Last Updated 20 Jun 2022

Barco Projection Systems – 1

Category Microeconomics, Sony
Words 1086 (4 pages)

Barco Projection Systems - Case Study, Assignment

  1. Describe the product line strategy of the Barco Projection Systems Division? BPS has followed a market segment based product line. BPS differentiated these segments based on the scan rate of the projectors. Video segment projectors had scan rates of 16 kHz, data projectors had scan rates ranging from 16 to 45 kHz, and graphics projectors at the higher end had rates from 16 to above 64 kHz. BPS was the leader in the graphics projection segment which was a niche market. Historically, Barco entered the projections market with the lower-end scan rates for video applications and has been adding depth to its product line by improving the scan rates. Thus, subsequently, BPS created data projectors and ultimately graphics projectors. However, BPS had been limiting the projector scan rates in each of these three segments thereby clearly differentiating the products in terms of the segments.
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  3. On page 12 of the case, Dejonghe comments that “all of our projections, however, were based on the assumption that Sony would respect our vision of the market place’. What does this mean? When does one competitor accept another’s the vision of the market? Traditionally, BPS’s competition had followed its practice of segmenting the projections market by the scan rates. By strong commitment to R&D, BPS had brought about continuous improvements in the projector scan rates and thus established itself as a comprehensive player with presence in all the segments. Based on this, BPS had a vision that it will continue to drive the technology improvements in the market (in terms of the scan rates). Also, Sony had always positioned its projectors below that of BPS in terms of performance. This made BPS assume that Sony will follow its vision of the market. Generally, a competitor might accept another company’s vision of the market if the other company – a. Is a clear market leader and has a good understanding of the market needs b. Is the front-runner in bringing new technology to the market
  4. Why did Sony decide to reject BPS’s vision of the market in August 1989? Although BPS had been a technology leader since 1985 BPS had been continuously watching and incorporating the tubes used by Sony on its projectors. This was a clear transition of BPS from being a technology leader to a follower of Sony’s technology. Further, there were no suppliers apart from Sony components that produced tubes with the quality necessary for high-end graphics projection. As a result, BPS had to heavily rely on Sony for tube technology. Sony perhaps believed that BPS did not innovate at a fast enough rate to capture the growth potential in the market. So Sony decided to put itself ahead of BPS in terms of the market vision.
  5. How serious a threat is Sony 1270? What are Sony’s objectives? On the performance scale, 1270 is positioned above BPS’s BG400, so the image of BPS as a high-end player in the projectors’ market is under serious threat. Also, 1270 is targeted at the U. S. and European markets from which BPS had 83% of its graphics revenues. This will significantly affect the share of the BG400 in these markets. If 1270 is priced at the lower end ($15,000), it can also eat into the market share of BD600. Further, at this price level, 1270 has the potential to serve both the data and graphics segment which will destroy BPS’s segmentation practice. The huge growth potential (~40%) expected in the graphics segment has perhaps prompted Sony to drive the technology change in this segment and develop 1270. In addition, by pricing it lower Sony aims at merging the data and graphics segment and thereby achieving an economy of scale. Sony aims to eventually make the graphics segment a commodity market rather than a niche market.
  6. Did Barco make a mistake somewhere along the way or do things like this ‘just happen’ when competing in high technology business on a global scale? Sony’s release of 1270 is not an incidental event. BPS’s failure to continuously innovate and update the technology of its projectors made them lose their technology leadership position to Sony. Following Sony’s tube technology was a direct conflict with BPS’s belief that Sony will accept their vision of the market. As a result, BPS did not foresee that Sony could be ahead of its own projections in terms of the scan rates and prices in the graphics projector segment. BPS also failed to realize that niche markets are always prone to be commoditized eventually.
  7. What should Barco do with respect to Price? Since there is only market speculation on the Sony 1270’s price, Barco should wait for Sony to announce the actual price of 1270. At two different pricing levels ($20,000 and $15,000) of Sony 1270, various pricing levels of BG400, the associated revenue loss (assumed % for the reduced prices), and the margins are calculated below. In the first scenario, with a pricing reduction of BG400, the total margins are clearly reducing. So, the current pricing should be retained. In the second scenario, a price reduction in the range of $23,000 may be considered to achieve slightly better revenues with the same total margins. Even at the $15,000 pricing level of Sony 1270, changing the price of BD600 would not do any difference to its total margins. So the pricing of BD600 should be retained at the current levels in both scenarios.
  8. What should Barco do now with respect to its product development plan? Short-term plan: Since BD700 is clearly inferior to Sony 1270 in terms of performance, it cannot be positioned higher. Hence, the development of BD700 should be put on hold immediately and BPS should instead focus on developing the BG800. The cost of developing the BG800 in time for the InfoComm should be compared against the cost of a BPS initiated marketing campaign to promote the BG800 and the pace of its development should be decided accordingly. The BG800 should be priced above 1270 and BG400. Long-term plan: BPS should re-examine its vision for the future and plan for continuous technology updates to create more depth in the product line. BPS should also develop other suppliers for its projector tubes and reduce its dependence on Sony. After the release of BG800, BPS should realign the pricing of BD600 and BG400 to maintain segment differentiation. Eventually, the data and graphics segments are likely to be commoditized and so BPS has to look at product line extensions in terms of width as well.
Barco Projection Systems – 1 essay

Related Questions

on Barco Projection Systems – 1

Who is Barco projection systems?

Barco Projection Systems A Case Study by Brendan Cronin Belinda DeSousa Megan Cruz Patrick McHugo Mike Wallace 1 2. Current Position • Barco N.V. is one of the top three worldwide manufactures with a focus on expensive high quality products in a niche market.

What does Barco do?

Current Position • Barco N.V. is one of the top three worldwide manufactures with a focus on expensive high quality products in a niche market. • It focuses on graphic projectors, which has the maximum growth and revenue in the projector market.

What is Barco’s market share?

• Barco’s market share are as followed: – 4% in video projectors – 23% in data projectors – 55% in graphic projectors • Major competitors to Barco are Sony, Electrohome, and NEC • The product that would compete with the Sony 1270 (BG 800) had a 40% chance of being completed by the Infocomm trade show 2 3.

What is the difference between Sony and Barco?

Sony’s and Barco’s Market Strengths: •In data projection, Sony held largest % of the market place. •In graphics, Barco was number one in the market. •In terms of performance, Barco ranked higher than Sony. 5. Barco’sstrengths and weaknesses as they relate to Sony.

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