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XM Satellite Radio Analysis
1. What is the value proposition of XM to different consumer segments? Who should be the primary target market for XM?
The value that XM has going for them is they are trying to meet different consumers by the music they play and the many options they have with the different styles. According to Arbitron, the nation’s largest radio-focused market research company, every week radio reaches 94% of the U.S. population. By putting the different channels with more variety it helps XM reach a broader market. In their current structure they have 6 areas they are focusing on: Young adults, baby boomers, seniors, African Americans, Hispanic Americans, and others. By targeting these groups they have certain stations play music that hit each one of these groups’ demands. As well as the style and music they want to hear.
Another value that would draw these consumers in is that each one of these markets wants lower commercials and higher volume of music. Currently there is up wards of 20 minutes of commercials between music. With them have less advertising it is a value to each one of these segments. Consumers will also want to know they can listen to a station or program throughout their whole trip without losing signal or the sound quality. With that quality they will want the XM to be just as clear if not clearer than traditional radio. They will also want to know that their current radio will be compatible to the new XM. With XM having the satellites and the player to receive the clear signal the customer will have uninterrupted radio.
If XM decided to run ads they could leverage marketing to these groups, because of the markets that only listen to these certain stations. These advertisers could play specific advertisements that would sell to these segment markets with direct marketing to them. This would give XM more leverage with outside companies and the prices they could charge to place an ad on the station.