m a r k e t i n g m a n a g e m e n t course overview the capstone simulation structure &...
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M A R K E T I N G
M A N A G E M E N T
Course OverviewThe Capstone Simulation Structure & Assignments Expectations & Grading
University of Alaska-Anchorage College of Business & Public Policy
Marketing Management-Semester 1 * 2008
M A R K E T I N G
M A N A G E M E N T
Professor Ed Forrest
• Telephone: – (O)786-4161 – (H) 694-4674
• Email: – [email protected]
• W3site: http://www.cbpp.uaa.alaska.edu/afef/
M A R K E T I N G
M A N A G E M E N T
After Graduation?
M A R K E T I N G
M A N A G E M E N T
What JOB?
M A R K E T I N G
M A N A G E M E N T
BA460
Gerbil Studies
Philosophy
Research
History
A
cB
A
A
Do Poorly in this course and ….
M A R K E T I N G
M A N A G E M E N T
“Yeah- she’s the one who got a C
in BA460”
M A R K E T I N G
M A N A G E M E N T
To date -your “study” of marketing has been piece-meal and in isolation!
M A R K E T I N G
M A N A G E M E N T
OVERARCHING COURSE OBJECTIVE
To “call-upon,” integrate & apply all the marketing,
finance & business
knowledge you have accrued to
date!
To “call-upon,” integrate & apply all the marketing,
finance & business
knowledge you have accrued to
date!
M A R K E T I N G
M A N A G E M E N T
Course Format
M A R K E T I N G
M A N A G E M E N T
Lecture-LearningLecture-Learning
‘Find-FactsStore FactsSpit facts
‘Find-FactsStore FactsSpit facts
Superficial short-term
knowledge
Superficial short-term
knowledge
M A R K E T I N G
M A N A G E M E N T
Ultimately- Real Learning
Occurs
Not from parroting information
gleaned from books & lectures!
….But from the consequences of your own actions
M A R K E T I N G
M A N A G E M E N T
M A R K E T I N G
M A N A G E M E N T
Course Format
CapstoneBusiness
Simulation
CapstoneBusiness
Simulation
M A R K E T I N G
M A N A G E M E N T
THE CAPSTONE SIMULATION
• Adopted by major Fortune 500 companies - General Motors, General Electric, Honeywell, Dell, John Deere, Citibank, Microsoft, Alcoa, BP, Allstate, Samsung, Goldman Sachs…
• Used by 100’s of colleges around the world
• w/ ~50,000 students/semester
Most widely used Business – Simulation Program in the World
M A R K E T I N G
M A N A G E M E N TAnd How Have
We Fared in this World-
Wide Competition
??
M A R K E T I N G
M A N A G E M E N T
2001 Top Ten Teams, World-Wide, for Round 8
• Top Ten Teams, World-Wide, for Round 8 by success measurement There are currently 940 active teams that have played Round 8. For a team to make this list: Cumulative Profits above 0 Overall Market Share (in dollars) greater then 5.0% Asset Turnover less then 8.0 Profit for Round 8 Round 8 - Mean - $ 25,324,003
• Top Ten Active Teams Professor School/Course Simid Team Value
• 1 Dr. Minu Afza College of Business - Bloomsburg University93 481 Business Policy & Strategy CAP1742 Digby $ 238,235,245 2 Mr. Bill Gardner Penn State University -Fayette CampusContemporary Business Seminar CAP1513 Andrews $ 193,853,427 3 Dawn DeTienne University of Colorado at BoulderSenior Seminar CAP1656 Andrews $ 184,258,599 4 Prof. Howard Feldman University of PortlandManagerial Decisions and Policy-Undergrad B CAP1787 Erie $ 181,422,390
5 Dr. Ed Forrest University of AlaskaMarketing Management CAP1611 Baldwin $ 163,281,864 6 Dr. Eric Wiseman University of Colorado at BoulderBusiness Senior Seminar CAP1818 Chester $ 157,930,382 7 Dr. Murrow Drury CollegeStrategy and Policy Formulation CAP1838 Erie $ 149,235,238 8 Dr. Pettus Millikin UniversityBusiness Policy CAP1748 Baldwin $ 147,967,873 9 Doug Mayer Hartwick CollegeManagement VII-secA CAP1811 Digby $ 137,339,216 10 Dr. Bruce A. Schooling Point Loma Nazarene UniversityStrategic Management CAP1794 Digby $ 121,289
