Barco Projection Systems
Barco Projection Systems (A): Worldwide Niche Marketing Case Write-Up – Decision – Decision Case – Case – BPS and its Product Line Strategy: Barco N.V originally started as a producer of radio broadcast receivers in 1934 and gradually made its way to the broadcast monitor and professional video equipment markets. After a global recession that followed the 1977 oil supply shock, the company decided to redefine its focus from consumer markets to industrial markets in order to keep its position in the industry. Dejonghe, Claerbout, and Dursin who were responsible for BPS’s R&D, marketing and sales department, worked closely together on projectors throughout the decade. The second largest division of Barco N.V, Barco Projection Systems (BPS) was formed in the early 1980s to enter the video projection market. It played a key role in the development of niche market and BPS had differentiated its products amongst other competitors in the market by its superior projector scan rates. For example, its most sophisticated product – – graphic projectors – had “scan rate of 16kHz to above 64kHz, and accepted input from powerful computer-aided design and manufacturing manufactu ring systems, as well as from video and data sources” (page 3). The brand name was established in a variety of entrainment, training and presentation markets. Despite its 4% low growth rate of worldwide market for graphic projectors, BPS still had most shares in graphics compared to its competitors. BPS’s main competitor – Sony – Sony Components and its 1270: BPS was confident in keeping its market share until the introduction of Sony’s 1270. It was introduced as a “superdata” projector that was with a scan rate of 75kHz, while Barco’s highest scan rate offered was 72kHz (BG400). It featured Sony’s newest 8” tube, which gave higher result in performance in terms of brightness, image quality and resolution. Now, Barco was faced with threats of losing its position in the market. So why did Sony have such an impact on Barco, and what was Sony’s objective? Although their product performances were below Barco’s in the past, in terms of scan rate, brightness, image quality and resolution (page 8), Sony had other competitive advantages that abled them to compete within the market. The difference in distribution method between Sony and Barco was substantial. Despite a small turnover of 1% in its Projection division to the company as a whole, Sony still had 50% of all units sold in the video segment of the projection market. One of the reasons was because Sony had 500 dealers in the U.S market versus BPS’s 100, resulting in a lower street price for Sony projectors (page 8). This creates incentives for dealers to buy more. As a result, Sony products were ordered by the dealers in high volume and it was estimated that 80% to 90% of dealers worldwide carried Sony’s
products. Barco was already making a step behind by comparing popularities with Sony, between the dealers. In addition, although it was mentioned that Sony’s projectors were inferior to Barco’s before 1270, Sony still produced higher quality tubes over Barco’s U.S supplier, Clinton. Sony’s 1020 video projection that was introduced in 1985 was slower than Barco’s but had a shaper focus, which indicated a better quality tube. Sony had more ability and flexibility to develop a better product because it develops its own component parts unlike Barco which had to rely on its main competitor. Sony’s main objective was to be 50% an industrial supplier, 50% a consumer supplier - not to beat Barco (page 9). Now with the pending launch of the 1270, BPS realized that Sony had changed their aim: to seek and reconquer the data and graphics market with their low-end, mass-produced products. The change of Sony’s “vision” had surprised Barco; Barco had no response. Mistakes along the way: By looking at the Market Share of the Major Competitors (Table E), Barco had superior market share in graphics, amongst its competitors. So what were the mistakes along the way that caused Barco to be so terrified of Sony’s 1270? Here are the reasons that could be considered: 1. Barco did not introduce any new graphic projectors in years, despite the fact that the company was specialized in graphic markets. Instead, the company spends substantial amounts of money and time into research and development on data or video projector products. This was not Barco’s target market and it caused a delay in realizing their products in graphics are becoming outdated. Ultimately, it resulted in the introduction of a threat that could’ve been avoided, Sony’s 1270. 2. Barco projections were based solely on assumption that Sony would respect Barco’s “vision” of the marketplace. They had a strong R&D team that brought countless improvements for the projectors of the day. Their scan rates in particular made BPS confident in thinking they have established themselves as a “leader” in the projection market. Sony also had their products below BPS’s products in terms of performance, which made BPS assume Sony would respect their vision. There were some signs shown before the introduction of 1270, that Barco should have realized to not to rely too heavily on their assumption. Sony’s introduction of a video projector with a tube that B arco had not seen would be a good case (page 9). Although Barco correctly predicted that Sony would launch a new product, they could not foresee it surpassing their models, let alone meeting the same standards. Therefore, Barco failed to anticipate Sony’s projection and activities, which caused panic after the introduction of 1270. 3. Although the company had its goal of increasing user-friendliness of its products throughout 1980s, there were still some dealers complaining about the difficulty of installing the projectors by 1989. Dealers were required to attend training sessions for sales, installing knowledge and technics by the distributers, but this failed to fix the problem. (page 7).
