Is Satellite Radio a Discretionary Purchase or is it a Necessity?

June 8, 2006

This is a question that investors in satellite radio have been dealing with for quite some time. Many that have had the service, state that they would never switch back. They have experienced the vast array of programming that satellite radio offers and simply love the service.

How does satellite radio currently market itself, and how should it market to those that have not yet tried either service?

Satellite radio is generally perceived as a bit of a luxury, a discretionary item........Basically as entertainment.

Perhaps a new tact should be considered. They can still market the entertainment value of the service, but should give due consideration into creating a perception that satellite radio is also a NEED rather than simply a WANT.

Creating a NEED

Showcase the news aspects of satellite radio. Recent headlines such as the killing of Abu Musab al-Zarqawi, the nuke-for-uranium enrichment negotiations with Iran, the hurricane season upon us, high gasoline prices, and looming inflation, etc. Are all items that people need to keep informed about. Perhaps satellite radio should promote the news and information aspect of programming.

For example, with satellite radio you can go from watching Fox News on television as you eat breakfast to listening to it in your car as you commute without missing a beat. It is not just about information, it is about getting consistent information that relates to news items that people want to follow.

For other people the need may relate to financial news, traffic and weather, or musical content that they love, but is not available in their area.

A service that made a transition from WANT to NEED is Onstar. However, they went with a path that virtually abandoned the WANT (or luxury) side of the equation. At introduction, Onsatr ran ads about getting restaurant reservations or directions live. They have now switched to the mother who just got into a car accident seeking help. Onstar is a very good service, and perhaps the reason they abandoned the luxury aspect of their marketing is because there simply was not enough luxury in the product to warrant the price of the service. We think satellite radio should continue the entertainment marketing campaign, but supplement it with a NEED aspect.

There are two prongs that need to be appealed to......Peoples WANTS and peoples NEEDS. Satellite radio should give consideration to pointing out why people NEED the service.

6/08/2006 08:51:00 AM

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