KONE:The Monospace Launch in Germany
International Management Institute, New Delhi
In order to enhance its financial position in a saturated elevator market and intense global competition, KONE developed the Monospace elevator that uses revolutionary technologies. It has various benefits, such as being the most energy efficient, not requiring oil and therefore eliminating fire and environmental hazards and its lower installation time.
1. Importance of Monospace launch for KONE and implications of success or failure
The launch of Monospace is very important for Kone. The reasons can be summarized as following –
• Value addition – The ...view middle of the document...
• It will reduce reliability of Kone in the market as it can’t develop a successful product even after investing large amount of money.
• Need to compensate the unsatisfied customers who have already purchased the Monospace elevators.
If Monospace launch is successful, company’s worsening financial position will improve and its market share in residential elevator market will improve. If it fails, company will further incur financial losses and hence company’s future growth strategy will get affected. The pricing and product positioning strategies set for Monospace in Germany would have a significant impact on the long-term success prospects for KONE.
2. Test Market Launches:
Unit sales and Market share
Units KONE Otis Schindler Thyssen
France 7000 14 41 20 18
UK 3300 20 30 10 10
Netherland 2100 40 19 13 6
Learning from the test market launches
• Target the major influencing group, i.e. energy suppliers.
• Target the architects and general contractors.
• Communicate the benefits of the new technology by print, electronic media and personal meetings.
• Before attracting the customers, install the pilot plants.
• Focus on the activities of competitors and work accordingly.
• With the low rise builders rarely using scaffolding and use cranes, we need to focus on which segment to target.
Comparison of German market with respect to other markets
• Saturated market and construction slumping Germany led to fall in demand for elevator equipment by 15 percent
• Price sensitive customers due to market saturation
• Skimming pricing strategy will not work in Germany
• Also quality, efficiency, and service oriented customers
• Legal approval for Monospace to be installed in every state throughout the country
• Government does not subsidize the elevator industry
• Property developers consistently used the bid process to pressure contractors for price reductions.
Monospace benefits, such as being the most energy efficient, not requiring oil and therefore eliminating fire and environmental hazards, as well as its lower installation time will appeal to German customers, who are not just price sensitive, but also quality, efficiency, and customer service oriented. Price skimming strategy, which is successful in other countries can¶t be applied in Germany, where consumers are extremely price-sensitive due to market saturation.Rather, KONE should price the Monospace similar to products offered by Schindler and Otis, but emphasize on Monospace benefits.
3. Launch Plan of Monospace
KONE was to launch the Monospacein the low-rise residential elevator market in Germany, which was its largest country market in Europe and vital to its overall success.Basically KONE has two options.
1. They could market the product either in-between the hydraulic and the geared traction
2. They could position it as top of the line
4. Monospace fit relative to product lines
Based upon above mentioned two options of Monospace launch plan, KONE...