Vizio Inc. Harvard Case Solution & Analysis

Introduction

Vizio was founded in the year 2002; the business model followed by the company was manufacturing high quality flat panel television sets at a reasonable price. The CEO and the founder of Vizio Inc. is William Wang who started the company with a total capital investment of $600,000. The company over a period of five years has grown rapidly with total employees reaching to a total of 120 employees and total revenue of approximately $2 billion. The basic business model or the concept of the company has been to offer discounted rates to the customers with the focus on quality to the customers. The motto of Vizio has been “Where Vision meets Value”.

The company since its start has considered offering good quality television with all the major features at reasonable prices. The company has expanded with the strategy of low cost television set provider. However, recently major competitors in the industry have considered adopting the similar strategy where each industry player has considered offering low cost products to compete in the industry. Along with this, since the world has been struck with the global financial recession, the sales volume for each industry player has decreased dramatically; therefore, William Wang is looking to develop a future strategy or a plan to move forward with the brand. The company has been looking for various option as to how it needs to remain a competitive force in the television industry.

Question 01: Why was Vizio able to gain market share so successfully against established brands like Sony and Samsung in the US flat panel TV market?

The main and the most obvious reason which actually made Vizio gain the market share so rapidly was because it offered low priced products than the industry rivals. Being a very small brand which started its operations in 2002, successfully transformed into a industry giant because of the fact that it offered extremely low prices. Although television industry had giants such as Sony and Samsung, but still Vizio made a name for itself based on the strategies it followed. The business model followed by the company was to offer low priced products with reasonable quality.

The prices offered by the industry rivals such as Philips, Sony and Samsung were $9,000 for a 40 inch flat screen television, whereas, Vizio offered similar size television set for a mere $3,000. This was the basic difference between the industry rivals and Vizio which made the company gain the market share and eventually grow rapidly in such a competitive market. Along with this, Vizio even offered Plasma technology and Liquid Crystal Display (LCD) technology at lower prices than that of competitors which was the basic or the prime reason for making Vizio become a renowned entity in the United States’ television industry.

Along with this, another major reason which actually contributed to the success of Vizio in the market and to make it a successful brand when compared to the industry rivals such as Sony and Samsung was because of the fact that the CEO of the company, Wang started selling its products through warehouse and discount retailers such as Costco Wholesale Corporation (Costco), Wal-Mart Stores (Wal-Mart) and the BJ Wholesale Club (BJ’s). The management of Vizio approached Costco initially and asked them to stock Vizio products at their retail stores. The reason for this move was simple, and a strategic move because as the case states, Vizio was a low cost manufacturer of television sets, it was competing with industry giants who had developed strong brand name over a period of time.

The only way Vizio can compete with them was on low prices; therefore, opening up stores for the brand was not a feasible option. Also, the management approached Costco in the initial part and made them stock the television sets manufactured by Vizio. Costco agreed to stock the brand because being a low cost retail store, and with Vizio itself being a low cost manufacturer actually complimented each other. This was one of the smartest moves by Vizio because people were generally unaware of Vizio...................................

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