The Situation Analysis has five areas: Perceptual Map, Demand Analysis, Capacity Analysis, Margin Analysis, and Consumer Report. You can divide the areas anyway you wish. Choose an analysis that interests you, or if you prefer, assign the tasks based on each team member's functional area: The R&D Department can complete the Perceptual Map (new and revised products will not sell if they are not inside a segment circle) The Marketing Department can calculate the Demand Analysis (understanding current and future demand levels is crucial for accurate sales forecasting) The Production Department can do the Capacity Analysis (understanding the costs associated with purchasing new Capacity and Automation is extremely important) The Finance Department can look at the Margin Analysis (cash from operations is factored into the balance sheet) The R&D and Marketing Departments can complete the Consumer Report (poorly perceived products can be revised, priced more aggressively, or promoted more heavily) The Situation Analysis will give you an idea of where the market currently stands and where it will go. Answer the following questions on situation analysis: a. On the Perceptual Map, all segments drift to the lower right. Which segment drifts at the fastest rate? Which drifts at the slowest?

b. 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?

c. Explain how increasing First Shift Capacity can reduce per unit labor costs.

d. Automation reduces per unit labor costs but it has two disadvantages. What are these?

e. 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?