Important Facts Concerning Tivo - Essay Example

Case Study - TiVo Contents Contents 2 Important Facts: 3 Problem: 3 Additional data: 4 Possible Solutions: 4 Consequences of Alternatives: 5 Decision: 6 General Ideas: 6 Important Facts: TiVo, in spite of having extraordinary technological attributes, showed slow sales. The marketing team felt that they were inept in providing a ‘relevant’ meaning to TiVo. Customer base or profile was narrow. TiVo was unable to get into the mass market. At therpoint of time TiVo launched several consumer surveys. On parameters like satisfaction and usability more than 90% customers responded in positive. While studies on demographics pointed out that 78% of the consumers were between 25-54 years of age and 71% of consumers were in the affluent category. Problem: The problem is: Shortcomings in the ‘positioning’ strategy of TiVo and also lack of consumer education about its high utility factor as a complete home entertainment solution. Theris the root problem because the surveys show that TiVo gets very high approval ratings on almost all key parameters from existing consumers i.e. people who have bought it and used it. The surveys also point out that 89% of consumers said watching TV without TiVo was frustrating and 96% said life without TiVo would be difficult. But the important factor is how to l get the ‘positioning’ right which would appeal to a broader base of consumers to try the product for the first time, after which they would buy it out of their own urge .Therproblem stemmed from strategic shortcomings in the positioning of TiVo in consumer’s mind space. The marketing team was unable to create marketing or promotional activities which would persuade probable consumers of a broader profile to buy or try out TiVo and not just only the ‘early adapters’. It should also be scrutinized whether the price or subscription fee at which TiVo was being offered was right i.e. whether the consumer preferred a lesser price for TiVo to try it out. The existing price point could have been acting as a barrier to entry for new consumers, who were not as affluent as most of the early adapters of TiVo. Additional data: Additional data on 2002-prices of TiVo’s competitors would have been useful as it would have clarified whether TiVo’s pricing was right or wrong for the new consumer in context of prices of its competing services and products. It must be pointed out that an implicit assumption has been made that TiVo’s initial pricing was unattractive for the mass market as at the outset mostly affluent consumers were buying the product. Detailed information about TiVo’s advertising and marketing plans and strategies would also have been helpful. Possible Solutions: Positioning: How the company positions TiVo is crucial to its success. If TiVo is positioned as a very high-end technology, it might scare away consumers who are not technology savvy. Therefore the strategic team should focus on positioning TiVo as a simple and easy to use product which could be enjoyed by anyone, be it a house wife or a kid. Consumer education: A broader profile of consumers needs to be educated about the high utility of TiVo and its peripheral functionalities, which make it a complete entertainment center for the family. For them TiVo could be showcased at places of gathering such as malls, multiplexes, tube-stations, etc. At these places the company should promote TiVo not just based on its unique functionalities but also as a complete entertainment center for the home which would surely communicate its utility factor more clearly to the consumer. Pricing: If pricing is acting as a deterrent for new consumers to buy the product then schemes should be launched which would enable him to acquire TiVo. For example, TiVo could be given free of cost with TVs. If the cost of manufacturing TiVo is $150 and its retail price $300, then TiVo could be sold to TV companies for $160 as part of a tie-up with them. This would ensure that TiVo recovers its manufacturing cost and the TV companies sell more number of TVs at and give away TiVo as a gift. Consequences of Alternatives: Positioning TiVo as a simple and easy to use product would ensure that more consumers form different profiles feel attracted towards it thereby considerably increasing the possibility of higher sales. On the other side this ‘positioning’ might not be attractive for early adapters or technology savvy consumers, who want to own something exclusive and which is not a mass market product. But mass market is where the maximum amount of business is, so TiVo has to broaden its appeal in the market to break the prevalent growth inertia. Also promoting TiVo as a complete entertainment solution would attract a higher number of subscribers who would look at the product as an answer to all of their entertainment needs. Getting a TiVo free with a new TV would ensure higher sales for the TV companies and also ensure that TiVo penetrates into a broader market base. Then this substantial consumer base could be leveraged in terms of subscription fees. A considerable proportion of these customers would continue the subscription, as studies on existing consumers show that more than 90% of them find life without TiVo or watching TV without it to be frustrating. Decision: It is not plausible or advisable to point out a single solution or alternative which is going to take care of all the strategic shortcomings. The mentioned solutions should be deliberated upon carefully to reach a proper mix which could then be applied to accomplish the company’s ultimate objective. General Ideas: Broad inferences that can be drawn from studying the case, points at the fact that in spite of having a technologically revolutionary product, success is not guaranteed for a company. To attain its expected level of sales or growth a company must ensure that has got its marketing strategy and promotional mix right. Also pricing strategy should be well thought out. As a perceived higher price could deter any consumer from purchasing it as at that stage the consumer is not well conversant with the high utility of the product. Therefore a curtailed launch price along with innovative schemes would surely make it easier for him to acquire it. Once the consumer understands the full utility of the product and begins to appreciate its unique capabilities, she would not deter from paying a slightly higher price for it. It is important also to have marketing strategies which focus on the basic function as well as the peripheral capabilities of a product; this ensures higher value addition for the product or service from a consumer’s perspective. ----o---- Read More