Barco Projection Systems (BPS) is right now in a problem as it needs to react rapidly to a contender's item which could take the market for representation projectors by tempest. Barco's chiefs are in a condition of stun as they trusted their rival Sony would think of an achievement item in the information projectors go, which had dependably been the fortification of Sony. A solid and practical picture of Sony ought to make BPS build up an item in design which could in any event meet the majority of the determinations of Sony's 1207 model if not outperform. Henceforth, Barco ought to deal with BG700 to play safe in these testing times.
As Sony's projectors were positioned below Barco in terms of performance (scan rate, brightness, image quality and resolution), so Sony's strategy was of price differentiation (to keep the projectors 15% lower in price on average). In video segment there was not much differentiation in the scan rate between Barco and Sony and accordingly Sony decided to capture that market. Also Barco was not interested in video segment because of 0.8% predicted annual growth (1989 ? 1994) and scan rate was at threshold level.
Sony's marketing strategy was to make use of its worldwide network of captive commercial video distributors which in turn worked with more than 1,500 dealers across the globe. Also Sony's strategy was to make use of brand name recognition which had a reputation of reliability and low price among dealers. Sony also took advantage of the fact that Barco was purchasing tubes from Sony Components. In some cases Sony's strategy was to be better off than Barco in terms of latest developments related to tubes with in-house supplier. Internal efficiencies were created from Sony Components ? Sony projectors would know about new tubes before competitors and thus be able to design for new tubes immediately. This resulted in supply chain efficiencies of being more responsive to demand, and not carrying high inventories.
Q2. Consider a hypothetical case where Sony was to charge $9,000 for its new 1270 ?super data' projector (assuming that 1270's marginal cost is much lesser than $9000). Do you think that Sony can merge the data and the video segments (in other words, it will attract a good chunk of customers, typically >30-40% of the share, in each of the two segments) if it was to charge the $9,000 price for 1270? Give reasons for your answer. Next, consider the hypothetical case where Sony was to charge $15,000 for the 1270 projector. Do you think Sony would be able to merge the data and the graphics segments if it was to charge the $15,000 price for 1270? Give reasons for your answer.
$9,000 for 1270 ?super data' projector
As of 1988, the market share of Sony in video segment was 50% and BPS had a small share of 8%. Sony's existing model in the video segment was priced at $7438 (15 % of price of BV600 i.e. $ 8,750). In the data segment, Sony's market share was 49% followed by 23% BPS and 11% EH. Sony's existing model was priced at $10,200 (15 % of price of BD600 i.e. $12,000).
Consumers in video segment do not value additional scan rate as much and hence they might not pay the extra 9000 ? 7438 = $1562. They might continue purchasing the 16 kHz (at $7438) projector to suite their optimum video requirements and not trade up for 1270 (75 kHz projector priced at $9000).
2- Problem Identification
3- Strategic Alternative
4- Recommended Strategy