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Dodge Neon. Presented By: Doug Fala, Greg Hodge, Lisa Patterson, Jody Thyen, & Anne Matthews. Strengths Low cost Great fuel mileage Safety. Weaknesses Poor performance ratings Low market share Ineffective advertising campaign. Major Competitors Honda Civic Ford Contour
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Dodge Neon Presented By: Doug Fala, Greg Hodge, Lisa Patterson, Jody Thyen, & Anne Matthews
Strengths • Low cost • Great fuel mileage • Safety • Weaknesses • Poor performance ratings • Low market share • Ineffective advertising campaign • Major Competitors • Honda Civic • Ford Contour • Toyota Corolla • Saturn
Decision 1 • Goals • Raise market share from 8.4% to 10.0%. • Increase contribution from $118M to $160M. • Reduce fixed costs. • Results • Raised market share from 8.4% to 9.7%. • Increased contribution from $118M • to $137M. • Lowered fixed cost by increasing • plant capacity.
Decision 1 cont’d... • Changes • Introduced a special interest rate of 4.9%. • Offered a $500 rebate & increased production on DX models. • Offered dealer incentives. • Increased production capacity from 69% to 98%. • Increased advertising budget from 17.3M to 21M. • Targeted ‘new families’ & ‘commuters.’
Decision 2 • Goals • Raise market share from 9.7% to 10.5%. • Drive sales toward the DX model. • Increase profit margins per unit. • Increase sales in the Great Lakes & Pacific regions. • Results • Market share dropped from 9.7% to 9.2%. • Contribution from $137M to $90M. • Profit margins increased by 20% on the • base model & 14% on the DX model. • DX sales increased by 3% from • decision 1.
Decision 2 cont’d... • Changes • Implemented a $130M vehicle upgrade. • Increased dealer incentive goals. • Increased production capacity from 98% to 116%. • Changed advertising demographic target from ‘income’ to ‘age.’ • Changed advertising psychographic target from ‘economizers’ • to ‘traditionals.’
Decision 3 • Goals • Increase market share from 9.2% to 11.5%. • Increase our sales profit margin. • Change our advertising strategy to better fit our • customers. • Results • Raised market share from 9.2% to 11.7%. • Increased contribution from $90M • to $210.5M. • Profit margins on the base model • increased from 2,653 to 3,009 & • 4,103 to 4,527 on the DX model.
Decision 3 cont’d... • Changes • Introduced a special interest rate of 1.9%. • Offered a $1000 rebate on the base model & $1500 rebate on • the DX model. • Eliminated dealer incentives. • Decreased production capacity from 116% to 98%. • Increased the MSRP price of the vehicle by 3.5%. • Adjusted our media allocation - less magazine ads • & more T.V. commercials.
Decision 4 • Goals • Maintain at least a 10% market share. • Increase sales of the DX model. • Maintain profit margins per unit. • Maintain current fixed cost. • Results • Market share dropped from 11.7% to 9.54%. • Contribution dropped from $210.5M • to $130M. • Profit margins remained at 3,009 on • the base models & 4,527 on the DX.
Decision 4 cont’d... • Changes • Shifted production to produce more base models. • Decreased our advertising budget from $21M to $17M. • Shifted our media allocation to more newspaper ads & less T.V. • Decided NOT to offer a new model because of our vehicle • upgrade that hit last quarter.
Decision 5 • Goals • Sell 60,000 units. • Maintain a market share of 9.54%. • Maintain profit margins per unit. • Results • Raised market share from 9.54% to 9.78%. • Increased contribution from $130M • to $137.4M. • Profit margins remained constant at • 3,009 (base) & 4,527 (DX). • Sold 59,500 units.
Decision 5 cont’d... • Changes • Increased our T.V. media allocation by 10% and decreased • our newspaper allocations by 10%.
If we had it to do over... • Should have offered an interest rate lower than 4.9% in decision 1. • Should have been more aggressive with special interest rates & rebates in decision 2. • Should have done a better job at targeting our customers with our advertising tactics.
