For each segment, sales distribution is determined by availability and a monthly Customer Survey Score. The December score is published in the Segment Analysis pages of the Capstone Courier.
A product’s Monthly Survey Score is developed using marketing’s "4 P’s" - Price, Product, Promotion and Place.
The Survey evaluates the product against the buying criteria. To get a perfect score, a product would need:
A product meeting the criteria above would have a perfect base score of 100.
Next, the base score is adjusted by squaring the result when the base score is divided by 10:
(base score)/10)2 = adjusted base score
This adjustment removes the linear relationship between the scores; in other words, better products are rewarded with proportionally higher results.
Promotion, driven by your promo budget, creates product awareness before customers shop. If customers are not aware of the product, they are less likely to buy, and that drags down the survey score. If awareness is 100%, there is no impact upon the adjusted base score. But if the awareness is near 1%, the adjusted base score falls by roughly 50%. The product's score goes down:
[(100%-Awareness%)/2] x the adjusted base score
For example, a product with 60% awareness loses 20% of its adjusted base score.
(100%-60%)/2 = 0.2 or 20%
A product with a perfect adjusted base score of 100 would have a customer survey score of 80.
Place is driven by your sales budget. It examines the question, "how easy is it for customers to work with you during and after the sale?" We measure this with the segment’s accessibility rating. An accessibility of 30% means that only 30% of customers have an easy time finding a product, talking to a sales person, taking delivery, etc. The accessibility can drag down a product’s survey score. The product's score goes down:
[(100%-Accessibility%)/2] x the adjusted base score
For example, a product with 40% accessibility loses 30% of its adjusted base score.
(100%-40%)/2 = 0.3 or 30%
A product with a perfect adjusted base score of 100 and 100% awareness would have a customer survey score of 70.
Together, Price, Product, Promotion and Place drive most of the score. For example, if the product had a great price and design with an adjusted base score of 80, but Awareness of 50% and Accessibility of 50%, the people conducting the survey would say: "The design is great and so is the price, but only half of the customers have heard of it (awareness), and of those, only half could easily take delivery (accessibility." The net score would be:
80 x (100%-50%)/2 x (100%-50%)/2 = 80 X 75% x 75% = 45
However, some factors could cause the score to fall further.
The rough cut factors (pricing outside the range, positioning outside the inner fine cut perceptual map circle, or MTBF below the expected range) can cause the score to fall to zero. The rough cut factors are what drive segmentation. A High End product, for example, could not sell to a Low End customer - it fails both the positioning and price rough cuts.
The accounts receivable policy can cause the score to fall. If your company offers no credit terms, your product’s customer survey score falls to about 60% of maximum. At 30 days, the score is 93%. At 60 days, the score is 99.3%. At 90 days there is no reduction.
If the TQM module is enabled, three TQM initiatives can collectively increase the product score by up to 10%. The initiatives include Channel Support Systems, Quality Function Deployment Effort, and CCE 6 Sigma.
If the Advanced Marketing module is enabled, Time Allocations or sales time can improve your score. Your Sales Budget drives two factors, Accessibility and Salesmanship. Accessibility examines infrastructure, is subject to diminishing returns, and is remembered from round to round. Time Allocations applies only to this year. Time Allocations could increase your product's score by up to 15% (remember, this could be at the expense of other products).
Note that customer satisfaction is often at odds with other goals. High scores imply high costs, and that could imply low margins. From a competitive standpoint, your demand is driven by the spread between your score and your competitors' scores. If everyone scores the same, whether at 10 or 50, they sell the same number of units.
The customers score the products each month. Sales distribution in that month is determined in a probabilistic fashion. Say there are five products and the scores are (20,20,20,20,20). Each would see identical demand. Likewise each would see identical demand if the scores were (1,1,1,1,1) or (100,100,100,100,100). If there is a spread, however, the top scoring product is more likely to sell than the bottom scoring product. Say the scores are (40,30,20,9,1). The total is 100. The first product's sales that month would be 40/100 = 40%. The bottom product's sales would be 1%.