5th
M A R K E T I N G
M A N A G E M E N T
2003 Top Ten Teams, World-Wide, for Round 8
• For a team to make this list: Cumulative Profits above 0 Overall Market Share (in dollars) greater than 6% Asset Turnover less then 8.0 Your class was ranked: with 711 Capstone ® teams completing round 8 by Apr 12, 2003. teams per game of 6 Category: All
• URL: http://www.capsim.com/prof/viewtopten.cfm?round=8&simid=C4806&version=KDate/Time: 04/12/2003 10:07:35eNote:
• Text:Cumulative Profit for Round 8 - Mean - $ 125,355,000 Top Ten Active Teams Professor School/Course Simid Team Value 1 natalie marsh Strayer UniversityBusiness Policy & Strategic Planning C4779 Baldwin $ 459,411,986 2 John Hall University of FloridaGlobal Strategic Management I2MBA 2002 C4923 Baldwin $ 386,472,583 3 natalie marsh Strayer UniversitySenior Seminar - Business Administration C4778 Erie $ 382,697,422 4 Peter Stanwick Auburn UniversityStrategic Management C5095 Chester $ 353,185,127 5 John Pearce Villanova UniversityPolicy Administration C5033 Ferris $ 348,535,130 6 Gavin Fox Georgia Southern UniversityBUSINESS SIMULATION C5041 Digby $ 343,761,703 7 Shirley Schooley Birmingham-Southern CollegeStrategic Management Senior Project Course Sec B C5356 Digby $ 341,865,002 8 natalie marsh Strayer UniversitySenior Seminar - Business Administration C4778 Ferris $ 339,568,171
9 Edward Forrest University of AlaskaMarketing Management C4806 Chester $ 333,620,198 10 Donald Kreps Kutztown Universitymba capstone C4797 Digby $ 327,188,363
9th
M A R K E T I N G
M A N A G E M E N T
2005 - #12005 - #1
M A R K E T I N G
M A N A G E M E N T
2006-
5th
M A R K E T I N G
M A N A G E M E N T
and 8th and 8th
M A R K E T I N G
M A N A G E M E N T Last Year 3rd Last Year 3rd
M A R K E T I N G
M A N A G E M E N T
SHAKE UP IN SENSOR INDUSTRY
Management Teams Fired
“After poor results, lackluster sales and angry customer reports……….. New dynamic leadership teams needed to take industry into the future!”
M A R K E T I N G
M A N A G E M E N T
YOUR HIRED!
M A R K E T I N G
M A N A G E M E N T
You Da’
Boss of
~ $100m Corporation
M A R K E T I N G
M A N A G E M E N T
Your Product Line:
SENSORS:SENSORS:
SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTHSees the next 8 years as consistent growth. All market segments increase at a nice “clip,” according to market analyst.
“I see the entire market growing at around 14% or 15% per year. The High Tech market alone will be growing at a whopping 16%.”
I hope those companies out there are ready for that kind of expansion!”
0
10000
20000
30000
40000
50000
60000
70000
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
M A R K E T I N G
M A N A G E M E N T
YOUR JOB
• Take on key management positions w/in your corporation
• Make the myriad of intertwined decisions necessary to create, produce & successfully market your products…
• Take on key management positions w/in your corporation
• Make the myriad of intertwined decisions necessary to create, produce & successfully market your products…
M A R K E T I N G
M A N A G E M E N T
You will engage in:
• Marketplace analysis – incl: situation analysis, competitor
analysis, SWOT analysis & performance assessment.
• Strategic planning – develop your corp. mission, vision, core
competencies & competitive advantage • Cross functional integration – of Marketing w/ R&D, Production, HR &
Finance• Tactical execution of your decisions - measured against competitors– in class &
worldwide…
• Marketplace analysis – incl: situation analysis, competitor
analysis, SWOT analysis & performance assessment.
