TiVo in 2002 : Consumer

Behaviour
GROUP H
Zsolt Homlokos
Vanessa Maempel
Sidharth Shakdher
Luis Watanabe Telleria
Pedro Sánchez González
Francisco Javier Rodríguez Fernández

21st Januray, 2009

http://www.youtube.com/watch?v=0qs7QfqYXl0
Case Background

•TiVo, Inc. was incorporated in 1997 - Creator and pioneer

of the DVR also known as PVR

•TiVo’s 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

Subscriber Survey Results

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

Purchase patterns
 > 70% of new subscribers knew somebody else who was
already using the product
 > 60% of new subscribers were mostly influenced by
friends & family

Demographic data of customers

 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
Issues faced by TiVo
Saturation of TiVo within specific consumer segments
- family households and single men with higher
Narrow segment of annual incomes, and well-educated
subscribers 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

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

Current financial Net losses of over $235 million for the last five
scenario quarters, due to inefficiency of marketing & sales
expenses
Analysis of Consumer Behaviour

Data from Consumer behavior study not effective

 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 low-income households or
people under 25 years old

Product is an experience-based one

 Reputation prevails over retail and mass
media
 Big influence of friends & family in purchase
decision
 Qualities are not “tasted” until it is personally
experienced
Critical Success Factor for TiVo

Remove the inertia of prospects given the exceptional

product satisfaction levels existing in the market
Close the GAP TO ACTION

Expanding subscriber
base across different
consumer segments
Minimizing
marketing & sales
costs while increasing
revenue to generate
positive cash flows
Strategic Action Plan for TiVo

Marketing campaign around the “Bring home your TiVo” theme

focusing on giving the potential buyer the experience of using
TiVo

Leverage on existing high product acceptability and subscriber

satisfaction in the market

Use current subscriber community more effectively in order to

leverage on the influence of recommendations in buying
decisions

Reposition TiVo in terms of pricing and product offering to make

it more acceptable to different customer segments
Recommendations for TiVo

“Bring Home Your TiVo” Marketing campaign

Staged marketing campaign informing the customer of the new TiVo
offerings, and a call to action with special prices, offers, etc to facilitate easy
ownership of the TiVo

Tactical Actions
 TiVo is an Experiential Product
Market Seeding with TiVo units given free for a period of 30 days to single
women and lower income families**

 Repositioning TiVo’s 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/Thanksgivings/etc
 Special referral discounts for existing consumers whose referrals lead to new
subscriber acquisitions – create a low-cost sales network

**High consumer satisfaction with product should ensure high adoption rates once
users experience the product thus helping keep seeding program costs very low
Recommendations for TiVo

Strategic actions

 Expanding the stakeholders – Maximising coverage,

Minimising costs
 Partner with cable companies – Get financial
commitments from them towards TiVo, and make the
TiVo available to them at highly discounted prices

 Product Line Expansion – TiVo Premium & TiVo

Standard
 Launch TiVo Standard – a low cost version of TiVo
(without the Suggestions + Network magazine features)
accounting for 84% of the relevant functionality of TiVo
 Substitutes upfront reduction in tariffs and avoids
erosion in perceived value
!! HAPPY TiVo !!