Over the past few months, many events have led Barco Projection Systems to

be confronted with an important decision:

Barco needs to continue its development schedule of the BD700 like they
planned, despite Sony’s release of the 1270. By making a quick and irrational
decision to drop all development on the BD700, they would likely gain back
their position on the market share but would endanger their reputation and
relationship to current customers, which is something more valuable than
competing with the new product. Even though they may not have superior
products, they can outperform Sony until they have time to develop a
superior product than the 1270.

Differentiation:
Differentiation includes “actually differentiating the market offering in order to
create superior customer value”. There are five main areas to differentiate:
product differentiation, services differentiation, channel differentiation, people
differentiation, and image differentiation.

Product Differentiation:
Product differentiation includes having superior features, performance, style or
design of the product to compete with the competition.
Currently, after Sony released the 1270, they have captured the market in
product differentiation. As Barco continues to work on a superior product they
will soon be able to one again excel in product differentiation, but at the
current moment they are not. They need to develop a product superior to that
of the 1270, which will take time and extensive research and development in
addition to searching for new suppliers. Barco is currently lacking in this
aspect of differentiation.

Services Differentiation:
Service differentiation includes making the product better than competition by
offering superior services to pair with the product. This is an area where
Barco needs to increase its time and energy, as it is the place where it can
outperform Sony. They could become more service differentiated by offering
complementary technician support service around the clock to all customers,
which is something Sony does not do. They could also continue to increase
dealer and distributor awareness and also offer to send educated specialists
to the different industries to offer instructional teaching sessions about the
projector to those at the company.

Channel Differentiation:
Channel differentiation includes outdoing the competition by being experts at
their channel’s “coverage, expertise and performance” (how well the business
is run...smoothly). Barco is currently doing an above average job in channel
differentiation because of their educated dealers and installation process.
They need to continue with this process and continue to educate their
technicians and dealers about their products in order to ensure that the
customers are satisfied.

People Differentiation:
People differentiation is when companies gain a competitive advantage by
hiring and training better employees than their competition. As stated
above Barco has prided itself on having educated dealers. There is always
room for improvement as they need to continue to hire more dealers and
technicians in addition to hiring new and networked employees in the
production aspect of the product. Barco needs new ideas in order
to compete with Sony and by hiring new employees to help
research and develop new products; they will potentially have a competitive
advantage.

Image Differentiation:
Image differentiation is the branding of the company. The stronger and more
well-known or recognizable the brand name is, the more of an advantage the
company has. Barco currently has a strong, well respected image, though this
may be lessened by Sony releasing its new 1270 projector. They have been
known as a company producing quality, high end projectors and will need to
release a new product in order to maintain that image. They have also always
had the image of a service oriented company which will be beneficial in this
time of turmoil and will help carry them through and maintain brand
recognition during this time.

As seen in the price and innovative technological benefits map, Sony has
captured the market share of having the most innovative products for a lower
price than Barco whose products are less innovative. This is posing an issue
for Barco as they are not able to compete with Sony at this current position. In
contrast in the customer service and price map, it is clear to see that Barco
has captured the market share of most customer-oriented products. The
deciding factor is how important this is to Barco’s current customer group. If
customer service and product knowledge is most important to them, Barco will
be okay. If not, Barco has a lot to lose to Sony who can offer higher quality,
more innovative products for a lower price.
Augmented Product:
The augmented product supports the actual product by offering additional
services to set it apart from competition and please the customer. Some of
these services include delivery and credit, after sale services, warranty and
product support.

Delivery and Credit:
Barco currently offers an extremely effective delivery
and installation procedure for its customers, which increases the intangible
benefits the customer gets from buying a Barco projector.

After Sale Service:

Currently Barco provides after sale support to their customers.
They should continue to offer free installation and setup of the new
projector in addition to instructional classes to those at the companies that
would be mostly in contact with the projectors for little to no cost to the
company purchasing the projector. Another service would be having a Barco
representative visit the company within the first six months after installation
of new projectors to make sure the company is satisfied and that everything is
running smoothly.