• Strategic planning – develop your corp. mission, vision, core
competencies & competitive advantage • Cross functional integration – of Marketing w/ R&D, Production, HR &
Finance• Tactical execution of your decisions - measured against competitors– in class &
worldwide…
M A R K E T I N G
M A N A G E M E N T
The Big Picture
•CCompanyompany
•CConsumersonsumers
•CCompetitorsompetitors
•CConditionsonditions• PESTPEST
Growth &Growth & Competitive Competitive StrategiesStrategies
Finance
HR
Production
R&D
Marketing
Functional Functional IntegrationIntegration
Profits Mrkt Share ROA ROS ROE Asset T/O Stock Mrkt Cap
Situation/SWOT Situation/SWOT AnalysisAnalysis
Strategic Strategic PlanningPlanning
Functional Functional IntegrationIntegration
Performance Performance AssessmentAssessment
M A R K E T I N G
M A N A G E M E N T
You are completely responsible for:
Planning, implementing & controlling your marketing
strategy
TargetTarget& &
PositionPosition
TargetTarget& &
PositionPosition
ProductProduct PlacePlace
PromotionPromotionPricePrice
M A R K E T I N G
M A N A G E M E N T
The Key Lesson for Marketing Majors
In order to successfully execute your
marketing decisions/strategy…
you must be in alignment w/ every decision made in
every other contributing
component of the corp./organization
M A R K E T I N G
M A N A G E M E N T
Must Coordinate Decisions w/ all Functional Areas
Marketing
Production
Finance
R&D
HR
R&D-re: Product
Development Quality Positioning
Marketing Must Coordinate w/: Marketin
g
Production
Finance
R&D
HR
Production- re: Market segment
growth- Buy or Buy or sell capacitysell capacity
Sales forecasts-Schedule Schedule productionproduction
Marketing Must Coordinate w/: Marketin
g
Production
Finance
R&D
HR
HR- re: Levels of
personnel training & support
Marketing Must Coordinate w/: Marketin
g
Production
Finance
R&D
HR
Finance-re: Overall
projections of sales, margins & profits
Marketing Must Coordinate w/: Marketin
g
Production
Finance
R&D
HR
Marketing Manager must become one- w/ Relationships betw
Price & demand Price & margin Promotion budget &
awareness Sales budget &
accessibility A/R policy & demand
Price & demand Price & margin Promotion budget &
awareness Sales budget &
accessibility A/R policy & demand
MARKETING MANAGERSSIMULATION
SPREADSHEET
Build customer awareness through promotion
Build customer awareness through promotion
Establish a sales force and distribution channels
Establish a sales force and distribution channels
Set price of your products in the marketplace
Set price of your products in the marketplace
Set Credit Policies AR/AP Set Credit Policies AR/AP
Set the sales forecast for our products
Set the sales forecast for our products
•Marketing also selects
media vehicles & message
weights
• AND determines
composition of sales/distributi
on staff ..and allocation of
their efforts by segment &
Brand
R&D MANAGERS
SIMULATION SPREADSHEET
Establish product positioning to meet customer demand Establish product positioning to meet customer demand
Build quality & reliability (MTBF) into products
Build quality & reliability (MTBF) into products
Ensure age of product meets customer demands Ensure age of product meets customer demands
Create new products Create new products
PRODUCTION MANAGERSSIMULATION
SPREADSHEET
Establish your workforce complement Establish your workforce complement
Buy or sell capacity of product lines Buy or sell capacity of product lines
Purchase machinery to automate our facilities Purchase machinery to automate our facilities
Schedule production for each line Schedule production for each line
M A R K E T I N G
M A N A G E M E N T
Human Resource Managers Responsible for:Human Resource Managers Responsible for:
• Recruitment, Recruitment, Hiring, Training & Hiring, Training & Firing of all laborFiring of all labor
• 2 groups:2 groups:– AssemblersAssemblers– TechniciansTechnicians
WagesWagesBenefitsBenefits
M A R K E T I N G
M A N A G E M E N TAcquire CapitalAcquire Capital– Issue StockIssue Stock–Short Term DebtShort Term Debt– Issue Long Term BondsIssue Long Term Bonds
Set DividendSet DividendRetire Long Term BondsRetire Long Term BondsRetire StockRetire Stock
• Responsible for Emergency Responsible for Emergency LoansLoans Big AL
The Loan Shark
Finance Managers Responsibilities:Finance Managers Responsibilities:
M A R K E T I N G
M A N A G E M E N T
FINANCIAL MANAGERS
SIMULATION SPREADSHEET
BA460 Marketing Management Spring 2008
1st Reorganize Company:
& Re-allocate responsibilities:
Marketing Production R&D Finance HR
M A R K E T I N G
M A N A G E M E N T
3 Co-CEO’s
M A R K E T I N G
M A N A G E M E N T
Incorporate- register w/ your assigned Capstone:
Sim ID#’s:
Incorporate- register w/ your assigned Capstone:
Sim ID#’s:
C23256 or
C23257
M A R K E T I N G
M A N A G E M E N T
Begin Business Plan R&DBegin Business Plan R&D
Capstone-Developing a Business Plan SBA-Writing a Business Plan Business Plan Software, Samples, and Strategy Center for Business Planning
M A R K E T I N G
M A N A G E M E N T
(I) Mission & Vision Statement
(II) Situation Analysis Market Structure:
•Consumer Segments & Product Attribute Preferences •Consumer Pricing & Positioning Expectations•Consumer Demand
Company Situation•Financials•Production•Marketing
(III) SWOT Analysis (IV) Strategic Planning Growth & Competitive Strategies Functional Strategy – Objectives & Tactics
• Marketing • Production • Financial
(V) Tactical Decisions FY2009 ……….
