The Marketing Game: What is It?A living case, where you learn about a situation, evaluate opportunities, develop a strategy, and make marketing plan decisions.In which you get regular feedback, in a report that summarizes your marketing outcomes and related financial results, based on both your plan and competitors decisions.Where you analyze what youve learned by doing to figure out answers to what you do not know (and could not know!) at the beginning.That challenges you to improve your strategy in light of the learning...

A Little BackgroundOriginally developed as the first PC-based marketing strategy simulation in 1985 Routinely revised and updated since that time.Now one of the most widely used teaching simulations in the world.Used in hundreds of universities, exec programs and companies, international competitions, etc.Well be using the third editionYoull need the student manual and accompanying CD-Rom (which has Windows software): The Marketing Game!, by Charlotte H. Mason and William D. Perreault, Jr., 3rd edition, published by McGraw-Hill/Irwin, Burr Ridge, Illinois, 2001.

Special Objectives Served by TMGTo develop skills in identifying marketing opportunities. This encompasses knowledge of and the ability to apply key marketing frameworks and tools for analyzing customers, competition, and marketing strengths and weaknesses. To develop insights about creative selection of target markets and making integrative strategy decisions concerning product, price, promotion, place and the needs of a target market. To develop skills in marketing analysis. To provide meaningful, practical experience in translating qualitative and quantitative analysis into conclusions about profitable marketing strategies and programs.

The Role of the Marketing Game The Game offers unique learning advantages, compared to other learning approaches (like reading texts and articles, lectures, guest speakers, case analysis and presentation, projects) because it:

Is dynamic, like most business situations.

Brings the competitive aspects of marketing to life.

Highlights the need for integrative planning based on qualitative and quantitative analysis of the market environment.

The Marketing Game is Integrative and Covers All Aspects of the Marketing Strategy Planning ProcessTechnology Political & Legal Social & Cultural EconomicCompanyMission, Objectives, & ResourcesCompetitorsCurrent &ProspectiveS.W.O.T.TargetMarketProduct PricePromotion External Market EnvironmentTargeting &SegmentationPositioning &DifferentiationNarrowing down to focused strategy with quantitative and qualitative screening criteriaPlaceCustomersNeeds and otherSegmentingDimensions

OverviewYou take over marketing management responsibilities for your firm.Must satisfy customers and earn profitsFocus 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.

The ProcessAnalysis of market situation/opportunitiesPlanning and budgetingMake marketing plan DECISIONS!!!Submit plan decisions The marketing game! simulationCompany reports returned to firms NextDecisionperiod

Industry EnvironmentMarket growth

Technological environmentNo major innovations expectedYearly revision cycleCompetitive environmentType of competition depends on firms decisions

Six Key Product-Market Segments

Past Sales By Market SegmentFor Voice Recognition Device

Distribution ChannelsFirm 1Firm 2Firm 3Channel 1TraditionalDealersChannel 2DiscountDealersFirm 4Firms reach customersthrough full-servicedealers and Internet/mail-order discount dealers.Different segments have different shopping preferences.

Product 1: Voice Recognition Device (VRD)Key ProductFeaturesError Protection (1-10)Number of Special Commands (5-20)Ability to Customize (1-10)

R&D for Product Modifications: Computing CostsNote: R&D for product changes is more expensive if you have to make big changes in a short period of time

FeatureCost to DecreaseCost to IncreaseSpecial Commands (5-20)$0$8,000*(change)2Error Protection (1-10)$0$5,000*(change)2Ease of Learning (1-10)$3,000*change$3,000*(change)2

ExampleFeatureLast periods productThis periods productChangeCost to ChangeSpecial Commands68+2$8,000*2*2=$32,000Error Protection43-1$0Ease of Learning35+2$3,000*2*2=$12,000Total modification costs: $44,000

Product 2: Digital Vocal Communicator (DVC)Key ProductFeaturesSimilarity of Commands (1-10)Number of Tasks (1-10)Ease of Learning (1-10)Level 3

Types of AdvertisingPioneeringDirect competitiveIndirect competitiveReminderCorporate (Institutional)

Marketing Decision Responsibilities (Level 1)PRODUCTFeatures(and R&D for product modifications) PRICEWholesale price

PLACEDistribution intensity in each channel

PROMOTION-Advertising$ Spending-Personal sellingNumber of sales reps in each channelCUSTOMER SERVICE$ SpendingMARKET RESEARCH 6 reports may be purchasedDemand forecast/production orderNumber of units

