1. Introduction Kone is currently facing a precarious financial situation in an industry that competes on price rather than differentiation. Should the situation persist‚ losses for 1996 will be imminent. With the launch of Kone MonoSpace in Germany‚ however‚ the company hopes to make profits as it expands its product line in this very critical market. Germany’s elevator market is the largest in continental Europe and with a market size of 15‚500 units in 1995‚ it is more than the market sizes of
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KONE: MONOSPACE LAUNCH IN GERMANY Factors contributed to the launch performance of KONE on the Netherlands‚ France and UK? When launched‚ sales of KONE’s Monospace was the highest in Netherlands‚ then France and in UK none was sold in the first 3 months. Monospace is an elevator invented by KONE using the latest technology that uses an “EcoDisc” that eliminates the use of a machine room and further incur significant energy cost savings for the building management. It is an upgraded version for
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KONE: The MonoSpace Launch in Germany Nature of the Situation: KONE Aufzug is the Germanic branch of KONE from Finland. During November 1996 Raimo Hätälä‚ the New Elevator Business director‚ was planning to launch a new product in the low-rise building market. The elevator industry in Germany was highly competitive and mature. From 1995‚ when the construction boom ended abruptly‚ until 2000 they expected the demand to shrink by 15%. This provoked the prices to fell between 5% and 7% in 1994
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accounted by hydraulic elevators. Hence‚ Monospace has a significant opportunity in Germany. Also‚ the production costs of both were comparable. Success in Germany depends on the increase in the sales and service revenue from Monospace. Even if Monospace loses due to sales in the short run‚ their overall profit can increase with the accompanied service. Successful launch will help eat out the share of the ‘other’ service providers as KONE alone knows the know-how of the disc
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Mβ K eta Kone: MonoSpace Launch Going Up or Down? Table of Contents K Mβ eta β. β. β. β. β. β. β. β. Background Illustrative Product Monospace vs. Competiton Marketing Plan Test Markets & the German Difference Implications of Success or Failure Competitive Reactions Kone Weakness Managed Background KONE - The world’s third largest elevator company‚ after Otis and Schindler Sales 13% K Mβ eta - 1995 KONE’s revenue: $2.2 B (38% from V1‚ 62% from V2 (78% maintenance
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global competition‚ KONE developed the Monospace elevator that uses revolutionary technologies and has the potential to create a blue ocean opportunity that will help sustain financial profits in the short-term and may lead to significant growth in sales and profits over the long-term. TARGET KONE was to launch the Monospace in the low-rise residential elevator market in Germany‚ which was its largest country market in Europe and vital to its overall success. If the Monospace launch is successful
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Major Issues KONE‚ world’s leading elevator and escalator‚ based in Finland‚ was established in 1910. The firm is the fourth largest manufacturer of elevators worldwide‚ a leading manufacturer of escalators. They started out with the repair and sale of rebuilt electrical motors. It expanded its business to include the manufacture and sale of steel‚ maritime equipment‚ cranes‚ wood handling systems and clinical chemistry analyzers. By 1995‚ after a series of 19 acquisitions‚ KONE became the world’s
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KONE: Final Exam 1996 – KONE was about to launch Monospace BUT: region-wide construction slumps & low differentiation among competitive offerings = significant price competition & margin erosion in the industry. Now‚ CEO was looking for an opportunity to grow with Monospace. Pricing Positioning Cannibalisation of own products? The elevator industry (new equipment & services) Number & types of elevators depended on urbanisation‚ population density‚ government support for public housing
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Exam case KONE: The MonoSpace Indledning KONE - The world’s third largest elevator company‚ after Otis and Schindler Sales 1995 KONE’s revenue: $2.2 B (38% from V1‚ 62% from V2 (78% maintenance‚ 22% for modernization) 1. What would be the critical factors of success in the German market? 2. What should be KONE’s value proposition? 3. What can be learned from the test market and launches in the other three countries? How does the German market (and KONE’s position in and approach to it)
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| KONE CASE HBS Purpose of the Report KONE Aufzug’s elevator business was suffering from region-wide construction slumps‚ increased price competition‚ and margin erosion within the elevator industry. Their operating income was falling significantly and they projected to report after –tax income of zero earnings in the next year. Raimo Hatala‚ director of KONE Aufzug’s elevator business‚ knew he had to introduce a new product to revolutionize the elevator industry and increase KONE’s downward
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