Case Write Up 1

Bus 252a

Marketing Management

Spring Semester 2012 Chenfei Guo (Candy) 1. Analyze the situation from the consumer’s standpoint. What is TiVo? What factors facilitate its adoption? What factors make adoption difficult? Who is TiVo best suited for? Tivo is a digital recorder that helps viewers to take control of what they watch. The features of Tivo are recording programs as per viewers’ request, suggesting the programs according to viewers’ habits, ability to skip commercials, and so on. The TiVo service provides consumers with a variety of specific features. There are many factors that could facilitate its features: a. Recording the programs – easy to record, stop, rewind, and schedule recording the shows. b. Skip the commercials – empowering the viewers to take control of what they are watching. c. Electronic program guide (EPG) TiVo has i) The option to watch live TV or to view all preciously recorded programming. ii) Previews for shows to schedule recording easily with one push of button. iii) TiVo produced video magazine, a set of network showcases and on-screen TV guide. iv) Season pass- users can specify their favorite show and TiVo would record them automatically. It could track and record the show without help from the viewer and account for scheduling changes. v) By pressing the TiVo remote with “thumbs up” and “thumbs down” button, viewers could indicate how much they like or dislike what they are watching and TiVo can track users’ preference and then make suggestions. Despite the apparent strengths TiVo incorporates, there are many factors that make its adoption difficult. Firstly, the consumer has a great disparity in defining and viewing TiVo. The degree of awareness for TiVo remained weak and consumer remained inert

because it is not their priority to improve TV viewing. After fourteen months into the launch, TiVo had only signed up 42,000 subscribers, with a current rate of 14,000 new subscribers per quarter. With 102 million TV-watching households in the US, that was only about 0.04% penetration. Therefore, from the data we could see that TiVo has not caught up a substantial awareness of the consumers. Secondly, the price seemed too high to be accepted by customers. The TiVo black box was priced $499 for a model with up to 14 hours of recording capacity and $999 for a model with up to 30 hours. The price was more expensive than most TV sets and more than twice the price of a good satellite system. Thirdly, Salesmen in distributors turned over fast which made it hard to train them explaining to customers properly. In addition, there were various ways for salesmen to sell TiVo. TiVo users primarily consist of young professionals, between the ages of 23 and 45, and had middle average annual income. In this regard, members with this kind of features are best suited for TiVo. We can also imply that people who have a college education, household greater income, and are heavy Internet users can be the target segment suitable for TiVo. 2. Now adopt the standpoint of the networks, the advertisers, and the cable/satellite companies: what do they want TiVo to be? Thinking about the competition: What are Microsoft’s potential strengths and weaknesses in this market? From the standpoint of networks and advertisers, they both face the challenge of TiVo but TiVo could also bring new opportunities to them. From Networks’ view-Networks want TiVo to assist them tracking how many audience are scheduling a show for future recording. Moreover, the season pass could guarantee that viewers would not miss any programs of their favorite show, increasing network viewership and loyalty so that network can adjust their campaigns. From advertisers’ view- by using the data collected by TiVo, advertisers can deliver more personalized and targeted advertisements. Moreover, they can also track the response to the commercials from the audience.

From cable/satellite’s view- Cable use TiVo to help reduce subscriber chum and also serve as a competitive edge against satellite providers. When TiVo was launched in March 1999, it was alone in its category. However, over time, competition developed. In fall 2000, software industry leader Microsoft announced that UltimateTV was to be launched. Microsoft’s potential strengths are described as follows. First and foremost, Microsoft can promote UltimateTV within its own existing one million WebTV subscribers. The existing services provided by WebTV would make the service more attractive to customers. Secondly with satellite television, could provide consumers with a unique combination of access to electronic mail, Internet surfing, interactive television and personal video recording. Finally, the devise could offer more technologically advanced features, including watching or recording two shows simultaneously, recording pay-perview movies, 20-second skip, and fast-forwarding at up to 300 times the normal speed. However, Microsoft still has some potential weakness. First, it might be hard for Microsoft to enter the market because consumers are used to TiVo. Second, TiVo has various partnerships with other industries, such as Amazon, Comcast, and so on to enrich its features. 3. How would you describe and characterize TiVo’s action plan as given at the end of the case? How do you evaluate the planned communication campaign? Does your situation analysis suggest an alternative plan? The TiVo’s new action plan consist of three major parts-product affiliation, price cutting and different communication tools. Product partnership with DirectTV and AOL provides consumers more options of entertainment, which make the bundle more attractive. However, TiVo’s competitorMicrosoft also has partnership with DirectTV, which could be a threat to TiVo, because consumers will have alternatives and might feel hard to differentiate between these two products. Finally, the product implications with AOL are not clear. Cutting the price from $999 to $399 and free give away is an effective way to attract more consumers. However, the reduction on price would hurt the company’s revenue if

the volume increasing could not compensate for the whole price cutting. Moreover, consumers who buy TiVo before will not be happy about the cutting price. The company decides to use different media for different purposes. The TV ads convey more about the notion and lifestyle while print ads and Internet ads share more features and details. The TV approach is good because consumers can easily receive the notion and be aware of this product in a short time. Moreover, consumers will focus on the most important thing without being confused by too many details. However, drawback within the website promotion is that consumers may not be willing to spend time checking the details online. Form my perspective, TiVo should change their plan with the product partnership. Instead of cooperating with DirectTV and AOL with uncertainty, TiVo can seek their own niche market. Regarding the price, I think it is unnecessary for TiVo to cut the price in almost half. With exceptional features, customers would be willing to pay for it because there is an value added in product and service. However, I would suggest TiVo go on a sales promotion, with 10 to 20 percent off in the coming season. With regard to using different media for different purposes, I think this communication is reasonable. But TiVo needs to work on more customer to customer promotion to increase the public exposure and raise awareness. The company could provide bonus and cash awards for consumers who check the detail online and sent the information to friends for reference. In conclusion, I think it is most important for marketing team to strengthen the notion of TiVo and come up with good solutions to promote TiVo widely.

Super VCR recording/season’s pass Family, busy people, sports fan Personal Channel show suggestion, EPG Loyal TV watchers Recommendation: Product: user-friendly Price: discount on box or no price for box under certain subscription Promotion: online demo Place: cable TV or BestBuy