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TiVo Case Analysis
Who should TiVo's target market(s) be?
TiVo's target market should be the mass consumer market. The article notes that TiVo is faced with a choice between speeding consumer adoption or striving for increased levels of innovation to differentiate themselves from competitors. The best option for TiVo is to aim for the mass consumer market to speed consumer adoption. There are several reasons for this decision.
The first reason is that the consumer is the end-user and the one with something to gain from TiVo. This makes the consumer the most likely to adopt the new technology. This also means that TiVo will be able to market the product to consumers more effectively than to other parties who have less to gain. The article also shows that TiVo has already put significant resources into developing the technology and that the technology is better than what the competition offers. If this can be communicated to consumers, then TiVo can become a clear choice over the competition. It is recommended that TiVo market its product aggressively to gain market share while it has strong advantages over the competition.
Another reason that TiVo should pursue the mass market is that it has a unique opportunity to introduce consumers to its product and to build customer loyalty. It is noted that the cable companies may introduce a similar product at a later time. If this is done, the cable companies have a strong advantage because of the convenience that the integration of cable and DVR technology offers. However, if TiVo takes advantage of the market now, they can build customer loyalty and develop their product, reducing the ability of the cable companies in eroding their market share.
The next reason that TiVo should focus on the mass consumer market is that achieving a strong market shares from the basis for improving their service and their profitability. For example, if they have a strong market share they can attract companies to produce Showcases as a form of advertising. If these continue to effectively combine advertising and entertainment, TiVo can offer these to consumers as a form of exclusive content. The most important point is that the larger the market of end-users TiVo has, the more effectively it can gain both content and advertising. If TiVo has a large mass consumer market, it will also be better able to expand its services by forming partnerships with other organizations. It must also be noted that advertising is an important part of TiVo's revenue base. Even more significantly, the greater the number of subscribers, the more appeal TiVo will have to advertisers. TiVo will actually have a resource that it can profit from, namely the viewers which TiVo can offer advertisers. In addition, TiVo offers advertisers the opportunity to determine viewer interest and so it serves as a market research tool as well, making it even more valuable to advertisers. It is suggested that this could create significant revenue for TiVo. If this potential is utilized effectively, the advertising revenue could generate enough profit that TiVo can provide end-users the service without a subscription fee. This will be important when TiVo faces competition from other areas, especially those that offer greater convenience. This would be an effective long-term strategy for TiVo. Most importantly, the strategy requires that TiVo develop a large customer base, with this providing significant benefits that will allow TiVo to remain competitive, even as competition increases.
The final reason that TiVo should focus on the mass market as the target market is that these marketing efforts will be likely to pay off in the long-term. For example, consider an alternative where TiVo selects CE retailers as the market, allowing the retailers to sell the product as their own brand. The major problem is that this is unlikely to generate significant long-term profits for TiVo, since any companies that do well initially will be likely to pursue developing their own competing product to achieve greater profit. Rather than increases its profits, the end result would be negative for TiVo. The same applies if TiVo considers advertisers as its market and focuses on gaining advertising revenue. The problem is that as competing products are developed, there will be no advantage to TiVo and advertisers will be just as likely to advertise with competing companies. This will put TiVo in a position where it will have to price cut to attract advertisers, with this eroding its advertising profits. The alternative where TiVo focuses on the mass market as the target market avoids this problem because the mass market that TiVo has attracted becomes its competitive advantage that enables it to attract advertising dollars and achieve maximum profits.
2. Which specific items in each of the 4P categories (Product, Place, Price, Promo) should TiVo address. What, specifically, should they do with the ones you selected?
The article notes that TiVo is not really in the DVR business. Instead, they claim to be in the user interface and entertainment services business. However, until they provide entertainment services that differentiate them from companies in the DVR business, they will be perceived as being the same to their market. This means that regardless of TiVo's long-term strategy, there will be no competitive advantage to attract customers to their service. Based on this, TiVo's product needs to have features and options that allow it to exist as a provider of entertainment services. This can include having exclusive opt-in advertising features. The Showcase described where Mike Myers talks about the movie Austin Powers in Goldmember is a good example. This is the type of opt-in feature that will attract subscriber interest, while also acting as an advertisement. Other exclusive programs could also be provided, with these sponsored by advertisers. Interactive elements such as competitions and quizzes could also be developed, with these also supported by advertisers. In addition, there is the potential to provide on-demand items such as music, film clips, and customized news.
In regards to quality, there is a need for the product to remain user-friendly. It is noted that customer satisfaction is based on individuals noting that TiVo makes their lives easier. For TiVo to be successful, it is important that it remains easy to use and that the additional features do not complicate the product to the extent that it becomes frustrating for consumers. It is also important that TiVo is easy to set up, with it especially important that consumers can easily set it up themselves and avoid the problem of having to have the system professionally installed.
The packaging of the TiVo unit will also be important. It is necessary that the packaging clearly explains what TiVo does and illustrates how easy it is to set up. It is recommended that the packaging include a diagram showing the set up via diagrams and a list of the features of TiVo, with these focusing on the problems it solves and the benefits it provides. The reason this is important is that TiVo needs to be sold in outlets where customer service and advice is minimal. This packaging is needed to provide people with the information they need so they can make a purchase decision.
The first place where TiVo needs to be sold is via retailers of televisions and home entertainment equipment. This is especially important because when an individual purchases a new television, it is the perfect time to introduce them to the product. This would be an effective place for several reasons. The first is based on the case noting that consumers are not aware of what TiVo does, what it doesn't do, and how it can benefit them. Using retailers as a sales point will be an effective way of educating consumers about the product. This includes that the product can be demonstrated to show the benefits. Another reason is that when the cost of a TiVo unit is compared to the cost of a most televisions and home entertainment systems, the cost seems minimal in comparison. This makes it a good opportunity to sell a unit. The final reason is that the commission paid to retailers presents an opportunity to motivate sales people into promoting TiVo. This includes that retailers will be able to add TiVo as part of a home entertainment system package. Not only does this provide retailers with a commission, but it can also be a sales tool.
The second place where TiVo needs to be placed is in department stores, including discount department stores such as Wal-Mart. This is based on the need to reach the mass consumer market. Having the product in these locations will make TiVo accessible to all individuals, which is necessary to the consumer adoption strategy.
To speed consumer adoption, price needs to be reduced. This is noted in the case study, where it describes how there are a number of potential buyers who choose not to buy because price is a barrier. It is recommended that the price of the…[continue]
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In Media Economics: Theory and Practice, Alexander, a., Owers, J., Carveth, R., Hollifield, C.A., & Greco, a.N. (Eds.) (pp. 149-170). Mahwah, NJ: Lawrence Erlbaum Associates. http://www.questia.com/PM.qst?a=o&d=104347833 Alexander, a., Owers, J., Carveth, R., Hollifield, C.A., & Greco, a.N. (Eds.). (2004). Media Economics: Theory and Practice. Mahwah, NJ: Lawrence Erlbaum Associates. http://www.questia.com/PM.qst?a=o&d=5017691928 Digital Freedom Campaign Begins; Claims a Right to Download. (2006, October 26). The Washington Times, p. C09. http://www.questia.com/PM.qst?a=o&d=5002563949 Fischer, R.L. (2003, November).
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