Misclassification Error
Gini Index
Entropy
P(i|t) what fraction of observation that are in class "i"
slide--13
MC_a = 25%
MC_b = 40%
MC_c = either way we get misclassify 50%, *note take 25 from both branch*
First split, we split on A cuz it has lowest MisClassification error.
Gini Index
Gini_a1 = 0.3444
Gini_a2 = 0.489
T = 2+, 3- 1- 2/5^2 - 3/5^2 = .48 5/9*0.48
F = 2+, 2- 1- 2/2^2 - 2/2^2 = .5 4/9*0.5
Gini Index is better on first split. while Misclassification show same result on 1st split.
Entropy
logP(j|t) / log 2
+:4 +:0
-:3 -:3
7/10(-4/7*log_2*4/7 - 3/7*log_2*3/7)
+
3/10(-0*log_2*0 - 1*log_2*1)
---------------------------------------
0.69
Split on A: Entropy = 0.69, InfoGain: 0.28
Split on B: Entropy = 0.71, InfoGain: 0.26
Wednesday, March 18, 2009
Quality Mgt
Reliability Prediction
Process Capability
goal- produce high volume w/ low defect
world class quality - part per million (ppm)
Sig Sigma
Design program emphasizes engineering control process
2 type of Capability study
1)Peak performance study - how it perform ide0ly
2)Process characterization study -how it perform in actual
1) choose a representative machine or process
2) define the process conditions
3) select a representative operator
4) provide the right materials
5) Specify the gauging or measurement method
6) record the measurements
7) construct a histogram graph
Process Capability Index
C_p=(USL-LSL)/6σ
C_pu=(USL-u)/3σ
C_pl= (u-LTC)/3σ
c_pk=min{C_pl,C_pk}
None centered process choose C_pk with lower tolerance between C_pu or C_pl
Capability requirements
* Process must be normally distributed
* Process must be in control
* Process capaple result:
<1.00 = not capaple
<1.33 = capable, but not acceptable
>1.33 = capable, and acceptable
>2.00 = capable and acceptable (6 sigma)
>5 or 10 = overkill, excessive resource
Capability vs Control
Control only look at variation of process
Capability concern with customer specification
Evolution - Quality Control
come out of Bell lab
Quality Assurance (QA)
-Attemp to raise awareness of quality
*Relate to "guaranteeing quality" of the product
*Put additional emphasis on design
- DFMEA (or FMEA)
- Concurrent engineering
- Process improvement
Total Quality Control (TQC)
Company-Wide Quality Control - all employee should participates
TQM
Six Sigma
Kaizen - Ongoing improvement daily
Hoshin - making long term objective, or break thru objective
Hoshin Kanri - how are u going to achieve Hoshin
Jidoka - Automatinaton detect of defects a) detect defects b) Method of stopping production
Poka-Yoke - by Shigeo Shingo, fail safing or mistake proofing. ie. backup battery in smoke alarm.
Value Chain - are task that add values to customer
chain of customer - customer, seller, customer, seller
supply chain management- who are u'r supplier, sub contract & main contract, logistic, warehouse
Supplier Partnering - trend torward developing close relationship, with fewer supplierLean Operation (JIT), Single source, Dual sourcing
Supplier Parnering
look at them at financial stability, geography, long term labor relation, performance, quality statistic, price stability
supplier certification
supplier audit
Electronic data Interchange (EDI)
Sole-source filters
-
Vendor Management Inventory
Process Capability
goal- produce high volume w/ low defect
world class quality - part per million (ppm)
Sig Sigma
Design program emphasizes engineering control process
2 type of Capability study
1)Peak performance study - how it perform ide0ly
2)Process characterization study -how it perform in actual
1) choose a representative machine or process
2) define the process conditions
3) select a representative operator
4) provide the right materials
5) Specify the gauging or measurement method
6) record the measurements
7) construct a histogram graph
Process Capability Index
C_p=(USL-LSL)/6σ
C_pu=(USL-u)/3σ
C_pl= (u-LTC)/3σ
c_pk=min{C_pl,C_pk}
None centered process choose C_pk with lower tolerance between C_pu or C_pl
Capability requirements
* Process must be normally distributed
* Process must be in control
* Process capaple result:
<1.00 = not capaple
<1.33 = capable, but not acceptable
>1.33 = capable, and acceptable
>2.00 = capable and acceptable (6 sigma)
>5 or 10 = overkill, excessive resource
Capability vs Control
Control only look at variation of process
Capability concern with customer specification
Evolution - Quality Control
come out of Bell lab
Quality Assurance (QA)
-Attemp to raise awareness of quality
*Relate to "guaranteeing quality" of the product
*Put additional emphasis on design
- DFMEA (or FMEA)
- Concurrent engineering
- Process improvement
Total Quality Control (TQC)
Company-Wide Quality Control - all employee should participates
TQM
Six Sigma
Kaizen - Ongoing improvement daily
Hoshin - making long term objective, or break thru objective
Hoshin Kanri - how are u going to achieve Hoshin
Jidoka - Automatinaton detect of defects a) detect defects b) Method of stopping production
Poka-Yoke - by Shigeo Shingo, fail safing or mistake proofing. ie. backup battery in smoke alarm.
