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How to Design R&D Projects THE S TR A TEG IC M A R K ETIN G S IM ULATION M A R K S T R A T 3
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How to Design R&D Projects
THE STRATEGIC MARKETING SIMULATION
M A R K S T R A T 3
How to design R&D projects in Markstrat3 - 2
Specifying a Vodite R&D Project
TABLE OF CONTENT
Specifying a Sonite R&D Project
Information Related to R&D
Projects
How to design R&D projects in Markstrat3 - 3
Sources of information related to R&D projects
Conjoint Analysis
MDS
Semantic Scales
Benchmarking
Newsletter
CompanyReport
How to design R&D projects in Markstrat3 - 4
The “Report” shows the base R&D project of your marketed brands
How to design R&D projects in Markstrat3 - 5
The “Report” lists all Sonites or Vodites R&D projects
Listing of available R&D projects as well as on-going ones. New brands can be launched or existing ones can be upgraded with available
projects. The brand will have the physical characteristics specified in the project. The current base cost is the transfer cost of the units produced, for the first
production batch of 100,000 units. If the cumulative production level is lower, the unit transfer cost will be higher. If the cumulative production level is higher, the unit transfer cost will be lower.
The minimum base cost is the minimum cost that can be specified in a cost-reduction R&D project with the same physical characteristics.
Unit transfer cost = $158Why ??
How to design R&D projects in Markstrat3 - 6
Conjoint Analysis
MDS
Semantic Scales
Benchmarking
CompanyReport
Newsletter
Sources of information related to R&D projects
How to design R&D projects in Markstrat3 - 7
The “Newsletter” gives the physical characteristics, the base costs and prices of all marketed Sonites or Vodites brands
How to design R&D projects in Markstrat3 - 8
Sources of information related to R&D projects
Conjoint Analysis
MDS
Semantic Scales
Newsletter
CompanyReport
Benchmarking
How to design R&D projects in Markstrat3 - 9
The “Benchmarking” study gives estimates of competitive R&D budgets
Useful to determine when first Vodite brands will be launched.
How to design R&D projects in Markstrat3 - 10
Sources of information related to R&D projects
Conjoint Analysis
MDS
Benchmarking
Newsletter
CompanyReport
Semantic Scales
How to design R&D projects in Markstrat3 - 11
The “Semantic Scales” study provides a graphical representation of segment needs and brand perceptions
Segment ideal points
Brand perceptions
Six dimensions : 5 physical characteristics plus price
How to design R&D projects in Markstrat3 - 12
The “Semantic Scales” study tracks the evolution of segment needs
The lifetime of an R&D project is several years long. Design R&D projects that will be attractive in a few years time.
?
How to design R&D projects in Markstrat3 - 13
Additional charts give exact coordinates of ideal points and brand perceptions on a 1-7 scale
Compare brand perceptions with segment expectations. R&D will let you fill in the gap
Need to improve Design
Good fit in Max Freq and Power
How to design R&D projects in Markstrat3 - 14
The “Semantic Scales” study plots the brand perceptions against the brand physical characteristics
Do graphical interpolations on these charts to calculate the characteristic in Kg, Dm3, KHz, W, … that corresponds to a given value on the 1-7 scale
Singles’ Ideal Max Freq in 2 years : 4.50
Singles’ Ideal Max Freq in 2 years : 30 KHz
How to design R&D projects in Markstrat3 - 15
Sources of information related to R&D projects
Conjoint Analysis
Benchmarking
Newsletter
CompanyReport
Semantic Scales
MDS
How to design R&D projects in Markstrat3 - 16
The “MDS” study provides a graphical representation of segment needs and brand perceptions in three “composite” dimensions
Segment ideal points
Brand perceptions
Three dimensions : Economy, Performance and Convenience
How to design R&D projects in Markstrat3 - 17
MDS dimensions are discovered by the MDS methodology and thus are a good representation of segment needs
Brand physical characteristics and prices have an influence on MDS dimensions.
For instance, Performance is strongly linked with Power and Max Freq.
How to design R&D projects in Markstrat3 - 18
The “MDS” study also tracks the evolution of segment needs
The lifetime of an R&D project is several years long. Design R&D projects that will be attractive in a few years time.
?
