Brand Profile for XM Radio
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*Brand Name: XM Radio
*Brand Quality: Superior digital sound technology, unparalleled signal coverage, proven chipset technology, and outstanding programming.
*Physical Characteristics of the Brand: All hardware is manufactured by third parties, the service is all that is supplied by XM; however all hardwire contains the XM logo.
*Brand Strategy: “With XM, listeners will enjoy the clearest the clearest, hottest, hippest, and most provocative radio entertainment, seamlessly across the country.”
*Brand Image: Satellite radio inventor, innovator, and market leader.
*Brand Reputation: XM enjoyed the #1 position for quite some time until Sirius obtained a contract from Howard Stern, this move eventual put the companies neck and neck in comparison.
*Brand Price: $12.95/month, 1-year @ $11.87/month, 2-years @ $11.33/month, and 3-years @ $9.99/Month. $6.99/month for family account (for 2 to 5 radios)
*Brand Core Value (if competition lowered its price, why would consumers still buy?): What XM offers that is exclusive is every MLB and NHL game, Nascar, and a radio show by Oprah Winfrey.
*Brand Logo and Tagline: “Beyond AM, beyond FM”.
*Brand Design and Packaging: All of XM’s hardware is manufactured by third parties such as Terk, Delphi, and Pioneer Electronics. However all product packaging bears both the logo and XM’s full channel listing. This provides consumers with the opportunity to see how diverse and expansive their channels are.
*Brand Equity: Since XM radio was the first company to offer satellite radio in September of 2001, allot of people become subscribers and never left.
*Brands Primary Competitors: Prior to the recently proposed merger, Sirius was their main competition. In addition the emergence of HD radio will now most likely their main competition however categorically XM/Sirius will in my opinion, have a monopoly on this market. Others include Clear Channel and broadcast radio.
Consumer Buying Behavior
Primary Target Audience: XM’s programming includes something for nearly every demographic. The extensive channels include gospel, country, rock, 40’s-90’s themed stations, hip-hop, R & B, talk, sports, comedy and kids programming. Therefore I presume XM is attempting to provide something for everybody.
*Consumer Demographics: 8 million subscribers with the majority 65%; of their subscribers are Male.
*Other External Factors Influencing Brand Purchase: The inclusion of an XM tuner as an option in most new cars provides an external opportunity for purchase of their service.
Consumer Buying Decisions: Primarily for their exclusive content some of which includes an Oprah Winfrey show and channel, and full NASCAR and MLB coverage.
*Who Most Influences the Buying Decision?
Since 65% of their subscribers are male I would assume they provide the most influence.
*Who Makes the Final Buying Decision? Again, I would assume males.
*Who Makes Actual product Purchase? From my personal experience selling the product for the last three years, I would say the average consumer is a 30-something male. However the product is also often purchased as a gift by people of all ages and demographics.
*Who is the User of the Product? Again, from my personal experience I would say 30-something males.
Other Factors Influencing Consumer Purchase (Social, Economic, Technological, Competitive, Environmental, Governmental, legal)? Technological and competitive advances have been the most influential factor affecting XM’s sales. These two factors were intertwined when automobile manufactures began incorporating XM tuners into their vehicles. This caused a surge in the process because vehicle manufacturers did not want to be left out of a possible decision buying option.
*How does it Provide Product Protection? The tuner and components are always sealed in plastic and then fit into a cardboard display package.
*How does it Persuade Consumer to Buy? The packaging for XM’s tuners always displays a full channel listing somewhere on the packaging which allows nearly all consumers to identify with at least one category. In addition the tuner is also displayed on the packaging with its LED panel displaying a popular artist, song, or celebrity.
*How does it Provide market Support? The packaging always displays a simple 3-step process including installation details and a phone number to call and register which enables the customer to have the product function with ease.
*Suggested Retail Price (What you pay): Pricing on the tuners varies with MSRP starting as low as $29.99 for a basic entry level device and up $399.99 for a portable device with MP3 storage and playback capabilities.
*Product Value (What you get): Whether you purchase an entry level tuner or advanced, you still receive the same programming. In addition XM offers products at various and a reasonable price which provides consumers with the opportunity to only pay for the features they want.
*Product Components: Components include portable tuners and tuners for the home, or vehicle.
*Product Features: Features include portability, varying levels of info/text display, wireless FM modulation, MP3 storage and playback, and ability to transfer certain units from a vehicle to a boom box or home system.
*Product Benefits (Perceived or Expected): Benefits include commercial free music, an extensive selection of programming, and uncensored content.
