Rehearsal Information

Rehearsal Information - Tactic 1: Repositioning a Product...

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Tactic 1: Repositioning a Product What is this tactic about? Positioning a product means choosing product attributes that customers want. You have five customer types or segments - Traditional, Low End, High End, Performance, and Size. They are interested in four product characteristics - Size, Performance (which together are plotted on the Perceptual Map), Age and Reliability. Each customer segment has different preferences. Your task is to give customers what they want, and that requires repositioning because the customer expectations change over time. For example, a year from now customers will expect different Size and Performance specifications, and your product will be a year older. You need to plan a revision today that will give customers what they want a year from now. Where do we get the data to plan a revision? We need two reports - The Capstone Courier, and the Industry Conditions Report. The Courier was published yesterday, December 31st. We are making decisions on January 1st for the upcoming year. In the Courier we will find a Segment Analysis page associated with each segment. On the page we will find a "Customer Buying Criteria" box. It tells us what customers wanted yesterday. In the Industry Conditions Report, we will find how quickly those expectations are changing. For example, suppose the Courier says that Traditional customers wanted a Performance of 5.0 yesterday. The Industry Conditions Report tells us that Traditional customers expect Performance to improve by 0.7 each year. Therefore at the end of this year, they will want a performance of 5.7. We need to know four things. When our product comes out of R&D, what will customers want for performance, size, age and reliability? How do we make the decisions? Open the R&D spreadsheet. Enter new Performance, Size, and MTBF specifications. Click "Recalculate." Observe the following: On the Perceptual Map, our product appears twice. The black letters show where our product is today. We will make and sell the product at those specifications until the product emerges from R&D. The magenta letters show where our product will be when it emerges from R&D. In the table we see a Revision Date and an Age at Revision. Whenever we move a product on the map, no matter how far it moves, the day it emerges from R&D the customers perceive it as being "new and improved," and they cut its age in half. We can see this graphically in the Age Profile chart at the bottom of the spreadsheet. If a product is revised in the middle of the year, its age profile will look like a sawtooth.
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In the Material Cost chart we can see the old product's material cost versus the revised product. Two things drive material cost - the positioning on the map, and the MTBF specification. Are there tips to keep in mind?
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This note was uploaded on 01/31/2011 for the course MGMT 450 taught by Professor N/a during the Spring '10 term at Mountain State.

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Rehearsal Information - Tactic 1: Repositioning a Product...

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