Since KONE Monospaces main new markets in Europe were the Netherlands,

France and UK where the low cost elevator sales made up a major percentage of
total elevator sales it was obvious that the company had to go after these
markets. The prevalence of one star construction and low quality elevators in UK,
two and three start construction in France and Netherlands meant that KONE had
to go for value cost optimization.
KONEs pricing in my opinion was well planned as although they were at
par with the comparatively expensive geared traction elevators they had the
value proposition of saving up on the machine room. The testament to their
pricing strategy was how they gobbled up market share in the Netherlands. They
had hit the sweet spot by getting their pricing right.

Pricing Strategy of Monospace in Germany:

For their Germany launch if the Monospace elevators can be priced aggressively
than the more expensive geared traction ones then they can be within the reach
of property developers and contractors who take the decisions most of the time.
The cost sensitivity of contractors, less space requirements and shorter
installation time have to be taken into account and thus it has to be marketed in
such a way that they deem to it be a convenient choice without much frills. By
having competitive pricing and the right marketing mix KONE Monospace
elevators can be successful as a new entrant in the German market.
Price levels for KONE low rise elevators ($)
PU
Market
PH(Hydrau PT(Tracti
( Traction Mono
Share
lic)
on)
)
Space
Netherlands 40%
40625
38750
42500
43125
France
14%
30000
36000
UK
20%
24308
46154
47308
Assuming that there will be no transfer pricing for Germany
30000
to
Germany
8.5%
36000
Here we have assumed the price level for Monospace in Germany similar to
that in France since Managers at KONE Brussels Head quarters had suggested
that the product should be priced above existing prices if KONE held less than
15% market share
Moreover we suggest that KONE keep the price of Monospace on the lower
side, keeping in mind that the German market like in the UK is going to be
price conscious due to an ongoing downturn and also since Customers maybe
initially reluctant to migrate to the new product due to the existing EU
regulations

GROUP-11||KONE Elevator Case

Positioning Strategy of Monospace in Germany

Keeping Ecodisc as low end would encourage customers to upgrade from

hydraulic to Ecodisc, because of cost benefits thus cannibalizing the
existing product line.

Positioning Ecodisc top of line above the gear traction can be a risk since
customers are looking for mainly the cheapest alternative not the added
benefits a new elevator technology can provide.

Ecodisc as an alternative to hydraulic elevators in German market

consisting of 60% share is not a good decision since the general contractor
makes the final elevator decision 50% of the time and they may have
been looking for the cheapest option.

Marketing the product between the hydraulic and the geared traction or
positioning it as top of the line. The positioning should be such that the
hydraulic should be KONEs low end model. Rather KONE should position
and market the eco Ecodisc as an alternative to the existing geared
traction elevators. Even though this is a smaller market, some people will
always be in the market for the lowest price alternative rather than selling
short by offering it as an alternative to hydraulic systems.

Promotional Strategy of Monospace in Germany:

Focus on is the lifetime cost savings to the group of customers looking for
a better alternative than the geared traction.
Having energy companies offer rebates to the customer for a specific
amount of time to promote environmental sustainability.

Marketing and appealing to the groups looking for overall costs and
creating a pull strategy by these people. This would enable by-pass the
construction companies who dont really see the environmental cost
savings.

Contacting clients and then presenting the material face to face. This
seemed to be effective method where questions raised could be dealt
right away.

KONE can continue to use the marketing kit. This has all the benefits in
one convenient package.

Other launch options that can be used are the direct mail (to invite customers to
presentations) and make use of the architectural journals. Not only would this
help to bring in business but it would also show that the product is in the market
place. Even if someone were not in the market right now, when he or she was
ready the Ecodisc would come to mind.

GROUP-11||KONE Elevator Case