Research and Development

Research and Development is what it sounds like. There is where you develop your product for the market. Depending on how you position your product, it will automatically move that product into a certain segment of the industry. If you don't update your product accordingly, it will fall into a different segment of the industry (e.g. If you don't update you High End product, it will eventually fall into the Tradition market, and then the Low End market). Lets examine the terminology first.

Name: This is the name of your product. It has no other meaning and it doesn't affect anything other than just having a name just like Samsung Galaxy Note, Samsung Galaxy S, Samsung Tab, etc.

New Pfmn: This is where you set the performance of your product for the next year. It is pretty self explanatory as to what performance means. Updating this will cost money and it will take time. Market such High End has a high demand of the best performance item.

New Size: This is where you set the size of your product for next year. Also self explanatory. Updating this will cost money and it will take time. Market such as Size segment has a high demand for small products.

MTBF: This is an abbreviation of Mean Time Before Failure. This means how long the product will last before it breaks. This is where you set the MTBF of your product for next year. Market such as Performance has a high demand for long lasting products. This number is also in the ten thousands according to what the market wants. If you go lower, people will not buy your product. Lowering and upping the MTBF will cost money both ways. A bit of an advice is to, according to how much money you can allocate, put it on max for Performance (27000), medium for Size and High End, and low for Low and Traditional (12000 and 14000 respectively). Remember, the higher the number, the more expensive it will cost to produce every year because you are putting more money into making a product that will last longer. For Low and Traditional, you don't necessarily have to put it on the lowest. Longer lasting product will obviously sell better but customers from those segments do not really care for such stat as much as other segments.

Revision Date: This is the date for when your product will be coming out into the market after revision. This means that every update you perform into performance and size, it will take time to edit. The time increases by how big of a change you put into the product. The ideal time I found to be good at releasing a new product is around September-October (Coincidence that Apple releases new iPhones around that time?) with enough time to make an impact for the year's sale. Remember, NEVER to go over a year because you will only have what you have left over in your inventory if you can't get the new product out in time for the year.

Age at Revision: This is the age of the product after it is updated. Each revision/update to the product cuts the age in half. Plan accordingly. What do people want in High End products? What do people want in Low End products? It's not the easiest to control the age of the product 100% accurately, but it's good to stay in a range and things like High End and Low Ends are easy to manage.

R&D Cost: This is the cost of how much it will cost to update your product. This is possibly the only factor that will prevent you from making the perfect product because you're limited on the amount of money you have. You want to upgrade as much as possible to not go under. If you don't have that much money to allocate, don't overspend. Update according to your budget.

Material Cost: This is the cost of producing each product. If you did not update your product, it will continue to cost the same amount to make that product. If you update it, it will cost more to make that product. What does this mean? The better the product, the more it will cost to produce. For example, Ark cost about $15 to make. If I think this following year, I will sell 1000 of Ark, I will make 1000 of those product costing me $15,000 to product the inventory for sales. This cost can be lowered with Automation which we will go into later as it is part of another section.

Position: Straight forward. Show you where your product currently is in terms of the different market. It also shows you where the new product will be. As a product means more towards a circle, it will sell more in that market and less in the other market. Being a product that fits into the Traditional market does not necessarily mean that product will only sell in that market. People from Low End market might also buy it too if the position of the product is near the top left of the Traditional circle. Though you might not want to create a product that is in the middle of two market as people might get confused and not really buy out your inventory.

Age Profile: Simple. It tells you the age of your product, where it will be by the end of the year, and where it will be if you update your product. I believe this chart only updates on the Excel version and not the browser version. But don't quote me on that as I haven't tried this simulation in a long time.

Now that all sections are fully explained and you should understand what they mean, what are some tricks and tips that I can provide?

As a rule of thumb, update your product based on how much money you can allocate. The more you update, the most it cost to update and the more it cost to produce. But it's a different story if you're controlling the whole market. If you're raking in a lot of money, just go wild on it and make the perfect product. This is why Samsung is such a leader in the smartphone market. The more money you have, the better product you can make, the more you sell, the more money you get. It's a vicious cycle.

Another tip is to produce new products as soon as possible. Most simulations only give you 8 years to work with. The more product you have in the market, the more you can stomp on other people. As for making the product, plan accordingly to the position you want and when this product is coming out. If you're making a High End product and it doesn't come out until 2 years later, you want to invest in position that are 2 years later so your product will come out with up to date position at the age people wants. Same goes for Low End. People want a 7 years old product. You want to set the stat of your new Low End product to match the 7th year's stat, may it be the stat of a Traditional product. Let it age into the Low End. That way, you can just leave alone and set automation to max so all you do is have machine produce the same product for 7 years without any other cost of having to do R&D or man strength to produce this product. This is how you win this simulation! I don't advice leaving existing products to age into other groups as there are down times when people don't buy your product as much because it's not really something that belongs to any markets (e.g. Letting your High End product aging into Traditional). These down time might not work in your favors in the long run. Unless you're really tight on money then it'd be a reasonable solution to not having to spend more money on updating.

There are also many more ways to go about this section! Put your imagination into it and good luck!

Question? Comments? Suggestions? Leave them in the comment section!