Barco Projection Systems

Barco Projection Systems (A): Worldwide Niche Marketing Case Write-Up

Decision Case
BPS and its Product Line Strategy:
Barco N.V originally started as a producer of radio broadcast receivers in 1934 and gradually made its
way to the broadcast monitor and professional video equipment markets. After a global recession that
followed the 1977 oil supply shock, the company decided to redefine its focus from consumer markets
to industrial markets in order to keep its position in the industry. Dejonghe, Claerbout, and Dursin who
were responsible for BPSs R&D, marketing and sales department, worked closely together on
projectors throughout the decade.
The second largest division of Barco N.V, Barco Projection Systems (BPS) was formed in the early
1980s to enter the video projection market. It played a key role in the development of niche market
and BPS had differentiated its products amongst other competitors in the market by its superior
projector scan rates. For example, its most sophisticated product graphic projectors had scan
rate of 16kHz to above 64kHz, and accepted input from powerful computer-aided design and
manufacturing systems, as well as from video and data sources (page 3). The brand name was
established in a variety of entrainment, training and presentation markets. Despite its 4% low growth
rate of worldwide market for graphic projectors, BPS still had most shares in graphics compared to its
competitors.
BPSs main competitor Sony Components and its 1270:
BPS was confident in keeping its market share until the introduction of Sonys 1270. It was introduced
as a superdata projector that was with a scan rate of 75kHz, while Barcos highest scan rate offered
was 72kHz (BG400). It featured Sonys newest 8 tube, which gave higher result in performance in
terms of brightness, image quality and resolution. Now, Barco was faced with threats of losing its
position in the market. So why did Sony have such an impact on Barco, and what was Sonys
objective? Although their product performances were below Barcos in the past, in terms of scan rate,
brightness, image quality and resolution (page 8), Sony had other competitive advantages that abled
them to compete within the market.
The difference in distribution method between Sony and Barco was substantial. Despite a small
turnover of 1% in its Projection division to the company as a whole, Sony still had 50% of all units sold
in the video segment of the projection market. One of the reasons was because Sony had 500
dealers in the U.S market versus BPSs 100, resulting in a lower street price for Sony projectors (page
8). This creates incentives for dealers to buy more. As a result, Sony products were ordered by the
dealers in high volume and it was estimated that 80% to 90% of dealers worldwide carried Sonys

products. Barco was already making a step behind by comparing popularities with Sony, between the
dealers.
In addition, although it was mentioned that Sonys projectors were inferior to Barcos before 1270,
Sony still produced higher quality tubes over Barcos U.S supplier, Clinton. Sonys 1020 video
projection that was introduced in 1985 was slower than Barcos but had a shaper focus, which
indicated a better quality tube. Sony had more ability and flexibility to develop a better product
because it develops its own component parts unlike Barco which had to rely on its main competitor.
Sonys main objective was to be 50% an industrial supplier, 50% a consumer supplier - not to beat
Barco (page 9). Now with the pending launch of the 1270, BPS realized that Sony had changed their
aim: to seek and reconquer the data and graphics market with their low-end, mass-produced
products. The change of Sonys vision had surprised Barco; Barco had no response.
Mistakes along the way:
By looking at the Market Share of the Major Competitors (Table E), Barco had superior market share
in graphics, amongst its competitors. So what were the mistakes along the way that caused Barco to
be so terrified of Sonys 1270? Here are the reasons that could be considered:
1. Barco did not introduce any new graphic projectors in years, despite the fact that the company was
specialized in graphic markets. Instead, the company spends substantial amounts of money and time
into research and development on data or video projector products. This was not Barcos target
market and it caused a delay in realizing their products in graphics are becoming outdated. Ultimately,
it resulted in the introduction of a threat that couldve been avoided, Sonys 1270.
2. Barco projections were based solely on assumption that Sony would respect Barcos vision of the
marketplace. They had a strong R&D team that brought countless improvements for the projectors of
the day. Their scan rates in particular made BPS confident in thinking they have established
themselves as a leader in the projection market. Sony also had their products below BPSs products
in terms of performance, which made BPS assume Sony would respect their vision.
There were some signs shown before the introduction of 1270, that Barco should have realized to not
to rely too heavily on their assumption. Sonys introduction of a video projector with a tube that Barco
had not seen would be a good case (page 9). Although Barco correctly predicted that Sony would
launch a new product, they could not foresee it surpassing their models, let alone meeting the same
standards. Therefore, Barco failed to anticipate Sonys projection and activities, which caused panic
after the introduction of 1270.
3. Although the company had its goal of increasing user-friendliness of its products throughout 1980s,
there were still some dealers complaining about the difficulty of installing the projectors by 1989.
Dealers were required to attend training sessions for sales, installing knowledge and technics by the
distributers, but this failed to fix the problem. (page 7).