Situation & SWOT Analysis
Consumer
Company
Competitors
Conditions
Initial Situation
Step #
1
Situation AnalysisTeam Member Guide- Chapter 4Help > Managers Guide > Situation Analysis
Situation Analysis Goals:
1.Discern marketplace dynamics
2.Calculate base info necessary for strategy development
3.Become familiar w/ The Capstone Courier
1.Discern marketplace dynamics
2.Calculate base info necessary for strategy development
3.Become familiar w/ The Capstone Courier
To Do List:
Download starting conditions …
Open Capstone.xls -- print Capstone Courier & Annual Report.
Begin your Analysis of the Situation
Download starting conditions …
Open Capstone.xls -- print Capstone Courier & Annual Report.
Begin your Analysis of the Situation
TargetTargetMarketMarket
Product Place
PromotionPrice
TargetTargetMarketMarket
Product Place
PromotionPrice
TargetTargetMarketMarket
Product Place
PromotionPrice
Situation AnalysisSituation Analysis Strategic Strategic PlanningPlanning
•CCompanyompany
•CConsumersonsumers
•CCompetitorsompetitors
•CConditionsonditions• PESTPEST
The Marketing Mix:The Marketing Mix:
Marketing StrategyMarketing StrategyP’sP’s
Growth & Growth & Competitive Competitive StrategiesStrategies
Company
Competitors
•Economic Analysis (margins,, profitability, Fin. Structure)
•Company, goals, resources- production, HR…)
•Economic Analysis (margins,, profitability, Fin. Structure)
•Company, goals, resources- production, HR…)
Customers
•Market Potential (size, growth rate)
•Customer Behavior (needs & wants/ segmentation, price sensitivity)
•Market Potential (size, growth rate)
•Customer Behavior (needs & wants/ segmentation, price sensitivity)
Conditions•Political•Economic•Socio-cultural•Technological
•Political•Economic•Socio-cultural•Technological
•Industry Structure Analysis (entry/exit barriers, buyers, sellers, substitutes)
•Competitor Response Profiles (capabilities, current and future actions)
•Industry Structure Analysis (entry/exit barriers, buyers, sellers, substitutes)
•Competitor Response Profiles (capabilities, current and future actions)
M A N A G E M E N T
M A R K E T I N G SWOT Analysis Identifies:
©South-Western College Publishing
SS
WW
OO
TT
Things the company does well.Things the company does well.
Things the company does not do well.Things the company does not do well.
Conditions in the external environment that favor strengths.Conditions in the external environment that favor strengths.
Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.
Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.
InternalInternal
ExternalExternal
Specifically…determine
Strengths & weaknesses w/in & across all functional areas; Profile of current product portfolio…
How market is segmented; relevant factors
that influence consumer demand & purchasing decisions
Your competitors relative market positions..
Macro-E considerations especially technological trends …
Consumer
Company
Competitors
Conditions
Portfolio Analysis
Which Brands should receive more/ less/ no investment-Based on:
Product Position/ Potential
Profitability/ Margins
Market-Growth/Market-Share Matrix
Which Brands should receive more/ less/ no investment-Based on:
Product Position/ Potential
Profitability/ Margins
Market-Growth/Market-Share Matrix
Boston Consulting Group’s Growth-Share Matrix
HighHigh
Relative Relative Market ShareMarket Share
HighHigh LowLow
LowLow
DOGSDOGSCASH COWSCASH COWS
Pro
du
ct-M
arke
t P
rod
uct
-Mar
ket
Gro
wth
(%
)G
row
th (
%)
STARSTARSS PROBLEMPROBLEMCHILDCHILD
10x 4x 2x 1.5x 1x .5x .2x .1x
Capstone Exercises
Key Questions AnsweredKey Questions Answered
Perceptual Map
How technology will reshape customer expectations over next eight years
Demand & Capacity Analysis
How demand will increase & impact your investments in Capacity
Consumer Report
How customers perceive you …and your competitors
Situation Analysis Guides:•Margins•Working Capital •Financial Structure
•Wealth Creation •Productivity •Customer Satisfaction
Situation Analysis - Resources
Capstone
Exercises
Key Questions Answered
Perceptual Map
How technology will reshape customer expectations over next eight years
Demand & Capacity Analysis
How demand will increase & impact your investments in Capacity
Consumer Report
How customers perceive you …and your competitors
55
4422
33
11
PerformancePerformance
PERCEPTUAL MAP Drift
Demonstration
Cheaper too-$.50 drop in price/year
PERCEPTUAL MAP
Plot the drift of each segment circle as simulation proceeds thru 8 rounds
("Fine Cut" circles have a radius of 2.5 units,
"Rough Cut" circles have a radius of 4 units)
Capstone
Exercises
Key Questions Answered
Perceptual Map
How technology will reshape customer expectations over next eight years
Demand & Capacity Analysis
How demand will increase & impact your investments in Capacity
Consumer Report
How customers perceive you …and your competitors
Key Demand Consideration: Overall market
growing @ ~ 14%/yr
“Average” company should/could double - sales in 6 years
Key Capacity Consideratio
n:
Key Capacity Consideratio
n:
This analysis examines growth of customer demand as simulation proceeds thru 8 rounds.
