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%.

Model Sales

Profit Margins

Neon Contribution by Model

0

1000

2000

3000

4000

5000

Y2Q2 Y2Q3 Y2Q4 Y3Q1 Y3Q2

Period

Per U

nit Base

DX

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.