Innovation & Creativity for Business 799887

Innovation & Creativity for

Business
6104LBSBW
Ali-Eren Unlucan
799887
Innovation & Creativity for Business 799887

Table of Contents
EXECUTIVE SUMMARY ........................................................................................... 3
INTRODUCTION .................................................................................................. 4
MARKET ENVIRONMENT (INTERNAL AND EXTERNAL FACTORS) .......................................... 4
SWOT ANALYSIS ................................................................................................. 4
PESTLE ANALYSIS ................................................................................................ 5
PORTER’S 5 FORCES .............................................................................................. 6
ANSOFF MATRIX .................................................................................................. 7
INNOVATION ...................................................................................................... 7
THE FIVE STAGES OF PRODUCT INNOVATION MODEL................................................................ 7
THE 4 P’S OF INNOVATION ........................................................................................ 9
CONCLUSION .................................................................................................... 10
BIBLIOGRAPHY .................................................................................................. 10
Innovation & Creativity for Business 799887

Executive Summary
AudioHub is an e-learning social media platform with the aim of educating aspiring
producers by outsourcing experienced producers, singers and other types of musicians
through online lectures and seminars, whilst also offering them the opportunity to network
with other music lovers. This is a small to medium enterprise that will operate within the
social media and education markets, however, the service provided has a niche market.

With the global pandemic caused by the outbreak of Covid-19, the music and events industry
has felt the harsh effects of it, just as most industries have. Concerts and festivals have been
indefinitely postponed in effort to control the virus. This has created a need of income for
musicians and performers, with many already hosting online video lessons for a small fee.

This report analyses the market environment that will be surrounding AudioHub to guide
them into making better business decisions. Furthermore, it evaluates internal and external
factors within the market it operates in using methods such as SWOT analysis, PESTLE
analysis and Porter’s 5 Forces. Through these methods of analysis, the report found that there
is a demand for an app like this as musicians are not gaining income that they usually would
through live performances. Furthermore, their expertise will definitely be a selling point to
potential users.
Innovation & Creativity for Business 799887

Furthermore, through the use of Ansoff Matrix, AudioHub concluded that their service was
going to use the product development strategy as it is a new product within an existing
market.

Following this, the report then proceeds to outline how AudioHub can mobilise the process
through innovation. The Five Stages of Innovation model was used which states 5 different
stages of product innovation: Step 1 Idea generation and Mobilisation, Step 2 Advocacy and
Screening, Step 3 Experimentaion, Step 4 Commercialisation and Step 5 Diffusion and
Implementation.

As well as that, the 4 P’s of Innovation model is utilised to determine whether the product is
an incremental or radical product. AudioHub found that their service was a radical service as
it is different to other social media sites. The report also found that AudioHub would take a
radical position in the market as it allows users to have close access to people they would not
usually.

Introduction
The online learning market is fast growing and even before the pandemic researchers
estimated the industry to be valued at around $350 billion by 2025 (Koksal, 2020). This
shows the potential to thrive for a platform like this, in society, when the need of physical
facilities lessens every day. Online learning makes it possible for people on different
continents to share ideas and if used properly, can be used to reach great success. AudioHub
had to analyse its market environment in order to gain enough information to minimise the
risk and appropriately assess the opportunities presented to the company.

Market Environment (Internal and External

Factors)
SWOT Analysis

Strengths Weaknesses
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• Niche service which could provide a • Membership cost could deter

loyal customer base.
• Offering a good service at an
accessible rate.
• Low cost of entry into the market.
• Service is easy to access.
• Good reputation if the appropriate
musicians can be recruited.
Opportunities
• No social media sites for people
with an interest in learning music.
• Growing popularity in online video
teaching – no cost to use any
physical facilities and convenient.
potential customers.
• Expensive to market the service on a
large scale.
Threats
• If a large social media site such as
Reddit decides to offer a similar
service.
• Uncertain economic environment.

SWOT analyses: strengths, weaknesses, opportunities and threats within a firms environment.
A highly reliable model of analysis as stated by Sarsby in his book about the strategy, “Swot
has been around for decades and could lay claim to being the most widely used strategy tool
in modern times.” (Sarsby, 2016). Proving that the method is reliable, further stating the
advantages that it is; easy to understand, applicable at different levels and easy to
communicate. However, like every strategy it has its drawbacks; potentially bias, poor data
quality and easy to ignore underlying principles. AudioHub however decided to adopt this
strategy to gain information about the market.

PESTLE Analysis
PESTLE Analysis evaluates political, economic, social, technological, legal and
environmental factors. Each of these are external factors so PESTLE is a useful method to
extract data about external market dynamics.

