© bill swinyard music2go 1 music2go: a battle between cd player mfrs

© Bill SwinyardMusic2Go Music2Go 11

Music2Go:Music2Go:A Battle Between CD A Battle Between CD

Player MfrsPlayer Mfrs


OverviOverviewew

Medical education Medical education

Beyond lecture, casesBeyond lecture, cases

Systems thinkingSystems thinking

Lessons for Lessons for strategy formulationstrategy formulation

tacticstactics


Business School Business School CriticsCritics

Assert that we Assert that we Place . . .Place . . . Too much emphasis on quantitative Too much emphasis on quantitative

analysis, tools, models, and theory analysis, tools, models, and theory Too little emphasis on qualitative thinking, Too little emphasis on qualitative thinking,

complex tradeoffs, execution, and complex tradeoffs, execution, and creativitycreativity

Too much emphasis on short term Too much emphasis on short term performance performance

Too little attention on interpersonal Too little attention on interpersonal relationships and social ethics relationships and social ethics

Not enough on long term success Not enough on long term success


How We Learn:How We Learn:Passive vs Active Passive vs Active

LearningLearningActAct

ObserveObserveDecideDecide

Update mental model,Update mental model,Evolve strategy and rulesEvolve strategy and rules

Adapt,Adapt,ReflectReflect


DecisionsDecisions ResultsResults

Observe Observe ResultsResults

Modify Modify DecisionsDecisions

Active Active Learning withLearning with

The The MarketplaceMarketplace

Make Make DecisioDecisio

nsns

ReflectionReflectionRepeat as often as you wishRepeat as often as you wish

ModifyModifythinkinthinkin

gg

MusicMusictotoGoGo

MusicMusictotoGoGo


Define the Mission of the Organ.

Determine Organ.

Objectives

SWOTAnalysis

Formulate Strategy

Implement Strategy Through

Operating Plans

Monitor and Adapt Strategies when Necessary

Based on Feedback

Corporate Level

Marketing Department

Feedback

Fee

db

ack

Planning, Planning, Implementation, Implementation,

ControlControl


Game Game ScenarioScenario

Consumer Electronics MfrConsumer Electronics MfrYou are:You are:

Portable CD Player (PCDP)Portable CD Player (PCDP)VP MarketingVP Marketing

1996 – 20011996 – 2001MarketMarket

Growth-Growth-StageStage

ProductProduct

U.S. Only,U.S. Only,40mm HH40mm HH

Competitor: EWS AudioCompetitor: EWS AudioHas strongerHas stronger

market position & resourcesmarket position & resourcesthan youthan you


Game Game OverviewOverview

Two PCDP firms – you & EWS Audio

You will make decisions relating to all four areas of the marketing mix

2 consumer market segments differentiated by

• age• income

• family• tastes

• lifestyle

• distribution

• promotion• pricing

• product design


Marketing Mix & Marketing Mix & TargetsTargets

2 Competitors• EWS Audio• You

Objective:Objective:

HigherHigherMkgt Contrib.Mkgt Contrib.

than EWSthan EWS

Standard

Youth

For Control of

2 Market Segments

Promotion

Distribution

Product Design

Pricing


Product Strategy:Product Strategy: Attributes, Segments, Attributes, Segments,

& Evolution& Evolution

Tec

hn

ical

Sp

ecs

Style

Standard

Youth

• Less active• Price conscious• Want simple tech• Newspapers

• Fashion conscious• Price sensitive• Want avg tech specs• TV, Radio

Note AttributesSegment positionSegment size & evolution


Promotion Promotion StrategyStrategy

AdvertisingAdvertising Sales Sales PromotionPromotion

OptimizingOptimizingthe Mixthe Mix

Media selectionMedia selectionTelevisionTelevisionRadio & station Radio & station

formatformatNewspapersNewspapersMagazine & Magazine &

categorycategory

Trade Trade showsshows

Sales Sales trainingtraining

Premiums Premiums POP POP

displaysdisplaysRebatesRebates

Market Market segmentssegments- lifestyle- lifestyle- demographics- demographics

Product life Product life cyclecycle

Media type & Media type & char’schar’s


Promotion Promotion StrategyStrategy

Advertising

SalesPromotion

ConsumerDemand(Sales)

