Demand Forecasting

1992 Industry Total (millions of units) 25" & larger (millions of units) 11% of 25" and larger over $1000 (thousands of units) 100 100 1993 1994 102 102 105 103 1995 107 107 1996 110 113 1997 113 120 1998 115 125 1999 118 133 2000 121 142

100

102

103

106

114

120

124

133

141

HDTV units industry forecast ('000s)

Zenith's forecast of industry sales ('000s)

100

205

409

682

970

1197

1242

1333 1409

100

205

409

682

970

1364

1970

2727 3788

Zenith forecast of U.S. market

160 140 120 100 80 60 40 20

Industry Total (million of units) 25" & larger (million of units) 11% of 25" and larger over $1000 (thousands of units)
1992 1993 1994 1995 1996 1997 1998 1999 2000

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

HDTV units versus Zeniths forecast of industry sales

4000 3500 3000 2500 2000 1500 1000 500 0 1992 1993 1994 1995 1996 1997 1998 1999 2000

HDTV units industry forecast ('000s) Zenith's forecast of industry sales ('000s)

. 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 increase 14 times in the year 2000 in comparison with that of year 1992, whereas the same for Zenith would increase to almost 38 times.

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 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.

What additional market research should be done to assess market potential/consumer preference for HDTV?

Dealer Research
Pros Get Get first hand Cons consumer Dealers interest in showcasing the new product hand consumer Little cost involvement to

information first

preference (price, quality, size) No additional investment Direct interaction with the

convince the dealers Might require sample pieces for showcasing to get better consumer

consumer
Brand name with the dealership

feedback

Secondary Source Research

Pros Cons

Would get consumer trend towards Not concentrating on a replacement

recent new technologies Can also understand the product products but on new technologies, hence the consumer trend might vary might not give the consumers liking for HDTV High cost is involved ($100,000)

quality, sizing and distribution strategy While this seems like a good idea, it More chances of being accurate & detailed

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 or not Will allow the consumers to get a feel influenced by others and moderators Information may not be considered of value if they have predetermined result

of the product which will allow 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 Production of HDTV, huge investment

both standards side-by-side and their Cost of study expectations of size, screen, picture Cost of developing programs to be quality and pricing viewed The innovators could add positive Research would be done only after the word of mouth HDTV is produced leading to delay

HDTV consumer awareness/halo effect survey

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

Ideal Strategy
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. 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.