Pricing Strategy:
Barco had been using price-skimming strategy by charging high initial price to users then lower the
price once competitors enter the market (i.e., Sony, Electrohome). Unlike price-penetration strategy,
price skimming allows the firms to gain large market shares by first giving users an indication of high
quality of their products, and gives an illusion of getting a good deal when discounts are applied.
Although Barcos products were slightly more expensive compared to Sonys and Electrohomes,
users believed that they get the quality for what they are paying for.
So how should BPSs BG400 and BD600 be priced knowing Sony was about to launch their new
product? Siggraph, Dejonghe, Claerbout and Dursin have estimated the potential impact of 1270 for
the rest of the year. The estimation was shown in Appendix 1.
If Barco decides to keep its current price for both products and if Sony prices their 1270 at $20000,
BG400 could potentially lose 30% of its market shares. Furthermore, if Sony prices it at or below
$15000, BG400 could lose 60% of its market share. By their estimation BD600 would also have
significant share erosion. It may seem that BPS would lose its place if they do not bring the price
down, however, Barco needs to understand that they cannot win a price cut war against Sony or
Electrohome (since their prices are just below Barcos). Lowering their price, could permanently
restrict Barco to recover their prices on graphic projectors. What BPS needs to consider to overcome
the crisis was to, instead of lowering the price of current inventories, focus on developing new
products that are above to Sonys 1270 standards.
Product Development Plan:
Since Sony had surprised Barco by launching its 1270 super data projector at a lower price with
superior function, Barco was forced to reconsider their product development strategies. Here are the
3 product development options Barco had come up with:
1. Continue on with developing BD700 to make it in time for the upcoming October. The sales are
expected to increase about 25%, representing about 4.3 million dollars. Clearly, however, BD700 will
not beat Sonys 1270s performance with scanning frequency of only 64kHz. Nonetheless, many
distributers have already ordered the product, and engineers are working overtime on the product. By
stopping the development, it will hurt both distributers and engineers morale, which leaves Clarebout
no choice.
From Barcos Product Positioning (Exhibit 5), BD700 was priced at $16000 for the scan rate of 64kHz.
If Sony decided to set 1270s price at $20000, BD700 wouldve be considered as financially viable,
however, the sales will still suffer because 1270 was still better function wise. If 1270 was set at
$16000 or lower, the BD700 would be placed in a bad position with higher price and inferior
performance. With Barcos current plan and inventory, it was highly predicted that the company would

