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XM Satellite Radio Competing in the New Digital World Case Solution

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Identify XM’s competitive advantages and disadvantages based on; a) market-based view; b) resource-based view. It is important for XM to target a specified market so that it can focus its resources on that particular segment(s). There are several options available to the company. After filtering out the competitor’s target market, the company is left with limited, but several options; the first option that the company has been to target older people. According to Arbitron Custom Listening Study, 23% of the market belongs to the age group of 34-44 years; whereas, 25% market belongs to the age group of 45-54 years and 28% belong to 55+ year’s age group. This means that approximately 76% of the ground is open for the company as the rest of 24% has been taken over by its direct competitor, Sirius. Another option that the company has been to target females and the Hispanic market as both groups are unattended by the majority of the direct and indirect competitors, and it was reported that this segment has a huge potential for the future.

Following questions are answered in this case study solution

  1. Which segments should XM target? Make sure that when you describe these segments you specify variables used as segmentation bases.

  2. Identify XM’s competitive advantages and disadvantages based on a) market-based view; b) resource-based view.

Case Analysis for XM Satellite Radio Competing in the New Digital World Case Solution

Given the aforementioned statistics and facts, it is recommended that the company should target the age group of 35-54 years as the “natural audience” of the company are “true car potato”, which have been defined as commuters, sales personnel, drivers, and truckers. Clearly, it would not be lucrative to attract females at the current point in time as the cost of purchasing program content is increasing at a drastic level. Moreover, the age group of 35-54 is “more comfortable with the radio format” than modern formats like MP3 et cetera. This age group will not be interested in knowing about hardware and software as they would simply focus on the result of their purchased product/services. So, the company can focus on its new target market by highlighting the fact that it provides superior content, commercial-free music, national coverage, and superior sound quality than AM and FM radios. Moreover, the targeted age group would have a higher income than the age group of 25-34 due to more experience in their professional/business fields. Furthermore, it would help the company in filtering and tailoring its content according to its target market. The company’s strategic choices of making alliances with car companies and others demand its customers to be financially stable as the hardware and service cost are clearly higher than others; except its direct competitors, Sirius.

So, the segmentation should be done on age and gender basis. Males belonging to the age group of 35-54 should be targeted by the company, and the company should position itself as a superior content and service provider.

Identify XM’s competitive advantages and disadvantages based on a) market-based view; b) resource-based view.

Resource-Based View

Advantages

The first advantage that the company had was its groundbreaking technology along with huge technological investment. The company revitalized the radio industry in the 21st century. The company made some prudent choices and build its competitive advantage. The company penetrated the market by making strategic alliances. The company made alliances with car rental companies and ensured that XM radio is played during test drives, and key chains with XM signature are distributed. The company targeted automobile manufacturers like GM, Cadillac, Toyota, Honda, Volkswagen, and various others to install XM hardware in newly built cars.

Disadvantages

The main disadvantage that the company faces is that its customers cannot customize the things they want to listen to. For instance, an iPod user can easily create his/her playlist and listen to it later when he/she wants to. In the case of XM, the company creates a playlist for its listeners, and they do not have a choice to listen to whatever they want, and whenever they want. The company’s direct competitors, Sirius, target sports as its main focus and listeners know that they have to wait for the game to begin/end, unlike music or entertainment shows.

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