Barco Projection Systems(A): Worldwide Niche

Marketing

MAK-II Group Assignment

Session 14
Submitted on 30th November 2010

Submitted by Group 9 (Section D)

Abhishek Verma (2010PGP010)
Amit Kumar Shaw (2010PGP032)
Ankit Bansal (2010PGP046)
M R Rohit (2010PGP171)
Nupur Gupta (2010PGP232)
Sravanti Krishna (2010PGP379)
Vaibhav Sarode (2010PGP410)
PROTAGONIST:

Erik Dejonghe, the Senior Vice-President and chief operating officer of Barco
Projection Systems. He was worried about the new product launched by Sony
that can harm the performance and the price of BPSs product. This new
product was high in quality and was expected to be priced 20 %-30% lower than
the established market price of the comparable product.

Competition Scenario:

Sony along with Electrohome and NEC were the three major competitors in the
Data and graphics segment. As shown in the exhibits, the share of BPS is 25%
compared to Sonys 45%. The Sony projectors were about 15% lower in price
and comparatively lower in performance rated by scan rate, brightness, image
quality and resolution.

Electrohome was another competitor which was third-largest player in unit sales
after Sony and BPS. It also had a stronger distribution network as compared to
BPS to its advantage.

Since Sony poses to be the major competitor, a comparison of the positioning of

the products is done:

Barco Sony
Market Segmentation Niche Markets Mass Markets
Distribution System Selective Distribution Intensive distribution
(Less distributors, 100 in (500 distributors in US)
US)
Product Reputation High End and high Low end but reliable
quality

Distribution Network:

Dealers carrying BPS projectors included both box dealers and system dealers.
The box dealers would simply sell the products and not provide any service or
expertise post purchase. System dealers on the other hand would help the user in
installation and integration of equipment depending on their needs. The typical
customers purchased a new projector every 5 years and tended to purchase more
performance in a projector than they needed keeping in mind the constantly
increasing scan rates.

Problem Analysis and Suggestions:

BPS is facing tough competition from 1270 projector from Sony. It could be
possible that BPS might lose 75% of the forecasted profits in 1990.

It is important for BPS to come up with a better alternative before Infocomm,

the trade show happens else it shall lose majority of its market share to Sony
since most of the customers have shown as interest in the Sonys product.

A lot of pricing options are available to Erik from which he has to decide which
one will assist him in not losing the comptetion market to Sony.

Pricing Options:

1. Reduce the cost of BD700 to make it more viable option

2. Do nothing

Product Response Options

1. Do nothing and proceed on with the development of BD700 as decided

earlier
2. Use the technological developments of BD700 and utilize it to make
BG700
3. Stop all work and focus on the production of BG800

Analysis of the Options above:

Pricing Options:

Without knowing what Sony Price will be, it is probably premature to

consider a price cut on the BD600, let alone consider a strategic price
reduction on the BD700
The price cut would have to be substantial for the product line so as to
make it more attractive than 1270
Any cut in the price might result into a price reduction game with Sony
with is inconsistent with the BPS reputation for technology. Besides, with
the data provided to us, it seems that BPS will not be able to win a price-
reduction strategy
Product Options

Option 1:
i. Continue BD700 upgrade to digital environment
ii. Project is already under way with already 180 person-month
utilized
iii. Delivering on-time is a message consistent with BPS
reputation for market
iv. Since Sony has just introduced 1270 and has not made any
sales, it is tough to foresee the market response
Option 2:
i. Shift BD700 development emphasis to matching KHz
performance of 1270 by making BG700 that will take
another 2-3 months
ii. This will postpone the delivery of BD700 that will cause
delay in its delivery to advance-order customers
iii. It does not guarantee completion by Infocomm date
iv. The quality of the projector in terms of light output, picture
quality and resolution shall still be inferior to 1270.
Option 3:
i. Focus all energy to make BG800 of 90Khz performance
before Infocomm
ii. BD700 development to be put on hold
iii. Management believes that it has capability to meet the
challenge
iv. This will preserve BPS reputation and leadership
v. Management believes that there is 40% probability to make
the Infocomm deadline
vi. Employees are already over-worked and thereby do not have
any enthusiasm to change strategy. If implemented, it might
demoralise them more since the holiday season was fast
approaching.
vii. Compression might result into low quality product

viii. There isnt any surety on the procurement of the lens from
Fujinon, which is of superior quality.
Suggestions:

1. From Product perspective, BPS should start the development of BG800

and launch it by Infocomm deadline. This will help BPS regain the lost
market share and shall provide them with competitive edge. It is also
important to launch BG800 irrespective of the competition or delay since
the predicted annual growth rate in the graphics section is supposed to be
40.2% which is promising.

2. Since BG400 gets a direct competition from the launch of 1270, we

propose a phased reduction in the price of BG400 and BD600 such that
perception of high quality is not compromised and BPS is effectively able
to monitor its market share. This decision is imperative as they
represented 83% of BPS graphics revenues and 91% of its data revenues.
Sony has started taking advance orders in Germany and given the fact
that it is the second largest market for BG400, price reduction should be
immediate.

3. BPS has very few suppliers and shares information on technology with
Sony Components. For better market development and share, BPS should
strive to look for other suppliers and not be dependent on one.

4. BD700 might be easily replaced by the graphics version BG700 given the
existing chassis, tubes and lens of BD700. But its tube size and features
like light output, picture quality and resolution may still not match 1270.
There is also speculation that it might not be completed before Infocomm
which defeats the entire purpose of choosing this alternative in the first
place.