Pricing Strategy: Barco had been using price-skimming strategy by charging high initial price to users then lower the price once competitors enter the market (i.e., Sony, Electrohome). Unlike price-penetration strategy, price skimming allows the firms to gain large market shares by first giving users an indication of high quality of their products, and gives an illusion of getting a good deal when discounts are applied. Although Barco’s products were slightly more expensive compared to Sony’s and Electrohome’s, users believed that they get the quality for what they are paying for. So how should BPS’s BG400 and BD600 be priced knowing Sony was about to launch their new product? Siggraph, Dejonghe, Claerbout and Dursin have estimated the potential impact of 1270 for the rest of the year. The estimation was shown in Appendix 1. If Barco decides to keep its current price for both products and if Sony prices their 1270 at $20000, BG400 could potentially lose 30% of its market shares. Furthermore, if Sony prices it at or below $15000, BG400 could lose 60% of its market share. By their estimation BD600 would also have significant share erosion. It may seem that BPS would lose its place if they do not bring the price down, however, Barco needs to understand that they cannot win a price cut war against Sony or Electrohome (since their prices are just below Barco’s). Lowering their price, could permanently restrict Barco to recover their prices on graphic projectors. What BPS needs to consider to overcome the crisis was to, instead of lowering the price of current inventories, focus on developing new products that are above to Sony’s 1270 standards. Product Development Plan: Since Sony had surprised Barco by launching its 1270 “super data” projector at a lower price with superior function, Barco was forced to reconsider their product development strategies. Here are the 3 product development options Barco had come up with: 1. Continue on with developing BD700 to make it in time for the upcoming October. The sales are expected to increase about 25%, representing about 4.3 million dollars. Clearly, however, BD700 will not beat Sony’s 1270’s performance with scanning frequency of only 64kHz. Nonetheless, many distributers have already ordered the product, and engineers are working overtime on the product. By stopping the development, it will h urt both distributers’ and engineers’ morale, which leaves Clarebout no choice. From Barco’s Product Positioning (Exhibit 5), BD700 was priced at $16000 for the scan rate of 64kHz. If Sony decided to set 1270’s price at $20000, BD700 would’ve be considered as financially viable, however, the sales will still suffer because 1270 was still better function wise. If 1270 was set at $16000 or lower, the BD700 would be placed in a bad position with higher price and inferior performance. With Barco’s current plan and inventory, it was highly predicted that the company would
lose as much as 75% of its forecast 1990 profits (page 11) completely depended on Sony’s price if continue to develop BD700, therefore, this option was unfeasible. 2. The second option that's available for Barco was to use BD700 as a springboard and develop a new digital graphic projector BG700. With BD700’s chassis, BPS’s engineers might be able to improve scanning rate to match the 1270. However, with BPS’s standard 7” tube, BG700 will still be inferior compared to 1270 in terms of light output, picture quality and resolution. Also, BD700’s launch will be delayed until December. 3. The third option available for Barco was to terminate both BD700 and BG700’s production and immediately start developing BG800, which was a digital upgrade of BG400. This would be the only product in BPS’s inventory (with scanning rate of 90kHz) that could potentially surpass 1270’s performance, however, Barco had faced difficulties getting the compatible material. In addition, the time requires to complete this product was substantial, with the current manpower, Claerbout estimated that BG800 only had 40% chance of making the Infocomm deadline. Short-term Decision for Barco: Barco should stop the development of BD700 and BG700 and pursue with option 3, develop BG800 instead. There are two large concerns associated with this option: limited resources and finding suppliers for those resources. In order to make it in time before Infocomm, Barco should devote all manpower to the development by recruiting seasonal engineers, although, there are risks of getting finished product with lower quality, and there is a 60% chance of not make it in time. It was understandable that Clarebout was concerned about its current engineers working overtime, however, considering the company’s future and morale of the product team, the company should not produce anything inferior to Sony’s. There are no other options other than having all manpower