AudioMax

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

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

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

4. AudioMax Customer ServiceAllocation/Module

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

6. AudioMax Attribute Expenditures/Module

7. AudioMax Average Customer Preferences Special Error Ease of Segment Commands Protection Learning ------- -------- ---------- -------- Students 11.2 4.4 3.7 Home Users 9.6 4.5 7.2 Assistants 12.7 6.3 7.5 Creators 15.7 2.4 3.9 Managers 17.4 5.3 2.7 Parents 5.1 2.2 8.6

8. AudioMax 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.

9. AudioMax 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: • Increases The Error Rate • Decreases The Ease of Learning.

10. AudioMax 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.

11. AudioMax Average Customer Preferences Error Ease of Segment Commands Protection Learning ------- -------- ---------- -------- Students 11.2 4.4 3.7 Home Users 9.6 4.5 7.2 Assistants 12.7 6.3 7.5 Creators 15.7 2.4 3.9 Managers 17.4 5.3 2.7 Parents 5.1 2.2 8.6

12. AudioMax Promotion • Advertising Expenses

13. Promotion

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

15. AudioMax Promotion • Sales Force

16. Promotion

17. AudioMax Promotion • Sales Promotion

18. AudioMax Promotion

19. AudioMax Placement • Group Decisions • Channel Selection • Channel Strategy • Successes • Failures

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

21. AudioMax Placement

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

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

24. AudioMax 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

25. 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 Pricing, Trial Run and First Period

26. 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 Pricing, Second Period

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

28. 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 Pricing, Fourth Period

29. 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 Pricing, Fifth Period

30. AudioMax

31. AudioMax

32. Channel One Price Lowered from $379 to $299

33. AudioMax

34. AudioMax 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 1st period kept us afloat