So as to increase the awareness of the different TiVo products and the brand, we propose to segment the market in terms of the specific customer profile whose needs are aligned to the particular benefit provided by the product. Accordingly, we arrive at a communication plan for the different TiVo products that target different customer segments through a mix of advertising, promotion, distribution and branding strategies.
In the following section, we analyze the situation that Tivo is faced with and follow it up with the logical sequence that helped us arrive at the above recommendations.
Company Analysis Calyx and Corolla is a new company in the fresh flowers market. They have pioneered the concept of selling fresh flowers by mail. In its short lifetime, C&C has established strong relationships with many large growers, who cut flowers when ordered, thereby increasing the life of the buds tremendously over typical florist shops whose buds may already be a week old when purchased.
They have also developed a strong relationship with Federal Express, who is their primary distributor.
Federal Express has a well-established brand name, known for speedy, on-time, and reliable delivery, giving C&C’s promise fro freshly delivered flowers credibility among customer who are unfamiliar with C&C’s brand. C&C reaches customers through a catalogue, which is mailed out to repeat customers and rented mailing lists. This makes it difficult to reach new customers, and catalogue mail-out have a low response rate. Individual consumers are more familiar with competitors such as FTD, who has a national network of florists.
C&C’s top executives, however, are no strangers to the mail-order business, which gives them at least somewhat of an edge.
Competition Analysis In recent years, supermarkets have emerged as a serious competitor to traditional florists. In the last ten years alone, their flower sales on average have grown nearly fourfold, bringing them close to 18% of the floral retail market. Supermarkets are using their growth and increasing importance to form valuable and cost effective relationships with growers, distributors and importers.
This will undoubtedly help save costs along their supply line.
In 1990, around 65%, or approximately 11,350, national supermarket chain stores sold flowers. Nearly 35% of independent supermarket stores sold flowers as well. As these stores raise price points to be more competitive with florists, they are likely to become formidable rivals. The major downside of the supermarkets’ flower retail operation is the employee base. These outlets lack employees with specialized floral knowledge and expertise required to handle, package and maintain the good.
In comparison to florists, this lack of knowledge equates into an overall lack in service. Calyx & Corolla also faces competition from the national network composing FTD… Context (Industry) Analysis Product Benefits: The core benefits of TiVo can be classified as: (i)Watch what one wants: find, group, record, and compress programs (ii)Watch when one wants: pause, replay, slow motion, flexible time (iii) Convenience: No supplies required, user-friendly and easy programming Value Chain: TiVo is an entertainment service intermediary.
This product makes use of new technology to satisfy potential customer problems in entertainment consumption. This is similar to that of many other intermediaries like internet portals and search engines (for example, Yahoo or Google positions between ISP and the internet and seek to satisfy potential problems in information consumption). Similar to these products, TiVo is likely to influence the value chain of the entertainment consumption process resulting in altered relationships between buyers and suppliers.
The parties directly affected by TiVo are the media communication provider (like cable, satellite) and the media hardware provider (TV manufacturers). The TV networks and advertisers will also be indirectly affected. Below we present the potential effect of TiVo on these players: a)Cable, Satellite: Negative effect in terms of pricing power. Since customer budget is limited, TiVo’s gain will be cable/satellite industry’s loss. Positive effect in terms of market expansion effect.
However, cable being a mature industry this effect will not be large.
Overall, negative for cable, positive for satellite. b)TV stations: Positive in terms of more viewers for its program. This effect is likely to be more for niche (specialized) TV channels.
May be negative for large networks which might lose some advertising revenue for its primetime programs. However this effect may be offset by additional revenue generated by daytime programs. Also, TV networks may also indirectly benefit since their buyers (cable/satellite) will be less powerful if TiVo becomes the preferred access point of end-consumers.
There may also be a negative effect for pay-channels in terms of the budget constraint of the customer.
Overall, positive for specialized channels, negative for pay channels, and uncertain effect on large TV networks. c)TV manufacturers: TiVo enriches the media content. Therefore, there should be a positive effect in terms of demand for high-end TVs. d)Advertisers: Positive effect in view of the targetability of customers. Change in technology: There is a major change in technology in the entertainment industry.
First, analog devices are being converted to digital devices by customers (VCR to DVD Player, Picture Tube TV to LCD, etc. ). Second, there is a race between the TV and the PC to be the centerpiece of all home entertainment appliances. Proliferation of TV channels: There are now numerous TV channels that target different segments and sub-segments of the population (Travel Channel, Weather, Spike for men, Lifetime for women, etc. ).
Moreover, several pay channels like HBO, Showtime, etc. , that do not depend on advertiser support have grown significantly.
Customer Analysis Customers have widely different TV viewing behavior. In addition, there are circumstances under which the same individual views TV differently.
In general, we categorized the viewing behavior under these broad patterns: •Couch potato: who watch TV viewing is the most important “activity” •TV geek: who watch TV in search of new “stuff” •Sports fan: watches TV primarily for sports •Busy: likes to watch TV but cannot see it (as a result cannot follow program) •TV-haters: does not enjoy T viewing because of ads, irrelevant content, etc.
Customers are now overloaded with many new subscription-based services like cell, DSL, and cable/satellite. This makes it harder to start a stand-alone subscription service. In addition because of the frequent changes in technology, customers are uncertain (both about price and future technology standards).
This leads to customers making up their mind (in view of the incremental benefits of a new appliance but postponing the purchase. There have also been concerns raised about privacy when service-providers use information about customers to earn additional revenue.