2. a) Problem Statement:
BPS is in a dilemma abouthow best to respond to its rival firmSony’s unexpected move of introducinga high
performing projector 1270, which threatened to collapseits traditional marketsegmentation as well as take away
75% of its forecast1990 profits.
The key challengebefore BPS is to match Sony’s high quality and lowpriceproduct so as to maintain its profitand
market share,in a very shortspan with limited resources at its disposal.
b) Situation Analysis:
● Company
➔ Among the top 3 players in all 3 segments- video, data and graphics.Marketleaders in high end
graphic projector.
➔ BPS- 2nd largestdivision of Barco N.V(turnover:1.39 billion Bfr).
➔ Focus- expensive high-quality products,nichemarkets
➔ Strength- electronics with strong commitment to R&D
● Customer
➔ Entertainment industry:resorts,discotheques, airplanes
➔ Trainingmarkets:IBM, Groupe Bull
➔ Presentation markets:board rooms, classrooms and betting shops
➔ Process control&simulation market: U.S. Union Pacific Railroad,English channel tunnel project
&military.
● Competition : 3 major competitors:
➔ Sony:
Major player in video & data segment Lower performance than BPS
Low price, larger distribution network Entering into European market
➔ Electrohome:
BPS’s biggest competitor in graphics Performance lower than BPS
3rd largestplayer,performance higher than Sony Distribution network comparableto BPS
➔ NEC
Pioneered digital data projector Couldn’t capture market share; inefficient
distribution channels
Panasonic,Mitsubishi,and GE;weren’t threats to BPS
● Context : BPS shouldn’t go for a pricewar with Sony as its a small company contributingonly 1%to its
overall revenue
● Collaborators: BPS had 45 distributors & 400 dealers worldwide(20%box, 80% system dealers).New
technology advancement means BPS has to train dealers.Sony systems provideBPS tubes.
c) Options Available:
Short Term:
Pricing:-
(i) Review the priceof the high-performingprojector BG400 so itdoesn’t lose the market share
Product Development:-
3. (i) Continue their development scheduleand complete BD700 by October
(ii)Develop BG700 usingthe advances made in the BD700 development and delay BD700 till December
(iii) Develop BG800 and postpone BD700’s development
Long run:
(i) BPS can also think of improvingits distribution channel.
➔ Sony’s dealer coverage in US- 500, Barco-100
➔ 80-90% of dealers worldwidecarried Sony’s products
(ii) Technology improvement- Dealers complained that the machines were unnecessarily complicated,difficultto
install and notuser-friendly.Reducing this would reduce costs for Barco.
d) Decision Criteria:
Pricing:-
Lowering prices of BG400 does not seem to be a considerableoption for Barco because itwould starta price war
and Barco being a nichemarket player will notbe strongenough to fight with a giant likeSony. Also,BPS was
known for its high quality amongdealers and end-users and a cut in prices would create an impression of inferior
performance.Also there are untapped markets of Sony and if BPS lower their pricethere then they are
unnecessarily losingtheir profit.
Product development:-
(i) Though BG800 would be an upgrade of BG400, to surpass1270’s performance,itwould require a scanning
frequency of at least90 kHz as well as Sony’s 8” tube. It also required atleast80 person months and to meet the
Infocomm deadline, all other development projects had to be stopped. All this was not feasiblefor BPS in the
present scenario.Also,there was only 40% chanceof making the deadlineanyhow.
(ii) BD700 had advance orders and it wouldn’t be viableto delay its delivery.Moreover, the upgrade BG700, even if
developed on time, would still beinferior to 1270 in terms of quality and resolution.
e) Your decision:
The most optimal option for the company would be to complete the development of BD700 projectfor the below
reasons:
● It has sufficienttime and resources to complete its development in time as opposed to BG800
● 25% increment in sales($4.3mn) were expected through its launch
● Advance orders could be completed and customer and employee morale would be boosted
● BG700 being inferior in quality to 1270 would be at disadvantageso should notbe opted
● After completingBD700, itcan launch BG800 by when Sony’s prici ngwould also beout
f) What are the tradeoffs in your option:
If BPS does not launch a competitive product likeBG800, it would miss the Infocomm deadlinewhere there is a
possibility of Sony takingaway the graphics market sharefrom BPS through its lowpriced product 1270 and it
might be too latefor BPS to regain its lostsharein the graphics segment where it was the leader. It might have to
give up its graphic market shareto retain the faith of its customers and employees in the data segment and al so
because of the lack of adequate time and resources required to launch competitive product.
g) Your backup plan:
The assumption was that BPS can launch BG800 later and regain its market shareif Sony’s 1270 succeeds to
capture its earlier held market share. However, there is a high possibility of Sony already becomingthe market
4. leader in both data and graphics segment through its superior product1270. In that case, BPS would have to enter
into a pricewar with Sony to sell its superior productBG800 to regain its lostshare.Also itshould try to promote
BD700, the firstdigital projector well and try to make up the losses incurred in pricewar through the revenue
made via BD700.Once it gets its leadership back,itshould improvethe scan ratefurther and increaseprice.Thus it
should consolidateits position in thedata segment whileregainingits sharein the graphics segment through
superior product,pricewar and better distribution.
