Assignment 7A – Testing the Hypothesis, Part 1

Assignment 7A – Testing the Hypothesis, Part 1

Hyperspeed HomeStudio Music Service

• Opportunity:

• One in 4 Americans play an instrument or would like to learn music, but do not have access to the studio equipment necessary to learn how to make their own unique finished songs.

• The who: Musically inclined American hobbyists who play instruments or want to learn to make their own unique music.
• The what: They cannot gain access to the equipment needed to make a full, good quality song.
• The why: Time in a recording studio is very valuable and the per hour rates are too expensive to be affordable to the average everyday music hobbyist and creator.

• Testing the who: Not just the American demographic has this need; music enthusiasts and creators are all around the world.  Music is a large part of our lives and many people, male and female, from all over the world enjoy creating their own music.  The majority of the ‘who’ we’re marketing to would be middle class American music creators and people who want to begin learning how.

• Testing the what: Proper music studio recording equipment can easily go for hundreds to tens of thousands of dollars depending on the quality.  Many different pieces of expensive equipment are needed for people to record at home, including a Digital Audio Workstation (DAW), an interface, an instrument (if applicable), a pop filter, shock mount, and boom arm.

• Testing the why: Booking time in a professional recording studio is more expensive than what the casual hobbyist is willing to pay.  This eliminates a large potential market, and confines the use of studios to the professionals.  Many people just enjoy playing music in their homes recreationally and don’t have that level of money to spend on recording sessions.

• Interview #1:
• In this interview with a friend, I found that people cannot afford the quoted rates for time in a studio ($100 per hour).  Especially for someone who’s just learning, there is a learning curve that may take a few hours to start getting the hang of.  He said how he sees $150 per day as a bargain in comparison. Moreover, that $150 includes connections with music professionals.

• Interview #2:
• This interview was conducted with a friend who feels the service should let you personally select what you want. He has everything except a microphone and interface and wouldn’t want to pay $150 per day just to rent those items.  Realistically, these pieces of equipment would go for $50 per day.  Coming up with a set rate for specific pieces of equipment would open up the service to clients like this one.

• Interview #3:
• I wanted to interview someone on the customer-facing side of the product, so I interviewed my uncle, a guitar enthusiast, audio engineer and songwriter. He agreed the service is definitely a good value for all you’re getting.  When I presented the base pay of $40 per hour for the professional personnel, he recommended increasing it to at least $50 to attract more talented creators who wouldn’t work at the $40 hourly level.  This would require me to raise the price to $175 per day to cover the added expense.  I was hesitant to raise the price as it has encountered some resistance among potential customers, but coming from an industry professional, this suggestion has added magnitude.  He understands the professional network aspect of the business and how it operates.  If the company can attract more top tier talent, HomeStudio will have more satisfied customers and a superior product, this is well worth the price increase.

• Interview #4:
• This interview was with Fabian, a friend from Miami.  He too raised concerns about the price.  He has a security job and is saving up money to invest in the stock market.  Even though he is willing and interested to learn how to make music, he doesn’t have the spare money needed to buy this full service.  People like this fall outside the target demographic.  Not only does the consumer have to have an interest in music, they must have the money to buy the product.

• Interview #5:
• This interview was with Nick, a future audio engineer.  He said he would now be interested to become a music professional on the service with the new rate of $50 per hour. He’s looking for a side job and the opportunity to work with other music creators.  He suggested some music professionals could be clients, trying to work with others in the field like he was trying to do.  Robert’s suggestion of paying the professionals just $10 more per hour is working as intended, helping to attract producers like Nick to work for HomeStudio.  The in-house personnel would also create a web of creators that I didn’t think of.  Perhaps there would be an opportunity in the future to make a professional roundtable where clients could work with multiple producers and engineers at once.

• Given your interviews, what do you know about the opportunity that you didn't know before? 
• The interviews allowed me to gain some new perspective into the minds of potential customers. The second interviewee proved the market for individual rental.  He represents a market of those that have several components needed but are lacking the others.  To capture this market, I’d have preset prices for each piece of equipment available to customers.  That way, they could efficiently select exactly what they need and won’t have to pay for products they wouldn’t use.
• From my interview with my uncle Robert, I was able to conduct research on the company-professional dynamic that my business model relies on.  Initially, I would’ve been lowballing the music personnel and they would go get more money elsewhere.  Now, with his suggestion for an increased rate that would make my price competitive, I will likely be able to attract and retain more talent.  This is a key insight to gain, as this component of operations affects our pricing, profits, costs and budget.  The new price for the service would be $200 per day, to cover the pay increases to $50 an hour paid to the creators.  This would help attract producers like Nick in interview 5.
• The first interview illuminated consumer perceptions on the price of the product.  It seems expensive at a surface level, but is actually cheap compared to other industry options.  The consumer gets great value and comparable quality for a fraction of professional prices.  However, this is an important ideal to convey to the consumer that isn’t addressed explicitly now.  Because of this need to emphasize value, I have decided to add a company slogan, “With HomeStudio, get top quality studio equipment packages for a fraction of studio prices”.  Those who aren’t willing or can’t spend the money necessary fall outside our target demographic, as seen with Fabian.
• Something that intrigued me about these interviews was how they showed so much opportunity is in the field, I just had to attune it to better fit the target demographics.  Potential creators and customers provided new insights to optimize the existing business model.