Dinesh J (1501013)

Anand K (1501067)

Shilanand Dhan (1501106)

The development of KONE Monospace elevator has various benefits, such as being the most energy
efficient, not requiring oil, hence eliminating fire and environmental hazards and its lower
installation time.
The launch of Monospace was very important for KONE because:

VALUE ADDITION

DWINDLING PROFITS

Eliminates therequirement
of machine room,
consumes only half of
other elevators and no
need of hydraulic oils.

Profits for KONE has

decreased from 6.5% to 6%
and profit after tax
hascome down to 0%. So,
It was important for KONE
to launch a product which
was advanced in terms of
technology.

SUCCESS

FOR GAINING MARKET

SHARE
The launch of Monospace
will cater to a new
segment whichshould
increase the market share
of Kone.

FAILURE

Gain a significant market share and

establish itself as a leadinginnovator and
technological superior company.
Help KONE to increase its profits.
Cannibalize other low price elevators that
have been offered by Kone.
Give an early mover advantage to Kone in
this new, energy saving, and
comfortableelevator segment.

Huge loss in terms of capital invested in

advertisement activitiessuch as road
shows, seminars and other PR activities.
Reduce reliability of KONE in the market
as it can t develop a successful product
evenafter investing large amount of
money.
Compensate the unsatisfied customers
who have already purchased the
Monospaceelevators.

Unit sales and Market share

COUNTRY
France
UK
Netherland

UNIT
7000
3000
2100

KONE
14
20
40

OTIS
41
30
19

SCHINDLER
20
10
13

THYSSEN
18
10
6

Learning from the test market launches

Target the major influencing group, i.e. energy suppliers.

Target the architects and general contractors.
Communicate the benefits of the new technology by print, electronic media and personal
meetings.

Dinesh J (1501013)
Anand K (1501067)

Shilanand Dhan (1501106)

Before attracting the customers, install the pilot plants.

Focus on the activities of competitors and work accordingly.
With the low rise builders rarely using scaffolding and use cranes, we need to focus on which
segment to target.

GERMAN MARKET WITH RESPECT TO OTHER MARKETS

Saturated market and construction slumping Germany led to fall in demand for elevator
equipment by 15 percent
Price sensitive customers due to market saturation
Skimming pricing strategy will not work in Germany
Also quality, efficiency, and service oriented customers
Legal approval for Monospace to be installed in every state throughout the country
Government does not subsidize the elevator industry
Property developers consistently used the bid process to pressure contractors for price
reductions.

Monospace benefits, such as being the most energy efficient, not requiring oil and therefore
eliminating fire and environmental hazards, as well as its lower installation time will appeal to
German customers, who are not just price sensitive, but also quality, efficiency, and customer
service oriented. Price skimming strategy, which is successful in other countries cant be applied in
Germany, where consumers are extremely price-sensitive due to market saturation. Rather, KONE
should price the Monospace similar to products offered by Schindler and Otis, but emphasize on
Monospace benefits.
MONOSPACE FIT RELATIVE TO PRODUCT LINES
Based upon above mentioned two options of Monospace launch plan, KONE can have following two
strategies to position Monospace in elevator market, so that it should not self cannibalize its own
products and should be differentiated among its competitors.
1. Rather than adopting price skimming strategy in extremely price sensitive German market,
KONE should price the Monospace similar to products offered by Schindler and Otis, but
emphasize Monospace benefits to customers.
2. KONE should position Monospace above the gear traction products, market its distinctive
features with high-end price and keep the hydraulic as their low-end model. Since there was
less demand for new elevator installation, KONE should focus on profits and not on market
share generated from following low cost strategy.
Monospace fit price and performance wise relative to other products

Pricing
Monospace was priced in line with equivalent and more expensive geared traction elevators
Monospace be priced above existing prices if KONE held less than 15% market share and in
line with existing price levels if KONE otherwise
A significant portion of the savings of not building a machine room would accrue to either
the owner or construction company motivating them to specify the Monospace
In France cost was FF55,000 per year less than that of a comparable elevator (repaying a
premium of FF 30000 in 6 years
In UK was dictated primarily by the 15000 pound TF which put it near the PT price

Dinesh J (1501013)
Anand K (1501067)

Shilanand Dhan (1501106)

Performance
A new drive system all other elements of which were identical to other KONE low-rise
elevators.
Extremely positive reactions from the customers
No ventilation due to decreased thermal loss
The benefits of eliminating the machine room and reduced consumption and the manner in
which the roping worked with emphasis on feasibility and reliability

5. Key weaknesses in KONEs current capabilities

The current Brand of KONE is not at the same level when compared to already settle bigger
brands such as Schindler, Otis, Thyssen present in Germany. Therefore, KONE will have to
conduct a lot of marketing activities such as Product launch, advertising etc. in order to fully
demonstrate its current capabilities to the prospective buyers.

KONE will have to work with its current network of salespeople in order to convince the
purchase decisions makers (general contractor and architects) to enclose deals. Currently, the
salespersons strength that KONE has for KONE AUFZUG, which operates in Germany, is much
lower and outnumbered by four or five to one by other big firms such as Thyssen, Otis, and
Schindler. Therefore, in order to effectively manage its selling team in Germany with lesser
number of employees, KONE current capabilities will play a major role.

Property owners fear of a monopoly: As the machine-room-less elevator was a

revolutionary technology started by KONE, property owners felt they could be left with very
little bargaining power as there was no other competitor offering this technology.
Convincing prospective customers on this front is a potential weakness.
Sales force of KONE was comparatively lesser than its competitors. This means lesser visits
per week in a given region. Building continuous relationship is of paramount importance in a
Business Market scenario.
Legal regulations of target market countries may or may not allow easy roll out of the latest
technology. May get caught in Red-tape issues.
Proprietary technology means customers have to rely on Kone throughout the lifecycle of
the machine as other local service providers have no/very little knowhow about this
technology.

To succeed in the new market, it is very important KONE leverages its competitive advantage that it
has in the form of technology (EcoDisc) and directs all their marketing strategies on this line.