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  1. 1. BARCO PROJECTION SYSTEMS Group 7, Section C Amitrajit Sett (09P126) Chintan C Singh (09P133) Priyak Purkaystha (09P156) Rudranil Dutta (09P165) Saurabh Agrawal (09P168) Shobhit Pareek (09P171)
  2. 2. Case Background  A division of Barco N. V.  1934 - “Electronic” industry  1948 - Television receiver  1955 to 1975 - Expansion into broadcast monitors and video equipment.  Late 1970’s – Inflection pt - Company redefined itself as a player in industrial markets.  Barco Projection Systems Strategy  High-end products in niche markets  BPS is relies on technical leverage in product development  R&D is a major strength, requiring 8-10% of revenue and 15% of employee capital  Market expansion is accomplished first through channels of distribution with a network of 45 distributors and 400 dealers worldwide; in key markets the distributors are “company operations  1989 growth was enhanced through $110M in acquisitions
  3. 3. Case Background  BPS Product Development  Product mix is based on equivalent technology in tubes(15%), lenses(20%) and electronics(50%) in three markets defined by combinations of product performance in brightness, image quality and resolution.  BPS product lines differentiated based on scan rate; variations in scan rate  3 defined lines of projectors - video, data and graphics.  Product development was a function of engineering solutions and not based on a market-driven plan  Product differentiation was based on image quality, input flexibility and “user-friendliness.”  Market Structure  Three markets defined by product characteristics  BPS and Sony were market leaders  Market growth was directly related to performance
  4. 4. Product Market Structure Video < 16 KHz 19,250/.8% 8%/1.4% 20% Data To 45KHz 10,139/12.3% 22%/12.3% 51% Graphics > 45KHz 960/40.2% 55%/25.0% 29% Industry Sales/ BPS Share/ Application Scan Rate Growth Growth BPS Margin
  5. 5. Case Background  Competitive Structure Market Segmentation Strategy Niche Mass Markets Distribution System Selective Distribution 100 dealers in US market Intensive distribution 500 dealers in US market Product Reputation High end Low end but reliable BPS Sony  Competitive Posture  BPS believes Sony will follow the same product development path.  “Competitors will respect BPS’s vision of the marketplace  In 1986, Sony Componets became the sole supplier of 8” tubes for BPS projectors.
  6. 6. How did Sony Successfully Execute a Bypass Strategy  BPS Product Development Myopia  A belief that technology drives products  A belief that all players had to follow the same developmental path  Technological Breakthrough – 1270 scans at 75 KHz  BPS Product Development Process  A move away from development strategy in play from 1982-1987  Resources committed to backfilling prevented rapid reallocation
  7. 7. Why did Sony Successfully Execute a Bypass Strategy  Sony saw a market opportunity based on BPS’s premium at the high end  Sony had a relative advantage  economies of scale  Market mix – especially distribution  Product reputation
  8. 8. 16KHz 45KHz 72KHz PERFORMANCE PRICE $24k $12k $10k Performance Price Premium Sony 1270 BPS MARKET SEGMENTATION BY PERFORMANCE AND PRICE
  9. 9. How Should BPS Respond? Critical Factors Impacting the Decision  Internal Factors  Marketing orientation  Resource allocation  External Factors  Technology  Competitive structure Decision Options  Pricing Response Options  Immediate Price Cut  Wait and see  Product Response Options  Do nothing  Platform up  To the Wall
  10. 10. Price Response Options Immediate Price Cut  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  Involve the channel of distribution  Preempt Sony introduction; proactive versus reactive Wait and See  Sony pricing structure is unknown; hard to make a decision  A cut now may result in a lower-price for the 1270 from Sony  BPS can’t win a price reduction game  Pricing reduction is inconsistent with BPS reputation for technology leadership
  11. 11. Product Response Options Stay the Course  Continue BD700 upgrade to digital environment  BD700 project is well-underway (180 of over 200 man-months)  Delivering “on-time” is a message consistent with BPS reputation for market leadership  Sony has not SOLD any 1270s; hard to judge market response Platform Up  Shift BD700 development emphasis to matching KHz performance of 1270  Best case scenario does not guarantee completion by Infocomm date To The Wall  Shift corporate assets to target 90 KHz by Infocomm  BD700 development put on hold  BPS management believes it has the capability to meet the challenge  Would preserve BPS reputation for technology leadership  Management estimates .4 probability to make Infocomm deadline
  12. 12. BPS Response Pricing  Implement an immediate price reduction of 25% to 33% for BG400  Add 60 day time limits  Cut price of BD600 to $10K  Involve the channel of distribution Product  Shift to develop BG800 to introduce at Infocomm Key learnings  Move to Market orientation from production orientation  Even a niche player has to make product development decisions based on market information  Develop an environmental scanning function  NEVER JUDGE A COMPETITOR BASED ON INTENTIONS, RATHER ON CAPABILITY
  13. 13. Thank You