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Barco

In: Business and Management

Submitted By 91minjin
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1. Financial Health (Exhibit 1):

The financial health of the company is solid. BPS has increased its turnover by 48.6% which contributed to the increase in its before tax income of 102.6% from 1988 to 1989. Overall the company has reduced its costs. They have reduced production costs, both overhead and direct, by 0.7% and 14.5% of turnover, respectively. In addition, marketing and R&D expenses have fallen by 0.8% of turnover. Although most of the decreases in costs have been beneficial for the company’s overall growth, the last reduction in marketing and R&D costs may have negative implications and could lead to the erosion of its competitive advantage. As a technology company, Barco caters to innovators by providing leading edge technology; a decrease in R&D could hinder the company’s ability to provide premium products.

2. Words Describing Barco:

All of BPS’s offerings are top-of-the-line. They share a “reputation for the highest quality final image and excellent reliability once fully installed” (pg.7). However, in seeking to provide the best available products, Barco has added complexities that are not particularly user-friendly.

3. Top 5 Key Issues:

|5 Key Issues |Brief Description |Crucial |
|How to react to Sony’s new 1270 product launch |It is estimated that BPS stands to lose as much as 75% of its forecasted 1990 |Yes |
| |profits. There are 3 possible courses of action being considered that could | |
| |determine the fate of the company. | |
|Worried Barco-owned distributors (Germany and |With Sony’s introduction of the 1270, distributors that only sell Barco |Yes |
|France) |projectors want a response by Barco (i.e. new product/price) to compete with | |
| |Sony so they don’t go out of business. | |
|A new supplier of the special lens required for |The lenses are required to build the 90 kHz projector that would be able to |Yes |
|the 8” tube needs to be found |compete with the new 1270 from Sony. | |
|Tubes being supplied by major competitor Sony |“The fact that we rely on them for an important component makes us vulnerable”|- |
| |(pg.9). They could be cut off at any time. | |
|Products are not considered user-friendly by |“Dealers frequently encountered complications in installing equipment. End |- |
|customers |users, too, often found BPS’s control panels and instructions too complex” | |
| |(pg. 7). | |

4. Organization Chart (Exhibit 2):

The organization chart shows Barco’s fully-owned distributors and their geographical location. In the event that Barco launches a new product (i.e. BG800), they may want to launch the product in their own distribution centres first. Financially the fully-owned distributors show the most potential for achieving high sales (75% of graphics units sales come from fully-owned distributors).

The product development manager as well as engineers within the electronic and mechanical/optical divisions would be important to consult about the chances of developing a competitive product before the Infocomm show. The organizational chart shows where the key knowledge centres and personnel are located within the company, and thus where we can go to consult them.

It is also important to note that each division within Barco has the same organizational structure. Therefore, if one division was experiencing a shortage of labour, they could consult the other divisions to obtain additional labour and expertise. In this case, if BPS decides to launch the new BG800, they could obtain additional engineers from another Barco division to help finish the production in time for the Infocomm trade show.

5. Product Evolution Chart (Exhibit 4):

Barco started out with video projectors and began to move towards data and graphics projectors because of the advances and trends in technology. Through the gradual evolution of their main product which culminated in the BG400, the company gained experience and expertise that enabled them to produce the best product in the graphics projector market.

More recently, Barco has updated its video and data projectors while failing to do the same for graphics, which is one of their most profitable niche markets. By failing to focus on their key product, Barco has strayed away from their vision of being the market leader in their graphics projectors niche market.

The graph shows the product launches over the past 8 years which can be used to assess where the company should go in 1990. In this case, the company should emphasize its data and graphics projectors by releasing new up-to-date models, and continue to stay ahead of market trends. As an increasing number of competitors have entered into the video segment’s market and as the technology has become more accessible to non-niche market players, BPS’s return has shrunk to the point where the company should no longer focus on seeking this business. As such, the company’s video projectors should receive less attention and funding. Instead, BPS should focus solely on the data and graphics segment and continue to build its brand image as a leader in cutting edge technologies.