lose as much as 75% of its forecast 1990 profits (page 11) completely depended on Sonys price if
continue to develop BD700, therefore, this option was unfeasible.
2. The second option that's available for Barco was to use BD700 as a springboard and develop a
new digital graphic projector BG700. With BD700s chassis, BPSs engineers might be able to
improve scanning rate to match the 1270. However, with BPSs standard 7 tube, BG700 will still be
inferior compared to 1270 in terms of light output, picture quality and resolution. Also, BD700s launch
will be delayed until December.
3. The third option available for Barco was to terminate both BD700 and BG700s production and
immediately start developing BG800, which was a digital upgrade of BG400. This would be the only
product in BPSs inventory (with scanning rate of 90kHz) that could potentially surpass 1270s
performance, however, Barco had faced difficulties getting the compatible material. In addition, the
time requires to complete this product was substantial, with the current manpower, Claerbout
estimated that BG800 only had 40% chance of making the Infocomm deadline.
Short-term Decision for Barco:
Barco should stop the development of BD700 and BG700 and pursue with option 3, develop BG800
instead. There are two large concerns associated with this option: limited resources and finding
suppliers for those resources. In order to make it in time before Infocomm, Barco should devote all
manpower to the development by recruiting seasonal engineers, although, there are risks of getting
finished product with lower quality, and there is a 60% chance of not make it in time. It was
understandable that Clarebout was concerned about its current engineers working overtime, however,
considering the companys future and morale of the product team, the company should not produce
anything inferior to Sonys. There are no other options other than having all manpower directed to this
project. Furthermore, it was riskier to continue the development of BD700 and BG700 because
Barcos future sales will be completely depended on Sonys 1270s pricing strategy. Solutions that
could be considered for supplies uncertainty is that Barco could offer Fujinon a higher price to secure
the lenses. Barco also needs to apologize to the dealers who already ordered BD700. All preparation
needs to be done as soon as possible since any delay of production of BG800 will harm Barcos
brand image that had been established over the years.
Mid-term Decision for Barco:
It was essential for Barco to analyze Sonys distribution method. Why Barco was inferior to Sony was
not the price strategy or its products, but their weak distribution strategy. 50 % of Sonys dealers were
box dealers compared Barcos 20%, which indicates that Sonys products are more user-friendly and
doesn't require much cost for users (i.e., installation fees, maintenance fees). It makes it unnecessary
to spend much of their costs to have a system of dealers or trained people. To increase sales and
reduce costs in order to over come this situation, Barco should consider developing more userfriendly products as well as increasing the number of box dealers in a mid-term.

Long-term Decision for Barco:

The most important fact that Barco should learn from this case was that they cannot rely on their
competitors and take their relationships for granted, just because they told them that their objective
was not to beat Barco. It seems that Barco was satisfied with their accomplishments and stopped
making better products. Barco needs to take actions that could potentially drive the market, not just by
making small improvements on past products, but to come up with more innovative products to
surprise other competitors in the market. Moreover, intensive research should be done to predict
competitors future moves in order to avoid such situations where the company is threatened because
of false predictions. Barco also needs to build relationships with other suppliers in case of difficulties
in finding compatible materials. Single sourcing must be avoided especially for niche marketers. At
last, expanding its market would be essential to keep its status in the market place when such shocks
occur. Asia for example, would be ideal since it had Predicted Annual Growth Rate of 18% (Table B),
which was higher than U.S and Europe.

Barco Projection System

Company: Barco Projection System Industry: Projector Systems

In the late 1970s, BPS moved from producing radio broadcast receivers to the market of projectors
based on a clear vision which market they could serve better and focused on research & development
to come up with top quality product and launched several activities aimed at global expansion. As a
result, BPS was the market leader in high end graphic projectors because of technologically superior
quality. But in 1989, Sony introduced 1270 Superdata Projector at the Siggraph trade show in Boston
and won the first place in Highest Performing Projector category from BPS BG400, much to the
surprise of Barco. 1270 was also price about 20-40% lower than Barcos projectors. This put BPS
under pressure to sustain the attack from a giant company such as Sony and come up with measures
to counter attack.
1. How serious a threat is the Sony 1270?
Though Sony was one of the top competitors to Barco, Barco did not expect Sony to come up with a
product such as 1270 and it was caught off guard. Barcos assumption that Sony concentrated mainly
on basic projects and didnt want to invest in R&D for high end projectors proved to be wrong.
Moreover Sony supplied one of the important component to BPSs projectors, tubes. Therefore, BPS
has to reply on Sony for tubes until they find other comparable suppliers. Sony could easily stop
supplying tubes to BPS and cut down its sales. In all, Sonys 1270 was a serious threat to BPS.
2. What should Barco do with respect to price? Product development plans?

BPS should reduce price as it will only result in price war with Sony who has the competitive edge
now with its lesser complicated, high quality projectors. BPSs strategy to have a complicated system
to avoid entry of competition back fired as they did not anticipate its competitors moves. Product
development options seems more viable than pricing strategies. BPS needs to decide if they want to
continue to target high end users who are willing to pay premium prices or sought out other low end
market. Product development could be impacted by this decision. BPS first goal is to win back the
market leadership position at the earliest while reducing loses as much as it could. It should continue
innovation to come up will less complicated technology which will help them reduce costs which can
be shared with customers and distributors.

