4-1 Discussion Debrief Round 2 and 3
My plan of attack is the Broad Cost Leader. For Able, my low-tech product, I predicted 1,200
units for Round 2 and placed an order for 1,200 more for production. That was insufficient, so I
filled up again. I set Able's price at $34.00. The margin of Able's contribution was 36%. Labor
expenses were $10.82 and material prices were $10.34. In the low-tech area, Able sold 1,025
units with a real market share of 16.8%, and in the high-tech segment, they sold 168 units with a
real market share of 5.4%. I anticipated that the high-tech market would not be very active since
Able will continue to be a low-tech brand. I now realize that my forecast and production should
have been higher than they were. Customer accessibility was at 45% in Round 2, customer
awareness was at 75%, and the customer survey score was at 22. In the low-tech sector, Able had
a potential market share of 21.3%, while in the high-tech market, it had a potential market share
of 7.1%. For the year, the capacity was 800. Next year, I raised automation from 3.0 to 5.8. In
Round 3, I boosted my expectation for Able to 1,550 units and placed a production order for
1,600 units. 1,408 items were sold by Able, and this time I did not stock up. 184 units remained
in my inventory. I can now clearly see that I created far too many units. I made Able's price
$33.33 instead of $34.00. I was given a $1,122,858 emergency loan. The reason for this was
probably the inventory of remaining units. The margin of Able's contribution was 47%. $9.17
was spent on materials, and $7.61 was spent on labor. I invested $5,000 in hiring new staff and
80 hours of training. I purchased 100 capacity for the following year and boosted automation
from 5.8 to 6.0. For low-tech, the actual market share was 20.2%, while for high-tech, it was
1.5%. For low-tech, the potential market share was 20.6%, while for high-tech, it was 1.4%.
Customer survey score was 22, customer perception was 95%, customer usability was 60%. My
high-tech product, Ava, was introduced in Round 2 in July 2022. Before the year ended, I had
just six months to sell this product. I predicted 274 units for Ava and ordered 278 for
manufacturing. That was likewise insufficient, so I stocked up. I set Ava's price at $42.00. The
margin of Ava's contribution was 23%. Costs for the materials were $17.49, and labor was
$14.42. With a potential market share of 10.8% and actual market share of 8.9% in the high-tech
sector, Ava sold 276 units. Ava had a 300 person total average. For the following year, I
increased automation from 1.0 to 2.0. Customer survey score was 30, customer awareness was
46%, customer accessibility was 61%. For Ava in Round 3, I boosted my projection to 700 units
and placed a production order for 600 pieces. With 597 items sold, Ava ran out of stock. I
reduced the cost of Ava to $41.99. Labor costs came to $13.18 and material prices were $17.63.
The margin of Ava's contribution was 27%. For the entire year, I kept automation at 2.0. For the
next year, I purchased 100 capacities. While potential was 21.7%, actual market share was
16.0%. If I had the ability, I think I could have achieved that goal or come very close to it.
Customer survey score was 38, customer accessibility was 74%, and customer awareness was
76%.
