kone version 1.0
TRANSCRIPT
KONE MONOSPACE
Group 8
DEVELOP A DETAILED MARKETING PLAN FOR LAUNCHING THE MONOSPACE IN GERMANY. SET A PRICE FOR THE MONOSPACE (TO FACILITATE COMPARISON WITH PRICES OF EXISTING PRODUCTS AS GIVEN AT THE BOTTOM OF CASE PAGE 4, PRICE A LOWRISE,4-FLOOR ELEVATOR) AND SPECIFY CLEARLY HOW IT IS TO BE POSITIONED RELATIVE TO THE CURRENT PRODUCT LINE (PH, PT, PU, OR PS).
BASED ON THE PRICING AND POSITIONING DECISIONS, PROPOSE A MARKETING AND SALES EFFORT. JUSTIFY YOUR DECISIONS AND INVESTMENTS WITH ANTICIPATED SALES AND THE ASSOCIATED CONTRIBUTION RELATIVE TO THE AMOUNT YOU PLAN TO SPEND.
PRICING STRATEGY
Factors for deciding pricing
• legal approval for MonoSpace to be installed in every state throughout the country, • the company’s objectives for differentiation and brand building, • the fact that the government does not subsidize the elevator industry, • as well as the headquarters suggestion to price the MonoSpace above existing prices if KONE’s market share was less than 15 percent,
These indicate that KONE should implement a skimming pricing strategy.
Results from similar markets, such as the Netherlands and France, signify this to be a successful strategy.
However, it didn’t work in UK given the price sensitive nature of Consumers.
Situation in Germany is similar where consumers are also extremely price-sensitive due to market saturation
POSITIONING IN GERMANYEnergy efficient, not requiring oil • price sensitive, • Want quality & efficiency• Customer service oriented.
Eliminating fire and environmental hazards,
Lower installation time.
Quality & Service
Nature of German Consumers
Marketing Kit Monospace Concept Brochure
Two powerpoint Sales Presentations, one directed at builders, architects & owners & a technical one for consultants & training purposes
Trade Press Releases
Building & Planning Guides with a front line CAD rendering
Monospace architectural Specifications
Marketing Resources• Direct Mail: To architects, investors & general
contractors• Launch Events: Road Shows used by large
players• Customer Visits (most tried & tested)• PR Activities around national & local presses
Annual Costs
Direct Mail for 150000 customers 209790.21Sales Visits double the Salesforce 5202797.2Road Shows - 4 839160.84Press 12 weekly & 12 monthly 47832.168Total 6299580.4
PRICING
Price of $45000 Price of $40000
Price of $30000
Price of $35000
Price of $32000
Price of $31500
Price of $31000
Kone Share 2424.2
PH+PT 2375.716
Revenue10690722
09502864
0712714808315006
07602291
27483505
47364719
6Excess available for Marketing Spend 39143304
27264724
3507563.9
15386144 8258996 7071138 5883280
Marketing Costs6299580.
4
Excess Revenues 328437232096514
3 -2792017 9086563 1959415771557.5 -416301
Price between $31000 & $31500 would break even the assumed Sales Effort / Marketing Costs
HOW IMPORTANT IS THIS PRODUCT LAUNCH FOR KONE?
WHAT ARE THE IMPLICATIONS OF THE SUCCESS OR FAILURE OF THE MONOSPACE LAUNCH?
Importance of Monospace for Kone
Germany was a key market and Monospace was the 4th largest provider in the market
Kone’s operating income was drastically falling
Early test Markets had mixed reactions, only Netherlands was a success.
Germany was a key market for KONE where it was the fourth largest player
Product positioning could make or break the game for KONE.
Since it was a first of its kind innovation, references of successful installations were needed for KONE to market it to other countries.
Implications for Success
Price 1. Capability to charge a premium2. At the same time give some value/ savings to the Customers3. Ability to maintain some margin in a market showing negative growth rate
Positioning 1. Positioned as High Tech Provider2. Position itself as a true Global Player3. High product differentiation, no competitor to the product4. Being a new technology, more Service Contracts
Reach1. Reach out to Construction companies
which were hard to convince with their space utilization proposal
2. Energy suppliers, an important influencer group recommended Monospace
Implications
Failure
• Financial Condition would worsen further• Reputation would be lost which could affect
other European markets• No chance of improving or operating in
other markets also
WHAT CAN BE LEARNED FROM THE TEST MARKET AND MARKET LAUNCHES IN THE OTHER THREE COUNTRIES?
