the marketing game introduction
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The Marketing Game Introduction. Dr. Gerald Smith MK-719. Overview. 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. - PowerPoint PPT PresentationTRANSCRIPT
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The Marketing Game Introduction
The Marketing Game Introduction
Dr. Gerald SmithMK-719
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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
NextDecision
period
NextDecision
period
4
Industry EnvironmentIndustry Environment
Market growth
Technological environmentNo major innovations expectedYearly revision cycle
Competitive environmentType of competition depends on firms’ decisions
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Distribution ChannelsDistribution Channels
HarriedAssistants
HomeUsers
High-techManagers
ModernStudents Professional
Creators
ConcernedParents
Firm 1 Firm 2 Firm 3
Channel 1Traditional
Dealers
Channel 2DiscountDealers
Firm 4
Firms reach customersthrough full-servicedealers and Internet/mail-order discount dealers.
Firms reach customersthrough full-servicedealers and Internet/mail-order discount dealers.
Different segments have different shopping preferences.
Different segments have different shopping preferences.
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Past Sales By Market SegmentPast Sales By Market Segment
0
5000
10000
15000
20000
25000
0 1 2 3
Year
Assistants
Managers
Students
Home
Creators
Parents
For Voice Recognition Device
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Competitor AnalysisCompetitor Analysis
Estimate competitor’s net contribution Analyze past strategies & likely changes. Evaluate positioning and target segments.
? XX
X
?
?X
1 2 3 4
Firms
1
2
3
4
5
6
Segments
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Expanded Marketing Responsibilities (Level 2)Expanded Marketing Responsibilities (Level 2)
PRODUCT Features (and R&D for product modifications) PRICE Wholesale price in each channel
PLACE Distribution intensity in each channel
PROMOTION
-Advertising $ Spending
Type
-Personal selling Number of sales reps in each channel
Percent non-selling time
Commission rate
-Sales promotion $ Spending per Channel
CUSTOMER SERVICE $ Spending
MARKET RESEARCH 7 Reports May be PurchasedDemand Forecast/Production order Number of Units
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Response Functions and Marketing SpendingResponse Functions and Marketing Spending
Sales
Marketing Spending
ThresholdLevel
SaturationLevel
Spending too little may have little effect, but spending too much just increases costs and reduces profit.
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Marketing Budget Items (Level 2 and 3)Marketing Budget Items (Level 2 and 3)
R&D product modification costs Sales force salaries and severance pay Advertising expense Customer service expense Sales Promotion Expense Market research reports expense
BUDGET FOR FIRST PERIOD: $984k
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Retail Prices Charged Final ConsumersRetail Prices Charged Final Consumers
The retail price set by a dealer depends on:
The wholesale price in the dealer’s channel.
The customary markup used in the channel.
The portion of any sales promotion “deals” that the dealer passes along to consumers as a price reduction.
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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)) = $210
Channel 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 = $190 Channel 1 Wholesale Price = $190/(1-.50) = $95.00
Channel 2 Wholesale Price = $190/(1-.35) = $123.50
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A “Good” Wholesale PriceA “Good” Wholesale Price
Should cover the unit cost of the product (given its features).
Should result in a retail price that will appeal to target consumers.
Should result in a profit margin that will contribute to other expenses and profit.
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R&D for Product Modifications: Computing CostsR&D for Product Modifications: Computing Costs
Feature Cost to Decrease Cost to Increase
Special Commands (5-20) $0 $8,000*(change)2
Error Protection (1-10) $0 $5,000*(change)2
Ease of Learning (1-10) $3,000*change $3,000*(change)2
Example
Feature
Last period’s product
This period’s product Change Cost to Change
Special Commands 6 8 +2 $8,000*2*2=$32,000
Error Protection 4 3 -1 $0
Ease of Learning 3 5 +2 $3,000*2*2=$12,000
Total modification costs: $44,000
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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Industry Sales ReportIndustry Sales Report
Brand Unit Sales Share (units) $ Sales (retail)
Firm 1 25,151 .250 $4,292,964
Firm 2 25,151 .250 $4,292,964
Firm 3 25,151 .250 $4,292,964
Firm 4 25,151 .250 $4,292,964
Total 100,604 $17,171,854
Channel Unit Sales Dollars Sales
1 56,296 $10,696.240
2 44,308 $6,475,614
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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
channel 1
$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 Promotion Channel 1 Channel 2
No. Sales Reps Channel 1 Channel 2CommissionCustomer 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 2)Market Research Reports (Level 2)
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 7. Product positioning report
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TMGPlan SoftwareTMGPlan SoftwareEasy to use for preparing and evaluating plans, managing reports
Select directory
Select directory
Enter Plan
Decisions
Enter Plan
DecisionsEvaluate spending and profit forecast
Evaluate spending and profit forecast
View, print, and manage
password protected reports
View, print, and manage
password protected reports
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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?
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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
Students
Home
Assistants
Creators
Managers
Parents
SpecialCommands
10-13
7-10
10-13
12-15
13-16
5-8
ErrorProtection
2-4
2-4
6-8
2-4
6-8
2-4
Ease ofLearning
1-3
6-8
6-8
4-6
2-4
7-9
PriceRange
low
low
high
high
high
low
What kind of product would a segment prefer?What reference price seems typical for the segment?How are segments similar and different?
What kind of product would a segment prefer?What reference price seems typical for the segment?How are segments similar and different?
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Marketing Effectiveness ReportMarketing Effectiveness Report
Brand AwarenessCustomer Service Consumer Group Rating Industry Average Rating
Channel 1: Sales Rep Workload Dealer Satisfaction Channel Strength (“Push”)
Channel 2: Sales Rep Workload Dealer Satisfaction Channel 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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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
Students
Home
Assistants
Creators
Managers
Parents
Percent of Shopping
in Channel 1
?
?
?
?
?
?
Who shops where?How do shopping patterns match distribution focus?
Percent of Shopping
in Channel 2
?
?
?
?
?
?
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Product Positioning ReportProduct Positioning Report
Brand
Firm 1Firm 2Firm 3Firm 4
1
????
2
????
3
???
?
4
????
5
????
6
????
Segment
Which brands are closest to which segments?Which segments have no close brands?