Case: Four products - Predicting Diffusion: Satellite Radio

Essay by jojojojojojojojojoUniversity, Master'sA+, October 2006

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Executive Summary

In 2001 a new concept for radio was born in the U.S.: Satellite Radio. Satellite Radio is based on the same principle as cable or Satellite TV. People have to pay for a number of channels of varied music and talk. The two rival start-ups, XM Satellite Radio Holding and Sirius Satellite Radio, both wanted to target the commuters and truckers. The Key question is whether this innovation will succeed.

Our analysis is basically based on the diffusion research and relevant trends that were visible in America when XM and Sirius were contemplating the introduction of Satellite Radio on the market. Given the history Americans already had with Satellite Television by that time, we concluded that the degree of compatibility, observability and most of all the perceived relative advantages in the case of Satellite Radio ought to be high and the degree of complexity low. Therefore this improved version of mainstream radio should be adopted by Americans very rapidly.

At the time of the introduction of Satellite Radio America was prepared and already had information about Satellite technology. There were no relevant social aspects that could impede the diffusion of this enhanced version of mainstream radio. Furthermore, Sirius and XM did market research before the launch of the product. It appeared that, although Americans in general were familiarized with Satellite technology, information about the advantages and benefits of Satellite Radio specifically were necessary.

The marketing challenge here is to build primary demand, making target customers aware of the benefits of the product and convincing them to adopt it. The core need that should be addressed is the need for high quality commercial free specialized music and entertainment with signals that never fade. We recommend a mass-market-penetration. Therefore heavy advertising is necessary to generate awareness among customers in...