Value Chain - are task that add values to customer
chain of customer - customer, seller, customer, seller
supply chain management- who are u'r supplier, sub contract & main contract, logistic, warehouse
Supplier Partnering - trend torward developing close relationship, with fewer supplierLean Operation (JIT), Single source, Dual sourcing
Supplier Parnering
look at them at financial stability, geography, long term labor relation, performance, quality statistic, price stability
supplier certification
supplier audit
Electronic data Interchange (EDI)
Sole-source filters
-
Vendor Management Inventory
Tuesday, March 17, 2009
International business
Political Ideology + FDI
1. The Radical View: brought thru Marxist Theory
Multinational are an instrument to imperialist domination
- Exploitation of host
- Profit go to home
- Key technology
- Important Jobs
- Suppressed foreign weak country
2. Free market View
Country should specialized in producing goods that they're most efficiently - absolute adv
- Specialize
- increase efficiency
- resource transfer benefits both and raise standard of living by increasing PPF
3. Pragmatic Nationalism
- We accept FPI as long as it benefits our nation
- Maximum National benefits & Minimize National Cost. Net benefit is positive.
Benefits of FDI to host country
1. Resource transfer effects
- Capital
- Technological
- Management
2. Employment Effects
1 Direct effect (ex. hire 3000 ppl in host country)
2 Indirect effect ">= than direct"
- Supplier multiplier (many other factories that help the main one)
- Local spending effect
3. Balance of payments effects
2main section (-) payment to another country
(+) receipt from another country
I. Current account
Merchandise trade (goods) - (if exceed 5% of GDP, expect armageddon) 6.5% last year
Services - (banking and insurances) +
Investment income +
Transfer payment -
II. Capital Account
Tracks purchase or sale of assets +
4. Efffect on competition and economic growth
+ productivity
- price
+ innovation
----------------
+ econ growth
BOND market
Primary bond market- new bond
Secondary market - used bond
price of bond go up, yield of it go down
why?
Substitution effect (not a benefits)
1. The Radical View: brought thru Marxist Theory
Multinational are an instrument to imperialist domination
- Exploitation of host
- Profit go to home
- Key technology
- Important Jobs
- Suppressed foreign weak country
2. Free market View
Country should specialized in producing goods that they're most efficiently - absolute adv
- Specialize
- increase efficiency
- resource transfer benefits both and raise standard of living by increasing PPF
3. Pragmatic Nationalism
- We accept FPI as long as it benefits our nation
- Maximum National benefits & Minimize National Cost. Net benefit is positive.
Benefits of FDI to host country
1. Resource transfer effects
- Capital
- Technological
- Management
2. Employment Effects
1 Direct effect (ex. hire 3000 ppl in host country)
2 Indirect effect ">= than direct"
- Supplier multiplier (many other factories that help the main one)
- Local spending effect
3. Balance of payments effects
2main section (-) payment to another country
(+) receipt from another country
I. Current account
Merchandise trade (goods) - (if exceed 5% of GDP, expect armageddon) 6.5% last year
Services - (banking and insurances) +
Investment income +
Transfer payment -
II. Capital Account
Tracks purchase or sale of assets +
4. Efffect on competition and economic growth
+ productivity
- price
+ innovation
----------------
+ econ growth
BOND market
Primary bond market- new bond
Secondary market - used bond
price of bond go up, yield of it go down
why?
Substitution effect (not a benefits)
Monday, March 16, 2009
Data Mining
Miss classification Error
Training Testing
Tree 1(depth4) 11.5% 30.8%
Tree2(depth1) 22.3% 28.2%
Tree3(depth6) o.% 26.7%
-In general, favor the simplest model "Principal of Parsimony" Occam's Razor
on a Training data, a more complicated tree gives better results.
How are classification Tree Generated?
*many algorithms use a version of a "top-down" or "divide-and-conquer" approach known as "Hunt's Algorithm (Page 152):
Use an attribute test to split the data into smaller subset untill there's only pure nodes.
