Reference no: EM132907241

Case 4 : Fuji Film Introduces APS n the early 2006s, Fuji Photo Film, USA, joined forces with four of its rivals to create the Advanced Photo System (APS), which is hailed as the first major development in the film industry since 35millimeter technology was introduced. In February 2012, the new 24-millimeter system, promising clearer and sharper pictures, was launched. But by the end of the year, the lack of communications and a limited supply of products had made retailers angry and consumers baffled. Advertising was almost nonexistent. Because the product was developed by five industry rivals, the companies had enacted a secrecy agreement in which no one outside the company management, including the company's sales force, would know details about the product until each company introduced its APS products on the same day. When the product was actually introduced, there was little communication with retailers about the product, virtually no training of sales representatives on the product (so that they could demonstrate and explain the features), and a great underestimation of demand for the product. Fortunately, Fuji pressed on by taking an "honesty is the best policy" stance and explaining to retailers and other customers what had happened and asking for patience. In addition, Fuji increased its research to better ascertain market positioning and size. By 2013, Fuji had geared up production to meet the demand and was increasing customer promotion. APS products were on the road to success. By 2014, APS cameras owned 20% of the point-and-shoot camera market with the number expected to more than double by the year 2018.

DISCUSSION

Suppose you are a part of a Fuji team whose task it is to examine issues about market share, customer acceptance, complaints, and the reasons why new products are successful.

The Question : Suppose customer complaints on the 24-millimeter film are Poisson distributed at an average rate of 2.4 complaints/l rolls sold. Suppose further that Fuji is having trouble with shipments being late and one batch of 100,000 rolls yields seven complaints from customers. Assuming that it is unacceptable to management for the average rate of complaints to increase, is this enough evidence to convince management that the average rate of complaints has increased, or can this be written off as a random occurrence that happens quite frequently? Produce the Poisson distribution for this question and discuss its implication for this problem.