This report discusses the case of XM Satellite Radio from the Harvard business school making an analysis on how to market the coming product of satellite radio and the business strategy to succeed in the industry. The report is divided in questions that help see the different aspects of the case and take a closer look at how to start this company. At the end recommendations are made on what is the best way to go with the business.
Only one competitor: SIRUIS company in the car radio
High price to manufacture radio system, $270
Key population segment that will have higher demand for the product: 25-34 years old
Principal radio manufacturers: Pioneer, Alpine, Sony
Winning idea: Commercial free radio
Near CD quality music
Average revenue from advertising $23, taken from traditional radio data Projected revenue from advertising $42,748,927
Penetration rate 7% (Assumed)
Use both home and car radio market
Create two plans of monthly charges: $8 basic and $12 premium Selling price for radio system $300
Number of channels: basic 25 stations, premium 50 stations
Retailers selection: Best Buy, Radio Shack and Wal-Mart
Eliminate advertising and go commercial free
Associate with radio manufacturers: Pioneer, Alpine, Sony
1) What is the value proposition of XM to different consumer segments? Who
should be the primary target market for XM?
The value proposition of XM basically tries to attract all customers with the purchasing power of acquiring the system. What they offer is satellite radio systems without the need to re-tune the station in order to get quality sound when moving from an area to another. Another important value proposition is the fact that the radio will contain stations for each age group and this will allow the customers to get what they want in terms of music.
Other value proposition should be the commercial free idea. This idea is under consideration because of the possibility to increase revenue from advertising payments. The...
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