KONE Version 1.0

KONE MONOS MONOSP PACE Group 8

DEVELOP A DETAILED MARKETING PLAN FOR LAUNCHING THE MONOSPACE MONOSPACE IN GERMANY. GERMANY. SET A PRICE FOR THE MONOSPACE (TO FACILITA FACILITATE TE COMPARISON WITH PRICES OF EXISTING PRODUCTS AS GIVEN AT AT THE BOTTOM OF CASE PAGE 4, PRICE A LOWRISE,4-FLOOR ELEVA ELEVATOR) AND SPECIFY S PECIFY CLEARLY HOW IT IS TO BE POSITIONED RELATIVE TO THE CURRENT PRODUCT LINE (PH, PT, PU, OR PS). BASED ON THE PRICING AND POSITIONING DECISIONS, PROPOSE A MARKETING AND SALES EFFORT. JUSTIFY YOUR DECISIONS AND INVESTMENTS WITH ANTICIPATED SALES AND THE ASSOCIATED CONTRIBUTION RELATIVE TO THE AMOUNT YOU PLAN TO SPEND.

PRICING PRICING STRATEGY STRATEGY Factors for deciding pricing  legal approval for MonoSpace to be installed in every state throughout the country, ry,  the companys objectives for differentiation and brand building,  the f  act act that the government does not subsidize the elevator industry, ry,  as we well as the headquarters suggestion to price the MonoSpace above existing prices if KONEs market share was less than 15 percent,

These indicate that KONE should implement a skimming pricing strategy. Results from similar mark rke ets, such as the Netherlands and France, signify this to be a successful strategy. However  , it

didnt work in UK given the price sensitive nature of Consumers.

Situation in Germany is similar where consumers are also extremely pr price-sensitive due to mark rke et saturation

POSITIONING IN GERMANY Energy eff  icient, not requiring oil ici Eliminating f  ire and environmental hazards, Lower installation time. Quality & Service Nature of German Consumers  price se sensitive,  Want quality & eff  ici iciency  Customer service or oriented.

Marketing Kit Monospace Concept Brochure Two powerpoint Sales Presentations, one directed at builders, architects & owners & a technical one for consultants & training purposes Trade Press Releases

Building & Planning Guides with a front line CAD rendering

Monospace architectural Specif  icati ications

Marketing Resources Direct Mail: To architects, investors & general contractors Launch Eve Events: Road Shows used by large players Customer Visits (most tried & tested) PR Activities around national & local presses Annual Costs Direct Mail for 150000 customers

209790.21

Sales Visits double the Salesforce

5202797.2

Road Shows - 4

839160.84

Press 12 weekly & 12 monthly

47832.168

Total

6299580.4

PRICING Price of $45000 Kone Share PH+PT

Price of Price of  Price of Price of Price of Price of  $40000 $30000 $35000 $32000 $31500 $31000 2424.2

Revenue Excess available for Marketing Spend

2375.716 10690722 9502864 7127148 8315006 7602291 7483505 7364719 0 0 0 0 2 4 6 2726472 3507563. 1538614 39143304 4 9 4 8258996 7071138 5883280

Marketing Costs

6299580. 4

Excess Revenues

2096514 771557. 32843723 3 -2792017 9086563 1959415 5 -41630 -416301 1

Price between $31000 & $31500 wou ld break  eve n the assumed Sales Effort / Marketing Costs

HOW IMPORTANT IS THIS PRODUCT LAUNCH FOR KONE? WHAT ARE THE IMPLICATIONS OF THE SUCCESS SUCCESS OR FAILURE FAILURE OF THE THE MONOSPACE LAUNCH?

Importance of Monospace for Kone Germany was a key market and Monospace was the 4th largest provider in the market

Kones operating income was drastically f  alling alling

Early test Markets had mixed reactions, only Netherlands was a success.

Germany was a key market for KONE where it was the fourth largest player

Product positioning could make or break the game for KONE. Since it was a f  irst of  its kind innovation, references of successful installations were needed for KONE to market it to other countries.

Implications for Success Price 1.  C apability to charge a premium 2. At the same time give some value/ savings to the Customers 3. Ability to maintain some margin in a market showing negative growth rate

Positioning 1. Positioned as High Tech Provider 2. Position itself  as a true Global Player 3. High product differentiation, no competitor to the product 4. Being a new technology, more Serv ice Contracts

Reach 1. Reach out to Construction companies which were hard to convince with their space utilization proposal luencer 2. Energy suppliers, an important inf  group recommended Monospace

Implications

Failure Financial Condition would worsen further  Reputation would be lost which could ffe ect other European marke rkets aff  No chance of  improving or operating in other marke rkets also

WHAT CAN BE LEARNED FROM THE TEST MARKET AND MARKET LAUNCHES IN THE OTHER THREE COUNTRIES?