6. Positioning (Exhibit 5):

The introduction of the 1270 will shake up the market because its scan rate will be 3 kHz higher than the BG400 but priced between $15 000 and $20 000, similar to that of the inferior BD700. This could take a significant amount of market share away from the BG400 and BD700.

The positioning chart lacks other measurements of quality, such as light output and resolution. The graph shows a strong correlation between Barco’s pricing strategy and the scan rate of their projectors, suggesting that they are pricing their projectors solely based on this one measure of quality. Other factors such as brand name and loyalty also affect one’s buying decisions.

7. Competitive Products (Exhibit 6):

It is interesting to note that Barco’s top-of-the-line product, the BG400, has one of the lowest light outputs of all the projectors listed. It also has the highest cost per lumen, which indicates that customers are paying a high price for a small amount of light output. This is a serious quality flaw with their best product.

Barco charges customers very little compared to competing projectors in each segment for resolution. For instance, for its data projector (BD600) it charges $7.50 per line of resolution. This is the second lowest for all data projectors and the only less expensive product for cost/line of resolution is Electrohome’s data projector (ECP 2000). However, this product has a scan rate that is significantly lower than Barco’s, thus it would be considered lower end along with the price at $8 600. Similarly for the BG400, Barco has the second lowest cost in the graphics segment for lines of resolution. Again, Electrohome’s ECP 3000 is slightly less expensive based on these specs, but the product is a lower-end product with a scan rate of 50 kHz versus 72 kHz for the BG400. Barco clearly has a competitive advantage when it comes to the cost for its projectors’ resolution.

Barco appears to be extremely cost effective in producing its data projector (BD600). Not only does it offer significantly more light output and resolution than the other data projectors in the segment, but its costs to the consumers for these features are the lowest. Barco should try to transfer these cost savings to its graphic projectors in order to gain even more market share through price in the graphics segment, and to better compete with new product introductions (i.e. Sony’s 1270) that have significantly lower prices and offer better quality.

8. Three Options:
|Criteria |Stay the course |Platform Up |To The Wall |
|Customer satisfaction |1 |2 |3 |
|Profit potential/competitiveness |2 |1 |3 |
|Align with goals |1 |2 |3 |
|Risk (Feasibility/Time Frame) |3 |2 |1 |
|Totals |7 |7 |10 - winner |

We do suggest implementing the “To The Wall” strategy. The company cannot afford to release a product that is inferior to Sony’s. Doing so would damage the company’s reputation and erode their niche position. Launching either the BG700 or the BD700 would essentially be the same as introducing a new product that is already obsolete at launch. Thus, the “Platform Up” option is eliminated. In like manner, the “Stay the Course” option does not address the immediate concerns raised by the launch of the 1270.

9. Pros and Cons:
|Criteria |Pros |Cons |
|Stay the Course (BD700) |1) Low risk (85% complete) |1) Inferior product to Sony’s 1270 (damages reputation) |
| |2) We have pre-orders for the product |2) Not in line with company vision |
|Platform Up |1) Shows dealers and customers the company’s commitment to |1) Inferior product to Sony’s 1270 |
|(BG700) |improvement and quality |2) Introduction of the BD700 would be postponed until |
| |2) Immediate reaction (realizing the threat) |December |
|To The Wall |1) Innovation shows customers and dealers that the company |1) Requires a special lens to work with the new 8” tube and |
|(BG800) |is still cutting edge |a supplier must be found |
| |2) New product could potentially surpass the performance of |2) Quality problems may result from rushed development |
| |Sony’s 1270 | |