All 30 D_t are "metal"
prediction: metal
"Pure" node
*Usually it is done in a "greedy" fashion.
*Greedy" meanings t hat the optimal split is chosen at each stage according to some criterion
*This may not be optimal at the end event for the same criterion.
However, the greedy approach is the computationally efficient
How to Apply Hunt's Algorithm
Using greedy approach we still have to decide 3 things:
1) what attribute test condidtions to consider
2) what criterion to tuse to select the "best" split
3) When to stop splitting
* For #1 will consider only binary splits for both numeric categorical predictors as discussed on the next slide
* for #2 we will consider miscassification error, gini index and entropy
* #3 is a subtle business involving model selection. It is tricky because we don't want to overfit or underfit.
Misclassification Error
Error(t)=1-maxP(i|t)
*misclassificiation error is usually our final metric which we want to minimize on the test set, so there is a logical argument for using it as the split criterion
*it is simply the fraction of the total cases misclassification
*1-Misclassification error="Accuracy"
Training Testing
Tree 1(depth4) 11.5% 30.8%
Tree2(depth1) 22.3% 28.2%
Tree3(depth6) o.% 26.7%
-In general, favor the simplest model "Principal of Parsimony" Occam's Razor
on a Training data, a more complicated tree gives better results.
How are classification Tree Generated?
*many algorithms use a version of a "top-down" or "divide-and-conquer" approach known as "Hunt's Algorithm (Page 152):
Use an attribute test to split the data into smaller subset untill there's only pure nodes.
All 30 D_t are "metal"
prediction: metal
"Pure" node
*Usually it is done in a "greedy" fashion.
*Greedy" meanings t hat the optimal split is chosen at each stage according to some criterion
*This may not be optimal at the end event for the same criterion.
However, the greedy approach is the computationally efficient
How to Apply Hunt's Algorithm
Using greedy approach we still have to decide 3 things:
1) what attribute test condidtions to consider
2) what criterion to tuse to select the "best" split
3) When to stop splitting
* For #1 will consider only binary splits for both numeric categorical predictors as discussed on the next slide
* for #2 we will consider miscassification error, gini index and entropy
* #3 is a subtle business involving model selection. It is tricky because we don't want to overfit or underfit.
Misclassification Error
Error(t)=1-maxP(i|t)
*misclassificiation error is usually our final metric which we want to minimize on the test set, so there is a logical argument for using it as the split criterion
*it is simply the fraction of the total cases misclassification
*1-Misclassification error="Accuracy"
Thursday, March 12, 2009
Supply Chain Management
Supplier->plants->warehouses D.C->Retailer
Supplier->Plants->Warehoues D.C (1)->Warehouse D.C (2)->Retailer
1st tier vs 2nd tier
Central warehouse and Scattered warehouse
Three Hierarchical Step
1)Network Design: number, location, size of plant & warehouse, allocating space,
Objective & Trade Off
Objective: Design or reconfigure the logistic network in order to minimize annual system-wide cost object to a variety of service level requirement.
Increase # of warehouse typically yields:
+ service level due to reduce travel time to customer
+ cost cuz more safety stock against uncertainties of demand
+ overhead & setup cost
- outbound transportation cost, from Warehouse to customer
+ inbound transportation cost, from mfg to warehouse
Data Collection
(look at slide)
Warehouse Costs.
+Handling cost- labor & ultility, porportional to annual flow through the warehouse
+Fixed cost
+Storage cost
Hub vs Direct
Hub only need to add city to network. n-1 routes Hub can provide more frequent flier
Direct need to add new routes for new city. (n(n-1))/2 ie. Southwest.
2)Inventory Positioning: ID stocking point, select facility to produce & stock. keep no inventory after produced, related to inventory management strategies
3)Resource allocation: determine whether production and packaging of different products is done at the right facility.
Homework
we do number 4 aircraft manufacturing
Supplier->Plants->Warehoues D.C (1)->Warehouse D.C (2)->Retailer
1st tier vs 2nd tier
Central warehouse and Scattered warehouse
Three Hierarchical Step
1)Network Design: number, location, size of plant & warehouse, allocating space,
Objective & Trade Off
Objective: Design or reconfigure the logistic network in order to minimize annual system-wide cost object to a variety of service level requirement.
Increase # of warehouse typically yields:
+ service level due to reduce travel time to customer
+ cost cuz more safety stock against uncertainties of demand
+ overhead & setup cost
- outbound transportation cost, from Warehouse to customer
+ inbound transportation cost, from mfg to warehouse
Data Collection
(look at slide)
Warehouse Costs.
