markstrat intro spring13
TRANSCRIPT
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PARIS BOSTON www.stratxsimulations.com
The Markstrat Challenge I
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Welcome to Markstrat Congratulations for your new position!
You have been recruited to manage the marketing department of the Electronics division of a large corporation You will compete with several other firms to market two types of durable goods to consumers You will be responsible for formulating and implementing the long-term marketing strategy of your division This short introduction will help you perfect your knowledge of the Markstrat world
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Your role for the next 10 years
Work in a highly competitive market
Target consumer segments and position your products
Interface with R&D to design and develop new products
Launch new products and improve existing ones
Interface with the production department
Make marketing mix decisions: pricing, advertising,
Decide on the size and priorities of your commercial team
Order market research studies to get up-to-date information for decision making.
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Getting started
Managing your firm
The Markstrat
World
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The Markstrat World
A large territory with a highly developed economy A population of 80 million inhabitants, 40% Urban (in the top five cities), 25% in smaller urban areas and 35% rural Inflation and GNP growth are fairly stable No major political, social or economic event is anticipated in the near future Currency: Markstrat Dollar ($)
Markstrat City
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Up to 6 competitors fight in this market
Each team will manage one of these competitors. All firms start in a different situation Product specification, target consumers, brand awareness levels,
market share, distribution coverage, profitability, R&D expertise, ...
The marketing strategy of your firm should be adapted to its particular situation
Choose a name for your company Starting with its initial (L, M, N, R, S or T) Reflecting the spirit within your team: do you feel like Tigers or
Turtles?
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Each firm can compete in up to two product categories
You can market up to 5 brands in each category at a given time
Independent
Not substitutes
Not complements
SONITES VODITES
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Sonite brands are already marketed, each characterized by 6 main attributes
Number of Features 10 20
Design Index 3 10
Battery Life 24 96 Hours (H)
Display Size 4 40 Inches ()
Processing Power 5 100 Gigaflops (Gflops)
Base Cost Minimum $10
$ 11/09/2012 8 Introduction to the Markstrat Challenge - Part I
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Resolution 20 100 lines/mm
Energy Efficiency 10 100 bio computations/Wh
Carbon Footprint 5 50 Kg
Connectivity Index 3 10
Number of Apps 5 100
Base Cost Minimum $10
No Vodites exist yet. Experts believe that they will be characterized by
$ 11/09/2012 9 Introduction to the Markstrat Challenge - Part I
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It is easy to recognize the origin of the brands from their names
Product Category:
O = Sonite
E = Vodite
Company marketing the brand:
L, M, N, R, S, T
Freely chosen letters or numbers
T O NIC M E LODY
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Sonite consumers have traditionally been classified into 5 segments
Highly interested in Sonite product Demand high performance products Quite price sensitive
EXPLORERS (Ex)
Personal and professional usage Look for high quality, high-performance and easy-to-use products Can afford expensive products
PROFESSIONALS (Pr)
Good product knowledge through extensive product comparison. Demand high qualityprice ratio Quite price-sensitive.
SHOPPERS (Sh)
High income level Demand performance and convenience Purchase expensive products
HIGH EARNERS (Hi)
Cautious in the way they spend their money Demand cheap, low-performance, average convenience products Future growth rate could exceed forecasts.
SAVERS (Sa)
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Initial studies have pointed to a different segmentation scheme for Vodites
Followers
Early Adopters
Innovators
Sales
Time
Typical segment size evolution over time
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Sonite & Vodite customers purchase through three distinct distribution channels
Small stores not necessarily organized in chains Located close to their customers and providing a high level of
service and technical support Broad product line including high-end products.
Specialty Stores
Operate on a low-price, high-volume basis Lower level of service than in speialty stores Depth of product lines usually restricted to a few units Distribute the cheaper, low-performance products
Mass Merchandisers
Includes web-only merchants and retailers websites Low but significant percentage of sales are done on the web High convenience as consumers shop from home Almost unlimited choice and easy comparison Likely to become more important in the next 5 to 10 years.
Online Stores
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Getting started
The Markstrat
World Managing your firm
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Your objective
Maximize your Stock Price Index You will have to optimize: Market share Sales growth Net contribution Cumulative net contribution R & D investments
.but the main objective is to LEARN!
