the individual level based on what the patterns of the user are. In addition to looking at the individual client that's out there listening to this, many many other
82 factors are taken into consideration in terms of how to, if you look at this as more type of market. Where Sweden is one type of market with a certain type of infrastructure in place that the average salary is pretty high, most people, I don’t know the numbers, but about 80+ % plus have a smartphone and an internet connection no matter where they have. They have it in their cohabited home and when they are on the road. That kind of puts us in a certain perspective of how the company thinks about the market. Another example with Sweden is that it's been very established that it's one of the first countries that the company has been in, the brand awareness is super high, I think it’s closer to 90%, everyone in Sweden knows what Spotify is and what it does. From a marketing perspective and how to then promote the service in that type of market is that the strategy for that is different then for example going into a country in southeast Asia where there might be awareness of what Spotify does, but Spotify has not been present in that market in the past. Then when going to such a market, consideration is taken to how we should start educating the people in the market about what we are and what we can do. How can we then change the offering that we present to them that is adapted to their type of daily life. Do they credit cards or debit cards? Is that a common thing there for paid services? Do people normally have a monthly salary or by-weekly salary? Or is it more like they don’t know how much money they will make tomorrow? Those types of questions are from a demographic perspective taken into account quite a bit. So to be you know one example could be that if there is a market where there is low brand awareness but people tends to have a lot of cellphone, it may not be the most you know most modern or powerfull one but they have cell phones, often times allowing customers then to add on to their their current subscription they have with their cell phone provider is an option, that company we then partner with. Hey, do you want to add a Spotify paid premium plan to your cell phone. That’s one example of then being able to bundle our service into a service that these customers know and are familiar with and it's just an added field on to their premium service. That's one angle when going into a market. Here are the top three pelco providers in this country, we partner with them and they are basically reselling our service in their own service. That sorts an entry point into that market, as we just become more present there, not having to worry if people have credit cards or other types of payment options. So the approach of entering markets is very different depending on the type of market. Sometimes another dimension that's being considered is if people are comfortable with subscribing for a full month if they have an uneven income. Certain types of countries like Indonesia, they are very accustomed to buying single-use things. For example, if you go out and want to wash your clothes, you don't buy the detergent in a big box. They might have a small place to live, they may not have enough money, so basically buying a big box is too much, so they actually buy smaller single serve or maybe three packets for doing laundry. So those types of markets are very different then the markets that we have in more established countries. So Spotify goes to lengths in trying to see how we can shift the product that we offer and how the people would pay for it in ways that are more attuned to the everyday life that the people have. So changing the product offering could be, instead of a monthly subscription they could choose a weekly one. This would be completely unnecessary in a country like Sweden. Where people would have enough money to pay for it. Either they want or they don’t. So for these groups of people it might be better for them to say that for this week I'm going to host a party and I want to turn off the ads in my stream so then they can actually pay for that and not the week after. There are a lot of considerations of that kind when entering a specific targeted
83 market. So there are tweaks to the standardization of the product based on the market that the company is entering and operating in. R: Wow, thank you. Our next question is also related to that, what are some of the functional adaptations? A: When you say functional, can you talk about what you mean with that? I would like to hear what your thoughts are. K: So the app for example, are there any changes to how it functions? Similar sort of engineering perspectives perhaps? A: Yes, there are. It goes back to kind of, we talked about the environment that we are used to here in Sweden, which is that everyone has an iPhone that is powerful and can actually pay for and afford it. There are places where infrastructure for example and networks are less developed, like a spotty connection or you may not have a phone connection there at all the time. Not even a 3G connection, versus 4G connection which is more common here. It's one thing on the network infrastructure to provide and give the service. That's one angle when making functional decisions. Another one is also the less powerful devices. The Spotify app that goes out to the majority of the developed world is pretty heavy. There is a lot going and there are just phones that are not able to run these apps. They are basically too heavy. There are then adaptations then that's slimming down basically cutting out features and a lot of physical size and processing powering needs of the application that are targeted towards markets where the majority have less powerful phones. So yes, there is quite a bit of thinking around that goes into how to design the service. But obviously then making engergering changes like that is also costly when it comes to time and effort spent within the company. So those efforts are sort of balanced out with a little bit of a longer time projecting into a market saying that if the average cell phone capability are this today what would it be in five years from now? So in terms of us entering the markets saying “what is the awareness of our service and how sticky will it be for the consumer what wants to use it? Then offset that with “how will it look in five years”? There is a project in 3-4 ýear then the abilities of the devices that people will have are gonna be a bit higher then perhaps the service will be targeted more towards that in those markets. So a tradeoff towards putting engergering focus and capacity and product development into tuning an app for today versus what's going to be in three years. R: Nice, I was just thinking out loud that in Kenya there are a lot of fake phones and I can imagine the same happens in other countries of southeast Asian and we wondered if phones could function in these phones that are not pure Android or iOS. P: Spotify in that sense does not really care about what a consumer might have as long as the application is able to run on that platform that they have. So there is no policing of that, if I put it that way. That's someone else's problem to solve in that sense. Spotify as a company wants as many people as possible around the world to enjoy the service, as much as possible and there and adoptions then in how we make that happen. Forcing anything outside of what we provide is not in the company's interest. R: The next question and maybe after this Kasper can take over, we are reaching question six now. How has the payment option limited or increased consumers' abilities to use Spotify in other countries? A: So it varies per market, if I put it that way. What’s very important is that, so Spotify offers a free service which is add supported as well a paid service which is then the premium service.
