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Market Strategy
the financial implications of marketing
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Market Strategy
Your task is to prepare a five year plan:
• You must explore several strategies
• Set and quantify objectives
• You must balance profitability with growth and survival
• You will be helped by a computer
• Leaving you to think and discuss
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The Business Situation
• A typical manufacturing company• The current, domestic market has stagnated• So you must investigate new markets
– Exporting the current products• Selling directly using your own staff• Selling via non-exclusive agents• Selling via non-exclusive dealers
– Launch New Domestic Products
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Performance Measures• Profitability
– Return on Investment
• Growth– Sales (units & value)– Market Share (unit & cash)– Worth (residual profit)
• Survival– Cumulative Cash Flow
• Long Term– Discounted Cash Flow (I.R.R. & N.P.V.)
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Market Structure• Total Market
– Total potential sales– Growing over time
• Served (penetrated) Market– Where the company is selling– Penetration of total market increases
• Competitive Share– Proportion of served market that buys– Influenced by your marketing decisions
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Market Influences
• Price• Promotion• Performance• Inventory Availability• Receivables Policy• Launch Year
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Using the Computer
• Choose & enter a team name• The Planning Options
– Review Current Plan– Compare Plans– What-If Analysis– Change Working Plan– Recess Planning
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Review Current Plan
Select from several reports– Detail Results– Summary Results– Combined Detail– Combined Summary
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Detail ResultsShows for each of the five years
– Sales Revenue– Unit Market Share– Cash Market Share– Profit – Profit to Sales– Capital Employed– Cumulative Cash Flow– Return on Investment– Residual Profit
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Summary ResultsShows for the five years as a whole
– Served Market Share– Total Sales Revenue– Average Unit Market Share– Average Cash Market Share– Total Profit – Average Profit to Sales– Worst Cash Flow– Internal Rate of Return– Net Present Value
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Observations
• Think before you act (do not waste your plans)
• Ask for help if you need it• There is no right or wrong answer
(your best plan will be the one that best meets the financial objectives you decide)
• Enjoy the challenge