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Tivo Case

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Executive summary

Problem statement
The company did pretty well in 2003 first quarter, but the CEO, Mike Ramsay felt that the company was at its inflection point at which a corporation facing a new situation must alter the path it was on and adapt, or fall into decline. Mr Ramsay realized that they were facing a lot of changes in their ecosystem and realized the need for an alternate path. He was in a dilemma whether to go for mass markets and speed consumer adoption or for product differentiation to maintain the technology advantage.
Summary of facts
TiVo was founded by Ramsay and Barton in 1997. It was the leading provider of digital video recorder (DVR) technologies and services in US.
In addition to the prices of the recorder which the customer had to pay, TiVo also increased the subscription fee to $12.95. This would make already-expensive monthly cable bills even more daunting
In addition to the prices of the recorder which the customer had to pay, TiVo also increased the subscription fee to $12.95. This would make already-expensive monthly cable bills even more daunting
In addition to the prices of the recorder which the customer had to pay, TiVo also increased the subscription fee to $12.95. This would make already-expensive monthly cable bills even more daunting
In addition to the prices of the recorder which the customer had to pay, TiVo also increased the subscription fee to $12.95. This would make already-expensive monthly cable bills even more daunting ricing Issues
In addition to the prices of the recorder which the customer had to pay, TiVo also increased the subscription fee to $12.95. This would make already-expensive monthly cable bills even more daunting
TiVo machine with 40 to 80 hours of recording time was priced between $249 and $349. And despite the price of the recorder that the customer had to pay, TiVo also increased the subscription fee to $12.95. According to the market response, the price seem a little higher for consumers. iVo was also continuously losing money. 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. The increased expenditure also did not contribute to increasing the sales. TiVo had not made a dime in the last few years. Profile of subscribers remain narrow
Majority of TiVo subscribers were married couples, high income families and middle aged consumers. Very small percentage of the subscribers comprised of singles, lower and middle income households, the young and elderly. This raised a question about TiVo’s universal appeal. 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 contradictory to TiVo’s expectation, of increasing sales volume through their existing customers
TiVo already had a very slow start in number of subscribers than originally forecasted. The main reason was the lack of awareness. And the company also faced financial problems, as TiVo suffered $500 million in operating losses since it was founded.

The competition was becoming intense over the years. Since the entrance of TiVo, competitors had increased to more than dozen by 1998. Despite having the strongest brand, the most differentiated product in terms of features and one of largest installed bases at that time, Tivo reached the Inflection point in 2003.
Analysis of facts
Consumers loved their products, but not many would like pay for it. As their products firstly came to the market, so there was no reference to compare to. And the pioneering functions were difficult to explain to customers.

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