XM Satellite Radio and Sirius Satellite Radio have recently confirmed the conclusion of their merger. The merger process has started since March 2007, but finally completed in July this year. Both satellite radio companies agreed to use the Sirius XM Radio Inc. as their company name, with the unified company’s headquarters stationed in New York. The merger resulted to a combined 18.5 million adherents. (Associated Press, 2008)1. How did XM Satellite Radio differentiate its product from that of Sirius?XM Satellite Radio was able to differentiate its product from Sirius’ because of the advantages that product development contributed to the organization.
XM Satellite Radio has been highly engaged in innovation and product development. The Top 20 on 20 Channel is one innovation incorporated by the organization to its services. This channel allows consumers to participate in the process of providing services to them, by voting as a form of assertion to what kind of service they want to receive. (Hinchcliffe, 2007)XM Satellite Radio is client-centered.
One of its partners includes Clear Channel. Other partners include large companies such as Sony, DirectTV and General Motors (Satellite Radio, 2005) XM gained approval from Clear Channel to rebroadcast four music stations alongside their 68 music streams. Moreover, XM steered away from competing with Sirius but rather focused on how to provide services lacking in the other company.
XM Radio focused on providing excellent cable news channels. If Sirius covered all aspects of sports news, XM succeeded in gaining partnerships with large news networks such as ABC, Bloomberg, CNBC, CNN, Fox, MSNBC, to name a few. Moreover, XM targeted consumers who are always on the road by providing real time traffic and weather reports. (Memmer, 2004) Overall, the strategies of XM to compete with Sirius are to transform the latter’s weaknesses into XMs strengths. In this way, XM creates a line between the two satellite radio stations obtains a unique consumer population from that of Sirius.2.
What role has quality played in XMs product development and management?XM realizes that quality plays a critical role in product development allowing the company to obtain competitive advantage over rival companies. From its establishment in April 1997, XM considered the quality of the services it will provide. It went for the 2.3 GHz band which was a satellite radio frequency that ensures non-interruption from rain unlike other satellite radio frequencies. Moreover, XM worked to build three satellites over the years and is expecting to put up a fourth one in the coming years. These satellites account for the wide range of coverage and its availability to function even in areas with critical terrain.
(Archer, 2006)When it comes to satellite receivers XM provides for its consumers, it promises excellent satellite communication services. The satellite receivers are not only reasonably priced but also compact, portable, made from lightweight material, installed with omni directional antennas (it connects to the satellite in any direction or position), and free from disruptions during electrical blackout because it is also installed with batteries (secondary source of power). XM Satellite Radio boasts that even during Hurricane Katrina, some channels if not all, were available for consumers.
The company boasts that it was a medium for all listeners even in New Orleans to receive real time news reports about the condition of the weather and states affected by the hurricane as well as the victims. (Archer, 2006)Quality fires up the process of product development and management. XM relies on concepts of quality to frame plans for product development and guide the management process. In so doing, they are able to put up superior satellite communications system that provides wide coverage and uninterrupted services. Product development continued to contribute to the company’s success by forming partnerships with large brand names in order to target a variety of populations and to provide countless channels that will suit the taste of consumers. Quality-wise, XM targeted household brand names that exhibit characters of trust and dependability. Partnerships with top brands include Buick, Cadillac, Chevrolet, Pontiac, Nissan, Alpine, Pioneer, Audiovox, Delphi, and Honda. In addition, XM won a series of awards for excellent quality of products and services, quite a number from Consumer Electronics Show in 2001, etc.
Part of quality consciousness in product development and management for XM is to employ the services of top electronic development providers such as ST and Elan Home Systems. (ST, 2002)3. At what stage of the product life cycle is satellite radio? How is the rate of adoption affecting the products progression through the life cycle?After the compete introduction of satellite radio in the late nineties, it is at the moment in the growth stage of the life cycle. It has been projected the subscribers for satellite radio will steadily increase throughout the years.
