BARCO Projection Systems

Case Study

Gurgaon Centre
Background
Barco N. V. began in 1934 in the Electronic industry
Developed first TV receiver in 1948, with 1955-75 as a major
period of growth & expansion into broadcast monitors & Video
monitors
Consumer markets were the major revenue source until
1977s recession post which they redrew their strategy to
focus on top-of-the-line products in niche markets
Barco Projection systems
As the parent company, focused on becoming a leader in the
niche markets
Focused on new product development leveraging the technical
know-how and R&D capabilities with 8% of revenue and 15%
of human capital invested in R&D
Market expansion through distribution network, global
expansion and acquisitions at a later stage ( in 1989 spent
110M$ for aquisitions
Dependent solely on the in-house suppliers of main
competitor Sony for better quality tubes; unsaid
BPS Product line
BPS Product Development
BPS though not inventors of video projection but played a
leadership role in applications of its technology
Product is based on equivalent technology in tubes, lenses
and electronics in three markets defined by combinations
of product performance in brightness, image quality and
resolution; BPS was achieving measurably better
performance than competitors in all the areas of
evaluation.
By 1983, the growth of the projector product paralleled the
changes in the computer market; from 1983 to 1989 the
product line showed good growth in high-end applications
Electronics comprise 50% of component cost and is used to
differentiate BPS products based on scan rate.
 BPS Product Line contd.
BPS Product line
Variations in scan rate define the three market segments, video, data and
graphicsBPS products Model Scan
Price
Video 16 khz BD600 45KHZ 12000

Data 16 - 45 khz BD700 64KHZ 16000

Graphics 16 - 64 khz and above BG400 72KHZ 24000

Tubes, lenses, electronics,casing

15,20,50,15% cost split

Product development was a function of engineering solutions and not based on a

market-driven plan
Product differentiation was based on image quality, input flexibility and user-
friendliness
 Barcos Assumptions about
Sony
Barcos main competition was Sony but both of them had a
different marketing strategy.
Barco Sony
Market Niche Markets Mass Markets
Segmentation
Distribution System Selective Intensive
Distribution (Less distribution
distributors, 100 in (500 distributors in
US) US)
Product Reputation High End and high Low end but reliable
quality
Sony was the only supplier for high-end video projection to all
the players in the market
Barco had a business relationship beyond competition as
Sony in-house suppliers was providing tubes to BPS and BPS
was sharing information on technical and developments thus
helping them in keeping the manufacturing cost lowered while
Sony supposed to keep abreast of latest developments.
Therefore BPS believed that Sony will follow the same product
development path & respect the mutual relationship following
 Barcos Assumptions contd.
Therefore BPS believed that Sony will follow the same product
development path & respect the mutual relationship.

The idea was based on two assumptions

- Sony dont want to beat Barco in projections & their goal is to
be 50% an industrial and 50% consumer supplier. Since Barco is
the only competition they would require them to survive.
- Sony will not use the new 8 tube that they have developed to
develop a better product than Barco who had refused to buy that
tube for developing BD700 data projector as it would involve
redesigning the shape of the projectors chasis and sourcing a new
lens ( little more extra work and cost that Barco decided to
avoid).
- Barco was too obsessed with their R&D and product
development capabilities and didnt believe that some one else
will decide to go that route. They were short sighted in assuming
Being the leader or Visionary in
the Market
The Pioneers or the First movers are accepted as leaders or
followed as leaders
Competitor accepts anothers vision of the market only when
that player clearly plays a leadership path by being the first
and a leader in following:-
- Is the first one to develop and launch a product and
therefore has
knowhow and technical leadership in product development
- Are established global leaders and defines the industry in
terms of its
possibilities to grow in all dimensions viz. by introducing
better
products, exploring new markets, pricing strategies and so
on
Sonys strategy:
There was a marketing opportunity for Sony to break their
image of being a mass producer of low-end products and
become market leader in data & graphics market
Sony had the resources to do so:-
In terms of technology with their new development of 8
tube.
Larger distribution
All 4 Ps of marketing viz.
- Product ( better product),
- Place ( targeting US & European markets first)
- Promotion ( Choosing big tradeshow for launch event)
- Price ( competitive pricing)
 Sony 1270 A threat
Sony 1270 poses a serious threat to BPS Market
share
Launched as super data projector with better product capabilities
like power to scan to 75kHz thus placing it in market for higher
performance graphic applications ( Barco couldnt enter this
market until a new product with such capabilities is developed)
Better brightness, image quality and resolution as compared to
Barcos exisiting BG400 and even BG600.
It was rumoured to be priced low & Barco may loose upto 75%
market share in that scenario

Sonys objective:
Objective : Sony clearly wants to break their image of being a
mass producer of low-end products and become a global market
leader in data & graphics market
Barcos Mistakes
Too much reliance on product oriented strategy

BPS was quite obsessed with their being a self proclaimed

leaders and their spents on R&D . They simply ignored & chose
not to act on market sentiments and information available

Being in High technology business they need to develop or aid

some one who is a vendor and not competitor to develop
capabilities to provide parts which are essential USP to
maintain the leadership they instead depended on a
competitor Sony who was solely handling the tube
requirement of the industry
 Barcos Mistakes
Assumptions that doing business is a fair-play field. Barco never had
any documented agreement that Sony would follow their product
development path they just believed so.. Living in their own
fantasy world had costed them dearly.

Barco failed at many levels in terms of keeping the leadership

position didnt choose to become the first ones to buy the 8 tube
instead gave an opportunity to Sony to develop a better product in-
house; didnt pay any heeds on threats like developing/expanding to
newer markets or strategy to launch products in mass markets even
if it is after a product is successful in niche market thus widening
their market presence; didnt work on exploring on multiple vendors

Failed miserably to understand the market pulse in short

Recommendations: Barco
Product strategies and Price
strategy
Price Strategies
- Phase wise reduction in the price of BG400 upto 25% &
BG600
- Involve the channel of distribution

Product Development
- To start developing BG800 immediately for showcasing
Infocomm: Barco missed the opportunity by not using 8

tube in BG700 but it shouldnt miss the opportunity now.

Further Recommendations
Move to market orientation from the product orientation
Look at alternate market strategies like strengthening 4Ps
- Product : Barco is strong in R&D and has focussed on
developing products
for niche markets
- Place : Need to relook at markets and probably developing
new markets
- Price : Since its highly competitive market Barco needs to
work on competitive pricing if it wants to maintain its
position in the market
- Promotion : Needs to promote the product strongly so that
consumer understands its functioning well
Thank
You