6.1.1 Changing Performance, Size and MTBF

A repositioning project moves an existing product from one location on the perceptual map to a new location, generally (but not always) down and to the right.

Repositioning requires a new size attribute and/or a new performance attribute. To keep up with segment drift, products must be made smaller (that is, decrease its size) and better performing (that is, increase its performance).

Positioning affects material costs (Figure 6.1). The higher the technology, the higher the cost. At the beginning of the simulation, the trailing edge of the Low End fine cut has the lowest cost, at $1.00; the leading edge of the High End fine cut has the highest cost, at $10.00. Positioning material costs decrease 3% to 4% per year.

The reliability rating, or MTBF, for existing products can be adjusted up or down. Each hour of reliability (MTBF) adds $0.0003 to the material cost. A product with 20,000 hours reliability includes $6.00 in reliability costs:

($0.0003 X 20,000 = $6.00)

Your R&D decisions are fundamental to your marketing and production plans. In marketing, R&D addresses:- The positioning of each product inside a market segment on the perceptual map- The number of products in each segment- The age of your products- The reliability of each product (its MTBF rating)

In production, R&D affects or is affected by:- The cost of material- The purchase of new facilities to build new products- Levels of automation for a product

Tip: Material costs displayed in the spreadsheet and reports are the combined positioning and MTBF costs.

Tip: Unsold products built prior to the completion of an R&D project are reworked free of charge to match the new specifications.

Tip: Products will continue to produce and sell at the old performance, size and MTBF specifications up until the revision date.