Barco Projection Systems

1. Discuss Barcos product line strategy before it faced unexpected competition from Sony.
Barcos product line strategy involved differentiating their products based on scan rate, which
measure the speed at which the projector was able to read and process incoming electronic signals.
The projectors were differentiated into the following 3 categories: video projectors, data projectors,
and graphics projectors.
Video projectors were designed for the compatibility with standard video sources, and were scanned
at 16kHz. Data projectors were used for displaying input from personal computers as well as video
sources, and were scanned at 16kHz to 45kHz. Graphics projectors could accept input from powerful
computer-aided design and manufacturing systems, as well as video and data sources, and were
scanned at 16kHz to 64kHz.
Barcos first projector was a video projector for showing movies on airplanes. From there Barco
developed its projector market share and moved on to more complicated products, which included the
use of the projectors with computers. Their intention was to tap on the highly niche high-end market
and not the general consumer market for projectors. They focused on research and development to
integrate the fast moving technology into their projectors so as to keep up to date. The constant
improvement of their technology was essential and their final aim for the development of projectors
was the digitally controlled projector market.
Barco also aims to have the first mover advantage in their products. They aim to release their high
performance products into the market as the innovator of the product, thereby selling it for a premium.
Upon competition arriving, they would then move on to products of a even higher calibre. They do not
intend to enter into price wars with competitors as they feel that they have nothing to gain from it and
in most cases, their prices tend to be the highest.
2. How should Barco respond to this potential threat, with respect to price and product development
plans?

For pricing options, there was only one option that Barco could enter into, that was to include a
considerable price reduction on the BG400, which is one of its most sellable products. However, as
mentioned, Barco, as best as they could, did not want to enter into a price war with Sony as they
believed that they would be on the losing end.
Looking more closely at the price competition that could occur, as predicted, if the BG400s price
remained unchanged and the 1270 was priced at $20,000, the BG400 could lose 30% of its market
share, or $3.85 million. Looking at the margin contribution of 29% for BG400, it would mean that
BG400 would cost $17,040 to be produced. Based on the calculations, it would seem that it would not
be feasible for Barco to drop its price to meet that of the 1270 as including the fall in market share,
Barco would still make more profits if it were to keep its price at $24,000 and not drop it to $20,000.
Another prediction was that 1270 was priced at $15,000 and that would threaten to capture 60% of
BG400s market share. In this case, it would not make any sense for Barco to drop its price
significantly as the price that the 1270 is selling is even lower than the cost price of Barcos BG400 at
$17,040. If Barco would like to match the price of the 1270, it would mean making losses for the
company, which is not desirable.
Hence, for the pricing option, it is evident that Barco should keep its price of BG400 at $24,000.
Furthermore, Barco has always been competing on the high end market unlike Sony, which has been
competing on the low end market. Hence, in the event of a price war, Sony would most likely win as
they would be able to reduce their selling price a lot more than Barco in the event that Barco reduces
its selling price.
For product options, there are many more options possible. Barco could continue the production of
the BD700, which has been in the works for 180-person months. Although the BD700 would never
compare to the 1270 in terms of performance, it could still rake in profits albeit not as much as
preciously predicted as their German distributors and several others already made preorders.
Another option was that Barco developed the BG700, an extension of the BD700. This would result in
the BD700 being delayed, which would then delay preorders. Similarly, BD700 would also not be on
par with the 1270 as the use of the 7 tube was still involved and the light output, picture, quality, and
resolution was still lacking. Hence, this would not be a viable option as the final product would still not
be comparable to the 1270 and profits would be lost from not being able to make the preorders.
The last option that Barco could do was develop the BG800. The BG800 was a digital upgrade of the
BG400. This BG800 would be the first in technology and would be able to trump the 1270 in terms of
performance. However, this project would require many man-hours and the BD700 project would
have to be delayed indefinitely and may not make it in time for Infocomm. Furthermore, it was not
clear whether Barco could purchase the lens needed for this project. If Barco were able to purchase
the lens needed to produce the BG800, the BG800 maybe the solution for Barco as there are still
many benefits that outweigh the cost, and costs such as making the deadline for Infocomm may not

be of such importance as even if Barco were to release this product late, BG800 being the top in
technology would still receive significant attention and there would be no direct competition to deal
with.
Some of the benefits of going ahead with the BG800 would be that Barco would still be the market
leader and have the first mover advantage in producing high performance projectors which cannot be
matched as of yet by another company, they would take out the threat of market annihilation, it could
also propel the companys reputation into being one which is ingenuous when it comes to technology.
Hence, going ahead with the BG800 project may be the best way forward

