Click Decisions and select R&D. Use the R&D area to maintain your product line:
Use the Customer Buying Criteria boxes on the Market Segment Analyses (pages 5-9 of The Capstone® Courier) to help determine the best position and reliability level for your products.
When a repositioning project completes, the product's age is cut in half. Thus, R&D drives three of the four buying criteria — positioning, reliability, and age — leaving only price, which is determined by Marketing.
Note: Your product will continue to sell with the old specifications up until the completion of the project, at which point it will begin to sell with the new specifications.
Repositioning Project
When a company starts a repositioning project, the product name appears twice on the Perceptual Map (once in its current position, written in black, and once in its new position, written in magenta). The computer also develops an age profile for the current year and projects material costs.
When existing products undergo R&D projects, they continue to produce and sell at their old coordinates until the Revision Date. Any inventory on hand at that time is reworked to match the new coordinates.
Product Invention
Companies also create new products with the R&D spreadsheet. New products are assigned a name (entered in any cell that reads NA– the first letter of all new products should match the first letter of the company name), size coordinate, performance coordinate, and an MTBF specification.
It takes at least one year to create a new product. The farther the new product is placed from an existing product, the longer it takes to develop. You must also go to the Production spreadsheet to purchase capacity and set an automation level one year prior to your product’s release.
Note: The first letter of all new products must match the first letter of the company name.
R&D Definitions
Name Each product's name begins with the first letter of the company name.
New Performance Sets each product's performance level.
New Size Sets each product’s size.
Important: Never enter 0 into the R&D spreadsheet. A value of 0 would move the product to a 0 coordinate on the Perceptual Map.
MTBF (Mean Time Between Failure) Adjusts the MTBF, which determines reliability (the number of hours the product is expected to run before it fails).
Revision Date The date the project will complete. The revision date varies depending on the number of projects under way and the distance the product is moved from its old coordinates.
Note: If the Revision Date for a product is more than one year away, the new coordinates will not appear in the next Courier.
Age at Revision The age (or perceived age) of a product when the project completes. Age is important because some segments want new products while others want older, proven products. For example, suppose a company introduces a product in January of 2007. A year later (2008) they start a repositioning project with a revision date of August 3, 2008, when the product will be 2.6 years old. When the revised product emerges, the market perceives the age of the redesigned product to be half the former age of 2.6 years (that is, the public perceives the age to be 1.3 years, hence Perceived Age).
R&D Cost R&D projects bill at a rate of $1 million dollars a year. If the dollar amount is less than $1 million, then the project takes less than a year. For projects that cost more than $1 million (therefore taking longer than a year), $1 million will be billed to the current year and the balance to the following year. Projects begin on January 1. If a product is still in R&D on January 1 of the following year, you cannot begin a new revision project for that product. The spreadsheet locks the line so that you can make no further changes. Therefore, companies should usually plan all R&D projects to complete in less than one year.
Material Cost Material costs are driven by the MTBF rating and by the placement on the Perceptual Map. Higher performance and MTBF values, and smaller size values increase material costs.