Xm Satellite Radio Case Essay

1885 Words Nov 4th, 2012 8 Pages
XM Satellite Radio 1. Value proposition of XM to different consumer segments and primary target segment.
XM had developed the capability to provide 50+ high quality (near CD quality) digital radio channels to cars and homes via satellite throughout the country. Such a service was not available before and has the ability to deliver uninterrupted service without any retuning needed. The value proposition here is high quality and ubiquitous radio broadcast, in addition to the variety of channels which will be of interest to different age and consumer groups and their disparate preferences. XM radio can also show song titles, artist and can be switched on at an ease of a button on the radio. Another possible value proposition
…show more content…
If XM has commercials, SIRIUS may be able to take away many customers who may have potentially purchased XM’s services. XM may hedge this risk by only allowing advertising on some channels, but it still may dampen the value proposition to users. Advertising may make XM seem closer to traditional radio, which has 6-20 mins of advertising. One advantage of advertising is that it would help finance many of XM’s cost and potentially allow them to charge a lower fee, which may help bring in customers by being cheaper than SIRIUS (Advertisers were willing to pay an average of $6.50 for CPM and spending is predicted to grow at 9.3% for the next 4 years) . If XM can generate sufficient or more revenue by balancing the right amount of advertising while capturing a certain level of customers at a low and attractive price, then advertising may be viable. However, this will hinge on how salient the value of commercial free radio is. 5. Implications of SIRIUS’s launch plans.
SIRIUS will be offering a very similar satellite radio service and it is mentioned that they have a head-start on the launch with their financing and technology in place. This may give SIRIUS a first mover advantage, and may allow them to capture the first and ensuring users of satellite radio and reach that breaking point more quickly where the majority of adopters are captured. Wall Street Analysts predicted that SIRIUS may gain 1.2 mm subscribers within one

Related Documents