KONE: MONOSPACE LAUNCH IN GERMANY
Factors contributed to the launch performance of KONE on the Netherlands, France and UK? When launched, sales of KONE’s Monospace was the highest in Netherlands, then France and in UK none was sold in the first 3 months. Monospace is an elevator invented by KONE using the latest technology that uses an “EcoDisc” that eliminates the use of a machine room and further incur significant energy cost savings for the building management. It is an upgraded version for geared traction elevators. There is more construction freedom and construction costs could be saved using Monospace too. The technology of Monospace then could be used for buildings of 12 floors or less. Hence KONE marketing team targets the low-rise residential elevators market segment in Europe. UK is dominated by low quality construction and high quality construction building works with very few in between mid-ranged constructions. For the one extreme spectrum, high-end elevators are in demand and the other, low budget and quality hydraulic elevators are in demand. Some of the low quality elevators barely meet regulatory standards in UK. Hydraulic elevators took up 90% of the market and only 10% for geared tractions. There are very high switching cost that deters customers to switch from hydraulic to Monospace elevators. The price of a Monospace elevator is twice the price of an hydraulic elevator. Thus even if Monospace made presentations in the London’s Science Museum with all relevant parties, there is a lack of market for Monospace and probably it explains why the sales were so low when it first launched. The situation in Netherlands was the complete opposite. Mid-ranged and low-rise elevators are in great demand as medium quality buildings dominate the market. Furthermore about 70% elevators in Netherlands are geared tractions. All these factors gave Monospace a huge market to play in. Coupled with direct selling tactics, strong working relationships are fostered. KONE also complied with the Dutch culture of supplying Monospace building specifications disks to architects for easy references even though it was expensive. All efforts have paid off when KONE became the market leader in the Netherlands elevator industry. In France the sales situation was the in between of Netherlands and UK. Mid-ranged and low-rise elevators are also in demand as medium quality buildings dominate the market. However, 80% of the elevators are hydraulic and only 20% are geared tractions. This probably explains the low demand initially. Write a value proposition for KONE Monospace A value proposition is the unique value that KONE can bring to its customers. The value should bring about significant benefits to its targeted customers and it is differentiated from competitors. KONE
KONE: MONOSPACE LAUNCH IN GERMANY
should adopt the resonating focus value strategy where KONE finds out what are the benefits that Monospace provide, matters most the the targeted consumers. These are the points that will bring about the greatest value to the customers. Firstly KONE has to identify who are the targeted market segment in Germany. They have chosen to target low-rise residential buildings. Next, KONE has to identify the list of players in the purchasing process that affects the buying orientation, most importantly to target the decider. As mentioned in the case. 50% of the time deciders are general construction managers, 40% are architects and 10% property owners. Hence the 2 important deciders in choice of elevators are general construction manager and architects. However. the 2 players are only important in the new building construction sector. In the existing elevator market, it is assumed that building managements have a greater say in deciding if they wish to upgrade their existing elevators to Monospace. With those targeted segments, KONE should probably come up with these 3 values that are important: 1. Construction freedom and savings This...
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