dealers and Internet/mail-order discount dealers. Differen

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The Marketing Game Introduction
Dr. Gerald Smith MK-719
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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.

3
The Process
Analysis of market situation/opportunities Plannin
g and budgeting Make marketing plan
DECISIONS!!! Submit plan decisions The marketing
game! simulation Company reports returned to
firms
Next Decision period
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Industry Environment

• Market growth
• Technological environment
• No major innovations expected
• Yearly revision cycle
• Competitive environment
• Type of competition depends on firms decisions

5
Distribution Channels
Firm 1
Firm 2
Firm 3
Firm 4
Firms reach customers through full-service dealers
and Internet/mail-order discount dealers.
Channel 1 Traditional Dealers
Channel 2 Discount Dealers
Different segments have different shopping
preferences.
6
Past Sales By Market Segment
For Voice Recognition Device
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Competitor Analysis

• Estimate competitors net contribution
• Analyze past strategies likely changes.
• Evaluate positioning and target segments.

Firms
1 2 3 4
1 2 3 4 5 6
X
?
X
X
Segments
?
X
?
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Expanded Marketing Responsibilities (Level 2)
PRODUCT Features (and RD 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
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Response Functions and Marketing Spending
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)

• RD 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 Consumers

• The retail price set by a dealer depends on
• The wholesale price in the dealers 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 Prices
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
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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.

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RD for Product Modifications Computing Costs
Note RD 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 Report
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Product Features and Prices Report
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 1
46.15
Brand of VRD Firm 1 Firm 2 Firm 3 Firm 4
Special commands 8 8 8 8
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Market Activity Report (Level 2)
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
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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 Software
Easy to use for preparing and evaluating plans,
managing reports
View, print, and manage password protected
reports
Select directory
Enter Plan Decisions
Evaluate spending and profit forecast
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Market Share by Segment Report
Segment
4 0.250 0.250 0.250 0.250 10,240
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
5 0.250 0.250 0.250 0.250 22,056
6 0.250 0.250 0.250 0.250 8,092
Whos selling to whom? Whos buying what? What
is each firm achieving? Which segments are buying?
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Market Share by Channel Report
Brand Firm 1 Firm 2 Firm 3 Firm 4 Total
Sales (units)
Channel 1 0.250 0.250 0.250 0.250 56,296
Channel 2 0.250 0.250 0.250 0.250 44,308
Whats selling where? Whos buying what?
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Consumer Preference Study
Price Range low low high high high low
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
Segment Students Home Assistants Creators Manage
rs Parents
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 Report
Competitors with lower Index 0 0 0 0 0
Competitors with equal or higher
Index 3 3 3 3 3
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
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Detailed Sales Analysis
Segment
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
Unit sales by segment and channel Are you
reaching your target?
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Detailed Sales Analysis
Segment
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
Unit sales by segment and channel Are you
reaching your target?
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Customer Shopping Habits
Segment Students Home Assistants Creators Manage
rs Parents
Percent of Shopping in Channel 2 ? ? ? ? ? ?
Percent of Shopping in Channel 1 ? ? ? ? ? ?
Who shops where? How do shopping patterns match
distribution focus?
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Product Positioning Report
Segment
3 ? ? ? ?
5 ? ? ? ?
6 ? ? ? ?
Brand Firm 1 Firm 2 Firm 3 Firm 4
1 ? ? ? ?
2 ? ? ? ?
4 ? ? ? ?
Which brands are closest to which segments?
Which segments have no close brands?