Political – Will have to abide by trade laws abroad. Brexit could have a potential effect on
business.

Economic – Due to Covid-19, most musicians and producers are out of work as events are
indefinitely postponed, so this creates demand for an app like this from musicians as a means
of income, which will drive the app forward.

Social – The use of social media is prominent within UK culture. Furthermore, the country
has a rich history in a range of genres of music so there will be a lot of aspiring producers
waiting for an opportunity such as this one.

Technological – Only a smart phone or laptop is needed to access the app. In 2020, it was
found that 84% of adults in the UK owned a smart phone, spending an average daily time of
2 hours and 34 minutes on their devices (Finder, 2020).

Legal – AudioPub will pride itself on looking after the artists that decide to use the brand
rather than extort them like some other music services whilst offering a small membership
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fee as the main aim of this enterprise is education not profit. Furthermore, as the app will
handle consumer data, the company will have to adhere to data collection and handling laws
within the App Store and Google Play Store.

Environmental – The company does not require any factories or industrial buildings which
is positive. However, as global warming is at the forefront of society’s issues the company
could emphasise an eco-friendly brand image, by encouraging consumers to be eco-friendly,
as part of the company’s CSR initiative. This will improve consumer relationship.

Porter’s 5 Forces

“Porter’s five force model is an analytical tool that analyses fives competitive forces that
help marketers and business managers look at the ‘balance of the power’ in a market that is
in-between various organisations on a global level and also help in determining an industry’s
weaknesses and strengths.” (Perera, 2020).

Customer Bargaining Power – Customers will have a

high bargaining power as their activity on social media
will already be mostly taken by other platforms such as
Facebook, Twitter and Instagram. Apps which are also
free, however they do not offer identical services to
AudioHub, which offers educational services.

Rivalry – Facebook, Discord or Reddit would be the

main competitors and market leaders as they offer a
similar service to AudioPub, in the form of forums and
discussions, on the other hand, AudioHub’s service is
specialised in music so hopefully that will sway music
listeners and artists to use it instead.

Threat of New Entrant - Costs around £15,000 to build an app so high cost of entry which
could deter competition. No real market leader as it is a niche service, this could attract new
market entrants. There is a gap in the market for a service like this so this could draw
competition.

Threat of Substitute – Most consumers use smart phones so technologically it will become
redundant as that will probably not change. Most consumers also use social media and
AudioHub offers some social media services. However, consumers may prefer learning in
person rather than online which could pose as an issue.

Supplier Bargaining Power – Suppliers will have a high bargaining power as it costs 3$99 a
year to publish an app on the App Store. Also, Google and Apple will also take tax from the
company, which is around 30%.
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Ansoff Matrix

This strategy focuses on four aspects: product development, market development, market
penetration and diversification.

Market Penetration – This focuses on increasing sales of an existing product in an

existing market.

Product Development – Focuses on introducing new products to an existing market.

Market Development – This strategy focuses on entering a new market with existing
products.

Diversification - Focuses on entering a new market with new products (CFI, 2020).

AudioHub decided to opt for a product development strategy as the service they provide is
not provided currently within the market to a quality level. Producers can find resources on
websites such as Reddit and YouTube to help them in improving their skills, however, the
information provided would be basic advice that could easily be acquired anyway. Whereas
AudioHub will have access to top level producers, who will need a stream of income, this
level of quality is not easily accessible.

To achieve this, AudioHub will have to invest in research and development to gain a better
understanding of how this niche service will fit into this market that is already established.
Furthermore, deals would have to be agreed with musicians as their services is the main
selling point of the product and app developers would have to be contacted to construct the
app and the website. However, it has to be considered that social media consumers will
already have strong loyalty to certain social media sites, spending the majority of their time
rotating between 2-4 different apps. Investing into research and development will combat this
as it will help the firm understand consumer behaviour on social media, further helping them
to construct a better, more engaging website for its users.

Innovation
The Five Stages of Product Innovation Model
Mariello states in ‘The Five Stages of Successful Innovation’ are: Step 1 Idea generation and
Mobilisation, Step 2 Advocacy and Screening, Step 3 Experimentaion, Step 4
Innovation & Creativity for Business 799887

Commercialisation and Step 5 Diffusion

and Implementation (Mariello, 2007). In
simpler terms,

This method is particularly effective as it

follows the product from its conception to
when it starts being sold.

The first stage of this model is idea

generation, this, for, AudioHub is the online learning platform for musicians, music
producers, songwriters and other forms of musicians. Although, this trade can be learned
independently, there is no doubt, especially with the outbreak of Covid-19 that people have a
lot more time on their hands and the access of expert music advice is limited on the internet.
Mobilisation is also part of the first stage, so app developers would have to be contacted once
the idea is formed.

