ZENITH: MARKETING RESEARCH

FOR HDTVCASE ANALYSIS

Q1. What information about customers, company, and competition (3Cs) exists that can be
used to assess the HDTV market? Draw out concrete customer insights from this information.
ANS:
Customers are the Consumer Households in the US who are already using previous
generation of products
Company is Zenith Electronics Corporation whose CEO is Jerry Pearlman and is
Headquartered in Glenview, Illinois. The company employs 32000 employees. It deals in
Colour TV Sets, Video Cam Recorders, Colour Picture Tubes, Colour Computer Monitors,
Cable Products, Monochrome Displays, etc.
Financials of the company:
Year Net Sales Net Loss
1988 $1401 Million $11 Million
1989 $1549 Million $17 Million

Competition:
• Thomson (RCA/GE brands): 22%
• North American Philips ( including Magnavox, Sylvania, Philco, and Philips brands):
11%
• Sony: 6%
Consumer Insights:
The consumers look for ‘value for money’ and does not want to go out of their budget.
Picture quality is the most important criterion for evaluating a product. Customers get
the most useful information from the retail outlets. Customers majorly notice
advertisements for store specials and sales. Few of the customers are inclined towards
American brands. Brand Loyalty and Brand Rating of Zenith are the highest as compared
to the competitors.

Q2. What are the forecasts for HDTV demand from 1992-2000? Use Scenario Analysis
Approach for the same.
a. Explain the process of creating scenarios in detail.
b. Explain the process of forecasting you undertake in detail.
c. Create forecasts for different scenarios.
ANS:
From Exhibit 2 of the Case which shows the Growth of TV in the USA Market over the last
3.5 decades, we can analyze the growth rate of Colour TVs and calculate the CAGR using the
formula as follows:
CAGR = (V final / V initial)1/n -1
Year Colour TV Growth Rate CAGR of Color TV
1965 7 0.42
1970 41 0.12
1975 74 0.02
1980 83 0.02
1985 91 0.02
1989 97 0.01
1990 98 NA

In 1990, the total number of Colour TV units produced is 22.2 million (from Exhibit 12).
The HDTV demand will be similar to the Colour TV demand and it will have a similar effect
on the market. The TV shows are mostly in a 4:3 ratio and converting them to a 16:9 ratio
will be technologically challenging and time-consuming.
Estimating that the HDTV will take 7% of the Colour TV market in 1965, the estimated
number of HDTV units will be 1.554 million.
Similarly, at the CAGR of 42% for the first 5 years and 12% for the next 5 years, the demand
forecast for HDTV will be as follows:

Year HDTV forecast in million units

1990 1.554
1991 2.206
1992 3.133
1993 4.449
1994 6.318
1995 8.971
1996 10.093
1997 11.354
1998 12.774
1999 14.371
2000 16.167

Various possible scenarios

Pessimistic Scenario:
The demand for HDTV will follow the trend of Multi-set where adaption of HDTV standards
will be delayed by the FCC and customers have to pay more to purchase the 16:9 HDTVs.
Optimistic Scenario:
The demand for HDTV will follow the trend of VCR where the HDTV standards are adopted
on time. Customers are willing to pay extra to purchase the HDTV and they perceive it as a
replacement product rather than a technological innovation.

Q3. Explain and highlight the importance of the Conjoint Analysis Technique. Should Zenith
do the Aspect Ratio Conjoint Study?
Conjoint Analysis is a quantitative market research technique that is used to measure
consumer preferences for various product attributes and understand the trade-offs customers
are willing to make between the attributes.
• It is the perfect medium to give feedback on more than one attribute.
• It can analyze the responses at individual and aggregate levels.
• It is effective for competitive analysis.
• It helps in to understand the brand value and how the market share is impacted by
various factors like pricing or brands.
Zenith should do the Aspect Ratio Conjoint Study for the manufacturing of picture tubes
larger than 28 inches since it would require a huge investment of millions of dollars for
setting by new production units. The research would give a clear idea of whether customers
want to purchase a bigger TV set or not and how much premium the customer is willing to
pay for greater size and better resolution since the wider TVs are costlier by approximately
$300 than the normal TVs.

Q4. What additional Market Research should be done to assess market potential/consumer
preference for HDTV?
• Dealer Research: While doing the Research, the marketing department would be
familiar with the consumer preference and realistic buying situation to get a detailed
insight about the market.
• Secondary Sourch Research: The data from the commercial marketing firms would
analyze all the existing data about consumer adoption of recent electronic products. It
would help to estimate the size and growth of HDTV industry.
• HDTV Innovators: A qualitative research should be conducted which would tell
consumer’s expectations for the product and identify them based on demography and
psychography to take insights on preparing marketing strategy.