Your instructor can customize the simulation scenario. The information below is specific to yourindustry.

The sensors your company manufactures are incorporated into the products your customers sell.Your customers fall into five groups which are called market segments. A market segment is agroup of customers who have similar needs. The segments are named for the customer's primaryrequirements and are called:

· Traditional · Performance

· Low End · Size

· High End

Customers within each market segment employ different standards as they evaluate sensors. Theyconsider four buying criteria:

· Price · MTBF (Mean Time Before Failure)

· Age · Positioning

1 Positioning

Perceptual Map

Each market segment has different positioning preferences. This is illustrated by the sets of dashedand solid circles in the graphic below. Over time, these preferences will shift (see Section 2.1.5 inthe Team Member Guide for more information).

Perceptual Map Form: Segment circles and ideal spots for Round 0 are shown below (see Section 3.1 in the Team Member Guide for more informationabout segment circles and ideal spots).

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Drift Rates

Each year, the segments drift the length of the hypotenuse of the triangle formed by customers'desire for smaller and faster products.

Table 1 Segment Circle Drift Rates: Every year, customersdemand increased performance (Pfmn) and decreased size.Note that the drift rates vary for each segment.

Pfmn Size Traditional +0.7 -0.7 Low End +0.5 -0.5 High End +0.9 -0.9 Performance +1.0 -0.7 Size +0.7 -1.0

Segment Centers

Table 2: Segment Centers at the End of Each Round: As shown in the Perceptual MapForm above, size is on the vertical axis and performance (Pfmn) is on the horizontalaxis.

Traditional Low End High End Performance SizeRound Pfmn Size Pfmn Size Pfmn Size Pfmn Size Pfmn Size

0 4.3 15.7 1.8 18.2 6.8 13.2 7.3 17.7 2.3 12.71 5.0 15.0 2.3 17.7 7.7 12.3 8.3 17.0 3.0 11.72 5.7 14.3 2.8 17.2 8.6 11.4 9.3 16.3 3.7 10.73 6.4 13.6 3.3 16.7 9.5 10.5 10.3 15.6 4.4 9.74 7.1 12.9 3.8 16.2 10.4 9.6 11.3 14.9 5.1 8.75 7.8 12.2 4.3 15.7 11.3 8.7 12.3 14.2 5.8 7.76 8.5 11.5 4.8 15.2 12.2 7.8 13.3 13.5 6.5 6.77 9.2 10.8 5.3 14.7 13.1 6.9 14.3 12.8 7.2 5.78 9.9 10.1 5.8 14.2 14.0 6.0 15.3 12.1 7.9 4.7

The information in Table 2 reflects the segment centers at the end of the round. Therefore, theRound 0 positions can be seen as the Round 1 starting positions, Round 2 positions can be seen asthe Round 3 starting position, etc. Each month during the simulation year, the segment drifts 1/12thof the distance from the starting position to the ending position.

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Ideal Spots

Table 3 Ideal Spot Offsets: Customers prefer products located this distance from the center of the segmentcircle.

Pfmn Size

Traditional 0.0 0.0

Low End -0.8 +0.8

High End +1.4 -1.4

Performance +1.4 -1.0

Size +1.0 -1.4

The information in Table 3 shows the Ideal Spot "offsets" or distances from the segment center.The ideal spot is that point where, all other things being equal, demand is highest. It is differentfrom the segment center. Why are some ideal spots ahead of the segment centers? The segmentsare moving. From a customer’s perspective, if they buy a product at the ideal spot, it will still be acutting edge product when it wears out.

2 Segment Sizes and Growth Rates

Traditional and Low End sell more units than the high technology segments, High End,Performance and Size. Page 10 of the Capstone Courier, the Market Segment Report, displays totalindustry sales.

Each market segment grows at a different rate. Table 4 lists the beginning segment growth rates foryour industry. The growth rates might change from year to year. Check the Segment Analysisreports in the Capstone Courier each round for the upcoming year's growth rates.

Table 4 Beginning Segment Growth Rates

Traditional 10.5%

Low End 13.3%

High End 17.9%

Performance 22.1%

Size 20.1%

3 Buying Criteria By Segment

These are your products and the primary segments they sell into at the beginning of the simulation.These can change according to your decisions and as the simulation evolves.

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Able TraditionalAcre Low EndAdam High EndAft PerformanceAgape Size

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The buying criteria for each segment, in order of importance, are displayed below. Positioning andAge score information also display. Please see Chapter 3 of the Team Member Guide forexplanations of Positioning, Age, Price and MTBF scores.

3.1 Traditional Segment Buying Criteria (Round 0)

Traditional customers seek proven products at a modest price.

Age, 2 years – importance: 47%Price, $20.00-$30.00 – importance: 23%Ideal Position, performance 4.3 size 15.7 – importance: 21%MTBF, 14,000-19,000 – importance: 9%

Industry Conditions Figure 3.1: Traditional BuyingCriteria

Traditional customers give higher position scores tosensors located in the center of the segment circle.

Traditional customers give higher scores to sensors inthe 2 year range.

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3.2 Low End Segment Buying Criteria (Round 0)

Low End customers seek low prices and well proven products.

Price, $15.00-$25.00 – importance: 53%Age, 7 years – importance: 24%Ideal Position, performance 1.0 size 19.0 – importance: 16%MTBF, 12,000-17,000 – importance: 7%

Industry Conditions Figure 3.2 Low End BuyingCriteria

Low End customers prefer inexpensive sensors withslower performance and larger size.

Low End customers give higher scores to sensors in the7 year range.

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3.3 High End Segment Buying Criteria (Round 0)

High End customers seek cutting-edge technology in size/performance and new designs.

Ideal Position, performance 8.2 size 11.8 – importance: 43%Age, 0 years – importance: 29%MTBF, 20,000-25,000 – importance: 19%Price, $30.00-$40.00 – importance: 9%

Industry Conditions Figure 3.3 High End BuyingCriteria

High End customers demand cutting edge sensors withhigh performance and small size.

High End customers give higher scores to newersensors.

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3.4 Performance Segment Buying Criteria (Round 0)

Performance customers seek high reliability and cutting edge performance technology.

MTBF, 22,000-27,000 – importance: 43%Ideal Position, performance 8.7 size 16.7 – importance: 29%Price, $25.00-$35.00 – importance: 19%Age, 1 year – importance: 9%

Industry Conditions Figure 3.4 Performance BuyingCriteria

Performance customers emphasize performance oversize.

Performance customers want sensors in the 1 yearrange.

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3.5 Size Segment Buying Criteria (Round 0)

Size customers seek cutting edge size technology and younger designs.

Ideal Position, performance 3.3 size 11.3 – importance: 43%Age, 1.5 years – importance: 29%MTBF, 16,000-21,000 – importance: 19%Price, $25.00-$35.00 – importance: 9%

Industry Conditions Figure 3.5 Size Buying Criteria

Size customers emphasize size over performance.

Size customers prefer sensors in the 1.5 year range.

4 Projected Interest Rates

Prime Interest Rate Round 1: 7.6%

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