New Business Launch Is Making

EXECUTIVE SUMMARY

XM’s main concern during this new business launch is making sure that the company is able to compete with its chief rival, SIRIUS.  During the launch stage XM must figure out their business model, which includes subscription pricing, target market selection, and deciding on advertising or advertising free stations.  The company must also decide the most cost effective way to manufacture new radios and choose the marketing strategy they would like to pursue.

In order for XM to be competitive in this highly saturated new market there are several objectives that must be met.  Immediate goals include establishing support with third-party radio manufacturers and deciding between having a subscription or advertising sponsored service.  For mid-term objectives XM will need to decide on their marketing and retail strategy.  They must decide between a consumer or manufacturer focus and begin retail market penetration at this time.  For the long term XM’s focus should shift to maintenance of radio content quality, sound quality, and reliability.

There are three key alternatives for XM to consider when deciding the best strategy to pursue.  The first alternative would be to target the home market with a radio price of $100 and a subscription rate of $12.  The next option would be to target the car market with a radio price of $100 and a subscription rate of $12.  The last alternative is to maintain a focus on manufacturers and retailers, setting manufacturing selling price at $70 with a subscription price of $12.  The best strategy will use a combination of alternatives.

        There are several recommendations for keeping XM competitive with SIRIUS.  XM should establish two marketing campaigns, one for manufacturers and one for consumers, and launch at different dates.  They should also offer subsidies to manufacturers and free trials for consumers.