Kone Case Analysis

Autor: Joshua • March 2, 2018 • 1,585 Words (7 Pages) • 487 Views

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1. To prevent from unknown market need or unexpected constraints, we recommend KONE to visit current first tier customers in Germany and introduce MonoSpace©. By doing so, KONE can get feedback from German customers. With these feedback, KONE can test the product compatibility with German market and change the product design and marketing strategy if needed. At the same time, KONE could also ask these first tier customers to evaluate their product and try to get into bidding process. These engagements will become strong support when KONE start to talk to new customers.

After getting more understanding of German market and finalize product design, KONE can further officially launch MonoSpace© to public by holding launch events to all potential customers. During the event, KONE could build connections with customers and understand their needs, then start direct visit to customers who are interested in MonoSpace©. For those who doesn’t have express interest, KONE could follow-up with emails and phone calls to understand the reasons behind that and schedule time for future visit.

2. Based on the existing price of KONE products (Exhibit 2), we analysis possible costs and consider the benefits which gain from the feature of MonoSpace© in our calculation (Exhibit 3). As aforesaid, we propose MonoSpace should be sell on $68,000(USD) which is little bit higher than PH cost and lower than PU cost. In Germany, the proportion of low level elevator installation are 60% PH, 13%PT, and 27%PU. Therefore, KONE can approach potential PH users with safer and energy-saving product, and keep price advantage of PH at the same time. PU can be use in mid and low level building; hence it could keep its customers in different demands with higher price.

3. In German market, contractors and architects account for 50% and 40% separately in making final purchase decision. Therefore, Exhibition/Trade show and Trade press and journal advertising are the most direct methods to attract their’ attention about MonoSpace. Due to the unwillingness of changing architectural drawing, KONE should have sales visits to contractors. Although this approach may increase labor cost, it not only builds stronger relationships with contractors but also convinces them by face-to-face explanations. In order to increase new product awareness in public, KONE can use direct mail to wide spread the product information. This tactic aims at educating customers about safety issue by compare the features among different types of elevator, such as oil using by hydraulic elevator and energy saving by MonoSpace. After acquiring reputation of new type of elevator, this public awareness may further influent developers’ choice when building the new constructions.

Risk Mitigation

First, the German construction market is shrinking, which might contribute to the decrease in elevator demand. To avoid that, KONE have to monitor the market and customer financial results more frequently to capture the changes. Besides, KONE have to expand customer base to divers the risk of concentrate on few customers.

Second, KONE has disadvantage position in the market in terms of market share compared to Schindler, Otis and Thyssen. Once these competitors acknowledge MonoSpace© and come out with comparable product with lower price, KONE will face fiercer competition. To mitigate, KONE should capture more customers when launching products that leave less time for competitors to catch and increase customers’ switching cost. Besides, KONE should continuously visit customers to understand the changing needs and continuously improve its product.

Exhibit 1

SWOT ANALYSIS

STRENGTHS (Page 5 & 8)

WEAKNESSES

- Thin, lightweight materials

- No machine room needed

- Combined with geared traction features with gearless speed

- No oil required

- Energy efficient

- Better safety

- Less install time

- Less expensive energy cost

- Positive customer reactions

- With great company reputation

- Small size of motor

- Inaccurately analyzed different markets needs (UK, NL, FR)

- Some unanticipated worries

- Cannot be used in buildings with penthouses.

- Not suitable for outdoor use

- Cannibalization issue

OPPORTUNITIES

THREATS

- Long-term prospects

- Better Reputation

- Energy suppliers’ recommendation

- Competitors awareness

- Reduced price of traditional products

- No approval for huge amount of elevator installation from local government

Exhibit 2

KONE Existing Product Analysis