*Pricing Set in Relationship to the Marketplace (At/Below/Above Competition): At competition (Sirius) $12.99 a month.
*Pricing Strategy: (Market-Skimming or Market-Penetration Pricing)? Again, I apologize if my answer sounds negligent but I believe the XM/Sirius merger will create a monopoly in which this question does not apply.
*Direct or Indirect Distribution? XM practices both methods.
*Direct: own Sales Force, Door-to-Door, Mail, own Store, Internet? XM’s website/phone line is the only place you can purchase their service. In addition the website offers a nearly full line of their products as well.
*Distribution Channel (Identify Middlemen): Middlemen include Best Buy, Circuit City, Wal-Mart, ABT, Costco and many other similar stores.
`*Multiple Distribution Channels, if Used (Identify Middlemen): XM has partnered with the following automobile manufacturers incorporating their tuners (as a option) in new vehicles the companies include Acura, Audi, Buick, Cadillac, Chevrolet, Freightliner, GM, Infinity, Isuzu, Lexus, Nissan, Pontiac, Toyota, Volkswagen, Saab, and Honda. Additional partners include Avis, JetBlue Airways, Air Tran Airways, United Airlines, and Direct TV.
*Primary Consumer Selling Message: Commercial free, extensive content selection, and exclusive uncensored programming
*Advertising Selling Message (Tagline): Beyond AM, Beyond FM.
*Other Media Types Used: Television, Internet, and outdoor advertising at all NASCAR, NHL, and MLB game.
-Direct-Action Advertising: XM provides Hertz with free service in all of their cars which allows renters the opportunity to preview the subscriber experience.
-Interactive Media (Website): XM offers a free online streaming of their channels on their website available to all subscribers.
*Total Media Expenditures in 2005 (and Previous 5 Years; 2000-2004)
From www.morningstar.com, $MIL
• 2005 - 531.4
• 2004 – 332.9
• 2003 – 27.4
• 2002 – 26.5
• 2001 – 124.4
• 2000 – 49.3
*Sales Promotion Techniques Used: Throughout the holiday season of 2007 XM offered a free 3-months of service with the purchase of certain XM tuners.
-By Reducing the Price (Coupons, Refunds, and Trade Deals): XM often sends coupons for additional tuners to its existing customers. A new technique employed is free service for a year on select newer automobiles. Additionally they regularly offer rebates for either service fees or some of the price of the tuner.
-By Adding Value (Sweepstakes, Contest, Value Packs, and Premiums): XM offers a family package which provides 2-5 extra lines of service at a reduced price of $6.99 a month per tuner.
*Methods of Positive Publicity Used:
-News Releases: In February of 2007, XM released a news release stating that they have agreed on a merger of equals, pending approval by the FCC.
-Press Conferences: XM holds an annual press conference to announce their new products and services at C.E.S.
-Lobbying: XM recently spent a great deal of time lobbying the FCC and the Department of Justice to approve their proposed merger with Sirius.
*Other Public Relations Activities Used:
-Sponsored Events (Concerts, Entertainment Tours, and Arts): A very recent sponsorship was for Danica Patrick’s race car. After the race she announced she will be hosting a show on XM. They also sponsored last year’s Live Earth and Farm Aid concerts. XM also offers a channel which airs exclusive concerts from their own state of the art studio. They also frequently sponsor smaller concerts and sporting events.
-Crisis Management (Need to Counter Negative Publicity): Recent opposition to the merger by public interest groups proposed that if approved the new company should have to adhere to the following:
• The new company makes available pricing choices such tiered programming.
• The new company makes 5% of its capacity available to non-commercial educational and informational programming over which it has no editorial control.
• The new company agrees not to raise prices for its combined programming package (as opposed to each individual company’s current programming package) for three years after the merger is approved.
In response XM stated that the new company would provide several benefits for subscribers. They said that it would add value for consumers because by consolidating their exclusive content, customers would no longer have to pay twice as much if they were interested in both companies’ services. The companies also argued that they would not be a monopoly because they have to compete with traditional radio, mp3 players, and the newly formed HD radio which is free of service fees.
Other Marketing Disciplines
*Trade Shows (Participation at Which Shows?): XM is present every year at C.E.S, M.E.R.A. Knowledge Fest, and S.E.M.A.
*Product Placements (Fees Paid for Product in Movies/ TV Programs): In 2004, Oprah Winfrey gave away 276 Pontiac G-6 cars to her audience members. All of the cars came with XM as an option and the inclusion was mentioned several times on the show.