Marketing Management

Zenith
Marketing Research for HDTV
Case Study Analysis

Group 6:

Priyanka Agarwal
Sherin Kalam
Saad Subooh
Anuj Inani
Amit Kumar
Devika Atree

Case Study Report Zenith: HDTV

Case Overview
Zenith Electronics Corporation is an American based manufacturer of color televisions, color
picture tubes, color computer monitors, cable products and hi-tech electronic components such as
monochrome displays, power supplies and automotive electronics. Zenith was investigating on
entering into its new High Definition television (HDTV) technology. With the HDTV
technology, they can provide to their market a higher resolution and super digital stereo sound
TV experience. The vice president of marketing at Zenith, Bruce Huber, is considering
conducting an appropriate marketing research to understand market and its preferences before
launching the HDTV technology. Traditionally the CEO of Zenith, Jerry Pearlman, launched
new products on gut feelings. For him, the role of marketing research was to give a direction and
theme for advertisers, to attract the appropriate crowd. Huber is currently in dilemma to choose
the appropriate research strategy to consider for the launch of HDTV technology.

SWOT Analysis for Zenith

Strength

Weakness

Good market share

Record sales volume

Popular player in color TV

No good advertisement strategy

industry

Not popular among the younger

Increase in net loss compared to previous

year despite the increase in sales

generation
Opportunities

HDTV technology that can

Threats

Despite the advent of HDTV,

provide better picture resolution

broadcasters would continue to broadcast

and super digital stereo sound

in 4:3 format

Visibly different in shape and

Hence in real world conditions, display

design so easy to market

would appear with side curtains or letter

Consumers valued picture quality

boxes

for choosing TVs

Only 3-4% of TVs were sold above

$1000, with HDTV price would increase
by $300

Case Analysis
Q1. How much existing information on TV buyers can be used to assess the HDTV market?
The company can make use of various researches that have been conducted during the previous
years. One research in 1988 highlighted key buying decisions of consumers: value, product,
price, distribution and promotion. They can also make use of the research conducted on Exhibit 9
identifying 3 main customer segments performance buyers, experience buyers, & price buyers.
Overall, Zenith should first think about information relating to Color TVs such as its penetration
rate to know if HDTV adoption would be similar to any other products adoption or not. Since
HDTV is a new technology the company has to rely on historical data to get a similar view of the
market. If the company is seeing the product as a replaceable product then it should also consider
Exhibit 5 to see how many TV owners exist. The company should look at how marketing plays a
role in forecasting demand for HDTV. Zenith should form team to do better research on
consumers acceptance and demand for HDTV. The company should also keep in mind how the
brand is viewed by its customer & then evaluate how the new product will affect the brand.

Q2. What are the forecasts of demand from 1992-2000?

Requirement is the forecast of HDTV from 1992 to 2000
Zenith Forecast of the HDTV U.S. Market done in 1988
1992 1993 1994 1995 1996 1997 1998 1999 2000
Industry Total (millions
100 102 105 107 110 113 115 118 121
of units)
25" & larger (millions of
100 102 103 107 113 120 125 133 142
units)
11% of 25" and larger
over $1000 (thousands 100 102 103 106 114 120 124 133 141
of units)
HDTV units industry 100 205 409 682 970 1197 1242 1333 1409
forecast ('000s)
Zenith's forecast of 100 205 409 682 970 1364 1970 2727 3788
industry sales ('000s)

160

in % after taking
1992 as base year

140
120
100

Industry Total (million of

units)

80

25" & larger (million of

units)

60

11% of 25" and larger over

$1000 (thousands of units)

40
20
0
1992 1993 1994 1995 1996 1997 1998 1999 2000

Graph 1: Zenith forecast of U.S. market

4000
3500
3000
2500
2000

HDTV units industry forecast

('000s)

1500

Zenith's forecast of industry

sales ('000s)

1000
500
0
1992 1993 1994 1995 1996 1997 1998 1999 2000

Graph 2: HDTV units versus Zeniths forecast of industry sales

The above forecast clearly shows that the industry demand for 25 or higher HDTV would
continuously increase during the span of 1992 2000. The increase in demand by 42% in the
forecasting shows that the budget of the customers would also increase accordingly. This can
also be seen by the simultaneous increase in the 11% of 25" and larger over $1000 (thousands of
units) category. This shows an increase of 41% in comparison with the base year 1992. (See
Graph 1)
Moreover, the forecast demand for Zenith in comparison to the industry for the same period is
showing a drastic increase in competition with the industry average. The demand of HDTV units
forecasted shows that the demand will increased 14 times in the year 2000 in comparison with
that of year 1992, whereas the same for Zenith would increase to almost 38 times. (See Graph 2)

Q3. Should Zenith conduct the aspect ratio study?

