4.1.1 Changing Performance, Size and MTBF

A repositioning project moves an existing product from one location on the Perceptual Map to a new location, generally (but not always) down and to the right. Repositioning requires a new size attribute and/or a new performance attribute. To keep up with segment drift, a product must be made smaller (that is, decrease its size) and better performing (that is, increase its performance).

Positioning Costs

Positioning affects material costs (Figure 4.1). The more advanced the positioning, the higher the cost. The trailing edge of the Low End fine cut has the lowest positioning cost of approximately $1.00; the leading edge of the High End fine cut has the highest positioning cost of approximately $10.00.

Figure 4.1 Approximate Material Positioning Costs: Material costs are driven by two factors, reliability (MTBF) and positioning. Positioning costs vary depending on the product’s location on the Perceptual Map. Products placed at the trailing edge of the segments have a positioning cost of approximately $1.00; products placed on the arc of the leading edge have a positioning cost of approximately $10.00. Products placed on the arc halfway between the trailing and leading edges have a positioning material cost of approximately $5.50. While the segments will drift apart, and the distance between the leading and trailing edges will increase, the positioning cost range will not change. The leading edge will always be approximately $10.00, the trailing edge will always be approximately $1.00 and the midpoint will always be approximately $5.50.

Reliability (MTBF) Costs

The reliability rating, or MTBF, for existing products can be adjusted up or down. Each 1,000 hours of reliability (MTBF) adds $0.30 to the material cost. A product with 20,000 hours reliability includes $6.00 in reliability costs:

($0.30 * 20,000) / 1,000 = $6.00

Improving positioning and reliability will make a product more appealing to customers, but doing so increases material costs.

Material costs displayed in the spreadsheet and reports are the combined positioning and reliability (MTBF) costs.

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