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									TiVo in 2002 Consumer Behavior
MARK 5311

Zino Egweh Johnny Ferraro Brittany Culberson Throy Campbell Amanda Rodriguez Heungsun Lim

TABLE OF CONTENTS


Introduction


What is TiVo

TiVo v. Competitors  Dilemma  Consumer Behavior Model  Options  Recommendations  TiVo Today
  

Financials

Q&A

HOME ENTERTAINMENT BEFORE TIVO
 

Satellite and cable channels present a dilemma for consumers
Too many favorite shows, conflicting times, busy lives How can we maximize the enjoyment of discretionary time? Record your shows Hard to program, not picture perfect clear, does not allow you to record and play a tape at the same time



Gary Becker and discretionary time




VCR




Problems


INTRODUCTION


Then came TiVo  TiVo was founded in 1997 by Mike Ramsey and Jim Barton
TiVo revolutionized the home entertainment industry when it pioneered the DVR technology  PVR=DVR personal/digital video recorder  September 30,1999: TiVo made its initial public offering for $16 per share


HOW DOES TIVO WORK


TiVo captures TV from satellite, cable and air, turns it into a digital form and stores it in a hard drive (Stephen Wildstrom, Business Week)  DVR allows consumers to record TV programs on a hard disk instead of video cassette (VCR)  TiVo consumers can watch their favorite shows during leisure time  TiVo consumers can pause live TV, fast forward through commercials, go back for instant replay and watch programs at a convenient time

COMPETITION COMPARISON
o TiVo
  

 








Has become a verb in households, i.e. I TiVoed that show last night Easier to use according to consumersearch.com “WishList” feature allows viewer to search for specific actors, directors, or even sports teams and automatically records them for you Offers parental controls in the form of “TiVo Kidzone” by prescreening programs for age appropriate rating “TiVo to-go” allows a viewer to transfer recorded material to personal laptops, other TiVo customers (mainly used for home video) and other mobile devices TiVo online services allow the viewer to set up and maintain their TiVo digital recording device via internet access. (This feature is only available on the series 2 and higher, not available at time of case study.) Requires separate “TiVo box” to be purchased along with monthly service fees “TiVo season pass” allows viewers to record every episode of their favorite shows whenever they play. Can download rented or purchased movies from Amazon.com (current market product)

DVR COMPETITION





 

Many cable, internet providers can provide DVR service without additional monthly service fees, generally less than that of TiVo Service can be rented if desired instead of purchased Many programs do not come with contracts allowing unrestricted entry and exit from the product Most cable and satellite TV providers offer this service Internet providers are offering similar products via the PC whereby viewers can download straight to the PC hard drive and watch video wherever they choose

Both TiVo and other DVR products
 

Multiple tuners allow for multiple channel watching and recording simultaneously Both offer HD recording products (current market conditions)

MARKETING STRATEGY


Originally very little spent on advertisement
Once the product gained recognition, it would sell itself  Consumers would find a need for TiVo




Relied on customer evangelism


Believed satisfied consumers would persuade others

PERCEPTIONS OF TiVo


Expensive


Consumers unwilling to pay $200 for box in addition to monthly subscription

 

High-tech VCR Too much hassle
Families do not want another „gadget‟  Hard to maintain  “Spying”


“TOO SMART FOR THEIR OWN GOOD”
 Pioneers

often overthrown by competitors

It‟s not necessarily being first to market that counts. It's being first to establish your brand in the minds of your target market that will ensure success. But be warned, awareness is not the same as establishing a brand. Julian Hearn, Brand Strategy Director, Kruder - November 6, 2001
 Generic

 

DVRs in abundance

DirecTV Other cable companies offering DVR bundled with cable box Loss of market share

 Unable


to turn a profit

Not enough customers to offset costs

BEHAVIORAL MODEL






In an attempt to better understand and satisfy consumer‟s needs and wants, TiVo conducted surveys which provided primary information. Responses enable TiVo to analyze internal and external influences, which impact customers self concept and lifestyle. The consumers way of life result in needs and wants, which begins the decision making process. Acquisition of and experience with the personal video recorder (PVR) impacts person‟s lifestyle and ultimately further purchases and product loyalty. Information was gathered using a biannual consumer survey, attitude survey and logs provided through consumer usage of the PVR. Satisfaction, Usability and Demographics Viewing Habits, Life with TiVo, TiVo vs. Technological Gadgets, Fun Facts Diagnostic data Discussed by using Dr. Rogers‟ Consumer Behavioral model

Consumer Biannual Survey:


