Tivo Case
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In the TiVo case, Brodie Keast, TiVos vice president of marketing and sales is trying to ensure a positive consumption of his relatively new product, the TiVo. TiVos marketing team intended to get the idea of TiVo across through catchy communications campaign, with a boldly humorous tone that would help consumers envision how TiVo restored the fun of television. TiVo was founded by two men who left Silicon Graphics, a leading provider of 3D graphics hardware and software, in August 1997. These gentlemen had the idea in mind to equip homes with household communication devices. Instead they invented TiVo, a device that will allow consumers to command their televisions as they desire. The TiVo had many features which allow customers to stop, pause, and record their favorite TV shows. With this new product came some major issues that would arise to Brodie and his marketing team. One of issues was that the company needed to resolve were how TiVo should segment the market and which segment would it be most efficient to target most aggressively at this stage of the products life cycle. Also, TiVos marketing team need to answer the question of: What positioning statement could they use as a guide for action, to bring TiVo ahead of the competition?
TiVo is targeted toward middle income families averaging about seven hours a day watching television. TiVo was priced as a distinct service not included in the hardware. The black box is priced $499 for a model with up to 14 hours of recording capacity and $999 for a model with up to 30 hours, and service fees apply as well.
TiVo allows customers to pause live TV whenever an interruption occurs. Along with this feature TiVo can also record up to 30 hours of programming without the hassle of videotape. The TiVo system can automatically detect and record the shows customers are used to watching based on their individual viewing patterns. With TiVo, customers are fortunate to watch anything they want whenever they want to.
TiVos marketers estimate that the market size for the digital receiver would be approximately 48,000 men and women subscribers by June 2000. With an increase of almost 33,000 subscribers a year from December 1999 to June 2000, TiVo was purchased more by middle and upper class individuals.
When it comes to competition TiVo was presented in a relative small market. A few of TiVos direct competitors includes Replay by Panasonic and Ultimate TV by Microsoft which were also sold nationally. Some of the other competitors include the up-and-coming Javio, as well as VHS video recorders and DVD players. TiVo is distributed on a national basis. The black box digital receiver can be purchased in most major consumer electronic markets in such stores as Best Buy, Circuit City, and Sears. Also, TiVo could be purchased on-line at TiVo.com.
The trends that took place that affect the television industry have been dramatic. With the average household owning 2.4 television sets and spending 7.4 hours watching television view your favorite TV show was not a passive activity. Americans were purchasing larger televisions exceeding 25-inch or
better. Many of these televisions upgrades included a surround-sound audio system.
Tivos mission is to provide the ultimate entertainment service, to ensure product reliability and effective distribution by enriching its customers while increasing television usage through previously recorded and live television. The
corporate strategy of TiVo was to attract people who have busy lifestyles and individual who watch multiple hours of TV for distribution, it has massive feature to accommodate those whose want to see things over, possible skip commercials or want to rewind, certain feature will increase viewers usage.
TiVo is a type of digital video recorder, the new VCR, of the 20th century. It involves many functions that were primarily not easy to explain or experience. Some of the high technology features were pausing and replaying live TV, as well as many other flexible recording services. The birth of TiVo was on March 31, 1999. The physical aspect of TiVo was a unit that is a set-top box that interfaced between he broadcast feed and the television. It came with four different set modes that ranged from best to basic. There were also two different recording capacities which were one for 14 hours and another for 30 hours. Truthfully the basics behind TiVo was to take the entire networks control away ad make the consumer have full control. It gave you the option to either watch live TV and pause when at busy moments of the day, or record all of the shows that the consumer like without having to program it every time.
TiVo is a high-quality definition device that stands out because of easy access and convince. You do not have to baby-sit this device to do all the things a general VCR needs done manually. Initially the cost of the model that holds up to 14 hours was $499 and the 30 hour capacity recorder that was set at $999. The TiVo service came at an additional charge $9.95 per month, $99 per year, and $199 for the lifetime unit. Without these services TiVo could pause, replay, and fast-forward without additional fees. From the primary prices that TiVo derived from, after complaints the TiVo team wanted to drop the 30 hour recorder from $999 to $399, but the 14 hour remained the same.
When it comes to distribution, Best Buy was the first store to have TiVo in stock (Sept. 99). When October 99 arrived Sears and Circuit City were added to the distribution places. TiVo was sold under the name brands of Philips and Sony, two of the major producers of electronics. When promoting TiVo, it was restricted to publics relations. TiVo used their website TiVo.com, which showed a service demonstration and the opportunity to purchase the system online. TiVo also used ads on TV to show the physical aspect of the demonstration of what it really does.
The target market for TiVo was early adopters, because it was rare that general people would go out and buy a $1000 device of its caliber. They needed at least seven points of exposure before TiVo was actually purchased. Companies gave demonstrations of the products and wanted TiVo consumers to past their experience to others.
Competition for this market is versatile because unlike TiVo, Jovio would have free service with advertising inserts into programs. Seagate & Thomson announced a joint venture to put there own personal television hardware inside the television set. WebTV also had similar features to TiVo. Even though there is a complete difference in distribution, the prices is where the damage is obtained. WebTV and TiVo both had monthly fees ranging at about $10 per month. DVD players and VHS recorders could be purchased a single one time rate without any fees,