Mini-Sim #3

Pick a SHAPE that best aligns with your segment PREFERENCES.

Teardrop Rucksack [Comfort is #1 with this segment followed by Capacity.]

Unit volume is one thing but to truly asses the potential of a market segment, you need to look at the revenue potential. Revenue potential is MARKET SIZE multiplied by the AVERAGE PURCHASE PRICE. What is the total market revenue of all market segments combined?

$4,118,000 [900,000+350,000+1,260,000+840,000+768,000]

Part of developing a profitable product is determining how much to spend to produce your product. While industry requirements vary, a good rule of thumb is to set a 50% GROSS MARGIN. A 50% gross margin for a product that sells for $100 means that the cost of the product is $50. Given the AVERAGE PURCHASE PRICE for the Urban Commuter, what product cost should you target to achieve a 50% gross margin?

22.5 [45*.50]

Look at the data under PURCHASE BEHAVIOR. How often do consumers in this segment purchase a backpack?

A purchase every four years

Which characteristic is most important for the Urban Commuter segment?

Comfort

As we get ready to move into the heart of this challenge and aligning PREFERENCES with features, take another look at the PREFERENCES for each segment. If you wanted to design a backpack with a CHARACTERISTIC that appealed to more than one segment, which one would you focus on?

Comfort [At 56% for Urban Commuters and 62% for Luxury Trendfollower, the preference for comfort is two to one over the next closest preference.]

Based on your calculations, which segment will net the largest revenue?

Outdoor Enthusiast

Price

Roughly $56 [$37/unit *.50%=18.5] [37+18=56]

Review the DEMOGRAPHICS for each market segment. You can find an overview of the TOTAL MARKET SIZE and the size of each market segment on the SEGMENTS/SUMMARY tab. Which market segment represents the greatest portion of the entire market at close to 36%?

School Children [at 35,000]

There are so many factors that need to be considered when determining which market segment to target. You have already determined that Urban Commuters purchase a backpack every four years. Now look at the PURCHASE BEHAVIOR for all market segments. Based on the purchase rate, which market segment is the most attractive?

Urban Commuters [At 23%, their 2014 purchase rate is the highest for all the target segments.]

Features

Water bottle Waterproofing Solar device

Now pick a STRAP that best aligns with segment PREFERENCES.

Wide Padded [Decent comfort and capacity numbers]