+Handling cost- labor & ultility, porportional to annual flow through the warehouse
+Fixed cost
+Storage cost
Hub vs Direct
Hub only need to add city to network. n-1 routes Hub can provide more frequent flier
Direct need to add new routes for new city. (n(n-1))/2 ie. Southwest.
2)Inventory Positioning: ID stocking point, select facility to produce & stock. keep no inventory after produced, related to inventory management strategies
3)Resource allocation: determine whether production and packaging of different products is done at the right facility.
Homework
we do number 4 aircraft manufacturing
Global economic
march 12
NATIONAL INCOME ACCOUNTING
fundamental goal of organizing = increase standard of living, measure by GDB per capita
NIA=better understanding, with the system and fed.
Related directly with current framework.
Aggregate demand function
Y<-- GDP -- standard of living
Y=C+I+G+NX
C= Consumption "about 70% in US"
I= Investment "shift out PPF, I=S Saving"
G= Goverment spending
NX= Export - Import "about 70% in Japan"
U.S vs Japan
US fell 6.2% economy last year, factor = 65% consumption from 70%
consumption based economy,
has negative Net Export,
has 3% growth rate speed limit of economy
-change in population, population growth rate 1%
-change in productivity, 2%
--------------------------------------------------
3%
Inflation = positive raise in Price, when increase in GDP, Wage price Spiral true fear of inflation.
Inflation distort true values. Lead to Miss allocation of resources, ex. housing market.
FEDERAL RESERVE - US central bank, Ben bernenki
Tools-
Monetary Policy: Interest rate policy a.k.a federal fund rate, its the guidance rate bank follows.
Nation is "overheating" raising GDP, increase interest rate.
National is "recession" slowing GDP, lower interest rate.
last year, 5.25% federal interest rate, now 0%
federal used this tool to increase or decrease growth, in attempt to reduce volitarity, increase stability and maximum employment
Money supply
inelastic goods, if lots of money available, its worth decreased.
Inflation, decrease money supply.
Open market activity- purchase or sale bond
FISCAL POLICY - government spending
Spending + Taxation
deficit spending likely to bring inflation
government make these decision. take time, tend to react with a lag.
Fiscal tend to aggregate business cycle. ex. stimulus packages.
Japan has most debt on the planet.
Japan fell 12.1% economy export based economy what is Y, how is it behave
Bank of Japan - Central bank
NATIONAL INCOME ACCOUNTING
fundamental goal of organizing = increase standard of living, measure by GDB per capita
NIA=better understanding, with the system and fed.
Related directly with current framework.
Aggregate demand function
Y<-- GDP -- standard of living
Y=C+I+G+NX
C= Consumption "about 70% in US"
I= Investment "shift out PPF, I=S Saving"
G= Goverment spending
NX= Export - Import "about 70% in Japan"
U.S vs Japan
US fell 6.2% economy last year, factor = 65% consumption from 70%
consumption based economy,
has negative Net Export,
has 3% growth rate speed limit of economy
-change in population, population growth rate 1%
-change in productivity, 2%
--------------------------------------------------
3%
Inflation = positive raise in Price, when increase in GDP, Wage price Spiral true fear of inflation.
Inflation distort true values. Lead to Miss allocation of resources, ex. housing market.
FEDERAL RESERVE - US central bank, Ben bernenki
Tools-
Monetary Policy: Interest rate policy a.k.a federal fund rate, its the guidance rate bank follows.
Nation is "overheating" raising GDP, increase interest rate.
National is "recession" slowing GDP, lower interest rate.
last year, 5.25% federal interest rate, now 0%
federal used this tool to increase or decrease growth, in attempt to reduce volitarity, increase stability and maximum employment
Money supply
inelastic goods, if lots of money available, its worth decreased.
Inflation, decrease money supply.
Open market activity- purchase or sale bond
FISCAL POLICY - government spending
Spending + Taxation
deficit spending likely to bring inflation
government make these decision. take time, tend to react with a lag.
Fiscal tend to aggregate business cycle. ex. stimulus packages.
Japan has most debt on the planet.
Japan fell 12.1% economy export based economy what is Y, how is it behave
Bank of Japan - Central bank
Monday, March 09, 2009
Data Mining
Classification
Start out with "training test" then classify it
Class--Categories we want to predict
Model--Equations used to test data for predict the class of each person
Ex. IRS
Training data set-build model on 1990-2000 (know the class)
Validation data set-test prediction 2001-2007 (know...)
