How to Design R

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How to Design RD Projects
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TABLE OF CONTENT
Information Related to RD Projects
Specifying a Sonite RD Project
Specifying a Vodite RD Project
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Sources of information related to RD projects
CompanyReport
Newsletter
Benchmarking
Semantic Scales
MDS
Conjoint Analysis
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The Report shows the base RD project of your
marketed brands
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The Report lists all Sonites or Vodites RD
projects

• Listing of available RD 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 RD project
  with the same physical characteristics.

Unit transfer cost 158 Why ??
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Sources of information related to RD projects
CompanyReport
Newsletter
Benchmarking
Semantic Scales
MDS
Conjoint Analysis
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The Newsletter gives the physical
characteristics, the base costs and prices of all
marketed Sonites or Vodites brands
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Sources of information related to RD projects
CompanyReport
Newsletter
Benchmarking
Semantic Scales
MDS
Conjoint Analysis
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The Benchmarking study gives estimates of
competitive RD budgets

• Useful to determine when first Vodite brands will
  be launched.

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Sources of information related to RD projects
CompanyReport
Newsletter
Benchmarking
Semantic Scales
MDS
Conjoint Analysis
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The Semantic Scales study provides a graphical
representation of segment needs and brand
perceptions
Segment ideal points
Six dimensions 5 physical characteristics plus
price
Brand perceptions
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The Semantic Scales study tracks the evolution
of segment needs

• The lifetime of an RD project is several years
  long.
• Design RD projects that will be attractive in a
  few years time.

?
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Additional charts give exact coordinates of ideal
points and brand perceptions on a 1-7 scale

• Compare brand perceptions with segment
  expectations. RD will let you fill in the gap

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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
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Sources of information related to RD projects
CompanyReport
Newsletter
Benchmarking
Semantic Scales
MDS
Conjoint Analysis
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The MDS study provides a graphical
representation of segment needs and brand
perceptions in three composite dimensions
Three dimensions Economy, Performance and
Convenience
Segment ideal points
Brand perceptions
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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.

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The MDS study also tracks the evolution of
segment needs

• The lifetime of an RD project is several years
  long.
• Design RD projects that will be attractive in a
  few years time.

?
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Additional charts give exact coordinates of ideal
points and brand perceptions on a -20 to 20 scale

• Compare brand perceptions with segment
  expectations. RD will let you fill in the gap

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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
Irrelevant if the MDS dimension and the
characteristic are not strongly linked
Pros Ideal Power in 2 years 75 W
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Sources of information related to RD projects
CompanyReport
Newsletter
Benchmarking
Semantic Scales
MDS
Conjoint Analysis
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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.

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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.

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TABLE OF CONTENT
Source of Information Related to RD Projects
Specifying a Sonite RD Project
Specifying a Vodite RD Project
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Repositioning an existing Sonite brand through
RD 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 (RD budget will be higher)
• 7. Launch an RD project with the new
  characteristics and the new base cost, using the
  current base project as a starting point.

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A Complete Example Repositioning SIBI

• SIBI Based on PSIBI
• Weight 19 Kg - Design 8 - Volume 60
  dm3
• Max Freq 15 KHz - Power 20 W
• Base cost 99 (current cost 79)
• Target Segment Singles
• Most important characteristics Power, Max Freq,
  Design
• Ideal Power in two years 4.80 65 W
• Ideal Max Freq in two years 4.70 30 KHz
• Ideal Design in two years 5.20 7
• RD project PSIN1
• Weight 19 Kg - Design 7 - Volume 60
  dm3
• Max Freq 30 KHz - Power 65 W
• Develop project at minimum cost

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Open the RD 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 RD project is now ready to be launched. It
will be available next period to modify an
existing brand or introduce a new one.
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TABLE OF CONTENT
Source of Information Related to RD Projects
Specifying a Sonite RD Project
Specifying a Vodite RD Project
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Specifying a Vodite RD 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
  scale
• Ideal Max Freq in KHz for this segment ???

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Specifying a Vodite RD project (contd)

• When no brands are marketed, estimating ideal
  characteristics through graphical interpolation
  is not possible.
• One has to assume that
• 1 on the semantic scales corresponds to the
  minimum feasible characteristic, e.g. 5 KHz
• 7 on the semantic scales corresponds to the
  maximum feasible characteristic, e.g. 20 KHz
• Variations are linear in between

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On your marks. Get set. Go!

• Respect the deadline

Good luck!