Name: SENTHIL N VELU

ID # 1403024
Case # Kone Monospace
Background:
Due to the changes in region-wide construction slumps and low differentiation among
competitive offerings, a price competition has risen which led to a reduction of margins
and therefore to a financial downturn of KONE. This case presents the problems faced by
KONE in entering the German market. Currently KONE is generating its sales in the EU
(53%) and North America (29%). However, according to the estimated demand by region
for 1996 the regions which should be mainly targeted are low-rise residential buildings in
Europe.
There is a prevalent mismatch in supply and demand. The new technology and current
conditions in the German market present challenges to the market entrant. The main
competition is from the mid-market players and small companies.
To Do List for KONE:
Break the barriers to entry by developing an aggressive pricing strategy.
Realign perceived value of the customers to the products.
Shape the perceived value of the customers by focusing on adding strategic service
differentiation strategies.
Develop a marketing plan and strategy that will directly address the core
customers of KONE.
Should steal the market share away from the mid-market players and small
companies.
Target Market
KONE MonoSpace will target German low-rise residential buildings of 12 floors or less.
The residential construction market in Germany is dominated by 20,000 small
contractors, making up 80% of the market; the remaining 20% being dominated by four
major contractors.
KONE Elevator Customers
1. General Contractors
The general contractor is the largest decision maker for elevator purchases, choosing the
type and brand of elevator installed 50% of the time. The contractors exerts the greatest
influence on elevator purchase on the developer. They possess little technical knowledge
and may often rely on the architect to select the elevator.

2. Architects
The architect is the second largest decision maker for elevator purchases, choosing the
type and brand of elevator installed 40% of the time. The architects design the needs of
the property developers. In doing so, the architect is concerned with maximizing useful
space of the building.
3. Property Developers
The property developer is the least decision maker for elevator purchases, choosing the
type and brand of elevator installed 10% of the time. They are mostly concerned with
overall costs, the investment value in terms of quality, time of completion, and the costs
of operating.
KONE should focus on differentiating itself from the other competitors by launching the
MonoSpace as an energy-saving elevator, which does not need oil. Moreover they should
focus on making cosmetic options for architects and make more modernized design
elevators. Also, they should focus on building long-term partnerships and build up a good
reputation.
1. General contractors looking for prize reductions
2. Architects looking for cosmetic options
3. Property Developers looking for price reductions when they purchase elevators as
they are concerned with the overall cost when developing or renovating new buildings
KONE should devote their time and resources in pursuing a significant launch of
MonoSpace as their new flagship product. The keys to success are reaching the right
target market with the right pricing strategy, modernized design of the product, and
strategic differentiation strategies. KONE must also ensure that they can meet market
demand with the elevators by coming up with the total market potential number.
Main Strategies: Low-Priced Products, Modernized Design, and Differentiated Service
Mix.