Capstone Industry Conditions Report For C58560

Your instructor can customize the simulation scenario. The information below is specific to your industry. The sensors your company manufactures are incorporated into the products your customers sell. Your customers fall into five groups which are called market segments. A market segment is a group of customers who have similar needs. The segments are named for the customer's primary requirements and are called: Traditional Low End High End Customers within each market segment employ different standards as they evaluate sensors. They consider four buying criteria: Price Age MTBF (Mean Time Before Failure) Positioning Performance Size

1 Positioning
Perceptual Map Each market segment has different positioning preferences. This is illustrated by the sets of dashed and solid circles in the graphic below. Over time, these preferences will shift (see Section 2.1.5 in the Team Member Guide for more information). Perceptual Map Form: Segment circles and ideal spots for Round 0 are shown below (see Section 3.1 in the Team Member Guide for more information about segment circles and ideal spots).

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Capstone Industry Conditions Report For C58560

Drift Rates Each year, the segments drift the length of the hypotenuse of the triangle formed by customers' desire for smaller and faster products.

Table 1 Segment Circle Drift Rates: Every year, customers demand increased performance (Pfmn) and decreased size. Note that the drift rates vary for each segment.

Pfmn Traditional Low End High End Performance Size +0.7 +0.5 +0.9 +1.0 +0.7

Size -0.7 -0.5 -0.9 -0.7 -1.0

Segment Centers

Table 2: Segment Centers at the End of Each Round: As shown in the Perceptual Map Form above, size is on the vertical axis and performance (Pfmn) is on the horizontal axis.

Traditional Round 0 1 2 3 4 5 6 7 8 Pfmn Size 4.3 5.0 5.7 6.4 7.1 7.8 8.5 9.2 9.9 15.1 14.4 13.7 13.0 12.3 11.6 10.9 10.2 9.5

Low End Pfmn Size 1.8 2.3 2.8 3.3 3.8 4.3 4.8 5.3 5.8 17.6 17.1 16.6 16.1 15.6 15.1 14.6 14.1 13.6

High End Pfmn Size 6.8 7.7 8.6 9.5 12.6 11.7 10.8 9.9

Performance Pfmn 7.3 8.3 9.3 10.3 11.3 12.3 13.3 14.3 15.3 Size 17.1 16.4 15.7 15.0 14.3 13.6 12.9 12.2 11.5

Size Pfmn Size 2.3 3.0 3.7 4.4 5.1 5.8 6.5 7.2 7.9 12.1 11.1 10.1 9.1 8.1 7.1 6.1 5.1 4.1

10.4 9.0 11.3 8.1 12.2 7.2 13.1 6.3 14.0 5.4

The information in Table 2 reflects the segment centers at the end of the round. Therefore, the Round 0 positions can be seen as the Round 1 starting positions, Round 2 positions can be seen as the Round 3 starting position, etc. Each month during the simulation year, the segment drifts 1/12th of the distance from the starting position to the ending position.

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Capstone Industry Conditions Report For C58560

Ideal Spots

Table 3 Ideal Spot Offsets: Customers prefer products located this distance from the center of the segment circle. Pfmn Traditional Low End High End Performance Size 0.0 -0.8 +1.4 +1.4 +1.0 Size 0.0 +0.8 -1.4 -1.0 -1.4

The information in Table 3 shows the Ideal Spot "offsets" or distances from the segment center. The ideal spot is that point where, all other things being equal, demand is highest. It is different from the segment center. Why are some ideal spots ahead of the segment centers? The segments are moving. From a customers perspective, if they buy a product at the ideal spot, it will still be a cutting edge product when it wears out.

2 Segment Sizes and Growth Rates

Traditional and Low End sell more units than the high technology segments, High End, Performance and Size. Page 10 of the Capstone Courier, the Market Segment Report, displays total industry sales. Each market segment grows at a different rate. Table 4 lists the beginning segment growth rates for your industry. The growth rates might change from year to year. Check the Segment Analysis reports in the Capstone Courier each round for the upcoming year's growth rates.

Table 4 Beginning Segment Growth Rates Traditional Low End High End Performance Size 9.9% 12.6% 16.9% 20.9% 19.0%

3 Buying Criteria By Segment

These are your products and the primary segments they sell into at the beginning of the simulation. These can change according to your decisions and as the simulation evolves.

Able Acre Adam Aft

Traditional Low End High End Performance

Agape Size

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Capstone Industry Conditions Report For C58560

The buying criteria for each segment, in order of importance, are displayed below. Positioning and Age score information also display. Please see Chapter 3 of the Team Member Guide for explanations of Positioning, Age, Price and MTBF scores. 3.1 Traditional Segment Buying Criteria (Round 0) Traditional customers seek proven products at a modest price. Age, 2 years importance: 47% Price, $20.00-$30.00 importance: 23% Ideal Position, performance 4.3 size 15.1 importance: 21% MTBF, 14,000-19,000 importance: 9%

Industry Conditions Figure 3.1: Traditional Buying Criteria

Traditional customers give higher position scores to sensors located in the center of the segment circle.

Traditional customers give higher scores to sensors in the 2 year range.

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Capstone Industry Conditions Report For C58560

3.2 Low End Segment Buying Criteria (Round 0) Low End customers seek low prices and well proven products. Price, $15.00-$25.00 importance: 53% Age, 7 years importance: 24% Ideal Position, performance 1.0 size 18.4 importance: 16% MTBF, 12,000-17,000 importance: 7%

Industry Conditions Figure 3.2 Low End Buying Criteria

Low End customers prefer inexpensive sensors with slower performance and larger size.

Low End customers give higher scores to sensors in the 7 year range.

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Capstone Industry Conditions Report For C58560

3.3 High End Segment Buying Criteria (Round 0) High End customers seek cutting-edge technology in size/performance and new designs. Ideal Position, performance 8.2 size 11.2 importance: 43% Age, 0 years importance: 29% MTBF, 20,000-25,000 importance: 19% Price, $30.00-$40.00 importance: 9%

Industry Conditions Figure 3.3 High End Buying Criteria

High End customers demand cutting edge sensors with high performance and small size.

High End customers give higher scores to newer sensors.

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Capstone Industry Conditions Report For C58560

3.4 Performance Segment Buying Criteria (Round 0) Performance customers seek high reliability and cutting edge performance technology. MTBF, 22,000-27,000 importance: 43% Ideal Position, performance 8.7 size 16.1 importance: 29% Price, $25.00-$35.00 importance: 19% Age, 1 year importance: 9%

Industry Conditions Figure 3.4 Performance Buying Criteria

Performance customers emphasize performance over size.

Performance customers want sensors in the 1 year range.

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Capstone Industry Conditions Report For C58560

3.5 Size Segment Buying Criteria (Round 0) Size customers seek cutting edge size technology and younger designs. Ideal Position, performance 3.3 size 10.7 importance: 43% Age, 1.5 years importance: 29% MTBF, 16,000-21,000 importance: 19% Price, $25.00-$35.00 importance: 9%

Industry Conditions Figure 3.5 Size Buying Criteria

Size customers emphasize size over performance.

Size customers prefer sensors in the 1.5 year range.

4 Projected Interest Rates

Prime Interest Rate Round 1: 6.4%

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