How to design R&D projects in Markstrat3 - 19
Additional charts give exact coordinates of ideal points and brand perceptions on a -20 to +20 scale
Compare brand perceptions with segment expectations. R&D will let you fill in the gap
Need to improve Convenience
How to design R&D projects in Markstrat3 - 20
The “MDS” study plots the brand perceptions against the brand physical characteristics
Do graphical interpolations on these charts to calculate the characteristic in Kg, Dm3, KHz, W, … that corresponds to a given value on the -20 to +20 scale
Pros Ideal Performance in 2 years : 10
Pros Ideal Power in 2 years : 75 W
Irrelevant if the MDS
dimension and the
characteristic are not
strongly linked
How to design R&D projects in Markstrat3 - 21
Sources of information related to R&D projects
Benchmarking
Newsletter
CompanyReport
Semantic Scales
MDS
Conjoint Analysis
How to design R&D projects in Markstrat3 - 22
The “Conjoint Analysis” study plots the utilities of various levels in each of the four most important characteristics
Higher utilities mean higher customer satisfaction levels Beware, the four levels are arbitrarily set. Maximum utility may be
achieved for a fifth level.
How to design R&D projects in Markstrat3 - 23
The “Conjoint Analysis” study indicates what characteristics are the most important ones
In the Sonite market, Price is the most important dimension, followed by Power.
For instance, almost 80% of the decision is driven by Price for Singles.
How to design R&D projects in Markstrat3 - 24
Specifying a Vodite R&D Project
TABLE OF CONTENT
Source of Information
Related to R&D Projects
Specifying a Sonite R&D
Project
How to design R&D projects in Markstrat3 - 25
Repositioning an existing Sonite brand through R&D in 7 steps
1. Decide on which segment to target using the MDS maps .
2. Determine what characteristics are important to that segment using the Semantic Scales or Conjoint Analysis.
3. Identify the dimensions where the gap between “Ideal” levels and your brand “Perceived” levels are the largest ones, using the Semantic Scales or MDS.
4. Decide on which brand characteristics you should modify. Small gaps and/or non-important characteristics can be ignored.
5. Calculate the “ideal” level in each characteristic you want to upgrade, using graphical interpolations. Remember to take the evolution of needs into account.
6. Estimate the future price of the brand when it is repositioned and decide on a “Base Cost” that will give you an acceptable profitability ratio.Or develop the project at the minimum possible base cost (R&D budget will be higher)
7. Launch an R&D project with the new characteristics and the new base cost, using the current base project as a starting point.
How to design R&D projects in Markstrat3 - 26
A Complete Example : Repositioning SIBI
SIBI : Based on PSIBIWeight = 19 Kg - Design = 8 - Volume = 60 dm3Max Freq = 15 KHz - Power = 20 WBase cost = $99 (current cost = $79)
Target Segment : SinglesMost important characteristics : Power, Max Freq, DesignIdeal Power in two years = 4.80 = 65 WIdeal Max Freq in two years = 4.70 = 30 KHzIdeal Design in two years = 5.20 = 7
R&D project PSIN1Weight = 19 Kg - Design = 7 - Volume = 60 dm3Max Freq = 30 KHz - Power = 65 WDevelop project at minimum cost
How to design R&D projects in Markstrat3 - 27
Open the R&D decision form and create a new project PSIN1 using PSIBI as a basis.
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Enter the new characteristics and then use an on-line query to estimate the budget.
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Your R&D project is now ready to be launched. It will be available next period to modify an existing brand or introduce a new one.
How to design R&D projects in Markstrat3 - 30
TABLE OF CONTENT
Specifying a Sonite R&D Project
Source of Information
Related to R&D Projects
Specifying a Vodite R&D
Project
How to design R&D projects in Markstrat3 - 31
Specifying a Vodite R&D project
The only available data are the “Semantic Scales - Ideal Values” and the importance of characteristics.
Eg: Most important characteristic : “Max Freq”Ideal level for Innovators : 4.90 on the 1 to 7 scaleIdeal “Max Freq” in KHz for this segment ???
How to design R&D projects in Markstrat3 - 32
Specifying a Vodite R&D project (cont’d)
When no brands are marketed, estimating ideal characteristics through graphical interpolation is not possible.
One has to assume that1 on the semantic scales corresponds to the minimum feasible
characteristic, e.g.: 5 KHz7 on the semantic scales corresponds to the maximum feasible
characteristic, e.g.: 20 KHzVariations are linear in between
5
1.0
7.0
20
4.9
15
How to design R&D projects in Markstrat3 - 33
On your marks. Get set. Go!
Respect the deadline
Good luck!Good luck!
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