group 3 kone

7/31/2019 Group 3 Kone

1/13

Presented by :

Group 3

Nila Lohita (PGP/14/284)

Rohith Acharya (PGP/14/292)

Santanu Chowdhury (PGP/14/297)

Vardhan Singh (PGP/14/311)

Mukesh Meena (PGP/14/219)

KONE: The MonoSpace Launch in Germany


2/13

German Low Rise Elevator Industry

The Hydraulic PH elevator has a market share of60%

The traction PT and PU elevator have market shareof 40%

Demand for elevator equipment is going to shrink by15% by 2000

Choice of elevator is not an important aspect forconstructors as not much price can be obtainedduring selling or renting of apartments

Market is highly price sensitive and is facing a cut

throat price war among competitors Buying decision is mostly taken by general

contractor (50%), architect (40%) and propertydeveloper (10%)

The contractors are high in number (around 20000)


3/13

Elevator Features and SpecificationsAttributes Hydraulic PH Traction PT Traction PU Traction PS Monospace

Speed(meters/s) 0.63 1 1 1 1

Load(kg) 630 630 630 630 630

Motor Size 11 5.5 5.5 5.5 3.5

Main fuse (amp) 50 35 35 35 15

Energy Consumption

(KW)7500 5000 5000 5000 2500

Oil requirements 200 3.5 3.5 0 0

Weight (kg) 650 430 430 430 190

Machine Room (m

square)5 11 11 11 0

Roping Arrangement Simple Simple More complex Most Complex Simple

Price (DM) 60000 75000 80000 120000-200000 ?


4/13

Monospace Value Proposition

Frees up space giving architectural freedom or

revenue generation

EcoDisc gave elevator ride comfort similar to

gearless drive system

EcoDisc is extremely energy efficient compared to

hydraulic and traction thus saving on energy cost No potential fire and environmental hazards as it

doesnt use oil like hydraulic elevators

Installation time is 60hrs less than the simplest

elevator thus saving on set up cost


5/13

Monospace Marketing Plan

Product:

POP Attribute wise Monospace is very similar tothat of Traction elevators in terms of elevator speed,

load, motor size, oil requirements

POD No machine room requirement, low energy

consumption, low set up time, simpler ropingarrangement and low weight

Fire and Environmental hazard free

Position it as a better elevator than both traction and

hydraulic highlighting the PODs


6/13


Price:

As the Monospace saves lot of space which can beutilized and has a very low energy consumption rate,

it can be priced at par Traction PU elevators i.e., DM80000

The customer can benefit from the low operatingcost (electricity cost), low set up cost (60Hrs saving)

and utilizing the machine room space for renting or

selling

This price will capture the traction elevator marketand also lure in the hydraulic PH market (60%)

specially the replacement market due to the value

proposition


7/13


Place:

The German construction market is dominated byresidential construction

The proportion of elevator units in low rise residentialapartment is 74% and is not expected to changemuch

So the place of launching will be Germany and thetarget segment will be low rise residentialapartment

Promotion:

Face to face, relationship based selling for the 4large contractors and architects - giving discounts forword of mouth publicity

Advertisement in building and architectural journals

for architects


8/13

Monospace Market Estimates

The market is decreasing at a CAGR of3.2%

An optimistic assumption that Monospace willcapture 10% market share of Hydraulic PH in the

first 2 years followed by 15% in the next 2 years and

finally 20% in the last 2 years

As Monospace is similar to Traction, it will capture25% of Traction PU market share in the first two

years, 30% in the next 2 years and finally 35% in the

last 2 years

As Monospace price is kept close to the Traction PT,it will capture 15% market share in the first 2 years,

20% in the next 2 years and finally 25% in the last 2

years

The estimate of market share shows that


9/13

Monospace Market Estimate

Market Details

1995 1996 1997 1998 1999 2000

Total Units 15500 15004.29 14524.44 14059.93 13610.27 13175

Hydraulic PH 9300 9002.575 8714.661 8435.956 8166.164 7905

Traction PU 4133 4001 3873 3749 3629 3513

Traction PT 2067 2001 1937 1875 1815 1757

Monospace

Share in

Hydraulic PH930 900 1307 1265 1633 1581

Share in

Traction PU1033 1000 1162 1125 1270 1230

Share in

Traction PT 310 300 387 375 454 439

Total 2273 2201 2856 2765 3357 3250

Market Share 14.67% 14.67% 19.67% 19.67% 24.67% 24.67%


10/13

Monospace Revenue Estimates

Revenue is obtained from both V1 and V2 sources

For V2, 80% of the V1 sales will be available forservice contracts

Service contract revenue is worth 1.7 times the sales

revenue

A marketing spend of around 5 million DM in the first2 years will fetch a sales of 490 million DM in first 2

years

In subsequent time, the advertisement spend can be

decreased as the elevator sells mostly on word ofmouth

('1000 DM) 1995 1996 1997 1998 1999 2000

Revenue 181866.7 176050.3 228517.8 221209.5 268576.1 259986.7

Revenue from

service309173.3 299285.6 388480.2 376056.2 456579.3 441977.3

Total Revenue 491040 475335.9 616998 597265.7 725155.3 701964


11/13

Competitors Possible Reaction

Competitors are large in size and have deep pockets andany erosion in market share will result in tough reaction

Competitors can cut price of the existing models ofhydraulic PH and Traction PU and PT (V1)

Competitors can cut the price of after sales service (V2)

Competitors can imitate the Monospace and launch

similar products in the marketKONEs response:

Price cut of competitors can be thwarted by showing thevalue proposition of Mono Space- reduction in operatingand set up expenses

A cut in after sales service price can be initiated fromKONEs end as retaliation to the competitor steps

First mover advantage will help KONE to produce moreunits and lower the cost of production through economies

of scale


12/13

Weakness in KONEs Capabilities

The main channel of promotion is face to face,relationship based selling of elevators and word of

mouth as the decision makers are highlyfragmented

The Sales force of KONE in Germany is too small toachieve the forecasted sales figure (23 full time and

20 half time employees) Less presence in advertisements specially mass

media

Decreasing profit margin will make it difficult to

support a large marketing campaign for Monospacein the first year

Managing the Weaknesses:

Recruit efficient sales person both full and half time

Advertise in mass media to spread the value


13/13

Thank You

group 3 kone

Documents