Barco Projection Systems , Case Study, Task 1 . Identify the product line strategy of the Barco Projection Systems Division? BPS has adopted a market portion based products. BPS differentiated these segments based on the scan price of the projectors.
Video part projectors acquired scan costs of 18 kHz, info projectors acquired scan rates ranging from 18 to 45 kHz and graphics projectors at the more advanced had costs from 16 to over 64 kHz. BPS was the leader in the graphics output segment that was a niche industry.
Historically, Nao entered the projections market with the lower-end scan prices for online video applications and has been adding depth to its product line by improving the scan prices. Thus, therefore BPS produced data projectors and finally graphics projectors. However , BPS had been constraining the projector scan prices in these three segments thereby evidently differentiating the products in terms of the segments. 2 . On page 12 of the case, Dejonghe comments that “all of our projections, nevertheless were based within the assumption that Sony will respect the vision in the market place’. What does this mean?
When ever does one competitor accepts another’s vision of the market? Traditionally, BPS’s competition got followed the practice of segmenting the projections marketplace by the search within rates. Simply by strong dedication to R, D, BPS had brought about continuous advancements in the projector scan rates and thus founded itself as being a comprehensive player with occurrence in all the sectors. Based on this kind of, BPS had a vision that it may continue to drive the technology improvements on the market (in the scan rates). Also, Sony had always positioned it is projectors beneath that of BPS in terms of functionality.
This produced BPS imagine Sony will abide by its eye-sight of the marketplace. Generally, a competitor may well accept one more company’s perspective of the marketplace if the various other company ” a. Is a clear marketplace leader and has a great understanding of the marketplace needs m. Is the front-runner in taking new technology towards the market 3. Why do Sony opt to reject BPS’s vision with the market that kicks off in august 1989? Even though BPS have been a technology leader, as 1985 BPS had been constantly watching and incorporating the tubes used by Sony in its projectors.
This was an obvious transition of BPS from being a technology leader into a follower of Sony’s technology. Further, there were no suppliers apart from Sony components that produced pipes with the quality necessary for sophisticated graphics discharge. As a result, BPS had to greatly rely on Sony for the tube technology. Sony maybe believed that BPS would not innovate at a fast enough rate to capture the growth potential in the market. Therefore Sony decided to put by itself ahead of BPS in terms of the industry vision. 5. How critical a threat is the Volvo 1270? What are Sony’s aims?
On the efficiency scale, 1270 is positioned previously mentioned BPS’s BG400, so the picture of BPS like a high-end player in the projectors’ market is below serious menace. Also, the 1270 is usually targeted at the U. S i9000. and Western european markets from which BPS got 83% of its design revenues. This will likely significantly have an effect on share from the BG400 during these markets. If the 1270 is priced at the lower end ($15, 000), it can also take in into the market share of BD600. Further, with this price level, the 1270 has the probability of serve both data and graphics portion which will damage BPS’s segmentation practice.
The large growth potential (~40%) predicted in the design segment features perhaps motivated Sony drive an automobile the technology change in this segment and develop the 1270. In addition , by prices it lower Sony is aimed at merging the data and images segment and thereby reaching economy of scale. Fiat aims to sooner or later make the images segment a commodity industry rather than a niche market. 5. Do Barco buy the wrong thing somewhere along the way or do something like this ‘just happen’ when ever competing in high technology business on the global scale? Sony’s relieve of the 1270 is not an incidental celebration.
BPS’s failing to constantly innovate and update the technology of their projectors made these people lose all their technology leadership position to Sony. Next Sony’s pipe technology was a direct discord with BPS’s belief that Sony need their eyesight of the industry. As a result, BPS did not anticipate that Sony could be ahead of their own projections in terms of the scan prices and prices inside the graphics projector segment. BPS also failed to realize that niche markets are prone to be commoditized eventually. 6. What should Nao do regarding Price?
As there is simply market rumours on the Volvo 1270’s selling price, Barco will need to wait for Volvo to announce the actual value of the 1270. At two different prices levels ($20, 000 and $15, 000) of Volvo 1270, numerous pricing numbers of BG400, the associated income loss (assumed % pertaining to the lowered prices) and the margins are calculated listed below. Scenario 1: Sony 1270 Priced at 20 dollars, 000| | | | | BG400 Pricing| Selling price per product $| Marigins %| Cost per unit $| Se révèle être. Revenue Loss| Estimated Income $Millions| Total Marigins $Millions| No Reduction| 24, 000| 29%| seventeen, 040 | 30%| almost eight. 6| installment payments on your 6| Decreased Price| twenty three, 000| 26%| 17, 040 | 25%| 9. 60| 2 . 5| | twenty-two, 000| 23%| 17, 040 | 20%| 10. 24| 2 . 3| | | | | | | | Circumstance 2: Volvo 1270 Priced at $15, 000| | | | | BG400 Pricing| Price every unit $| Marigins %| Cost every unit $| Est. Earnings Loss| Predicted Revenues $Millions| Total Marigins $Millions| Simply no Reduction| twenty four, 000| 29%| 17, 040 | 60%| 5. 12| 1 . 5| Reduced Price| 23, 000| 26%| 17, 040 | 55%| a few. 76| 1 . 5| | 22, 000| 23%| 17, 040 | 50%| 6th. | 1 . 4| Inside the first circumstance, with prices reduction of BG400 the whole margins will be clearly minimizing. So , the latest pricing needs to be retained. Inside the second situation, a price reduction inside the range of $23, 000 can be considered to obtain slightly better revenues with the same total margins. Even at the $15, 000 costs level of Fiat 1270, changing the price of BD600 would not do any difference to its total margins. And so the pricing of BD600 must be retained on the current amounts in the two scenarios. six.
What will need to Barco perform now with admiration to the product development prepare? Short-term plan: Since BD700 is clearly inferior to Sony 1270 in terms of performance, it cannot be positioned larger. Hence, the introduction of BD700 should be put on maintain immediately and BPS should certainly instead concentrate on developing the BG800. The price of developing the BG800 over time for the InfoComm needs to be compared against the cost of a BPS initiated marketing campaign to market the BG800 and the tempo of it is development ought to be decided accordingly.
The BG800 should be priced above the 1270 and BG400. Long-term plan: BPS ought to re-examine it is vision for future years and plan for continuous technology updates to produce more depth in the product line. BPS should also develop other suppliers for its projector tubes and minimize its dependence on Sony. Following the release of BG800, BPS should realign the costs of BD600 and BG400 to maintain the segment difference. Eventually, the data and design segments could be commoditized and so BPS has to look at manufacturer product line extensions in terms of width as well.