What is the Perceptual Map? The perceptual map is a visual representation of the five different customer segments based on how specialized these customers want their produc to be. For example, some customers want higher performance and smaller size than other customers, so they are grouped in a segment called the 'High End'. Other customers don't mind about the size but want really good performance, so they are grouped in a segment called 'Performance', and so on. Just like in real life, over time all customers' expectations move toward better products, which in the simulation means smaller and higher performance. The animation below shows the moving expectations of customers, called 'Segment Drift': For a deeper look into the Perceptual Map click here to view a description in the online guide. For more details about the drift rates in the perceptual map, please refer to the section titled 'Drift Rates' in the Industry Conditions Report. How can I use the Perceptual Map? The Research \& Development Department can use the Perceptual Map exercise to plan revision and invention projects that meet customers shifting size and performance expectations. The Marketing Department can use the results during forecasting as they compare competing products and when determining prices (in general, better positioned products can command higher prices) To calculate where the ideal spot is in each round, start with the segment center in the table below and then adjust for the offset. These offsets represent the distance from the center of the segment to the ideal spot. The activity practices how to calculate the Ideal Spot using information in the Industry Conditions report. Looking at the table below for Round 1, the 'Low End' segment center has a Performance (Pfmn) specification of 3 and a Size specification of 17. Now we look at the bottom of the table to see how much the ideal spot is offset from the center of the segment, and we see that the Low End ideal spot is offset by -0.8 for Pfmn and +0.8 for size. So, we can calculate that the Round 1 ideal spot for my product in the Low End segment is: Use the segment centers in the table above to calculate the new ideal spots for the segments. Once you have successfully entered the correct ideal spots for Rounds 0 and 1 (open fields), the rest of the table will fill in automatically. If you have entered any answers incorrectly, a line should appear through your answer and a pop bubble will appear. Calculating Market Demand The Industry Demand Analysis will help the Marketing and Production Departments understand future demand. Marketing can use the total demand for each segment as it creates a sales forecast. Production can use the results when making capacity buy and sell decisions. You will need: - The Segment Analysis reports (pages 5-9) of the Capstone Courier for Round 0 - The Industry Conditions Report. - At the top of each Segment Analysis page you will find each segment's statistics (see example below). The top line is the total demand for the segment for last year (the Courier reports last years data). The fourth line tells you next years growth rate for the segment. To find out the coming years total demand, simply apply the growth rate to last years total demand. For example, in the High End segment analysis on the left, Total Demand is 2554 and next years growth rate is 16.2% Next years demand is calculated as follows: * The above growth and demand figures are for example only. Your industry growth rates and demand may differ, but the process to calculate next years total segment demand is identical. Industry Demand Activity For your purposes, complete the form below with the "average" scenario. Assume the Round 1 growth rates will continue into the future unchanged. This will give you some idea for potential market size. If you have time, try a worst case and best case scenario for Rounds 2 through 8 . For worst case, assume, say, half the growth rate. For best case assume, say, 1.5 times the growth rate. Capacity Analysis Being able to analyze plant and equipment (capacity and automation) is essential to understanding how you and your competitors are supplying the market demand. There is often unmet demand in segments because companies do not or cannot produce enough units. If you successfully analyze industry capacity, your team could benefit from these shortfalls. Each product has its own production line where you can set capacity and automation. Capacity represents the company's ability to produce units of its product. Think of capacity as your manufacturing plant. For each unit of capacity, there are two shifts of workers that can use your manufacturing plant to produce your products, which represents a first and second shift. So if your product has a capacity of 1000 , this means you can produce up to 2000 units of your product. Automation represents the robot-to-worker ratio in your manufacturing plant. A higher ratio of robots will provide your company with a lower labor cost. However, this will increase the amount of time it takes your products to be updated. You will need: - The Production Analysis report (page 4) of the Capstone Courier for Round 0 On the Production Analysis page, look at the table of products (the Andrews company is displayed below). The highlighted boxes (plus a little math!) are where you will find the information you need to complete the analysis. Production Costs Activity Use the table below with page 4 of the Courier to complete the activity. Production Costs Activity Use the table below with