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TiVo in 2002: Consumer Behavior

Abha Bhuskute Vijaya Suryavanshi Kaniz Aeliya Sahil Agarwal 10P133 10P179 10P205 10P228

Group 8

Case background
TiVo, Inc. was incorporated in 1997 - Creator and pioneer of the DVR also known as PVR TiVos appeal - Innovation in features and product Early on, TiVo had some success among young single men, and now enjoys the same success with higher income families TiVo partnered with the satellite service provider, DirecTV, and exclusive retailer Best Buy, a nationwide electronic store Slow growth in subscriber addition (380,000 in March, 2002) as compared to initial forecasts TiVo has been losing money for the past 3 years Huge cost of sales and marketing have little to show for it
Consumer Behaviour

Issue
Precarious financial position Number of subscribers to TiVo is substantially lower than previously forecasted Subscriber profiles are narrow, indicating a small target market Promotion of the TiVo category, including PVR and DVR, relatively low
Consumer Behaviour

Narrow consumer profiles


Saturation of TiVo within specific consumer segments - family households and single men with higher annual incomes, and welleducated Singles (female), low and middle income households (<50K), the young (<25 yrs) and the elderly consumer (>54 yrs) remain a small percentage of TiVo subscribers 7% are single women Only 3% are between 18 and 25 years old People with annual incomes below $50K are less than 25% of the subscriber base

Consumer Behaviour

High customer satisfaction, but poor growth


90% of customers are satisfied > 95% would recommend the product > 80% enjoy TV more after purchasing TiVo

Satisfaction level over 90% proving the products quality and usability, but subscriber growth has been below expectations

Consumer Behaviour

Consumer Behaviour
Positioning based on consumer behavior within a certain segment only, so marketing efforts end up being focused on an already existing and well-penetrated segment No recent research conducted in other niches such as lowincome households or people under 25 years old Big influence of friends & family in purchase decision Qualities are not tasted until it is personally experienced Good post purchase Behavior survey suggests that existing customer will most likely recommend it to others Fascinated by TiVo , trying to apply same functions in nonTiVo situations

Consumer Behaviour

Breaking Through the Inertia

Converting liking for the product in actual purchase and increasing profits

Making people realize TiVo as life changing product, making them dependable on it

Expanding customer base by targeting different categories

Minimizing marketing costs at the same time increasing sales to create healthy cash flow

Consumer Behaviour

Breaking Through the Inertia


TiVo customers are fiercely loyal to their TiVo, and can greatly influence future purchases among family members and friends Leverage this high customer satisfaction and influence by offering referral discounts in the form of discounts off of monthly subscription rates Quickest way to improve financials is to increase sales/subscriptions Reposition TiVo in terms of pricing and product offering to make it more acceptable to different customer segments
Consumer Behaviour

Recommendations
Customers like to maximize benefits from resources they spend Provide free subscription for 3 months to tie the customers to their products Provide Referral benefits to its existing customers. Existing customers referring new customers will get referral money Repositioning TiVos Value Proposition Upfront Discount in prices Indirect reduction in prices by reducing ownership costs Special time-bound discounts for lean periods Discounted Gift packs (subscription pre-paid) for Christmas/New years etc
Consumer Behaviour

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Recommendations
Make use of Super bowl experiment findings to convince advertisers and network operators how TiVo can be beneficial to them as well Improve distribution system, use more cable providers and retailers Provide retailer support in the way of retail demonstrations and sales person training

Consumer Behaviour

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Thank you!