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AudioMax Michael Adamo Helen Butz Rob Davis Ray Demaio Joey Mayfield James McKeague Nathan Steinhubel.

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Presentation on theme: "AudioMax Michael Adamo Helen Butz Rob Davis Ray Demaio Joey Mayfield James McKeague Nathan Steinhubel."— Presentation transcript:

1 AudioMax Michael Adamo Helen Butz Rob Davis Ray Demaio Joey Mayfield James McKeague Nathan Steinhubel

2 Ease of Learning Consumer’s Concerns: 1.Having more special commands can lead to numerous errors and, ultimately, makes the VRD more difficult to comprehend. 2.Detailed tutorials are often paced slowly and can be rather elementary. 3.Availability of Customer Service Support. AudioMax

3 AudioMax’s Strategy Ease of Learning Rating of (3) + High Customer Service Budget Allocation = Maximization of Consumer Interests! Both Technological and Non-Technological Consumers AudioMax

4 Customer Service Allocation/Module ModuleCustomer Service Allocation 1$68, $98, $120, AudioMax

5 Error Protection Consumer’s Concerns: 1.More Error Protection = Slower VRD. 2.Conservative users prefer a relatively high level of error protection, while more advanced users don’t. AudioMax

6 Attribute Expenditures/Module Module Special Commands Error Protection Ease of Learning AudioMax

7 Average Customer Preferences Special Error Ease of Segment Commands Protection Learning Students Home Users Assistants Creators Managers Parents AudioMax

8 Result: Doing so would have reduced our unit production cost: = $4(SC) + $3(EP) + $2(EL) –Which would increase our contribution to covering fixed expenditures and, ultimately, increasing net income for the period. AudioMax

9 Special Commands Consumers are only interested in the commands that they can utilize because having a VRD with multiple special commands has the following adverse effects: 1.Increases The Error Rate 2.Decreases The Ease of Learning. AudioMax

10 Special Commands –As a result, we established the Special Commands rating at level 13 and kept it at this level through all 5 modules. –We felt this level was appropriate because it positively correlated with the average customer preference report purchased in Module 1. AudioMax

11 Average Customer Preferences Error Ease of Segment Commands Protection Learning Students Home Users Assistants Creators Managers Parents AudioMax

12 Promotion Advertising Expenses Trial$309,000 Period 1$309,000 Period 2$556,000 Period 3$350,000 Period 4$386,000 Period 5$316,000 AudioMax

13 Promotion

14 How we allocated advertising expense… Production Allowance for more production Salaries Dependent upon sales AudioMax

15 Promotion Sales Force Channel 1Channel 2 Trial$140,000$40,000 Period 1$140,000$40,000 Period 2$200,000$80,000 Period 3$220,000$280,000 Period 4$200,000$300,000 Period 5$200,000$300,000 AudioMax

16 Promotion

17 Sales Promotion Channel 1Channel 2 Trial20,00010,000 Period 150,00080,000 Period 2100,000120,000 Period 380,000115,000 Period 480,000115,000 Period 5100,000120,000 AudioMax

18 Promotion AudioMax

19 Placement Group Decisions Channel Selection Channel Strategy Successes Failures AudioMax

20 Placement Group Decisions Choosing a Channel Use of the table adapted from the book Provided us with customer attributes AudioMax

21 Placement SegmentsPriceSpecial Commands Error Protection Ease of Learning Reason for Use % of Last Year’s Sales Modern Student VeryLowModerateLowFun/School20% Home UserModerateLowModerateHighFun15% Harried Assistant LowModerateLow/ModerateHighWork25% Professional Creators LowHighModerateLowWork10% High Tech Managers LowHighModerateLowWork/Social22% Concerned Parents Low to Moderate LowModerateHighLearning8% AudioMax

22 Placement Channel Selection We Decided to Focus on Modern Student Professional Creators High Tech Managers We believed these people were Channel 2 AudioMax

23 Placement Channel Strategy We would target our product towards Channel 2 What we Found Creators and Managers were not Channel 2 AudioMax

24 Placement Problems and Success Problems Possible higher margins based on correct identification Successes We were able to straddle the Channels This helped us to gain moderate margins AudioMax

25 Pricing, Trial Run and First Period Channel One Initial Price = $403 –Skimming Strategy Status as well as functionality Channel Two Market Penetration Strategy Main Focus College students are price sensitive Home users more likely to buy new product if cheap AudioMax

26 Pricing, Second Period Channel One Lowered price to $379 to stay competitive EasyVD $260 thevoice $399 YeHu!!! $398 Channel Two Thought sales were good, no changes necessary 3 Ch. Two User Segments (mkt share) Students 38% Home Users 29% Parents 22.5% AudioMax

27 Pricing, Third Period Channel One thevoice lowered price to $359 to our $379 Brand Awareness was 78% –Were not worried at the time thevoice was 4 th. Kept price constant Channel Two 1 st in sales, 2 nd in profit –Thought we could safely raise price to $250 (2 nd highest) We had the brand name and high sales AudioMax

28 Pricing, Fourth Period Channel One Lowered price to EasyVD’s range ($299) Average Customer Price Range (all too high) Equal in 2 product attributes & better in one Better Product in Ch.1 than YeHu!!! & $100 less Channel Two Lowered ten dollars to $240 to stay competitive Trying to curb EasyVD’s run Period 3 was lowest sales yet AudioMax

29 Pricing, Fifth Period Channel One Period 4 showed large growth in sales Raise price $10 to gain some needed profits Estimated overall profits to be close between EasyVD, AudioMax & YeHu!!! Channel Two Kept our competitive price Didn’t want to lower and lose precious last period profits Channel Prices had become constant AudioMax

30

31

32 Channel One Price Lowered from $379 to $299

33 AudioMax

34 Lessons Learned Focus on one channel Look long-term with pricing Don’t just follow trends –Find out why they work Buy market research in trial run Entry into the market is key –Good 1 st period kept us afloat AudioMax


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