Distributioncoverage

ProductAwareness

Distributorperformance


Distribution Distribution StrategyStrategy

Distribution Distribution ChannelsChannels

Optimizing Optimizing DistributionDistribution

Consumer Electronics Stores(e.g., Circuit City)

Department Stores(e.g., Sears)

Discount Stores(e.g., Wal-Mart)

Market Segments’- purchase behavior- demographics

Channelcharacteristics

Sales Rep support


Distribution Distribution StrategyStrategy

SegmentDemand

Channelmatch

# SalesReps

RepSalaries Consumer

Demand(Sales)

PotentialSales

Coverage

DistributorSupport


Pricing Pricing StrategyStrategy

Market ConditionsMarket Conditions Optimizing PriceOptimizing PriceEstablished

productPrice ranges

dictated by marketAbility to reduce

variable costs through R&D

Segment characteristics- price elasticity - price ranges

Product life cycle stage

Prices vary by channel- discount stores- electronics stores


Pricing Pricing StrategyStrategy

R&DSpending

RecommendedRetail Price

(RRP)

Manufact’g Cost

PreferredPrice Range(by segment)

RetailMarkup

Competitor’s Price

Discount

BaseCost


Market Market SegmentsSegments

Demographics• 18 years and less• Fashion conscious• Purchases made by

parents

Promotion• Mass media• Point of sale

promotion

Product• Emphasis

on style

Distribution• Deep product

assortment• Want customer

service (purchase advice)

Pricing• $50- $60• Relatively price

sensitive

YouthSegment


Market Market SegmentsSegments

StandardSegmentDemographics

• 19-34 yrs old• Less active

lifestyle• No dependents• High disposable

income

Product• Newspapers,

magazines, TV• Average styling &

technology

Pricing• $60-$100• Not too price

sensitive

Distribution• Broad product

line (accessories)• Want customer

service (sales advice)

Promotion• Broad reach

media• Distributor sales

force training


The Product The Product Life CycleLife Cycle

Marketing Marketing VariableVariable

GrowthGrowth MaturityMaturity DeclineDecline

ProductGoal

Improve product specifications

Differentiated Reduce

product cost

Minimize cost

PriceGoal

Reduce over time

Lowest Increasing

DistributionGoal

Intensive Intensive Selective

PromotionGoal

Build brand preference

Get apurchase commitment

Counteract substitution


Think of Early SpendingThink of Early Spendingas an Investmentas an Investment

$$$

Time

Costs to set up & grow the business

Revenue

Venture capitalto cover losses

Profits toinvestors


TeaTeamsms

Up to 3 people Up to 3 people Can change teams at any timeCan change teams at any time Good mix of skillsGood mix of skills

Computer-literateComputer-literate Good record-keepingGood record-keeping Planning-orientedPlanning-oriented CustomerCustomer-oriented!-oriented!

Thorough reading of in-game Thorough reading of in-game documentation!documentation!


Plan of Action Plan of Action for M2G Ifor M2G I

Form a groupForm a group Review the M2G tutorial pps fileReview the M2G tutorial pps file Read/review the Student Manual – teach Read/review the Student Manual – teach

each othereach other Download & install the simulationDownload & install the simulation Complete three years (to 1999) using Complete three years (to 1999) using

frequent rollbacks frequent rollbacks Goal after rollbacks & trial experience: Goal after rollbacks & trial experience:

as close as you can get to EWS in NMC as close as you can get to EWS in NMC after three rolloversafter three rollovers

Expect 4-6 hours of time together/aloneExpect 4-6 hours of time together/alone


Key Benefits of PlayingKey Benefits of Playing

Develop teamworkDevelop teamwork

Refine your decision-making skillsRefine your decision-making skills

Facilitate learning of basic Facilitate learning of basic marketing concepts marketing concepts

Develop strategic planning & Develop strategic planning & execution skills execution skills


Key Benefits of the GameKey Benefits of the Game

Instill a bottom line focus and the Instill a bottom line focus and the simultaneous need to deliver customer simultaneous need to deliver customer value value

Discover the importance of market data Discover the importance of market data & competitive signals to adjust the & competitive signals to adjust the strategic plan & tacticsstrategic plan & tactics

Build confidence through knowledge & Build confidence through knowledge & experienceexperience


This is the screencapture to includein your paper.


