The European elevator company was established in early 1900 and had its headquarters based out in Helsinki and Brussels. The European elevator company was a respected company in the elevators and escalators industry and had been operating in this industry from its inception. The European elevator company amongst the 3 largest elevator company in terms of its revenue and market-share. The European elevator company revenue was primarily from two sources – one sale of new equipment (~38%) and services (~62%).
The global elevator industry had been under consolidation phase. There were three market segments in the industry at that point in time, the small size elevators, medium rise elevators and high rise elevators. With construction industry looking at a slump, there is a fall expected in the demand for elevators. Most of the industry demand (~75%) is from the small size segment. With falling demand, the competition was becoming aggressive but was not able to make profits on their revenue (both Otis and Schindler posted losses).
In order to weather this storm, The European elevator company R&D had developed “Breakthrough”, a product with many superior value propositions. “Breakthrough” was launched in Netherlands, France and UK to begin with. And the strategy employed was articles in journals and face to face meetings. However, the sales of “Breakthrough” units did not pick up as expected and entry into Germany was imperative.
Germany was the largest elevator market and was dominated by residential constructions especially in small size elevators. Its growth CAGR was 9.91%. However, with abrupt end to the construction boom, the demand was slated to fall. Major players in this market were engaged in price wars and exerted price pressure and depended on service for their survival and growth.
“Breakthrough” was an innovative product which could change the revenue mix