1. Analyze the situation from the consumer’s standpoint? What is TiVo? What factors facilitate adoption? Who is TiVo best suited for (Target audience)? TiVo is an innovative personal digital video recording device introduced in 1999. TiVo makes it possible to save TV programs on hard drive and replay them if required.
TiVo possesses several advanced features such as, pausing and replaying live TV, recording without DVD, VCD or video cassettes, Electronic Program Guide (interface), “thumbs up”; “thumbs down” buttons for rating favorite shows, season pass feature (system which learns viewing preferences of watchers), fast forwarding up to 60 times the normal speed, suggesting shows for users they would want to watch etc. Basically, TiVo enables user to watch what they want and when they want it . You can be your own networker and customize the way you watch TV. Due to the overall mass customization trend TiVo hits the nerve.
Every customer who owns a TiVo seems to be satisfied, with 72% people stating TiVo had made TV viewing a lot more enjoyable . The TiVo receiver is available at $999 for the 30h recording box and $499 for 14h recording. Additionally, the service fee costs $9. 99 a month, $99 a year or $199 for the lifetime of a product. To produce and distribute the product, TiVo Inc. established a major partnership with consumer electronic brands Sony and Philips. Further, TiVo became nationally available through agreements with chains like Best Buy, Circuit City and Sears.
The promotional activities were restricted to public relations, their own website and very restricted mass media campaigns. From the beginning on TiVo focused on early adopters as the main target audience. According to theory early adopters are expected to function as opinion leaders and attract new customers with the help of word of mouth. As the costs are lower to address only a small, niche group of people with a homogenous character and the hope for a viral effect confirmed TiVo’s strategy to address early adopters.
After some research they found out that even early adopters, normally standing for purchases in early lifetime phases of products, were hard to convince and needed a high amount of media exposure to finally come to a purchase decision. Further, early adopters didn’t show consistency in retelling TiVo’s features and advantages. The only constant topic was that TiVo was liberating their daily life. Since this target group didn’t show the expected results I would suggest to focus on a different kind of customer. On one hand, the targeted audience has to have the necessary capability to afford such a high priced product.
Hence, young people can’t be the major target group. On the other hand, TiVo requires a certain amount of technical knowledge which sets restrictions on elderly people (60+). For this reasons I would suggest to address young professionals (23-40 years old), living in a middle-income household and male (due to tech affinity). As we found out from the case most watched programs were children’s programs, dramas and situation comedies. Hence, families offer great potential as well. Later on in this case analysis we will learn other reasons besides targeting why TiVo is confronted with a lackluster in sales. . Analyze the case from the Networks/Advertisers and satellite/cable point of view. What do they want TiVo to be? Think about competition – What are Microsoft’s potential strengths and weaknesses as a brand in this category? Due to the fact that TiVo enables fast forwarding through advertising and makes networker’s task “redundant”, networkers and advertisers need to be included in this case analysis. Advertisers see the threat that TiVo’s consumers can skip commercials. Actually, TiVo offers a lot of opportunities for a new kind of advertising as well.
One opportunity is that advertisers can see the viewing pattern of the customers and react accordingly. Since TiVo is able to document when, what and how often a show has been watched, besides many other interesting statistics, advertisers can use this information and provide highly targeted and personalized commercials. Further, new kind of formats can be introduce, like telescoping ads (where viewers can select which ad they want to watch), showing commercials during installation of TiVo, or providing different versions of one commercial and show the most suitable to the individual viewer.
Statistics showed that customers like to see commercials as long as they are interesting. Networkers experience a change in the in the way traditional work has been conducted. TiVo basically changes the whole system, like when to schedule which show etc. These changes are not necessarily threatening. Likewise for the advertisers, tracking of viewing patterns is a huge benefit for networkers, too. They are able to track the amount, response, characteristics even before the program starts. In addition, TiVo shows the effectiveness of network showcases directly after broadcasting and before he premiere. The loyalty of viewers goes up, since they are able to watch e. g. a specific series and are not tied to fixed broadcasting times. Moreover, the feedback function (thumbs up, thumbs down) delivers qualitative feedback on the program. What is more, networkers do not need to worry about scheduling, as the program can be watched whenever the customer wants it. The networks and advertisers want TiVo to be an information and data provider regarding quality feedback, viewing quotes, fast-forwarding statistics and many more.
Through features like the season pass for example they can increase loyalty to exactly their network. In my opinion TiVo follows the right track as they try to communicate with networkers and the advertisers and work on a concept that benefits all. If TiVo is going to be the number one digital video recording device, the networkers and advertisers who cooperated with TiVo will carry away huge competitive advantages. Microsoft’s UltimateTV, launched in March 2000, is a huge competitor to TiVo in the personal digital video recording category.
Microsoft biggest strength is that they already have a similar product on the market called WebTV and alongside with this product, 1 million subscribers. Additionally, Microsoft offers advanced features such as pay-per view, 30 seconds skip, fast forwarding up to 300 times normal speed and more, which were features TiVo couldn’t offer. The tremendously high financial background is another major strength. For example, where TiVo has to watch wisely over a minor marketing budget, Microsoft has the possibility to be present in many more channels and to a larger extend.
