A Harvard Business School Case
Sales and Distribution Strategy 6 4. Appendix 7 1. External Situation Analysis 1. Nine Market The projector market is segmented in 3 main areas with predicted growths according to the table 1 and figure 1 showing the video segment becoming a commodity, the data segment growing with 12. 3% and a strongly growing graphics market with 40. 2% predicted growth per annum over the next 5 years. A major characteristic of the market is its high velocity of innovation and the increasing demand for private and industrial customers for cutting edge technology.
The new generation of devices has Just been brought to market with digital data projection and hand held remote control. According to Porters “Five Forces” BSP is focusing on: 1 . Searching for the best possible image (competitors) 2. Flexibility towards input (potential entrants) 3. Increasing user-friendliness (buyers) 4. All together building power against possible substitutes 5. A potential vulnerability was it’s dependency on Sony tubes (supplier) 1. 2. Growth According to the table 2 and figure 2 as well as table 1 one sees that the video market is mature and only a marginal growth (0. %) can be expected, BSP market share growing slightly over the industries
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This implies that new competitors are expected to enter the market with high class products and target BSP prime niche. The implication is that Baric is well advised to intensify R, marketing and sales efforts quickly in this segment. In order not to lose more ground than necessary it needs to build a consistent strategy in exploring new markets and technologies including a refined intelligence program in order not to be caught of guard by other (big) firms 1. 3. Competition According to tame 3, only 3 companies (Sony, Electronic Ana NECK) compete Walt Baric in the data segment, other big companies (Panasonic, GE, etc. Concentrate on the video and low-frequency scan segment and only Electrocute competes in the graphics segment up to now. With the more or less surprising announcement of the 1270 “superstar” Model from Sony the Barrio’s “vision” of the market: asking premium prices for premium products for the premium segment was disturbed. Sony is clearly targeting both the data and graphics segment (even though the new projectors name may make believe otherwise). Worth mentioning is, that since 1985 Sony was the sole supplier of the tube Baric installed. . Internal Situation Analysis 2. 1 . The Company Brace Projection Systems (BSP), the second largest division of Baric N. V. , a well established company developing, manufacturing and marketing sophisticated video projectors for industrial applications in entertainment, surveillance, training and reservation markets. It’s major competence is in distinct, complementary niche markets, in which it plays a key role in. Its high commitment in R combined with a superb product quality had brought it its respectable reputation .
It would only enter a new engagement when it had enough intelligence about that market and technology to enable it be positioned among the top 3 performers. Through some major accusations in 1989 BSP sought to globally expand in sales, product development and production. It’s traditional strength is in the electronics behind the projection technology (of which some key components were even bought from competitors, I. E. Tubes from Sony), thus enabling superior performance. A major part of the cost (50%) of the projectors incurred was for the electronics.
In 1983 the focus was set on computer graphics projection, thus keeping in line with it’s strategy of “skimming the market” and keeping out the bigger firms (which whom they could never compete on price) due to the complexity of the applications. 2. 2. Current Situation and causes Brace’s position in the market was certainly threatened due to the introduction Sony 1270 “superstar” in August 1989,for various reasons: It Is clearly ten Inaugurates inlets performing projector 2. It is obviously (also) targeting the graphic sector, even though its name imposed otherwise 3.
Worst of all it is rumored to be priced 20-40% under the current established market prices The combination of high performance and low price is threatening to destroy the traditional market segmentation, as Baric (and the rest of the industry) had perceived it. Being the leader in the high-end graphic projectors segment, holding 55 % of this nice of 4 % market share (see Table 2) Brace hadn’t launched a new graphics erector since the BAGGY in 1987. 2. 3. SOOT Analysts The following alternatively designed SOOT-Table points out where the company needs to react (fast).
Opportunities Threats Strengths Strong R commitment No clear R Strategy Well established in the high-end market segment possible loss of market shares due low price/high performance competitors products Best of class in electronics High development & production costs Weaknesses No graphic projector ready in the pipe-line No graphic projector innovation in the last 2 years launched operating in small niche time pressure operating in strong growing market complicated and user-unfriendly products life-cycles too long dependent on components fabricated by competitor insufficient intelligence on competitors 3.
Marketing Strategy 3. 1 . Product and R& D Strategy Hollowing steps snouts market: De consider EAI to position BSP stressfully In ten projector 1 . As the most urgent measure BSP should focus ALL manpower on developing the BAG 800 in time for the “Inform” mass and stop ALL other projects (despite the large sunk costs and potential R engineers frustration), since the high-end rapids segment is the main target of Sonny’s 1270, hence perusing a flanking attack to save as much of the segment market share as possible.
Finish developing the BAGGY is no real alternatives, being technically inferior to the Sony would have to be priced clearly below the 1270. The introduction of an already obsolete product on the market is a mistake! 2. BAD 700 should be launched as planed since it is strictly targeted to the data segment, but it will have to be priced below the Sony 1270, hence the pricing decision will have to be postponed until Sony definitely hits the market. 3.
BSP should move its main focus back to its original mission of being one of the top 3 manufacturers in cutting edge technology, which surely is the computer graphics segment. Meaning that innovation needs to be driven on, thus enabling a lead in existing niche markets and allowing entry and/or creation of new profitable niches in the data and graphics segment (see projections in table, figure 1) . In order to have the means to accomplish this expel