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Kone Case Study

1060 words - 5 pages


THE MONOSPACE Launch In Germany.


EEPM : 04

Nov 1996 Raimo Hatala- Director of Konie
Construction Industry slump, Low Differentiation among competiton, lead to low pricing and low margin in the Industry.
Margin of Kone came down to 6% of turnover in 1st 8 mths of 1996.

New Revolutionary Pdt- MONO SPACE.
Concern of Raimo Hatala
Size of Monospace in Germany.How to Price & position Monospace.How will it canabalize Sales of KoNes Existing Low ise elevators.Launch strategies?
Elevator Industry:
Mainly dominated by 5 companies..New Equipment mkt accounts for : 9 Billion Dollar & Servicing mkt for : ...view middle of the document...

KONE MONOSPACE: Machine room not required and replaced by ECO Disc, and high comfort. 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

The Lauch of Monospace is very important for KONE:
Value addition, Slumping Profit and Market share.
Take away on successful Launch og MONO Space in Germany:
It will help Kone in gaining a significant market share and establish itself as a leadinginnovator and technological superior company.
As it has a better margin than existing elevators, it will help Kone in increase its profits.
It might cannibalize other low price elevators that have been offered by Kone.
It will give an early mover advantage to Kone in this new, energy saving, and comfortableelevator segment.
Implications of failure 
If the product fails, it will be huge loss in terms of capital invested in advertisement activitiessuch as road shows, seminars and other PR activities.
It will reduce reliability of Kone in the market as it cannot develop a successful product even after investing large amount of money.
Need to compensate the unsatisfied customers who have already purchased the Monospace e levators.

If Monospace launch is successful, companys 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 companys 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.
Test Market Launches:Unit sales and Market share Units KONE Otis Schindler Thyssen

Comparison of German market with respect to other markets
Saturated market and construction slumping Germany led to fall in demand for elevatorequipment 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...

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