These are the numbers toadd up to get the exactCumulative contribution

Being able to report the exact amount


What a What a waste of waste of

time!time!

Music2Go:Music2Go:Various PerceptionsVarious Perceptions

It’s been a It’s been a good good

learning learning experienceexperience

My team My team has been has been

funfun

I should I should have sold have sold my ideasmy ideas I wish I I wish I

had had thought thought

moremore

This has This has been been

stupidstupid


Best PracticesBest Practices Strategy definition.Strategy definition. Understand the Understand the

difference between difference between strategystrategy and and tacticstactics … & have a clear approach … & have a clear approach for each quarter.for each quarter.

Systematic thinking.Systematic thinking. Create a Create a strategy that is balanced between strategy that is balanced between present decisions and future present decisions and future outcomes. outcomes.

Execution.Execution. Use consistent & faithful Use consistent & faithful execution of strategy. execution of strategy.


Rollback, rollback, rollback.Rollback, rollback, rollback. See how See how things work, rollback, change things work, rollback, change

Understand the market.Understand the market. Know the fine Know the fine details of what your segments wantdetails of what your segments want

Reporting.Reporting. Document key learning points Document key learning points during & between runs in a “game log.”during & between runs in a “game log.”

Team structureTeam structure. Try to match team . Try to match team strengths to the tasks of decision strengths to the tasks of decision making. making.

Best PracticesBest Practices


HintsHintsFind out what people want orFind out what people want or

what competitors what competitors havehave

Tell them you have what they Tell them you have what they wantwant

Get retailer supportGet retailer support

Close the saleClose the sale

MarketingMarketingresearchresearch

Advertise in theAdvertise in theright mediaright media

Sales force, in Sales force, in the right storesthe right stores

•Retailer supportRetailer support•AdvertisingAdvertising•Product mixProduct mix

Develop what people wantDevelop what people want Product designProduct design& pricing& pricing


Reactions to a CharacteristicReactions to a Characteristiceg., advertising spendingeg., advertising spending

More isbetter

High

LowLess More

Some adds value,too much is bad

High

LowLess More

Little response‘til thresholdis crossed

High

LowLess More

Any amountis bad

High

LowLess More

High

LowLess More

More is good,to a point ofdiminishing

returns

A little isjust rightHigh

LowLess More


HintsHints Work with a group.Work with a group. Group decisions are Group decisions are

much better than solitary ones; most much better than solitary ones; most who didn’t work in groups say they who didn’t work in groups say they wished they had.wished they had.

Read, know, & understandRead, know, & understand the the documentation.documentation.

Use your strategy as the guide in Use your strategy as the guide in making decisions.making decisions. Stick to your strategy, Stick to your strategy, but still be flexible enough to revise.but still be flexible enough to revise.

Follow the Hints.Follow the Hints. Maximize the customer experience.Maximize the customer experience.


Maximize the Customer Maximize the Customer ExperienceExperience

1. How well 1. How well do you meet do you meet

customer customer needs? needs?

2. How 2. How smoothly smoothly

do you do you solve your solve your customers’ customers’ problems?problems?

3. How 3. How quickly do quickly do

you anticipate you anticipate what they’ll what they’ll want next?want next?

Source: “The Customer Experience,” Net Company, Fall 1999.

& do all& do allthese thingsthese thingsbetter thanbetter than

the competitionthe competition


Plan, Implement, Plan, Implement, ControlControl

Define the Mission of the Organ.

Determine Organ.

Objectives

SWOTAnalysis

Formulate Strategy

Implement Strategy Through

Operating Plans

Monitor and Adapt Strategies when Necessary

Based on Feedback

Corporate Level

Marketing Department

Feedback

Fee

db

ack

© bill swinyard music2go 1 music2go: a battle between cd player mfrs

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