TiVo in 2002 : Consumer

Behaviour
GROUP H
Zsolt Homlokos
Vanessa Maempel
Sidharth Shakdher
Luis Watanabe Telleria
Pedro Snchez Gonzlez
Francisco Javier Rodrguez Fernndez
21st Januray, 2009

http://www.youtube.com/watch?v=0qs7QfqYXl0

Case Background
TiVo, Inc. was incorporated in 1997 - Creator and pioneer
of the DVR also known as PVR
TiVos appeal - Innovation in features and product
Early on, TiVo had some success among young single men,
and
now
enjoys the same success with higher income
families
TiVo partnered with the satellite service provider, DirecTV,
and
exclusive retailer Best Buy, a nationwide electronic
store
Slow growth in subscriber addition (380,000 in March,
2002) as compared to initial forecasts
TiVo has been losing money for the past 3 years
Huge cost of sales and marketing have little to show for it

Subscriber Survey Results

Customer satisfaction
> 90% of customers are satisfied
> 95% would recommend the product
> 80% enjoy TV more after purchasing TiVo
Purchase patterns
> 70% of new subscribers knew somebody else who was
already using the product
> 60% of new subscribers were mostly influenced by
friends & family
Demographic data of customers
7% are single women
Only 3% are between 18 and 25 years old
People with annual incomes below $50K are less than
25% of the subscriber base

Issues faced by TiVo

Narrow segment of
subscribers

High Customer
satisfaction but
slow growth

Current financial
scenario

Saturation of TiVo within specific consumer segments family households and single men with higher annual
incomes, and well-educated
Singles (female), low and middle income households
(<50K), the young (<25 yrs) and the elderly consumer
(>54 yrs) remain a small percentage of TiVo subscribers

Satisfaction level over 90% proving the products

quality and usability, but subscriber growth has been
below expectations

Net losses of over $235 million for the last five

quarters, due to inefficiency of marketing & sales
expenses

Analysis of Consumer Behaviour

Data from Consumer behavior study not effective
Positioning based on consumer behavior
within a certain segment only, so marketing
efforts end up being focused on an already
existing and well-penetrated segment
No recent research conducted in other
niches such as low-income households or
people under 25 years old

Product is an experience-based one

Reputation prevails over retail and mass
media
Big influence of friends & family in purchase
decision
Qualities are not tasted until it is personally
experienced

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 existing in the
the market
Close
Close the
the GAP
GAP TO
TO ACTION
ACTION

Expanding subscriber
base across different
consumer segments

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

Bring Home Your TiVo

Marketing campaign

Staged marketing campaign informing the customer of the new TiVo

offerings, and a call to action with special prices, offers, etc to facilitate easy
ownership of the TiVo
Tactical Actions
TiVo is an Experiential Product
Market Seeding with TiVo units given free for a period of 30 days to single
women and lower income families**
Repositioning TiVos Value Proposition
Upfront Discount in prices
Indirect reduction in prices by reducing ownership costs
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
**High consumer satisfaction with product should ensure high adoption rates once
users experience the product thus helping keep seeding program costs very low

Recommendations for TiVo

Strategic actions
Expanding the stakeholders Maximising coverage,
Minimising costs
Partner with cable companies Get financial
commitments from them towards TiVo, and make the
TiVo available to them at highly discounted prices
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

!! HAPPY TiVo !!