Business in class 1 15 15 Attractiveness Scores Costumer Survey Score CSS 7 criteria 1 Product position performance and size 2 MTBF mean time between failure 3 Price 4 Age years since initial introduction 5 Awareness how aware your costumers are about your products 6 Accessibility how easily your costumers are able to find purchase your product 7 Accounts Receivable policy your costumers ability to purchase your product on credit Attractiveness Scores Attractiveness scores represent market research that has been done for you and provided for your use Profit Maximization Setting prices so that total revenue is as large as possible relative to total cost Who are my costumers Segmenting Markets Target Markets What are the market segments in Foundation In terms of units sold what is the largest smallest market segment in Foundation How fast is demand growing in the low tech segment High tehc segment Marketing Who are your potential costumers How big is the market How fast is it growing Can you usefully group your customers What do they want from you The four Ps Service Product What are the product characteristics Price How much will they pay Place Where do they buy my product Promotion How do they learn about my product Service What level of service will I experience The Impact of Service The service element can be particularly influential for commodity products those products that are similar to each other without meaningful differentiation Product Questions What do they want 1 What are the characteristics of the product that are important to costumers 2 What is the most important product characteristic in the low tech segment In the high tech segment 3 What is perceived age of a product 4 How is reliability measured 5 What will increase material costs What are the characteristics of the product that are important to customers Electronic sensors Size Performance Processing speed Reliability MTBF Age how recently has it been updated Segment Criteria Ranking What is the most important product characteristic in the low tech segment In the high tech segment Low tech 1 Price 2 Age 3 Reliability 4 Positioning High Tech 1 Positioning 2 Age 3 Price 4 Reliability Age Low tech General Questions How do you manage age What is the ideal age Management questions What is the ideal age range When do you revise a low tech product to manage age Perceived Age What is the perceived age of a product You introduce a product on July 1 2010 On July 1 2010 it is 0 years old On December 31 2010 it will be 5 years old On Decemeber 231 2011 it will be 1 5 years old Your reposition change the size and or performance and the revision date is July 1 2010 On June 30 2010 it is almost 2 years old On July 1 2010 its perceived age is cut in half 2 5 1 Foundation rule A change in size or performance to an existing product creates a revision date that appears on the spreadsheet When that date occurs the age of the product is divided by two to reflect the new and improved status of the changed product Pricing What is the trade off Revenue price per unit x number of units Higher price more revenue per unit Higher fewer units Lower price less revenue per unit Lower price more units Strategy Create a company that will allow you to compete on price lower your prices and still meet your performance targets Lower your material costs Lower your labor costs Marketing Strategies Pricing strategy Impact Volume Impact Marginal revenue What is the difference between your price and unit cost Contribution margin per unit Promotion and Sales Impact Increased period costs and sales Promotion and Awareness Promotion your message Awareness percent of market that received the message Lose 33 awareness year promo budget replaces diminishing returns Foundation rule One third of the costumers that have seen a promotional tactic in the past year are unable to remember the purpose of that promotion Mean Time Between Failure MTBF How is reliability measured MTBF How long can I expect your product to reliably function 1 Take 200 sensors plug them in and run them count the hours before they fail 2 Calculate the average arithmetic mean time between failures Managing Low Tech MTBF Range 14 000 20 000 hours Tradeoff Higher the MTBF the greater the demand limit until the top of the range Higher the MTBF the greater the cost of materials Low Tech position To manage the age you revise your product every 2 years Every year the Ideal spot is 5 units smaller and 5 units faster Your position your product on the ideal spot with an age of 2 Every 2 years you revise to manage the age How much smaller and how much faster would you make it Product Strategy Low tech products Price As much as you can and still meet your goals with the consideration that price competition requires efficient Revise Product Only manage the age ideal 3 range over the year 2 3 or 34 MTBF Never above 20 000 Managing High Tech Products The ideal high tech product is a new product The almost ideal High tech product is On or near the ideal spot every year As young as possible How much does the center of the high tech segment drift on the perceptual map 7 units faster 7 units smaller How much does the ideal spot of the High Tech segment drift 7 units faster 7 units smaller Ideal spot is most important revise every year to keep it on or near the ideal 7 units faster 7 units smaller nd Age is 2 most important revise every year to keep it as young as possible Price is 3rd important charge as much as you can and still meet your sales goal MTBF set it at 23 000 hours and leave it alone Trade offs Higher price Fewer people buy make more on each Lower price More people buy make less on each New product Expense of development new costumers Old products Loss of appeal no risk