TEAM Y

Christina Crawford Mike Meserole Ron King Pete Stupak Jim Bruno

Agenda
 Brief History  SWOT Analysis  Main Strategies  SONITE - What went right and wrong  VODITE What went right and wrong  Lessons learned, recommendations

Product Characteristics
PRODUCT
SYGU* SYCA SYGX SYCX SYCP** SYCH

R&D
PSYGU PSYCA PSGU1 PSCA1 PSYCP PSYCH

WEIGHT (Kg)
18 13 18 13 13 16

DESIGN (INDEX)
3 8 7 8 8 9

VOLUME (Dm3)
75 40 75 40 50 68

MAX FREQ (KHZ)

25 40 18 30 41 28

POWER (W)
12 75 37 60 84 57

SEGMENT
---Buffs Others Singles Prof HiEarners

PRODUCT

R&D

AUTONOMY (M)
52 60

MAX FREQ (KHz)

12 13

DIAMETER (Mm)
55 56

DESIGN (INDEX)
6 7

WEIGHT (G)
55 60

SEGMENT

VY02 VY03

PV004 PV005

Adopters Followers

*Dropped in Period 3 **Dropped in Period 9

Team Y - Timeline
 Period 0 - Introduced SYCA, SYGU  Period 1 - Increased advertising and

advertising research budget  Period 3 - Introduced SYGX, dropped SYGU , requested Loan  Period 4 - Introduced SYCX, did not purchase marketing reports

Team Y Timeline Cont.

 Period 5 - Introduced VY02, interest paid,

loan received  Period 6 - Base cost reduction SYCX, VY02  Period 8 - Introduced SYCH, SYCP, base cost reduction VY02  Period 9 - Introduced VY03  Period 10 - Dropped SYCP

Team Y - Budget
Budget (k) 30,000
26,350 25,350 25,850

Budget (k)

25,000 20,000 15,000

10,550 14,050 11,450 9,150 7,150 8,250 11,600

22,900

10,000 5,000 0

5 Period

10

Loan in Period 4

Sales Force
TEAM
Number of Salespeople 250 200 150 100 50 0 65 71 80 80 60

- A ES FORCE
216 226 171 110 128 100

5 Period

10

Sonite - Segment Growth

SEGMEN GROW H
SEGMEN SIZE (KU) 1,500 1,000 500 0 1 Buffs 2 3 4 Pr s 5 6 PER OD 7 8 9 10

Singles

HiEarners

Others

Vodite Segment Growth

VODITE - SEGMENT GROWTH
2000 Size (KU) 1500 1000 500 0 1 2 5 6 7 8 9 Period Innovators Adopters Followers 3 4 10

Sonite Life Cycle

E
300,000 250,000

LIFE LE LYSIS Y V LUME S LD PE P

DUCT

V LUME S LD

200,000 150,000 100,000 50,000 0 1 2 3 4 5 6 7 8 9 10 11

PE I D SYGU SYCA SYGX SYCX SYCP SYCH

Sonite Competitors Market Share

MARKET SEGMENT - OTHERS
1.1% 17.0%

22.0%

7.9% 26.0% SAME SEXY SIOT SUMS SYGX

25.9%

MISC.

Sonite Competitors Market Share

MARKET EGMENT PROFESSIONALS
17.4% 3.1% 34.0%

12.6% 32.9% NK L I I N MI .

Sonite Competitors Market Share

MARKE SEGMENT 14.3 11.0 2.1 44.6

IEARNERS

17.9

10.2

ALT

ILO

OHE

UHE

CH

MI

Sonite Competitors Market Share

MARK T HAR I LES

5.3% 25.0% 45.5%

13. %

10.5% SOSY SUDS SYCX MISC.

SI

Sonite Competitors Market Share

MARKE SE MEN - BUFF
16.5% 5.1%

17.8%

10.2% 37.7% 12.8%

SA T

SA E

SE

S N

SY A

S .

Vodite Competitors Market Share

MARKE SE MEN - INN
37 41 35 85 83 20

RS

69 9 AN VANE VANQ VERJ V D V 2 V 3

Vodite Competitors Market Share

MARKET EGMENT EARLY ADOPTERS
10% 9% 6% 24%

24% 4% VAIN VANE VANQ VERJ 23% VO I VY VY 3

Vodite Competitors Market Share

MARKET EGMENT - FOLLO ERS
5.5 0.2 0.7 12.3 0.5 41.1

39.7 O 2 Y03

Strengths of Competitors
 Team A-Market capitalization, high market share, 4

Sonites and 3 Vodites, 198 salespeople  Team E-High Sonite market share(P,O), 2 Sonites and 1 Vodite, 135 salespeople  Team I-High Sonite market share (S,O), 4 Sonites, high ROI  Team O-Large HiEarners market share, 3 Sonites and 1 Vodite, high Innovs market share  Team U-High singles market share, 3 Sonites

Weaknesses of Competitors
 Team A-No product aimed at Singles, High

marketing expenses  Team E-Small Vodite market share, 2 Sonites  Team I-No Vodite, one product(SIGN) produces most of sales  Team O-80 Salespeople, low Sonite market share, 1 Vodite aimed at Innovs  Team U-No Vodite, low Sonite market share, no product aimed at Pros

