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Sirius Satellite Radio Marketing Plan

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Sirius Satellite Radio, Inc.

SITUATION ANALYSIS

COMPANY BACKGROUND

SIRIUS Satellite Radio was incorporated on May 17, 1990 as Satellite CD Radio Inc. On November 18th 1999 the company changed their name to SIRIUS Satellite Radio Inc, which is the name under which the FCC license to distribute satellite radio was given to. SIRIUS Satellite radio currently offers over 100 of music, news, sports, talk, entertainment, traffic, weather, and children's programming to subscribers throughout the United States.

Their primary source of revenue is through subscription fees, with most of their customers subscribing to SIRIUS Satellite Radio on either a monthly or a yearly basis. They also derive revenue from activation fees, advertising sales on non-music channels and the direct sale of SIRIUS radios, which are currently sold in over 6,500 retail locations around the nation. As of December 31, 2004, SIRIUS has had over 1.2 million subscribers and 375 employees.

MARKETS

The overall market for Sirius is any consumer that listens to the radio. The target market that Sirius is aiming for is the 100 million automobiles currently on the road today. Sirius only has to gain a small portion of this market to become a profitable company.

COMPETITION

Sirius faces competition for both listeners and advertising dollars. In addition to pre-recorded entertainment purchased or paying in cars, homes and using portable players, Sirius competes most directly with the following providers of radio or other audio services:

XM Radio. Sirius's direct competitor in satellite radio service is XM Radio, the only other FCC licensee for satellite radio service in the United States. XM Radio broadcasts certain programming that we do not offer. XM Radio service is also offered as an option on various car model brands, certain of which do not also offer SIRIUS radios.

Traditional AM/FM Radio. Sirius's competition also includes traditional AM/FM radio. Unlike SIRIUS radio, traditional AM/FM radio has had a well established market for its services for many years and generally offers free broadcast reception paid for by commercial advertising rather than by a subscription fee. Also, many radio stations offer information programming of a local nature, such as local news and sports, which Sirius does not offer as effectively as local radio. Some radio stations also have begun reducing the number of commercials per hour, expanding the range of music played on the air and experimenting with new formats in order to compete more directly with satellite radio services.

Internet Radio and Downloading Devices. Internet radio broadcasts have no geographic limitations and can provide listeners with radio programming from around the country and the world. Although Sirius believes that the current sound quality of Internet radio is below standard and may vary depending on factors that can distort or interrupt the broadcast, such as network traffic, Sirius expects that improvements from higher bandwidths, faster modems and wider programming selections may make Internet radio a more significant competitor in the future.

Direct Broadcast Satellite and Cable Audio. A number of companies provide specialized audio services through either direct broadcast satellite or cable audio systems. These services are targeted to fixed locations, mostly in-home. The radio service offered by direct broadcast satellite and cable audio is often included as part of a package of digital services with video service, and video customers therefore generally do not pay an additional monthly charge for the audio service.

PRODUCTS

Sirius's music channels offer nearly every genre in music from heavy metal and hip-hop to country, dance, jazz, Latin and classical. Each of their 65 music channels is programmed and hosted by a team of experts in their field, including musical performers and other unique personalities. Sirius's programming is dynamic, fluid and changes from time to time.

In addition to their music channels, Sirius currently offers over 55 channels of news, sports, talk, entertainment, traffic and weather programming, most of which includes commercial advertising. Sirius continuously evaluates their news, sports, talk, entertainment, traffic and weather programming, and regularly implements changes designed to improve and enhance their service. Live play-by-play sports is an important part of Their programming strategy. Sirius is the Official Satellite Radio Partner of the NFL, with exclusive rights to use the NFL shield logo and collective NFL team trademarks.

CHANNELS

Sirius's primary emphasis is on the retail channel, specifically electronics, car and home audio, specialty, and department stores. The company sells plug-n-play receivers which are portable units that have the capability of being used in a house, car, boat, pretty much anywhere you have access to a base unit for it whether it be an FM modulated in car base or a home stereo unit base or even a standalone boom box. Sirius also sells standalone home audio receivers and in dash car receivers.

A secondary channel of sales for Sirius is through car manufacturers. This is expected to become one of Sirius's largest channels in the coming years. Sirius has contracts with many auto manufacturers including Ford, Daimler-Chrysler, and BMW among others who have elected to off Sirius as a dealer installed option in some models or as a stander feature in others which is coupled with a trial subscription pack that varies from one manufacturer to another.

Sirius also currently uses the internet as another secondary sales channel. Sirius offers direct sales from their website at http://www.sirius.com/ where you can buy a receiver and subscription directly from Sirius and have it shipped to your doorstep.

ENVIRONMENT

Economic Considerations. Sirius service is still young and growing. Currently sales are on the rise and subscriber numbers look good. The company is vulnerable to economic change though. Since Sirius's income is based on a subscription model and satellite radio is seen as a convince rather than a necessity in a time of economic hardship Sirius could suffer greatly.

Demographic Considerations. Sirius's target audience is any average consumer, specifically any consumer with a motor vehicle. There are around 100 Million motor vehicles on the road today. The satellite radio industry has only been able to infiltrate around 4.5 Million of them so far. With this huge target market and the word about this new technology

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