page 4 of the Courier to complete the activity. "In the simulation, the input cells are in thousands ('000's), so an input of 1 is actually 1000 units. So, in the example below 500,000 units is inputted as 500 in the cell. This applies to dollar values as well. Margin Analysis Being able to calculate a healthy Margin Analysis will help the Research \& Development Department understand how to change the cost of material and the Production Department understand how to change the cost of labor. You will need: - The Production Analysis report (page 4) of the Capstone Courier for Round 0 - The Segment Analysis reports (pages 5-9) of the Capstone Courier for Round 0 Determining Current Margin * The product details are for example only. Your product names and data may differ, but the process to calculate margins is identical. Useful formulas: Contribution Margin(\$) = Price ( Material Cost + Labor Cost) Margin Percentage (%)= Contribution Margin/Price Calculating Margin Activity In the table below enter each product's price, material cost, and labor cost found in your report, and note whether or not a second shift was used (Y/N). Then, use the values you entered to calculate the Contribution Margin and the Margin Percentage. Calculating Margin Activity In the table below enter each product's price, material cost, and labor cost found in your report, and note whether or not a second shift was used (Y/N). Then, use the values you entered to calculate the Contribution Margin and the Margin Percentage. Determining Margin Potential Finding the maximum amount of profit you can generate from one unit of a product is called Margin Potential. This is useful for a company when making a decision about whether to go into production or not. In its simplest form, you can calculate Margin Potential as: Margin Potential = Maximum Price - Minimum Unit Costs Price Use the information table below to find the maximum price that customers deem acceptable. You can find this in the Customer Buying Criteria for each segment. Minimum Material Cost Calculate the minimum Material Cost per segment using the following equation and table below: Minimum Material Cost =[( Lowest Acceptable MTBF * 0.30) / 1000] + Trailing Edge Material Cost Minimum Labor Cost Calculate the minimum Labor Cost for each segment. Assume a base labor cost of $11.20 ( $11.20 is a rough estimate of labor cost used solely to illustrate the Margin Potential Concept). Minimum Labor Cost =[$11.20(1.12 Automation Ratings Below )]+ 1.12 \begin{tabular}{|c|c|c|c|c|c|c|} \hline \multicolumn{7}{|c|}{ Customer Segment Information } \\ \hline & \multicolumn{2}{|c|}{\begin{tabular}{l} Trailing Edge Material \\ Cost \end{tabular}} & \begin{tabular}{l} Leading Edge Material \\ Cost \end{tabular} & \begin{tabular}{l} Lowest Acceptable \\ MTBF \end{tabular} & \begin{tabular}{l} Maximum \\ Price \end{tabular} & \begin{tabular}{l} Automation Level (out \\ of 10) \end{tabular} \\ \hline Traditional & \multicolumn{2}{|c|}{$3.80} & $7.80 & 14,000 & $30.00 & 8.0 \\ \hline Low End & \multicolumn{2}{|r|}{$1.00} & $5.00 & 12,000 & $25.00 & 10.0 \\ \hline High End & \multicolumn{2}{|c|}{$6.00} & $10.00 & 20,000 & $40.00 & 5.0 \\ \hline Performance & \multicolumn{2}{|c|}{$4.50} & $8.50 & 22,000 & $35.00 & 6.0 \\ \hline Size & \multicolumn{2}{|c|}{$4.50} & $8.50 & 16,000 & $35.00 & 6.0 \\ \hline \multicolumn{7}{|c|}{ Margin Potential } \\ \hline Product & Name & \begin{tabular}{l} Maximum \\ Price \end{tabular} & \begin{tabular}{l} Minimum Material \\ Cost \end{tabular} & \begin{tabular}{l} Minimum Labor \\ Cost \end{tabular} & \begin{tabular}{l} Contribution Margin \\ (\$) \end{tabular} & \begin{tabular}{l} Contribution Margin \\ (%) \end{tabular} \\ \hline Traditional & Cake & & & & & \\ \hline Low End & Cedar & & & & & \\ \hline High End & Cid & & & & & \\ \hline Performance & Coat & & & & & \\ \hline Size & Cure & & & & & \\ \hline \end{tabular} Consumer Report The Consumer Report illustrates the aspects of your product offerings that are important to your consumers. In this exercise, you will "grade" your product based upon how well it is meeting the customer expectations. Keep in mind that the customer buying criteria represents the "perfect product" in the eyes of the consumer. However, supplying the perfect product may not always be feasible or cost effective for your company. You will need: - The Buying Criteria from the Segment Analysis pages (pages 5-9) in the Round 0 Capstone Courier. In the customer buying criteria (located in the top left-hand corner of the segment analysis reports), you will find a range for both price and reliability (MTBF) that customers find acceptable. In the "Top Products" section (located at the very bottom of the segment analysis report), you will find your product's current price and MTBF. Based on where your price and reliability (MTBF) fall within that range, you will assign a "grade. "For example, if the list price of your product is $28 while the acceptable range is $20$30, then it would fall in the top of the range and earn a " C grade. The chart below breaks down the price and reliability ranges from the customer buying criteria for the Traditional segment with a corresponding grade. You will need to do a similar analysis for each segment. "Keep in mind that consumers want a low priced product with high reliability, so that will impact the "grade" that is assigned to your product. "Keep in mind that consumers want a low priced product with high reliability, so that will impact the "grade" that is assigned to your product