directed to this project. Furthermore, it was riskier to continue the development of BD700 and BG700 because Barco’s future sales will be completely depended on Sony’s 1270’s pricing strategy. Solutions that could be considered for supplies’ uncertainty is that Barco could offer Fujinon a higher pric e to secure the lenses. Barco also needs to apologize to the dealers who already ordered BD700. All preparation needs to be done as soon as possible since any delay of production of BG800 will harm Barco’s brand image that had been established over the years. Mid-term Decision for Barco: It was essential for Barco to analyze Sony’s distribution method. Why Barco was inferior to Sony was not the price strategy or its products, but their weak distribution strategy. 50 % of Sony’s dealers were box dealers compared Barco’s 20%, which indicates that Sony’s products are more user -friendly and doesn't require much cost for users (i.e., installation fees, maintenance fees). It makes it unnecessary to spend much of their costs to have a system of dealers or trained people. To increase sales and reduce costs in order to over come this situation, Barco should consider developing more userfriendly products as well as increasing the number of box dealers in a mid-term.
Long-term Decision for Barco: The most important fact that Barco should learn from this case was that they cannot rely on their competitors and take their relationships for granted, just because they “told” them that their objective was not to beat Barco. It seems that Barco was satisfied with their accomplishments and stopped making better products. Barco needs to take actions that could potentially drive the market, not just by making small improvements on past products, but to come up with more innovative products to surprise other competitors in the market. Moreover, intensive research should be done to predict competitors’ future moves in order to avoid such situations where the company is threatened because of false predictions. Barco also needs to build relationships with other suppliers in case of difficulties in finding compatible materials. Single sourcing must be avoided especially for niche marketers. At last, expanding its market would be essential to keep its status in the market place when such shocks occur. Asia for example, would be ideal since it had Predicted Annual Growth Rate of 18% (Table B), which was higher than U.S and Europe.
Barco Projection System
Company: Barco Projection System Industry: Projector Systems In the late 1970’s, BPS moved from producing radio broadcast receivers t o the market of projectors based on a clear vision which market they could serve better and focused on research & development to come up with top quality product and launched several activities aimed at global expansion. As a result, BPS was the market leader in high end graphic projectors because of technologically superior quality. But in 1989, Sony introduced 1270 Superdata Projector at the Siggraph trade show in Boston and won the first place in Highest Performing Projector category from BPS’ BG400, muc h to the surprise of Barco. 1270 was also price about 20-40% lower than Barco’s projectors. This put BPS under pressure to sustain the attack from a giant company such as Sony and come up with measures to counter attack. 1. How serious a threat is the Sony 1270? Though Sony was one of the top competitors to Barco, Barco did not expect Sony to come up with a product such as 1270 and it was caught off guard. Barco’s assumption that Sony concentrated mainly on basic projects and didn’t want to invest in R&D fo r high end projectors proved to be wrong. Moreover Sony supplied one of the important component to BPS’s projectors, tubes. Therefore, BPS has to reply on Sony for tubes until they find other comparable suppliers. Sony could easily stop supplying tubes to BPS and cut down its sales. In all, Sony’s 1270 was a serious threat to BPS. 2. What should Barco do with respect to price? Product development plans?
BPS should reduce price as it will only result in price war with Sony who has the competitive edge now with its lesser complicated, high quality projectors. BPS’s strategy to have a complicated system to avoid entry of competition back fired as they did not anticipate its competitors’ moves. Product development options seems more viable than pricing strategies. BPS needs to decide if they want to continue to target high end users who are willing to pay premium prices or sought out other low end market. Product development could be impacted by this decision. BPS first goal is to win back the market leadership position at the earliest while reducing loses as much as it could. It should continue innovation to come up will less complicated technology which will help them reduce costs which can be shared with customers and distributors.
