KONE: THE

MONOSPACE
LAUNCH IN GERMANY

Group 7
SECTION-Y
PGDM-2
Debarchan Mishra (U113082)
Arijit Mohanty (U113133)
Debashis Das (U113142)
Peeyush Anurag Ray (U113158)
Pinaki Mishra (U113159)
Global Elevator Industry

 Rise demand in elevators: Urbanization, increased population in city area

and government support to public housing

 Revenue structure in elevator industry business was divided into two

sectors: new equipment ($9 Bn-41%) and service ($ 13 Bn-59%)

 Service Market had low entries barriers: simple technologies, steady

demand and high margin which made the market highly competitive

 Demand had reached its peak and was expected to fall

 Industry dominated by 5 companies: Otis (US), Schindler (Switzerland),

KONE (Finland), Mitsubishi Electronic (Japan), Thyssen (Germany)
 KONE : Company Profile
 Established in 1910
 Sales: Low-rise elevators (75%), mid-
 Headquarters: Helsinki (Finland) &
rise elevators (15%) and high rise
Brussels (Belgium)
elevators (10%)
 Operates in the Elevator & Escalator
 R&D team introduced a new product to
industry
the market called Monospace, using new
 World’s third largest elevator
technology that uses Ecodisc instead of
company
using old machine room
 Revenue from 2 sides: Selling new
 Advantages: Better space utilisation,
equipment (38%) and from services
cost and time saving in installation,
(62%)
energy cost saving and better safety
 Sales in 1995: 57% Europe; 29% North
 Monospace test marketed in Netherlands,
America; 10% Asia & Australia; 4%
UK, and France and currently being
other countries
planned to launch in German market
 During 1991-1995 the net financial
 Marketing strategies, Sales results
of Monospace launch in test
markets
 Monospace was launched in The Netherlands, France and UK

 Marketing strategies included formal launches and articles in journals and face-to-

face meetings

 Results:

 1. Netherlands- Concerns of upsetting the market as it had gained too much market

share at a very short duration; Competitors could engage in price wars.

 2. France: Sales target was 300 units for the first year where it had sold only 40 units

in the first 3 months

 3. UK: No units sold even after 1 month of launch

Elevator Market in Germany
 Europe’s largest elevator market. CAGR of 9.91%
 Market was dominated by residential construction. (low-rise elevators)
 Abrupt end of construction boom; new elevator prices fell between 5-7%,
also demand was expected to fall; so there may be a likely demand for a
cheaper Monospace elevator
 Small and mid size players focusing on service and exerting price pressure
 Six majors players dominant in market share during this period included
Schindler, Otis, Thyssen, KONE, Haushahn, and Schmitt & Sohn
 Schindler and Otis reported losses of 11% and 13% of turnover
 Demand of low-rise residential elevators was not expected to fall
 Competition
 Five other major players: Schindler, Otis,
Thyssen, Haushahn and Schmitt & Sohn
 Mid-size players: Appx. 30 mid-size players
with new equipment sales of 100-300 elevators
per year
 Cowboys: Small local companies usually
operated in a single city about 150 in number
 KONE is the world’s third largest elevator
company behind Otis and Schindler. (with a
market share of 8.2% (units) 8.5% (value)).
 Competition has become very aggressive with
decreasing demand of new equipment leading
to decrease in prices by players.
 Many of the mid-size players have now moved
their focus from new elevator equipment
towards service.
 Schindler is now focusing on gaining share and
become a clear market leader in hydraulic
elevators and Otis has lost market share in the
elevator business.
 Likely strategies by top 2 competitors:
 1. Schindler: May go for an aggressive
marketing strategy as they have used it before
when entering Asia and Eastern Europe and
focus more on gaining market share.
 2. Otis: Will most likely focus on a growth
strategy in order to gain its lost market share
SWOT Analysis

Strength Weakness
•Requires no oil •Failure to match demand and supply
•Lower energy costs •Unanticipated consumer worries in
• Better safety connection with MonoSpace
• Reduced installation time •No provision for ventilation
•Ride comfort •Lack of approval for the MonoSpace
•Energy-saving/energy-efficient •Cannot be installed in Penthouse Buildings
•Machine room eliminated •Not suited for outdoor use
•Positive customer reactions to the
MonoSpace
Opportunities Threat
•74% of low-rise residential buildings are •Elevator regulations
not expected to fall •Lower pricing by competitors
•Extend capabilities of the EcoDisc and •Competition alerted by sudden upset of
MonoSpace product line market in Netherlands
•Long-term partnerships
•Better reputation
 STP: Germany
 Segmentation: Low rise, mid-rise and high rise elevator users

 Target: Low-rise residential buildings of 6 floors or less.

 Decision Makers: General Contractors (50%); Architects (40%); Property developers

(10%)

 A. General Contractors: Appx. 20,000 small contractors in the market that bid for jobs
in the low-rise residential construction market. Request bids from elevator suppliers,
possess little technical knowledge and may often rely on the architect to select the
elevator.

 B. Architects: The architects design the needs of the property developers. In doing so,
the architect is concerned with maximising useful space of the building. Increase in
useable space increases the revenue generated from the additional space.

 C. Property Developers : Mostly concerned with overall costs, the investment value in
 Positioning, Pricing &
Promotion
 POSITIONING

1. Avoid price wars with any of the major competitors

2. Focus on differentiating itself from the other competitors by launching the

MonoSpace as an eco-friendly and economical elevator. Focus more on the cost
savings.

3. Focus on making cosmetic options for architects and make more modernised
design elevators.

4. Focus on building long-term partnerships and build up a good reputation.

 PRICING & PROMOTION

Thank You !!!