For this exercise you need the Market
Segment Analysis pages (pages 5 - 9) of The Capstone Courier- Round 0
W/in Segment Statistics-Use the Industry Unit Demand - top left corner
DEMAND ANALYSIS
Demand Analysis
73877387
7387 X 1.092=80677387 X 1.092=8067
Page 30 TMG
Traditional StatisticsTotal Industry Unit Demand 7,387Actual Industry Unit Sales 7,387Segment % of Total Industry 32.4%Growth Rate 9.2%
Page 5 capstone Courier
CAPACITY ANALYSIS
This exercise requires the Production Analysis (page 4) of The Capstone Courier.
The analysis asks: What Would it Cost to Double
Capacity; What Would it Cost to Maximize
Automation?
CAPACITY ANALYSIS
To successfully manage your company--need to know the cost of increasing the number-of- units you can manufacture.
Need to decide how best to increase output:
1. Increase manufacturing capacity; or 2. Increase automation (which allows
you to profitably run a line on overtime).
CAPACITY ANALYSIS
#units * ($4 *(10 - Current Auto-level)= Cost
CostDC= (# unitsDC) * ($6 Floor + $4 autopt*Auto-level)
(X 6) (X 6) 4 $39.6m $43.2m
INTERNAL
EXTERNAL
S
T
OW
• What are the S & W’s w/ respect to your company’s production lines
capacities & efficiencies
•What are the O & T’s w/ respect the nature, direction and magnitude of consumer demand
Capstone
Exercises
Key Questions Answered
Perceptual Map
How technology will reshape customer expectations over next eight years
Demand & Capacity Analysis
How demand will increase & impact your investments in Capacity
Consumer Report
How customers perceive you …and your competitors
Your Consumers
Consumer Buying CriteriaDeterminant Attributes
Strive to meet customers preferences on top two criteria
Don’t spend limited resources (time & $) meeting lesser concerns
KEY POINT
•Traditional customers seek proven products using current technology
•Traditional customers seek proven products using current technology
•Low End customers seek old, simple & cheap tech.•Low End customers seek old, simple & cheap tech.
•High End customers seek cutting-edge sensors in both size & performance
•High End customers seek cutting-edge sensors in both size & performance
•Performance customers seek advanced tech., w/ high reliability
& performance
•Size customers seek advanced sensors that focus on small size
INTERNAL
EXTERNAL
S
T
OW
Evaluation Scheme:
Attribute Poor Fair Good
Price Top1/3 Mid1/3 Bttm1/3
Reliability Bttm1/3 Mid1/3 Top1/3
Age +1yr .6-1yr ~.5yrs
Position +1.5 units
.6-1.5 w/in .5
Awareness
<50% 50-80% 80%+
Access <50% 50-80% 80%+
Overall How Rate On Top 2 Attributes
Customer Satisfaction
INTERNAL
EXTERNAL
S
T
OW
From results… can determine Strengths & Weaknesses of current marketing mix:
Product -Product - Positioning; age & quality (reliability)--
Current levels of support w/ respect to: • PromotionPromotion• DistributionDistribution (accessibility)• PricingPricing - - policy/competitiveness
Compare your results w/ the December Survey…December Survey…
Wherein: <25 = Poor 26-50= Fair 50+ = Good
Evaluation results Classifications:
Finally-evaluate your Current Financial Structure and levels of success
Key MeasuresKey Measures
Cumulative Profits Market Share ROA ROS ROE Asset Turnover Stock Price Market Capitalization
M A R K E T I N G
M A N A G E M E N TQuestions?