Expanded Marketing Responsibilities (Level 2)PRODUCTFeatures (and R&D for product modifications) PRICEWholesale price in each channel

PLACEDistribution intensity in each channel

PROMOTION-Advertising$ SpendingType-Personal sellingNumber of sales reps in each channelPercent non-selling timeCommission rate-Sales promotion$ Spending per ChannelCUSTOMER SERVICE$ SpendingMARKET RESEARCH 7 Reports May be PurchasedDemand Forecast/Production orderNumber of Units

Expanded Marketing Responsibilities (Level 3)2 PRODUCTsFeatures (and R&D for product modifications) PRICEWholesale price in each channel for each product

PLACEDistribution intensity by channel, product

PROMOTION-Advertising$ Spending for each productType for each product-Personal sellingNumber of sales reps in each channelPercent non-selling time in each channelCommission rate-Sales promotion$ Spending per channel, productCUSTOMER SERVICE$ SpendingMARKET RESEARCH 7 reports may be purchasedDemand forecast/production orderNumber of units for each product

Production Economies of ScaleIf the president decides to invest in new equipment,unit production costs will decline as cumulative production increases:

Response Functions and Marketing SpendingSpending too little may have little effect, but spending too much just increases costs and reduces profit.

Marketing Budget Items (Level 1)R&D product modification costsSales force salaries and severance payAdvertising expenseCustomer service expenseMarket research reports expense BUDGET FOR FIRST PERIOD: $984k

Marketing Budget Items (Level 2 and 3)R&D product modification costsSales force salaries and severance payAdvertising expenseCustomer service expenseSales Promotion ExpenseMarket research reports expense BUDGET FOR FIRST PERIOD: $984k

Discretionary BudgetPolicy on initial discretionary budget.Unspent money carries to future periods and earns interest. When its gone, its gone.Policy on special budget requests.

Computing PricesComputing Retail Prices from Wholesale Prices:Expected Retail Price = Wholesale price/(1-% Markup)Example: Wholesale price = $105Channel 1 Retail Price = ($105/(1-.50)) = $210Channel 2 Retail Price = ($105)/(1-.35) = $161.54Computing 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

Retail Prices Charged Final ConsumersThe 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.

A Good Wholesale PriceShould 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.

Competitor AnalysisEstimate competitors net contributionAnalyze past strategies & likely changes.Evaluate positioning and target segments.?XXX??X1 2 3 4Firms 123456Segments

Industry Sales Report

BrandUnit SalesShare (units)$ Sales (retail)Firm 1 25,151.250$4,292,964Firm 2 25,151.250$4,292,964Firm 3 25,151.250$4,292,964Firm 4 25,151.250$4,292,964Total 100,604$17,171,854

ChannelUnit SalesDollars Sales156,296$10,696.240244,308$6,475,614

Product Features and Prices Report

BrandofVRD

Firm 1Firm 2Firm 3Firm 4

Specialcommands

8888

Errorprotect-ion

3333

Ease of learning

3333

Retailpricechannel 1

$190.00$190.00$190.00$190.00

Retailpricechannel2

$146.15$146.15$146.15$146.15

Market Activity Report (Level 2)

Adv. DollarsAdv. Type

Sales Promotion Channel 1 Channel 2

No. Sales Reps Channel 1 Channel 2CommissionCustomer Service

Firm 1

$250,000

$0$0

10105%$92,500

Firm 2

$250,000

$0$0

10105%$92,500

Firm 3

$250,000

$0$0

10105%$92,500

Firm 4

$250,000

$0$0

10105%$92,500

Market Research Reports (Level 1)1. Market share by segment (all brands)2. Market share by channel (all brands)3. Consumer preference study4. Marketing effectiveness report5. Sales by segment by channel (own brand)6. Consumer shopping habits study

Market Research Reports (Level 2)1. Market share by segment (all brands)2. Market share by channel (all brands)3. Consumer preference study4. Marketing effectiveness report5. Sales by segment by channel (own brand)6. Consumer shopping habits study7. Product positioning report

Market Research Reports (Level 3)1. Market share by segment (all brands)2. Market share by channel (all brands)3. Consumer preference study4. Marketing effectiveness report5. Sales by segment by channel (own brand)6. Consumer shopping habits study7. Product positioning reportNote: separate reports are available for each product,Except for the consumer shopping habits study

TMGPlan SoftwareEasy to use for preparing and evaluating plans, managing reportsSelect directoryEnter Plan DecisionsEvaluate spending and profit forecastView, print, and manage password protected reports

Submitting Marketing PlansSubmitting marketing plans decisions Policy on paper form Policy on electronic fileEach firm has a distinct industry and firm identification Need to keep it straight! Passwords and the TMGPlan softwareRemember password used to create PlanIt is case sensitive (upper and lower case make a difference)Best to stick to one password!

