Barco Projection Systems:

Worldwide Niche Marketing

History of Barco N.V.
2400 employees.
Top 3 Worldwide manufacturers
Built first TV in
receiver 1. APCS
TV formed the 2. Graphics Art
bulk of its sales 3. CAD
4. Industrial Projection

1934 1948 1955 - 1975 1989

Started as a Grew rapidly and

producer of Expanded into
Radio broadcast monitor
Broadcast and professional
receivers video equipment
Barco’s 3 Point Strategy in the
1980s
Focus on top-of-the-line products in niche markets
1. Committed itself to becoming leader in a variety of
distinct, but complementary, niche markets
- Entered new activity only if it could be among the top 3

2. Strong commitment to R&D

- 8% to 10% of its annual turnover - 15% of company’s employees

3. Expand international presence in Sales, Product Dev.,

and Production
- Launched Global expansion campaign for acquisitions and JV
- Reorganized its seven autonomous divisions each with its own R&D, product
dev, production, marketing and sales
COMPETITOR
ANALYSIS
4 A’s of Marketing
• Sony’s ‘Superdata’ 1270 was a better product than BPS’
Acceptability
BG400.

• Sony’s ‘Superdata’ was cheaper by 20-40% as compared to

Affordability
BPS’ BG400.

• Barco was an industry leader in a niche market while Sony

Accessibility
had more diversification and bigger distribution channels.

• At Siggraph trade show in Boston, Sony’s projector seized the

first place as industry’s highest performing projector. Industry
Awareness had taken notice of the advantages of this new product.
Porter’s 5 forces model
Threat of new entrants
• Apart from industry leaders of the global projector market (Barco, Sony,
E.H & NEC) – the share of other players are insignificant.
• Projector market required a lot of investment in technical advances
(product development), 15% of Barco (Barco N.V) employees did R&D
and 8% to 10% of its annual turnover.
• Due to the entry barrier of high cost & technology involved, there was no
potential threats which could challenge the market share of industry
leaders like Barco, Sony, EH etc.
Bargaining power of suppliers
• Barcos sourced from Sony’s in-house suppliers even though they were competitors in
the projector market.
• Barco had no easy substitute to Sony Components. It was high risk, with low
negotiating ability. Trusting Sony Components for an important part of their scanner
made Barco vulnerable.
• They had to consider switching supplier because after Sony introduced 1270, Barco
was vulnerable to being sidelined in the market.
• Sony could have easily increased the prices of their scannercomponents or stopped
the supply altogether.
Threat of Substitutes
• Barco BG400 was the most advanced graphic projector in the market (till August
1989) with a scan rate up to 72 kHz.
• Sony revealed its 1270 “super-data” projector (Siggraph trade show, Boston) with
a better scan rate of 75kHz (reportedly 20-40% cheaper than it’s established market
rate) and was projected to affect Barco’s profits for and reduce them by almost
75% as per the projection.
• In Europe and North America, for Graphics, apart from Barco & Sony, Electro
Home was also used as a substitute. For Data, there was NEC as well as Electro
Home.
Bargaining power of buyers
• Barco customers were not very price sensitive because in those times, projectors were not
a common household commodity and mostly used in offices.
• Sony projectors were positioned below Barco’s in terms of performance (scan rate,
brightness, image quality, and resolution), and were, on average, 15% lower in price.
• Buyers of Barco products had to buy from Barco’s because their installation and after
sales support was not avaible else where.
• Until the announcement of Sony 1270 was introduced, Barco customers did not have
many substitutes available. Thus, overall, the Buying Power was quite low.
• With the advent of ‘Superdata’ 1270, this was about to change.
Industry Rival
% Market Share
8% 25%
8%

14%

45%
Industry Rival
• Most competition was limited to these players because of the entry barrier of high
technology costs.
• The products in the industry were prone to changes since the technology involved was very
dynamic and prone to changes.
• Barco customers were not very price sensitive because in those times, projectors were not a
common household commodity and mostly used in offices.
• This also gave distributors a good 30% margin and dealers used to offer large discounts.
• With constant advancement in computer technology, the projectors also needed updation of
their scan frequency rates.
SONY 1270

Expectations: Reality:
• Barco already had an idea that Sony was • Show Stealer
bringing out a new product • Power to scan - 75kHz
• Direct Competitor for BD600 • Major Market focus – U.S. and Europe
• Power to scan - 46-50 kHz • Placed in the market for high
• 10% to 15% lower prices performance graphics applications
• High brightness, image quality and • New 8” Sony Tube
resolution • Low Price Rumors - Placed in BPS’s
• SONY’s 75kHz graphics projector in data range, at 600,000 Bfr to 800,000
1990 (800000 Bfr) Bfr($15000 - $20000)
• introduce a 64 kHz digital upgrade of • Largest ever publicity campaign - 15000
BD600 (the BD700) customers, dealers and distributers had
• Threat of a industry losing a great deal of been invited to 1270’s preview in France
money
Option 1: Continue development of BD700 as planned

• Introduce BD700 in October for immediate production and delivery

• Sales were expected to increase by 25% incremental over the forecast
revenue of the BD600
• By September, 1989, $16,000 order had been booked by German distributors
• Completing BD700 for engineers’ and customers’ morale
• But, BD700 would not beat the 1270’s performance at the Infocomm show in
January 1990
Option 2: Use advances made in BD700
as springboard for BG700

• Estimated that BPS engineers could develop a graphics version in two to

three months
• Introduction of the BD700 would need to be postponed until December,
causing delay in its delivery to advance-order customers
• Reuse the same chassis, lens and tubes as intended for BD700 – reduced
additional input costs
• Not good for brand reputation – launching an inferior product (in terms of in
terms of light output, picture quality, and resolution)
Option 3: Develop and introduce BG800

• BG800 now had to be designed to surpass the 1270’s performance

• Require scanning freq. of at least 90 kHz and incorporating Sony 8” tube
• Inline with the company’s vision to be a leader in niche market
• 40% chance of making the deadline
• Overtime needs to be given to employees
• Feasibility of getting the special lens from Japanese firm is low
• Will require 80 person months – will indefinitely delay BD700 project
Thank you!