Barco Projection Systems
1. Discuss Barco’s product line strategy before it faced unexpected competition from Sony. Barco’s product line strategy involved differentiating their products based on scan rate, which measure the speed at which the projector was able to read and process incoming electronic signals. The projectors were differentiated into the following 3 categories: video projectors, data projectors, and graphics projectors. Video projectors were designed for the compatibility with standard video sources, and were scanned at 16kHz. Data projectors were used for displaying input from personal computers as well as video sources, and were scanned at 16kHz to 45kHz. Graphics projectors could accept input from powerful computer-aided design and manufacturing systems, as well as video and data sources, and were scanned at 16kHz to 64kHz. Barco’s first projector was a video projector for showing movies on airplanes. From there Barco developed its projector market share and moved on to more complicated products, which included the use of the projectors with computers. Their intention was to tap on the highly niche high-end market and not the general consumer market for projectors. They focused on research and development to integrate the fast moving technology into their projectors so as to keep up to date. The constant improvement of their technology was essential and their final aim for the development of projectors was the digitally controlled projector market. Barco also aims to have the first mover advantage in their products. They aim to release their high performance products into the market as the innovator of the product, thereby selling it for a premium. Upon competition arriving, they would then move on to products of a even higher calibre. They do not intend to enter into price wars with competitors as they feel that they have nothing to gain from it and in most cases, their prices tend to be the highest. 2. How should Barco respond to this potential threat, with respect to price and product development plans?
For pricing options, there was only one option that Barco could enter into, that was to include a considerable price reduction on the BG400, which is one of its most sellable products. However, as mentioned, Barco, as best as they could, did not want to enter into a price war with Sony as they believed that they would be on the losing end. Looking more closely at the price competition that could occur, as predicted, if the BG400’s price remained unchanged and the 1270 was priced at $20,000, the BG400 could lose 30% of its market share, or $3.85 million. Looking at the margin contribution of 29% for BG400, it would mean that BG400 would cost $17,040 to be produced. Based on the calculations, it would seem that it would not be feasible for Barco to drop its price to meet that of the 1270 as including the fall in market share, Barco would still make more profits if it were to keep its price at $24,000 and not drop it to $20,000. Another prediction was that 1270 was priced at $15,000 and that would threaten to capture 60% of BG400’s market share. In this case, it would not make any sense for Barco to drop its price significantly as the price that the 1270 is selling is even lower than the cost price of Barco’s BG400 at $17,040. If Barco would like to match the price of the 1270, it would mean making losses for the company, which is not desirable. Hence, for the pricing option, it is evident that Barco should keep its price of BG400 at $24,000. Furthermore, Barco has always been competing on the high end market unlike Sony, which has been competing on the low end market. Hence, in the event of a price war, Sony would most likely win as they would be able to reduce their selling price a lot more than Barco in the event that Barco reduces its selling price. For product options, there are many more options possible. Barco could continue the production of the BD700, which has been in the works for 180-person months. Although the BD700 would never compare to the 1270 in terms of performance, it could still rake in profits albeit not as much as preciously predicted as their German distributors and several others already made preorders. Another option was that Barco developed the BG700, an extension of the BD700. This would result in the BD700 being delayed, which would then delay preorders. Similarly, BD700 would also not be on par with the 1270 as the use of the 7” tube was still involved and the light output, picture, quality, and resolution was still lacking. Hence, this would not be a viable option as the final product would still not be comparable to the 1270 and profits would be lost from not being able to make the preorders. The last option that Barco could do was develop the BG800. The BG800 was a digital upgrade of the BG400. This BG800 would be the first in technology and would be able to trump the 1270 in terms of performance. However, this project would require many man-hours and the BD700 project would have to be delayed indefinitely and may not make it in time for Infocomm. Furthermore, it was not clear whether Barco could purchase the lens needed for this project. If Barco were able to purchase the lens needed to produce the BG800, the BG800 maybe the solution for Barco as there are still many benefits that outweigh the cost, and costs such as making the deadline for Infocomm may not