Overview of Market Research ReportsMarket share by segment (all brands)Market share by channel (all brands)Consumer preference studyMarketing effectiveness reportSales by segment by channel (own brand)Consumer shopping habits studyProduct positioning report (Level 2 & 3)

Market Share by Segment ReportBrand

Firm 1Firm 2Firm 3Firm 4

Total Sales(units)

1

0.2500.2500.2500.250

20,028

2

0.2500.2500.2500.250

15,084

3

0.2500.2500.2500.250

25,104

4

0.2500.2500.2500.250

10,240

5

0.2500.2500.2500.250

22,056

6

0.2500.2500.2500.250

8,092

SegmentWhos selling to whom?Whos buying what? What is each firm achieving?Which segments are buying?

Market Share by Channel ReportBrand

Firm 1Firm 2Firm 3Firm 4

Total Sales(units)

Channel 1

0.2500.2500.2500.250

56,296Whats selling where?Whos buying what?Channel 2

0.2500.2500.2500.250

44,308

Consumer Preference Study

Segment

StudentsHomeAssistantsCreatorsManagersParentsSpecialCommands

10-137-1010-1312-1513-165-8ErrorProtection

2-42-46-82-46-82-4Ease ofLearning

1-36-86-84-62-47-9PriceRange

lowlowhighhighhighlowWhat kind of product would a segment prefer?What reference price seems typical for the segment?How are segments similar and different?

Marketing Effectiveness Report

Brand AwarenessCustomer 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) Index0.550

100%100%

100%1.00.500

100%1.00.500Competitorswith lower Index0

00

00Competitorswith equal orhigher Index3

33

33

Detailed Sales Analysis

Firm

Channel 1

Channel 21

896

5,2692

1,109

3,3373

5,602

1,3964

1,808

1,1965

4,363

1,8656

1,086

1,074SegmentUnit sales by segment and channelAre you reaching your target?

Customer Shopping Habits

Segment

StudentsHomeAssistantsCreatorsManagersParentsPercent of Shoppingin Channel 1

????? ?

Who shops where?How do shopping patterns match distribution focus?Percent of Shoppingin Channel 2

??????

Product Positioning ReportBrand

Firm 1Firm 2Firm 3Firm 41

????

2

????

3

??? ? 4

????

5

????

6

????

SegmentWhich brands are closest to which segments?Which segments have no close brands?

RecommendationsAnalyze the reports as you would analyze a case.Make intentional changes.Find a balance in marketing research spending.Be integrative--think carefully about how each decision impacts each of the others.Have some fun!

List of All Slides (with Hyperlinks)1. Title slide2. The Marketing Game: What Is It3. A Little Background4. Special Objectives Served by TMGThe Role of the Marketing Game6. Integrative Marketing Strategy Planning Process7. Overview8. The Process9. Industry Environment10. Six Key Product-Market Segments11. Past Sales by Market Segment (VRD)12. Distribution Channels13. Product Features Voice Recognition Device14. Computing Costs of R&D for Product Mods15. Product Features Digital Vocal Communicator16. Types of Advertising17. Marketing Decision Responsibilities Level 118. Expanded Marketing Responsibilities Level 219. Expanded Marketing Responsibilities Level 320. Production Economies of Scale21. Response Functions22. Budget Items Level 123. Budget Items Levels 2 and 324. Discretionary Budget25. Computing Prices26. Retail Prices Charged Final Consumers27. A Good Wholesale Price28. Competitor Analysis29. Industry Sales Report30. Product Features and Prices Report31. Marketing Activity Report (Sample)32. Market Research Reports Level 133. Market Research Reports Level 234. Market Research Reports Level 335. TMG Software36. Submitting Marketing Plans / Policies37. Overview of Market Research Reports 38. Market Share by Segment39. Market Share by Channel40. Average Customer Preferences41. Marketing Effectiveness Report42. Detailed Sales Analysis43. Customer Shopping Habits44. Product Positioning Report45. Recommendations46. Blank side (end of show)47. This list

The Marketing GameThe Marketing Game