10. Buyology:
|Buyology Chapter 3 – I’ll Have What She’s Having Mirror Neurons at Work |
|Interesting Concept |1) “[Humans] are sensitive to positive social signals.” (pg. 61) |
| |2) “...sometimes just seeing a certain product seeing it over and over again makes it more desirable” (pg. 62) |
|How it Might Help |1) 8 to 10% of revenue comes from after-sale service. Thus promoting a package deal by providing high quality |
| |products and personal customer services will make BPS’s product offerings more profitable. |
| |2) Increased advertisements appealing to the brand’s superiority will help build brand awareness and help customers |
| |recognize BPS’s high quality, thus building additional sales. |
|Buyology Chapter 4 – I Can’t See Clearly Now Subliminal Messaging, Alive and Well |
|Interesting Concept |1) Subliminal messaging causes consumers to unconsciously buy certain goods (pg. 70). |
| |2) Perceived information about a certain product can induce purchase, regardless of whether the information is |
| |factual (pg. 76-77). |
|How it Might Help |1) BPS could hire a crowd of people to stand around their booth at the Infocomm trade show to attract interest. |
| |2) Send out leaks that BPS has developed the newest breakthrough in projector technology, just as Sony is launching |
| |the 1270. If people think a better product is coming, they will be hesitant to buy a current product that may be |
| |inferior. |
|Buyology Chapter 5 – Do You Believe in Magic Rituals, Superstitions, and Why We Buy |
|Interesting Concept |1) People are comforted by the idea of being part of a community (pg. 99). |
| |2) Rituals associated with a product or brand encourage customer attachment (p. 99). |
|How it Might Help |1) Barco could develop a “BPS Community” (e.g. newsletters for people who purchase projectors, etc.). |
| |2) Create a commercial relating our projector to other products with high perceived values. The advertising campaign |
| |could feature images of individuals polishing their Ferraris, sports trophies, grand pianos and then flash to an |
| |executive in a boardroom caring for their BPS projector. We want to create an emotional attachment to the BPS brand. |

11. Marketing Mix:
|Marketing Mix - Product |
|Suggestion |- BG800 with 90 kHz of scanning frequency and the Sony 8” tube for best possible performance. |
|Rational |- This option is in line with the company’s objectives and best addresses the launch of Sony’s 1270. BPS needs to stay at the |
| |forefront of leading technology and maintain their cutting edge image. |
|Marketing Mix – Price |
|Suggestion |- 1 080 000 Bfr ($27,000) which is higher than the Sony 1270. |
|Rational |- The BG800 is priced higher than the Sony 1270 and existing BPS products because it is a newly introduced product with a higher |
| |scan rate than anything else on the market (leading edge technology). |
|Marketing Mix – Promotion |
|Suggestion |- Offering the full-package deal. |
| |- Send personal invitations to companies, encouraging them to come to our “exclusive event” (a.k.a. our booth at Infocomm). |
| |- Hold a draw to be the first to get the new BG800. |
|Rational |- A more comprehensive package deal including more through customer service, such as complete installation service offered by |
| |dealers who will be trained and know how to integrate and install equipment packages to meet each customer’s needs and wants, and|
| |warranty will be offered. |
| |- By providing this increased value of knowledge and quality care for BPS’ customers, it will increase the customer’s perceived |
| |value and we will continue to be “the acknowledged technological leader in the high end.” (pg. 6; P1) BPS acknowledges that it |
| |cannot compete with Sony in terms of pricing and therefore will now use a more total customer experience approach. As said by |
| |Roger J. Best in Market-Based Management, “knowing the total customer experience – encompassing the customer’s acquisition, use, |
| |and disposal of a product – enables a business to add meaningful customer value to its product.” |
| |Personal invitations will build up hype about the product and make customers feel valued. This would help build interest and |
| |awareness for the BG800, and take attention away from Sony’s 1270. |
|Marketing Mix – Place |
|Suggestion |- Launch and distribute product with fully-owned distributors first in Belgium, France, and the UK, and then eventually the US. |
|Rational |- The distributors in these four regions account for 75% of BPS’s current graphics projectors’ sales. We would like to leverage |
| |the strongest part of the company’s distribution chain in order to successfully launch the product. Also, the price of graphics |
| |projectors is generally 15% higher in the European market than in the US. |

