Sirius satellite radio systems have recently announced that they are introducing factory-installed Sirius radio units on a number of vehicles, including BMW’s Mini Cooper and Ford’s Lincoln MKZ, MKX, Navigator, Navigator L and Mark LT starting with 2008 models. For the Ford vehicles, the unit will come with a six-month subscription with hopes that the consumer will purchase the monthly fee based subscription thereafter. In the Mini Coopers, the consumer must purchase the component at $950 and a subscription to the service goes for $1,400 and lasts the life of the vehicle, which amounts for a pre-purchase of approximately 9 years of use. The strategy of including thier prepaid service in the cost of the car is clever—a consumer already spending a large amount of money on a car may not notice paying a couple thousand more.
However, I doubt that consumers are that blind and I can’t imagine this prepayment sales tactic will amount to very many consumers purchasing the installation and lifetime subscription
package. Consumers who are unfamiliar with Sirius radio won’t even know if they will like it, let alone spending over $2,000 and committing to the service for the next 9 or more years. Also, considering the face that Sirius has been in the news recently for its merger with XM may make consumers wary of the stability of the brand and will therefore be less likely to be willing to commit to the service for an extended period of time. Sirius is trying to force consumers to purchase their product for an extended period of time without any trial period, and while the idea is novel can’t imagine that many consumers will fall for it.
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