XM radio is truly changing the world of radio. In 1997 XM paid more than $80 million for a federal license to broadcast digital radio. Am and Fm radio is free due to commercial sponsorship. However, XM believed that consumers would be willing to pay for crystal clear 24hr digital radio, commercial free with up 160 channels. Their argument is that people pay for cable television when basic channels are already free. XM currently has two satellites that work clear across the United States. XM faced extensive set up for its operations. It spent over $1billion to get fully up and running. Listeners have to purchase radios in addition to paying a monthly service fee. To help push their services, XM partnered with large auto makers to have their radios factory installed. These dealers include General Motors, Honda, Hyundai, Nissan, Porsche, Subaru, Suzuki and Toyota, and are available in more than 140 different vehicle models for 2008. These radios initially cost consumers $300, but the company has focused it efforts on bringing the cost of these radios down so that more consumers would sign on for their monthly service. Initially the monthly fee for service was $9.95, currently it is $12.95. XM had nearly 5 million customers sign up within the first four years. Sirius, XMs only competitor opened just a year after XM and has a customer base of 3 million. Both XM and Sirius look to major sports icons and celebrities to bring in new subscribers, by hosting their own shows.
Key Marketing Issues
One sure strength for XM is that now the company can focus more on signing new subscribers and increasing customer service levels, as the technical end of the business has already been set up and product costs have been decreased for its radios. They are past the major part of their learning curve in bringing digital satellite radio to consumers.
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(2008, 10). Xm Radio. StudyMode.com. Retrieved 10, 2008, from http://www.studymode.com/essays/Xm-Radio-167279.html
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"Xm Radio." StudyMode.com. 10, 2008. Accessed 10, 2008. http://www.studymode.com/essays/Xm-Radio-167279.html.