Barco Projection Systems

BARCO PROJECTION SYSTEMS (A).Worldwide Niche Marketing Harvard

Business SchoolRev. April 25, 1996

1. What product development strategy would you recommend?

Which product(s) should the company pursue? Which should phase

out? BPS is threatened by Sony introduction of the 1270

projector that has a better performance and much lower price

than BPS projectors. BPS could lose as much as 75% of its 1990

forecasted profits, from 30% to 60% market share loss in the

graphics segments, and erosion in sales in the data segment.

BPS lacks a consistent strategy for marketing and product

development since product evolution at BPS was "more a result

of engineering solutions to problems that arose than a

specific development plan" , and as a nicher BPS has failed to

protect and to create more niches. BPS also lacks a competitor

intelligence strategy and furthermore it assumed that

competitors (like Sony) would respect forever their vision of

the market place.

Therefore, we recommend developing a Marketing and R&D

strategy that helps BPS to achieve the following:

1.1 Increase efforts to encourage innovation and promote new

product generations aimed to support Barcos' mission of being

the technology leader among the 3 top manufacturers.

Innovation can also lead to create new profitable niches or

segments, as BPS successfully did creating the graphics

segment in 1987 with the BG400 projector. The effort consists

in increasing the budget for Marketing and R&D considerably

above the 1989 level of 8.7% of revenue (see Exhibit 1) to

even a double level in the first year. The new budget must be

applied mostly to develop the data and graphics segments that

have higher projections in growth and market share for BPS

(Exhibit 2 shows growth and market share projections for

1989-1994), as well as to develop new segments.

1.2 Concentrate in creating simpler and more user friendly

products. New characteristics of next product generations

should include -among other things- ease of use for control

panels and instructions, and thorough and appealing-to-read

manuals. Developing less complex products will have the

following positive impacts:

*Decrease production costs as unnecessary complex designs will

not be undertaken.

*Simpler design for projectors will help to speed up

introduction and production of new products.

*Reduce costs and resources spent in training, technical

courses, and required Barco-approved Technicians.

*As less training is required to dealers, less priced

protection of unsold units to dealers can be achieved.

*Increase sales volume through a bigger distribution network

of "box" dealers since more and more dealers (and end-users)

could more easily handle BPS projectors without the need of

much expertise and know-how.

*Less reliance on service will also reduce the problems and

projector-related total cost for BPS end-consumers

strengthening its brand, increasing value, and attracting new

customers.