Kone Case - B2b Marketing

Wilson Tanudjaja & Justin Zak

KONE Case Small Team Memo

M-407 / Section 32102

Joshua Gildea

10/6/2016

INTRODUCTION STATEMENT

The purpose of this memo is to provide the corporate management of KONE with the pricing, positioning, and launch strategies of the MonoSpace product into the German market.

BACKGROUND

Lack of differentiation in the elevator industry has caused concern for the KONE management. However, the invention of the EcoDisc that leads to the birth of the MonoSpace, is a valuable innovation that can create potential profit gains for KONE. Utilizing the experience that has been gained from the launches of the new MonoSpace elevators in Netherlands, France, and United Kingdom, KONE aims to seize the opportunities in the German market. It is important to note that Germany has the biggest market size compared with the previously mentioned countries; this means that successfully gaining share of the market would translate into a great deal of profitability. KONE aims to capture at least 15% of German elevator industry by the end of year 1999.

RECOMMENDATION

1). Set the starting price of MonoSpace at DM 130,000 prior to reaching the 15% market share mark and adjust price accordingly once the objective is met. The market share objective is shown in Exhibit 1.

2). Emphasize MonoSpace’s launching/marketing efforts around road show, sales visit, and trade press/journal advertising.

• Hold 12 road shows in a span of 18 months
• Make 4 sales visits per month
• The option for the journal advertising is one-page advertisement in a weekly journal with a circulation of 31,000

3). Position MonoSpace as a leading technology product that is based on innovation through the launch media being utilized.

• Emphasize energy saving (one-third of the energy required by a comparable hydraulic system), safety (absence of oil eliminates potential fire and other environmental hazards), efficient use of building space (machine-room-less elevator justifies the benefit)

BASIS FOR RECOMMENDATION

Basis for recommendation #1 – DM 130,000 is the best starting price on the basis that MonoSpace is a one-of-a-kind, premium product that is based on recent innovation. Also, KONE has to price MonoSpace higher than the type PS traction (which starts at DM 120,000) as the firm wants potential customers to perceive MonoSpace as the most valuable offering that the firm currently offers. More importantly, the pricing helps to set the stage for the long-term performance of MonoSpace; this creates a perceptual map in the mind of consumers, guiding them to realize the value that they obtain from its purchase. Once the objective is met, KONE can reduce the price of MonoSpace in order to elevate its negotiating capability and further increase market share, knowing that firms in the elevator industry have to compete on price at some point.