DIAGNOSIS OF THE PROBLEM: TiVo was launched in March 1999 and aimed at transferring control from TV networks to consumers. Currently (May 2000) TiVo has a low market penetration (0. 04%) but current customers highly satisfied. Experts predicted that the customer base would reach 35000- 80000 by 2000 yearend. PROBLEM IDENTIFICATION: To increase product awareness, customer acquisition and sales by modifying the current marketing strategy and also address the emerging competition. SITUATION ANALYSIS: Price: ?There are two variants of TiVo, “14hour box” ($499) and “30 hour box” ($999). Additionally there are service charges with three different rental plans ($9. 95 per month, $99 per year, $199 for life time). ?Price of the product is high than most existing TV sets and very meagre proportion of consumers are ready to pay this high, a price. Product: The product provides various features such as: ?Pausing LIVE TV (“wow! ” Factor) ?EPG(Electronic Program Guide)- User Interface available with the device ? Thumbs up and Thumbs down feature, which allows the user to set their preferences based on which a particular program will be recorded proactively by the TiVo box.
These preferences are also used by TiVo for suggesting programmes to users. ?Season Pass- automatically records all the episodes of user specified shows. Promotion: ?Confusion around the TiVo product positioning in the press ( PVR, DVR ,EDR ,IVR ,On Demand TV) ? Focus on early adopters in their initial marketing campaign. ?Very limited mass media campaign. Place: ?TiVo collaborated with Consumer Electronics Superstars SONY and PHILIPS and TiVo subsidised the two companies so that they would manufacture the black box distribute it and promote it to retailers. TiVo became nationally available through Best Buy, Circuit city and Sears ALTERNATIVES: ?Reduce the price of 30 hour model to $399 and stop production of 14 hour model while releasing the existing stock of 14 hour model for free. ?Simplifying the user interface to make TiVo more user-friendly. ?To introduce a feature comparable to the 30 second quick skip button available with Replay TV. ?Offer incentives to existing customers for promoting the product. ?Shift in the advertising strategy from early adopter based to mass media campaign while focusing on the desired segment of the market (couch potatoes and business executives). Partnership with DirecTV to be sold as a bundle offer. ?Organize events/kiosks to increase awareness about the product. EVALUATION OF ALTERNATIVES: ?Reduction of Price: Reducing the price of TiVo will boost sales but the loss incurred will have to be taken into consideration while deciding a price cut. ?The production of “14-hour” recorder can be stopped and the units in inventory can be given out for free. Salesman can be given an option to take the “14-hour” recorder for free and sign an agreement of serving for at least 6 months.
This would decrease the turnover rate and increase the understanding of the product amongst sales force that would, in turn, increase the sales. ?Simplification of User Interface: ?The only feature that TiVo lacks in comparison to Replay TV is30 second skip button – “Quickskip”. So the RnD department should work towards incorporating the same at the earliest. ?Introduction of a referral programme where incentives would be offered to people whose friends or relatives buy an additional TiVo. This would increase the acquisition rate substantially. Shifting to mass media advertising campaign would require a huge capital induction and prior identification of market segments plus targeting the desired segment (couch potatoes and business executives) with appropriate print and audio-visual advertisements. ?Partnership with DirecTV will bring it into direct competition with Microsoft as it also is going to enter in a partnership with DirecTV giving your customers option to choose from either bundle. ?In the below mentioned table, data till Jun 2000 has been taken from Company document and forecasted thereafter.
Growth rate from Jun-00 to Sep-00 has been taken to be the same as Jun-99 to Sep-99. TiVo will have to concentrate majorly in the 3rd quarter 2000 and spend most of their allotted marketing and sales expenses in these 3 months. Growth rate from Sep-00 to Dec-00 has been taken to be half of Sep-99 to Dec-99 because of expected competition from Microsoft’s Ultimate TV. If TiVo is able to attain the forecasted subscribership then it will be in line with industry experts’ predictions for year-end 2000. Jun-99Sep-99Dec-99Mar-00Jun-00Sep-00Dec-00
No. of subscribers (‘000)1. 02. 518. 032. 048. 0120. 0492. 0 Quarterly growth rate 150%620%78%50%150%310% ACTION PLAN: ?TiVo to be bundled with DirecTV receiver before a similar deal strikes between DirecTV and Microsoft. ?Include the quick skip feature in the product at the earliest. ?Stop producing 14 hour recorder and reduce the price of 30 hour recorder. ?Maximum marketing and sales efforts must be put in before Christmas season including enhanced advertising strategies, incentives to existing customers for product promotion.
CONTINGENCY PLAN: ?If the loss due to price cut is too alarming then partnerships with networks can be sought (ABC, CBS and NBC). ?If the media campaign is not able to show the customers what features is TiVo exactly providing then the campaign needs to be revamped so as to more aptly define the features of TiVo. ?Competition from Microsoft’s Ultimate TV box may force TiVo to enter into partnerships with online providers such as AOL to enter the online market.
