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BarcoProjectionSystem::CaseStudy,Analysis,Niche,Marketing,solution

CaseAnalysisofBarcoProjectionSystem:WorldwideNicheMarketing
Introduction
BarcoN.V.wasestablishedin1934asaproducerofradiobroadcastreceivers.Attheendof1970's,facingtheeconomic
recessionowingtooilsupplyshock,thecompanyaltereditsmarketstrategyfromconsumermarkettoindustrialniche
marketofprojectors.ThisdecisionwasbasedonfirmandclearvisionthatBarcoknewwhichmarketithadtoserve.
Pursuingtopofthelineinthehighendnichemarket,BarcofocusedonR&Dtoretainthetopqualityandlaunchedseriesof
internationalexpansionactivities.
Thestrategyofthemostadvancedplayerinthenichemarketresultedinyearsofitsmarketleadershipingraphicprojector
sectorofhighendindustrialmarket.BarcoProjectionSystem(BPS)virtuallyenjoyedthefruitofitsdedicationon
technologicallysuperiorprojectors,however,theprojectormarketencounteredanunexpected(inlightofBPS)newproduct
1270"superdata"projector(1270)fromSony.IntroducedatSiggraphtradeshowin3rdquarterof1989,1270showedits
superiorityinbrightness,imagequality,andresolutiontothecounterproductofBPS.
SinceBPScouldn'texpectacompetingproductlike1270,boththecompanyandthedistributorwereshockedandstirred.
ConsideringBarco'sscaleinthemarket,eventhoughBPSwasinthepositionofindustryleader,itcouldn'tdefenditself
fromtheattackofthegiantlikeSony.Atthispoint,tokeepthemarketpositionandshareBPSshouldtakeanimmediate
actionagainstSony'smarketconqueringmovementwiththehighqualitybutlowpricedprojector1270.Atthistime,the
managersofBarcowereconsideringbasicallytwooptions:pricingoptionandproductdevelopmentoption,butbothoptions
hadsomedefects.
StrangerelationshipwiththeGiant
BPSwasknownitshighqualitytodistributorsandendusers.Basedonitsstrategyofbeingrankedintop3inthe
designatedmarketsegmenthighendprojectors,BPShadachievedtheno.1ingraphicprojectorandmanagedtobetop3
indataandvideoprojectorsectors.BPShadintentionallysetthebarbymakingitsproduct"unnecessarilycomplex"to
preventtheentranceofothercompetitors.DealersandenduserscomplainedaboutitbutBPSheldthisstrategysinceit
wasregardedasanecessarydifferentiatingwayamongcompetitors:Sony,Electrohome,andNEC.Sonywasthestrongest
competitorandhadauniquerelationshipwithBarco.CompetinginthemarketofindustryprojectorwithBarco,itprovided
thecorecomponentoftheprojectortoBarcotubes.AsSonywasthebestproducerofqualitytubesthatwereessentialto
BPShighqualityprojector,BPShadbeentryingtodiversifyitssupplyoftubesbutuntilthattime,BPScouldn'thelprelying
onSony.
EventhoughSonywasthestrongestcompetitortoBarco,itsstrategicmovementwith1270hadnotbeenexpected.Sony
wasknownmoreforconsumermarketplayeranditsproductmixofprojectormarketwasmoreskewedtovideoside,which
waslessdedicatedbyBPS,andSonywasoftenconsideredtohavelessinterestininvestingR&Dofprojectorrelated
technologies.However,theseassumptionswereturnedouttobewrongintheendandtheproductdevelopmentplanof
Barcobasedonmarketexpectationbasedontheseassumptionsbroughtsignificantcrisis.
Relationshipwithdealers
BPShadatwostepdistributionsystem,whichwascomposedof45distributorsandabout400dealersglobally.Theratioof
fullyowneddistributorswasabout11%,buttheymadeup61%ofBPS'stotalunitsalesand59%ofitsmargin.Thereason
thatafewfullyowneddistributorswereinchargeofmorethanhalfofunitsales,revenues,andmarginswaspartially
attributedtothe"complexity"oftheprojectors.Tomarketitsprojectorswell,BPSneededtohavesystemdealersthathad
theknowhowofintegrateandinstallequipmentpackages.Becauseofhighmargin,theexistingdealerslikedtosellBPS's
projectsbuttheintentionalproductcomplexityprohibitedtheexpansionofdistributionchannel.Intermsofvolume,dealers
didhighervolumewithSony80%to90%ofprofessionalaudiovisualdealersworldwideSonyproductsbecauseofreliability
andlowpriceamongdealers.
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BarcoProjectionSystem::CaseStudy,Analysis,Niche,Marketing,solution

