Charlotte H. Mason Perreault, Jr.

moancapableAI and Robotics

Nov 17, 2013 (3 years and 8 months ago)

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1

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

Modified for MKT304 by H. Bruce
Lammers

Marketing Research Technology Lab

California State University, Northridge


3
rd

edition

The Marketing Game: What is It?


A
“living” case
, where you learn about a situation,
evaluate opportunities, develop a strategy, and make
marketing plan decisions.


In which you get regular
feedback
, in a report that
summarizes your marketing outcomes and related
financial results, based on both your plan and
competitors’ decisions.


Where you

analyze

what you’ve learned by doing … to
figure out answers to what you do not know (and could
not know!) at the beginning.


That challenges you
to improve

your strategy

in light of
the learning...


2

A Little Background


Originally developed as the first PC
-
based
marketing strategy simulation in 1985 …


Routinely revised and updated since that time.


Now one of the most widely used teaching
simulations in the world.


Used in hundreds of universities, exec programs and
companies, international competitions, etc.


We’ll be using the third edition


You’ll need only Chapters 2,3, & 5 of student manual
which are downloadable from our MKT304 website.

3

Special Objectives Served by TMG


To develop skills in identifying marketing opportunities.
This encompasses knowledge of and the
ability to
apply

key marketing frameworks and tools for
analyzing customers, competition, and marketing
strengths and weaknesses.


To develop insights about creative selection of target
markets and
making integrative strategy decisions
concerning product, price, promotion, place and the
needs of a target market.


To
develop skills in marketing analysis
.


To provide meaningful, practical experience in
translating qualitative and quantitative analysis into
conclusions about
profitable marketing strategies

and
programs.

4

The Role of the Marketing Game


The Game offers unique learning advantages,
compared to other learning approaches (like reading
texts and articles, lectures, guest speakers, case
analysis and presentation, projects) because it:



Is
dynamic
, like most business situations.



Brings the
competitive

aspects of marketing to life.



Highlights the need for
integrative

planning based on
qualitative and quantitative analysis of the market
environment
.

5

The Marketing Game is Integrative … and Covers All Aspects of the

Marketing Strategy Planning Process

6

Technology Political & Legal Social & Cultural Economic

Company

Mission, Objectives,
& Resources

Competitors

Current &

Prospective

S.

W.

O.

T.

Target

Market

Product


Price

Promotion


External Market Environment

Targeting &

Segmentation

Positioning &

Differentiation

Narrowing
down

to focused strategy
with quantitative and qualitative

screening criteria

Place

Customers

Needs and other

Segmenting

Dimensions

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.


Requires attention to competitive environment.


Considers short term and long term perspectives.


Features ongoing, rapid feedback.

7

The Process

8

Analysis of market situation/opportunities

Planning and budgeting

Make marketing plan DECISIONS!!!

Submit plan decisions

The marketing game! simulation

Company reports returned to firms


Next

Decision

period

Industry Environment


Market growth



Technological environment


No major innovations expected


Yearly revision cycle


Competitive environment


Type of competition depends on firms’ decisions


9

Six Key Product
-
Market Segments

10

Harried

Assistants

Home

Users

High
-
tech

Managers

Modern

Students


Professional

Creators

Concerned

Parents

Segments have different needs, preferences,

situations, sizes, growth rates.

Past Sales By Market Segment

11

0
5000
10000
15000
20000
25000
0
1
2
3
Year
Assistants
Managers
Students
Home
Creators
Parents
For Voice Recognition Device

Distribution Channels

12

Harried

Assistants

Home

Users

High
-
tech

Managers

Modern

Students

Professional

Creators

Concerned

Parents

Firm 1

Firm 2

Firm 3

Channel 1

Traditional

Dealers

Channel 2

Discount

Dealers

Firm 4

Firms reach customers

through full
-
service

dealers and
Internet/mail
-
order
discount dealers.

Different segments
have different shopping
preferences.

The Product : Voice Recognition Device
(VRD)

13

Key

Product

Features

Error Protection (1
-
10)

Number of Special Commands (5
-
20)

Ability to Customize (1
-
10)

R&D for Product Modifications:
Computing Costs

14

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 (p. 32)

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…

Types of Advertising


Pioneering (p.24)


Direct competitive (p. 25)


Indirect competitive (p. 25)


Reminder (p. 25)


Corporate (Institutional) (p. 25)


15

Marketing Responsibilities

16

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 Purchased

Demand Forecast/

Production order


Number of Units

Production Economies of Scale

17

72
75
78
81
84
87
90
93
96
99
102
0
100,000
200,000
300,000
400,000
500,000
Cumulative Units Produced
P
ercent of Base Unit Cost
Response Functions and Marketing
Spending

18

Sales

Marketing Spending

Threshold

Level

Saturation

Level

Spending too little may have little effect, but
spending too much just increases costs
and reduces profit.