84
Generally speaking, we want as many people as people enjoy either one of these two services, wherever they are. When we talk about the paid offering, it gets a little bit more complex. The developed world specifically, the western world or America, everybody has a credit card. I think there is a time limit set for zoom supported minutes, if this one times we can sort of set up another one. R: I apologize, I will just start another immediately, I’m sorry. P: That’s perfectly fine, I think Zoom has a limit for three people in 40 minutes. Going back to the paid service you want people to be able to give you money for the service that you have. That can get quite complicated, so like I mentioned earlier in the call today, partnering up with telephone companies is a very common way to enter or tag a lot with something that is already established. That is called carrier billing as a payment option. So the telephone provider would be Telia or something like that here in Sweden. Then you can sort of through Telia pay for a premium version of Spotify. Carrier billing is a common way of accessing or providing a paid service to others. Then depending on markets, there will be credit cards or debit cards available. There is something called vouchers which is a very common way to provide abilities to pay for a service, they are kind of like gift cards in some way. You go out and buy like “I want 30 dollars and I give that to the retailer when I check out my food. I give a card with a code that I can then redeem. Then I get access to the service. That’s another way that’s very common and that’s used in many different markets. Having the ability to summarize this, so being able to offer payment methods that are relevant to the customer you want to reach is very important for a company at this scale. So the payment methods will be adapted to the local environment, to the extent that it's possible. There are obviously limitations to it, you can’t provide a specific one to each market. It’s a mindset thing that it's important to be able to provide it to the vast majority of users. K: I think you just answered our next question, how can someone pay if they don’t have a credit card? I think you summarized that pretty will. A: Yeah, it’s in the same bucket. K: Maybe we take a new call here. Before we get into another question. R: Let's take a short commercial break. A: Yeah, that sounds good. I’ll just wait for the link. K: Sounds good. A: Awesome. See you soon. R: Kasper will we continue now? K: Yes, we will start with the next question. So we talked a little bit about how Spotify adapts when it comes to different consumers but we had another question about how Spotify thinks about different demographics and also different cultures within Sweden so when it comes to marketing is there any sort of strategy about targeting different cultures or demographics within Sweden or is it more of a general strategy? A: I think there are two parts to that, there will be a multipart sort of response to the question. K: Yeah. A: So first off, if you look at it globally, Sweden is a very small market from that perspective. Is it worth sort of focusing on specific marketing efforts and subgroups within Sweden where we have like 10 million people? Versus the entire user base which is over 300 million or something like that in terms of actual monthly users? So, from that perspective, from a scale
85 perspective it is really hard to focus on subgroups and sub demographics within certain markets. But that said, so if you take Sweden as an example, so I think the small answer to it in terms of, is there any specific targeted marketing for this market? Not really. But the thing that Spotify really tries to do is to project itself as a very inclusive company when it comes to different cultures and how people behave etc. So from that perspective it is more like a corporate, like a stance, to be inclusive. And then being able to say that “Hey we have underrepresented groups of people over here, maybe we can support them in certain ways.” So, from a corporate perspective, from a brand perspective, it is very important to start working towards those values of being inclusive to everybody across the globe. That in itself is sort of a companywide, across all markets, sort of initiatives to do so. So, the company is focusing very much on being inclusive to as many groups as possible in many different ways. It may or may not be specifically in Sweden per se. But globally, so that's sort of when it comes to the market focus. The way that the market groups within the company operates is very much in consideration of the culture components of the world. South America as a continent which has plenty of countries within it, they all have their own subcultures, but there are certain common themes that they are focusing on to market in a broader sense. The communication and the brand portail to the people and the users and different markets looks different. It's adapted to the local environment to the extent it’s possible. It’s true in Sweden itself, but Sweden itself is a small market. It could be that there are certain editorial playlist certain groups of people that may enjoy that type of music or content and start promoting that through social media. Culture awareness and demographic awareness from a company perspective is huge and a lot of that is going into consideration when it comes to interacting with our users in different markets. K: Yes, so you touched upon a little bit, the next question is when reaching out to new markets outside of Sweden. Is there any specific culture aspect that Spotify looks at? A: Yes, we kind of touched on it in different ways earlier today in the discussion. Adapting the service is in the product that's offered to different cultures and circumstances is very important. That goes into two sides of it. One is the kind of purely the sort of product that is being offered. Is it what's called a thick client, we talked about as a high power device, a smaller less powerful device is a thinner client. Those are taken into consideration, that's more like on the considerations that's about adapting the product from an engineering perspective to the local market. The second aspect of that is then the content aspect of what's being provided. If you are in a country that has a flourishing rich culture component is that content actually available on our platform, obviously Spotify wants to provide as much as possible of that to the local environment, but then it comes in to talking about the content providers and licensings rights that need to be put in place etc. From Spotify's perspective, we want to provide a locally adaptive customer experience when it comes to interacting with the service, but also a locally adaptive experience, essentially what is it that you can find within Spotify that's relevant to you and your environment. Are you a local artist there? Perhaps the biggest artists of the country can be easily found, but the ones that are not as popular or big, can they be found? There is an interest from Spotify to provide a product experience as well as a good content experience in the local market. But the content component is something that Spotify can’t decide on its own, because they have to work with the rights holder of the local music markets etc, but be able to have the content available all the time.
