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Barco Projection System: Worldwide Niche Marketing

1336 words - 6 pages

IntroductionBarco N.V. was established in 1934 as a producer of radio broadcast receivers. At the end of 1970's, facing the economic recession owing to oil supply shock, the company altered its market strategy from consumer market to industrial niche market of projectors. This decision was based on firm and clear vision that Barco knew which market it had to serve. Pursuing top-of-the-line in the high-end niche market, Barco focused on R&D to retain the top quality and launched series of international expansion activities.The strategy of the most advanced player in the niche market resulted in years of its market leadership in graphic projector sector of high-end industrial market. Barco ...view middle of the document...

1 in graphic projector and managed to be top 3 in data and video projector sectors. BPS had intentionally set the bar by making its product "unnecessarily complex" to prevent the entrance of other competitors. Dealers and end-users complained about it but BPS held this strategy since it was regarded as a necessary differentiating way among competitors: Sony, Electrohome, and NEC. Sony was the strongest competitor and had a unique relationship with Barco. Competing in the market of industry projector with Barco, it provided the core component of the projector to Barco - tubes. As Sony was the best producer of quality tubes that were essential to BPS high quality projector, BPS had been trying to diversify its supply of tubes but until that time, BPS couldn't help relying on Sony.Even though Sony was the strongest competitor to Barco, its strategic movement with 1270 had not been expected. Sony was known more for consumer market player and its product mix of projector market was more skewed to video side, which was less dedicated by BPS, and Sony was often considered to have less interest in investing R&D of projector-related technologies. However, these assumptions were turned out to be wrong in the end and the product development plan of Barco based on market expectation based on these assumptions brought significant crisis.Relationship with dealersBPS had a two-step distribution system, which was composed of 45 distributors and about 400 dealers globally. The ratio of fully owned distributors was about 11%, but they made up 61% of BPS's total unit sales and 59% of its margin. The reason that a few fully owned distributors were in charge of more than half of unit sales, revenues, and margins was partially attributed to the "complexity" of the projectors. To market its projectors well, BPS needed to have system dealers that had the know-how of integrate and install equipment packages. Because of high margin, the existing dealers liked to sell BPS's projects but the intentional product complexity prohibited the expansion of distribution channel. In terms of volume, dealers did higher volume with Sony - 80% to 90% of professional audiovisual dealers worldwide Sony products because of reliability and low price among dealers.How to win back the competitive edgyBPS lost its competitive edgy because it relied on the enemy - supplied by Sony - although these situations had been happening to other companies and it misjudged the market change based on the wrong assumptions including Sony's product development plan. Its strategy heavily relied on its advancement of product quality, but with the advent of Sony's 1270, the map of the high-end projector market had to be redrawn. BPS should have more focused on developing...

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