ZENITH! Marketing Research for High Definition Television(HDTV)
Case study
Zenith Electronics Corporation is a brand of the South Korean conglomerate LG Group by way of LG Electronics. The company was previously an American manufacturer of televisions 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.

According to electronic industry association, HDTV could be measured by the resolution of the picture or the no. of horizontal and vertical lines scanned on the screen . HDTV would many more lines and have twice the horizontal and vertical resolution then the NTSC standard , providing the clarity and sharpness to tv pictures otherwise available only on 35mm film .

Zenith’s vice president Bruce Huber and CEO Jerry Pearlman were discussing on how the new technology HDTV can be introduced in the market . The Zenith product group were confused on the consumer preference of the aspect ratio of the HDTV .They were struck with many questions like the preference of 16:9 white screen aspect ratio or the standard 4:3. If the consumer would have prefer 16:9 then the company would have to invest 100 of millions of dollar . the other questions were whether the demand for the HDTV will be under a pessimistic , most likely , and optimistic scenario. They also wanted to know how the colour tv buyers will help assess the market for HDTV .Then finally the market research require to assess the situation related to HDTV introduction .
Q1. How much existing information on TV buyers can be used to assess the HDTV market?
As shown in exhibit 3 shows that the sales of the large screen TV’s (20 inches) steadily increase from 2.2 million units in 1975, to 9.73 millions in 1998 . Projection TV sales to dealers increased from 265,645 units in 1985 to 301,784 units in 1989.It is also seen that in 1990 98% of US households owning a color tv . The major brands like Thompson , Philips, Sony, and zenith were competing against each other with Thompson with the highest market share of 22% . All the above information was available which would be very useful for the HDTV to be launched in the market .
Q2. What are the forecasts of HDTV demand from 1992-2000?
The EIA was forecasting that HDTV would penetrate 25 % of all US households by the end of 20 th century . For this part Zenith predicted there would be at best 10 % penetration of total tv industry by 1999. Most studies however forecast that HDTV penetration would be like that of color TV , a much slower penetration that what was predicted.
Although color TV had a slow early growth , by 1990 it had penetrated 98% of all households . the VCR with the faster penetration rate , had become volume driven with low margins . Camcorders , however , existed in only 10 % of households and had a good profit margins with the retail price of 1000$. Projection tv had penetrated 4% of US household, with an average retail price of $2500. It remained to be determined whether the penetration curve for HDTV would be like a color tv , VCR’S , projection tv.
Q3. Should Zenith do the Aspect Ratio Study?
YES , certainly , zenith should do the aspect ratio study because HDTV is associative with the new aspect ratio of 16:9, leading to a wider screen .The FCC is under pressure not to go sub standard so would be hard pressed to adopt the standard that’s was not 16:9.The study is important because the screen becomes 30% wider which becomes a lot more expensive and will cost approximately $300 more than the normal tv . This $300 premium would be lot for the consumer to pay . The secondary objective of the study would be ,
1. To determine changes in consumer preferences at various prices .
2. To determine changes in consumer preferences with different programs
3. To determine changes in consumer preferences with different diagonal sizes
Q4. What additional market research should be done to assess market potential / consumer preference for HDTV?
The alternative proposal for HDTV marketing research are :
1. Dealer research- zenith has not yet done any formal HDTV research with the dealers. This is important as a group 1st familiar with the consumer preferences and realistic buying situation .

2. Secondary source research- this is the data from the commercial marketing research firm. This is to estimate the ties and growth of HDTV industry in various scenarios .

3. HDTV INNOVATORS AND QUALATATIVE RESEARCH ON EARLY ADOPTION – THIS research would consist of series of focus groups with innovators and early adopters of consumer electronic products

4. HDTV /NTSC – TV PREFERENCES TEST- This was the joint analysis with thousand respondants who viewed actual working models of HDTV and NTSC monitors under various pricing scenarios .

5. HDTV consumer awareness/ HALLO EFFECT survey- a quantative survey could investigate the consumer awareness of HDTV after introduction .

Marketing 6.9 of 10 on the basis of 1395 Review.