be of such importance as even if Barco were to release this product late, BG800 being the top in technology would still receive significant attention and there would be no direct competition to deal with. Some of the benefits of going ahead with the BG800 would be that Barco would still be the market leader and have the first mover advantage in producing high performance projectors which cannot be matched as of yet by another company, they would take out the threat of market annihilation, it could also propel the company’s reputation into being one which is ingenuous when it comes to technology. Hence, going ahead with the BG800 project may be the best way forward
Barco Projection(Marketing-1)
INDIAN INSTITUTE OF MANAGEMENT UDAIPUR CASE: BARCO PROJECTION SYSTEMS(A)WORLWIDE NICHE MARKETING SUBJECT: MARKETING 1 INSTRUCTOR: Prof K.R.Jayasimha NAME | ROLL No. | MANISH KAKATI | 111025 | NIVEDITHA NADIMPALLI | 111028 | SONU ROSHAN EKKA | 111052 | VIKRAMADITYA GUHA | 111058 | EXECUTIVE SUMMARY The following immediate actions are recommended to BARCO PROJECTION SYSTEMS(A): * To stop the development of BD700 and give full priority to BG800. * To set price of BG800 above the 1270’s price. * To retain current BG400 price until launch of the BG800.
* As the market segmentation between the BG & BD series is becoming less strong with the introduction of the 1270 it is recommended to reduce the price of the BD400 & the BD600 so as to value ratio that is out of balance compared with the BG800. * To maintain a competitive edge, BARCO have to adopt innovative technologies. Failing to do so will result in BARCO being a follower rather than a tech. leader. * Apart from adhering to their catering products for niche market, it is imperative that BARCO continue to devote commitment to research and development to retain quality products and their market leadership. PROBLEM STATEMENT: BARCO Projection Systems( BPS) is a company that designs , manufactures and markets sophisticated video projectors for industrial applications. In 1989, SONY Corporation, launched its new product 1270 which dethroned BG400 from the position of the industry’s highest performing projector. 1270 was also rumored to be priced at least 20%-40% lesser than the prevailing market price in its category of quality. BPS being a small manufacturing firm could not compete with SONY Corp. both on price and on quality and was worried about an erosion of its market share. According to calculations BPS stood to lose as much as 75% of its forecasted profits of 1990. Now BPS has to evaluate its options as to how to tackle the emergence of a competitor like SONY Corp in a niche marketing segment. ANALYSIS OF THE PROBLEMS: Barco Projection Service holds the largest percentage of marketplace in graphics and second largest in data projector. Despite being technologically advanced it was behind Sony in terms of its projector tube technology this is the third time that Barco engineers are caught off guard by Sony in the tube domain: * In 1985, 1987 Sony introduced video projectors using a new tube. Barco eventually used this tube into its BD600 product. * In 1989, when Sony Components contacted Barco to inform them of a new 8” tube, the Barco engineers were against using the tube as it required a redesign of the projector chassis and the requirement of a new lens to fit the square form of the new tube. It is estimated that if the BG400’s price remained unchanged and the 1270 was priced at 20,000$ the BG400 could lose 30% of its market share. At 15,000$ Sony 1270 threatened to capture 60% of the BG400’s market share.
BPS can continue its development schedule and launch BD700 as planned but it won’t beat 1270’s performance at the Infocomm show in January. Another option is BPS can halt the production of BG400 and invest the work force and advancements made to BD700 in developing BG700. But this causes delay in the delivery to advance-order customers. Alternatively, BPS can immediately turn to BG800 and complete it before January, 1990 for the Infocomm. The supplier of 8” tube is available but a special lens is required and there is only 40% chance of making the Infocomm deadline. SUGGESTIONS: Taking into consideration the situation and relevant data at hand, Barco can either go for competitive price reduction on its current and future product line or develop a product with higher performance than that of Sony’s 1270 or both. Our stand is as follows: * Put the BD700 in the back-burner for the time being. * Re-negotiate with the customers who have already put orders for BD700 and promised to deliver high performance product BG800 at competitive rate. * Prioritizing the development of BG800 so that it gets completed by Infocomm keeping an eye that the compression of development don’t have repercussions on the quality of the final product. Tie-up with Fujinon. * Competitive price scheme for all the current and future products as we can see that BARCO is selling the projects with gross margin of about 59%. But it should be implemented after Sony comes out with the price tag of 1270 and the likes.
