ZENITH HDTV

(CASE STUDY)
SRISHTI SAINI, GROUP 4
ABOUT ZENITH

Zenith was the American manufacturer of TV, CRTs, Colour Computer

Monitors, etc
Net Sales- $1.549 Billion in 1989
Though increase in sales volume, it incurred a loss of $17 mn in 1989
compared to a loss of $11 mn in 1988
Zenith was discussing its options regarding a technology that produced higher
resolution and superior digital stereo sound
PRODUCT:

Colour TV sets and video recorders, colour picture tubes, colour computer
monitors, electronic components (monochrome displays, power supplies,
automotive electronics)
Cathode ray tubes in sizes less than 19 and greater than 27
PROBLEM

Despite increase in sales Zenith saw net losses because of competition from
far east
Zenith wanted to introduce 16x9 aspect ratio but a lot of programs were shot
in 4x3 aspect ratio
To tackle this Zenith had come up with proposals for various kinds of market
research and forecasts for demand
They were also introducing many new technologies
TV INDUSTRY

From 1971 to 1989 the TV industry had grown considerably

Average price per unit had fallen from $698 to $280

As of 1990, 98% of US households owned a colour TV

COMPETITOR ANALYSIS ACCORDING TO
MARKET SHARE
Chart Title

22%

Thomson Zenith North American Philips

50%
12%

Sony Others
11%
6%
Existing Information that can be used to
access HDTV market

The historic data about color TV as per exhibit 2

The factors considered by a buyer as per 1988(4 Ps), 1989 survey and exhibit
9
Price and placement data of potential buyers as per IMR survey, 1989 and
exhibit 15
The comparison between sizes of TVs as per exhibit 13

Source: Zenith: Marketing Research for HDTV by Harvard Business School

Existing Information Analysis

1) Provide value for money

2) Product- a)Picture quality most important criterion
b) Large screen seen as status symbol
3) Price- higher side of ballpark budget
4)Distribution- should be sold at retail stores
5)Promotion- ads for store specials and sales (source :Pg 6 consumer tv )
6) HDTV can change perception of old and obselete image and bad
quality( source:1989 survey)
Forecasts for Various Scenarios

Pessimistic Most-Likely Optimistic

Broadcast issues were not Broadcast issues were resolved Broadcast Standard were
resolved readily adopted and studios
made investment in Programs

Sales will not pick up as HDTV Slow sales at first. Sales will Sales would follow the pattern
Programs were not available pick up after enough quality of the VCR with high
HDTV Program are available penetration rate

Consumers do not see the Consumers slowly become The superior sound and picture
benefit in paying higher price.` willing to invest in a HDTV quality will drive consumers to
buy HDTV
Aspect ratio study:

Zenith should perform the Aspect Ratio study as it will provide huge insight
into customer preferences on below parameters
Customers would still receive older programming content based on 4:3
format. Thus a study on whether customers would be likely to buy the 16:9
ratio HDTV display which would have side curtains or letter boxing
This study will shed light on whether customers would buy the new 16:9 ratio
HDTV as a replacement to their existing TV sets
Shed light on geographic areas of customers who are more likely to buy and
hence they can be targeted
Research

PROBLEM: To check the feasibility and profitability of manufacturing HDTV

ALTERNATIVES:
1)Manufacture HDTV only
2) Manufacture both varieties
3) Manufacture HDTV in smaller sizes
4) Manufacture with letterboard or side curtain
Objectives

1) Measure consumer preference for TV aspect ratio(16:9 vs 4:3) with equal

height and diagonal
2) measure change in consumer preference at
A) price differential
B) programme content differentiation
C) diagonal sizes
Variables

Price
Program content
Diagonal sizes
Side curtains
letterboard
Additional Market Research

HDTV/NTSC-TV Preference Test: This test will conduct a conjoint analysis with
1000 respondents who will view working models of both HDTV and NTSC. This
comparison will give an insight into the customer preference for HDTV on the
parameters of size, price and quantity sale forecasting.
Secondary Source Research: This study will assist in a non biased view of new
technology adoption trend by the consumers. Using this study as a baseline
predictions can be made for the least likely/likely/most likely scenarios
Geographical or area wise demand forecasting can be applied