Kone Case Solutions 5b3p5j

Group 1- Mayank Mani, Rajat Kedia, Ritesh Verma, Priyanshu Nishad, Subhash Mohan

KONE: The MonoSpace Launch in Introduction KONE is the third largest elevator company. They have two sources of revenuesales of New Equipment ( 38%) and services(62%). Their product can be categorized into three segments: low rise elevators, mid rise elevators and high rise elevators where the low rise elevators gives the 75% of total sales. During 1991 to 1995, KONE’s net income started dropping so they decided to launch a new product to the market called MonoSpace using new technology that uses Ecodisc instead of old machine room. It was also cost efficient and safer as it required no oil. KONE had been test marketed in Netherlands, and UK before deciding to penetrate . was the Europe’s largest elevator market. Six major players in of market share were Schindler, Otis, Thyssen, KONE, Haushahn and Schmitt & Sohn. However, before launching the MonoSpace in German Market, KONE needs to consider and analyse the new products, current market situation as possible marketing strategies. Issues

Issues Prior Launching MonoSpace in Issues with New Product:

 

Is MonoSpace™ the right product for the German market? How MonoSpace would differentiate itself from the existing product line in German market?

Issues with Current Market:

  

Does current German market situation the launch of new product? What would be the size of the German elevators market? How competitive is the German elevators market?

Issues with Marketing Strategy:

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What would be the right segment for the MonoSpace™ elevator in ? What would be the possible best pricing strategy?

  What would be the perfect launching & advertising vehicle for MonoSpace? There are many issues that KONE had to figure out prior to launching MonoSpace in .

Analysis On New Product  

No machine-room required Comparable ride comfort like the gearless elevators

Group 1- Mayank Mani, Rajat Kedia, Ritesh Verma, Priyanshu Nishad, Subhash Mohan     

Extremely energy efficient, requiring only half of the energy of comparable geared tractions and one-third of the energy required by hydraulic drive elevators Does not require oil like hydraulic drive elevators Environment and eco-friendly Required significantly less installations-hours comparatively with the traditional elevators Lower maintenance cost

On Current Market KONE is not the market leader in . It had only 8.5% market share while players like Schindler, Otis and Thyssen had 17.7%, 13.8% and 15.4% respectively. Furthermore, the price of new elevator fell between 5% and 7% in 1994 and 1995. Even the midsize players and the cowboys (small local companies) were threat to KONE. German market is not looking favourable for growth by considering the entire situation. Recommendations Market Segmentation Strategy It would be better for KONE to target low rise elevators as approx. 70% of market share in is captured by low rise elevators. And moreover KONE earned about 485 of its total sales in 1995 from low rise market. The customers in low rise market are general contractors, architects and property developers. So KONE should target them. Pricing Strategy

MONOSPACE PRICING

DM

Monospace Cost Discount (8% padding) Retained value of savings (30%)

MONOSPACE PRICE

60000 65217 6000

712 17

Keep the price at DM 71217 for each unit. 65217 is because we can give a discount upto 8%. 8% discount will lower the price to 60000. The additional 6000 customers will pay because of the savings they make in machine room cost and installation cost. Promotion Strategy

Cost/ year (DM)

Launch Options Direct Mail Road Show

NO NO

(Kone had a limited experience (Too expensive)

Group 1- Mayank Mani, Rajat Kedia, Ritesh Verma, Priyanshu Nishad, Subhash Mohan Telemarketing Exhibitions/ Trade show Sales Visit Video Distribution Video Dubbing Seminar Trade press/ Journal advt

Total Launch Cost

NO NO YES YES YES YES

(Ineffective means of communication) (Cost too high relative to respo 96000 (Assuming 4 visits per week) 5000 20000 120000 (1 seminar per month) 19200 (Monthly journal)

260200

With the above mentioned strategies coupled with the uniqueness and cost saving features of MonoSpace it is not hard to expect that it can shake up the German market.