Opportunities for Competitors

 Team A-Singles product, buy out another team,

continue to cut costs and increase margins  Team E-Singles, HiEarners product, increase Vodite market share, increase advertising  Team I-Buffs product, produce a Vodite product, hire more salespeople to increase brand awareness  Team O-Others product, make Vodite for Followers segment, increase advertising for Vodite  Team U-Pros product, produce a Vodite product, hire more salespeople to increase brand awareness

Threats for Competitors

 Team A-Two companys merging, new anti-trust

laws  Team E-Buy out from another company, change in consumer preferences  Team I-SIGN product no longer popular with Singles, Vodite segment continues to grow  Team O- Buy out from another company, change in consumer preferences  Team U- Buy out from another company, Vodite segment continues to grow

Sonites
 Strategy: Tailor a single product to each customer

segment type and market it as long as it has a positive effect on net contribution.
SYCA SYCX SYCP SYGX SYCH Buffs Singles Professionals Others High Earners

Design and Development Strategies

 How to chose product characteristics
Conjoint analysis
What do market segments want?
Design, Max Freq., Power, and Price

Semantic scales
Brand Perceptions and Ideal Values
Information source for Weight and Volume

The lower the Base Cost the better!

Price and Production Strategies

 Price
Selling price is approx. 64% of suggested retail Mass merchandisers sell at 10% discount

 Production
Level: combination of purchase intentions, market growth, market share, and strategy adjustments For ongoing products, inventory is better than lost sales

Advertising and Sales Force Strategies

 Advertising
 More during product introduction
 Higher values for advertising research too

 Utilize advertising experiments  If you want to increase sales you better increase your advertising

 Sales Force
 Where is the targeted segment shopping?  Competitive forces  Sales force experiments

Brand Results

Brand

When Offered 1-10 1-2 3-10 4-10 8-10 8-9

Units Sold (KU) 1,222 221 1,370 916 155 44

R&D K$ 1,280 1,180 1,190 1,500

Advertising K$ 22,801 4,650 14,925 10,165 5,400 2,200

Sales Force K$ 6,907 1,870 7,152 5,291 1,842 905

Inventory K$ 788 66 693 973 651 374

Net Contrib. K$ 169,233 14,288 73,384 38,095 9,625 (1,939)

ROI

SYCA SYGU SYGX SYCX SYCH SYCP

555% 217% 305% 216% 106% -38.9%

Performance-Market Shares
45

arket Sha Team Y's Segment

40

35

30

25

20

15 Buffs Singles Professionals High Earners Others

10

5 Period

What Went Right

 Increased market share in the following segments:
Buffs, Singles, and Others

 Hold the highest market share of the Buffs  Climbing our way back into High Earners segment  Positive net contribution for 4 ongoing Sonite products
SYCA, SYGX, SYCX, and SYCH

What Went Wrong

 Often underestimated production  Went from first (37.4% MS) to fifth (1.4% MS) in the professionals segment
Waited too long to tailor a product to this segment Once we decided to tailor a product, there was too much competition Too little spent on advertising and salespeople

What Went Wrong (cont)

 Not competitive in High Earners market for many years
Did not tailor a product to their needs until period 8
Thought we could just adjust price of existing product We were wrong!

Vodite Market
 Strategy: Maximize profitability by having two

products targeting the Followers segment.

VY02 Adopters and Followers Followers

VY03

Design and Development Strategies

 How to chose product characteristics
Conjoint analysis
What do Vodite market segments want?
Adopters: Max frequency and price Followers: Max Frequency, price,and autonomy

Semantic scales
Brand perceptions and ideal values
Information source for weight, diameter, and design

Time-to-Market is essential

Price and Production Strategies

 Price
Selling price is approx. 64% of suggested retail Mass merchandisers sell at 10% discount

 Production
Level: combination of purchase intentions, market growth, market share, and strategy adjustments For ongoing products, inventory is better than lost sales

Advertising and Sales Force Strategies

 Advertising
 More during product introduction
 Higher values for advertising research too

 Utilize advertising experiments  Perceptual objectives for max frequency, autonomy, and price

 Sales Force
 Where is the targeted segment shopping?  Competitive forces  Sales force experiments

Brand Results

Brand

When Offered 5-10 9-10

Units Sold (KU) 809 327

R&D K$ 8,160 3,000

Advertising K$ 20,442 6,550

Sales Force K$ 6,171 1,847

Inventory K$ 7,697 1

Net Contrib. K$ 137,423 40,526

ROI

VY02 VY03

324% 356%

Performance-Market Shares
30

arket Share (% Team Y's Segment

25

20

15

10

Innovators Adopters Followers

5 Period

What Went Right

 Profitable Vodite products
VY02 - K$137 Million VY03 - K$40 Million in 2 periods

 Second to Team A in Vodite products  VY03 well positioned for Follower segment

What Went Wrong

 Lost first-to-market advantage  Some underestimation of production  Waited too long for VY03

Recommendations
 Dont wait on new market area  Advertise aggressively at product launch  Use advertising research, perceptual

objectives  As product matures, reduce advertising, increase sales force  Keep price in line with target market segment