Barco Projection(Marketing-1)

INDIAN INSTITUTE OF MANAGEMENT

UDAIPUR
CASE: BARCO PROJECTION SYSTEMS(A)WORLWIDE NICHE MARKETING
SUBJECT: MARKETING 1
INSTRUCTOR: Prof K.R.Jayasimha
NAME | ROLL No. |
MANISH KAKATI | 111025 |
NIVEDITHA NADIMPALLI | 111028 |
SONU ROSHAN EKKA | 111052 |
VIKRAMADITYA GUHA | 111058 |
EXECUTIVE SUMMARY
The following immediate actions are recommended to BARCO PROJECTION SYSTEMS(A):
* To stop the development of BD700 and give full priority to BG800.
* To set price of BG800 above the 1270s price.
* To retain current BG400 price until launch of the BG800.

* As the market segmentation between the BG & BD series is becoming less strong with the
introduction of the 1270 it is recommended to reduce the price of the BD400 & the BD600 so as to
value ratio that is out of balance compared with the BG800.
* To maintain a competitive edge, BARCO have to adopt innovative technologies. Failing to do so will
result in BARCO being a follower rather than a tech. leader.
* Apart from adhering to their catering products for niche market, it is imperative that BARCO continue
to devote commitment to research and development to retain quality products and their market
leadership.
PROBLEM STATEMENT:
BARCO Projection Systems( BPS) is a company that designs , manufactures and markets
sophisticated video projectors for industrial applications. In 1989, SONY Corporation, launched its
new product 1270 which dethroned BG400 from the position of the industrys highest performing
projector. 1270 was also rumored to be priced at least 20%-40% lesser than the prevailing market
price in its category of quality.
BPS being a small manufacturing firm could not compete with SONY Corp. both on price and on
quality and was worried about an erosion of its market share. According to calculations BPS stood to
lose as much as 75% of its forecasted profits of 1990. Now BPS has to evaluate its options as to how
to tackle the emergence of a competitor like SONY Corp in a niche marketing segment.
ANALYSIS OF THE PROBLEMS:
Barco Projection Service holds the largest percentage of marketplace in graphics and second largest
in data projector. Despite being technologically advanced it was behind Sony in terms of its projector
tube technology this is the third time that Barco engineers are caught off guard by Sony in the tube
domain:
* In 1985, 1987 Sony introduced video projectors using a new tube. Barco eventually used this tube
into its BD600 product.
* In 1989, when Sony Components contacted Barco to inform them of a new 8 tube, the Barco
engineers were against using the tube as it required a redesign of the projector chassis and the
requirement of a new lens to fit the square form of the new tube.
It is estimated that if the BG400s price remained unchanged and the 1270 was priced at 20,000$ the
BG400 could lose 30% of its market share. At 15,000$ Sony 1270 threatened to capture 60% of the
BG400s market share.

BPS can continue its development schedule and launch BD700 as planned but it wont beat 1270s
performance at the Infocomm show in January. Another option is BPS can halt the production of
BG400 and invest the work force and advancements made to BD700 in developing BG700. But this
causes delay in the delivery to advance-order customers.
Alternatively, BPS can immediately turn to BG800 and complete it before January, 1990 for the
Infocomm. The supplier of 8 tube is available but a special lens is required and there is only 40%
chance of making the Infocomm deadline.
SUGGESTIONS:
Taking into consideration the situation and relevant data at hand, Barco can either go for competitive
price reduction on its current and future product line or develop a product with higher performance
than that of Sonys 1270 or both.
Our stand is as follows:
* Put the BD700 in the back-burner for the time being.
* Re-negotiate with the customers who have already put orders for BD700 and promised to deliver
high performance product BG800 at competitive rate.
* Prioritizing the development of BG800 so that it gets completed by Infocomm keeping an eye that
the compression of development dont have repercussions on the quality of the final product. Tie-up
with Fujinon.
* Competitive price scheme for all the current and future products as we can see that BARCO is
selling the projects with gross margin of about 59%. But it should be implemented after Sony comes
out with the price tag of 1270 and the likes.