12. Trade Show:

The theme of Barco’s trade show booth should be based on a red carpet event. This campaign would begin before Infocomm with personalized invitations mailed out to customers and prospects. At the show itself, BPS will have a red carpet leading up to its booth to make customers feel like they are receiving star treatment. On either side of the carpet will be flashing lights, reminiscent of cameras and projectors. As people walk the red carpet, the company can hand out pamphlets that highlight the product specs. The focal point of the booth will be the new BG800 in a glass case, like those found in museums, which is roped off with red velour roping and protected by two security guards. Behind the cased projector will be a screen on which a promotional clip will be projected describing the new product. This image will showcase the exclusive nature of our product and its great worth as top of the line technology.

b) Why This Idea Will Work:

“Attracting crowds is a matter of leveraging the power of natural human curiosity.” (www.trade-show-advisor.com) If BPS is able to attract some mild interest and get a few people to come check out the booth, that small crowd will inspire curiosity in others and will attract the attention of more people. Thus, a large crowd will form and BPS will be able to make more of an impression and impact on its consumers.

BPS understands that the consumers invest a lot of their time and money in choosing the projector that best fits them. As projectors are expensive by nature, consumers carefully consider the price tags against the value of the product. BG800 is clearly the best quality product in the market; however, BPS cannot win a price war with Sony. That is why BPS will put a heavier emphasis on BG800’s outstanding quality, and increased customer service and value.

c) Estimated Budget:

The team of 25 representatives will be chosen from the very best employees of the company. Barco’s pre-Infocomm sessions will ensure that every member is familiarized with the structure of the event, and finalize their preparation for the actual event.

There will be one over-all manager who looks over the Infocomm team. The other twenty-four employees will be divided into three teams to be in charge of set-ups, promotions, interaction with people, gathering information from other booths and technicality of the booth. As for the body guards, we will hire part time workers from United States.

Our employees will take the flight from Brussels Airport, (in Belgium where the BPS headquarters is located) to Las Vegas. Although the flight is more costly, Barco sees the importance of sending its employees from the headquarters for the Infocomm 1990. This will cost around $60,000 USD.

Infocomm exhibition usually lasts for 3days. As a company who values its employees, Barco will provide hotel rooms for four-nights-and-five-days to our 15 BPS employees who will represent the company at Infocomm. Hotel accommodations and other expenses related to the BPS representatives, such as food and transportation, will be around $30,000 USD.

Other costs that Barco should consider for the Infocomm includes fee for taking part in the trade show, personally mailed out invitations, brochures, flashing lights and red carpet. All together, the estimated budget for the event comes to around $ 110,000 USD.

• Assuming each room costs 400USD/night, 2 people per room

• Food expense: 300USD per day per person

• Transportation: 7,300 USD as a group for the whole trip

• Other expenses (trade show, lights, invitations, brochures, etc.): 20,000USD

d) Citations: 1. Bes, Roger J., “The Customer Experience and Value Creation”, Market-Based Management Fifth Edition [pg. 134] 2. http://www.trade-show-advisor.com/trade-show-booth-ideas.html 3. http://www.adventurebizsuccess.com/10commandments.php 4. http://www.createitdisplays.com/sub_department.cfm?id=18 5. http://www.worldoftradeshowdisplays.com/
13. Prevention of Future Surprises:

As a leading player in a niche market that favours the most technologically advanced products, Barco should adopt the newest technologies as quickly as possible. This falls directly in line with the company’s strong commitment to research and development. If the company wants to maintain a competitive edge, they should continuously adopt innovative technologies. Failure to do so will cause BPS to become a follower, rather than a market leader.

The company should also perform efficient environment and competitor analysis to stay at the forefront of market trends. One means of achieving this would be to communicate with dealers who sell both BPS and competitors’ products to assess the products’ strengths and weaknesses. This would allow the company to address issues such as user-friendliness and identify the major selling points from the competition.