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From Data to Strategy
You will need to do a certain amount of analysis before setting a strategic direction for your firm
Data Information Strategy
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Research studies provide market data. Your task is to prioritize, digest & interpret them
Consumer survey & consumer panel Distribution panel Semantic scales Multi-dimensional scaling (MDS) Market forecast Industry benchmarking Competitive advertising & commercial team Advertising and commercial team experiment Conjoint analysis
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Once your strategy is clear, you should make a number of tactical decisions each year
Marketing Mix Production planning Pricing Advertising & segmentation strategy
Commercial Team Size of commercial team Allocation across distribution channels Allocation across marketed brands
Market Research Ordering industry-wide market studies Ordering market-specific market studies
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Making Production Planning Decisions
A production plan must be submitted each period for each brand, taking into account: The potential sales for the brand The existing inventory at the beginning of the period The flexibility of the Production department
From one period to the next, production plans may be increased or decreased without any penalty Actual production levels are automatically adjusted in response to actual demand by plus or minus 20%
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Sample Production Planning Decisions
Potential sales
Beginning inventory
Production plan
Actual production
Actual sales
Lost sales
Ending inventory
Ideal Case
154,000
20,000
150,000
Reduced to 134,000
154,000
0
0
Pessimistic Case
154,000
20,000
100,000
Increased to 120,000
140,000
14,000
0
Optimistic Case
154,000
20,000
200,000
Reduced to 160,000
154,000
0
26,000
Market Demand
Initial Situation
Your Decision
Production Action
Final Situation
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Competitors
Order-book
Industry
Estimating lost sales
Comparing purchase intentions with market shares at the end of the period can give you a feel for how many sales you have lost
Purchase Intentions
Market Shares
Sales Lost to
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Brand prices must be set once a year
You set the Recommended Retail Price in $ You should take into account The margin of the distributors The discounts made by some channels
Sample prices and contributions, assuming a pricing decision of $400 and a transfer cost of $125
Specialty Stores
Mass Merchandisers
Online Stores
Average Discount None 10% $40 5% $20 Actual retail price $400 $360 $380 Distribution margin 40% $160 30% $108 30% $114 Selling price $240 $252 $266 Transfer cost $125 $125 $125 Unit gross contribution $115 $127 $141
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Each firm receives a marketing budget for the coming period
The budget amount is based on the previous periods performance
Bud
get
Advertising Advertising Media Advertising Research
Commercial Team Operating costs
Research & Development Development budgets
Market Research Cost of studies
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Understanding Brand Contribution
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Understanding your Company P&L
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The simulation starts at the end of the initial period
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. The new management (you!) make decisions for
the next period
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The decisions for the first period are limited in scope
Your team can get familiar with Markstrat Gather information Do not make any major changes in your firm's operation Do not introduce new brands, modify or withdraw existing ones Do not start R&D projects Do not give perceptual objectives for advertising
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Organize yourselves and manage the group process
Time pressure
Conflicting opinions
Information overload
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The Markstrat
World Managing your firm
Getting started
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Starting a working session Direct access
You may set up a shortcut in your favorite links to : http://70.34.194.228/WebApp_MarkstratWeb/PrepareHome.aspx
Enter the information given by your
professor
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Browse the ANALYZE menu to review the available reports and studies
Start from here
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Click one of these images to open
the corresponding report or study
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You can access all decisions on the Decision Home
Start from here
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Choose a name for your firm
It must start with the initial of your firm and
be 8 character long maximum
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Marketing Mix decisions should be entered for each brand
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Your marketed
brands
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The sales force is allocated across distribution channels and brands
Introduction to the Markstrat Challenge - Part I
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Buying market research studies will help you make information-based decisions
The cost of each study is given here
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Check your budget at regular intervals
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Click here to check your budget
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Check your errors & warnings at regular intervals
Click here to check your messages
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ON YOUR MARKS, GET SET, GO!
Respect the deadlines
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The Markstrat Challenge IWelcome to Markstrat Congratulations for your new position!Your role for the next 10 yearsSlide Number 4The Markstrat WorldUp to 6 competitors fight in this marketEach firm can compete in up to two product categoriesSonite brands are already marketed, each characterized by 6 main attributesNo Vodites exist yet. Experts believe that they will be characterized byIt is easy to recognize the origin of the brands from their namesSonite consumers have traditionally been classified into 5 segmentsInitial studies have pointed to a different segmentation scheme for Vodites Sonite & Vodite customers purchase through three distinct distribution channelsSlide Number 14Your objectiveFrom Data to StrategyResearch studies provide market data. Your task is to prioritize, digest & interpret themOnce your strategy is clear, you should make a number of tactical decisions each yearMaking Production Planning DecisionsSample Production Planning DecisionsEstimating lost salesBrand prices must be set once a yearEach firm receives a marketing budget for the coming periodUnderstanding Brand ContributionUnderstanding your Company P<he simulation starts at the end of the initial periodThe decisions for the first period are limited in scopeOrganize yourselves and manage the group processSlide Number 29Starting a working sessionDirect accessBrowse the ANALYZE menu to review the available reports and studiesYou can access all decisions on the Decision HomeChoose a name for your firmMarketing Mix decisions should be entered for each brandThe sales force is allocated across distribution channels and brandsBuying market research studies will help you make information-based decisionsCheck your budget at regular intervalsCheck your errors & warnings at regular intervalsON YOUR MARKS, GET SET, GO!