Welcome to Marketing Simulation:

Managing Segments and Customers

Marker Motion, Inc. (MM) manufactures inertial motion capture sensors. Customers
utilizing MM's solutions are typically analyzing human movement for applications which
include improving manual work processes in order to improve employee safety and/or
efficiency, designing automation on production floors, and various types of ergonomic
product development.

With 45 employees, MM's revenues grew at an average rate of 5.5% over the prior three-
year period; however, the most recent quarterly financial data showed a decline in
revenue. Although senior management was pleased that MM had just turned a modest
profit after several years of losses, there was concern about recent potential market share
loss.

The inertial motion capture sensors in which MM specialized offered several advantages
over optical systems, which use two tracking cameras and match-moving software to
track movement visually. Both methods are commonly used to create character
movement in the movie and video game industries. Non-optical systems, like that of MM,
provide a capture rate up to 70 times faster than that of the optical method and, after
running a calibration protocol to measure study subjects' body dimensions, can
accurately measure joint angles, reach distances, and other body kinematics with high
precision.

Purchasing Criteria
The most critical sensor package purchasing criteria include the following:

Size and weight. Since sensors need to be able to send data about both large position
changes and tiny micromovements, it is essential that they be positioned securely during
a study. Bulky sensors can feel awkward to the subject, resulting in unnaturally affected
data. If a sensor is poorly affixed or loose, the data is corrupted by its own
micromovements. Ideally, you need smaller, lighter sensors.

Battery life. When researchers need to capture motion over long periods of time, battery
life is an important strength in non-optical sensors. Stopping to replace sensors or charge
batteries results in wasted time and resources. Furthermore, the motion being captured
would be interrupted as well, affecting the integrity of the data.

Cost. Because inertial motion sensors contain accelerometers, a battery, and a complex
electronic controller, they cost more up front than passive optical sensors. However,
inertial motion sensors could often be a less expensive than optical packages, as they
don't require an extensive camera setup.

Customer Base
Approximately 70% of Marker Motion's revenue comes from customers that place large-
volume orders. The balance is generated from customers that ordered in smaller volumes
from distributors. Customers placing large-volume orders were roughly divided into four
subsegments (A–D), distinguishable by their purchasing behavior and the relative
importance they assigned to specific product features.

Segment A places a premium on the sensors' battery life and generally requires a high
level of sales support due to the requirement for customization.

Segment B places a premium on small and light sensors, and also values the market and
technical knowledge of a manufacturer's sales representatives.

Segment C, the least price-sensitive of large-volume customers, requires superior

battery life as well as small, easy-to-affix sensors. These customers conduct sophisticated
research for highly technical applications, therefore their technical standards are
stringent.

Segment D is price-sensitive. They buy sensors in bulk for large scale studies.

Finally, small customers who purchase through distributors are also quite price-
sensitive. Since small-volume purchasers generally have to buy off-the-shelf sensor
packages from a distributor's catalog, they are concerned that the product would be easy
to integrate into their software and that the vendor's product literature would be
comprehensive.

As the newly appointed chief executive officer of Marker Motion, Inc., you are now
responsible for designing the company's marketing strategy. This includes determining
all aspects of the company's go-to-market approach (including sales-force deployment
and distribution-channel strategy) and associated elements of product policy, including
pricing and market positioning of the company's inertial motion sensor line. You will
need to make critical decisions regarding how marketing resources such as sales-force
time and market-research funds should be allocated. You will also need to determine how
MM will meet the needs of the market and its intended customer base. In doing so, you
should understand how market segments value MM's product offering, and you will need
to decide whether and how MM's positioning relative to segment needs and behaviors
should change.