Barco Case
Barco-case Barco Background and Strategy Barco Projections Systems (BPS) was the second biggest division of Barco N.V.. The division employed 350 employees and accounted for 23% of Barco N.V.’s total revenue in 1988, whi ch
grossed $35 million. The BPS division was formed due to the large growth momentum during the 1980’s in order to pursue the highly opportunistic technology of video projection. Originally, Barco N.V. began as a producer of radio broadcast receivers and over the years the company expanded its product line into broadcast monitors and professional video equipment. It was not until the global recession after the 1977 oil supply crisis, demand and sales for Barco’s consumer products diminished greatly. At this time, the Barco company repositioned its firm during the 1980’s with three clear cut elements that was to shape its vision and strategy. The visions were three fold: Barco committed itself to become an industry leader in distinct, but complementary niche markets; it would create a strong commitment to research and development; and lastly Barco sought to expand its international presence in sales, product development, and production. On the one hand while Barco was establishing its strategic vision for the projection industry, on the other hand the company was redefining its industry as a whole and setting the bar of high end quality projectors. The product line that rolled out from the Barco Projection Systems division were all based on the same design. The BPS’s projectors comprised of three major elements---tubes, lenses, and electronics. The division’s products were relatively focused around a 7” tube. The niche among BPS’s product line was the scan rate. The more sophisticated its market, the higher the scan rate of the projector. The following table demonstrates BPS’s product line prior to the competitors release of the Sony 1270 super-data projector. Manufacturer & Model |Scan Rate/Light Output/Resolution |Retail Price | |BARCO: BD600 BD400 |16-45 600 1,600 16-72 400 2,000 |$12,000 $24,000 | |SONY: VPH1031 |16-35 300 1,100 |$10, 500 | | The BPS division focused on three types of projectors: video, data and graphics. The evolution of its product line was centrally focused around digital projectors in 1989. BPS was the accepted technological leader in the high end projector market until Sony strategically unveiled its 1270 superdata projector and threatened to steal BPS market share. Sony Corporation The Sony Corporation had a very strong and reputable name to back its projectors in the market and thus resulted in Sony holding approximately 49% of total projector units sold. Nevertheless, Sony projectors were far inferior of quality when compared to those projectors manufactured by Barco. The
selling price was normally about 15% less than Barco’s and in 1989 Sony projectors could be found in an estimated 80-90% of audiovisual dealer stores worldwide. It was not a secret that Sony had a reputation of reliability and low prices among dealers and few dealers could not stay open for business without the Sony projector sales. Sony entered the projection market with its flagship 1020 video projector. Again true to its reputation, the 1020 was slower than Barco’s video projectors but interestingly enough this time t he projector had a sharper focus which indicated in a better quality projector tube. Upon further research and closer examination by BPS executives, it was decided to maintain its projector quality and market share BPS forged a threatening relationship with Sony. BPS entered into a contract with Sony Components to become the sole supplier of tubes, which is ultimately why Sony didn’t respect Barco’s vision in the market any longer. By creating the supply contract with BPS, Sony was able to maintain its strategic vision and strategy by always knowing the capability and quality of the tubes in BPS projectors. BPS made a terrible mistake as only keeping a 3-month supply of tubes on hand and 2-months of orders in transit. The mistake was as clear as day, that was made by BPS General manager Frans Claerbout. He assumed that because BPS lowered Sony’s manufacturing costs down and Sony made an attempt to always keep BPS in-touch with its latest developments, that the relationship would be profitable for both companies. Nothing could have been further from the truth. The old saying, “keep your friends close, and your enemies closer...” was real life for Sony. By supplying BPS tubes for its projectors it had vital technological and development knowledge of BPS products and thus would be able to use that information to the companies advantage by developing its own high end projector that would not just compete with Barco but Sony’s goal was to reacquire market share and reposition its projectors away from the mass producer of low-end products. In a strategic move at the Siggraph trade show in Boston, Sony unveiled its 1270 projector and was trade-show stealer. For the industry and more importantly BPS-the 1270 ability to scan at 75 khz in addition the 1270 featured the new 8” Sony tube, placing the projector in the market for high performance graphics applications that BPS could not enter. It was also rumored to be priced at $15,000-$20,000. If this was true, this high of performance had not been seen before in the market for that low of a price. Conclusion and Recommendations From the case study, it is obvious that BPS general manager made it very clear by saying, “Barco can not win a price war against Sony.....In addition, a drastic price drop would damage our reputation among recent, and hopefully repeat, BPS customers.” With this in mind my recommendations to BPS is to re-iterate its already strong relationships with its many dealers across the globe.
