1. Dodge Neon Presented By: Doug Fala, Greg Hodge, Lisa Patterson, Jody Thyen, & Anne Matthews

2. Strengths Low cost Great fuel mileage Safety Weaknesses Poor performance ratings Low market share Ineffective advertising campaign Major Competitors Honda Civic Ford Contour Toyota Corolla Saturn

3. Decision 1 Goals Raise market share from 8.4% to 10.0%. Increase contribution from $118M to $160M. Reduce fixed costs. Results Raised market share from 8.4% to 9.7%. Increased contribution from $118M to $137M. Lowered fixed cost by increasing plant capacity.

4. Decision 1 cont’d... Changes Introduced a special interest rate of 4.9%. Offered a $500 rebate & increased production on DX models. Offered dealer incentives. Increased production capacity from 69% to 98%. Increased advertising budget from 17.3M to 21M. Targeted ‘new families’ & ‘commuters.’

5. Decision 2 Goals Raise market share from 9.7% to 10.5%. Drive sales toward the DX model. Increase profit margins per unit. Increase sales in the Great Lakes & Pacific regions. Results Market share dropped from 9.7% to 9.2%. Contribution from $137M to $90M. Profit margins increased by 20% on the base model & 14% on the DX model. DX sales increased by 3% from decision 1.

6. Decision 2 cont’d... Changes Implemented a $130M vehicle upgrade. Increased dealer incentive goals. Increased production capacity from 98% to 116%. Changed advertising demographic target from ‘income’ to ‘age.’ Changed advertising psychographic target from ‘economizers’ to ‘traditionals.’

7. Decision 3 Goals Increase market share from 9.2% to 11.5%. Increase our sales profit margin. Change our advertising strategy to better fit our customers. Results Raised market share from 9.2% to 11.7%. Increased contribution from $90M to $210.5M. Profit margins on the base model increased from 2,653 to 3,009 & 4,103 to 4,527 on the DX model.

8. Decision 3 cont’d... Changes Introduced a special interest rate of 1.9%. Offered a $1000 rebate on the base model & $1500 rebate on the DX model. Eliminated dealer incentives. Decreased production capacity from 116% to 98%. Increased the MSRP price of the vehicle by 3.5%. Adjusted our media allocation - less magazine ads & more T.V. commercials.

9. Decision 4 Goals Maintain at least a 10% market share. Increase sales of the DX model. Maintain profit margins per unit. Maintain current fixed cost. Results Market share dropped from 11.7% to 9.54%. Contribution dropped from $210.5M to $130M. Profit margins remained at 3,009 on the base models & 4,527 on the DX.

10. Decision 4 cont’d... Changes Shifted production to produce more base models. Decreased our advertising budget from $21M to $17M. Shifted our media allocation to more newspaper ads & less T.V. Decided NOT to offer a new model because of our vehicle upgrade that hit last quarter.

11. Decision 5 Goals Sell 60,000 units. Maintain a market share of 9.54%. Maintain profit margins per unit. Results Raised market share from 9.54% to 9.78%. Increased contribution from $130M to $137.4M. Profit margins remained constant at 3,009 (base) & 4,527 (DX). Sold 59,500 units.

12. Decision 5 cont’d... Changes Increased our T.V. media allocation by 10% and decreased our newspaper allocations by 10%.

13. Model Sales

14. Profit Margins

15. If we had it to do over... Should have offered an interest rate lower than 4.9% in decision 1. Should have been more aggressive with special interest rates & rebates in decision 2. Should have done a better job at targeting our customers with our advertising tactics.