WKDS: FM Radio Station

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1 MARKETING WKDS: FM Radio Station Market Opportunity There continues to be no permanent commercial radio station entirely dedicated to young children in the United States, and specifically in the target market of the four Mid- Atlantic states of Delaware, Maryland, New Jersey and Pennsylvania. At best, there are children s programs in adult radio stations (e.g. Kids Corner on membership radio WXPN in Pennsylvania), pop stations marketed towards the tweener set (e.g. Disney Radio) and community radio stations sponsored by non-profits and churches (His Kids Radio). There are plenty of television channels and time slots on the mainstream channel for young people, but very little on radio to meet the needs of younger children. Yet children clearly have both spending and pester power. Parents, too, are known to indulge their kids. Although radio for children occupies only a small fraction of the national radio market, it is alive and on the air. According to the television news magazine, Entertainment Tonight, children's music, alone, is a nine billion dollar business and growing. Much of that music is being aired on children's programs. (Source: viewed 2/10/05; Author: Gary Ferrington) Market Share With respect to commercial radio stations focused on children s programming, WKDS could initially have a monopoly, although it may not take long for a rival station with a similar concept to enter the market. As a pioneer in the market, however, it could capitalize on audience loyalty that would retain, if not expand, advertising revenue. As a first mover, WKDS can also easily expand its market share through other ancillary channels such as its own website. Amidst increasing advances in entertainment technology (such as CD and DVD players) and alternative radio media such as satellite and internet radios, a commercial FM radio station such as WKDS will have to remain innovative in order to maintain a sustainable market share. Pricing The combined value of accessible education and entertainment will certainly draw a large audience, especially in such an underserved market. With this in mind, advertisers will also appreciate the focused target market of WKDS both in demographics of listening audience and geographical coverage. For this, WKDS can arguably command a premium over typical rates for commercial advertising in other general-format radio stations. Comparing with the Competition The value proposition of WKDS will compare favorably with the competition. For parents and educators, it is a welcome alternative to other radio stations which are not 1 of 5

2 always appropriate for young children. Furthermore, the learned skill of generating images within the mind, which is what radio as opposed to television or DVDs foster, is important. For children, WKDS offers an opportunity for entertainment and education that is just for them. For businesses and institutions, especially in the coverage area, WKDS will provide an effective use of precious advertising dollars that can target a more specific audience. INDUSTRY ISSUES Demographics Where people Listen 3% 33% 39% Home Work Car Other 25% Source: Arbitron, Inc. "Radio Today: How America Listens to Radio," various editions, 1998 through Trends There is an increasing trend towards subscription to satellite radio, as well as access to internet radio (such as Podcasts ). Barriers to Entry Competition from large parent corporations. Ten parent companies dominate the radio spectrum, radio listenership and radio revenues. Deregulation has allowed a few large radio companies to swallow many of the small ones. Together these ten parent companies control two-thirds of both listeners and revenue nationwide. Two parent companies in particular, Clear Channel and Viacom, control 42% of listeners and 45% of industry revenues. (Source: Tower Location. Tower location is critical to ensure proper audience is targeted. Capitalization. 2 of 5

