Kone Case Study
In order to achieve a successful product launch and gain market share within the mid-rise geared traction elevator market segment in Germany, KONE has got to develop and implement an effective pricing and promotion strategy that will appeal to general contractors and architects, who are the most influential decision making units within the market segment for the Eco Disc Mono Space power unit , as well as property owners and building service managers, without cannibalizing its existing residential low-rise hydraulic elevators sales.
In the EcoDisc MonoSpace power unit, KONE has a revolutionary product that if marketed correctly, could enable the company to dominate the mid- and low-rise elevator industry. However; world-wide construction slumps, low differentiation between products and strong competition within the market has resulted in a saturated and relatively static market in which new elevator equipment is often being sold at or below cost to price-sensitive customers and contributed to a 12% decline in KONE operating income from 1994 to 1995. KONE’s inability to effectively and efficiently educate the decision makers in France and the United Kingdom has resulted in tepid sales in France and none in the United Kingdom. Successful penetration of the German elevator market poses significant challenges for KONE: their sales people are outnumbered by larger competitors by “four or five to one”, the elevator market in Germany is projected to shrink 15% within 5 years, the decision makers who exert the greatest influence on elevator purchase are general contractors which operate within a highly fragmented industry which makes effective and efficient promotion more difficult and expensive, and following the end of the German construction boom, elevator prices have fallen between 5% and 7% in the preceding two years. KONE must devise a successful pricing and promotion strategy that will communicate the...