Barco Case

Barco-case
Barco Background and Strategy
Barco Projections Systems (BPS) was the second biggest division of Barco N.V.. The division
employed 350 employees and accounted for 23% of Barco N.V.s total revenue in 1988, which

grossed $35 million. The BPS division was formed due to the large growth momentum during the
1980s in order to pursue the highly opportunistic technology of video projection.
Originally, Barco N.V. began as a producer of radio broadcast receivers and over the years the
company expanded its product line into broadcast monitors and professional video equipment. It was
not until the global recession after the 1977 oil supply crisis, demand and sales for Barcos consumer
products diminished greatly.
At this time, the Barco company repositioned its firm during the 1980s with three clear cut elements
that was to shape its vision and strategy. The visions were three fold: Barco committed itself to
become an industry leader in distinct, but complementary niche markets; it would create a strong
commitment to research and development; and lastly Barco sought to expand its international
presence in sales, product development, and production.
On the one hand while Barco was establishing its strategic vision for the projection industry, on the
other hand the company was redefining its industry as a whole and setting the bar of high end quality
projectors.
The product line that rolled out from the Barco Projection Systems division were all based on the
same design. The BPSs projectors comprised of three major elements---tubes, lenses, and
electronics. The divisions products were relatively focused around a 7 tube. The niche among BPSs
product line was the scan rate. The more sophisticated its market, the higher the scan rate of the
projector. The following table demonstrates BPSs product line prior to the competitors release of the
Sony 1270 super-data projector.
Manufacturer & Model |Scan Rate/Light Output/Resolution |Retail Price | |BARCO: BD600
BD400 |16-45 600 1,600
16-72 400 2,000 |$12,000
$24,000 | |SONY: VPH1031 |16-35 300 1,100 |$10, 500 | |
The BPS division focused on three types of projectors: video, data and graphics. The evolution of its
product line was centrally focused around digital projectors in 1989. BPS was the accepted
technological leader in the high end projector market until Sony strategically unveiled its 1270 superdata projector and threatened to steal BPS market share.
Sony Corporation
The Sony Corporation had a very strong and reputable name to back its projectors in the market and
thus resulted in Sony holding approximately 49% of total projector units sold. Nevertheless, Sony
projectors were far inferior of quality when compared to those projectors manufactured by Barco. The

selling price was normally about 15% less than Barcos and in 1989 Sony projectors could be found in
an estimated 80-90% of audiovisual dealer stores worldwide. It was not a secret that Sony had a
reputation of reliability and low prices among dealers and few dealers could not stay open for
business without the Sony projector sales.
Sony entered the projection market with its flagship 1020 video projector. Again true to its reputation,
the 1020 was slower than Barcos video projectors but interestingly enough this time the projector had
a sharper focus which indicated in a better quality projector tube. Upon further research and closer
examination by BPS executives, it was decided to maintain its projector quality and market share BPS
forged a threatening relationship with Sony. BPS entered into a contract with Sony Components to
become the sole supplier of tubes, which is ultimately why Sony didnt respect Barcos vision in the
market any longer.
By creating the supply contract with BPS, Sony was able to maintain its strategic vision and strategy
by always knowing the capability and quality of the tubes in BPS projectors. BPS made a terrible
mistake as only keeping a 3-month supply of tubes on hand and 2-months of orders in transit. The
mistake was as clear as day, that was made by BPS General manager Frans Claerbout. He assumed
that because BPS lowered Sonys manufacturing costs down and Sony made an attempt to always
keep BPS in-touch with its latest developments, that the relationship would be profitable for both
companies. Nothing could have been further from the truth.
The old saying, keep your friends close, and your enemies closer... was real life for Sony. By
supplying BPS tubes for its projectors it had vital technological and development knowledge of BPS
products and thus would be able to use that information to the companies advantage by developing
its own high end projector that would not just compete with Barco but Sonys goal was to reacquire
market share and reposition its projectors away from the mass producer of low-end products.
In a strategic move at the Siggraph trade show in Boston, Sony unveiled its 1270 projector and was
trade-show stealer. For the industry and more importantly BPS-the 1270 ability to scan at 75 khz in
addition the 1270 featured the new 8 Sony tube, placing the projector in the market for highperformance graphics applications that BPS could not enter. It was also rumored to be priced at
$15,000-$20,000. If this was true, this high of performance had not been seen before in the market for
that low of a price.
Conclusion and Recommendations
From the case study, it is obvious that BPS general manager made it very clear by saying, Barco can
not win a price war against Sony.....In addition, a drastic price drop would damage our reputation
among recent, and hopefully repeat, BPS customers. With this in mind my recommendations to BPS
is to re-iterate its already strong relationships with its many dealers across the globe.