Warranty
:
No information was given about current warranties Barco offers,
but this would be an appropriate channel to pursue. By offering warranties,
this would increase customer trust and therefore customer loyalty.

Product Support:
One addition they could make to their current services would be to have a
certified technician on staff in all locations near the majority of their customers
for easy access. Barco has a pretty established product support system in
place currently, it would just be strengthening the one they have.

Actual Product
:
The actual product is the tangible creation that has features,
packaging, design, a certain quality level and one that supports and
strengthens the brand name.

Features
:
Barco products have provided superior features in the past but with
the release of Sony’s 1270, the special features in Barco’s current products
will be insignificant. This again is a special spot where Barco is able to sell
their customer service as a feature, something that is able to surpass Sony.
Then once they are able to develop a new product, superior to the 1270, they
will recapture the market with their special features.

Brand Name
:
the Barco brand name is one that is well recognized in the
market and well respected. They are known for their quality products and
service. Their brand name and reputations sets them apart from other
companies, especially their direct competition, Sony. Though Sony is able to
release superior products, they are still unable to compete with the customer
service aspect of Barco.

Packaging
:
Though packaging is an important part of marketing, it is not
considered important or applicable in this case. Nothing was mentioned in the
case study about packaging and since they sell to industries and not the
general consuming public, packaging is not considered a priority.

Design
:
The case study mentioned that Barco’s customers were sometimes
confused by the complexity of its projectors, though felt that Sony’s projectors
were easier to use. It is important for Barco’s designers to take note of this
and examine the layout and ease of use of Sony’s projectors. Though still
maintaining a unique design, implementing some of Sony’s ideas would be
beneficial to both Barco and its consumers.

Quality Level
:
Barco has prided itself on its quality products and services to
consumers. Even though their features may not be able to compete with
Sony’s new products, keeping a high standard of quality will
keep customers loyal and satisfied until Barco can release a new product able
to compete with the benefits of Sony but still being considered high quality
.
Core Customer Values
:
The core customer values determine what the customer is actually seeking
when buying the product. These include the benefits and services the
customer will have when purchasing the product, though the benefits can be
intangible as well. There are two main core customer values Barco’s
customers possess: high quality, top of the line innovative products and
customer service.
Through the recent transition with Sony releasing the 1270, Barco is currently
unable
to provide the latest innovation to its customers. Because of this, they will
need to provide even better service and quality products (as discussed
earlier).

In product development, there are seven different stages.

Up until the release of Sony’s 1270 projector, Barco had been successful in
implementing and fulfilling each stage. Ever since the release of Sony’s 1270
though, there needs to be significant changes in how they approach each of
these stages. In the generation of new ideas, Barco needs to hire more
research and development employees to think up of new, innovative ideas.
Then when the ideas are being screened, they need to be careful not to throw
out any ideas that seem “farfetched” yet would give them a competitive
advantage over Sony. It was in these first two steps that Barco slacked and
therefore gave Sony the competitive advantage over the market.
The next steps are required, but based upon Barco’s history and success in
the market they seem to be accomplishing these steps well. It is truly the idea
generation and screening that need to be closely examined and re-evaluated
for Barco to stay in the market.

III.
Conclusion
As shown in all the supporting documents, Barco is at a very risky point in
their career as a high end producer of projectors because of the advances
their direct competitor, Sony, has made. Barco needs to continue to release
their 700 line as planned, though in order to survive this setback they will need
to increase their intangible goods to the consumers while they work to develop
a product that is superior to Sony’s 1270. This can be shown through their
increase in customer service and employee knowledge of the product. As long
as they can continue to increase their brand loyalty and consumer satisfaction
with the product, they will survive this minor setback. Even though at the
current time Sony is able to offer more innovative products, Barco is still able
more customer support and satisfaction.
Q1) How would you describe the product line strategy of Barco vis-a-vis Sony? A
product line strategy is a strategy to develop an upgraded product to enable the
firm to control the largest possible market share. Barcos Product line strategy in
the 1980s and early 1990s was one that concentrated on segmenting markets by
scan rate and developing various products aimed at various industrial markets.Its
first product was a video projector for showing movies on airplanes but this
developed into more complicated computer compatible projectors and then to
graphic projectors which can handle CAD/CAM input. There final development
being into the digitally controlled projector market.

