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Low-End Ideal Spot

By:   •  December 4, 2018  •  Term Paper  •  922 Words (4 Pages)  •  462 Views

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1. On the Perceptual Map, all segments drift to the lower right. Which segment drifts at the fastest rate? Which drifts at the slowest? According the perceptual map, the High-End segment was drifting at a faster rate verses the Low-End segment due to the placement of the segment on the map. This is also because of the customer’s preference. High-End customers prefer a product with a higher performance and a smaller size. The Low-End segment has the lowest performance and the largest size so therefore is drifts the slowest. “Each year, the segments drift the length of the hypotenuse of the triangle formed by customers' desire for smaller and faster products (Industry Conditions Report, 2018).”

2. Each Segment’s Ideal Spot shows the buyer’s preferred coordinates within the circle. Why is the High-End Ideal Spot to the lower right of the segment center? Why is the Low-End Ideal Spot to the upper left of the Low-End segment center? As stated in my answer to question number 1, customers prefer a smaller size, faster performing product which is why the High-End has an ideal spot. Then High-End’s ideal spot is located on the lower right of the segment because that’s where the buyer demand for the High-End segment is primarily concentrated. The same situation applies to the Low-End ideal spot because it is a larger, lower performance segment. The ideal spot for the Low-End segment is in the upper left because that’s where buyer demand is focused the most. “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 customer’s perspective, if they buy a product at the ideal spot, it will still be a cutting-edge product when it wears out. (Industry Conditions Report, 2018).”

3. On a unit demand basis, the Performance Segment is growing at the fastest rate, 19.8% each year. In which round will demand for Performance products exceed the demand for Size products? I have created a growth demand table below that illustrates the demand for Performance Segment and Size Segment. The Performance Segment will exceed Size in Round 3 and will continue to do so for the remaining rounds (Capstone Courier, 2018, reports 1-5).

4. Explain how increasing First Shift Capacity can reduce per unit labor costs. Increasing the First Shift Capacity can reduce per unit labor cost based mostly off the fact that when the First Shift Capacity is less expensive than the Second Shift Capacity and overtime. What is implies is that if one was able to increase amount the First Shift Capacity can generate, then there will be not as much needed for the Second Shift Capacity. The Second Shift Capacity might be paid for with 50% premium, in which the same mindset holds true for overtime. By which I mean the more First Shift Capacity the less one must rely on overtime which also has 50% premium that is over the initial shift pay. So essentially, you can reduce labor costs because you increased the capacity in the first shift because you produce more products in less time.

5. Automation reduces per unit labor costs, but it has two disadvantages. What are these?

• One disadvantage is the increase in the length of the R&D projects on the products. This makes re-positioning more difficult to accomplish.

• Another disadvantage is the separation


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