Tivo’s new consumer electronics product has the potential to revolutionalize media consumption habits and the structure of the television industry. The key challenges include:
(i) how to improve the value of the product in terms of the benefit to cost ratio and
(ii) how to increase awareness of the brand as well as the many different product attributes.
We recommend that
(i) TiVo improve the value of the product by unbundling it in terms of the various benefits provided and then bundling the individual components with other complementary products.
(ii) So as to increase the awareness of the different TiVo products and the brand, we propose to segment the market ...view middle of the document...
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.
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...