Transcript Welcome to the Marketing Simulation Game!

Welcome to
the Marketing Simulation Game Class!
Dr. Satyendra Singh
Overview
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Long-term Perspective
Focus on Marketing Planning
Focus on Strategic Issues
Competitive Environment
Rapid Feedback
The Process
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Analysis of Company Results
Planning and Budgeting
Marketing Plan DECISIONS!!!
Turn in Decision Forms
THE MARKETING GAME SIMULATION
Company Reports Returned to Firms
Industry Environment
• Market Growth
• Competitive Environment
– Type of Competition Depends on Firms’ Decision
• Technical Environment
– No Major Innovations Expected
– Yearly Revision Cycle
The Market Segments
• There are Six Product-Market Segments
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High-tech Managers
Modern Students
Concerned Parents
Commercial Artists
Harried Assistants
Home Producers
Distribution Channels
• Channel 1
– Traditional Dealers
– 50% Margin
• Channel 2
– Discount Dealers
– 35% Margin
Product Features - Multimedia
• Number of Special Commands (5-20)
• Error Protection (1-10)
• Ease of Learning (1-10)
Types of Advertising
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Pioneering
Direct Competitive
Indirect Competitive
Reminder
Corporate (Institutional)
Marketing Responsibilities…
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Product  Features  Modify  Do Not!
Price  Wholesale Price in Each Channel?
Place  Distribution Intensity in Each Channel?
Production  How many units?
Customer Service  $ How much?
Marketing Responsibilities…
• Promotion
– Advertising
• $ Spending  How much?
• Type  P, D, I, R, or C ?
– Selling
• # of Sales Reps in Each Channel.
• % Non-Selling Time
– Sales Promotion
• $ Spending  How much?
Marketing Responsibilities
• Market Research - 7 Reports  Which?
#1
#2
#3
#4
#5
#6
#7
Mkt. Share by Segment (all brands)
Mkt. Share by Channel (all brands)
Consumer Preference Study
Marketing Effectiveness Report
Detailed Sales Analysis (own brand)
Customer Shopping Habits
Product Positioning Report
$15,000
$12,000
$30,000
$25,000
$15,000
$7,000
$30,000
Budget Items
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R & D Product Modification Costs
Sales Force Salaries and Severance pay
Advertising Expense
Customer Service Expense
Sales Promotion Expense
Market Research Reports Expenses
Computing Prices
• Retail Prices from Wholesale Prices:
– Expected Retail Price = (Wholesale price/1-% Margin)
– Example: Wholesale price = $105
• Channel1 Retail Price = ($105/1-.50) = $ 210.00
• Channel 2 Retail Price = ($105/1-.35) = $ 161.54
• Wholesale Prices from Desired retail
Price:
– Wholesale Price = Retail price (1-% Margin)
– Example: Desired Retail price = $ 190
• Channel 1 Wholesale Price = $190 (1-.50) = $95.00
• Channel 2 Wholesale Price = $190 (1-.35) = $123.50
Retail Prices Charged Final Consumers
• The retail price set by a dealer depends on:
– The wholesale price in the dealer’s channel
– The customary margin used in the channel
– The portion of any sales promotion “deals”
that the dealer passes along to consumers
as a price reduction.
A “Good” Wholesale Price
• Should cover the unit cost of the
product (given its features).
• Results in a profit margin that will
contribute to other expenses and profit.
• Result in a retail price that will appeal to
target customers.
Computing Costs of R & D for Product Modifications
• Feature
Cost to Decrease
Cost to Increase
• Special Commands (5-20)
$0
$8,000 x (change)2
• Error Protection (1-10)
$0
$5,000 x (change)2
• Ease of Learning (1-10) $3,000 x change
• Example:
• Old Brand
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New Brand
8
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$3,000 x (change)2
Change
Cost
+2
$8,000 x 2 x 2 = $32,000
-1
= $0
+2
$3,000 x 2 x 2 = $12,000
Total Costs = $ 44,000
And finally….
• Looking forward to receiving your
quality decisions!