For example, if Barco reinforces the fact that BPS products are competitively more advantageous
than Sonys newest projector because BPS is more hands on with the sale by the dealer than this
would give peace of mind to the dealers that are experiencing market pressure to decrease the price
of BPSs BG400.
Barco projectors had a dealer reputation for the highest quality and excellent reliability once fully
installed. Furthermore, Barco dealers were required to attend sales and technical courses and to hire
certain number of Barco-approved technicians. This streamline body of resources is second to none
when it comes to technology and Barco needs to reinforce these benefits to the market. At this point,
the only thing Sony has in its favor is a known projector with higher quality from its predecessor
products with an unknown rumored lower price point. Nowhere at the trade show did Sony roll out a
post purchasing dealer resourcefulness or reliable service channel for end users to depend on like
BPS has already offered with its projectors.
Lastly, it is my ultimate recommendation that BPS immediately buy the 8 tube from Sony
components and conduct its own research and development upon the device. By doing so, this will
allow BPS to cut its ties to Sony and delete the information knowledge about the next line of
projectors that BPS could ultimately produce in response to Sonys 1270 super-data projector. By
researching the 8 tube BPS could then subcontract the manufacturing of the device internally if the
funding allows for it or BPS could find an external supplier that could match the quality of Sony
Components.

Barco Projection Systems (A): Worldwide Niche Marketing

Context
Sony (one of the major competitors of Barco) has introduced the 1270 super data projector in the
market, announcing better performance and lower prices than the best projector which Barco has
currently to offer in the market. Such a move by Sony is a possible threat to eliminate the niche
market which Barco has targetted. Barco needs to decide the future course of actions based on the
sudden announcement of Sony and react promptly.
Strategy options
Barco has the following three options as courses of actions to choose from as their strategy in
response to Sony's move:
1. Lower prices of BG400 and BD600 to hold on to market share and not give it away to the cheaper
Sony 1270

2. Make advances in the already flowing project for BD700 and work on the launch of a digital
graphics projector, the BG700
3. Stop projects on developing BD700 and instead start working on getting BG800 to market at the
earliest
Strategy to opt for
I would suggest Barco to go with option 3 from the list above.
Rationale behind my suggestion are enlisted as follows:Why not option 1?
* Cutting down on prices of well-known products offered by Barco would negate the reputation earned
by these products and result in brand equity erosion for Barco
* Barco was never in a price war with Sony, and should not opt for such a path just in the spur of the
moment as reaction to the sudden news
* Sony has still not announced what the price of the 1270 projector would be, and Barco could
guesstimate the range of prices. It would be a risky move cut prices based on estimates
Why not option 2?
* BD700 as well as BG700 would be inferior in quality to Sony's 1270
* This option would mean delaying the process of launching the new product from the targeted month
of October to December
* By the time BD700/BG700 was launched, Sony would have captured a niche market segment for
their 1270 projector and it would be hard to snatch the same back from Sony with an inferior product
Why option 3?
* BG800 would be a superior product to Sony's 1270 projector
* It would help Barco gain back its share of niche market segment which Sony would try to settle into
Overcoming hiccups
* People factor: It is in the best interest of the company to put the BD700 project on hold, and hence
the employees who had been working on the same would have to be shown the big picture and
incentivized accordingly for their support

* Probability of meeting deadline at 40%: Keep the buzz going on BG800, by promoting through future
trade shows and accepting pre-launch orders at discounted prices till the product is launch ready