Pandora Radio: Fire Unprofitable Customers Harvard Case Solution & Analysis

Market and Customer Analysis

The real value proposition for Pandora Radio customers is the capacity to customize the musical heeding practice and Pandora Radio’s capacity to cater to the separate listening needs of each one of its potential subscribers, due in the enormous part thanks to their structure and particular algorithms generated by the original founders of Pandora and Music Genome Plan.  Customers also even enjoy the accessibility and most importantly the ease of use that was offered by the Pandora Radio. Customers can easily get access to the high quality music streamed directly to their Pc’s, tablet, smart-phone and other web empowered devices wherever they have a web connection or a cellular reception. Pandora has profited from the United States conventional shift toward the usage of constant web and smart-phones or some other internet based devices in that their entire delivery technique costs are decreased. It is not mandatory to purchase a special Pandora Radio Device or any other exclusive apparatus that would allow them to listen to Pandora Radio. Customers simply log in to Pandora’s website or downloads the specific Pandora application that the company offers free of cost, and they can initiate to listen instantly (Detroit, 2012).

Alternatives and Recommended Action Plan

The conceivablealternatives for Pandora Radio for their enormous usage as mentioned in the case study are:

Show aggressiveness in advertising

Introduce the “Freemium” concept

Apply a subscription model

Limit the listening time by charging users a fixed price for exceeding a specific limit

Show aggressiveness in advertising:It has been observed that Pandora Radio must add more and more advertising till it is non-intrusive. Pandora Radio can influence on the fact that it can provide direct advertising based on the related and useful information gathered from their subscribers. Presently only around 60 % of its advertising space is being consumed and so Pandora Radio has a lot of potential to increase its revenues by just placing more graphical advertisements. The accomplishment of the iPhone Application of Pandora Radio is an additional reason for putting more pressure on advertising as this has directly ledregularly and in a more specific and advanced manner. Pandora Radio should preserve their policy of not introducing audio ads because by doing that, itwould spoil the customers’involvement which may not apply to sustain customers.

Introduce the “Freemium” conceptof proposing Pandora Radio’s service is a worthyalternative to earn more revenues from users. Though, this cannot be practically applied on the present service level on all alone basis, as the users who are actually used to,forgetting their service free of cost might not beready to pay for the similar level of facility. Certain trimmings must be made to the presentfacility of Pandora Radio if this model has to be successfully applied.

Apply a subscription model:Requesting for a subscription charge from all users for using Pandora Radio services offers the rewards of spreading the costs of the extensiveuser base dropping the cost per customer which can be simply paid by them. Though, this yet again, leads to the problem of unwillingness on the part of the users to pay up for the free services which they have been using for free for long. Even though this methodologymight seem reasonable as users would be paying for the price of streaming onlinemusic, butthere are immense chances that a lot of customers mightonly stop using the website as it has also happened in the past.

Limiting the listening hours: The user who listens to Pandora Radiotoo much, the evangelist customers are likewise unprofitable. The customers who didn’t have payamount forthis online streaming the radio leave it on even whereas they were quiet away from their Pc’sproducing no incomes as they didn’texecute any movement on their Pc’s and producing streaming costs for Pandora Radio. Therefore, to stop such usage, the cap of around 40 hours of completely free usage per month and then demanding a small amount of around 99 cents for additional use seems like a perfect strategy. The stableand relatively small payment volume would also not consequence in bad Word of Mouth. The company has already witnessed that a lesser cap on around10 hours did not effectively work in an optimistic manner for Pandora Radio. Even this is a worthy strategy, it is still not totallyguaranteedas users might pay the extra 99 cents and still continue “Leaky Faucets” by using the facilityexceptionallymuch without any movement for more than around 80 hours a month. Still, this can solve the existingissue faced by Pandora Radio to a larger extent.........................................

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