TiVo in

2002:Consumer
Behaviour
GROUP 3 SECTION A

Presentation Outline

Case Background
Issues Faced by TiVo
TiVos Objectives
SWOT TiVo
Consumer Behaviour Model
TiVos Consumer Behaviour
Strategic Action Plan for TiVo
Recommendations
Solution

Case Background
TiVo, Inc. was incorporated in 1997 - Creator and pioneer of the DVR also known as PVR

The case deals with the problems faced by TiVo(a creator of the personal video
recorder)in 2002.
This is with respect tothe amount of sales it is ableto acquire along with the fact that
they have been operating with losses for the last few quarters.
It also highlights the different measures TiVo has undertaken in the form of surveys and
consumer research projects to understand the customers perspective of their product.
This research was aimed at seeking options as to how TiVo could increase their customer
base.

Issues Faced by TiVo

Surprisingly slower start (number of subscribers lower than originally estimated)

Profiles of subscribers were lower: No Mass Appeal

From Exhibit2: Financials Net losses of over $235 million for the last five quarters,
due to inefficiency of marketing & sales expenses
Current Financial Scenario
From Exhibit5: Demographic Data we get to know thatthe higher percentage of
TiVo subscribers are formed by

Age Groups: Above 24 years and Below 55 years

Married Couples

High Income Families ($51K and above)

Narrow Segment of
Subscribers

Failure of Microsofts Ultimate TV:

Could not create an impact on people, which lead to its withdrawal from the industry.

No promotional campaign from Microsoft after failure

Issues Faced .. Cont.

Lack of awareness about TiVo: Poor Marketing!

Disparity between customer satisfaction and growth

Perceived Risk

High Customer Satisfaction

but Slow Growth
Post purchase attitude reflects high level of customer satisfaction

Middle and low income households small % of purchasers

Awareness and intention to buy are rising, action is not following

Customers seek reinforcement from friends prior to purchase

Pricing Issues

TiVo also increased the subscription fee to $12.95. This would make alreadyexpensive monthly cable bills even more daunting.

Best Buy was considered the exclusive retailer of TiVo: Poor Distribution
Channels

TiVos Objectives

Generating Positive Cash Flow

Increase their dominance in the PVR Industry

Identifying Potential Customers and understanding their needs

Using advertisers, television networks, content owners and service operators to play
a role in TiVos relevance in life of the customer

To reach potential customers who dont see TV as a problem and to make them
understand how TiVo can improve their experiences

SWOT

Internal

Strengths
Innovative
technology
Customer
satisfaction
New and convenient
Co-branding

External
Opportunities

Growing demand
Customer referral
More incentives
Strategic ads
Convenience
Delayed price hike
Good distribution

Weaknesses
Unknown product
Low penetration rate
Low customer base
Monthly Pricing
Plans
Weak marketing
Accumulating losses
High costs

Threats
High competition
Technology changes
No ad revenue
Low entry barriers
RePlayTV / UltimateTV / DVD
Recorders

Consumer Behaviour Model

Consumer
Psycholog
y

Marketin
g
Stimuli

Other
Stimuli

Products
Services
Price
Distribution
Communica
tion

Economic
Technologi
cal
Political
Cultural

Motivation
Perception
Learning
Memory

Consumer
Characteris
tics

Cultural
Social
Personal

Buying
Decision
Process
Problem

recognition
Information
search
Evaluation
of alternatives
Purchase
decision
Postpurchase
behavior

Purchase
Decision
Product

choice
Brand
choice
Dealer
choice
Purchase
amount
Purchase
timing
Payment
method

TiVos Consumer Behaviour

Satisfied Needs: Facilitates watching of the programs at any time of the day
or night (by using Trick Play)

Better Utilization of Money spent

Strengthens Interpersonal Relationships: Can devote more time towards

spouse and children and have some time for yourself too (self management)

Improves Social Life: Does not force one to leave a function unattended only
to watch a particular program.

Patronage: Possibility that the existing customers will most likely recommend
it to others

Appeal Factor: Customers find TiVos features more attractive than most of
the other Electronic gadgets.

Critical Success Factor for

TiVo

Remove
Remove the
the inertia
inertia of
of prospects
prospects given
given the
the exceptional
exceptional product
product satisfaction
satisfaction levels
levels existing
existing in
in the
the
market
market
Close
Close the
the GAP
GAP TO
TO ACTION
ACTION

Expanding
Expanding subscriber
base
base across different
consumer
consumer segments
segments

Minimizing
Minimizing
marketing
marketing & sales
costs
costs while
while increasing
increasing
revenue
revenue to generate
positive
positive cash
cash flows
flows

Strategic Action Plan for

TiVo

Marketing campaign around the Bring home your TiVo theme focusing on giving the
potential buyer the experience of using TiVo

Leverage on existing high product acceptability and subscriber satisfaction in the market

Use current subscriber community more effectively in order to leverage on the influence of
recommendations in buying decisions

Reposition TiVo in terms of pricing and product offering to make it more acceptable to
different customer segments

Recommendations

Need Appeal and Awareness: Make the networks and advertisers use the
result from the Super Bowl experiment to convince people to buy TiVo.

Maximize Customers Benefits & Strengthen Relationships:

Provide free subscription for 3 months to tie the customers to their

products

Provide Referral benefits to its existing customers .

Risk Factor : Use survey results to show how TiVo can change their lives

People buy products based on the risks attached to them - Lesser the risk more they
buy

Level of Interest : Target people between 18-24 years of age

They are more likely to spend on entertainment and would prefer technology

Forging relationships with cafes andsports bars

Repositioning TiVos Value Proposition

Upfront Discount in prices
Special time-bound discounts for lean periods

Discounted Gift packs (subscription pre-paid) for Christmas/Thanksgivings/etc

Special referral discounts for existing consumers whose referrals lead to new
subscriber acquisitions create a low-cost sales network

Product Distribution & Promotion:

Do not limit to Best Buy only; improve the distribution system by involving
more cable providers and retailers

Create partnerships with cable providers and retailers, use them to educate
people about TiVo, promote package deals

Product Line Expansion TiVo Premium & TiVo Standard:

Launch TiVo Standard a low cost version of TiVo (without the Suggestions +
Network magazine features) accounting for 84% of the relevant functionality of
TiVo

Substitutes upfront reduction in tariffs and avoids erosion in perceived value

Conclusion

Primary criterion for selection of the best Solution is that it should

be the most effective in addressing all of the problems stated.

Cost Effectiveness

Ease of implementation

Long term Benefits

TiVo should strategize their action plan in two steps

Short Term Combination of Pricing and Promotion

Long Term Create Partnerships and Differentiated Product

Changing the way Americans watch TV is going to take some

time. TiVo has to try to work in that direction to bring about the
change