Zenith Case Study

Zenith case study

Q1.) How much existing information on TV buyers can be used to assess the HDTV market?

The innovation of colour TV came to the U.S markets in the year 1965. This innovation brought a significant change in the TV industry and was well accepted by the consumers. Over a period of 10 years (from 1965 to 1975) this new innovation was able to penetrate to the extent of 74% of market share. Since the inception year to the year 1990 the colour TV segment saw a compounded annual growth rate (CAGR) of 11%. Another innovation to the TV industry was the introduction of VCR. This new technology of VCR was able to penetrate the market to the extent of 66% in a time period of 5 years. This segment grew at a CAGR of 36% since its launch. The existing growth rate information of colour TV and VCR segment tells us that a new technology which has added value to the overall experience of watching television has been able to penetrate at a fast pace. Thus the existing information on this can used to assess the future of HDTV market.

Next, the information on the past sales of large screen size colour TVs will also help to give some insight of HDTV market. The share of large screen colour TV sales has been in between 24% to 28% until year 1989. This tells us that the sale of large screen colour TV has a considerable market share.

Another piece of existing information is the different buyer types. It says that 36% of buyers make their decision on the basis of performance/features of the television, 34% make their buying decision on the basis of the experience and remaining 30% make their buying decision on the basis of price. This piece of information will help us in knowing the broader profile of past TV buyers.

In our opinion the existing information on the above three areas will help in getting some meaningful information about the HDTV market.

Q2.) What are the forecast of HDTV demand from 1992 – 2000?

FORECAST1:

One way of forecasting the future demand of HDTV technology could be on the basis of CAGR growth of other leading past innovations. An example of such innovation is colour TV. This innovation brought a dynamic change in the TV industry. Since the inception year until 1990 the colour TV sales recorded a compounded annual growth rate (CAGR) of 11%. Another such innovation was the introduction of VCR. This segment since inception recorded a CAGR of 36% until 1990. In our opinion this new technology of HDTV could again change the experience of watching television and could record at a CAGR of +10% YOY until the year 2000.

FORECAST2:

Using the econometric model the research has come out with the colour TV sales forecast (Exhibit 12). Further this forecast has been subdivided into 4 types of purchase occasion. In our opinion another approach to forecast the demand of HDTV could be based on studying the replacement purchase occasion. The replacement occasion has been shown to grow at a CAGR of 7% over a period of 6 years till 1994. With the launch of HDTV technology the colour TV replacement occasion could be taken over by HDTV replacement occasion and could see a probable forecast of CAGR 6% YOY until the year 2000.

Q3.) Should Zenith do the aspect ratio study?

The electronic Industries Association (EIA) described HDTV as the next generation of TV technology. Zenith was exploring the option of entering into this new HDTV technology.

Using HDTV technology would have enhanced the overall experience of watching colour TV because it offered the benefits of higher resolution and superior digital sound. Using the new HDTV technology it was possible to develop large screen size TV and wider screen pictures which could have further added to the experience of watching colour TV.

In our opinion Zenith must do the study on aspect ratio. By carrying this study company will able be to access consumer preferences on the following parameters:

1. Whether the consumers will prefer 16:9 wide screens TV proposed for HDTV technology or the current U.S standard of 4:3.

2. How the consumer preferences for 16:9 wide screen changes at various price differentials.

3. How will the consumer preferences changes with different program content?

4. What Changes would be there in consumer preferences with change in diagonal sizes.

Thus finally conducting the aspect ratio study using the conjoint analysis would help the