BARCO PROJECTION SYSTEMS: WORLDWIDE NICHE MARKETING

SECTION A: GROUP 9

Overview​:Barco Projection Systems(BPS) was the second largest division of Barco N.v, with a turnover
of ＄35 million,headquarted in Belgium.It was formed in early 1980s to pursue emerging technology of
video projection.They have seven autonomous divisions for operartions (Research,product
development,production,marketing and sales).They had developed three lines of projectors:video,data
and graphics.In graphics,BPS was in first place in graphic projectors with 55% of the market in 1989.
Problem Statement:​How should BPS tackle the launch of Sony 1270 and retain it's reputation.
Alternatives:
Pricing​: To avoid losing market share when Sony’s 1270 is launched, BPS can review the price of BG400.
Product Development​: BPS can launch the on board BD700 by October 1989 as decided and then
develop the digital upgraded version of BG400, BG800 for a late 1990 introduction.
A new product BG700 can use the chassis, lenses and tube of BD700.
Barco can go for new product development (BG800) to beat Sony 1270.

Framework Used:
5-C Analysis:
Analyzing Customers​EEC,Groupe Bull,U.S Union Pacific Railroad,Entertainment and Presentation
Market: Barco projectors had demand in mainly board rooms , training centres, discotheques,
classrooms, airplanes, and betting shops for its high picture quality. These projectors with higher
specifications and high performance.
Analyzing Context Technological Environment: BPS projectors were categorized into 3 segments.The
main feature of these projectors was the scan rate which proved to be the deciding factor in choosing the
product. The three segments are: Video - 16Hz,Data - 16Hz-45Hz and Graphic - 16Hz-64Hz and higher
With the evolution of computer technology, there always resides a challenge of compatibility of the
projectors with the scan rate. Economic Environment:Recession in 1970s resulted in the drastic fall of
demand in projectors.Also, since Sony, despite being the main competitor, is the sole tube supplier. Sony
poses a threat to BPS in a way that it might anytime bring in change in the prices of these tubes.
Analysis of the company​: Its competitive strategy includes:Focusing on capturing niche industrial
markets. They are strongly commitment to research and development(8 to 10 % of its turnover and 15%
of its employees are dedicated towards R&D activities)The company sought to expand its international
presence in sales, product development and production.
Collaborators and Complementers Analysis
They had 45 distributors and 400 dealers worldwide. ​Distributors were spread across Belgium, France,
UK and USA. Fully owned distributors represented 61% of BPS’ total unit sales, 61% of its revenues and
59% of its margins. The system dealers had know-how to integrate and install equipment packages
according to the end users individual needs. Sony was the main supplier of projector tubes since 1986.
Prior to that BPS had tube supplies from Clinton’s. For the precision lens, BPS got the supply from USPL
Competitors Analysis
Sony: ​It was the main player in video segment.Sony had reputation for reliability and low price amongst
the dealers.BPS spent over about $2.5 million annually on 20000 sony tubes. ​ElectroHome: ​It operated in
data and graphics segments of the market and was the largest competitor of BPS in graphic segment.
NEC: ​It had its stand mainly in video and data projectors with product mix of 48% and 52%
respectively.NEC had pioneered digital convergence technology in the marketplace, introducing a digital
data projector in 1987 that became market standard.It held 4% and 9% of total units of video and data
projectors market respectively.
Porter's Five Forces Analysis:
Industry Competitor Analysis : Panasonic, Mitsubishi, General Electronic competed primarily in the video
and low screening data segments - not considered as major competitors.
Competition on the feature of the product, constant development on technology, Scan rate (the speed at
which the projector able to read & process incoming electronic signals) are the major differentiating
factors between the products.
Potential Entrants :Other competitors: Panasonic, Mitsubishi, General Electronics have an insignificant
role in market penetration, also they mostly concentrate on video projectors only. High production cost
and developed technology are the main factors in differentiating between products, except for established
companies like Barco, sony, and Electrohome. Hence, there is a negligible chance of new entrants in the
industry.
Substitutes​ :Barco BG400 (72 kHz, 960000 Bfr) technologically advanced graphic projector in the market.
Sony 1270 ‘Superdata’ projector at the Siggraph Trade show in Boston, going to be the highest
performance projector in the market, expected to be 20-40% below the established market price in its
performance class. It is going to affect the market share of the BBarco .The alternative substitutes for
customers of Baco and Sony were, Electrohome and NEC for graphics and Data, in the region of Europe
and North America. The graphic projectors might substitute data and video in long future
Buyers Power :2 step distribution system, 45 distributors, approximately 400 dealers worldwide. 41
independent operator, 4 owned by BPS who represented 61% of BPS’s total unit sales, 61% of its
revenues, 59% of its margin. Barco's product had the best image quality and was flexible towards inputs.
Sony has a greater opportunity to address the market as 15000 customers, dealers and distributors were
invited in France and 5000 in France. Sony had 80% Box type dealers where Barco had only 20% of
them. End users found the infrastructure of Barco’s product, complicated.
Suppliers Power ​: Barco bought their lens from a US based supplier. They could hope to get newer
lenses from Fijinco (Sony's supplier) but it was doubtful that they could get any. Barco had no easy
substitute to tubes, as barco's projector was highly dependent on tubes, if sony found Barco a threat, they
may stop delivering the tubes. Barco has a high dependency on sony.
Evaluation of alternatives-
Pricing: Barco cannot win the price war against Sony. Price can be lowered by offering discounts. Since,
maximum sales is happening through company owned distribution channels, the discounts will come from
reducing the company’s or distributor’s margin. BPS can have significant revenue losses in case Sony’s
1270 is cheaper.German and French distributors are pressuring BPS to lower the price of BG400 due to
Sony 1270’s advance orders and apprehensions in the market.
BD700: The scanning frequency will be higher and comparable to 1270. Overall, BG700 will not be as
efficient as 1270 but scanning frequency will be roughly the same.
BG800:This will require holding the development of BD700 and diverting resources to develop BG800.
And BPS will have to develop it before January 1990, Infocomm show, to make a strong presence.
Recommendations-
(1) As price reports on Sony’s new projector 1270 could not be confirmed, it’s more realistic to wait till
Sony declares its price. Barco should not believe rumors of low price as this might be opponent’s market
strategy. Generally customers associate higher price product to higher quality so reducing product prices
to compete with opponents will lower market reputation of Barco. Hence our group suggest Barco should
maintain regular prices of product which will help to maintain brand image.
(2) BPS should continue its development schedule as planned to introduce BD700 on time in October
1989 for immediate production and delivery and launch at its price of $16000. This would convey
important message that firm is steady and unaffected by competitors move in market.
(3) BPS also need to dedicate some resources and efforts in the development of BG800 because
ultimately this product can compete with Sony’s new projector 1270. BPS should design BG800 in a way
to surpass the 1270’s performance and sooner the BD800 launch in market, lesser will be the customer
loss of BPS.
(4) BPS should reduce the dependencies on other sources for raw materials like Sony’s tube manufacture
and try to develop such materials within their firm which will also reduce its cost.
(5) BPS should invest more time in analyzing market conditions, technical advancements and developing
business strategies. This will help to stay ahead from present and potential competitors.