1. Summary and Conclusion
We believe XM Satellite Radio should offer a subscription-based offering of 50+ channels for $10 per month. XM needs to acquire new customers and we recommend using the $100M launch campaign as described in this report to generate significant customer adoption.
2. Situation Analysis
a. Company
XM Satellite Radio was founded in 1992 to provide radio entertainment to the via a satellite-based broadcast system. XM is a very early-stage company.
Primary Issues
· XM must define a business model, manufacturing process, and marketing strategy.
· XM has not yet launched a product, though its product is technologically feasible.
· No company has been able to provide nationwide radio coverage in this manner.
b. Customers
Radio listeners are diverse and can be classified into a range of market segments. Listener characteristics include gender, age, ethnicity, location, and tech-friendliness. Also, listeners have shifted from home listening and to in-car listening.
Primary Issues
· Listeners vary in terms of their price sensitivity.
c. Competitors
XM's direct competition is SIRIUS. Competition is limited by the FCC, which governs which new players can enter the satellite radio market.
XM's indirect competitors include traditional radio companies, radio offered through satellite and cable tv, and internet radio.
Primary Issues
· SIRIUS has the first-mover advantage and intends to launch its service by the end of 1999.
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