The Marketing Game 1

1

Charlotte H. Mason • William D. Perreault, Jr.

3rd edition

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The Marketing Game is Integrative … and Covers All Aspects of the Marketing Strategy Planning ProcessThe Marketing Game is Integrative The Marketing Game is Integrative …… and Covers All Aspects of the and Covers All Aspects of the Marketing Strategy Planning ProcessMarketing Strategy Planning Process

Technology Political & Legal Social & Cultural Economic

CompanyCompanyMission, Objectives, Mission, Objectives,

& Resources& Resources

CompetitorsCompetitorsCurrent &Current &ProspectiveProspective

S.S.W.W.O.O.T.T.

TargetMarket

ProductProduct PricePrice

PromotionPromotion

External Market EnvironmentExternal Market Environment

Targeting &Targeting &SegmentationSegmentation

Positioning &Positioning &DifferentiationDifferentiation

Narrowing Narrowing downdown to focused strategy to focused strategy with quantitative and qualitativewith quantitative and qualitative screening criteriascreening criteria

PlacePlace

CustomersCustomersNeeds and otherNeeds and other

SegmentingSegmentingDimensionsDimensions

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OverviewOverview

� You take over marketing management responsibilities for your firm.� Must satisfy customers and earn profits

� Focus is on marketing strategy planning.� Requires integration of all strategy decisions. � Requires attention to competitive environment.� Considers short term and long term perspectives.� Features ongoing, rapid feedback.

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The ProcessThe Process

Analysis of market situation/opportunities

Planning and budgeting

Make marketing plan DECISIONS!!!

Submit plan decisions

The marketing game! simulation

Company reports returned to firms

NextDecisionperiod

5

Industry EnvironmentIndustry Environment

�Market growth

�Technological environment�No major innovations expected�Yearly revision cycle

�Competitive environment�Type of competition depends on firms’ decisions

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Six Key Product-Market SegmentsSix Key Product-Market Segments

HarriedAssistants

HomeUsers

High-techManagers

ModernStudents Professional

Creators

ConcernedParents

Segments have different needs, preferences, situations, sizes, growth rates.

The Marketing Game 2

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Past Sales By Market SegmentPast Sales By Market Segment

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For Voice Recognition Device

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Distribution ChannelsDistribution Channels

HarriedAssistants

HomeUsers

High-techManagers

ModernStudents Professional

Creators

ConcernedParents

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Channel 1Traditional

Dealers

Channel 2DiscountDealers

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Firms reach customersthrough full-servicedealers and Internet/mail-order discount dealers.

Different segments have different shopping preferences.

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Product 1: Voice Recognition Device (VRD)Product 1: Voice Recognition Device (VRD)

Key ProductFeatures

Error Protection (1-10)

Number of Special Commands (5-20)

Easy of Learning (1-10)

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R&D for Product Modifications: Computing CostsR&D for Product Modifications: Computing Costs

$3,000*(change)2$3,000*changeEase of Learning (1-10)

$5,000*(change)2$0Error Protection (1-10)

$8,000*(change)2$0Special Commands (5-20)

Cost to IncreaseCost to DecreaseFeature

+2

-1

+2

Change

5

3

8

This period’s product

$44,000Total modification costs:

Example

$3,000*2*2=$12,0003Ease of Learning

$04Error Protection

$8,000*2*2=$32,0006Special Commands

Cost to Change

Last period’s productFeature

Note: R&D for product changes is more expensive if you have to make big changes in a short period of time…

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Marketing Decision Responsibilities (Level 1)Marketing Decision Responsibilities (Level 1)

PRODUCT Features(and R&D for product modifications)

PRICE Wholesale price

PLACE Distribution intensity in each channel

PROMOTION-Advertising $ Spending

-Personal selling Number of sales reps in each channel

CUSTOMER SERVICE $ Spending

MARKET RESEARCH 6 reports may be purchasedDemand forecast/production order Number of units

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Marketing Budget Items (Level 1)Marketing Budget Items (Level 1)

�R&D product modification costs�Sales force salaries and severance pay�Advertising expense�Customer service expense�Market research reports expense

BUDGET FOR FIRST PERIOD: $984k

The Marketing Game 3

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Computing PricesComputing Prices

Computing Retail Prices from Wholesale Prices:Expected Retail Price = Wholesale price/(1-% Markup)

Example: Wholesale price = $105Channel 1 Retail Price = ($105/(1-.50)) = $210Channel 2 Retail Price = ($105)/(1-.35) = $161.54

Computing Wholesale Prices from Desired Retail Prices:

Wholesale Price = Retail Price (1 - % Markup)

Example: Desired Retail Price = $190Channel 1 Wholesale Price = $190 (1-.50) = $95.00

Channel 2 Wholesale Price = $190 (1-.35) = $123.50

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Competitor AnalysisCompetitor Analysis

�Estimate competitor’s net contribution�Analyze past strategies & likely changes.�Evaluate positioning and target segments.

