Essay Zenith Hdtv

Words: 6516
Pages: 27

Harvard Business School

Rev. July 24, 1991

Zenith: Marketing Research for High Definition Television (HDTV)
On August 1, 1990, Bruce Huber, VP of marketing at Zenith Electronics Corporation, was meeting with CEO Jerry Pearlman. They were discussing Zenith’s options regarding high definition television (HDTV), a new technology that produced higher resolution (i.e., sharper pictures) and superior digital stereo sound. It could also permit larger screen sizes and wider screen pictures. The company had to decide how to forecast demand for this new technology and whether to conduct a study to assess consumer preferences for the new wider screen format implied by HDTV. The recently retired president of Zenith’s Consumer
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The growth in TV and related innovations is shown in Exhibit 2. Even though color TV was introduced in 1955, its growth was slow until 1965, when it took off. Part of the problem was the scarcity of color TV programs. However, VCR adoption rapidly increased with the VHS format primarily because of price declines and software availability: nearly 70% of U.S. households had adopted it by 1990. Total annual factory sales of TVs in the United States from 1971 to 1989 are shown in Exhibit 3. Sales of large screen TVs (20” and larger) steadily increased, from 2.28 million units in 1975 to 9.73 million in 1988. Projection TV sales to dealers increased from 265,645 units in 1985 to 301,784 by 1989. Although by 1987 twenty companies were manufacturing color TVs and components in 35 U.S. cities, only two companies were owned by U.S.-based companies. By 1990 Zenith was the only U.S.-owned TV manufacturer.

1The NTSC standard had 525 lines per picture frame, a 4:3 aspect ratio, and a 6 MHz channel allocation for

broadcasting. 2

Zenith: Marketing Research for High Definition Television (HDTV)


Industry Competitors
In 1990, the U.S. color TV industry was a mature one (with 98% of U.S. households owning a color TV) and extremely competitive. Key competitors were Thomson (RCA/GE brands) at 22% market share, Zenith (12%), North American Philips (including Magnavox, Sylvania, Philco, and Philips brands), at