The Research & Development (R&D) Department invents new products and changes specifications for existing products. Changing size and/or performance repositions a product on the perceptual map . Improving performance and shrinking size moves the product toward the lower right on the map.

Figure 6.1 Material Positioning Costs: These costs vary depending on the product’s location on the perceptual map. At the start of Round 1, products placed at the trailing edge of the Low End segment would have a positioning component cost of $1.00; products placed at the leading edge of the High End segment would have a positioning component cost of $10.00.

Tip: Improving positioning and reliability will make a product more appealing to customers but doing so increases material cost. See “Margin Potential” in the "Situation Analysis."

All R&D projects begin on January 1. If a product does not have a project already underway, you can launch a new project for that product. However, if a project begun in a previous year has not finished by December 31 of last year, you will not be able to launch a new project for that product (the decision entry cells on the R&D spreadsheet in Capstone.xls will be locked).