The Markstrat Challenge I

The Markstrat Challenge I
PARIS – BOSTON
www.stratxsimulations.com
Markstrat is a simulation designed to focus
on strategic marketing issues
Understanding customer needs
Long-term perspective
Marketing as a profit center
Competitive environment
Marketing strategy is based on segmentation,
positioning, and resource allocation... marketing mix
decisions are secondary
The
Markstrat
World
Managing
your firm
Getting
started
The Markstrat World: A large territory with a
highly developed economy
The Markstrat World
Population: 250 million
Currency: Markstrat Dollar ($)
The basic scenario begins with firms starting
in different positions
Each firm can compete in TWO product
markets
Maximum: 5 brands/firms marketed at a time
SONITES
•
independent
•
not substitutes
•
not complements
VODITES
The Sonite market is already developed,
each product has 6 product characteristics
Weight
Design
Volume
(10 – 20)
(3-10)
(20-100)
Kg
Index
dm3
Max. Frequency
Power
Base Cost
(5 – 50)
(5-100)
(min. 10)
kHz
W
Vodites will also have 6 physical characteristics,
but the market is yet untapped
Autonomy
Max. Frequency
Diameter
(5-100)
(5-20)
(10-100)
m
kHz
mm
Design
Weight
Base Cost
(3-10)
(10-100)
(min. 10)
Index
Kg
It is easy to recognize the origin of the
brands from their names
S
I
Product
Type:
Company
marketing
the brand:
S=Sonite
V=Vodite
A, E, I, ...
B
I
Freely chosen
letters or numbers
Sonite customers have traditionally been
classified into 5 segments……
SINGLES (Si)
PROFESSIONALS (Pr)
BUFFS (Bf)
HIGH EARNERS (Hi)
OTHERS (Ot)
...whereas initial studies for Vodites have pointed
to a different segmentation scheme
Typical segment size evolution over time
Sales
Followers
Early
Adopters
Innovators
Time
Sonite & Vodite customers can choose to purchase
through 3 distinct distribution channels
Specialty
Stores
Department
Stores
Mass
Merchandisers
Summary of the Markstrat World
Technology
Market
Growth
Economic
Environment
The
Markstrat
World
Managing
your firm
Getting
started
Your objective in managing your company is to
maximize your Stock Price Index
You will have to optimize:
•
•
•
•
•
Market share
Sales growth
Net contribution
Cumulative net contribution
R & D investments
….but the main objective is to LEARN!
You will need to do a certain amount of analysis,
before setting a strategic direction for your firm
Data
Strategic
Options
Information
Research studies provide market data, it is up to
you to prioritize, digest & interpret them
Consumer survey
Consumer panel
Distribution panel
Semantic scales
Multi-dimensional
scaling (MDS)
Industry benchmarking
Market forecast
Competitive advertising
Competitive sales force
Advertising experiment
Sales force experiment
Conjoint analysis
Once your strategy is clear, you should make
a number of tactical decisions each year
Production planning
Inventory disposal
Pricing
Mass communication
Sales force & distribution
Market research
Production department adjustment
Your production department will automatically adjust production
levels (+ or -) 20% against your plan
Market
demand
Inventory
build-up
Lost
sales
(assuming zero
inventory level)
Number of
Units
Production
QP
(1-20%)
QP
Requested
production
level
QP
(1+20%)
Comparing purchase intent with market share
can give you a feel for the size of "lost sales."
Purchase
Intent
Market
Share
Lost
Sales
Competitors
“Order-book”
Lost to industry
Pricing in Markstrat is fixed once a year
Recommended Retail Price = $100
Average Retail
Price
Distrib. Margin
Average Selling
Price
Specialty
Stores
Department
Stores
Mass
Merchandisers
$100
$100
$90
$40
$ 30
$ 27
$ 60
$ 70
$ 63
Each firm receives a marketing budget for the
coming period
The budget amount is based on the previous period’s performance
Advertising expenditures
Budget
Advertising
Advertising research
expenditures
for each
brand
Operating cost
Sales force
Hiring & training cost
Firing cost
R&D
Development budget
Market
Research
Sonite and Vodite
study costs
for each
project
Brand results
Company performance
The simulation starts at the end of the initial period
.
.
The new
management (you!)
make decisions for
the next period
The decisions for the first period are limited
in scope
Your team can get familiar with Markstrat
•
•
•
•
•
Gather information
Do not make any major changes in your firm's operation
Do not introduce new brands, modify or withdraw existing ones
Do not start R&D projects
Do not give perceptual objectives for advertising
Organize yourselves and manage the group
process
Time
pressure
Information
overload
Conflicting
opinions
The
Markstrat
World
Managing
your firm
Getting
started
When you return to your team room,
the Main Menu will be on your screen
Click here to
access session
information
You can access all the decisions on the main
screen to make decisions for the next period
The decisions
you will make
Marketing Mix decisions should be entered for
each brand
Switch from
Sonites to
Vodites
You are
making
decisions for
the brand
SAMA
The sales force is organized by channel type to
meet the specific needs of the channels
Click on the
assistant to help
you allocate to
sales forces
automatically
Buying market research studies will help you
make sound decisions
The cost of
each study
appears as
you make your
selections
You can monitor the status of your decisions
at any time
Don't forget to transfer your decisions to
your instructor by closing the session
You can close
your session by
clicking on
Interface/Close
Markstrat Session
or just click here
On your marks, get set, GO!
Give a name to your company
Respect the deadlines