Test Markets
France•Two & Three Star Buildings•80% low rise hydraulic, 20% geared traction•Sales focus on Newspaper Ads, TV Programs & Breakfast meetings•Individual presentations for large clients•Only 40 units sold in first 3 months
UK•One star & Five Star buildings•90% Hydraulic Elevators, only 10% low rise Sales•Marketing Focus on “technology” through presentations at the London Science Museum•No units sold even one month after the launch
Netherlands•Two & Three Star Buildings•60-70% Geared Traction•Marketed through Individual Customer meetings, publishing articles & CD ROMs•Won market share in 10 months
LearningsSavings were not valued in Netherlands but were sought after in France & UK. These could be as much as 5% of the total construction & installation costs
Energy Suppliers were a big influencer in Netherlands who had not been considered by KONE
The Warning label : There was need for a an Upfront communication about where Monospace could be used & could not be used
Cost Savings from Monospace were not a USP in France & Netherlands as it was passed to the developers. Could be used in UK as there was price sensitivity. Thus Positioning & Pricing needs to be changed in different countries.
Single Supplier Worries: Monospace was the only product that didn’t require a machine room. So bargaining power of KONE was very high. It needed to convince Clients with emphasis on Relationships & long term partnerships
Netherlands installation was doing well. Such a model should be followed everywhere as it’s a proof of concept
HOW DO YOU EXPECT COMPETITORS TO REACT TO YOUR LAUNCH PLAN?
HOW DO YOU PLAN TO MANAGE COMPETITORS’ REACTIONS?
Give negative feedback to customers emphasizing on flaws.
Awed by product since has comfort as geared and price as hydraulic. Also, half the energy consumption as geared.
Competitors(Otis, Schlinder) might get into price wars.
Otis : Tried the product in past but could not succeed so might re launch the product with better technology
Kone should not reduce prices since benefits derived can be easily overcome by deep pockets of competitors.
Kone still needs Government to pass regulation for its architecture. Competitors can reduce cost and customers may not see any added benefits in such a case.
OTIS can improve on its replica of MonoSpace and come up with a better offering. A relatively less premium will ensure that Kone enjoys a market capitiliztion for a longer duration.
Most of the revenue is derived through Services; hence it should focus more on Services revenue.
Reactions & Management
HOW DOES THE GERMAN MARKET (AND KONE’S POSITION IN AND APPROACH TO IT) DIFFER FROM THE OTHER MARKETS?
WHAT ARE THE IMPLICATIONS OF THESE DIFFERENCES FOR TRANSFERRING EXPERIENCE GAINED IN THE OTHER MARKETS?
German Market Vis-à-vis other MarketsMarket is already saturated due to overcapacity. So price sensitive consumers & Demand is expected to decrease by 15% by 2000
• 60% Hydraulic & 40% Geared Traction. • Implies a good market potential for EcoDisc
20% Market dominated by 4 construction companies & rest among 20,000 small contractors. Tremendous opportunity to make a mark
• Quality & Relevance of Information• Level of Service• Design of Bid document • Customer’s impression of the Salesperson also affected Purchase decisions
Dominated by Residential Construction
KONE was reactive rather than being proactive
Market was Quality conscious
The Construction Company Manager was the POC & Purchase decisions were influenced by
After the deal was signed, the Purchasing Manager became the POC
Implications for KONE’s ApproachFirstly, KONE needs to change its positioning based on Germany’s affiliation towards “Quality, Service & Technology”
Type of Salespeople have to be different before the deal is signed & later on as the POC changes in the Client organizations
Proactively approaching clients may help in building market share
Demonstrations as followed in the Netherlands office might be a good idea
The Proposition should clearly communicate the emphasis on Long term Partnerships & Collaboration
Any other influence group if involved in Decision making needs to be checked out like Energy Suppliers
WHERE DOES THE MONOSPACE FIT PRICE- AND PERFORMANCE-WISE RELATIVE TO KONE’S AND ITS COMPETITORS’ CURRENT PRODUCT LINES?
OR, DOES IT POTENTIALLY CHANGE ANYTHING? IF YES, HOW?
WHAT ARE THE SHORT-TERM AND LONG-TERM IMPLICATIONS OF YOUR APPROACH?
A COMPARATIVE
Does it change anything?
Disruptive Innovation
• Financial muscle• Scale
Competitors will leverage advantages they enjoy
Price War?
Increased expenditure on R&D
A Lot of Attention on KONE
WHAT KEY WEAKNESSES IN KONE’S CURRENT CAPABILITIES WILL NEED TO BE MANAGED TO ENSURE THE SUCCESS OF THE PRODUCT LAUNCH?
KONE’s Weaknesses
Sales force limitations
• Smaller sale force than major competitors• Proactive Selling Approach• Sales force effort aligned with clients’ DMU
Limitations of the Product ‘Ecodisc’
• The Mono Space can’t be used in building with penthouses because of the temperature (it means less opportunities) • It was also unsuitable for Outdoor Use• This has to be taken care of in the positioning & communication mix
Weaknesses can be taken care of through a better Sales Strategy including Sales force organization & Communication mix