Testing data set-applied to new data 2008 (dont know)
Training>Model>validating>Final Model>Testing
99/1 test. look at 99 test on 1.
Classification Tree
Training set: given a collection of records, attribute =x, with one addition attribute class (y)
find a model and predict the class as a function of the values of the attributes
Goal: previously unseen records should be assigned a class as accurately as possible.
a test set is used to determine accuracy.
EX.
classifying credit card, legits or fraud
classifying structure of protein
categorizing news stories as finance, weather, entertainment...
predict tumer cells as benign or malignant.
Classification Tree
splitting attributes.
"rpart" the function rpart() in the library "rpart" generates classification trees in R
whatever 1 u'r trying to predict make sure its a factor.
slide #16 look at indentation,
class = % of each class. ex. out of all the ppl in our set 79%
at the root node, its for the whole data set.
Prediction: predict whichever class with higher percentage. *choose class w/ high %"
a) age = middle, number = 5, start = 10 (class 2)
b) class 1
c) class
Start out with "training test" then classify it
Class--Categories we want to predict
Model--Equations used to test data for predict the class of each person
Ex. IRS
Training data set-build model on 1990-2000 (know the class)
Validation data set-test prediction 2001-2007 (know...)
Testing data set-applied to new data 2008 (dont know)
Training>Model>validating>Final Model>Testing
99/1 test. look at 99 test on 1.
Classification Tree
Training set: given a collection of records, attribute =x, with one addition attribute class (y)
find a model and predict the class as a function of the values of the attributes
Goal: previously unseen records should be assigned a class as accurately as possible.
a test set is used to determine accuracy.
EX.
classifying credit card, legits or fraud
classifying structure of protein
categorizing news stories as finance, weather, entertainment...
predict tumer cells as benign or malignant.
Classification Tree
splitting attributes.
"rpart" the function rpart() in the library "rpart" generates classification trees in R
whatever 1 u'r trying to predict make sure its a factor.
slide #16 look at indentation,
class = % of each class. ex. out of all the ppl in our set 79%
at the root node, its for the whole data set.
Prediction: predict whichever class with higher percentage. *choose class w/ high %"
a) age = middle, number = 5, start = 10 (class 2)
b) class 1
c) class
Quality Mgt
Leadership--
Lee Iacocca - "where have all the leader gone"
LEADERSHIP & PUBLIC RESPONSIBILITY
Ethic-
Health, safety, and environment- ex. shade to employee & customer at parks.
Community support- city council
COST OF QUALITY
Tradition VS Current
Appraisal- goes beyond Inspection & evaluating quality of products
prevention- keep it from happening
Internal failure- cost incurred when have a defective product in the plant
External failure- happens outside the
Appraisal-
Prevention- Poke oke-Mistake proofing, Visual aid, training, Maintenance
Internal failure- Cost-Repair or scrap,
External failure- Cost-Replacement, Recall, law suit & gov fine, lost sales, images & reputation.
"Well its all depends" kill quality, not sure meet specification "Don't ship it"
"Quality is free" do a good job, makes money.
Stragetic Planing
broad & looking at long term
what is customer requirement? what is option? best use of resources? in synch with both.
Active participation of top management, employees, customers, supplier - incorporate into plan
page 20 Strategic planning process
Objectives is above the goals
Profit is a measure of effective, not reason of existen
Mission - Vision - Guiding Principles
Enviroment assessment
Strategic Objectives- long term
Goals-quantitative and time specifics measureable
Strategies- broad plan of action, how to reach that goal
Action Plans- tactic to use
Vision- make sense if u can visualize it concrete
Strategy- SWOT "str, weakness, opportunity, threats" 2 from in, 2 from out.
Distinctive competencies, what's u'r str at, good at, ex. HP good at R&D
Quality & time based strategies - ex. Mc Donnald: consistency & fast
Tactics- methods & action for implementing strategy
observation
Mission-
quality, flexibility, cost, solution, long term partner ship
need to be Concise, Specifict & grab your attention
Vision- where the org is headed and what it intends to be
Brief and memorable - grab attention
Inspiring and challenging - create excitement
HP Shared Values
Passion for customers
We put our customers first in everything we do
Trust and respect for individuals
We work together to create a cuture of inclusion build on trust, respect and dignity for all
Achievement and contribution
we strivfe for excellent in all we do, each person contribution is critical to our success
Results through team work
Speed and agility - quick & responsive
meaningful innovation -
uncompromising integrity- open, honest, direct w/ dealing
HP corporate Objectives
Customer loyalty - #1 important
Profit - #2 create values
Growth -
Market Leadership - depend on innovative product
Commitment to employees
Leadership Capability
Global citizenship
Lee Iacocca - "where have all the leader gone"
LEADERSHIP & PUBLIC RESPONSIBILITY
Ethic-
Health, safety, and environment- ex. shade to employee & customer at parks.
