TIVO Case Analysis by Agata Amorim

Analyze the situation from the consumer’s standpoint.
What is TiVo?
TiVo is a black device in a box shape, which incorporates a digital video recorder that allows viewers to watch what they want, when they want to watch it, and it allows pause and instant replay functions of live TV by storing information on a hard drive. It enables a person or a group of persons in a household to create their own personal television schedule by using the regular television programs. The additional features include the ability to skip commercials, and input their own viewing preferences.

What factors facilitate its adoption? * In contrast with other devices, TiVo allows consumers to record over 30 hours of television without the need to use video tapes or other types of storage units. * TiVo offers independence to viewers since it allows them to watch what and when they want. The device also allows viewers to pause live television and attend to their needs like cooking, answering the telephone, and going to the bathroom, and other activities. * It makes TV viewing enjoyable, backed by the fact that everyone who owned TiVo seemed satisfied with it and 72% of the owners claimed that TiVo had made TV viewing a lot more enjoyable. * Also, TiVo offers better recording quality from its digital technology, easy-to-use features for setting up the recording as well as the capability to skip commercials fast. * TiVo also have popular features such as the "season pass", that allowed users to specify their favorite shows, so that TiVo would automatically record all its episodes. Among the most popular strength of TiVo was the "thumbs up" and "thumbs down" button. These buttons allow viewers to indicate how much they liked or disliked what they were watching.

What factors make adoption difficult? * TiVo, a device with lots of functions such as pausing, replaying live television and flexible recording, was not as easy to explain as it was to experience. It was therefore difficult to convince prospective customers. * Also, the price for box with 30-hour recording capacity was very high, being more expensive than most television sets and over twice the price of good satellite dish. * One of the biggest challenges was for consumers to change 50 years of TV viewer habit overnight. * Improving television viewing was not on the top of most people’s priority list so the drive to embrace the new product was not high. * The fact that TiVo was new in its category with no reference points would discourage or delay consumers making their purchase decision.

Who is TiVo best suited for?
TiVo is for people who are very busy or not available to watch the programs they like when they are shown by the television networks, and for families whose members have different viewing preferences.
For these group of people, TiVo helps reduce conflicts linked to what program is going to be watched, and for other people it changes their daily routine because they are no longer under pressure to watch their favorites programs at the time when the networks air them, they can now watch these shows whenever they like.

Now adopt the standpoint of the networks, the advertisers, and the cable/satellite companies:
What do they want TiVo to be?
The unique features of TiVo, that gives the client the opportunity to skip advertisements is viewed as a significant threat to the advertisement industry, and thus to the whole TV industry, which is very dependent on advertising revenues. * The Television Networks:
They want TiVo to complement their business instead of compete against or jeopardize it. They want to use TiVo to improve advertising revenues. Also, they want to use TiVo has a mean of motorizing the viewer rates of their programs so they can improve their strategy to increase markets share and therefore gain competitive advantage.

* The Advertisers:
The advertisers want TiVo to be a device with which they can conduct more personalized and targeted advertising. Also like TV networks they want to monitor consumer preferences, but now regarding to different types of advertisements for them to know what type of ads are more effective and what types are not.

* The Cable/Satellite Companies:
Like TV networks, these companies want to TiVo to be a complement to their services. The goal is to increase market share as a result of synergies that might occur when combining the variety of channels they have with the flexibility of TiVo. A new product with this combination can be very appealing to consumers.

About the competition
Two major movers have started to emerge: * Replay Networks, which sells a more expensive product, is a threat due to similar characteristics of its product and also to the large commissions it pays to the salespeople; * Ultimate TV, from Microsoft is about to enter the market a may become a greater threat mainly because it combines several products like Internet and Email, into the same product.