Since they are launching a new product that is visibly differentiable, it would be useful to know
the acceptance of the new aspect ratio 16:9 with equal height and or equal diagonal displays. The
aspect ratio study would help Zenith understand the preferences of their consumers towards the
new HDTV wider screen aspect ratio or the current standard 4:3. The study also aims to
understand the changes in consumer preferences for 16:9 wide screens at various price
differentials, with different program content and different diagonal displays.
The previous research conducted by RCA on aspect ratio did not consider the response on
customers on adverse circumstances in real world, such as that of viewing with letter boxes and
side curtains. In the proposed study, the research team recruited 2,250 respondents who had
purchased TV in the past year from a shopping mall in a single city. The respondents would be
exposed to various real world situations, to choose their better preferred options. They were also
given option to choose their overall preference as well.
Even though the study would cost Zenith $125,000, it is needed as they are launching a new
technology for which they have to make huge investments on plant. Thus it is important to make
sure that the customers are satisfied and would still prefer the HDTV despite of various changes.
The results would be more accurate and reasonable in this study since the researchers are
working on real world scenarios. Hence, the company would be able to understand how the
consumers made tradeoffs among the various features of the HDTV that are under study.

Q4. What additional market research should be done to assess market potential/consumer
preference for HDTV?
Analysis of each alternative proposal for HDTV marketing research:
Dealer research
Pros

Cons

Get first hand consumer information

Dealers interest in showcasing the new

Get first hand consumer preference (price,

product
5

 Little cost involvement to convince the

quality, size)
No additional investment

dealers

Direct interaction with the consumer

Might

Brand name with the dealership

require

showcasing

to

sample
get

pieces

better

for

consumer

feedback

Secondary source research

Pros

Cons

Would get consumer trend towards recent Not

new technologies

concentrating

on

replacement

products but on new technologies, hence

Can also understand the product quality,

the consumer trend might vary

While this seems like a good idea, it might

sizing and distribution strategy

More chances of being accurate & detailed

not give the consumers liking for HDTV

High cost is involved ($100,000)

HDTV innovators and qualitative research on early adoption

Pros

Cons

Insight of what a consumer actually Members in a focus group might be

excepts, whether he likes the new product

Information may not be considered of value

or not
Will allow the consumers to get a feel of
the

influenced by others and moderators

product

which

will

allow

if they have predetermined result

for Early adopters do not represent the

formulation of strategies

population

HDTV/NTSC-TV preference test research

Pros

Cons

Consumer would be able to compare both Production of HDTV, huge investment

standards

side-by-side

and

their Cost of study

6

expectations of size, screen, picture quality Cost of developing programs to be viewed

and pricing

Research would be done only after the

The innovators could add positive word of

HDTV is produced leading to delay

mouth

HDTV consumer awareness/halo effect survey

Pros

Cons

By doing this survey, they would not only Takes long to get survey results
find out about the HDTV market but would Cost involvement of $100,000
also become aware of zeniths brand image Will be conducted after introduction so
and purchase considerations

there is a risk of product failing before the

research

The most ideal strategy in this case would be to use HDTV innovators & qualitative research on
how the product will be adopted. As this would be an explorative research the company can
easily introduce variables or scenarios it believes it needs to study for its HDTV technology. This
will also allow the company to see the customer reactions directly & this can help them adopt the
right strategy when introducing the product. E.g. If most of the focus group feel that this will
replace or redefine the color TV then the company can make strategies accordingly. Through this
the company will also be able to identify the consumer behavior with regard to the product like
their willingness to pay, their need for information, where will they buy from, and other related
factors. This study would not consume time as it can be conducted at the earliest & the cost of
conducting it is not very high. As of now the company is making losses & huge investment in
research may not seem like the best of ideas. Keeping costs low even for the new product is
crucial for the company to succeed with the new technology. Lastly, as the company is directly
dealing with its customers & if the customers give a positive response, then this will help the
company generate positive word of mouth publicity for its upcoming product. This can help the
company create a buzz in the market & make its product highly anticipated.