Strategic Initiatives: XM and Sirius

Topic: ArtMusic
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Last updated: February 7, 2019

One of XM’s attempts to appeal to broader demographics has been its wide variety of receivers—from personal portable systems to smart phone capabilities and all the way up to home theater systems.  However, a positive short-term strategy would be to build more of a potential lifetime base of customers by targeting young people.  To this end, they should focus on a demographic of 18-25 year olds.

  One of the simplest ways to do this is for the company to form agreements with major colleges to sell (and aggressively market) XM personal systems in campus bookstores.  In turn, XM can launch a new, exclusive channel to broadcast the sports events of these universities…particularly ones that are unlikely to get major media attention.  In the longer-term, this will result in more new subscribers.Another way of reaching a younger demographic it to find a way to break into the podcast phenomenon that is most commonly associated with Apple’s iPods.  Integrating a recording feature in future models that synchs up with a wireless communication program would allow individuals to record their own podcast and, if within range of a wireless network, to go ahead and upload it.

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  Such features are important as smart phones get more and more advanced—for all intents and purposes, all portable electronics devices are competing with what smart phones are increasingly capable of.  XM already allows play through existing smart phones, such as “iPhone or Blackberry” (“Change the Way You Listen”).  Integrating more interactive technology may help give XM a needed edge, though by definition this is a short-term strategy, and XM will need to adapt to newer technology and trends as they emerge.  Best of all, such a feature is not that different from the existing ability to “[let] consumers record songs onto special receivers” (Numeister).

One of the key long-term prospects of appealing to a younger demographic is appearing more eco-friendly.  A way of doing this that doesn’t really alter how XM devices are made is to reach a partnership with companies like Prius to have XM radio already installed in those vehicles.  This can be accompanied by advertisement campaigns linking environmental friendliness and XM radio in customer’s minds—slogans like “Satellite radio—so Earth-friendly it’s out of this world” with a visual focus on a satellite.  The cherry on the top of this campaign would be for the monthly fee of Prius-owning XM subscribers donating a percentage to an eco-friendly charity of their choice.The final key to XM’s future is to embrace their own past.

  Their previous programming agreement with Clear Channel radio allowed them to appeal to conservative listeners who favored programs such as Glenn Beck’s radio talk show.  Beck, particularly, is a good entity to have a commercial agreement with, because of his ability to help sell merchandise on both his radio and his TV programs.  If XM was willing to re-negotiate with Clear Channel radio and reach a similar agreement as they had before, it would be a great “quid pro quo” long-term way of marketing XM to an extremely broad audience over the airwaves.  Better still, though a longer shot by far, would be an attempt to reach an exclusivity agreement with a right-wing media figure.  For all intents and purposes, it would be the more conservative answer to the Sirius agreement with Howard Sterns—if XM was suddenly the only way for conservative audiences to portably hear a figure such as Glenn Beck or Rush Limbaugh, it would greatly increase both system sales and new subscribers, as well as bring old subscribers back into the fold.

Value Added, Lessons Learned and Insights Gained The value added to the company by such changes would be significant.  By expanding the customer base, XM will receive both short-term and long-term benefits by bringing in new subscribers and illustrating to existing ones the company’s dedication to offering a variety of services to a variety of clients.  These recommendations are all centered on what amounts to the key issue regarding any form of satellite radio to a potential new customer: why should they pay for the radio, when the radio in their car is free?  These recommendations form a kind of variegated rhetoric to draw in different customers: individuals can feel like they’re able to follow their favorite talk-show pundit, bringing in customers based on loyalty.

  They can feel like they are helping to save the world by helping themselves to XM’s services, which appeals to them emotionally.  They can feel like they are imparting their unique vision to the world through broadcasts, which appeals to their aggrandized sense of self.  And they can also feel like embracing XM radio makes them a more solid part of their college community, which appeals to both their sense of school spirit and, to be frank, their sense of peer pressure.

