J.D. Power study is overly rosy about HD Radio prospects

Here is the central section of the report:

While consumer interest in new technologies typically drops after a price point is revealed, relative interest in premium surround sound and HD radio actually improves dramatically after the market price is provided. Premium surround sound, which ranks sixth in consumer interest before the price is revealed, moves to second after consumers learn its market price ($400). With a realistic market price of just $150, the HD radio-compatible receiver jumps from 16th in initial interest to third after pricing is revealed. “What is truly surprising is that among those interested in equipping their next new vehicle with the premium surround sound feature at $400, nearly 80 percent of those are willing to pay $800 for a branded system,” said Lawrence Wu, senior director of automotive emerging technologies at J.D. Power and Associates.

A couple points:

First, how do you establish the potential appeal for a product consumers have never heard of? How do you determine that people will pay $150 for something that is brand new to them, ill-defined, containing God knows what content and offering anyone’s guess-type variety?

My guess is that people were responding to “$150” and “Radio.” Would you like a $150 Radio in your new car? You bet I would! Bring it on!

In other words, J.D. Power is actually measuring something different from what they’re presenting to consumers.

Caveat emptor.

Second, doesn’t it puzzle you that 80% of consumers are willing to pay $800 for a premium sound system? Let me repeat: 80% OF CONSUMERS ARE WILLING TO PAY $800 FOR A PREMIUM SOUND SYSTEM. If this were true, then wouldn’t roughly 80% of cars already be loaded with premium sound systems? Including many of the so-called economy cars?

I think the only way to view this research is as some sort of fantasy wish-list. The answers do not commit you to pay anything for anything. Thus, what the heck, say “yes” to the stuff that sounds sweet.

Here’s a better way to conduct this research:

1. Offer HD Radio as an option in one type of cars for 6 months 2. Measure how many people order it

There it is. Easy as pie.

But don’t simply predict that HD Radio would be a hit sight unseen, sound unheard, concept not understood.

On the face of it it shouldn’t surprise us that folks would like a $150 radio in their car, regardless of what’s on it. The real surprise would come if Joe and Jane Average strolled into a Best Buy to have one installed, to buy one for their office, or to place on on their hip or their kitchen counter.

And finally on this…where’s the point of reference? That is, where’s the opportunity to trade off the options of a FREE conventional radio vs. a $150 HD Radio? Which do you think folks would pick then, huh? What about a $150 mp3 player and streaming audio receiver, which unit do you think folks would pick then?

Equipping a new car is not buying off a shopping list, it’s TRADING OFF costs and values from items on a shoppng list. If you don’t offer the tradeoff, you can’t get to the truth.

This study is riddled with bias.

Radio Business Report’s observations were as follows:

It’s all about offering the listener more and better choices.

No it isn’t. And by the way, what’s a “better” choice than we have now?

We think once the majority of HD stations and HD receivers offer Multicasting, it could tip the scales away from satellite.

No it won’t. Because the scales do not favor Satellite now.

Through innovative FM multicasting formats, traditional radio can theoretically match the offerings of satellite in decent-sized markets.

Hopefully more innovative than the ones on our current channels?

And it is free.

No it isn’t. Not if I have to buy a radio. The point of reference is NOT Satellite Radio. It’s the “free” radio we all own right now.

Certainly, ad campaigns educating the consumer on multicasting are needed-especially for the Christmas shopping season!

No you don’t. “Multicasting” is not an attraction or appeal. That which is multicasted is the attraction and appeal. That difference is not subtle.

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