Reference no: EM132177836

Question: Response 1: The Dot Sensor production department is tasked with the production of sensors for the Performance customer segment. The performance customer segment seeks high reliability and cutting-edge performance technology. (Capstone Industry conditions reports, 2014). From the market share report in the capstone courier, the units of product sold matches the graph for the demand from customers from the performance section. Also, the projected growth rate for the coming year seats at 19.8% indicating that with other strategies well put in place, there would be a significant increase in units sold which could increase the contribution margin for the company at large. The aim for the company would be to improve services and customer satisfaction which in turn is expected to raise revenue.

The industry has been in existence for a while, so has our company and its sensors. However, our products are getting old, our marketing strategies are falling short, our production lines need revamping and our financial management is almost nonexistent. (Capstone, 2014). Our aim towards the market mix (product, price, place and position) would then first be to improve the existing products and increase customer satisfaction. The first step to improve our services will be through market penetration. "The primary focus of market penetration is increasing the size of a firm's existing market segment". (Pettus,2012). This would be achieved through series of strategies like utilization of excess production capacity to achieve economy of scale, gaining market share through improved reliability and price reduction of the product, and of course, investing in more effective advertisement.

To achieve this, the Broad differentiator or the Niche differentiator strategy would be employed. Through either strategy, the company will look to gain a competitive advantage by developing a product with excellent design to distinguish it from that of competitors. The products will be expected to keep pace with the market offering improved size and performance. The company will price above average and will expand its capacity as it generates higher demand. (Capstone, 2014).

In applying this to the first round of the simulation, I have decided to improve the MTBF to meet the customers' demand while slightly reducing the size to 15.0 in the R&D department. I also increased the price to the maximum preference while reducing the promo and sales budget as this helped to improve the product's benchmark predictions and contribution margin. Automation rating was improved to 4.0 in the production department and cash wash generated from the finance department to fund the project.

Response 2: Reflecting on your learning in the MBA program, section 4.2 of the CapSim Team Member Guide, and Pettus, Chapters 5 and 6, identify and explain the value of a marketing strategy that could lead to market dominance for your product and/or company. What decisions are you considering in Practice Round 1 to maximize your market share? Discuss your approach in terms of the marketing mix variables.
Include in your assessment:

• Your approach to each of the marketing mix variables (product (R&D), price, place, and promotion)

• Approach to growth in terms of market penetration, development and product development as discussed by Pettus in Chapter 6.

• How your strategy can be achieved through CapSim decisions

Of the "Four Ps" I would place most emphasis on product and price. What I do believe I have learned though is that while you can place emphasis on specific areas, that does not mean that the others go neglected. My section (Baldwin/Bid) is High End so I am most inclined to use a niche differentiator (high tech) strategy. My primary focus will be on the product (size/performance) and accompanying research and development. To do this, it is important to target a customer and determine what specific size and performance requirements that they have. In this manner we can best shift our R&D to that goal. This strategy differs significantly from developing a particular product and then marketing to potential clients and that is what makes it a niche differentiator strategy. In this method (niche) the company is not targeting a broad range of customers, but rather a very specific need. The risk then is greater but so are the rewards. I included price in this mix because with R&D costs and a more narrow market segment, the accompanying price will have to be higher. Ultimately, if Bid commits finances to this effort, it is very risky because those costs will be unrecoverable if our product is not selected for purchase. The good news is that if it is, the technology will probably be embedded and used for a long time and future generations of technology will most likely be relied on for Bid to provide as the company holds proprietorship and license (patents) over the technology. Moreover, in the future it will cost more for customers to change vendors than it would be to upgrade and continue to use Bid's. This is where the balance between product and pricing is. Bid will need to recover costs of R&D and there will need to be enough consumer need to cover that cost. Bid's penetration strategy then is to research customer needs that suit a profitable niche solution. Promotion and distribution will be of less consequence for obvious reasons. At the high end, Bid's market segment is very specific and not as broad as others; meaning we are going in with the understanding that our niche technology is not suited for everyone and we will not market to the masses, but rather businesses with a specific sensor requirement. Distribution, likewise, will be very tailored to a consumer's technical timeline. The supply chain management again, will not be to the masses for unknown or unlimited quantities, but rather correlate directly to the specific production. I like to compare this to cell phone technology. Most people have a cell phone these days. However, a secure telephone using 256 kb and better encryption technologies is a niche differentiator. Bid will aim to secure a niche market with a long term client with a large enough demand and big (and open) pockets.

Bid's performance was increased to 15.0 and the size to 13.5. The MTBF was changed to 18,000. This consequently moved Bid's plot accordingly on the graph. The subsequent R&D cost to this is $2,595,000. The price is $32.00 with a promotion budget of $500,000 and a sales budget of $600,000. I noted that the promotion and sales amounts are significantly less than the R&D which would appear to be the right mix for a niche differentiator strategy. The production schedule is 514 yet the forecast is 700. It would seem to me that we are not producing to demand. So I believe that the R&D efforts have slowed down our production capability. Bid's new automation rating is 3.0. I am not sure I want to increase that and price our sensors out of the market.