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CapsimGlobalMarketConditionsReport.pdf

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CapsimGlobal | Market Conditions Report

MARKET CONDITIONS REPORT

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CapsimGlobal | Market Conditions Report

Perceptual Map Each market segment has different positioning preferences. This is illustrated by the solid circles in the graphic to the right. Over time, these preferences will shift (see Page 3 of the User Guide for more information).

Your company manufactures genetic testing devices. Your customers fall into two groups, which are called market segments. A market segment is a group of customers who have similar needs. The segments are named for the customer’s primary requirements: Low Tech and High Tech.

In addition to operating in the USA, your company will now have the opportunity to compete in two additional global markets: Germany and China.

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

+ Price

+ Age

+ Positioning

+ Service Life

To the right is an illustration of the perceptual map from the end of Round 1. You’ll notice the fine cut, and ideal spots for your product to be located.

1. POSITIONING

MARKET CONDITIONS REPORT

Jan 1st 2017 Jan 1st 2018 Jan 1st 2019

CapsimGlobal | Market Conditions Report

Drift Rates Each year, the segments drift up and to the right, resembling the customers’ preference for faster and more accurate products. In each year of the simulation, customers will demand that products move by the following:

Segment Centers The information in the table below reflects the segment centers at the end of the round. Therefore, the Round 0 positions can be seen as the Round 1 starting positions, and so on. Each month during the simulation year, the segment drifts 1/12th of the distance from the starting position to the ending position.

SPEED ACCURACY

SPEED ACCURACY SPEED ACCURACY

Low Tech

ROUND

High Tech

+0.5

4.8

5.3

5.8

6.3

6.8

7.3

7.8

8.3

8.8

4.8

5.3

5.8

6.3

6.8

7.3

7.8

8.3

8.8

6.0

6.7

7.4

8.1

8.8

9.5

10.2

10.9

11.6

6.0

6.7

7.4

8.1

8.8

9.5

10.2

10.9

11.6

+0.7

+0.5

+0.7

POSITIONING

CapsimGlobal | Market Conditions Report

Segment Sizes by Country At the beginning of the simulation, more units in the Low Tech segment are sold than the High Tech segment. With the industry moving to a more global market, projected demand across the three countries at the end of Round 0 is growing. Below is the total number of units demanded during Round 0.

IDEAL SPOTS ACCURACYSPEED

Low Tech

High Tech

+0.0

+1.4

+0.0

+1.4

2. SEGMENT SIZES & GROWTH RATES

Germany ChinaUSA

Low Tech

High Tech

5,838 911 823

3,195 747 263

Growth Rates Over the course of the simulation, each segment in each country will grow at a different rate. However, each segment’s growth will stay constant across the 8-year simulation.

Germany ChinaUSA

Low Tech

High Tech

6% 20% 45%

13% 35% 32%

The information in the table above shows the Ideal Spot “offsets,” or how far away the ideal spot is from the segment center. Remember the ideal spot is different from the segment center in the High Tech market because customers constantly demand faster, more accurate devices.

POSITIONING

CapsimGlobal | Market Conditions Report

SEGMENT SIZES & GROWTH RATES

ROUND

5838

6188

6560

6953

7370

7813

8281

8778

9305

3195

3610

4080

4610

5209

5887

6652

7517

8494

911

1093

1312

1574

1889

2267

2720

3264

3917

747

1008

1361

1838

2481

3350

4522

6105

8241

823

1193

1730

2509

3638

5275

7649

11091

16082

263

347

458

605

798

1054

1391

1836

2424

SEGMENT SIZES OVER TIME

Germany ChinaUSA

GROWTH RATE

13%

20%

35%

45%

32%

LOW TECH SEGMENT

Germany ChinaUSA

HIGH TECH SEGMENT

CapsimGlobal | Market Conditions Report

3. PRICING ANALYSIS

Pricing has a large impact on margins, demand and overall company High Tech. Prior to the beginning of the simulation, your marketing department had already worked collaboratively with local market analysts to understand customers’ acceptable buying price ranges across different countries. They believed that the price ranges, displayed in local currency, will remain valid for the next 8 to 10 years. However… Over time you will need to formulate a strategy of how you will reduce your cost structure, or combat the price pressure from your customers and competitors. Below are tables of the local price ranges your customers will have for all eight rounds.

¤35.00

¤45.00

¤15.00

¤25.00

LOW HIGH

Germany (¤)

¥240

¥305

¥100

¥170

LOW HIGH

China (¥)

$35.00

$45.00

$15.00

$25.00

LOW HIGH

USA ($)

LOW TECH PRICE BY COUNTRY

HIGH TECH PRICE BY COUNTRY

CapsimGlobal | Market Conditions Report

4. CUSTOMER BUYING CRITERIA

USA – Low Tech Segment + Price, $15-$35 — importance: 55%

+ Age, 3 years — importance: 19%

+ Ideal Position — importance: 17%

+ Service Life, 14,000-20,000 — importance: 9%

Germany – Low Tech Segment + Price, ¤15-¤35 — importance: 50%

+ Ideal Position — importance: 21%

+ Age, 3 years — importance: 15%

+ Service Life, 14,000-20,000 — importance: 14%

Germany – High Tech Segment + Ideal Position — importance: 43%

+ Age, 0 years — importance: 33%

+ Service Life, 17,000-23,000 — importance 16%

+ Price, ¤25-¤45 — importance: 8%

China – Low Tech Segment + Price, ¥100-¥240 — importance: 60%

+ Ideal Position — importance: 14%

+ Service Life 14,000-20,000 — importance: 14%

+ Age, 3 years — importance: 12%

China – High Tech Segment + Ideal Position — importance: 41%

+ Age, 0 years — importance: 28%

+ Service Life, 17,000-23,000 — importance 20%

+ Price,¥170-¥305 — importance: 11%

Each of the three countries has varying operating costs. Users must take into account the currency exchange rates, shipping costs, tax rates, tariffs, and defect rates of each country before making final decisions. Users will be given one chance to relocate their factory in Round 1, while their company headquarters stays in the United States. Below is information from the end of last year.

5. REGIONAL OPERATING COSTS

Shipping Costs Ship from USA: $2.5 Ship from Germany: $2.0 Ship from China: $1.5

Factory Defect Rate USA: 4% Germany: 2% China: 6%

Starting Labor Wages USA: $22.05 Germany: $24.03 China: $20.07

Prime Interest Rate – 7.0%

USA – High Tech Segment + Ideal Position — importance: 39%

+ Age, 0 years — importance: 32%

+ Service Life, 17,000-23,000 — importance: 19%

+ Price, $25-$45 — importance: 10%

LOW TECH SEGMENT HIGH TECH SEGMENT

Tariffs USA: 2% Germany: 5% China: 3%

Tax Rates USA – 35% Germany – 32% China – 25%

CapsimGlobal | Market Conditions Report

6. CURRENCY EXCHANGE RATES

Over the years, currency exchange rates adjust in relation to your home currency, which is the U.S. dollar ($). These rates vary, and will move from year to year.

Below, you’ll see the projected rates over the next three years. Projections beyond that are unavailable, but be sure to check each region of the Marketing Department in the simulation for the current year’s exchange rate.

YEAR 0

YEAR 1

YEAR 2

YEAR 3

Currency Exchange Rates

¤0.98

¤0.90

¤1.00

¤1.05

Germany (¤)

¥6.80

¥7.00

¥7.20

¥6.60

China (¥)

$1.00

USA ($)