3 Research Methods Interviews with parents from day cares, schools, and other children s activity gathering locations. Given more time, surveys would be a viable option which would help create the programming structure. Personal experience MARKET & CUSTOMERS The immediate market that we will broadcast to will be four of the Mid-Atlantic states Delaware, Maryland, New Jersey, and Pennsylvania. This area has approximately million citizens according to recent census estimates. Of that total population, approximately 6-7% are between the ages of 2 and 9, which is our primary audience and target customer. It s a relatively wealthy area of the United States with a median income of approximately $52,000 vs. the national average of $43,000. This is also important because we will be targeting wealthy families in order to attract high-end advertisement dollars. The average profile of our target customer would be a family of four with a combined household income greater than $150,000. One or both parents would hold well-paying jobs, while the other or a nanny stays home with the children. The market plan is to provide quality children s programming throughout the day, while mixing in programming for parents. While the children will be the main focus of the radio station, the parents are important as customers as well because they will be the main focus of our advertisers. Our show will be sold to various advertisers such as those who specialize in children s toys and clothing as well as high-end stores where the parents would tend to shop. Children s service providers such as baby gyms, daycare schools, private schools would also be potential advertisers. Because our station would have programming for both children and adults, it should keep a strong ratings hold throughout the daytime radio slot. The strong ratings will attract the best advertising dollars, and therefore, increasing these ratings will be the key to increasing revenues. PRODUCTS & SERVICES What are the features and benefits of the products or service? Child content programming during majority of daytime hours Appeal to age range: 2 9 years Content will contain music and age-appropriate children s shows Provide parents with an option not currently found on AM/FM radio Program content for adults (parents) in afternoon or evening hours Content will provide information on childcare: programs, services, help lines, support groups, etc. Provide an online website? 3 of 5

4 What product development tasks must be undertaken, and what is the timeline for completion? If a website will be tied to this radio station, it must be developed and tested. It will most likely go online after on-air programming. Programming content will need to be developed and on-air staff acquired. This would take approximately six months to complete. Is there potential for intellectual property rights? We don t believe this is an issue. The ability of others to imitate the concept and content of the programming will, however, pose a challenge. How is the product or service differentiated from others in the market? Currently WXPN offers limited children s content from 7-8 pm on Sunday Thursday Program is targeted to 6 13 year old children. It features music and call-in programming. There is also a Disney Channel (WWJZ AM), which provides pre-teen and young teen programming content. Our station will target a younger age group (2 9 years) and provide full-day music listening for 5 days/week (M-F), and possibly Saturday & Sunday. Parental content will be available in the evenings and weekends. It seems all stations offer on-line websites primarily targeted to kids. Our web content will contain material for children but should be directed more to parents. Advertising will be targeted at parents promoting products and services offered by companies, retail outlets, and service providers in listening area. COMPETITION The competition in our industry comes from three areas: Local Radio Stations Local radio stations compete for advertising dollars with us. They currently provide content directed toward adults. Though they do not provide content for children, advertisers have a large choice of stations to pick from, and thus reducing the amount of advertising revenue we can obtain. Competition also comes in the form of copying. Radio content is very easy to imitate. New Technology New technology comes in the form of personal music players, internet radio, and satellite radio. Personal music players enable customers to listen to commercial free music. In the children segment, CD s and DVD s provide alternate forms of entertainment in the car. Personal players installed in the car can be a substitute for radio. Internet radio 4 of 5

5 streamed into cars can also become a substitute for radio. New wireless standards with faster data rates are capable of streaming music and video. By far the biggest threat is satellite radio. Satellite radio, which provides commercial-free music, is rapidly growing in the market. Though it is subscription based, it provides better quality and more content that traditional radio. Greater coverage lets users listen to the same station in any state. National Media Companies National media companies that provide listeners with radio, and live entertainment are sources of competition. The industry has consolidated in the past 20 years with a few major media companies buying many of the local radio stations. The media companies have the capital, airwave licenses, and infrastructure to provide listeners with varied content including children s broadcasting. Media companies also provide consolidated services to audiences. Consumers can listen to their favorite artists and buy tickets to concerts. However, the same strategy can be used for children by giving away free tickets to local events and movies. What are the future sources of competition? Technology is the greatest threat to commercial radio. New forms of distribution including satellite radio, and streaming internet radio compete with traditional FM radio. Satellite radio is subscription based reducing their dependence on advertisers. Internet radio is cheaper to operate because it does not require getting FCC licenses and radio assets. What other influences will affect the competition? Consumer tastes and habits will affect the future of media delivery. Recently, consumers are moving more towards commercial-free media delivery. Therefore, advertisers are spending less on radio and television ads. Consumers are looking for the best content without having to listen to ads. The future of radio will be providing targeted advertising. Content will be a major source of competition in the future. Radio stations will compete for the best radio personalities in the market. 5 of 5

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