(Greenfield, 2005) Prior to the merger between XM and Sirius, they were the only two competing networks in the satellite radio industry. This marks that the industry is still about to grow, with the need for the emergence of competitors for it to reach the stage of maturity in the product life cycle.Innovation and product development is still in progress providing substantiation of the still growing industry of satellite radio. XM and Sirius are still working on developing their products and services in order to gain more subscribers and reach the fullest potential of the satellite radio industry. Analysts have also revealed that the future of satellite radio is promising, with no signs that it will hit the bottom ground in the future. This is highly evident in the staggering attention brought to satellite radio.
Consumers are just amazed at the broad services satellite radio can provide. The most attractive elements of satellite radio is wide coverage with over one hundred channels of pure music and entertainment made available, superior sound quality, flexibility in providing service at is not only available in houses but also in cars, the inclusion of news and talks shows in services, programs uninterrupted by commercials, excellent satellite communications reach free from interruption, just to name a few. (Greenfield, 2005)Some signs that indicate the growth of satellite radio include the ongoing process of signing up renowned brand names to incorporate satellite radio services to their offerings and well-known celebrities to endorse the two major satellite radio broadcasting network. Through the years, more celebrities are endorsing each network.
Aside from maintaining products and services as indicators of the growth of the industry, the pricing, the distribution, and the promotion of these products and services confirms the industry’s position in the product life cycle. As aforementioned, promotion by employing influence from celebrities is still prioritized by the industry. Distribution channels are tapping into a wide variety of medium, from car radio, home entertainment systems, portable radios, etc. and pricing is still made available and practical to attract more consumers.
4. Evaluate the brand names of XM Satellite Radio and Sirius Satellite Radio. What are the strengths and weaknesses of each brand name? Which is the better brand name? Why?The strengths of both XM and Sirius are their differentiated products and services.
Both companies have managed to compete with each other in the past because they provided different services despite their similarity in providing satellite radio communications. Sirius is known for airing sports news, while XM concentrates on cable news, most especially traffic and weather news. Music coverage also varies for both companies. Although they provide same music genres to appeal to all tastes of music listeners, each has its own image when it comes to musical selections. XM is more mainstream music, while Sirius opts to provide diverse musical genres.
(Memmer, 2004) Prices are the same for both companies. Requiring reasonably priced fees is considered strength because costumers are likely to subscribe if they can afford to do so. (Deitz, 2002) Basically, what set them apart from each other are their differences.
They become who their competitors are not, setting up their image and identity as an independent company. Inversely, what they cannot become as their competitors are, turns out to be their weakness. When it comes to the number of subscribers, the length of time XM has been present in the industry makes it strength for the company because it has over three million subscribers, while the late comer Sirius has only one million. Therefore, the weakness of Sirius is its incapability to measure up to the achievements of XM so it can acquire larger consumer population. (Moskovciak, 2005)Marketing the New Combined CompanyThe completion of the merger between XM and Sirius means the formulation of new policies, most especially in the field of marketing.
Independently, both have succeeded to market their products and services, but with the merger, people are expecting that there should be changes in the marketing processes for the unified Sirius XM Satellite Radio Inc. Recently, the company said it will offer bundles of channel programs for subscribers in order to compartmentalize services. (Atlanta Business Chronicles, 2008) When you think about it though, marketing should be a least priority for the company because it does not have competitors in the satellite radio industry. So it is guaranteed that satellite radio subscribers and potential subscribers will definitely patronize the unified company. The focus of marketing should be on how they will lure AM/FM listeners to subscribe to satellite radio.
With this in mind, marketing should be sensitive about how the company will inform the people about the benefits and advantages of satellite radio as compared with AM/FM radio. The company should market what XM and Sirius has, combined, and its future developments (i.e. incorporation of video) reiterating its advantage over AM/FM radio (no commercial interruptions, breadth of coverage, traffic, sports, and news updates, celebrities such as Howard Stern, Martha Stewart, Oprah, etc.).