1.

Which pricing strategy should KONE pursue to successfully launch the

MonoSpace© in Germany? Why? At what price (for a low-rise, 4-floor elevator)?

To obtain a suitable price for a the MonoSpace in Germany (low-rise, 4-floor elevator) we
would recommend a value-based strategy. Our goal is not to compete on price with the major
market players, as we clearly know that we are no match for a ‘price battle’.
MonoSpace provides value to the customer in the form of cost savings, ease of installation
and energy efficiency. There will be less thermal loss which eliminates the need for a specific
ventilation system. By not requiring oil and therefore eliminating fire and environmental
hazards, the MonoSpace could adopt a safe and ecologic image. Next to this the
MonoSpace needs no machine room, which incorporates a real gain of space. Nevertheless,
the customers are quite suspicious about this profit and are not likely to involve this in their
building plans because they are afraid of price gouging. Current market dynamics makes it
very attractive for KONE to launch mono space in Germany. The total market for low rise
elevators is 74% of the total elevators market.. We assume that the current German market
has more chance to be penetrated in a geared traction elevator segment. Therefore we will
make a comparison with the geared traction elevator. We have to make a statement towards
the current owners of geared elevators that changing to our product would incorporate some
major cost savings.

 due to energy savings: DM 661,375 (which is a annual cost, and incorporates an

enormous profit for the customer)
 5% savings of the construction and installation costs for the construction company.

Next to this there are the not quantifiable benefits, such as:
 No machine room
 No oil, so no fire and environmental hazards

We will add to the selling price of a geared elevator, DM 80000, a premium of 5% and ask:
DM 84000.

DM PH(Hydraulic) PT(Traction) PU(Traction) Monospace

Netherlands 58093,75 55412,5 60775 61668,75
France ? 42900 ? 51480
United 34760 66000 ? 67650
Kingdom
Duitsland 60000 75000 84000

We made a study of the prices we already implemented in other markets. This shows that we
systematically did placed our price above the other elevators. Although the markets are quiet
different, it seemed us appropriate to not neglect this trend. Our calculated price of DM
84000 fits in this strategy. We have chosen not to charge the client for every tiny bit of profit
they make through cost savings . This way we can divide the extra value we offer over the
different parties involved.
2. How would you position the MonoSpace© product?

We would describe our product as an elevator with the same specifications as the current
market offerings, and this in an ecologic and more safe image. Our elevator is not only more
energy efficient, due to less energy consumption and less thermal loss, but the MonoSpace
will offer our customers equal speed and load capacity than any other product. One of the
major advantages of the elevator is the gain of space. As the product name describes the
MonoSpace eliminates the need for a machine room by creating a mono volume for elevator
and motor. Of course our elevator provides high quality ride comfort. The installation time
needed for our product is seriously less in comparison with our competitors.

The customer segment that will get our main attention, will be that of the contractors, who
make elevator purchase decisions 50% of the time. Next to this we may not underestimate
the importance of the architect who make the purchasing decision in 40% of the cases. The
focus should be on convincing the contractors of the economic benefits of the MonoSpace
and the architect of the positive image and place gain. The contractors mostly are quite price
sensitive and they posses little technical knowledge. To persuade them of the quality of our
product we should focus on the savings that can be made and explain them of the high
quality and efficiency of the MonoSpace. The architect will be interested in the space savings
and the green and safe image. Only 10% of the time the purchasing decision is made by the
property developers. They use often an bid strategy so the overall cost savings and the time
gain should please them.