Case Study TiVo in 2002: Consumer Behavior

Group 13 M1

This research was aimed at seeking options as to how TiVo could increase their customer base. It also highlights the different measures TiVo has undertaken in the form of surveys and consumer research projects to understand the customer s perspective of their product. . Background of the case The case deals with the problems faced by TiVo (a creator of the personal video recorder) in 2002. The below report showcases the problems faced by TiVo and the possible solutions TiVo can adapt to overcome the same. This is with respect to the amount of sales it is able to acquire along with the fact that they have been operating with losses for the last few quarters.1.

high income families and middle aged consumers. TiVo had not made a dime in the last few years. y Perceived Risk of Purchasing A small percentage of the purchasers were from the middle and low income groups. The main reason for this was that customers seek referrals from their friends and acquaintances prior to making any purchases. This raised a question about TiVo s universal appeal. TiVo saw a surprisingly slow start. y Company s focus on sales. The main reason for this initially was assumed to be due to the lack of awareness. it did not translate into action. even though the awareness and intention to buy was rising. The increased expenditure also did not contribute to increasing the sales. Very small percentage of the subscribers comprised of singles. This was because. Problems y Slower start in number of subscribers than originally forecasted Compared to the forecasted sales. . y Company facing financial problems TiVo was also continuously losing money. This was contradictory to TiVo s expectation. not evangelism Sales are good for a company but evangelism is good for customers. of increasing sales volume through their existing customers. lower and middle income households. TiVo s big-picture marketing focused on promotional sales tactics rather than embracing enthusiastically outspoken customers who could influence sales on customer s behalf.2. the young and elderly. y Disparity between customer satisfaction and growth Post purchase attitude reflected high level of customer satisfaction but on the other hand the volume of sales was still lagging. This was evident from the fact that the amount of money spent on Sales and Marketing greatly exceeded the total revenues that they were getting in return. y Profile of subscribers remain narrow Majority of TiVo subscribers were married couples.

95.y Pricing Issues In addition to the prices of the recorder which the customer had to pay. . TiVo also increased the subscription fee to $12. This would make already-expensive monthly cable bills even more daunting.

Also at the same time. y y y . o Penetrate a broader consumer market The company needs to increase their sales to singles. low and middle income households and the young and elderly. Decrease the perceived risk The company needs to focus on producing a quality product and thereby on increasing customer satisfaction.3. Objectives of the Company The main objectives of the company at present include: y Increase their dominance in the PVR industry o Close the gap between intention to buy and action o It was known that the product awareness. they need to maintain strong relationships with current subscribers. understanding and intention to buy was increasing and hence the company has to focus on influencing customers to purchase the high quality and high satisfaction product.

either pricing options or promotional options.e. This could be done during the festival seasons like Christmas. The short term loss in profits would invariably lead to greater growth and opportunity to maintain customers. Pricing Options y Reduction of prices Because of the high entry cost. a unified and concentrated focus on word of mouth would surely increase the sales. They can also provide limited time offers (10-15% reduction for one quarter). Customer evangelism is driver of all strategies and tactics. we see that most of the customers bought once they were influenced by their friends. y Refer a friend awards From the case facts. TiVo could attract more buyers thereby increasing its customer base. they could offer rewards to customers who . TiVo should increase their focus on embracing this customer community. By reducing the prices. It would also increase the cash flow for them. This will help TiVo increase its sales among the low and middle income households. Easter etc. y Financing One more option can also be to offer the product to the customers through installments. For a product with such fervent customer evangelism. To promote this further. y Rebates Special schemes which would give rebates in the form of a year s subscription for free in return for 3 years fees in advance could also be provided by TiVo. Alternate Solutions The options that TiVo could consider would broadly fall into one of the 2 categories i.4. Promotional Options y Free Trials TiVo could look at providing free trials which would help to promote the awareness and also at the same time would provide an experience to the customers and help to eliminate the perceived risk. many consumers were not willing to buy TiVo.

refer TiVo to their friends and relatives and influence them to buy the same. This would help to increase the awareness among the potential customers at a dramatic pace. y Costumer Plus Delta In addition to their core product. This would encourage the customers to buy and test with the product and given that the quality is good. TiVo could look at forging strategic alliances/tie-ups where such games were broadcasted. Also the same could be used by TiVo to address any concerns that customers had which would in turn strengthen the relations with the customers. . this would increase the sales. TiVo should aim at creating an online community feedback system. y Forging relationships with cafes and sports bars Given that games like the Super Bowl was watched by most of the customers. TiVo can look at using a scheme of money back. y Money back guarantee To increase the customer confidence on the quality of the product. This would act as an incentive. This would help to solicit customer inputs and use it to make company decisions.

. The ones we consider which would work the best in conjunction are Rebates & Financing and Refer a friend award . TiVo would be able to attract more customers from the low and middle income groups etc which would help to increase their customer base.Long term advantage y Solution: In the short term.5. they would be able to attract more customers through their existing customers. This would solve the remaining problems they are facing like perceived risk. disparity between customer satisfaction and sales. the most effective solution according to us is in fact a combination of the best features of the alternative solutions. By doing this they can promote package deals which would act as an incentive as well for customers. the best option we believe would be for TiVo to create partnerships with cable companies. This would in turn increase their sales thereby providing a solution to their low sales and net loss problem.Cost effectiveness . By using the pricing option. - - In the long term. At the same time they have to make a strong effort to maintain good relationships with subscribers who would in turn market the company by word of mouth. with the promotion option.Ease of implementation . On the other hand. Other criteria include: . Solution Criteria for selection: y The primary criterion for selection of the best solution is that it should be the most effective in addressing all of the problems stated. We believe the best way for TiVo to solve their problems would be to use a combination of a pricing and a promotion option.

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