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Industry Sales ReportIndustry Sales Report

$6,475,61444,3082$10,696.24056,2961

Dollars SalesUnit SalesChannel

$17,171,854100,604Total $4,292,964.25025,151Firm 4$4,292,964.25025,151Firm 3$4,292,964.25025,151Firm 2$4,292,964.25025,151Firm 1

$ Sales (retail)Share (units)Unit SalesBrand

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Product Features and Prices ReportProduct Features and Prices Report

Brandof

VRD

Firm 1Firm 2Firm 3Firm 4

Specialcommands

8888

Errorprotect-

ion

3333

Ease of

learning

3333

Retailprice

channel1

$190.00$190.00$190.00$190.00

Retailprice

channel2

$146.15$146.15$146.15$146.15

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Market Activity Report (Level 2)Market Activity Report (Level 2)

Adv. DollarsAdv. Type

Sales PromotionChannel 1Channel 2

No. Sales RepsChannel 1Channel 2

CommissionCustomer Service

Firm 1

$250,000

$0$0

10105%$92,500

Firm 2

$250,000

$0$0

10105%$92,500

Firm 3

$250,000

$0$0

10105%$92,500

Firm 4

$250,000

$0$0

10105%$92,500

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Market Research Reports (Level 1)Market Research Reports (Level 1)

�1. Market share by segment (all brands)�2. Market share by channel (all brands)�3. Consumer preference study�4. Marketing effectiveness report�5. Sales by segment by channel (own brand)�6. Consumer shopping habits study

The Marketing Game 4

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Market Share by Segment ReportMarket Share by Segment Report

Brand

Firm 1Firm 2Firm 3Firm 4

Total Sales(units)

1

0.2500.2500.2500.250

20,028

2

0.2500.2500.2500.250

15,084

3

0.2500.2500.2500.250

25,104

4

0.2500.2500.2500.250

10,240

5

0.2500.2500.2500.250

22,056

6

0.2500.2500.2500.250

8,092

Segment

Who’s selling to whom?Who’s buying what? What is each firm achieving?Which segments are buying? 20

Market Share by Channel ReportMarket Share by Channel Report

Brand

Firm 1Firm 2Firm 3Firm 4

Total Sales(units)

Channel 1

0.2500.2500.2500.250

56,296

What’s selling where?Who’s buying what?

Channel 2

0.2500.2500.2500.250

44,308

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Consumer Preference StudyConsumer Preference Study

Segment

StudentsHomeAssistantsCreatorsManagersParents

SpecialCommands

10-137-10

10-1312-1513-165-8

ErrorProtection

2-42-46-82-46-82-4

Ease ofLearning

1-36-86-84-62-47-9

PriceRange

lowlowhighhighhighlow

What kind of product would a segment prefer?What reference price seems typical for the segment?How are segments similar and different? 22

Marketing Effectiveness ReportMarketing Effectiveness Report

Brand AwarenessCustomer ServiceConsumer Group RatingIndustry Average Rating

Channel 1:Sales Rep WorkloadDealer SatisfactionChannel Strength

(“Push”)

Channel 2:Sales Rep WorkloadDealer SatisfactionChannel Strength

(“Push”)

Index0.550

100%100%

100%1.00.500

100%1.00.500

Competitorswith lower

Index0

00

00

Competitorswith equal orhigher Index

3

33

33

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Detailed Sales AnalysisDetailed Sales Analysis

Firm

Channel 1

Channel 2

1

896

5,269

2

1,109

3,337

3

5,602

1,396

4

1,808

1,196

5

4,363

1,865

6

1,086

1,074

Segment

Unit sales by segment and channelAre you reaching your target?

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Customer Shopping HabitsCustomer Shopping Habits

Segment

StudentsHomeAssistantsCreatorsManagersParents

Percent of Shoppingin Channel 1

??????

Who shops where?How do shopping patterns match distribution focus?

Percent of Shoppingin Channel 2

??????