COLOR

KINETICS
INCORPORATED

BY - GROUP 3
 ABOUT THE COMPANY

• Founded in 1997.
• Founders: George Mueller and Ihor Lys
• High-tech start-up company that developed light emitting diodes (LEDs) based technologies
and products for the lighting industry
• Creator of Chromacore® a patented technology which generates millions of colors and colored
lighting effects via microprocessor-controlled red, green and blue LEDs
• Provide products and solutions to market through own brand, private label, OEM and
licensing
• Filed 10 US and PCT patent applications for product technology
• Core business strategy: create and innovate while supporting R&D efforts with solid patent
program
 TARGET MARKETS

• Initially targeted Theater & Entertainment

• Later moved into Retailtainment which includes:

– the industries of architectural, retail, merchandising, display and visual
merchandising. Example: High profile project like the Sony Lowesmarquee
sign in Times Square.

• Recently entered Commercial & Residential Architecture, Consumer Products

and OEM
 SALES STRATEGY

• “feet on the street” sales strategy.

• In 1999, 10 salespeople, reported 4 sales managers, deployed across country
• Strategy: win at one single flagship store and let the word spread. Example:
limited store.
• Scaling through Retailtainment.
• Direct phone sales.
 CONCERNS

• Increasing competition from power players like GE, Sylvania and

Philips.
• Lowering the product costs to allow quicker adoption from target
market.
• High cost of assembling the digital technology using American
manufacturers.
EVOLUTION OF LIGHTING TECHNOLOGY

Technology

Incandescent Light bulbs

Fluorescent Light Bulbs
Neon Lights
Led Technology
Chromacore Technology
 Segments & Product Segment Fit for Color
Kinetics Incorporated
• Target Market: Retailtainment
• Retailtainment includes architectural retail, merchandising and display industries.
• Since its inception entertainment and the theatrical industries were the target
market because of changing lightning products. With the help of disruptive
technology they entered into this new category.
• Themed Restaurants, Retail Stores incorporating this lights have changed the
dining, shopping and decision making experience of the customers.
• They saw the opportunity to grow into this market and be a leader and generate
high return on sales.
• Examples: Rainforest Café, Disney Stores, Bath and Body Works Victoria’s Secret.
 Segments & Product Segment Fit for Color Kinetics
Incorporated

• Target Market: Visual Merchandising.

• Targeting world’s largest brand marketers where there is a branding war so
collaborating with them would certainly benefit the sales of CKI.
• Every brand is trying to differentiate itself, so would benefit CKI from this
high end retail stores which portrays as invested in image.
• Examples: Sephora, Estee Lauder, MAC Cosmetics, Harrods, Christian Dior and
Saks Fifth Avenue.
Some of the Pictures of Color Kinetics Projects
 GROWTH PLAN
• In November 1999, they had plans to attain revenues of $14million in one year
and have double digit growth after that.

• Alternatives available to achieve the growth target:

1. Expand with current Retailtainment and Visual Merchandising markets.

(1.12 million chain retail locations, 43,600 shopping malls)

2. Expand “upwards” into higher performance theatrical and entertainment

markets. (Design networking, Disney, Casino, publicity)
 GROWTH PLAN

3. Expand towards Mass markets with consumer products. (iColor series)

4. Expand into other Niche markets (landscape design, yachts, swimming pools,
vending machines)

5. Expand via OEM and licensing to either lighting industry players or other
Niche industries.
 THEATRICAL / ENTERTAINMENT MARKET
• Earlier theatrical / entertainment market included theatres,
amusement parks, concert halls, trade shows & casinos.
• Lighting in this segment was highly specific to particular event &
required significant maintenance and the job for this had been left up
to the skilful hands of “Lighting Jocks”- usually roadies from rock
band concerts.
• CKI had viewed this market as highly competitive and also they were
not interested in technological advancement when they had made
their first market choice of retailtainment.
 THEATRICAL / ENTERTAINMENT MARKET
• With advancement in CKI’s technology & reputation, and the existing
relationship with lighting designers provided potential links between
otherwise independent customer projects.
• In addition high profile customers such as Disney & Universal along with
the expanding “Casino” market of 704 casinos with 5.5 million Sq. Ft of
gaming space was proving to be a lucrative factor for CKI to enter into
entertainment market.
• CKI’s one of the earliest theatrical / entertainment project at times
square & Boston Symphony Hall had resulted in significant publicity for
the company.
 THEATRICAL / ENTERTAINMENT MARKET

• CKI had estimated $50,000-$300,000 or more for each of its project

in this sector.
• At the same time it also required a change in their sales strategy,
focussing more on lighting designers & single large projects.
• This segment also demanded a different product development effort,
more focussed towards driving high end performance.
• YES- They could enter in this segment as the potential revenue is
higher than the risks & costs associated in entering this segment.
 MASS MARKET WITH CONSUMER PRODUCTS

• This segment demanded a significantly different development & marketing

efforts by CKI. CKI had explored 2 different categories of consumer product
in the range of $10-$30 for retail market.
• CKI thought of creating a new brand altogether to potentially avoid diluting
the value created by them in professional markets.
• Also they needed a drastic change in infrastructure to serve consumer
markets .
• NO- They should not enter into this segment as the costs and risks are
higher than the potential revenue. Also the presence of existing big players
such as Phillips, GE, Sylvania should be taken into consideration.
 DEVELOP NEW PRODUCTS FOR OTHER MARKET
NICHES

• CKI Identified potential markets such as swimming pools, luxury

boats, automotive etc.
• Many opportunities existed for these niche markets and these niche
markets had huge profit potential.
• However the products required more customization as per the
needs of the customer.
 EXPAND OEM AND LISCENSING EFFORT
• Color Kinetics competes in a big industry with billion $ players.
(GE, Philips, Osram Sylvania)
• Lighting is a commodity market – it’s slow and boring with
little technology advancement. It’s filled with “Brass, Gas and
Glass” companies.
• Speed is imperative.
• Intellectual property is key. Own the future market space.
• YES, they can start in a market segment where the industry
giants are least likely to go and with customers that they can
afford to lose.
THANK YOU