TEAM-13

KONE : The Monospace launch in Germany

KONE is the third largest elevator company in Europe. They majorly have two sources of revenue- (a) sales
of New Equipment (38%) and services (62%). Their product can be categorized into three segments low-
rise elevators, mid-rise elevators and high-rise elevators, where the low rise elevators gives the 75% of
total sales. During 1991 to 1995, company’s net income started dropping so they decided to launch a new
product to the market called MonoSpace using new technology that use Ecodisc instead of old machine
room. It was also cost efficient and safe as it required no oil and generates less heat. KONE had been test
marketed in Netherlands, France and UK before deciding to delve into Germany.

ANALYSIS ON CURRENT MARKET:

 KONE’s business was divided into two divisions V1 and V2: V1 accounted for 38% and V2 for 62%
of the total revenue of $2.2 billion.
 Low Rise elevators accounted for 75% of its total equipment sales and in 1995 KONE spent 1.5%
of revenues on New product development Sale.
 In Germany, 48% of the sales were residential of which 92% were PH,6% PT and 2% PU.
 Between 1995-2000 the demand for elevator was expected to decrease by 15%.

TARGET CUSTOMER FOR MONOSPACE - They will target German low rise residential buildings of 12 floors
or less. This segment is dominated by 20,000 small contractors which constitutes 80% of the market. The
customers or the Decision makers mainly include General Contractors, architects and property
developers. The customer were mainly Price Sensitive, Quality Conscious and were concerned about
serviceability.

PRICING- The price of Monospace should be in between the price of PH Hydraulic and PT- gearless i.e.
between 60000-75000.The customer will be willing to pay atleast 10% higher than DM’s price.
The price we suggest is 66000. This will be beneficial because:-
 The customer would be willing to pay as it will provide them with additional benefit of lesser
energy consumption and absence of machine room.
 The market pricing is reduced by 8% for PH. Monospace current pricing is 10% higher than PH and
if we count the reduced price and the losses,still KONE would be able to gain from the market
which is growing at 8%
 KONE will also save on cost due to less maintenance need and less time on installation.
PROMOTION- KONE monospace will be positioned in a way which will highlight its core benefits of
Ecodisc which includes modernized motor, small fuse, energy efficient and smaller fuse oil-free motor
which will require no machine room. The empty space could be used for generating higher revenue by
proper utilization. The focus would also be on reliable and modernized design elevators.

PROMOTION- By the previous learning experience of UK,Netherlands and France launches, KONE Aufzug
should undertake a holistic launching approach with the combination of Launch Event, Advertisement
and Seminars. They should
  Arrange a product launch event in the business hub of Germany in which the construction
companies, architects, property developers as well as journalist should be invited.This should be
followed by advertisement in newspaper.
 Undertake massive advertising for about 2-3 months in all the popular architectural, building
and construction areas.
 KONE Aufzug to conduct at least one seminar in each region every month.
 They should Also try to leverage their existing sales force more in outbound sales activities
rather than existing inbound sales approach.
ANTICIPATED SALES:-

STRATEGIC DIFFERENTIATION- Redesign processes and redefine customer roles to simplify service
encounters.
After sales service was a very substantial part of KONE’s business. It is source which produces its
maximum revenue . To differentiate from its competitor KONE should adopt some strategies:-
 A service program that will incorporate the suggestions and recommendations of clients in
enhancing the service quality of the firm.
 Customer engagement is the key to consumer satisfaction and as this business completely rely
on word of mouth advertising, this may prove a key.
 In case of Pricing:- they should look at
1. Differential Pricing - Price the products low enough to break the barriers to entry and steal
market share from mid-market players and small companies.
2. Complementary Service - Provide an outstanding service to clients with highly trained
employees to exceed customer expectation.
 For better sales they should focus on
1. Part-time employees - Hire part-time employees to do sales to steal market share from mid-
market players and small companies.
 2. Increase consumer participation - Create a service mix to empower customers in customizing
and managing services.
 Service Marketing Excellence:
1. External Marketing - KONE should describe the normal work of preparing, pricing,
distributing, and promoting the service to customers.
2. Internal Marketing - KONE should invest in training and motivating employees to serve
customers well.
3. Interactive Marketing - KONE should market the employees’ skills in serving the client.

COMPETITORS REACTION:-

 The competition may not be able to react faster due to a new technology and the added
benefits it comes with. KONE will be able to take leverage of this situation alteast till 1 year.
 There is always a probability that competitor will lower the price of their existing products and
get into price war. Due to a better distribution and reach of competitor KONE can also be hit
hard.

KEY WEAKNESS IN CURRENT CAPABILITIES:- The current status of KONE also showcases some weakness
in its system:
 The distribution and sales were still a problem
 The MONOSPACE could not be used in the building with PENTHOUSE as public access was
necessary.
 It was not suitable to use outdoor because its temperature has to be maintained between5-40
Degrees
 Compare to other players Kone has smaller sales force
 No proactive sales approach