Barco Projection Systems (a): Worldwide Niche Marketing

Topics: Marketing, Projector, Video Pages: 5 (1741 words) Published: December 12, 2006
Q1. What are the key differences between Sony's and Bacro's strategies as far as their product roll out is concerned prior to Aug 1989 in the projector market (that is, you need to compare and contrast the chronological order and the scan rate/prices/other features of the models that both players introduced in the market prior to Aug 1989)? Why is it that both players were playing such different strategies prior to Aug 1989?

Barco launched its first projector BV1 (scan rate of 16 kHz & priced at $11,250) in video segment in 1982. But soon Barco decided to enter the computer applications market and by the end of 1983 launched BD1 (scan rate of 16 to 18 kHz & priced at $13,500) in data segment. In 1984 Barco introduced two more projectors BV2 (scan rate of 16 to 18 kHz & priced at $9,875) and BD2 (scan rate of 16 to 25 kHz and priced at $14,750) in video and data segment respectively. 1985 saw the entrance of Sony in the industrial projection market with its 1020 video model. 1020 was slower compared to Barco's video projectors available at that time but it had a sharper focus indicating a better quality tube. In 1985 Barco launched BD3 (scan rate of 16 – 32 kHz & priced at $17,000) and then in 1986, Barco introduced BDHR, its first projector in the graphics segment (scan rate of 16-45 KHz and priced at $17,375). In June 1987, Barco came up with BG400 for graphics segment (scan rate up to 72 kHz, initially priced at $25,000 and later reduced to $24,000). In the same year, Barco also introduced BD400 (scan rate of 16 to 45 kHz & priced at $14,500) and immediately next year came out with BD600 (scan rate of 16 to 45 kHz & priced at $12,000) and BV600 (scan rate 16 kHz & priced at $8,750).

Barco's main strategy was to work in niche markets and they believed that complexity of the application would work to their advantage by keeping large firms out of market. They had a traditional strength in electronics and given the same tube and lens combination, BPS could achieve better performance than its competitors. Barco continually upgraded the scan rates of its most sophisticated projector line to match advances in application. For this, company committed strongly to R&D to keep them ahead of the industry experience curve. Their strategy was to limit the scan rate for each segment such as video (up to 16 kHz), data (16 to 45 kHz) and graphics (16 to 64 kHz & above). The raison d'être behind this was that they could have made it on one machine for each segment but not sold it for the highest price (determined by the Willingness-to-Pay for the customer in each segment). Different projectors priced at different price would help them to extract the maximum consumer surplus. As part of marketing strategy, BPS captured more specialized markets such as process control and simulation thus covering the breadth of industries (rail road, military, consulting, computing, entertainment). BPS also made strong ties with customers such as IBM and EEC thus creating barriers to entry. Barco forced dealers to spend time learning about Barco products, and dealers had to hire a certain number of Barco-approved technicians. The idea behind this was that dealers would know more bout Barco products than competitors and thus would push Barco products. Barco kept the number of dealers to low because more dealers will mean that they will have more buyer power over distributors, and thus over Barco. The effect will move up the chain, e.g. if distributors are forced to decrease their margins this will put pressure on BPS. The distributors were specialized and had exclusive contracts with Barco.

As Sony's projectors were positioned below Barco in terms of performance (scan rate, brightness, image quality and resolution), so Sony's strategy was of price differentiation (to keep the projectors 15% lower in price on average). In video segment there was not much differentiation in the scan rate between Barco and Sony and accordingly Sony decided to capture...
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