Test Markets France

UK

 Two & Three Star Buildings  80% low rise hydraulic, 20% geared traction  Sales focus on Newspaper Ads, TV Programs & Breakf  ast meetings  Individual presentations for large clients  Only 40 units sold in f  irst 3 months

 One star & Five Star buildings  90% Hydraulic Elevators, only 10% low rise Sales  Marke rketing Focus on technology through presentations at the London Science Museum  No units sold even one month af  ter the launch

Netherlands  Two & Three Star Buildings  60-70% Geared Traction  Marke rketed through Individual Customer meetings, publishing articles

& CD ROMs  Won marke rket share in 10 months

Learnings Savings were not valued in Netherlands but were sought af  ter in France & UK. T hese could be as much as 5% of  the total construction & installation costs

Energy Suppliers were a big inf  luencer in Netherlands who had not been considered by KONE

The Warning label : There was need for a an Upfront communication about where Monospace could be used & could not be used Cost Savings from Monospace were ere not a USP in France & Netherlands as it was passed to the developers. Could be used in UK as there was price sensitivity. Thus Positioning & Pricing needs to be changed in different countries. Single Supplier Worries: Monospace was the only product that didnt require a machine room. So bargaining power of KONE was very high. It needed to convince Clients with emphasis on Relationships & long term partnerships Netherlands installation was doing well. Such a model should be followed everywhere as its a proof of  concept

HOW DO YOU EXPECT EX PECT COMPETITORS TO REACT TO YOUR LAUNCH PLAN? HOW DO YOU PLAN TO MANAGE MA NAGE COMPETITORS REACTIONS?

Reactions  & Management Give negative feedback to customers emphasizing on flaws. Awed by product since has comfort as geared and price as hydraulic. hydraulic. Also, half the energy consumption as geared. Competitors(Otis, Schlinder) might get into price wars. Otis : Tried the product in past but could not succeed so might re launch the product with better technology Kone should not reduce prices since benefits derived can be easily overcome by deep pockets pockets of competitors. Kone still needs Government to pass regulation for its architecture. Competitors can reduce cost and customers may may not see any added benefits in such a case. OTIS can improve on its replica of MonoSpace and come up with a better offering. A relatively less premium will ensure that Kone enjoys a market capitiliztion for a longer duration. Most of the revenue is derived through through Services; hence it should focus more on Services revenue.

HOW DOES THE GERMAN MARKET (AND KONES POSITION IN AND APPROACH TO IT) DIFFER FROM THE OTHER MARKETS?

WHAT WHAT ARE THE IMPLICATIONS IMPLICATIONS OF THESE DIFFERENCES FOR TRANSFERRING EXPERIENCE GAINED IN THE OTHER MARKETS?

German Marke rket Vis-à-vis other Marke rkets Market is already saturated due to overcapacity. So pr p rice sensitive consumers & Demand is expected to decrease by 15% by 2000 20% Market dominated by 4 construction companies & rest among 20,000 small contractors. Tremendous opportunity to make a mark Dominated by Residential Construction  6 0% Hydraulic & 40% Geared Traction.  I mplies a good m arket potential for EcoD isc

KONE was reactive rather than being proactive Market was Quality conscious The Construction Company Manager was the POC  & Pur chase decisions were inf  luenced by  Qu alit y & Relevance of  Inform ation  Level of Service  Des ign of Bid document  Customers impression of  the Salesperson also affected Purchase decisions

Af  ter the deal was signed, the Purchasing Manager became the POC

Implications Implications for KONEs ONEs Approach Firstly, KONE needs to change its positioning based on Germanys aff  iliati iliation towards Quality, Service & Technology 

Type of Salespeople have to be different before the deal is signed & later on as the POC changes in the Client organizations Proactively approaching clients may help in building market share ic ice might be a good Demonstrations as followed in the Netherlands off  idea

The Proposition should clearly communicate the emphasis on Long term Partnerships & Collaboration luence group if  involved in Decision making needs to be Any other inf  checked out like Energy Suppliers

WHERE DOES THE MONOSPACE FIT PRICE- AND PERFORMANCE-WISE RELATIVE RELATIVE TO KONES AND A ND ITS COMPETITORS CURRENT PRODUCT LINES? OR, DOES IT POTENTIALLY CHANGE ANYTHING? IF YES, HOW? WHAT WHAT ARE THE SHORT-TERM SHORT-TERM AND LONG-TERM IMPLICATIONS IMPLICATIONS OF O F YOUR APPROACH?

A COMPARATIVE

Does it change anything? Disruptive Innovation Competitors will leverage advantages they enjoy  Financial muscle  Scale

Price War? Increased expenditure on R&D

A Lot of Attention on KONE

WHAT WHAT KEY WEAKNESSES IN I N KONES CURRENT CAPABILITIES CAPABILITIES WILL NEED TO BE MANAGED TO ENSURE THE SUCCESS OF THE PRODUCT LAUNCH?

KONEs Weaknesses Sales force limitations  Smaller sale force than major competitors  Proactive Selling Approach  Sales force effort aligned with clients DMU

Limitations of  the Product Ecodisc  The Mono Space cant be used in building with penthouses because of  the temperature (it means less oppor tunities)  It was also unsuitable for Outdoor Use  This has to be taken care of  in the positioning & communication mix

Weaknesses can be taken care of  through a better Sales Strategy including Sales force organization & Communication mix