BARCO PROJECTION SYSTEM (A) :

A WORLDWIDE NICHE MARKETING

By : EPSM Batch-10
Kushagradhi , Seema, Rajiv, Neha (Dwarka)
Partha, Tanweer, Saurabh (CP)
Pushpak & Puneet (Rajouri Garden)
About BARC0
Barco is one of the top three worldwide manufactures in its product lines

1) Automated production control system 2) Graphic arts 3) CAD

4) Industrial projections (with a focus on high quality projectors) with market share :

8% in video projectors (commodity)

23% in data projectors
55% in graphic projectors (market leader)
BPS designed, manufactured & marketed sophisticated video projectors for Industrial applications.
Competitors - Sony, Electrohome & NEC

Barco were taken by surprise by Sony in 1989 offered a super-data graphics projector 1270 with scan rate of 75kHz
at price range $15000-$20000, likely to be launched at a lower price (20-40% below from established market price).

BPS stood to loose 75% of its 1990 profits.

Would compete with Sony 1270 with BG 800 40% chance of being completed by Infocomm show.
 Describe the product line strategy of Barco Projection Systems division.
To focus on Top line products in Niche market Less volume & More Value.
3 Lines of projectors Video , Data & Graphics.
Product differentiations SCAN RATES (basis of Market segmentation)

Projectors Scan Rates Functions

Video 16 kHz Designed for compatibility with standard video sources (TV & VCR)

Data 16 45 kHz Could display input from PC as well as from video sources
Graphics 16 64 kHz above Most sophisticated- accepted input from CAD/CAM systems as well as from Date & Video sources.
Need to match scan rates of its source to produce clear picture.
Not compatible with any computer scanning higher than 64kHz.
Scanning rate continuously upgraded to meet advancements.

BPS evolved & expanded its product in all three categories on the basis of SCAN Rates , broader compatibility and to
match technological enhancements.
Decided to limit scan rate of Data projectors & to increase scanning rates of Graphic projectors in response to ease
frustration of end users & for sake of selling at Higher price.
Evolution of product line based on :
- To generate best output image flexibility towards inputs increase ease of usage
More a result of engineering solutions to problems that arose than on a specific development plant
 On P 12 of the case Dejonghes comments that, All our projections, however were based on
assumption that sony would respect our vision of the market place. What does this mean?

BPS anticipated that world-wise market for industrial projectors would continue to expand for at-least 5 more
years before being superseded by new technologies.
Typical end user purchased a new projector every 5 years , customers tended to more performance that they
needed.
3 product lines : BD 600 (45kHz, $12000) , BG 400 (72kHz, $24000) & Video projectors ($7000).

Sony`s ultimate goal was to be 50% an industrial supplier & 50% consumer supplier and not to beat Barco in
projection (need competition to survive).

BPS projected Sony will introduce data projector at scan rate between 46 50kHz and to enter Graphic
projector by late 1990 So, BPS planned for BD 700 at scan rate of 64kHz ($24000) and later introduce digital
version of BG 400 ie: BG 800 in late 1990. BPS expected to introduce 75kHz graphics projector by late 1990
priced at $20000.

But Sony Introduced 1270 just opposite of BPS`S vision of Marketplace.

 When does one competitor accepts anothers vision of the market?
When competition is lagging in technology enhancement and tends to follow superior of the herd.
(who is more knowledgeable of marketplace & understand the market requirements better).
In this case, BPS was driving the technological developments and Sony had always positioned its products lower
in terms of performance.

Why did Sony decide to reject Barcos vision of the market in August 1989?
Positioned to take chunk of market share.
Aim to reconquer DATE & GRAPHICS projector segment .
Not interested to compete with BARCO OR ELECTROCHROME.
Had better & wider distribution network.
Had best Tube technology.

How serious a threat is Sony 1270 ? What are Sonys objective?

BPS stood to lose approx. 75% of forecasted 1990 profits.
Distributors of Germany (2nd largest market of BG400) were taking advance orders of 1270.
French distributors also getting price decrease demands on BG400.
Threatened to lose 30-60% of market shares as per 1270 `s final price.
Price reduction pressures for current model BG400.
 Did Barco make a mistake somewhere along the way or do things like this just happen
when competing in high technology business on a global scale?

It did not just happen

In 1987, Sony introduced a Video projector with a Tube that BERCO had not seen.
BERCO subsequently purchased and introduced in BD600. Threat was always present.

Solely dependent on Sony for Tubes so where the other competitors. Dependence on Sony.

Led R&D as per their vision of marketplace ie: scaling up scan rates only, rather than innovating.
 What should Barco do now with respect to price?
And with respect to its product development plans?

Should hold price drop of BG400 until 1270 market prices are confirmed.
Can not win price war with Sony. Lowering sudden prices will affect Profitability and won`t be able position their
product line higher in the market and will damage their reputation.

Should continue with BD700 (64kHz) production (as it was 85% complete and pre-orders already booked) &
to establish market share being first digital model.

Speed up launch of BG700 priced at $16000 (digital graphic projector) by leveraging their big R&D teams,
by paying out overtime & incentives

Speed up launch of BG 800.

Can reduce price of BG400 (72kHz) after confirmation of 1270 price (75kHz).
but should maintain price band for upgraded models being the market leader.