Question

A NEW MOBILE “APP” FOR A MUSIC COMMUNITY

Following his graduation from an excellent university with a degree in music and entrepreneurship, Brian Wright was eager to launch a music-related business. Brian always enjoyed working with new technologies as well as listening to music. Because of the proliferation of social media sites on the Internet and the advances in mobile technologies with smartphones, he believed that developing an “app” for mobile phones that brings together a community of fans for their favorite music would be ideal. The development of mobile applications has become one of the largest industries of mobile technologies and hundreds of thousands of apps exist for mobile users in almost every category: games, lifestyle, social networking, education, business, etc. In the Apple App Store alone are more than 500,000 apps and counting; many are even free, but many others are not, which means mobile applications are truly a growing source of business.

Brian was confident that the success of the other open sourced communities and other mobile apps proved that there was a market for his idea; therefore, developing an app for personal music would be an easy concept for customers to grasp. Although music can be downloaded for free or for small fees, Brian knew that he and his friends preferred to listen to an particular music and then comment about it. Brian believed that any true fan of a particular brand of music would want to engage with other like-minded individuals. And, if it was available on a smartphone as an app, then the mobility issue would ensure its success.

When calculating potential revenue, Brian concluded that the best way to monetize the app would be through a reasonable purchase price and then have music related companies pay for ads that run within the app. Since he was creating new social community around music, this would certainly be an avenue for companies to advertise. As Brian began discussing his idea with his friends, their enthusiasm convinced him that he needed to act quickly before someone else seized the opportunity. At $2 per app purchase and an estimated four new community members per month, he would only need a little over 20,000 customers to reach $1,000,000 in annual revenue. After looking at his financial forecasts, Brian decided that it was time to bring his mobile music app to market.

QUESTIONS

1.      Has Brian completed the proper marketing research for this potential opportunity? Why or why not? Explain.

2.      Based on the case, are there key mistakes that you would caution Brian about? Explain.

3.      What specific steps would you recommend to Brian for him to better assess this opportunity?

Answer 1

(1). Brian has not completed the proper marketing research for this potential opportunity because---

• He has not explored similar apps and assessed their features.
• He has not conducted survey among people to find out if they are actually interested in the idea.
• Even if they are interested what is the price that they would be willing to pay for the app has not been ascertained.

(2). The calculation of 4 customers per month resulting in 20,000 customers per year is incorrect. He would only get 96 customers per year. Even if he gets 20,000 customers annually, his income would be $40,000 annually and not $1,000,000 as mentioned.

(3). Steps for better assesment are as follows----

• Conduct market research
• Come up with a marketing strategy to sell the product.
• Calculate costs and risks.
• Conduct a survey among people to find out potential customers.
• Proper calculation of estimated revenue must be done.