OPPapers.com

Xm Radio Marketing Analysis

XM Satellite Radio

Marketing Case Analysis

[pic]

Introduction to Market Problem

XM Satellite Radio began illustrious career as an unproven and untested digital radio technology back in 1992 by American Mobile Satellite Corporation (AMSC). Although recent technological advances had made it feasible to deliver satellite radio nationwide, there was no clear understanding of the value of the product to the marketplace. The immediate concern AMSC faced was if consumer demand and willingness to pay for such a service would exceed the expense of the terrestrial and orbital satellite system that would need to be developed, implemented, and maintained. Just as significant, SIRIUS Satellite Radio, had beat XM to the market and already been granted a license from the FCC for satellite radio transmission.
In order for AMSC and its partner WorldSpace to generate investor capital, of $1 billion, it would require enough consumer hype that would overcome a speculative investment and guarantee profit returns. Thus, immediate product adoption and mass market service was required. However, at this time, the general public is not in tune to benefits of satellite radio nor are they accustomed to receiving instantaneous radio feed from distant places or customized channels. In fact, to compel listeners away from free radio, the true challenge was to create a need for a subscription or fee based service.
To accomplish this, XM Satellite Radio, like its sole competitor, SIRIUS, set forth on solving another set of further complex issues. First, consumer attention needed to be drawn away from traditional AM-FM radio. Heavy emphasis would have to be placed on niche marketing, differentiation, continuous advertiser free service, and big-name radio celebrities. The pitch had to be on target for satellite services or subscribership would flounder. Second, traditional radio service already had reliable technology. Satellite service would have to promise...