86
K: Okay, great. We are at the final question, which is about reaching the consumers. Which channels does Spotify use? Which are the ones that you find the most effective? When we say channels we mean using email, word of mouth, social media and so on…. A: The short answers are all of them. There are billboards in big cities, in terms of communication I take it in to parts, one is marketing in a sense but also then in an in-direct way of communicating. So all the ones that you mentioned, emails, social media, SEO type of activities are all considered and are all being worked on, often by different teams in terms of how we reach and how we communicate with customers. The example I mentioned earlier with the random act of kindness that the customer support team can do is one such reach out ability that one specific customer representative has to one specific customer. That usually results in a customer saying “wow”, I’m one out of so many customers, this is something that got presented to me and that's unique to me. It was based on my current circumstances and I feel awesome, this is amazing. Then they go on and talk about this, creating the word of mouth component that kicks in. The most powerful marketing tools today are connected in some way to social media. In terms of search engine optimization, that's efforts we put in to make sure we rank high when people search for us. When it comes to email communication to push out, for example saying “hey, we have this new podcast on this service”. We have the email address for many of our customers. That's a rather push type of marketing. But I think the most notable at least ways for the company to build a brand is leveraging virality as much as possible. As people sharing stories and experiences, sort of expanding out on that. There are a few examples of that that's been very good, the prime ones are end of year campaigns that Spotify has been talking about. They send out a report saying “here’s your playlist for the year, this is what you listen to”. Giving you as a consumer specific information, such as here is your toplist of the year. It's an interesting way to round off a calendar year. At least in the Gregorian calendar year. That results in users saying “oh my god, back in March last year I was in a bad place listening to whatever that song was”. These sort of campaigns go out to everybody and give opportunities for the users to interact and to share their story. Click this link and share it to facebook, twitter or to whatsapp. It also gives opportunities to interact with the artist that has provided the content that you listen to. So the user ends up saying “hey, thanks my favorite band while I was in a bad place and I feel better now”. That creates a social media expansion of the brand and the individuals feels good about it, it's very powerful. So tapping into that and finding ways to create situations where virality exists, through sharing stories etc. So the short answer is that all of the communication channels are being used. The ones generating the most leverage are the social media ones. R: By social media you mean kind off? A: All of them. R: All of them yes, I just wondered. How much do you use influencers to push your brand? A: I think about influencers as artists, then quiet a lot. Spotify today is so big, when you have 300 million + people interacting with your service everyday. If you can tap in to them directly, you create a volume of feedback loops in the social media space. So not really focusing on specific individuals. As an example, there is quite a bit of focused efforts from the company. For example, a few years back, I believe David Bowie passed away, there was a celebration of all the art created by him. So Spotify bought a lot of ad space in at least one subway station in New York. This was the subway station that he often frequented and that was close to his home
87 or something, David Bowie was all over that specific sort of subway station. It created a localized pop-up experience for people who passed through that every day. They then take photos and post the hashtag that was associated with that event. Another example would be that’s a bit more recent, but about two years back, it was a pop-up even with Billie Eillish. There was a whole physical experience that was created in Los Angeles, where she was there physically. It was an event that lasted about a day or so. Those types of connections are then obviously done in collaboration with David Bowie's estate, rights holders of the license and Billie Eillish herself etc. So yes, there are collaborations happening with content creators, not influencers that are focused on as a target group, because there are so many artists that are already on the platform that want to have bigger exposure on the platform. They are examples of good collaborations. K: Yeah. We're out of questions now. So unless you want to add some last few words? A: The questions that you asked were great. You narrowed it down to what you wanted to get out of it. It was very entertaining for me and fun to talk with you guys. So I appreciate the opportunity to do so. I have been sharing a lot of information, so I'm happy you recorded this.
88