KONE: THE MONOSPACE

LAUNCH IN GERMANY

Group 7
SECTION-Y
PGDM-2
Debarchan Mishra (U113082)
Arijit Mohanty (U113133)
Debashis Das (U113142)
Peeyush Anurag Ray (U113158)
Pinaki Mishra (U113159)

Global Elevator Industry

Rise demand in elevators: Urbanization, increased population in city

area and government support to public housing

Revenue structure in elevator industry business was divided into two

sectors: new equipment ($9 Bn-41%) and service ($ 13 Bn-59%)

Service Market had low entries barriers: simple technologies, steady

demand and high margin which made the market highly competitive

Demand had reached its peak and was expected to fall

Industry dominated by 5 companies: Otis (US), Schindler (Switzerland),

KONE (Finland), Mitsubishi Electronic (Japan), Thyssen (Germany)

KONE : Company Profile

Established in 1910

Headquarters: Helsinki (Finland) & Brussels

Sales: Low-rise elevators (75%), mid-

(Belgium)

rise elevators (15%) and high rise

Operates in the Elevator & Escalator

elevators (10%)

industry

R&D team introduced a new product to

Worlds third largest elevator company

the market called Monospace, using new

Revenue from 2 sides: Selling new

technology that uses Ecodisc instead of

equipment (38%) and from services (62%)

Sales in 1995: 57% Europe; 29% North

using old machine room

America; 10% Asia & Australia; 4% other

countries
During 1991-1995 the net financial income

has dropped significantly

Advantages: Better space utilisation,

cost and time saving in installation,

energy cost saving and better safety
Monospace test marketed in Netherlands,

UK, and France and currently being

planned to launch in German market

Marketing strategies, Sales results of

Monospace launch in test markets

Monospace was launched in The Netherlands, France and UK

Marketing strategies included formal launches and articles in journals

and face-to-face meetings

Results:

1. Netherlands- Concerns of upsetting the market as it had gained too

much market share at a very short duration; Competitors could engage in
price wars.

2. France: Sales target was 300 units for the first year where it had sold
only 40 units in the first 3 months

3. UK: No units sold even after 1 month of launch

Elevator Market in Germany

Europes largest elevator market. CAGR of 9.91%

Market was dominated by residential construction. (low-rise elevators)

Abrupt end of construction boom; new elevator prices fell between 5-7%,
also demand was expected to fall; so there may be a likely demand for a
cheaper Monospace elevator

Small and mid size players focusing on service and exerting price pressure

Six majors players dominant in market share during this period included
Schindler, Otis, Thyssen, KONE, Haushahn, and Schmitt & Sohn

Schindler and Otis reported losses of 11% and 13% of turnover

Demand of low-rise residential elevators was not expected to fall

Competition

Five other major players: Schindler,

Otis, Thyssen, Haushahn and Schmitt &

moved their focus from new elevator

Sohn

equipment towards service.

Mid-size players: Appx. 30 mid-size

share and become a clear market leader

300 elevators per year

in hydraulic elevators and Otis has lost

market share in the elevator business.

Cowboys: Small local companies usually

KONE is the worlds third largest elevator

Likely strategies by top 2

competitors:

number

Schindler is now focusing on gaining

players with new equipment sales of 100-

operated in a single city about 150 in

Many of the mid-size players have now

1. Schindler: May go for an aggressive

company behind Otis and Schindler. (with

marketing strategy as they have used it

a market share of 8.2% (units) 8.5%

before when entering Asia and Eastern

(value)).

Europe and focus more on gaining market

Competition has become very aggressive

share.

SWOT Analysis
Strength

Weakness

Requires no oil
Lower energy costs
Better safety
Reduced installation time
Ride comfort
Energy-saving/energy-efficient
Machine room eliminated
Positive customer reactions to the
MonoSpace

Failure to match demand and supply

Unanticipated consumer worries in
connection with MonoSpace
No provision for ventilation
Lack of approval for the MonoSpace
Cannot be installed in Penthouse
Buildings
Not suited for outdoor use

74% of low-rise residential buildings

are not expected to fall
Extend capabilities of the EcoDisc
and MonoSpace product line
Long-term partnerships
Better reputation

Elevator regulations
Lower pricing by competitors
Competition alerted by sudden upset
of market in Netherlands

Opportunities

Threat

STP: Germany

Segmentation: Low rise, mid-rise and high rise elevator users

Target: Low-rise residential buildings of 6 floors or less.

Decision Makers: General Contractors (50%); Architects (40%); Property

developers (10%)

A. General Contractors: Appx. 20,000 small contractors in the market that

bid for jobs in the low-rise residential construction market. Request bids
from elevator suppliers, possess little technical knowledge and may often
rely on the architect to select the elevator.

B. Architects: The architects design the needs of the property developers.

In doing so, the architect is concerned with maximising useful space of the
building. Increase in useable space increases the revenue generated from
the additional space.

Positioning, Pricing &

Promotion

POSITIONING

1.

Avoid price wars with any of the major competitors

2.

Focus on differentiating itself from the other competitors by launching

the MonoSpace as an eco-friendly and economical elevator. Focus more
on the cost savings.

3.

Focus on making cosmetic options for architects and make more

modernised design elevators.

4.

Focus on building long-term partnerships and build up a good reputation.

PRICING & PROMOTION

Microsoft Office
Excel Worksheet

Thank You !!!