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The Markstrat Challenge I

The Markstrat Challenge I. Markstrat is a simulation designed to focus on strategic marketing issues. Understanding customer needs Long-term perspective Marketing as a profit center Competitive environment

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The Markstrat Challenge I

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  1. The Markstrat Challenge I

  2. 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

  3. The Markstrat World Managing your firm Getting started

  4. The Markstrat World: A large territory with a highly developed economy • The Markstrat World • Population: 250 million • Currency: Markstrat Dollar ($)

  5. The basic scenario begins with firms starting in different positions

  6. Each firm can compete in TWO product markets • Maximum: 5 brands/firms marketed at a time • independent • not substitutes • not complements • SONITES • VODITES

  7. The Sonite market is already developed, each product having 6 determining product characteristics Weight Volume Design Index Kg dm3 10 - 20 3 - 10 20 - 100 Base Cost Power Max. Frequency W kHz $ 5 - 50 5 - 100 min. 10

  8. Vodites will likely also have 6 main physical characteristics, but the market is as yet untapped Autonomy Max. Frequency Diameter m mm kHz 5 -100 5 -20 10 -100 Design Weight Base Cost $ Kg Index 3 -10 10 -100 min. 10

  9. Product Type: S=Sonite V=Vodite Company marketing the brand: A, E, I, ... Freely chosen letters or numbers It is easy to recognize the origin of the brands from their names S I B I

  10. Singles / Si Professionals / Pr Buffs / Bf High Earners / Hi Others / Oi Sonite customers have traditionally been classified into 5 segments……

  11. ...whereas initial studies for Vodites have pointed to a different segmentation scheme Typical segment size evolution over time sales Followers Early adopters Innovators time

  12. Sonite & Vodite customers have the choice of purchasing through 3 distinct distribution channels

  13. Summary of the Markstrat World Environment MarketGrowth Technology Economic Environment

  14. The Markstrat World Managing your firm Getting started

  15. Your objective in managing your company is to maximize your Share Price Index • To do that, you will have to optimize: • Market share • Sales growth • Net contribution • Cumulative net contribution • R & D investments ….but the main objective is to LEARN!

  16. Data Information You will need to do a certain amount of analysis, before setting a strategic direction for your firm Strategic Options %

  17. Consumer survey Consumer panel Distribution panel Semantic scales Multi-dimensional scaling (MDS) Market research studies provide market data… it is up to you to prioritize, digest, and interpret them • Industry benchmarking • Market forecast • Competitive advertising • Competitive sales force • Advertising experiment • Sales force experiment • Conjoint analysis

  18. Once your strategy is clear, you should proceed to make a number of tactical decisions each year • Production planning • Inventory disposal • Pricing • Mass communication • Sales force & distribution • Market research

  19. Your production department will automatically adjust production levels up to 20% (+ or -) against your plan Marketdemand (assuming zero inventory level) Inventory build-up Lost sales Number of Units Production QP (1-20%) QP (1+20%) QP Requested production level

  20. Comparison of 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

  21. Pricing in Markstrat is fixed once a year Recommended Retail Price = $100

  22. Advertising Advertising expenditures for each brand Advertising research expenditures Operating cost Sales force Hiring & training cost Firing cost R & D for each project Development budget Market Research Sonite and Voditestudy costs Each firm receives a marketing budget for the coming period, based on the previous period’s performance Budget

  23. Brand results

  24. Company performance

  25. The simulation starts at the end of the initial period, the new management (you!) making decisions for the next period START MSPH

  26. The decisions for the first period are limited in scope, so that your team can familiarize itself 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

  27. Organize yourselves and manage the group process Time pressure Information overload Conflicting opinions

  28. The Markstrat World Managing your firm Getting started

  29. Click here to open a session & access the decisions screen When you return to your team room, the Main Menu will be on your screen

  30. Within the Decision Screen, you will start making decisions for the coming period Click here to make Production, Price & Advertising decisions The decisions you will make

  31. Decisions on production, price and advertising should be entered for each brand Switch from Sonites to Vodites You are making decisions for the brand SAMA Switch from one brand to the other

  32. The sales force is organized by channel type to better meet the specific needs of the channels Click on the assistant to help you allocate to sales forces automatically

  33. Buying market research studies will help you make sound decisions The cost of each study appears as you make your selections

  34. You can monitor the status of your decisions at any time

  35. 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

  36. On your marks, get set, GO! • Give a name to your company • Respect the deadlines Good luck!

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