New Product Alert - New Product Alert - New Product Alert

1
New Product Alert - New Product Alert - New
Product Alert

• HoTTea
• The innovative self-heating tea for busy people
  on the move.
• A short computerised simulation to explore
  essential marketing and financial concepts.
• To build skills in analysis, decision-making and
  team working.

Its hot, its really hot, its a real HotTea
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The Task

• You will be divided into small groups to run the
  HoTTea company for at least eight periods.

You will use your own micro-computer to simulate
the effect of your decisions.
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The Good News

• HoTTea is a totally new product
• and there is no competition
• Each period, potential sales are 1,000,000
• It only costs 0.50 to make
• but you should be able to sell it for 2.00

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The Bad News

• Eventually competition will arrive.
• No one knows about HoTTea.
• Fixed Costs (each period) are 20,000.
• Every time you increase production you invest 2
  per unit of new capacity.
• HoTTea has a limited shelf-life and so you lose
  half any inventory remaining at period end.

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The Even Worse News!

• You only have 400,000 to fund your growth.
• If you over spend on
• production capacity
• inventory
• initial losses
• You may go bankrupt!

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Your Decisions

• PRICE 1.90
• PROMOTION 75000
• PRODUCTION 70000
• Besides illustrating the decisions, these have
  been tested and a forecast of the results
  produced.

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Your Results
Penetration 5
Market Share 100
Unit Sales 50000
Inventory (units) 10000
Sales Income 95000
Net Profit -30000
Fixed Assets 140000
Inventory (value) 5000
Cash 225000
Cum Profit -30000
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Using the Computer

• Enter a team name
• to identify your data and demonstrate creativity,
  aggression etc.
• Enter Decisions into the template confirm
• Results will be printed and displayed
• Analyse and make your next decisions

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YOUR OBJECTIVES

• run the business for at least eight periods
• make the greatest possible cumulative profit
• without going bankrupt
• explore essential marketing finance
• practice your decision-making skills
• work as a team sharing understanding
• HAVE FUN!