Case: Zenith (hdtv)

Zenith (HDTV)

Himanshu Arora
1301-528
Section - B
1

Introduction
• Net sales in 1989-$1.559 billion
• Products: colour Tv, video recorders, color
picture tubes, color computer monitors etc.
• Headquarters- Illinois
• Number of employees- 32,000
• PROBLEM- Despite increase in sales Zenith
saw net losses because of competition from
far east
HIMANSHU ARORA 1301-528_B

2

TV INDUSTRY
• From 1971-1989 the Tv industry has grown
considerably
• Average price per unit has fallen down from
$698 to $280


3

Issue 1
• The prospective demand for HDTV from 1992
to 1999 under pessimistic, most likely and
optimistic approach
• The main factors that need to be considered in
order to analyse the market
• Solutions to the factor issues


4

Issue 2
• Aspect Ratio Analysis
• Primary Objective: to measure consumer preferences for TV
aspect ratios (4:3 and 16:9) with equal height and and/or
equal diagonal displays using conjoint analysis
• Secondary Objective:
 To determine changes in consumer preferences at various price
differential
 To determine changes in consumer preferences with different
program content (sport, movies, news)
 To determine changes in consumer preferences with different
diagonal sizes


5

Consumer Behaviour towards Tv
• Consumers looked for value for their money
and stayed within their budget
• Picture quality was the most important
evaluative criterion
• Tv’s were purchased from retail outlets
• Advertising with information, product
orientated focus seemed to go unnoticed
• Data show that Zenith had brand loyal
customers

6

Competitor Analysis based on Market
Share
Sales

Zenith
RCA
Sony

Magnavox
GE


7

Focus Group Analysis about Zenith
• Zenith had an old image
• Used to be a good brand
• Associated Zenith with the malfunctioning Tv
their parents owned
• Questioned it quality
• Did not recall Zenith advertising


8

LEAD QUESTION NO. 1
• What should Bruce Huber do?
– Bruce Huber should, for the time being, concentrate on
the research for production of HDTV sets rather than the
HD content or programs. This is so because he has scarce
resources and has to prioritise. Also by creating a product
like this he is going to create an opportunity for the
existing content production houses to produce HD
programs and Zenith will then be the sole television which
could show such programs.
– For example: in India, smartphones with 3G technology
came much before 3G networks actually got installed. This
was in anticipation that the advancement is superior and
the network providers will make a move on it.


9

LEAD QUESTION NO. 2
• Should Zenith undertake the aspect ratio study? I so,
when and what should be the research design? What
are the pros and cons of the existing proposal?
– Zenith should do the research on a different pattern which
will provide it more certainty with regards to the
acceptability of the product. This design is as follows
• First conduct a ‘HDTV innovators and qualitative
research on early adoption’. A focus group qualitative
research that will tell consumers’ expectations for the
product, price, placement and promotion & hence take
insights on preparing the marketing strategy
– Cost: $50000 - $70000

10

LEAD QUESTION NO. 2
• Second, conduct a ‘HDTV preference test’. A conjoint
analysis with 1000 respondents which would include
showing them an actual working model of an HDTV. This will
show
– Their willingness to buy
– The premium they are willing to pay
– Cost: $75000

• Third, if the research has given positive results, conduct the
aspect ratio study that will clearly show whether the
customer wants to buy a bigger TV set or not and how much
premium he will pay for the size and resolution
– Useful as there are high investment costs if zenith has to produce
sets of more than 28’
– Cost: $125000

11

LEAD QUESTION NO. 3
• How should one assess the market potential
for HDTV
– Under pessimistic, most likely and optimistic
approach
• Pessimistic:
– Quality HDTV programming are not available
– HDTV sets are readily available
– Consumer do not see the benefit of spending so much on
them
– HDTV issues are not resolved


12

LEAD QUESTION NO. 3
• Most likely:
– Sales are slow initially
– Sales will boost as soon as the HDTV programming improves
– Consumers slowly become willing to spend on a HDTV

• Optimistic Approach:
–
–
–
–

Broadcasts standards are readily available
Tv stations invest in new equipment and HD programming
HDTV sets are readily available
Consumers think the superior sound quality and price are worth


13

LEAD QUESTION NO. 4
• What is the role of MR for innovative hightech consumer durable innovations
– Marketing research for an innovative high-tech
consumer durable should be a little different for
products whose features or types are already
known by the consumer at large.
• The research should be aimed at recognising the
current underserved needs and the fallacies in the
products they are using currently
• To find out the premium they are willing to pay for such
a new innovation in product features

14

LEAD QUESTION NO. 4
• No trend analysis should be conducted on
acceptability of similar innovations in the past
as there is no plausible explanation that the
consumer will react the same way. This is
because
– The time zones may be different due to which the
evolution of the consumer may get unaccounted for
– Mediums of information transfer may accelerate
the acceptance by customers
– There may have developed an overall culture to
shift to better products

15

LEAD QUESTION NO. 5
• All findings from the MR relating to price,
product specifications, acceptance etc. will
ultimately aid the marketer to develop a
marketing plan based on information and not
intuition while also saving itself huge sums on
costs as it already is incurring losses and
cannot afford to overspend


16

Case: Zenith (hdtv)

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