For example, if Barco reinforces the fact that BPS products are competitively more advantageous than Sony’s newest projector because BPS is more hands on with the sale by the dealer than this would give peace of mind to the dealers that are experiencing market pressure to decrease the price of BPS’s BG400. Barco projectors had a dealer reputation for the highest quality and excellent reliability once fully installed. Furthermore, Barco dealers were required to attend sales and technical courses and to hire certain number of Barco-approved technicians. This streamline body of resources is second to none when it comes to technology and Barco needs to reinforce these benefits to the market. At this point, the only thing Sony has in its favor is a known projector with higher quality from its predecessor products with an unknown rumored lower price point. Nowhere at the trade show did Sony roll out a post purchasing dealer resourcefulness or reliable service channel for end users to depend on like BPS has already offered with its projectors. Lastly, it is my ultimate recommendation that BPS immediately buy the 8” tube from Sony components and conduct its own research and development upon the device. By doing so, this will allow BPS to cut its ties to Sony and delete the information knowledge about the next line of projectors that BPS could ultimately produce in response to Sony’s 1270 super -data projector. By researching the 8” tube BPS could then subcontract the manufacturing of the device internally if the funding allows for it or BPS could find an external supplier that could match the quality of Sony Components.
Barco Projection Systems (A): Worldwide Niche Marketing
Context Sony (one of the major competitors of Barco) has introduced the 1270 super data projector in the market, announcing better performance and lower prices than the best projector which Barco has currently to offer in the market. Such a move by Sony is a possible threat to eliminate the niche market which Barco has targetted. Barco needs to decide the future course of actions based on the sudden announcement of Sony and react promptly. Strategy options Barco has the following three options as courses of actions to choose from as their strategy in response to Sony's move: 1. Lower prices of BG400 and BD600 to hold on to market share and not give it away to the cheaper Sony 1270
2. Make advances in the already flowing project for BD700 and work on the launch of a digital graphics projector, the BG700 3. Stop projects on developing BD700 and instead start working on getting BG800 to market at the earliest Strategy to opt for I would suggest Barco to go with option 3 from the list above. Rationale behind my suggestion are enlisted as follows:Why not option 1? * Cutting down on prices of well-known products offered by Barco would negate the reputation earned by these products and result in brand equity erosion for Barco * Barco was never in a price war with Sony, and should not opt for such a path just in the spur of the moment as reaction to the sudden news * Sony has still not announced what the price of the 1270 projector would be, and Barco could guesstimate the range of prices. It would be a risky move cut prices based on estimates Why not option 2? * BD700 as well as BG700 would be inferior in quality to Sony's 1270 * This option would mean delaying the process of launching the new product from the targeted month of October to December * By the time BD700/BG700 was launched, Sony would have captured a niche market segment for their 1270 projector and it would be hard to snatch the same back from Sony with an inferior product Why option 3? * BG800 would be a superior product to Sony's 1270 projector * It would help Barco gain back its share of niche market segment which Sony would try to settle into Overcoming hiccups * People factor: It is in the best interest of the company to put the BD700 project on hold, and hence the employees who had been working on the same would have to be shown the big picture and incentivized accordingly for their support
* Probability of meeting deadline at 40%: Keep the buzz going on BG800, by promoting through future trade shows and accepting pre-launch orders at discounted prices till the product is launch ready
