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. 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. 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. 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. 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. 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. 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. 16KHz 45KHz 72KHz
PERFORMANCE
PRICE
$24k
$12k
$10k
Performance
Price Premium
Sony 1270
BPS MARKET SEGMENTATION BY
PERFORMANCE AND PRICE

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. 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. 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. 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. Thank You