MOPD – Weekly MeetingsMeeting 1 – Year 15-16

Program outline

Session Task(s) Topic(s) Chapter(s)

1 1-2 Customer analysis and

segmentation

Defining the competitive set

Customer analysis

2 3-4 Product development and

forecasting

New products

Market potential and sales forecasting

3 5-6 Strategic capacity

planning and decisions

Location planning

Strategic capacity planning and Decision

theory

Location planning and analysis

4 7-8 Capacity planning and

decisions(cont.)

Project management

Process and facility layout

Strategic capacity planning and Decision

theory,

Project management

Process selection and facility layout

5 9-10 Quality management

Inventory management

Quality management and control

Inventory management

6 11-12 Aggregate planning

Scheduling

Aggregate planning

Scheduling

1

MOPD

Weekly meeting 1

2

Levels of competition Examples?

1. Budget competition

2. Generic competition

3. Product category competition

4. Product form competition

1. Budget: sport and clothing Picked: clothing

2. Industry: pants, shirts, underwearPicked: pants

3. Type of product: short, slim-fit, …Picked: slim-fit

4. Product form: Diesel, HandM, … Picked: handM

Competition level

3

Manager

Managerial judgment

Customer

Customer behavioral

data

Customer judgment

Different sources to estimate competition

4

Customer based

measures

Behavioral data

Brand switching

Cross elasticity

Judgement

Overall similarity

(perceptual map)

Similarity within

consideration sets

Product deletion

Substitution in use

Main customer based measures

5

1

• Administer a survey aiming at understanding the perception of your brand versus the perception of other brands

2• Find the most optimal number of dimension

explaining customers’ perception (scree plot)

3• Qualify your dimensions (perceptual map)

Steps to perceptual map

6

Dimension selection 2 Dimensions

Selection of dimensions

7

A B C

A 0.6 0.1 0.3

B 0.2 0.3 0.5

C 0.1 0.1 0.8

Brand switching

8

Time T+1

Tim

e T

Type Pros Cons

Managerial judgment

(ask the managers)

• Knowledge widely available (via

human capital knowledge)

• Only focused on product/service

and markets

Brand switching matrix

(check purchase at time T and T+1)

• Based on actual sales data • Requires sale date for our

products and competitors

Cross Elasticity

(% changes in sales followed by a

change in a marketing variable)

• Broader perspective • Requires historical data (Lagged

effect)

• Requires competitors’ marketing

and sales data

Product deletion

(Inspect reactions to the removal of

our product)

• Understand the substitution

effect from a larger angle

• Can be done via Survey

• Surveys need to be done

Substitution in use

(ask what the customers would

substitute our product with)

• Broader view than previous

(generic or budget level)

• Broader can mean less precise

and too qualitative

Pro(s) and con(s) of five approaches

9

Note: Data are made up

Decision criterion

10

University

Criteria Importance Maastricht Aachen Liege Oxford Cornell

Quality 40 4 3 2 4 5

Reputation 20 4 1 1 5 5

Location 5 4 4 4 2 1

Language 5 5 4 2 5 5

Student life 10 3 4 5 2 2

Price 20 4 5 5 2 1

Compensatory

Rule: Make the sum of the importance weighted consumer perception

Maastricht = 40*4 + 20*4 +5*4 + 5*4 + 10*3 + 20*4 = 395

Find the one with the highest sum,

Note: Sometimes, it might be that the lowest is better

Lexicographic

Conjuctive

Rule: Look at the most important factors and check who is the best in that

category (if two products have the same values, go to second most important)

Winner would be Cornell (5 in the quality)

Rule: Cut of value of one or more attributes using “filters). If one product

does not meet this

requirement, it will not be selected

If your “filters” are not precise enough, several items might come out of a

decision based on this rule

How customers choose (three methods)

11

Economic The economics benefit of buying an object (e.g. reselling it later)

Functional

Psychological

The utility of the object (e.g. a car can drive you somewhere)

The feels of the object. You buy the object because of the image and how it

makes you feel to owe it (buying luxury cloth versus non branded cloth)

Sources of customer value

12

Socio-demographic

Psychographic

How to segment customers

13

1) Easy to find the size of the group

2) Can be reached easily

3) Easy to describe

1) Heterogeneity between Socio-demographic groups is at doubt

2) Homogeneity within a group is at doubt

3) Stability within/between group (e.g. due to time)

Socio-demographic segmentation

14

Output

Selection and naming

Looking at the graph above, 4 clusters seem to be a acceptable answers. However, cluster analysis

is an art. To understand which answer is best, it is valuable to look if 4 clusters make sense in

terms of your answer.

Therefore, if you are able to name those 4 clusters distinctly, you are probably on the right track.

The name is totally up to you, you just need to have a good argumentation for it.

Cluster analysis – Finding the right number of groups

15

Cluster analysis: double check

16

Verticale Icicle plot Dendogram (can be horizontal or vertical)

Making the groups (part I)

Note: the data are made up (incl. the Euclidian distances)

17

Oxford

Cornell

Maastricht

Liege

Aachen

4:

Oxfo

rd

5:

Corn

ell

1:

Maast

rich

t

3:

Lie

ge

2:

Aach

en

1 x x x x x x x x x

2 x x x x x x x x

3 x x x x x x x

4 x x x x x x

Number

of

clusters

Cases

0.1

5

0.4

0.2

8

0.9

Making the groups (part II)

18

1) Heterogeneity across segment

2) Homogeneity within segment

3) Stability

1) Hard to quantify the size

2) Hard to label the groups

3) Hard to reach

Psychographic segmentation

19

MOPD

Extra questions

20

A B C

A 0.6 0.1 0.3

B 0.2 0.3 0.5

C 0.1 0.1 0.8

Brand switching

21

Time T

Tim

e T

-1

Question

Answer

Based on the previous table, which of the statements is true?

A. A’s customers are the least loyal

B. 20% of the customers will buy B

C. B is loosing most of its customers to C

D. Product C is complementary to B

Answer: C

Exam time!

22

Decision criterion

23

Question

Answer

Based on the table before and using the lexicographic rule, which product should I buy?

A. WinBook

B. HP

C. Dell

D. Toshiba

Answer: A

Exam time!

24

Question

Answer

Customers of company Panda are buying their products because it makes them feel good. Which

customer value should Panda focus on while doing advertisement?

A. Functional

B. Emotional

C. Parental

D. Psychological

Answer: D

Exam time!

25

Question

Answer

Which of the following argument(s) are/is in favor of using psychographic segmentation?

A. Homogeneity between groups

B. Heterogeneity within groups

C. Easy to describe

D. Stability over time

Answer: D

Exam time!

26

Data

Answer

Which of the following statements is true?

How many clusters should you make?

A. 3

B. 4

C. 7

D. 8

Answer: B

Exam time!

27

Icicle plot

28

Question

Answer

Based on the previous output, what does China cluster with for its first cluster?

A. Germany

B. France

C. France and Russia

D. France, Russia, and Poland

Answer: D

Exam time!

29

Cluster output

30

Question

Answer

Regarding the previous output, which statements is false?

A. The last remaining cluster is only composed of the initial clusters 1 and 2

B. The output is an agglomeration schedule

C. The coefficients are a measure of within group heterogeneity

D. We should stop at stage 7

Answer: A

Exam time!

31

We wish you Success!

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