Xm Satellite Radio Case
1. Define the customer/prospect segments.
In 1997 XM Satellite Radio was investigating how they could utilize customer segmentation to create a focused target market in their business plan. After proper consideration XM Satellite Radio determined that a multi-segmented approach would be advantageous to their business model. A multi-segmented approach would allow for XM Satellite Radio to tailor certain stations to meet the needs of large populations that share distinct characteristics. This approach would not only be beneficial to bringing in revenue dollars through subscriptions, but it would help attract advertising revenues into the business, if advertising was the route taken. Advertisers would be drawn to XM Satellite Radio’s communication medium, which would help them market their products to potential customers within the target markets they wanted to reach. XM Satellite Radio segmented their potential customer base using two main demographics, age and race/culture. An additional smaller, demographic was utilized as well which we’ll refer to as other. Within each of one of these demographics are the customer segments that XM Satellite Radio chose to focus on:
Demographic: Age 1) Young Adults 2) Baby Boomers 3) Seniors
Demographic: Race/Culture 1) African Americans 2) Hispanic Americans
Demographic: Other (Occupation, Religion) 1) Business People 2) Truck Drivers 3) Religion
2. Define a value proposition for each of these segments. In order for XM Satellite Radio to create an attractive and profitable business which investors will want to finance, they need to understand and show how they plan to create value propositions for each customer segments which will entice those customers to purchase XM Satellite Radio. First, we will look at some facts pertaining to each market segment and then propose possible value propositions for each segment.
(Note: In referencing demand levels we will focus on figures
In 1997 XM Satellite Radio was investigating how they could utilize customer segmentation to create a focused target market in their business plan. After proper consideration XM Satellite Radio determined that a multi-segmented approach would be advantageous to their business model. A multi-segmented approach would allow for XM Satellite Radio to tailor certain stations to meet the needs of large populations that share distinct characteristics. This approach would not only be beneficial to bringing in revenue dollars through subscriptions, but it would help attract advertising revenues into the business, if advertising was the route taken. Advertisers would be drawn to XM Satellite Radio’s communication medium, which would help them market their products to potential customers within the target markets they wanted to reach. XM Satellite Radio segmented their potential customer base using two main demographics, age and race/culture. An additional smaller, demographic was utilized as well which we’ll refer to as other. Within each of one of these demographics are the customer segments that XM Satellite Radio chose to focus on:
Demographic: Age 1) Young Adults 2) Baby Boomers 3) Seniors
Demographic: Race/Culture 1) African Americans 2) Hispanic Americans
Demographic: Other (Occupation, Religion) 1) Business People 2) Truck Drivers 3) Religion
2. Define a value proposition for each of these segments. In order for XM Satellite Radio to create an attractive and profitable business which investors will want to finance, they need to understand and show how they plan to create value propositions for each customer segments which will entice those customers to purchase XM Satellite Radio. First, we will look at some facts pertaining to each market segment and then propose possible value propositions for each segment.
(Note: In referencing demand levels we will focus on figures