ZENITH

MSO: Case study

By,
Section E
Group 4

INTRODUCTI
ON
Zenith electronics corporation is a electronics manufacturer and produces TV sets, color picture
tubes, computer monitors, etc. The company is incurring losses despite increase in revenue and
sales. So they are looking for a new
innnovative product to help them regain leading position in TV market in US. The company is
looking to forecast
demand for its new HDTV technology.
CHALLENGES FACED:
1. Relevance of available data to forecast demand for HDTV in future
2. What additional marketing research is to be done to assess the situation properly
3. What features affect the demand for HDTV

Q1:- How much of existing information on TV buyers can be used to assess

the HDTV market?
Growth of TV and related innovations in US market (Exhibit 2)
It shows the growth of various innovations from the time of introduction into the market till
present
Total Annual sales of TVs in US from 1971 to 1989 (Exhibit 3)
It shows the growth pattern and price of TV sets and also CPI adjusted price in 1989
Color TV tracking, Incidence and Image awareness surveys (Exhibits 5 through 8)
It shows,
shift of consumers from one brand to another
consumer satisfaction with brand and their perception towards it
Color TV segmentation study (Exhibit 9)
It shows the market shares of the customer segments performance/feature, experience, price
It also shows the brand share under each customer segment
Forecast data for HDTV demand by FCC (Exhibit 10)

Forecast data for demand of color TV and HDTV for next 5 years by Zenith (Exhibits 11 to 15)
It shows data related to sales forecast of color TVs under various heads like first purchase,
replacement and additional
It divides sales data with respect to size of the TV set
We can use this data to estimate the demand of HDTV for the first buyers and replacement buyers
of color TV which could be targeted for HDTV
Qualitative study by Americas research group as commissioned by Zenith
It shows how people perceive Zenith as a brand and relate its qualities by TV sets owned by their
parents. It also showed impact of ads and presence on shop floors

Q2:- What are the forecasts of HDTV demand from 1992-2000 under
Pessimistic, Most Likely and Optimistic Scenarios? How to define these
Scenarios?
The above question can be answered by analysis of the data about other innovative
project such as Color TV and VCR etc. and also on the basis of forecast data of HDTV as
present with Zenith
1. Color TV
Color TV was First introduced in US market in 1956 and it took 10 years for sales to
take off. The main reason behind this was scarcity of color programs. From 1965 to
1975 the Color TV penetration grew from 7% to 74% and to 98 % by 1990
2. VCR
VCR grew very rapidly after it was introduced in US market in 1985 and has
penetrated about 70% of US household in 1990. This is due to,
Economical Price
Software availability
Volume Driven with Low Margins
3. Projection TV
Projection TV grew very slowing in the market because of two reasons
Poor image quality
High Prices

Most Likely Scenario

HDTV would follow the adoption trend of color TV and would penetrate 7 10% of US Households
from 1992 to 2000
lack of content in compatible format initially
adoption time required for studios and production houses to produce content in 16:9
high manufacturing cost increases retail cost - for example, it costs $300 more to produce a
27set for same height with 16:9 resolution
Optimistic Scenario
HDTV would follow the adoption trend of VCR and would penetrate 70-80 % of US Households by
2000
FCC passes HDTV standard by 1992
consumers accept the product because of image quality and are willing to pay extra for the
same
studios and production houses readily upgrade their technology to suit the HDTV format
Pessimistic Scenario
HDTV would follow the adoption trend of projection TV set and penetration will be below 7 % of US
Households from 1992 to 2000
FCC delays HDTV standard
studios and production houses take time in upgrading to HDTV format
high cost

Q3:- Should Zenith do the Aspect Ratio Study?

ect Ratio Study must be done because it gets important information directly from the consumers. Also it cou
n a few months
BACKGROUND

FCC wont go for substandard technology

Japans technology wont be used
RCAs aspect ratio study was inadequate
Zenith is already a transmission standards
proponent which
shows they have invested in research
Zenith has to gain market share in HDTVs in
future

POTENTIAL INFORMATION
1.

2.

Change in consumer behaviour on the grounds of

price diff
different sizes
program content
Various trade-offs from the customers perspective

These in turn will give an idea on the sizes to produce and

the quantity to produce.
What consumers would do in future under the below
circumstances
they buy 16:9 TV and most programs would be 4:3
(side curtains)
they retain 4:3 TV after 16:9 standards are adopted by
FCC (letterboxing)
This would show their willingness to change to HDTV once
broadcasting standards change and also willingness to
Survey
is conducted
using
NTSC
and not
using HDTV. This
buy a HDTV
in view of
future
change
in broadcasting
gives
a more realistic situation in the near future until
standard.

Q4:- What additional market research should be done to assess market

potential/consumer preference for HDTV?
From the previous researches and market surveys, it has been found that the following
aspects or attributes affect the market potential / consumer preference:
Availability of formatted content for a particular TV set (as in case of Color TV)
Price of TV sets
Image Quality
Manufacturing defects
Brand Consciousness
Advertisement and sales promotion
So on the basis of the above factor , the zenith should go for HDTV Innovators and
qualitative research on early adoption. From this study, zenith will benefit from getting
insight on the various factors affecting the early adoption consumer. They can use this data
to market HDTV for the early adopters when initially launching it.

Thank You