Live Project_27

1.On the Perceptual Map, all segments drift to the lower right. Which segment drifts at the fastest rate? Which drifts at the slowest?

Ans:

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As we can see from the table above High End has the highest drift rate and Low End has the lowest drift rate.

2. Each Segment’s Ideal Spot shows the buyer’s preferred coordinates within the circle. Why is the High End Ideal Spot to the lower right of the segment center? Why is the Low End Ideal Spot to the upper left of the Low End segment center?

3. On a unit demand basis, the Performance Segment is growing at the fastest rate, 19.8% each year. In which round will demand for Performance products exceed the demand for Size products?
4. Explain how increasing First Shift Capacity can reduce per unit labor costs.
5. Automation reduces per unit labor costs but it has two disadvantages. What are these?

6. A product’s margin is determined by subtracting its manufacturing costs (labor and material) from its price. Logically, higher prices and lower labor and material costs result in higher margins. Keeping in mind the Customer Buying Criteria, how would you increase margins for a Low End product? How would you increase margins for a High End product? Hint: The criteria can be found in the Capstone Courier Market Segment Analyses.

The Low End Products do not demand much performance and hence constant innovation is not needed, So we can automate the manufacturing process which will in turn reduce the labor costs and increase the margin (The cost of automation can be balanced out by the reduced labor costs in the next 2-3 years whereas the subsequent years will benefit in the margin by the labor costs reduced by this automation. To increase the margins in the High End product, we can increase the acceptable price level to the consumer since they are less price sensitive than the Low End segment.

7. The Consumer Report indicates how customers perceive your product offerings. For example, Reliability (MTBF) is very important to Performance customers. What is the current MTBF for your Performance product? Given the desired range for Performance customers (found in the Buying Criteria) how many hours would it need to be raised to receive an "A" on the Consumer Report?