Sony’s’ product strategy is less aggressive than Barcos in that they only want to be
50% an industrial supplier and 50% a consumer supplier.It main concentration was
in Video projectors and its strategy was to undercut Barco in price but this came
with less superior quality also. Sony is not specialized in the projector market to
the same extent that Barco is and so their Product line strategy is less intense than
Barco and they are happy to not dominate the higher end market but to be suppliers
to Barco instead. This was all until a surprise launch of a hugely superior product
in August 1989 that overtook Barcos BG400 in quality and undercut it in
price.Sony’s strategy had suddenly changed to one where they wanted to expand
from being a mass producer of low-end products.

Q2) Did Barco make a mistake somewhere? Yes, their major mistake was to
assume that Sony would continue to respect their ‘vision’ of the market place.
They fell into a false sense of security assuming it would not over take them in the
market as they were suppliers to them also. Barco should have anticipated and
prepared for a new Sony product that would outdo their BG400, especially when
there was rumours’ circulating.They made the mistake of thinking that Sony would
just develop a product equal to the BG400, although they were already aware of
Sony’s development of a new 8″ tube that was of superior quality. It was obvious
that this 8″ tube was being developed for a reason and Barco failed to anticipate the
implications of this development in a new product.

Q3) Should Barco alter its current pricing strategy? I don’t think that Barco should
alter it pricing strategy because like the case says they would not be able to win a
price war with Sony.
Instead they should continue to market themselves as a high-end product as well as
developing their projectors further to compete on a technological level. Barco
could engage in a new advertising campaign to re-instil their image as an upmarket
product and they could also improve customer service and after sales service to
gain competitive advantage. Whatever Barco decided to do in response to Sony’s
1270 they should not engage in a price war as this would ultimately lead to failure.

Q4) Where should Barco focus its product development efforts?I think that with
only a 40% chance of the BG800 making the Infocomm deadline that Barco should
not pursue the risky venture of putting all other development projects on hold to
just concentrate on this product. This is further true as they do not know when
Sony’s 1270 will reach the market, what the price will actually be and what the
customer reaction will be.

Instead I think that Barco should continue with its current product development
efforts and tackle the treat form Sony by difference means such as later developing
a competitive product, concentrating on customer perception, advertising and
customer service.

SWOT
Analyzing the Barco’s superiority from the case, it’s show that Barco has two big
markets: the United States and Western Europe. From the Table B Geographic
Segment Growth, Barco has 50% units in the United States and 36% units in the
Western Europe 1988 and the predicted annual growth of each are 9% and 11.5%
from 1989 to 1994. And the weakness part is the relationship with dealer. Barco
hasn’t the system dealer who know-how of integrate and install equipment packages.
From the Table D BPS’s Pricing Index, BPS has 41% direct cost and 59% gross margin,
and this is the high margin. Existing dealers liked to sell BPS’s products. But BPS’s
product is complexity. “In 1989, few dealers could survive without the Sony volume;
an estimated 80% to 90% of professional audiovisual dealers worldwide Sony
products because of reliability and low price among dealers” (p. 244). Sony has a lot
of dealers and good for his product selling. The opportunity of Barco’s products are
high technology and famous brand in the worldwide of projectors. Barco can
develop “high-end” product BG800 or upgrading BG700. The threat is Barco need to
scrap BD700 production. It means they lose a lot of money and need more time for
the new “high-end” product development. And they will lose a lot of market share
from their competitors. If the BG800 are not fit in the market, Barco will lose and
never come back.