Free Sample: Marketing KONE Case Analysis paper example for writing essay

Marketing KONE Case Analysis - Essay Example

Market Penetration depends on arbitration, population density, and government support for public housing. Commoditized product/service – low differentiation between brands Market for Germany Market growing steadily until 1995, however expected to shrink by 15% until 2000. 48% of 1995 Cone’s sales in Germany were residential. Hydraulic elevators represented 60% of the low-rise residential market and geared traction 40%. 74% of the low-rise residential installed elevators was not expected to change over 5 years.

Company Established in 1910 1995 divested its non-elevator businesses and become through a series of 19 acquisitions, the world’s third largest elevator company, behind Otis and Schneider. Two divisions: 2. Billion sales (16500 new units and 425000 service units). 1. 5% in R&D (below main competitors) VI – New Equipment – 38% revenues – Several lines of elevators (low – 75%, medium – 15%, high-rise – 10%); V – Services -62% revenues (78% maintenance, modernization of existing elevators 22%).

Two headquarters: Helsinki and Brussels. Sales by market: EX. – 53%; Rest of Europe – 4%; North America – 29%; Asia and Australia – 10%; Other Countries – 4% ZONE Fugue – Cone’s Germany ranch 48% residential sales. Geared sales – 92% PH (cheaper), 6% OPT and 2% PU Steady growth in sales of services, however the decrease in VI products is negatively affecting the profit that is decreasing.

Competition 5 main competitors worldwide: Otis – US – Market Leader in Europe, US, Canada – Present in 45 countries (above 30% of market share) – 21% Profit Growth, 1,6% investment in R Schneider – Switzerland – Flat revenues and decrease on profit around 50% Mediumistic – Japan – Market Leader in Japan and in many Asian markets (36% market share in Japan – Asia is the rarest with biggest market) – Part of a big group present worldwide Teethes – Germany – Outsourcing strategy, however keeps strategic production in-house – 15% market share in Europe – Investing heavily in Asia The 5 main competitors represent 80% of the market in services.

However new small, local service-only providers Competition in Germany: 5 Major Competitors – Schneider, Otis, Teethes, Husband, and Schmitt & Soon. Eh service networks and new elevator sales and installation branches and manufacturing facilities. Mid-Size Players – 30 mid-size players. Outsourced manufacturing, but made sales of new equipment regionally. Cowboys – 150 Local Players – Focused on the purchase and assembly of components and installation and local service.

New Elevator Segment – High level of competition – Sales below cost – Margin erosion – Prices decreased between 5% and 7% in 1994 and 1995. Service Contracts – Low level of competition – Advantage in winning contracts to service the installed bases Low entry barriers – No complex know-how needed, steady demand, high margin in the service market (5%) Customers Purchase decisions based on building type and design. Increasing number of decisions takers according to the type of elevator. Pronunciation of features and properties varied among individual participants.

Owners decisions: post-construction purpose. Owners/Developers with the intent of selling – up-front costs. Owners/landlords – life-time costs, unless could charge a premium – no worry about ride comfort or aesthetics. Owners/tenants – usually considered most factors. ZONE Moonscape Based on induction motor concept, the “Ecocide” offered ride comfort comparable to that of a sugarless drive system. The need for a machine room was eliminated. Energy saving superior to the geared traction (half energy) and hydraulic (one third).

Less expensive electrical wiring and fuses. Less dangerous than the hydraulic elevators. Less installation time, thus less costly. Max 8 or 13 people – not suitable for buildings bigger than 12 floors. SOOT Analysis Strengths: Requires no oil Lower energy costs Better safety Reduced installation time Ride comfort Energy-saving/ energy-efficient Machine Room Eliminated Positive customer reactions Weaknesses: Not available for high-rise No provision for ventilation Not suited for outdoor Opportunities:

Extend capabilities of the Ecocide and Moonscape product line Long-Term partnerships Better Reputation (finally a feasible innovation in the elevator business) Threats: Elevator Regulations Lower priced competitors Many competitors in the market Segmentation and targeting Generic Variables: Travel height, traveling speed, ride comfort, machine room requirements, drive system, controls, cabin size, interior finishing, and price.

Sugarless (10% sales market share in volume) – Only high rise (more than 25 floors – Lowest service and replacement costs – High quality in most of the variables – Big machine room disadvantage in terms of space and price) Geared (30%) – Available in low, middle and high rise (inadequate speed) – Lower quality than Sugarless – 3 fixed placement options Hydraulic – (60%) Low Cost (price 50% less than Geared) – Oil based (potential risk) – Low rise (less than 6 floors) application Total elevator cost – 50% equipment and 50% construction of the shaft and machine room and installation costs.

Geared traction machine 25% of total cost. CONE’S It’s a BIB business. Target is the German low-rise residential buildings of 12 floors or less. Residential construction is the dominate driver for elevator sales in Germany. Key factor to introduce the Moonscape in Germany. The need for new residential elevators in Germany is expected to decrease, while maintenance is most likely expected to stay the same. Segments The contractors request bids from elevator suppliers, usually also incorporating a low-cost offering.

The contractors possess little technical knowledge and often rely on the architect to select the elevator. A. General Contractors (50% of the decisions) – 4 key contractors made 20% of the market – Worried with the establishment price B. Architects (40% of the decisions) – They design the needs of the property developers – maximizing useful space of the building to maximize revenue generated from additional space. C. Property Developers (10% of the decisions) – BUDGET!

Concern with the overall cost of the new building and factors that will affect the value of the property (quality of the product, time of completion and costs of operating). ZONE currently does not communicate directly with them. Targeting ZONE should distinguish Moonscape in the market by stressing on the values that re going to be created by the new Ecocide technology that include energy efficiency, low maintenance costs, CEO friendliness, the fact that the machine-room is no longer needed which improves the liberty in the building design.

These are the perceived value propositions that will be perceived by the customers when purchasing the Moonscape elevators for their buildings. The latest technology of this product brought together the complete set of the values the customers were looking since a long period of time. The management of the company should also take a functional consisting strategy since the Moonscape new technology resolves many of the issues related to the functional areas of the elevator systems.

In addition, considering the fact that ZONE is a well-established brand in the major markets, it would be easy to position this new product based on its functional aspects. The market of France and Netherlands would also play a strong influence in furnishing this strategy. The company should also take actions to avoid the single supplier issues by setting up campaigns for the long term partnerships and also preserving the reputation in the German market. What – The needs: Budget, Design, Time of Completion, and costs of operating.

Who – Group of Customers – Short-Term: ZONE Moonscape should be targeted at Architects. How – Value Proposition – ZONE Moonscape – With less space needed to install the elevator, architects have fewer restrains in terms of design and can be more creative. Mid/Long-Term: ZONE Moonscape should be targeted at Property Developers and the 4 main general constructors. As owners of the project they have the capability to influence the Architects and the General Constructors. The key characteristics of the new product mainly benefits them.