Community support- city council
COST OF QUALITY
Tradition VS Current
Appraisal- goes beyond Inspection & evaluating quality of products
prevention- keep it from happening
Internal failure- cost incurred when have a defective product in the plant
External failure- happens outside the
Appraisal-
Prevention- Poke oke-Mistake proofing, Visual aid, training, Maintenance
Internal failure- Cost-Repair or scrap,
External failure- Cost-Replacement, Recall, law suit & gov fine, lost sales, images & reputation.
"Well its all depends" kill quality, not sure meet specification "Don't ship it"
"Quality is free" do a good job, makes money.
Stragetic Planing
broad & looking at long term
what is customer requirement? what is option? best use of resources? in synch with both.
Active participation of top management, employees, customers, supplier - incorporate into plan
page 20 Strategic planning process
Objectives is above the goals
Profit is a measure of effective, not reason of existen
Mission - Vision - Guiding Principles
Enviroment assessment
Strategic Objectives- long term
Goals-quantitative and time specifics measureable
Strategies- broad plan of action, how to reach that goal
Action Plans- tactic to use
Vision- make sense if u can visualize it concrete
Strategy- SWOT "str, weakness, opportunity, threats" 2 from in, 2 from out.
Distinctive competencies, what's u'r str at, good at, ex. HP good at R&D
Quality & time based strategies - ex. Mc Donnald: consistency & fast
Tactics- methods & action for implementing strategy
observation
Mission-
quality, flexibility, cost, solution, long term partner ship
need to be Concise, Specifict & grab your attention
Vision- where the org is headed and what it intends to be
Brief and memorable - grab attention
Inspiring and challenging - create excitement
HP Shared Values
Passion for customers
We put our customers first in everything we do
Trust and respect for individuals
We work together to create a cuture of inclusion build on trust, respect and dignity for all
Achievement and contribution
we strivfe for excellent in all we do, each person contribution is critical to our success
Results through team work
Speed and agility - quick & responsive
meaningful innovation -
uncompromising integrity- open, honest, direct w/ dealing
HP corporate Objectives
Customer loyalty - #1 important
Profit - #2 create values
Growth -
Market Leadership - depend on innovative product
Commitment to employees
Leadership Capability
Global citizenship
Thursday, March 05, 2009
Marketing Notes ch.8
multiple choice 100 Questions, scantron, midterm march 19
200 choices questions, no more than 50 will appears on the test.
Products-creating & managing products
fig 8.2
Core product?
underline basic functionality or value of that product or services
what is underline value of an ipod? store & play music or basically personal music
anything else related with core value are not core concepts
encompass w/ boombox, mini dvd players.. anything that store music and allow u to play it, its got the basic core value, very broad basic core value
because that what is what ppl really buying.
Actual product- encompassed the core product
ex. actuall product store and record music for personal consumption.
what made ipod so popular? 1 hand 1 finger, ez to operate, store, play, small.
features- size play weight control functionality, quality of sounds,
did it differ from sony walkman?
it didn't do anything diff from pior mp3 player, it just did better.
diff features along with the core princible.
Augmented Product - Ipod, think about apple. apple quality, images, services,
numerous location, warranty, discounting, personality.. all these augment the product
added to product, its not physical feature, tend to me emotional feature.
basically augmented feature are things intangible,
Competitive Analysis, start with core product, then differentiation. based on augmented features & the actual features. Ppl say they want a mp3 player, then all the features based on augmented.
Most consumer looks beyond better mouse trap.
built better mouse trap, the market will beat it to u, only go so far
MOUSE TRAP!!
poison bait - most effective mouse trap
most ppl do not like poison bait, even thought its most efficient and least cost means.
-Product Testing, Why?
got an idea, made a basic product, test it.
mechanical test, usage test,
Marketing is about Controlling Perception
product testing is what we telling people is what it is. walk the talk.
ex. Mc Donnald, no1 think its a product of quality
Marketer classified products on how they purchased or used
one of the major classification is how long will it last? durable or non durable
durable 5-10,15 yrs, refrig, stove, oven, water heater, air conditioner
Power tools are not durable,
Category - How ppl search for product
Convienience, searh for, specialty, products, Unsought of product.
ex. Funeral services, surgery except cosmetic, Dental work, Insurance, lawyer
Internet - good way to sell unsought goods. Dentist, DUI, Funeral parlor.
