Spares Parts Pricing Proprietary Part Segmentation and Pricing Date Download the full document at: www.gazhoo.com

Table of Contents Objectives and Scope Part Segmentation Key Findings and Segment Recommendations Implementation Plan Airline Pricing Package (example) Download the full document at: www.gazhoo.com

Objectives and Scope

Part Segmentation

Key Findings and Segment Recommendations

Implementation Plan

Airline Pricing Package (example)

A strategic pricing approach is an important first step in improving Client X Aviation Services ’s proprietary parts business Strategically segregate Client X Aviation Services parts businesses to meet objectives and commitments Develop relevant Aerospace Client X proprietary parts segments Step 1 : Determine Aerospace Client X Pricing by Segment Redistribution business Distribution business Assess competitive position by segment Competitors Structural Advantages Delivery Capabilities Develop pricing approach for specific parts segments 1 Aerospace Client X proprietary parts business Step 3 : Develop Customer Segmentation Approach Scope of this project Determine needs of customer/ segment Develop customer specific pricing packages Step 2 : Assess Availability and Marketing Requirements Develop plan to stock/deliver Aerospace Client X proprietary parts Assess product availability requirements by part segment Develop customer segments & identify targets Develop channel strategy and new parts marketing program Define Client X Aviation Services objectives for customer/ segment Develop market based pricing baseline Develop, market and provide parts solutions to customers 1 Including consideration of profitability by segment Download the full document at: www.gazhoo.com

Competitors

Structural Advantages

Delivery Capabilities

In order to develop market based pricing, we must first align parts by segments that are based on competitive position This exercise is the main focus of this project Total Universe of Aerospace Client X Proprietary Parts Segment parts based on customer purchasing patterns, internal categorization, and external competitive levels Segment A Segment B Segment C Segment D Segment E Segment F Segment G Segment X . . . Product offering and pricing recommendation Strong competitive position - raise prices Some fragmented competition - maintain prices Stronger competition - lower prices to gain share Extreme competition - raise prices as exit strategy or consider alternative revenue model e.g. licensing Download the full document at: www.gazhoo.com

Product offering and pricing recommendation

Strong competitive position - raise prices

Some fragmented competition - maintain prices

Stronger competition - lower prices to gain share

Extreme competition - raise prices as exit strategy or consider alternative revenue model e.g. licensing

We looked for purchasing patterns across three major dimensions (customer, part type, and model) to develop the parts segments Few/no discernable trends were seen in customer purchasing across all models Few/no discernable trends were seen in part type purchasing across all models Some trends were seen in model-specific purchasing: Aerospace Client X vs. Acquisition X - weak/no trends In vs. Out of production - some trends Narrow vs. Wide body - stronger trends Older vs. Newer - stronger trends Model Part Type 1 Customer Observations The volume of this cube is Aerospace Client X’s sales to top 20 customers 1 Part Types refer to 6 categories that were developed using Aerospace Client X’s 25 system codes Download the full document at: www.gazhoo.com

Few/no discernable trends were seen in customer purchasing across all models

Few/no discernable trends were seen in part type purchasing across all models

Some trends were seen in model-specific purchasing:

Aerospace Client X vs. Acquisition X - weak/no trends

In vs. Out of production - some trends

Narrow vs. Wide body - stronger trends

Older vs. Newer - stronger trends

…and then used these trends to develop the following parts segments 1 Old Structures 2 New Structures Parts Segments 3 Power Plant 4 Old Avionics 5 New Avionics 6 Narrow Body L.G. 7 Wide Body L.G. 8 Narrow Interiors 9 Wide Interiors 10 Non-Electrical Systems 6 categories from Aerospace Client X’s 25 part codes * Reference Appendix 2 for detailed process of determining segments Download the full document at: www.gazhoo.com Structures Power Plant & Electrical Systems Controls, Avionics & Instruments Landing Gear Interiors & Cargo Non-Electrical Systems MD A, MD B MD C MD D MD E MD F MD K MD K2 MD K3 MD K4 MD M NARROW WIDE Mixed Weak Strong Customer Purchasing Patterns for Aerospace Client X Parts: 1 2 1 2 4 5 4 5 3 6 6 7 7 8 8 9 9 10

Appendix 5: MD Model Proprietary Parts Quotations (relative to Aerospace Client X Price) Controls Interiors Landing Gear Non-Electrical Systems Power Plant Structures 28 7 59 1,155 25 1,120 3,372 61% 22% 41% 25% 8% 20% 7% 11 14% 30 61% 6,539 39% 39% 25 100% 77 13% 29% 44 3% 8 7% 40 20% 580 345% 31 33 33 151 1,517 2,890 4,031 4 3,350 310 7 86 200 283 870 2,483 237 974 2,170 18,983 44 79 52 7,845 238 29% 97% 36% 29% 9% 22% 202% 29% 53% 20 75% 168% 9% 80% 11% 29% 16% 29% 127% 51% 25% 89% 35% 29% 28% 29% 79% 40% 62% 43% 27% 61% 26% 56% 48% 29% 34% 38% 30% 27% Notes: Quoted prices are shown relative to Aerospace Client X’s Part Price Graphical scales are illustrative Download the full document at: www.gazhoo.com Key New Part Surplus Part Weak Aerospace Client X Position Strong Aerospace Client X Position

Notes:

Quoted prices are shown relative to Aerospace Client X’s Part Price

Graphical scales are illustrative