III The Special Value on QVC: An Analysis of Factors That Affect Home Shopping Revenue A Thesis Submitted to the Faculty Of Drexel University By Azamir Latriel Green In partial fulfillment of the Requirements for the Degree Of Master of Science in Television Management September 2015 i 7 Copyright 2015 Azamir L. Green ii Dedication To my immediate family, Mom, Dad, and Ty, I am so thankful to have you guys in my corner. There is nothing I look more forward to other than making you all proud. To my extended family and friends your prayers and support are greatly appreciated. To my best friend, Mark thank you for every alley-oop, and for being the glue that held my broken pieces together during this journey. Because of you all I didn’t give up! I Love You All! iii Acknowledgments Thank you to my Thesis Advisor, Phil Salas and my Program Director, Albert Tedesco. You both have helped me through this graduate experience and I appreciate your patience and guidance throughout my graduate studies and thesis writing process. iv Table of Contents List of Tables ............................................................................................................... vi List of Figures ............................................................................................................. vii List of Appendices .........................................................................................................v Abstract ...................................................................................................................... viii 1. INTRODUCTION .....................................................................................................1 1.1 Introduction ..............................................................................................................1 1.2 Statement of the Problem .........................................................................................3 1.3 Background and Need ..............................................................................................5 1.4 Purpose of the Study ................................................................................................7 1.5 Research Questions ..................................................................................................8 1.6 Significance to the Field ..........................................................................................9 1.7 Limitations .............................................................................................................10 1.8 Definitions..............................................................................................................11 2. LITERATURE REVIEW ........................................................................................12 2.1 Introduction ............................................................................................................12 2.2 HSN- Home Shopping Network, Inc. ....................................................................12 2.3 QVC- QVC, Inc. ....................................................................................................13 2.4 Value Perception: Do You Have to Love It to Buy It? ..........................................16 2.5 Brand Relationship.................................................................................................21 2.6 Forecasts ................................................................................................................24 3. METHODOLOGY ..................................................................................................28 v 3.1 Introduction ............................................................................................................28 3.2 Criteria for an Objective Analysis .........................................................................28 3.3 Qualitative Analysis (Survey) ................................................................................29 4. RESULTS ................................................................................................................33 4.1 Introduction ............................................................................................................33 4.2 TSV’s are given a certain amount of air- time; does QVC allocate adequate tease time and airtime to TSV’s that are sold at different price points? ...............................33 4.3 What challenges are encountered by customers when making purchases and how does it affect QVC? ..............................................................................................................38 4.4 What is the perceived value of Today’s Special Value? ........................................40 5. DISCUSSION ..........................................................................................................44 5.1 Introduction ............................................................................................................44 5.2 Discussion ..............................................................................................................44 5.3 Recommendations for Future Research .................................................................46 5.4 Conclusion .............................................................................................................47 LIST OF REFERENCES .............................................................................................48 APPENDIX A: TSV Email Pre- Purchase Blast .........................................................52 APPENDIX B: Inside Q ..............................................................................................54 vi List of Tables 1. Beauty Electronic TSV ............................................................................................36 2 Kitchen/ Food TSV ...................................................................................................37 3 Electronics Computer TSV .......................................................................................37 vii List of Figures Figure 1: Existent Model of Perceived Value .................................................16 Figure 2: Perceived Cost and Benefit ..............................................................17 Figure 3: In the Kitchen with David Branding ................................................24 Figure 4: Using the scale below, could teasing TSV’s priced over $150.00 prior to airdate be beneficial? .........................................................................34 Figure 5: Host Social Page TSV Tease ............................................................40 Figure 6: Screenshot of Today’s Special Value Blogs ....................................41 Figure 7: Screenshot of customer who has no interest in the upcoming TSV .41 Figure 8: Screenshot of customers soliciting advice ......................................42 Figure 9: Customer missed TSV presentation .................................................43 Figure 10: Customer didn’t receive TSV email for upcoming TSV ................43 viii The Special Value on QVC: An Analysis of Factors That Affect Home Shopping Revenue Azamir Latriel Green QVC is known as the leading home shopping network. Every day, they offer their customers a Today’s Special Value that can vary across broad categories. Today’s Special Values are provided as an incentive to customers; a way to gain new customers and boost revenue. The thesis will examine the challenges that are faced by customers when they make purchases and how they affect QVC. It will also provide an analysis of the amount of time spent teasing and selling a Today’s Special Value and if it is an adequate amount for different price points. In addition, this thesis will study the perceived value of QVC customers, in hopes of finding an effective way to forecast sales for Today’s Special Value. ix 1 CHAPTER 1: INTRODUCTION 1.1 Introduction The migration of retail from brick and mortar to television’s multi-billion dollar home shopping networks has transformed the way customers purchase. The start of home shopping was in 1977 via radio in Clearwater, Florida. Masterminds Lowell W. Paxson and Roy Speer took their idea of selling merchandise on radio to television shortly thereafter. In the early 1970’s, Paxson, an AM radio station owner, had succumbed to the rise of FM radio and began to lose listeners as well as advertisers (International Directory of Company History, 2004). In an effort to keep his company afloat after an advertiser could not pay his bill, Paxson took some electric can openers provided by the advertiser and began to sell them on the radio. Due to the success of the can opener sale, Paxson decided to change the name of the radio station to Suncoast Bargaineers and change his programming to radio shopping. Listeners would call the radio station and make purchases through the phone (Schudel, 2015). In order for Paxson to successfully orchestrate this transition, he enlisted the help of Roy Speer for financial support. Speer was an attorney and real estate developer (Reference of Business 2015). The two decided to change their company name in order to fit their new programming genre and selected the “Home Shopping Channel.” A few years later they would go on to change the name again, dropping “channel” and adding “club.” By 1985, while rechristening their company, they launched the network nationwide, broadcasting 24 hours a day through cable and local television stations (HSN.com, 2015). 2 The success of HSN did not go unnoticed by a West Chester,