Howtowinbackthecompetitiveedgy
BPSlostitscompetitiveedgybecauseitreliedontheenemysuppliedbySonyalthoughthesesituationshadbeen
happeningtoothercompaniesanditmisjudgedthemarketchangebasedonthewrongassumptionsincludingSony's
productdevelopmentplan.Itsstrategyheavilyreliedonitsadvancementofproductquality,butwiththeadventofSony's
1270,themapofthehighendprojectormarkethadtoberedrawn.BPSshouldhavemorefocusedondevelopinginnovative
productsoutperformingcompetitors'products.
Atthisstage,themanagersofBPShadtodecidewhichwaytogotosurviveinthemarketandtowinbackthemarket
leadership.Loweringpricesofexistingarenotanoptiontoconsider.ItwouldcausepricewarandeventuallyBPSwouldbe
disappearedinthemarketbecauseBPS,anicheplayerisnotstrongenoughtofightwiththegiant.Inaddition,thecustomer
ofBPSmightrelatethemarkdowntotheinferiorquality.Theproductqualityistheraisond'tretoBPSandonceits
reputationstartstoberuined,itwon'tbeeasytobuilditback.
TheproductdevelopmentoptionseemstobemoredesirabletoBPS,eventhoughtherewereseveralrestraints.Since
customerstendedtopurchasemoreperformanceinaprojectorthantheyneed,thedemandformoresophisticatedproducts
wouldbeanticipatedtogrowup.Asanichemarketplayer,BPSshouldthinkofitstargetconsumergrouptheywantmore
advancedandinnovativeproductandaffordtopaythepremiumprice.ThemanagersofBPSmightdedicatetofinishthe
developmentofBG800beforemeetthedeadlineofInfocomm.Byadoptingthisstrategy,BPScouldbepreparedforthe
competitionoftheoneoflargestmarketsU.S.withBG800.UpgradingBG700optionwouldrathernotbeconsideredasit
couldcausethedelayinitsdeliverytoadvanceordercustomerswhoalreadyacknowledgethequalityandfunctionofthis
modelandmadeadecision.
Whilepursuingproductinnovation,stillBPScancutdownsomecost.Lesscomplicatedtechnologywillreducecosts
(explicitandimplicit)forcustomers,dealersandBPSincreasingvalueforall,hencestrengtheningtheitspositioninthe
marketevenmore.
Conclusion
Asweallknow,survivinginthecompetitivemarketisnoteasy.Actuallyonlythebestcansurvive.Barcohadredefinedits
targetmarketfromconsumertohighendindustrytoavoidunnecessarycompetitionandreapmoreprofitbyraising
profitability.Amajorcharacteristicofthemarketisitshighvelocityofinnovation,butwithmisjudgmentoncompetitors'
moveinthemarket,itencounteredacrisisoflosingitscompetitiveedgy.Thisshowstheimportanceofbeingawakenedto
developthemostinnovativeproductthatcompetitorscannotreactimmediately.FromBPS'perspective,it'sthemosturgent
assignmentistowinbackitagainwhileminimizinglossasfarasitcould.Usinglesscomplicatedtechnology,BPScould
getmorepowerforpricecompetitionandadvantageousplatformtodevelopnewinnovativeproducts.FortheInfocomm,
althoughitseemstoberiskybutBPSisrecommendtofocusonthemostadvancedproduct,BG800nottoloseU.S.
markettoSonyandtosustainitsreputationoninnovationandquality.

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