Attitude Survey:


TiVo Logs:
 

BEHAVIORAL MODEL
External
(sociological)

Internal
(psychological)

culture
social class

needs
motives

learning

reference groups family marketing mix

wants awareness

personality perception attitude preference

b e h a v i o r

Demographics Tech Gadgets Diagnostic Data

Diagnostic Data Viewing Habits Tech Gadgets Fun Facts Demographics

S a t i s f a c t i o n

U s a b i l i t y

BEHAVIORAL MODEL


External (Sociology)


Demographics
  

78% of subscribers were 25 – 54 age group which comprise 60% of population Families with young children are well represented 71% of subscribers are home owners; professionals with upper management occupations



Internal (Psychology)


TiVo vs. Technological Gadgets


Compared to microwave (unavoidable component of everyone‟s home)



Personality & Perception


Viewing Habits


69% of subscribers watched more television with TiVo TiVo impacted viewers‟ day to day personal life and interactions with others 96% of users find it frustrating to watch television without TiVo





Life with TiVo


Fun Facts


Behavior


Usability
   

89% perceived TiVo‟s easy to use 95.1% found the “Trick Play” (pause, rewind, fast forward) Satisfaction 90% of customers were satisfied with TiVo and 96.4% would recommend

OPTIONS


Product Strategies
 

 




Sell technology Develop unit that contains TiVo software and cable/satellite box in one Develop more features that appeal to public Develop a “lower-end”/more generic unit that is more affordable to company and public Develop software that more accurately tracks and analyzes subscriber data (demographics, programs watched, commercials watched/skipped, etc.) and sell to marketing companies Protect valuable patents



Distribution Strategies
 

Sell standalone units at more electronic and super stores License software with all cable/satellite television services
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MORE OPTIONS


Promotion Strategies



  



Reevaluate advertising dollars and reallocate dollars to television ads during most watched shows, major sporting events and sweeps months Cut advertising budget Offer coupons/rebates on standalone unit purchase Offer free product trial on lower-end units Offer incentives to subscribers who influence enrollment of friends/family Offer free set up and training to subscribers



Pricing Strategies
Immediately cut price on standalone units  Eliminate initial purchase of standalone unit and increase monthly subscription price for unit rental

14

RECOMMENDATIONS
Develop a “lower-end”/more generic unit  Immediately cut price on standalone units  Offer rental contract on standalone units  License software to cable/satellite television providers  Begin aggressive promotion programs



Refer-A-Friend and save!
70% of TiVo purchasers knew someone with TiVo prior to purchase  68% of TiVo purchasers were influenced in part by friends




Free trials, coupons and/or rebates
 

“Life is better with TiVo.” TiVo more important than everything but my children


Ranks more important than VCR, MP3 player, video camcorder, digital camera, DVD player, PDA

TRYING TO EXPAND MARKET
 

Bolsters international presence with launch of TiVo service at retail in Canada Develop a software solution that will bring the TiVo experience to users receiving their television signals through a computer Broaden relationship with NCTA



ANNOUNCED RELATIONSHIP WITH NCTA


Solidifying relationships with the cable industry, ensuring easier installation of Cable CARD products and underscoring the cable industry's recognition of TiVo's importance to their subscribers Comcast, Wind stream Communications, Jaman.com, Music Choice Network



INTERACTIVE ADVERTISING & AUDIENCE RESEARCH PARTNERSHIP
 

Stop//Watch(TM) Rating Service to NBC & CBS Power//Watch(TM) Consumer Panel to Starcom & Carat

SUBSCRIBER NUMBERS
4,500 4,000 3,500 3,000 2,500 2,000 MSOs/Broadcasters 1,500 1,000 500 0 Oct 31,2007 July 31,2007 April 30,2007 TiVo owned

Jan 31,2007

Oct 31,2006

July 31,2006

April 30,2006

Jan 31,2006

CONTINUED POOR EARNINGS
As Reported Annual Income Statement 1/31/2007 1/31/2006 1/31/2005 1/31/2004 1/31/2003 217,985 170,859 115,476 77,357 60,170 Service & technology revenues 88,740 72,093 111,275 72,882 45,620 Hardware revenues
Research & development expense Sales & marketing expense Net income (loss)

50,728 42,955 -47,754

41,087 35,047 -34,398

37,634 37,367 -79,842

22,167 18,947 -32,018

20,714 17,629 -80,596

300,000 200,000 100,000 0 Service & technology revenues Hardware revenues

STAGNATED STOCK PRICE

Q&A


								
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