Also, the internet feature of UlitmateTV is a huge benefit as you can browse, retrieve e-mails and interact with your TV. The partnership with Thomson and Sony, being strong brands in the multimedia field, shows another advantage. Microsoft’s weakness in this category is that their brand name stands for PC devices and their systems and programs. People might get confused with Microsoft acting in the television market. Further, the large size of Microsoft also imposes a huge threat, especially in the fast moving technology market, because it drives inflexibility compared to TiVo which is a small company with quick decision processes. . Evaluate TiVo’s marketing strategy to-date. What has worked, what hasn’t and why haven’t they met their volume goals? TiVo’s marketing strategy had two major goals. One was to change people’s consumption habits regarding TV and explain them the product with its features and advantages. The other was to raise awareness with controversial and provocative commercials without emphasizing on product features. There were plenty of things that worked out and many that didn’t. One major achievement was that people who bought TiVo showed a great level of satisfaction and loyalty.
Another positive step was that they didn’t upset advertiser by promoting how easy it is to skip commercials. They actually tried to work together with advertisers and networkers. If a bad relationship with networkers arises, there won’t be any programs available for your service and if you neglect advertisers you forget about a huge revenue stream. Nonetheless, one look at the sales shows that not everything went in the right direction. Even though they were rewarded with high loyalty of customers they didn’t spread the word and therefore weren’t useful as advertisers.
In addition, the features were very hard to explain because TiVo was a new product and launched in a totally new market. Operating in a blue ocean also brings along that the press is confused and doesn’t really know how to categorize TiVo. Another major issue was that the product was too expensive. Especially pragmatists didn’t go for this price in a technology sector as it excesses the normal barrier of $200-$300 of spending on consumer electronics. The lack of a reference price was another driver for confusion. Another problem was that TiVo was, due to their partnerships, separated from its customers.
The high turnover in sales personnel made it almost impossible to train them adequately. TiVo had some major issues to find their right target group. As mentioned before, the early adopters didn’t seem to be the right target group. Due to the fact that TiVo is a minor company, marketing efforts were low. These and many other factors led to a lack of awareness and identification of TiVo. They also lacked marketing consistency as they chose different types of advertising with no common slogan or red line behind it. 4. Do you think TiVo is a strong brand? Why or Why not?
In my opinion, TiVo is a strong brand. TiVo has created the right brand image as a friendly and fun brand. This image is supported by the logo which also includes the picture of a TV. This “cute” brand image gives the technology behind a gracious face. The first-mover advantage in a new market brought high (media-) awareness in the beginning. The partnerships with Sony, Philips and major electronic chains provided them an outstanding reliable and qualitative image. The consumer-focused attitude (“Bring control to customers”, data is inaccessible ) contributed to a positive brand recognition.
That customers who purchased TiVo stayed loyal and were satisfied also confirmed TiVo as a strong brand. The loyalty did not come from the fact that there was no substitute product, but because they liked the way how TiVo integrates in their daily life. As we learned from the case a strong brand doesn’t necessarily come along with positive financial achievements. TiVo made losses about $24 million . Besides the factors mentioned above a big mistake was to not have a red line across all marketing and communications activities. They introduced the slogan “TiVo.
TV your way” but didn’t follow this line for other commercials and communication activities. A lack of consistency results in an inconsistent brand perception and loss of awareness. 5. How would you describe TiVo’s action plan at the end of the case? How do you evaluate the planned communications campaign? What is the strength of the TiVo brand? Does your analysis suggest an alternative plan? First of all it can be stated that setting up a marketing plan at this product stage is pretty late. Nonetheless, the new plan contains many interesting and necessary changes.
The planned partnership with DirecTV and AOL brings along many positive aspects. On one hand, TiVo can learn from the experience of the partners and use their strength. On the other, TiVo has the possibility to improve their awareness and build strong brand recognition. The second step was a major decrease in price from $999 to $399 which is circa 40%. They found out that the price was too high and that TiVo will gain more customers with a lower price. Additionally, the new pricing enables TiVo to operate in a new pricing category and will leave the premium price sector. Another step was to change communication.
Different media for different purposes was the new strategy. This means that television ads are responsible for creating awareness and have to foster the brand image. Print is responsible to give detailed information about the product with its features. Web provides deeper educational experience regarding service, price and functionality. In my opinion, TiVo should also focus more on the consistency in communication processes. As we learned before, many people were confused by different messages and no solid central theme nor strap line. The communication strategy shows some good approaches.
The new kinds of commercials emphasize the main features of TiVo instead of attacking networkers like they did with the first “Network Executive” commercial. Combined with strategic consistency the communication plan should create more awareness and increase sales. In addition to many positive, easy to use and innovative features of the product, the TiVo brand offers many strengths. They were the pioneer in the digital video recorder category. TiVo has a very high level of customer satisfaction and loyalty. The brand contains a friendly-sounding name and a cute brand image.
The partnership with major players is another strength. Since TiVo thought about communicating with networkers and advertisers, multiple potential revenue streams seem attractive. Not to forget the major benefit that TiVo “is liberating daily live” of their customers. Besides finding a strap line through all communication activities, I also suggest to combine TiVo with the internet as it will not be successful without it nowadays. Furthermore, TiVo has to continue revolutionize the way TV is consumed and keep up with innovational changes. TiVo should forget the past with disappointing sales and invent the future.
