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What drives material costs? |
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Page 1 of 3 The MTBF specification and the placement on the perceptual map determine a products material cost.
There are two components to material cost -- Reliability (MTBF) and Positioning. The positioning component is actually driven by the distance from the trailing edge of the Low End segment to the product. In round zero this puts about a $4 dollar spread from leading edge to trailing edge of the segment. As the game progresses, however, the High Tech segment pulls away from the Low Tech segment. This puts a small upward pressure on material costs in the high tech parts of the market.
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