Department of Marketing WiMP Bachelor Bachelor of International Marketing Date: 08.06.2014 by Elisabeth B. Moen Erik Jahren John Reinert Ulland Philipp Pascal Schmitz This paper is done as a part of the undergraduate program International Marketing at BI Norwegian Business School. This does not entail that BI Norwegian Business School has cleared the methods applied, the results presented, or the conclusion drawn Acknowledgements We would like to thank all the people that have been involved in our bachelor thesis on the different levels. We would like to thank the staff at WiMP for giving us the opportunity to write about the company, and contributing us with information on this thesis. A special thanks to Ms. Bettina Engelmann, Ms. Annelie Beccu and Ms. Meike Nolte from WiMP Germany and also Mr. Are Thu from WiMP Norway for providing us with information throughout the process. We would also like to thank the participants in our survey. Last but not least we would like to express our great gratitude towards Mr. Stephan Mühlhäuser (Lehrstuhl für ABWL und Marketing I, Professor Dr. Dr. h.c. mult. Christian Homburg) at the University of Mannheim for being our supervisor and mentor throughout the entire process and providing us with his expertise. ———————— ———————— Elisabeth B. Moen Erik Jahren ———————— ————————- John Reinert Ulland Philipp Pascal Schmitz Mannheim, the 8th June 2014 1 Bachelor International Marketing- WiMP Executive summary WiMP is a music streaming service that provides the user with customized music offerings. The company is established in several countries including Germany, which will be the focus of this thesis. The goal for this thesis is to figure out how WiMP can continue their growth in the German market, and gain a competitive advantage on their competitors. To reach this goal the group has gathered a large amount of information, conducted a survey and an analysis of the company both internal and external. This is summarized in a SWOT analysis. The group has used relevant theories and models throughout the thesis to explain the situation of WiMP. At the end, the group will provide a summary and a strategic recommendation for what measures the company should pursue in the future. Bachelor International Marketing- WiMP Table of Content List of Figures................................................................................................................... 1 1. Introduction................................................................................................................... 2 1.1 Problem Definition ................................................................................................. 2 1.2 Research Limitations .............................................................................................. 3 2. WiMP............................................................................................................................ 3 2.1 Company Profile..................................................................................................... 3 3.1 Research Design ..................................................................................................... 5 3.2 Data Collection ....................................................................................................... 5 3.3 Survey Findings...................................................................................................... 6 4. Internal Analysis......................................................................................................... 16 4.1 ACE Model........................................................................................................... 16 4.2 Boston Consulting Group Matrix ......................................................................... 19 4.3 Bakka – Model...................................................................................................... 20 4.4 Internationalization Process.................................................................................. 22 5. External Analysis........................................................................................................ 26 5.1 Competitors Analysis............................................................................................ 26 5.2 WiMP – Porter ́s Five Forces................................................................................ 31 5.3 PESTEL Analysis WiMP ..................................................................................... 35 5.4 The Industry’s Globalization ................................................................................ 39 6. SWOT Analysis of WiMP.......................................................................................... 40 6.1 In Debt Analysis ................................................................................................... 40 7. Strategy....................................................................................................................... 46 7.1 Strategic Problem Definition ................................................................................ 46 7.2 Operative and Strategic Objectives …………………………………………… .46 7.3 Critical Success Factors........................................................................................ 47 7.4 Marketing Structure.............................................................................................. 49 7.5 The Nine Strategic Windows................................................................................ 49 7.6 Marketing Mix...................................................................................................... 51 7.7 Blue Ocean Strategy ............................................................................................. 53 7.8 Porter´s Generic Strategies ................................................................................... 54 8. Summary..................................................................................................................... 56 Bachelor International Marketing- WiMP 9. Recommendation ........................................................................................................ 57 10. Affidavit.................................................................................................................... 60 11. Biography & Appendix............................................................................................. 61 List of Figures Figure 1: Streaming quality differences …………………………………………….. 4 Figure 2: Satisfied with current music provider …………………………………….. 9 Figure 3: Importance of backup and saving playlist ……………………………….. 10 Figure 4: Importance of price ………………………………………………………. 11 Figure 5: Importance of sharing ……………………………………………………. 12 Figure 6: Importance of new music recommendations …………………………….. 13 Figure 7: Importance of large music selection ……………………………………... 14 Figure 8: Importance of sound quality ……………………………………………... 15 Figure 9: ACE Model ………………………………………………………………. 16 Figure 10: Boston Consulting Group Matrix …….……………..………………….. 19 Figure 11: Internationalization Process …………………………………………….. 25 Figure 12: The recorded music market in Germany, 2003-2013 …………………... 27 Figure 13: The market share of digital music formats, 2008 …………… ………… 28 Figure 14: The market share of digital music formats, 2013 …………… ………… 28 Figure 15: Physical and Digital music graph ………………………………………. 37 Figure 16: SWOT …………………………………………………………………... 40 Figure 17: Solberg´s Nine Strategic Windows ……………………………………... 50 Figure 18: Blue Ocean Strategy ……………………………………………………. 54 Figure 19: Porters Generic Strategy model ……………………………………….… 55 Figure 20: Porters Five Forces ……………………………………………………… 56 1 Bachelor International Marketing- WiMP 1. Introduction This thesis is our final project in our Bachelor´s degree in International Marketing from BI Norwegian Business School. We have written the thesis with assistance from our supervisor at the University of Mannheim. We have been exchange students in Germany during our 5th and 6th semester. WiMP Germany has provided us some information regarding the company and their current activities. The purpose of the thesis is to describe and explore the possibilities for WiMP in the German music streaming market. At the end we will provide a strategic recommendation for what measures the company should pursue in the future. 1.1 Problem Definition “How can WiMP continue their growth in the German music streaming market and obtain a solid foothold, and get a competitive advantage over their main competitors” Research questions Gripsrud, Olsson and Silkoset (2011 p.28) describe research questions as questions that summarize and answer the research aim. WiMP must acquire information about relevant factors to further plan their market strategy: o Are WiMP and music streaming services attractive for German consumers compared to more traditional ways of listening to music? o Which factors regarding streaming are most valuable for the consumers? o Does people in Germany have a basic understanding of music streaming? 2 Bachelor International Marketing- WiMP 1.2 Research Limitations o We did not have any prior knowledge to the music streaming market in Germany o Our survey had too few respondents to make a representative collection of the population. It is only valid for academic purposes. o The respondents were mostly students situated in the Mannheim area with a low annually income. 2. WiMP 2.1 Company Profile WiMP is a music streaming service focusing on inspiring users to listen to new music and old