Kone - Monospace

1. Introduction Kone is currently facing a precarious financial situation in an industry that competes on price rather than differentiation. Should the situation persist, losses for 1996 will be imminent. With the launch of Kone MonoSpace in Germany, however, the company hopes to make profits as it expands its product line in this very critical market. Germany’s elevator market is the largest in continental Europe and with a market size of 15,500 units in 1995, it is more than the market sizes of the Netherlands, France and the UK combined. The German market is, thus, critical because of its sheer market size and its potential to bring Kone back into a profit making business. This report seeks to address the key considerations of the MonoSpace launch in Germany, its launch strategy and implementation process. 2. MonoSpace’s Value Propositions Currently, MonoSpace can only be used in low-rise buildings because it can not operate on buildings with more than 12 levels. Value propositions of the MonoSpace include: 1. Machine-room-less A machine room is typically 25% of the total elevator cost for geared traction and slightly less for hydraulic elevators. Without the machine room, developers will have more area to rent out or sell. 2. More comfortable ride “ EcoDisc” offers a more comfortable ride as compared to a gearless traction elevator, the most expensive option for an elevator. 3. Extremely energy efficient The energy saved is considerable, ranging between one third to half of other elevator systems. In addition, electrical fuses required for the MonoSpace were $42 a year, significantly cheaper compared to $559 a year for geared traction elevator fuses and $1,119 a year for hydraulic elevator fuses. 4. No oil required Potential fire and environmental hazards are eliminated, as is the cost of oil. 5. Shorter installation time Requires 60 hours less time compared to the simplest traditional elevator 6. Lower construction and installation cost Cost savings can amount