The company should also consider gradually phasing out reliance on Sony. Although Dejonge believes that Sony’s goal is not to beat Barco in projection; however, the introduction of Sony’s 1270 contradicts his opinion. In order to keep Barco’s trust, Sony has confirmed the supply of the new 8” tube. Sony has made a smart move of secretly changing its lens supplier from the common supplier to Fujinon who “Dejohnge was not sure would supply [new lens] Barco as well.” Sony has made the 1270 in such a way that Barco cannot easily adopt the new technology, but simultaneously have made sure that it does not look like Sony has done it purposefully and is still willing to keep the partnership. Therefore, BPS should recognize the possibility of Sony no longer continuing to be their supplier of tubes and start to search for a new supplier of tubes that can match Sony’s quality and price in order to continue to dominate in the market.

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...the compatibility with standard video sources, and were scanned at 16kHz. Data projectors were used for displaying input from personal computers as well as video sources, and were scanned at 16kHz to 45kHz. Graphics projectors could accept input from powerful computer-aided design and manufacturing systems, as well as video and data sources, and were scanned at 16kHz to 64kHz. Barco’s first projector was a video projector for showing movies on airplanes. From there Barco developed its projector market share and moved on to more complicated products, which included the use of the projectors with computers. Their intention was to tap on the highly niche high-end market and not the general consumer market for projectors. They focused on research and development to integrate the fast moving technology into their projectors so as to keep up to date. The constant improvement of their technology was essential and their final aim for the development of projectors was the digitally controlled projector market. Barco also aims to have the first mover advantage in their products. They aim to release their high performance products into the market as the innovator of the product, thereby selling it for a premium. Upon competition arriving, they would then move on to products of a even higher calibre. They do not intend to enter into price wars with competitors as they feel that they have nothing to gain from it and in most...

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Barco Projection System

...Company: Barco Projection System Industry: Projector Systems In the late 1970’s, BPS moved from producing radio broadcast receivers to the market of projectors based on a clear vision which market they could serve better and focused on research & development to come up with top quality product and launched several activities aimed at global expansion. As a result, BPS was the market leader in high end graphic projectors because of technologically superior quality. But in 1989, Sony introduced 1270 Superdata Projector at the Siggraph trade show in Boston and won the first place in Highest Performing Projector category from BPS’ BG400, much to the surprise of Barco. 1270 was also price about 20-40% lower than Barco’s projectors. This put BPS under pressure to sustain the attack from a giant company such as Sony and come up with measures to counter attack. 1. How serious a threat is the Sony 1270? Though Sony was one of the top competitors to Barco, Barco did not expect Sony to come up with a product such as 1270 and it was caught off guard. Barco’s assumption that Sony concentrated mainly on basic projects and didn’t want to invest in R&D for high end projectors proved to be wrong. Moreover Sony supplied one of the important component to BPS’s projectors, tubes. Therefore, BPS has to reply on Sony for tubes until they find other comparable suppliers. Sony could easily stop supplying tubes to BPS and cut down its sales...

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...For exclusive use Great Lakes Institute of Management (GLIM), 2015 9-591-133 REV: MAY 9, 2002 ROWLAND T. MORIARTY Barco Projection Systems (A): Worldwide Niche Marketing On Saturday morning, September 23, 1989, Erik Dejonghe, Frans Claerbout, and Bernard Dursin were drafting a crucial presentation that Dejonghe was scheduled to make to the Barco N.V. board of directors on Monday. As senior vice president and chief operating officer (COO) of Barco N.V., with responsibility for Barco’s Projection Systems Division (BPS), Dejonghe had to respond to a competitor’s recent move that threatened the heart of the division’s sales. Claerbout, the general manager of BPS, and Dursin, in charge of managing Barco’s distribution subsidiaries and coordinating worldwide marketing of projectors, had both worked closely with Dejonghe to formulate the company’s options. One month earlier, the Sony Corporation surprised BPS and the rest of the industry by unveiling its 1270 “superdata” projector at the Siggraph trade show in Boston. At Siggraph, Sony’s product seized first place as the industry’s highest-performing projector from BPS’s BG400. More damaging, the 1270 was rumored to be priced 20% to 40% below the established market price in its performance class. The industry saw the 1270’s positioning as an attempt to widen the market through lower prices. For BPS—a small, batch manufacturer—the 1270’s combination of low price and high performance threatened both to......

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