Sirius Radio Pricing Strategy

Satellite radio has been in existence since 1999 and with approximately 14 million subscribers today, it has proven to be formidable competition to many of the other digital media outlets. The two main competitors in this market are XM and Sirius. They use technology, content diversity, and commercial free uncensored programming and attractive pricing to bring new subscribers to their product. This paper will focus on Sirius Satellite Radio and highlight who they have determined to be their target market, How they have positioned their product, their pricing strategy relative to their competition (XM Radio), How their pricing and positioning draw in their target market, and how they support their additional marketing mix.

Target Market

Sirius Radio has identified their target market to be the over 230 million registered vehicles and over 110 million households in the United States (Chester, J 2007). In addition to vehicle and household market potential, new technologies such as their new product developments which focus on the portable and wearable audio markets. The market mix of listeners is as broad as Sirius's channel line-up, from the Disney channel to Adult programming. This programming mix gives Sirius the broadest market saturation required for optimum subscription potential. With their attention to diversifying their channel programming line-up, Sirius will be able to tap into specific markets with dedicated listeners i.e. Nascar, Howard Stern, Martha Stewart and offer an unique perspective outside the watchful eye of the FCC.

Product pricing comparison to the competition (XM)

Pricing strategy for both satellite radio providers is very similar as seen in the chart below, taken from http://radio.about.com/od/satelliteradio/a/blsatcomparecht.htm . Each provider offers monthly subscriptions at the same rate and each have incentives for multiple year sign up. Beyond the 2 year agreement plan the companies begin to diverge slightly from each other. Obviously, both companies pay close attention to their pricing structures and realize the satellite market is very elastic, so engaging in pricing wars would be detrimental to both of their interests. Each company attracts new subscribers more through programming options and technology advantages. The bigger question is whether or not the government will allow the two companies to merge and if the merger will ultimately affect pricing as it stands today. After the merger the company, will be able to study and market test different pricing options which will drive revenue through adding lower cost subscriptions or through higher costs subscriptions and lower subscriber numbers.

Service SIRIUS XM

Streams Over 125 Digital Channels Over 160 Digital Channels

Online Listening Yes Yes

Cost Monthly: $12.95

1 Year: $142.45

2 Years: $271.95

Lifetime: $499.99 (offer ends 1/31/07) Monthly: $12.95

1 Year: $142.45

2 Years: $271.95

3 Years: $359.64

4 Years: 479.52

5 Years: 599.40

Activation Fee On website: $5

Over phone: $15. On website: $9.99

Over phone: $14.99.

Cancellation Fee Cancel monthly anytime.

Cancel prior to the expiration of prepaid subscription: get refund based on days remaining. Lifetime Subscriptions nonrefundable. Cancel monthly anytime

Receive prorated refund of the unused subscription. Cancel prior to end of prepaid subscription they may charge a cancellation fee of up to $75.00.

Additional Radios: (2-4) $6.99 per month (2-5) $6.99 per month

Pricing and positioning

Sirius has not used pricing to position itself in the market. Sirius has however, paid close attention to their only competition XM and mirrored their pricing with some slight exceptions (see details above). Sirius has spent a tremendous amount of money to secure such programming as Nascar, Howard Stern, Martha Stewart, NFL, NBA, Playboy and many other specific programming geared to a specific market. Programming is the main strategy both satellite companies are using to keep and increase their subscriber base. Technology is the other area Sirius has focused on to gain an advantage over the competition.