  The insights from this exercise are chiefly centered on this…it is surprising to learn the difficulty of how to appeal to a mass of people while still offering the vision of a company as unique and individual.  However, it is rewarding to find out that such a task is far from impossible.Recommendations for Strategic Initiatives: Sirius RadioAn admirable recent move on the part of Sirius to branch out from their traditionally-perceived image as a haven for bad boys such as Howard Stern is the inception of the Sirius Backseat TV initiative, offering streaming video of kid-friendly programming such as Nickelodeon, Disney Channel, and Cartoon Network.  One logical extension of this progression would be to offer a cheap (less than $50), colorful receiver model (that is limited to kid-friendly music channels) that is marketed to young children.  This would appeal to children of existing Sirius customers that wish to emulate their receiver-owning parents and, in some cases, the reverse: children requesting it as a gift from their parents may actually get their parents to purchase a receiver for themselves.

  Especially if an incentive was included with the children’s models which stated that their subscription to the limited “kid-friendly” stations would be free if another individual in the household purchased a receiver and a full subscription within thirty days.  Otherwise, the “kid-friendly” subscription would be $5 a month.On the opposite spectrum, it would be wise for Sirius to expand an initiative they started in 2003 by launching Sirius OutQ, which appeals to the LGBT audience and invites listeners to hear “news, information, and entertainment for the gay and lesbian community.

”  It would be wise for Sirius to launch exclusive channels concerning music and talk radio for other minority audiences.  This is something that would appeal to a teenage and young adult demographic, which would certainly help to sell units and subscriptions among a target audience that represents years of possible subscriber income.  It would also dovetail well with the image of Sirius as a more “liberal” radio station, willing to grant controversial audiences their own voice…something that is often stifled, if not outright prevented, by mainstream media.Sirius currently offers a “Sirius Music for Business” model in which businesses can legally use commercial-free Sirius broadcasts in everything from “on hold” telephone music to conference presentations.  It would be profitable to expand this model to other venues, such as colleges and universities.

  A program with a clever name such as “Sirius for U” could provide music in university dormitories, cafeterias, and student centers.  This functions well as a long-term strategy because it means exposing a rotating crop of students to Sirius programming for a period of four years.  This will inevitably drive sales, and would offer a chance for universities to feature their own radio station on the Sirius network.  In this way, both the university and Sirius radio will benefit.A solid long-term strategy for Sirius would be to acquire exclusive radio rights to NBA games.  This would serve as an answer to XM’s exclusivity with MLB games, and help reinforce the image of Sirius as hip and sports-friendly.

  A short-term way of doing this would be to focus on more obscure sports—Sirius already has the world’s only horseracing talk show, and adding channels focusing on poker, chess, and even dodgeball would add a quirky charm that rival services cannot offer.  One humorous hook for such a channel would be to name it “The Ocho,” in honor of the movie Dodgeball’s humorous vision of an ESPN channel that focuses exclusively on quirky sports.Value Added, Lessons Learned and Insights GainedThe value added to Sirius through these suggestions primarily centers around expanding on the services it already offers.  There is a reason for this—as the most recognized brand of satellite radio, Sirius has had years to throw almost every idea against the wall, and see what sticks.  These ideas represent an expansion of stickiness—appealing to those who feel like mainstream outcasts while, at the same time, appealing to the nuclear family of traditional values through kid-friendly programming.  It also represents an opportunity for ongoing customer appeal—the institution of a “Sirius for U” program, particularly, means that thousands of students can experience Sirius every day that otherwise would be unfamiliar with it.  A continued focus on sports serves as the second part of a one-two punch that starts with the appeal to college students…a group that is traditionally sports-focused, and likelier to stick around as part of the Sirius customer base if they feel that their favorite sport (to watch or to play) is being featured.  The insight of this experience is primarily centered on perfection, as opposed to creation…as elaborated on above, Sirius is a company that has tried an impressive variety of marketing tactics over the years.

  The challenge comes from singling out the ones that have further potential from the ones that, rightfully, were discarded by the wayside.  However, the evolving nature of business means that businesses must be constantly evolving; perfection of the moment can easily be the defects of the future, so business models must constantly strive for change.Works CitedNumeister, Larry. “Suit by Record Companies Against XM Going to Trial.”  The WashingtonPost.

n. pag. Jan 20 2007. Web. 30 May 2010Sirius.

“OutQ Radio.” n. pag. 30 May 2010XM Radio. “Change the Way You Listen.

” n. pag. Web. 30 May 2010  

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