BARCO CASE ANALYSIS

To evaluate the product development decisions, the pros and cons of each option are listed below:

OPTION 1: BPS SHOULD CONTINUE WITH THE DIGITAL DATA PROJECTOR BD700 ON TIME
PROS CONS
 Upkeep the morale of engineers since already 180  The data segment is projected to grow at a
person months had been spent on the project. modest rate of 12.3% as opposed to the 25%
 Although BPS holds a 23% market share in the growth of graphics segment
data segment, it holds 54% of its revenue share  The product itself did not possess the superior
(Table C). performance (64kHz) when compared to Sony’s
 Would help BPS gain the first mover advantage 1270 (75kHz)
in the digital technology product.  Failure to launch a new advanced performance
 An upgrade in digital aspect of the product is product can lead to a loss of 75% of projected
forecasted to bring 25% increase in the revenue profits in 1990
over BD600 to about $17.7M. Even if BPS loses
its share to Sony, giving away the product would
make BPS still lose a huge chunk of money
 Match the customer expectations and advance
order deliveries for the new product
 BPS already offers a high-performance product
BG400 comparable to Sony 1270 for the time
being

OPTION 2: BPS SHOULD COME UP WITH A DIGITAL GPRAPHIC PROJECTOR BG700 INSTEAD
PROS CONS
 The graphics segment represents 55% market  The delay of three months will create a negative
share for BPS with a projected market growth impact for customer’s expected deliveries for
of 25% advance orders
 The graphics segment is already positioned as a  Would still lack the core technology of 8” tube
high-performance at 72kHz and high-priced used by Sony
premium category.  The hybrid product would hence still lack behind
 Would only require an additional two-three Sony 1270 on light output, picture quality and
months resolution which are important for the graphics
 The existing digital product technology (lacking segment
in Sony 1270) of BD700 can be combined with  Would be difficult to position a new mediocre
the introduction of 1270’s matching performance product in the premium segment
of 75kHz.  A major drop in morale of engineers for
switching the product abruptly

OPTION 3: BPS SHOULD START A NEW DIGITAL GPRAPHIC PROJECTOR BG800 INSTEAD
PROS CONS
 The graphics segment represents 55% market  The delay of 80 person-months required to
share for BPS with a projected market growth develop the product from scratch. This would
of 25% also disrupt customers
 The graphics segment is already positioned as a  The urgency to launch before Infocomm would
high-performance and high-priced premium lead to a compromise in product quality
category.  Would require a suspension of all other projects
 The product would represent the highest superior in the pipeline
performance with 90kHz and 8” tube along with  Only a 40% probability exists for the product
digital technology (lacking in Sony 1270) in the coming up before Infocomm even with the best
market and hence could continue selling at a efforts
 premium.  A major drop in morale of engineers for
switching the product abruptly

SWOT Analysis for BARCO

Strengths
 Incumbency Advantage, Deep Pockets and R&D
 Strong distributor relationships and loyal
customer base
 Strong position as a premium and reliable
product
 Strong Data Segment hold with 54% revenue
share
 Existence of BG400 to take on performance
rivalry with Sony 1270
Weakness
 Dependence on rival Sony for supply of 8” tube
 Still lacking the core competence and technology
for performance at >70kHz in the Data Segment
Opportunities
 25% increase in revenues expected over BD600
in case of launch of BD700
 Sony still facing difficulties in repositioning
from a low quality to a premium product
 Unknown customer response to Sony 1270
 Huge investments in marketing to reposition the
“convenience of digital technology” with their
brand perception and advertising messages to
differentiate
Threats
 Sony’s ability to withdraw components’ supply
 Sony’s head on rivalry and price-wars with low
price, high performance 1270

On evaluating the pros and cons of each of the product development options and the strengths and weaknesses for
Barco, BPS should go with Option 1 as of now i.e. continue with the plan of coming up with BD700. Since BPS
doesn’t know about the pricing and marketing strategy of Sony 1270, BPS can make use of its strengths and
spend heavily on marketing the “digital technology” to capture the maximum possible projected market size of
$17.7M. On the other hand, Sony will still be facing challenges in building awareness and repositioning itself.
In the long run, however, BPS should go for Option 3 and launch the R&D for the same right away.

Going with the above strategy the following competitors may respond in different ways

COMPETITOR ADVANTAGE/ USP RESPONSE

SONY  Major Supplier of 8’’ tubes
 A direct competitive entry with Sony
1270 high performing and expectedly
low-priced product
ELECTROHOM  Major competitor in graphics segment
E expected plans in response to 1270 and
NEC  A mediocre player with forte in digital
technology
 Sony may aggressively spend on
marketing the “value for
performance” to differentiate
 Sony may take on BPS with a price war
 Sony may withdraw the supply of 8’’
tubes and components to squeeze out
BPS profits
 Can take cue from BPS long term
start building on a similar R&D to
have a share of the market
 Can take advantage of the heavy
promotion of “digital” technology and
reap the free-rider benefit of re-
entering the market