Lanning suggest that customers base their buying decisions on two criteria: 1) the benefits of the product and/or service and 2) price.1 Two reasons that sales were not taking off as anticipated relate to the marketing strategy. First, the TiVo value proposition was unclear to customers and sales people, as evidenced by the “amount of confusion in the press as to how the new product category should be introduced.” 2 Second, the market segmentation approach of targeting early adopters did not produce the leadership buzz that TiVo had anticipated. For their part, “TiVo’s marketing team argued that lack of awareness was a key cause of the discrepancy between the love for TiVo and its lackluster sales. Additionally, TiVo partnered with Philips and Sony for manufacturing and brand recognition. Philips and Sony provided a sense of reliability to the new product, but they were unable to provide support and training for the sales force. Coupled with a salesperson turnover rate of over 50% and the need for extensive explanations and demonstration, the result was an inconsistent message for an innovative technology.” 3
With regards to price, the $1,000 price tag often exceeded the cost of the television itself which created a dissonance that gave pause even to technophiles who were unclear of the value proposition. As a new technology, there was no reference point to indicate the relative value of the purchase. Tacking on an additional service fee to record and receive suggested content in addition to a cable bill increased the overall perception of cost. In addition, tie-ups with satellite TV created the added burden and confusion of potentially switching services resulting in another hurdle to overcome.
Lastly, television viewing habits have largely been unchanged since its introduction. Like death and taxes, there is a certain feeling of inevitably that the