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
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