M
ARKSTRAT
T HE S TRATEGIC M ARKETING S IMULATION
How to Design R&D Projects
3
TABLE OF CONTENT
Information Related
to R&D Projects
Specifying a Sonite
R&D Project
Specifying a Vodite
R&D Project
How to design R&D projects in Markstrat3 - 2
Sources of information related to R&D projects
Company
Report
Newsletter
Benchmarking
Semantic
Scales
MDS
Conjoint
Analysis
How to design R&D projects in Markstrat3 - 3
The “Report” shows the base R&D project of your marketed
brands
How to design R&D projects in Markstrat3 - 4
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 = $158
Why ??
How to design R&D projects in Markstrat3 - 5
Sources of information related to R&D projects
Company
Report
Newsletter
Benchmarking
Semantic
Scales
MDS
Conjoint
Analysis
How to design R&D projects in Markstrat3 - 6
The “Newsletter” gives the physical characteristics, the base
costs and prices of all marketed Sonites or Vodites brands
How to design R&D projects in Markstrat3 - 7
Sources of information related to R&D projects
Company
Report
Newsletter
Benchmarking
Semantic
Scales
MDS
Conjoint
Analysis
How to design R&D projects in Markstrat3 - 8
The “Benchmarking” study gives estimates of competitive R&D
budgets
 Useful to determine when first Vodite brands will be launched.
How to design R&D projects in Markstrat3 - 9
Sources of information related to R&D projects
Company
Report
Newsletter
Benchmarking
Semantic
Scales
MDS
Conjoint
Analysis
How to design R&D projects in Markstrat3 - 10
The “Semantic Scales” study provides a graphical
representation of segment needs and brand perceptions
Segment ideal points
Six dimensions : 5 physical
characteristics plus price
How to design R&D projects in Markstrat3 - 11
Brand perceptions
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.
?
How to design R&D projects in Markstrat3 - 12
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
How to design R&D projects in Markstrat3 - 13
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
How to design R&D projects in Markstrat3 - 14
Sources of information related to R&D projects
Company
Report
Newsletter
Benchmarking
Semantic
Scales
MDS
Conjoint
Analysis
How to design R&D projects in Markstrat3 - 15
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 R&D project is several years long.
 Design R&D projects that will be attractive in a few years time.
?
How to design R&D projects in Markstrat3 - 18
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
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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
Pros Ideal Power in 2
years : 75 W
How to design R&D projects in Markstrat3 - 20
Irrelevant if
the MDS
dimension
and the
characteristic
are not
strongly
linked
Sources of information related to R&D projects
Company
Report
Newsletter
Benchmarking
Semantic
Scales
MDS
Conjoint
Analysis
How to design R&D projects in Markstrat3 - 21
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 R&D
Projects
Specifying a Sonite
R&D Project
Specifying a Vodite
R&D Project
How to design R&D projects in Markstrat3 - 24
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.
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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
 R&D 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 R&D 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 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.
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TABLE OF CONTENT
Source of Information
Related to R&D
Projects
Specifying a Sonite
R&D Project
Specifying a Vodite
R&D Project
How to design R&D projects in Markstrat3 - 30
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 scale
 Ideal “Max Freq” in KHz for this segment ???
How to design R&D projects in Markstrat3 - 31
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 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
7.0
4.9
1.0
5
How to design R&D projects in Markstrat3 - 32
15
20
On your marks. Get set. Go!
Respect the deadline
Good luck!
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