What are Microsoft’s potential strengths and weaknesses in this market? Strengths | Weaknesses | * Microsoft has the advantage of introducing its digital video recording device through one million consumers who currently subscribe to its WebTV subsidiary. * Customers could be offered a unique combination of services all at once; electronic mail, internet surfing, interactive television as well as personal video recording. * The company already has a good brand name that gives consumers confidence in its products. * The claim of its product being more technologically advanced than TiVo including features that allowed of two shows simultaneously. | * The company was coming in late into the digital video recording business. * Digital video recording business is not Microsoft’s core business and it is not experienced in this new business area. * Microsoft’s product announcement and marketing communication’s continued emphasis on UltimateTV’s technological advances over others seemed to be an indication that it was going to introduce the product at a high price. |

Analysis of the marketing campaign and recommendations
How would you describe and characterize TiVo’s action plan as given at the end of the case?
TiVo’s action plan as given at the end of the case is as follows: * Possible merger with DirecTV: is a good option to adopt because DirecTV already has a large client base which TiVo could use to leverage its product to a large number of customers. The program and channel variety which DirecTV offers combined with the flexibility which TiVo gives to customers would be a great combination, as mentioned before. * Price reduction from $999 for the 30-hour set to $399 and interruption of the 14-hour set with the rest of its inventory used promotional purposes: The price reduction is another good idea because the initial pricing of $999 for a new product without any reference point for advertising would repel potential customers. Using the remaining 14-hour units as promotional items is also a very good move because as indicated in the case TiVo is easier to experience than to explain. These promotional units would therefore be a good tool to make a lot more people to experience TiVo. * Use different media to pass on different messages to consumers, and introduce four sets of hilarious television commercial to promote the product

How do you evaluate the planned communication campaign?
The plan of using different media to advertise different aspects of TiVo may not be a good idea because it removes reliability in the message that TiVo would be trying to pass on to consumers. Also not all consumers will get the experience TiVo adverts in all the different media, and it is possible that consumers will fail to get the whole picture because they only see fragments in the different media.
TiVo has segmented the ad campaign with four advertisements: network executive, sports education, cop, and kids. Although the advertisements are effective in showing TiVo as alternative product to consumers, they lack in conveying the message across by not answering what the product is and how it works.
Does your situation analysis suggest an alternative plan?
TiVo marketing team and its vice president Brodie Keast need to market strongly toward the general TV audience and not toward early adopters. Not advertising directly to early adopters is a good idea because these individuals didn't previously fulfill their role as effective advertisers of TiVo. By relying on early adopters to advertise the important factors of TiVo were lost in translation between the owner and his friends. Most of the owners would refer to TiVo as a super VCR while others focus exclusively on the season pass and live TV features. The only consistent element that the early adopters use was that TiVo was changing for better their daily life.
If TiVo want to be successful in its marketing campaign to this general audience they should go along with its plan to let the price of the 30 hour recorder drop from $999 to $399. By adjusting the price the TiVo would be viewed as a more sensible purchase to the public.
In addition, they should technicians to go out and help customers set up their TiVo and explain the basic functions to the customers something similar to what Dell does with computers.
Another recommendation is to keep on selling the TiVo product in major electronic stores, but setup in these stores a live television with TiVo to help demonstrate to customers how it actually works.
Referral marketing would be an effective way to connect with the target market. Research shows that 71% of consumers were influenced by friends or relatives, when buying electronic equipment. To increase this influence, TiVo should provide new customers in the target markets with a direct mail offer containing coupons for their friends to receive a free TiVo for 30 days. In exchange for each new customer they bring in, members of the target market would receive one free month of TiVo service.
If TiVo is going to succeed, it needs to reduce the gap between their product, advertisers and networks by convincing them that TiVo is a friend. I recommend walking away from the "program your own network" slogan because it alienates networks. Rather than alienate networks and advertisers, TiVo should make them understand that TiVo has fantastic benefits for both. For networks, TiVo can provide increased product sampling, expanding primetime and providing viewer feedback. For advertisers, TiVo can provide more predictability of audience size and characteristics, and direct response offers when consumers press the "thumbs up" button during an ad.
With relevant advertising and quality programming, TiVo has the power to help evolve television towards a more customer-focused product with a significantly improved value proposition.