Specialty product - specially unique to buyer, ex. hot sauces indian food. Sporting goods, salt water fishing gears.
Convenience product - buy regularly, common
Biz 2 Biz world.
parts needed, materials are diff from what u built in-house
3 TYPES OF INNOVATIVE PROCESS
continuous, dynamic, & dynamically innovation continuously.
Almost all Innovation are Continuous. We almost don't see it. ex. Laptop.
Dynamic- Noticeable change, u can see appearance, ex. Run Flat tire.
Discontinued dyanimc change. ex. Nuclear Power plan, Original Telephone
INNOVATION & CREATIVITY
every company wanted creative problems solver, "that's bullshit"
ppl who want to do things differently are ppl who are unhappy and disrupted and are not team players. ALL biz want team players. Really Creative = Unemployed. Tend to be entrepreneur. Great artist, scientist, inventors. Driven by certain dissatisfaction, which make them weird. 1-3 in scale of team players and creative.
very few 3-3
Specific telesys, exeptional rule. "In the Zoo"
Running a Biz and having creative ppl is 2 diff things.
Cannot have both.
Creativity vs Team Player.
Successful on first product, fail miserable on the following product
due to lack of touch to market, become manager. Maintain market innovation but lack keeping up the business. "Bean counter" to handle business.
New Product Processes--
the model that company used to market new product. ex. Procter & gamble models.
Setup matrix - what u wanted in the new product. low entrance fee, high returns..etc defined characteristic. Criteria for evaluation. sit down & evaluating those Ideas.
define core benefit, augmented, actual product, develop a mark up.
next - Engineering and manufacturing product developing, analysis, based on analysis it is a go or no go Idea. Then Test Market. go/nogo => commercialization
A process will result about 80% success rate when a product introduced.
The Other Approach - OVER THE WALL approach. *throw over the wall and hope it work*
quick cheap, may maybe have 25% to reach customer.
Exploratory Approach - diff from other two, develop product -> take product then selectively test it, listen to output from listener. Then Adapt the product and changed immediately.
Adoption pyramid, fig 8.3
Stage of consuming adoptiong. almost identical to consumer process.
Diffusion of Innovation grouping.--
INNOVATOR broke into 2 category > bloody edge or Cutting edge.
Bloody Edge - technology innovator, if new and might work, u'll take the chance. take risk. Have something no one have. PPL wait in lines for new products
Cutting Edge - ppl who said once I believe it likely to work, I am willing to take my risk. still high risk group, still want to know some possibility for returns.
Early adopter, ppl who looking to be leader, they look at company, product life cycle. Willing to take the risk to buy it for early advantage.
Early Majority, ppl looking at this as low risk purchases, I am willing to pay a little bit more for the benefits.
Late Majority, Not willing to take the risk but willing to take the product.
Lagger, Its not about risk, its about cost. If u can sell it to me cheap and improved product, i'll buy it. The last generation of laptop. Lagger is the person you dump your old products. They're the ppl you planed all along to dump u'r products. know who and when at what price when needed. W/ strategy. Ex. Outlet store, sells to lagger.
Factors effect Relative advantage. user perceive advantage of product.
Compatibility, -> lower the cost of adoption.
Complexity, -> the less learning the faster it get adopt.
try-ability -> can you try the product before use it
Observability -> can you identify benefits from other ppl use? some1 use gasoline additive.
Perceptions, Values, Needs, Risks -> terms that are inherent to marketing @ business.
Adoption, rate, product life cycle, benefits using research.
200 choices questions, no more than 50 will appears on the test.
Products-creating & managing products
fig 8.2
Core product?
underline basic functionality or value of that product or services
what is underline value of an ipod? store & play music or basically personal music
anything else related with core value are not core concepts
encompass w/ boombox, mini dvd players.. anything that store music and allow u to play it, its got the basic core value, very broad basic core value
because that what is what ppl really buying.
Actual product- encompassed the core product
ex. actuall product store and record music for personal consumption.
what made ipod so popular? 1 hand 1 finger, ez to operate, store, play, small.
features- size play weight control functionality, quality of sounds,
did it differ from sony walkman?
it didn't do anything diff from pior mp3 player, it just did better.
diff features along with the core princible.
Augmented Product - Ipod, think about apple. apple quality, images, services,
numerous location, warranty, discounting, personality.. all these augment the product
added to product, its not physical feature, tend to me emotional feature.
basically augmented feature are things intangible,
Competitive Analysis, start with core product, then differentiation. based on augmented features & the actual features. Ppl say they want a mp3 player, then all the features based on augmented.
