28-06-2013, 04:54 PM
Zenith: Marketing Research for High Definition Television (HDTV)
Zenith Marketing Research.docx (Size: 38.99 KB / Downloads: 39)
INTRODUCTION
Zenith Electronics Corporation is a brand of the South Korean conglomerate LGGroup by way of LG Electronics. The company was previously an American manufacturer oftelevisions and other consumer electronics, and headquartered in Lincolnshire, Illinois. Before LG Electronics acquired a controlling share of Zenith in 1995 and eventually the rest in 1999,Zenith was the inventor of subscription television and the modern remote control, color picture tubes , color computer displays , cable products and high tech electronics components such as monochrome displays, power supplies , and automotive electronics. Zenith has employed more than 32000 people world wide .all though brand and distribution were among its strength , results from continuing operations were disappointing in 1999.Despite sales volume increases, zenith saw net loss of $17 million compared to a net loss of $11 million in 1988.
Zenith Electronics Corporation was keen on entering into the High Definition Television (HDTV) segment by launching a new technology that produced higher resolution (sharper pictures) and super digital stereo sound. Currently, there exists a relatively square NTSC (National Television Systems Committee) standard with an aspect ration of 4:3, found in almost all the households in the United States. However, Zenith would like to study whether consumers preferred the 16:9 wide screen aspect ratio proposed to HDTV as compared to the existing NTSC. If preferred, Zenith would have to shell large amounts on investments in new plants and equipments to produce wide shape picture tubes larger than 28” in diagonal.
Case Analysis
Zenith was primarily a CRT manufacturing firm. They had a perception in people mind which was like a father’s TV set (Old TV Sets). They major matter if concern was their market capture. Thompson and RCA were the leading companies. Zenith saw a net loss of $11 million in the year 1988 in the corresponding year their sales volume increased by 9% even then they faced a net loss which increased to $17 million in 1989. As a result Mr. Jerry Pearlman CEO was very concerned and asked Mr. Bruce Huber, VP Marketing of Zenith to conduct a thorough Market research upon the introduction of HDTV technology which functioned at an aspect ratio of 16:9, as compared to the present ratio of 4:3. There were many problems with this innovation as Zenith had no idea of the consumer preferences and their choices. Their marketing activities were majorly focused on the gut feel of their CEO. Which needed to change, Zenith was the pioneer of HDTV technology. As HDTV was taken into consideration a lot of problems arrived the first and foremost was whether to go ahead with this technology as the not only the cost of production but also the cost of market research was way too high. At the point of time when they were in process to take a decision on HDTV technology the major competitor was Thompson and RCA. During this period HDTV was given the name of the next generation technology but the acceptance was uncertain amongst the people.
Price, Promotion, Place and Product Analysis
Price: Consumers have a fixed budget which was not extremely low as it signified a
cheap product. The objective was to get the best TV within the budgeted amount.
a. Product: Picture quality was the main concern of the consumers .They also concentrated
on other features such as remote controls and stereo systems.
b. Place: Consumers would generally tend to buy their products from retail outlets .They got
more product information at stores rather than through advertisements.
c. Promotion: Informative advertising generally went unnoticed. Customers were more
interested in sale offers.
ISSUE 3
It is advisable to opt for primary research when it comes to Aspect Ratio Analysis as
the results must be customized in order to meet the research requirements of Zenith.
Moreover the RCA in its earlier research had certain discrepancies wherein it did not
take into consideration how displays would be viewed in the real world. As pertaining
to 16:9 ratio display, aspects such as “side curtains” and “letterbox” images view were
overlooked.
Conclusion
Even though there were many competitors present in themarket, the demand forecasting of HDTV by Zenith wassuccessful. However, they should have focused more on buildingadoption models so that more and more people accept and usethe product and spread a good word of mouth, so that furthersales can be achieved and a permanent customer base isacquired.The data they collected was relevant and was efficiently used,also we’d like to suggest to use the secondary research alongafter a successful Aspect Ratio study.