To Mr Erik DejongheRe Recommendation for a suitable response to Sony s introduction of the 1270
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Recommendations
To counter the threat of competitor actions, I recommend that Barco move along the following three dimensions.
Pricing.
Approach to New Product Development.
Customer Orientation.
Pricing
Short Term
I do not recommend Barco responding to the competitor's actions in an overtly aggressive way by resorting to a price war. While this may win some market share in the short-term, based on the information given in this case and the unique supplier relationship it enjoys with Sony, a weak Sony is also not in the best interests of Barco.
Having said that, it is essential for Barco to immediately lower the price of the BG400 in price-sensitive markets like Europe. This will pre-empt any loss of market share that would have occurred if the price would have remained unchanged and offset any price-advantage that Sony may have.
Long Term
It is obvious that Sony wants to break out of their image of being a mass producer of low-end products and is trying to gain market share in the data and graphics segment. Keeping this in mind, for future products, I recommend that Barco uses a pricing strategy that "skims" the market if it is an innovator...