Barco Projection Systems (a). Worldwide Niche Marketing

BARCO PROJECTION SYSTEMS (A).Worldwide Niche Marketing Harvard

Business SchoolRev. April 25, 1996

1. What product development strategy would you recommend?

Which product(s) should the company pursue? Which should phase

out? BPS is threatened by Sony introduction of the 1270

projector that has a better performance and much lower price

than BPS projectors. BPS could lose as much as 75% of its 1990

forecasted profits, from 30% to 60% market share loss in the

graphics segments, and erosion in sales in the data segment.

BPS lacks a consistent strategy for marketing and product

development since product evolution at BPS was "more a result

of engineering solutions to problems that arose than a

specific development plan" , and as a nicher BPS has failed to

protect and to create more niches. BPS also lacks a competitor

intelligence strategy and furthermore it assumed that

competitors (like Sony) would respect forever their vision of

the market place.

Therefore, we recommend developing a Marketing and R&D

strategy that helps BPS to achieve the following:

1.1 Increase efforts to encourage innovation and promote new

product generations aimed to support Barcos' mission of being

the technology leader among the 3 top manufacturers.

Innovation can also lead to create new profitable niches or

segments, as BPS successfully did creating the graphics

segment in 1987 with the BG400 projector. The effort consists

in increasing the budget for Marketing and R&D considerably

above the 1989 level of 8.7% of revenue (see Exhibit 1) to

even a double level in the first year. The new budget must be

applied mostly to develop the data and graphics segments that

have higher projections in growth and market share for BPS

(Exhibit 2 shows growth and market share projections for

1989-1994), as well as to develop new segments.

1.2 Concentrate in creating simpler and more user friendly

products. New characteristics of next product generations

should include -among other things- ease of use for control

panels and instructions, and thorough and appealing-to-read

manuals. Developing less complex products will have the

following positive impacts:

*Decrease production costs as unnecessary complex designs will

not be undertaken.

*Simpler design for projectors will help to speed up

introduction and production of new products.

*Reduce costs and resources spent in training, technical

courses, and required Barco-approved Technicians.

*As less training is required to dealers, less priced

protection of unsold units to dealers can be achieved.

*Increase sales volume through a bigger distribution network

of "box" dealers since more and more dealers (and end-users)

could more easily handle BPS projectors without the need of

much expertise and know-how.

*Less reliance on service will also reduce the problems and

projector-related total cost for BPS end-consumers

strengthening its brand, increasing value, and attracting new

customers.

1.3 Focus on shortening the product life cycle and development

time of new product introduction that can help BPS to maintain

its market share and to achieve sales and profits of the

projected market growth.

1.4 Develop a Competitors Intelligence program aimed to pay

more attention to substantially bigger companies like Sony,

that is a leader in market share and that only needed to

improve its projectors performance to threaten BPS

positioning; and like NEC, that is two times bigger than Sony

Corporation, has been a pioneer in technology introducing the

first digital data projector back in 1987 (BPS is just

introducing its first digital projector in 1989), and only

needs to improve its network distribution to become a

formidable competitor.

2. Pricing strategy for Barco. First of all, the video

projectors will remain at U.S. $7,000 since this segment

contributes to BPS sales and margins and it is not attacked by

the moment by the 1270 projector.

Launching the BD700 projector can avoid to a certain degree,

if not fully, the erosion in sales that could come from the

Sony's 1270 projector introduction. Yet, BD700 can not be

priced at