A CASE ANALYSIS OF BARCO PROJECTION SYSTEMS NEW PRODUCT DEVELOPMENT, PRICING AND MARKETING STRATEGY
Barco Projection Systems faces a challenge to its market dominance by the introduction by a rival, Sony, of a product of purportedly greater quality than BPS offerings, at a cheaper price. BPS faces a dilemma on how to respond to Sony’s introduction of the 1270 projector into the high performance projector market, at prices that would threaten BPS’s hold across the its entire niche market segmentation.
BPS also has to address the optimal product development path for its new products, reexamine its marketing focus and company perception, reexamine its manufacturing integration processes, market pricing strategies and overall adjust to a new competitive reality in the market.
Sony Corporation surprised BPS by unveiling the 1270 super data projector at the Siggraph trade show in an attempt to prevent a competitive response by BPS and the rest of the industry. The 1270 was designed to compete with BPS’s highest performing projector on the market (BG400) and is reportedly priced at a range that would undermine BPS market share of the high performance projector market and affect the wider industry at large. BPS also faces questions about its geographical market focus, its vertical integration strategy, its market brand perception and its pricing strategy in lieu of Sony’s product.
The introduction of Sony’s 1270 presents the biggest challenge to BPS in its company history since the 1977 oil supply shock and revealed inherent flaws in the company marketing strategy, consumer vision, manufacturing processes and pricing strategy. BPS has to respond to Sony in order to save its market share but also has to address long term issues that have being revealed by the challenge from Sony.
We need to first address the short term implications of the introduction of the 1270 and BPS’s response to it. The fact that BPS needs to respond to Sony’s product despite having close association to the manufacturing arm of Sony, shows a dearth of market awareness and anticipatory skills by BPS, which is partly due to BPS focus on product evolution rather than market need.
There are 3 options being considered by BPS in response to Sony and by analyzing these scenarios using tools like SWOT analysis, come up with the least damaging scenario for BPS to undertake.
BPS could continue its development schedule as planned, introduce the BD700 on time in October for immediate production and delivery
We ran a SWOT analysis of the strategy to identify the strengths and weaknesses of the strategies and, identify any possible opportunities or threats that could arise as a result of the strategy
• The potential pros of adopting this strategy stem mainly from BPS satisfying a small segment of its existing consumer base that had pre ordered the BD700 projection system and would receive them without delay.
• There was also the boost to its engineers' morale that on time production and delivery of the BD700 would have caused.
• The on time release of the BD 700 would have had a negative quantitative impact to BPS’s bottom line because BD700 was inferior to the Sony 1270 and couldn’t have beaten the 1270 at the Infocomm show of January 1990.
• This would have eroded significantly the projected 1990 sales of the BD700 as they were based on the non existence then of the 1270.
• When the 1270 steals the top spot at the Infocomm show, as predicted, BD 700 would be regarded as an overpriced obsolete piece of technology.
• The focus on releasing the BD700 would also inhibit the development of product lines as the company focuses on satisfying preexisting orders.
• A customer service boost as BPS shows existing customers it cares about timetables, delivery et al.
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