Xm Radio

XM Satellite Radio Final Case Analysis

December 2, 2013

1) What is the value proposition of XM to different consumer segments? Who should be the primary target market for XM?

Value Proposition: XM Satellite Radio’s value proposition to the young adult segment would be its seamless delivery of ubiquitous content across the country (no need to “retune” as they travel), as well as it’s high quality service. At the time of the case, up to 31% of radio listening was occurring in the car, rather than at home as in previous decades. The high quality service and ubiquitous broadcasting capabilities provided by XM Satellite Radio would be particularly appealing to several different consumer segments, including young adults and general interest listeners. Young adults were becoming increasingly mobile, and increasingly busy. More of their lives were spent in transition from one activity to the next than previous generations. The increase in dual-career families also contributed to the increased amount of time spent in a car by young adults. Additionally, the young adult segment was defined by an increasing expectation of instant gratification. Young adults expected high quality and ease of use in their purchases.. This is a segment with fairly strong purchasing power, as well as trend-setting abilities (allowing it’s reputation to be boosted). XM Radio offered fifteen to twenty channels aimed at the young adult market segment.

To the “baby boomers/general interest” market segment, XM Satellite Radio’s value proposition was their wide variety of music offerings and seamless extension of their already existing devices to interface with the XM Satellite system (they could retrofit the XM Satellite System into car stereo systems by simply putting in a disc or cassette- the “chipset”). This group was less inclined to invest in totally new technologies without a clear demonstration of added value over their existing systems (“if it ain’t broke, don’t fix it!”). XM Offered...