how to design r&d projects

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


Sources of information related to R&D projects

Conjoint Analysis

MDS

Semantic Scales

Benchmarking

Newsletter

CompanyReport


The “Report” shows the base R&D project of your marketed brands


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 ??


Conjoint Analysis

MDS

Semantic Scales

Benchmarking

CompanyReport

Newsletter



The “Newsletter” gives the physical characteristics, the base costs and prices of all marketed Sonites or Vodites brands



Conjoint Analysis

MDS

Semantic Scales

Newsletter

CompanyReport

Benchmarking


The “Benchmarking” study gives estimates of competitive R&D budgets

Useful to determine when first Vodite brands will be launched.



Conjoint Analysis

MDS

Benchmarking

Newsletter

CompanyReport

Semantic Scales


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


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.

?


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


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



Conjoint Analysis

Benchmarking

Newsletter

CompanyReport

Semantic Scales

MDS


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


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.


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.

?


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


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



Benchmarking

Newsletter

CompanyReport

Semantic Scales

MDS

Conjoint Analysis


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.


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.


Specifying a Vodite R&D Project

TABLE OF CONTENT

Source of Information

Related to R&D Projects

Specifying a Sonite R&D

Project


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.


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


Open the R&D decision form and create a new project PSIN1 using PSIBI as a basis.


Enter the new characteristics and then use an on-line query to estimate the budget.


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.


TABLE OF CONTENT

Specifying a Sonite R&D Project

Source of Information

Related to R&D Projects

Specifying a Vodite R&D

Project


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 ???


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


On your marks. Get set. Go!

Respect the deadline

Good luck!Good luck!

how to design r&d projects

Documents

base rd project

design rd projects

costreduction rd project

vodite rd projectspecifying

sonite rd projectinformation

unit transfer cost

minimum cost

minimum base cost