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TiVo is a new innovative technology allowing viewers to record videos so they can watch whenever they want to. More than a year into its launch, TiVo's sales are not that good. Brodie Keast, VP of marketing and sales, must come up with strategies to boost the company's sales. Keast wants to delve into attractive communications campaigns and product bundling with satellite television receivers along with better sales support and aggressive pricing to achieve better sales. It is necessary that TiVo communicates its constructive role in the future media scenario.
Luc Wathieu; Michael Zoglio
Harvard Business Review (501038-PDF-ENG)
November 22, 2000
Case questions answered:
- 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?
- 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?
- 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?
- Read the case carefully and complete exercises 1-8 at the end of the case. Question 9 asks you to write a 150 word summary of which segmentation scheme from question 8 seems best to you and why. Rather than being limited to the two schemes identified in question 8, analyze the entire market research process outlined in the case in 500-1000 words.
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TiVo Case Answers
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Introduction – TiVo Corporation
Tivo Corporation was founded in 1997 by Jim Barton and Michael Ramsay. Since then the company has been dedicated to designing household consumer electronics, later focusing their vision on television. Through their products, the company attempts to improve the lives and viewing experiences of homeowners.
Tivo’s entrance into the market was the introduction of the Tivo box. With this product, the company gave its buyers more control over how and when they watch their favorite television shows. Tivo is the first of its kind. It is a small box, connected to the tv that allows the viewer to pause live programs, fast forward through commercials, and automatically record their favorite shows to watch later.
It also includes other features including thumbs up and down buttons which allow users to rate shows and help the system recommend new shows they would enjoy. This revolutionary technology, however, is very off-putting to some of the major network programmers who are used to having full control over what their audiences see.
The best part about Tivo is that it brings the power to the viewers, it allows them to choose what they watch and when they want to watch it. Despite these benefits, Tivo has not been as successful as many in the company believed it would be.
Over a year since the first box was shipped and Tivo has been unable to capture even a full percent of the market. This could be due to the dramatic change Tivo brings to the entire tv experience. This change is also what made many networks and advertisers wary of this new item.
The company has since created a strategic plan which they hope will increase awareness and sales of their product before the company is surrounded by competition and income losses.
Type of Case
Despite the company’s problems and the decisions that must be made going forward, Tivo is an evaluation case. The problem has already been revealed. Although many homeowners like the product, it has failed to capture a substantial share of the market. Their website, filled with excellent reviews, is not getting seen by potential customers.
Because of its uniqueness and somewhat complicated interface, many salesmen in electronics stores are unable to push the product effectively which is leading to losses on the company’s income statement.
The decision on how to correct these problems has already been made but not implemented just yet. The company’s top analysts believe that the strategic plan they have created will help Tivo rise above the competition and increase their market share. However, Brodie Keast, the company’s vice president of marketing and sales, is having second thoughts. Some network companies have even warned him that parts of the plan, including the ill-humored tv ads, will not work with the current system in place.
This is an evaluation case. Therefore, my job is to determine if these decisions really represent the company’s best plan of action. Tivo is in trouble. They are trying to change the consumption habits of their audience, but their previous marketing attempts have not gotten the product’s true message out. Many are confused as to what the product actually does, and why it costs so much.
As someone looking in from outside, I will be evaluating the previous analysis done by Tivo’s team and providing my professional opinion on those marketing decisions with the addition of a few small points.
Here I will be analyzing the company’s analysis. In their SWOT, Tivo mainly focused on the external opportunities and threats. Part of the reason why the company isn’t doing as well as it should is because the people in charge are hesitant or unwilling to look for the problems within their own company. Also without a proper evaluation, Keast will not know the strong points of the product which should be focused on in the marketing campaign. For the 3 C’s, Tivo’s analysts did a respectable job and covered most of the major points.
However, there was no mention of the diffusion of innovations and how this could be affecting the company’s ability to market the product.
Below, I have included a complete SWOT analysis which also includes the strengths and weaknesses of Tivo itself as well as revisions to their other tools.
Later, I will discuss how the company can use the information provided by these tools to market Tivo more successfully.
- The company has a dedicated design team that came up with this innovative product that includes features no one has ever seen before.
- No one hates the product. These features are enjoyed by consumers and the number of subscriptions and sales, although small, is growing by almost 50,000 every year and is predicted to increase.
- The Tivo switches the balance of power from the network programmers to the viewers themselves. With this product, they get to decide what they watch and when they want to watch it.
- Tivo is currently being financially backed by major heads in the industry including Disney, NBC, and Discovery.
- With these new features comes the necessity for learning and growth. However many people find Tivo confusing, and the interface hard to use and understand.
- Because it is hard to explain all the features many salesmen are unable to talk shoppers into purchasing the product. The high turnover rate of salesmen also is not helpful for Tivo
- Tivo is also rather expensive compared to somewhat similar products. $1000 is more than most TV sets and is out of many people’s price range for an entertainment system.
- A combination of these issues, loss of image quality on HDTVs, and the company’s ineffective marketing strategy means they have a very small share in the market against DVRs and similar products.
- Tivo has the opportunity to completely change how and when programs and advertisements on TV are shown and seen by viewers.
- They are still one step ahead of DVRs because they offer the ability to pause, fast forward, and rewind, live television.
- For advertisers, the system allows them to receive feedback on their advertisements which helps them develop more relevant content. It also provides more ‘prime time’ slots for companies like P&G and General Motors to advertise, based on the show, not necessarily the time.
- For networks, Tivo provides more specific future audience numbers, which helps those companies market their ad slots more accurately. It also gets more people attracted and dedicated to their favorite shows which could lay the foundation for them to work together.
- Tivo gives power to the people which takes it away from programmers, advertisers, and satellite companies. Although the product offers a lot of benefits, they will resist the change and want Tivo to be simply another provider of equipment to increase television sales.
- Competitors like Microsoft and ReplayTV see the opportunity to steal the market share Tivo has been unable to capture for over a year. They are imitating Tivo’s product and making their own improvements.
- Tivo’s ability to reduce audience attendance at major ‘prime times’ affects the network companies ratings and the effectiveness of advertisements. This makes many companies see Tivo as the enemy.
Environmental Factors (3 C’s)
Tivo is currently outsourcing the manufacture and distribution of the box to Sony a Philips. They in turn make the products available through a network of several electronics stores including Best Buy, Circuit City, and Sears. This is an excellent choice on Tivo’s part because it provides their smaller company with more reliability and recognition in the industry. However, it is stated that this partnership has not brought as much awareness to Tivo’s products as was previously predicted. The complex features prevent salesmen from marketing them as well as other items. The company itself is not in the best financial position, with net revenues being reported at a loss since their start as seen below.
(Quarterly data, in thousands)
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