Marketing Budget Items


R&D product modification costs


Sales force salaries and severance pay


Advertising expense


Customer service expense


Sales Promotion Expense


Market research reports expense

YOUR BUDGET FOR FIRST PERIOD:
$984k



19

Computing Prices (p. 37)

20

Computing Retail Prices from Wholesale Prices:


Expected Retail Price = Wholesale price/(1
-
% Markup)

Example:

Wholesale price = $105


Channel 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

Retail 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.


21

A “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.

22

Competitor Analysis


Estimate competitor’s net contribution


Analyze past strategies & likely changes.


Evaluate positioning and target segments.

23

?

X

X

X

?

?

X

1 2 3 4

Firms

1

2

3

4

5

6

Segments

Sales in Units and Dollars Report

24

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

Product Features and Prices By Firm
Report

25


Brand

of

VRD


Firm 1

Firm 2

Firm 3

Firm 4




Special

commands


8

8

8

8


Error

protect
-

ion


3

3

3

3



Ease

of

learning


3

3

3

3


Retail

price

channel


1


$190.00

$190.00

$190.00

$190.00


Retail

price

channel

2


$146.15

$146.15

$146.15

$146.15

Industry Market Activity Report

26



Adv. Dollars

Adv. Type


Sales Promotion


Channel 1


Channel 2


No. Sales Reps


Channel 1


Channel 2

Commission

Customer Service


Firm 1



$250,000




$0

$0



10

10

5%

$92,500




Firm 2



$250,000




$0

$0



10

10

5%

$92,500




Firm 3



$250,000




$0

$0



10

10

5%

$92,500




Firm 4



$250,000




$0

$0



10

10

5%

$92,500




Market Research Reports

(All provided free of charge in Fall 2013)


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

27

Submitting Marketing Plans


Submitting marketing plans decisions


Follow the instructions given at our MKT304 home page.

28

Overview of Market Research Reports


Market share by segment (all brands)


Market share by channel (all brands)


Consumer preference study


Marketing effectiveness report


Sales by segment by channel (own brand)


Consumer shopping habits study


Product positioning report

29

Market Share by Segment Report

30

Brand


Firm 1

Firm 2

Firm 3

Firm 4


Total

Sales

(units)


1


0.250

0.250

0.250

0.250


20,028




2


0.250

0.250

0.250

0.250


15,084




3


0.250

0.250

0.250

0.250


25,104




4


0.250

0.250

0.250

0.250


10,240




5


0.250

0.250

0.250

0.250


22,056




6


0.250

0.250

0.250

0.250


8,092




Segment

Who’s selling to whom?

Who’s buying what?

What is each firm achieving?

Which segments are buying?

Market Share by Channel Report

31

Brand


Firm 1

Firm 2

Firm 3

Firm 4


Total Sales

(units)


Channel 1


0.250

0.250

0.250

0.250


56,296



What’s selling where?

Who’s buying what?

Channel 2


0.250

0.250

0.250

0.250


44,308



Consumer Preference Study

32


Segment


Students

Home

Assistants

Creators

Managers

Parents

Special

Commands


10
-
13

7
-
10

10
-
13

12
-
15

13
-
16

5
-
8

Error

Protection


2
-
4

2
-
4

6
-
8

2
-
4

6
-
8

2
-
4

Ease of

Learning


1
-
3

6
-
8

6
-
8

4
-
6

2
-
4

7
-
9

Price

Range


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?

Marketing Effectiveness Report

33


Brand Awareness

Customer 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”)



Index

0.550


100%

100%



100%

1.00

.500




100%

1.00

.500

Competitors

with lower

Index

0







0

0





0

0

Competitors

with equal or

higher Index

3







3

3





3

3

Detailed Sales Analysis

34


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 channel

Are you reaching your target?

Customer Shopping Habits

35


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


?

?

?

?

?

?

Product Positioning Report

36

Brand


Firm 1

Firm 2

Firm 3

Firm 4

1


?

?

?

?


2


?

?

?

?


3


?

?

?


?

4


?

?

?

?




5


?

?

?

?



6


?

?

?

?


Segment

Which brands are closest to which segments?

Which segments have no close brands?

Recommendations


Analyze

the reports as you would analyze a case.


Make
intentional

changes.


Find a
balance

in marketing research spending.


Be
integrative
--
think carefully about how each decision
impacts each of the others.


Have some
fun!



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