Step 2 of the process is weighing the pros and cons of the idea, which Mariello also states.
The pros for the service are:
• Low barriers to entry.
• There is a demand of educational music platforms like this as creative vocations are
often rejected in general within UK education.
• There is a demand of income for musicians as concerts and live performances have
been indefinitely cancelled due to the pandemic.
• Online learning is increasingly becoming popular with the use of technology
becoming more prevalent each year within society.

The cons for the service are:

• Demand could be limited as when events resume musicians may be occupied. Extra
financial incentives could be offered at this point if the service is successful.
• Attaining consumers could be difficult as most consumers have strong loyalty to
certain apps.

In the third stage, AudioHub will have to carry out market research to decide whether the
service they are providing is viable. As well as that, they will have to figure the costs
involved with running the service:
• how much to pay musicians – lessons will average approximately 20 students per
lesson, paying musicians ranging from £5-10 per student in a lesson depending on
their reputation and expertise.
• app store costs - $99 a year to have a subscription as an app developer a year with
Apple (Apple Developer, 2020).
• membership cost – prices will start at £4 per month and £8 for elite membership
which offers exclusive content and easier access to higher level tutors.

Additionally, in this stage, musicians, producers and music teachers will be approached to
gauge whether they have interest in working alongside the service. It is estimated a lot of
people that will be approached will accept the offer as income will be low due to Covid-19.
Furthermore, it will help these people reach a wider market and it will provide exposure for
them on a larger, personal scale.
Innovation & Creativity for Business 799887

Stage 4, a focus group will be requested to trial the app for a time period to see if the service
is viable. As this is an incremental service the focus groups will be asked to treat the app as a
social media platform and if the user sees the app as beneficial then the app should be ready
to be launched. These focus group will be in the UK market as this is where the company is
based. Furthermore, in this stage you would have to develop marketing strategies and acquire
the required licensing to launch the service.

Stage 5, AudioHub will be launched into real markets and international markets. As the
company will have invested significantly in research and development, the appropriate study
would have been undertaken to ensure AudioHub is culturally appropriate for foreign
markets.

The 4 P’s of Innovation

“An innovative enterprise is the driving force in the creation of new management standards,
relating both to the enterprise and its
surroundings. The activity of such companies is
based on the continuous generation of new ideas
that will have a significant impact on the
development of the company (Białoń, 2010).”

“Innovations can also be considered in terms of

their degree of novelty – ranging from gradual to
radical (Tidd & Bessant, 2013).”

The 4 P’s model has 4 different dimensions:

process, paradigm, position and product.
Furthermore, these dimensions are determined by
whether it is an incremental or radical innovation.
Incremental innovation means that the
product/service is a better version of the other
products in the market, whereas radical
innovation means creating a different
product/service. AudioHub would be providing a radical product as there is no website
specialised in music production education, however, there are still website people could
access to gain information on music production. Additionally, the company’s position within
the market would be radical as it allows users direct access to expert and reputable musicians,
which is something other social platforms cannot, as on Instagram or Twitter, they could just
ignore whichever queries people have whereas on AudioHub, they have to respond. The app
allows 1on1 conversations with producers and artists which can be done on other sites such
as Instagram, however, on AudioHub the artists must respond if they are members. This is an
incremental paradigm as it offers a similar service to other social media sites, but it offers a
better version for a certain audience. The service will be provided in app form, however,
there will also be a website to accompany it and different membership rankings. This would
be an incremental process.
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Conclusion
AudioHub should aim to proceed with their innovation provided their market analysis returns
favourable results. The analysis of the market environment should be completed, using the
models already mentioned. SWOT analysis proved that there is a demand for an app of this
sort as musicians have lost income because of Covid-19 and their expertise would definitely
attract a market.

Through the use of the Ansoff Matrix, AudioHub realised they were to develop a product
development strategy as they are providing a new product within an existing market. To do
this, significant investment would have to be allocated to research and development. By
doing this, the company will be able to understand consumer behaviour more clearly. After
this, the musicians would have to be approached to measure whether they are interested, full
creative freedom will be given to each teacher, which will hopefully be an incentive for them
to join. The app would then be tested out on focus groups around the UK, this helps gain a
better knowledge on whether the app would be successful. AudioHub predicts it will be as
finding music resources online can be a tedious task whereas if it’s all centralised in one app
then user will want to use it. Once the app has been trialed the marketing process will begin
and the company should make heavy investments towards marketing as the social media
industry is already extremely saturated.

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