Markstrat

Monday, April 20th 2015

Laura Frias, Michael McBride, Alex Sugano, Travis Shirley

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Target Segments

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ROUND 1 ROUND 7

RICH: SinglesOriginally targeted low income (and singles)

Rationale: largest segments, unaware customers in low incomeBy period 3, realized that private brands would always have low incomeSwitched to Median Income and SinglesSupreme made a perfect product for median incomeImmediately switched to focus solely on singles with both R&D and

advertising

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RISE: 50/50 Affluent and High EarnersWe decided early on to drop its price, drop its advertising, and relatively

ignore it.Assumed the high margin competition would be too strong.

False assumptionSplit segment expenses 50/50 between affluent and high earnersMinimized promotion

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RUNWAY: Health ConsciousTargeted health conscious because they were early adopters and we

expected to be first to marketDid not expect to capture every segment

Only product in industry took all sales (first mover advantage)This was crucial, because we knew that early sales would fund more R&D

and expansion

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RUMBLE: FamiliesFamily segment in Nutrites grew to twice the size of health conscious or

elderly by round 6We knew this represented a threat from SupremeWe decided to preempt the competition and develop a product that would

target families in order to prevent entrants from gaining market share

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RICH (Clinite)

PRODUCT: Usability (69)Pleasure (60)Packaging (51)

PRICE:$12

PLACE: Specialized Mass (47%)Mass Merchandise (33%)

PROMOTION:Advertising Media: $7,500KAdvertising Research: $800K

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RICH (Clinite)

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IDEAL VALUES

BRAND PERCEPTIONS

RICH (Clinite)

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RISE (Clinite)

PRODUCT: Safety (78)Efficacy (69)Pleasure (49)

PRICE: $19

PLACE: Department stores (33%)Specialized mass (33%)

PROMOTION: Advertising Media: $100KAdvertising Research: $50K

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RISE (Clinite)

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IDEAL VALUES

BRAND PERCEPTIONS

RUMBLE (Nutrite)

Product: Clinical Benefits (72)Packaging (69)Variety (60)

Price: $26

Place: Specialized mass (40%)Department Stores (37%)

Promotion: Advertising Media: $2,357KAdvertising Research: $800K

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RUMBLE (Nutrite)

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IDEAL VALUES

BRAND PERCEPTIONS

RUNWAY (Nutrite)

Product: Clinical Benefits (63)Flavor (57)

Price: $25

Place: Specialized Mass (42%)Department Stores (42%)

Promotion: Advertising Media: $3,150KAdvertising Research: $500K

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RUNWAY (Nutrite)

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IDEAL VALUES

BRAND PERCEPTIONS

Period 1: Clinites

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Game theoretical decision to launch Nutrite

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Our Prediction Expected Opponent Prediction

Refresh

Opp. Opp.

Refresh

10m, 10m 12m, 20m

20m, 12m 10m, 10m

10m, 10m 25m, 20m

EnterDon’t

Don’t

Don’t

Don’t

Enter

EnterEnter 20m, 25m 10m, 10m

Period 2: R&D Into The Nutrie Market

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Period 3: Continuation of R&D

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Period 4: Nutrite Initial Launch

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Period 5: Further R&D Into Families

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Period 6: Clinite Advertising

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Overall Industry TrendsPrice sensitive customers entering market at faster

paceProfit margin trade off

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Overall Industry Trends

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Successes and FailuresSUCCESSES: 1. First mover advantage in the

Nutrite market2. Targeting singles with Rich and

lots of advertising3. Underfunding Rise4. Preempting competitors

entrance into Nutrite market and their strategies

FAILURES:1. Not anticipating Supreme

targeting singles in Period 12. Not anticipating Supreme would

target median income in Period 43. Targeting low income with Rich

in Period 1

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Key Learning Experiences 1. Focused on Semantic Elements that had most importance

a. Advertising and pricing 2. Bold choices paid off, but required trade-offs 3. Paid close attention to competitor’s maneuvers

Eg. Noticed the amount of money Supreme spent on R&D 4. Short and long term goals - stayed consistent with our plan5. Competitive Advertising and Commercial experiment study

a. Avoided diminishing marginal returns (most people were overspending)

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