Most consumer looks beyond better mouse trap.
built better mouse trap, the market will beat it to u, only go so far
MOUSE TRAP!!
poison bait - most effective mouse trap
most ppl do not like poison bait, even thought its most efficient and least cost means.
-Product Testing, Why?
got an idea, made a basic product, test it.
mechanical test, usage test,
Marketing is about Controlling Perception
product testing is what we telling people is what it is. walk the talk.
ex. Mc Donnald, no1 think its a product of quality
Marketer classified products on how they purchased or used
one of the major classification is how long will it last? durable or non durable
durable 5-10,15 yrs, refrig, stove, oven, water heater, air conditioner
Power tools are not durable,
Category - How ppl search for product
Convienience, searh for, specialty, products, Unsought of product.
ex. Funeral services, surgery except cosmetic, Dental work, Insurance, lawyer
Internet - good way to sell unsought goods. Dentist, DUI, Funeral parlor.
Specialty product - specially unique to buyer, ex. hot sauces indian food. Sporting goods, salt water fishing gears.
Convenience product - buy regularly, common
Biz 2 Biz world.
parts needed, materials are diff from what u built in-house
3 TYPES OF INNOVATIVE PROCESS
continuous, dynamic, & dynamically innovation continuously.
Almost all Innovation are Continuous. We almost don't see it. ex. Laptop.
Dynamic- Noticeable change, u can see appearance, ex. Run Flat tire.
Discontinued dyanimc change. ex. Nuclear Power plan, Original Telephone
INNOVATION & CREATIVITY
every company wanted creative problems solver, "that's bullshit"
ppl who want to do things differently are ppl who are unhappy and disrupted and are not team players. ALL biz want team players. Really Creative = Unemployed. Tend to be entrepreneur. Great artist, scientist, inventors. Driven by certain dissatisfaction, which make them weird. 1-3 in scale of team players and creative.
very few 3-3
Specific telesys, exeptional rule. "In the Zoo"
Running a Biz and having creative ppl is 2 diff things.
Cannot have both.
Creativity vs Team Player.
Successful on first product, fail miserable on the following product
due to lack of touch to market, become manager. Maintain market innovation but lack keeping up the business. "Bean counter" to handle business.
New Product Processes--
the model that company used to market new product. ex. Procter & gamble models.
Setup matrix - what u wanted in the new product. low entrance fee, high returns..etc defined characteristic. Criteria for evaluation. sit down & evaluating those Ideas.
define core benefit, augmented, actual product, develop a mark up.
next - Engineering and manufacturing product developing, analysis, based on analysis it is a go or no go Idea. Then Test Market. go/nogo => commercialization
A process will result about 80% success rate when a product introduced.
The Other Approach - OVER THE WALL approach. *throw over the wall and hope it work*
quick cheap, may maybe have 25% to reach customer.
Exploratory Approach - diff from other two, develop product -> take product then selectively test it, listen to output from listener. Then Adapt the product and changed immediately.
Adoption pyramid, fig 8.3
Stage of consuming adoptiong. almost identical to consumer process.
Diffusion of Innovation grouping.--
INNOVATOR broke into 2 category > bloody edge or Cutting edge.
Bloody Edge - technology innovator, if new and might work, u'll take the chance. take risk. Have something no one have. PPL wait in lines for new products
Cutting Edge - ppl who said once I believe it likely to work, I am willing to take my risk. still high risk group, still want to know some possibility for returns.
Early adopter, ppl who looking to be leader, they look at company, product life cycle. Willing to take the risk to buy it for early advantage.
Early Majority, ppl looking at this as low risk purchases, I am willing to pay a little bit more for the benefits.
Late Majority, Not willing to take the risk but willing to take the product.
Lagger, Its not about risk, its about cost. If u can sell it to me cheap and improved product, i'll buy it. The last generation of laptop. Lagger is the person you dump your old products. They're the ppl you planed all along to dump u'r products. know who and when at what price when needed. W/ strategy. Ex. Outlet store, sells to lagger.
Factors effect Relative advantage. user perceive advantage of product.
Compatibility, -> lower the cost of adoption.
Complexity, -> the less learning the faster it get adopt.
try-ability -> can you try the product before use it
Observability -> can you identify benefits from other ppl use? some1 use gasoline additive.
Perceptions, Values, Needs, Risks -> terms that are inherent to marketing @ business.
Adoption, rate, product life cycle, benefits using research.
Subscribe to:
Posts (Atom)