THE MARKSTRAT CHALLENGE - INTRODUCTION I B2C DURABLE …
Transcript of THE MARKSTRAT CHALLENGE - INTRODUCTION I B2C DURABLE …
THE MARKSTRAT CHALLENGE - INTRODUCTION IB2C – DURABLE GOODS
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CONGRATULATIONS ON YOUR NEW POSITION
You have been recruited to manage the marketing department of the Electronics division of a large corporation:
• You will compete with several other firms to market two types of durable goods to consumers
• You will be responsible for formulating and implementing the long-term marketing strategy of your division
Your performance will be assessed each year on:
• Your business results – sales, market share gain and improved profit – are combined in a Share Price Index (SPI)
2Introduction to the Markstrat Challenge - Part I
YOUR ROLE FOR THE NEXT 10 YEARS
• Work in a highly competitive market
• Target consumer segments and position your products
• Interface with R&D to design and develop new products
• Launch new products and improve existing ones
• Interface with the production department
• Make marketing mix decisions: pricing, advertising, …
• Decide on your digital marketing strategy
• Decide on the size and priorities of your commercial team
• Launch Marketing initiatives
• Order market research studies to get up-to-date
information for decision making.
3Introduction to the Markstrat Challenge - Part I
4Introduction to the Markstrat Challenge - Part I
GETTING
STARTED
MANAGING
YOUR
FIRM
THE
MARKSTRAT
WORLD
THE MARKSTRAT WORLD
80 MILLION INHABITANTS:
UP TO 6 COMPETING FIRMS EACH MANAGED
BY A TEAM:
• All firms start in a different situation: Product specification, target consumers, brand awareness levels, market share, distribution coverage, profitability, R&D expertise, ...
• The marketing strategy of your firm should be adapted to its particular situation;
ANNUAL BUDGET FUNCTION OF RESULTS:
All competitors operate under similar budget constraints, with annual budget granted as a percentage of past period profits (EBT).
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MARKET CONDITIONS:
• Large territory with a highly developed economy
• Inflation and GNP growth fairly stable and no major political, social or economic events are anticipated.
• Currency: Markstrat Dollar ($)
40% URBAN(top 5 cities)
35% RURAL
25% SMALLER URBAN
TWO PRODUCT CATEGORIES
You can market up to 5 brands in each category at a given time
SONITES VODITES
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INDEPENDENT
NOT SUBSTITUTES
NOT COMPLEMENTARY
SONITE PRODUCT ATTRIBUTES
NUMBER OF
FEATURES
10 – 20
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DESIGN
INDEX 3 – 10
BATTERY LIFE
24 – 96 HOURS (H)
DISPLAY SIZE
4 – 40 INCHES (”)
PROCESSING POWER
5-100 GIGAFLOPS
(GFLOPS)
BASE COST
MINIMUM $10
Sonite brands are already marketed, each characterized by 6 main attributes
Introduction to the Markstrat Challenge - Part I
VODITE PRODUCT ATTRIBUTES
RESOLUTION
20 – 100 LINES/MM
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ENERGY EFFICIENCY
10–100 BIO
COMPUTATIONS/WH
CARBON
FOOTPRINT
5 – 50 KG
CONNECTIVITY
INDEX 3 – 10
NUMBER OF APPS
5 – 100
BASE COST
MINIMUM $10
No Vodites exist yet. Experts believe that they will be characterized by
Introduction to the Markstrat Challenge - Part I
BRAND NAME CONVENTIONS
T O NIC
M E LODY
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Company marketing the brand:
L, M, N, R, S, T
Product Category:
O = Sonite
E = Vodite
Freely chosen letters or numbers
SONITE CONSUMERS
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Look for high quality, high-performance and easy-to-use productsCan afford expensive
products
Highly interested in Sonite productDemand high
performance productsQuite price sensitive
Like premium quality products, and price can be
seen as an indication of quality
Tech dependent, have good product knowledge
through extensive product comparison.
Demand high quality–price ratio.
Value performance and convenience
But very price sensitive
DIFFERENT SEGMENTATION SCHEME FOR VODITES
TYPICAL SEGMENT SIZE EVOLUTION OVER TIME
Sales
Time11
FOLLOWERS
EARLY
ADOPTERS
INNOVATORS
Introduction to the Markstrat Challenge - Part I
MEDIA CATEGORIES
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This is media owned and controlled by the product. This includes company's web site, mobile apps, blogs and their social presence (Facebook, LinkedIn, Twitter, etc.)
Earned media is essentially online word of mouth, usually seen in the form of 'viral', mentions, shares, reposts, reviews, recommendations, or content picked up by 3rd party sites
Paid media is bought by the company to build its position, usually display ads, paid search or sponsorship. Ideally this investment feeds ‘owned’ and creates ‘earned’ media
Traditional media is any form of mass communication available before the advent of digital media. This includes television, radio, newspapers, books, and magazines.
Outdoor media is all media that reaches consumers when they are outside their homes. Common forms of outdoor advertising today fall into three categories: Billboards, Public Transport, Sponsored Events.
DISTRIBUTION CHANNELS
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• Small stores not necessarily organized in chains
• Located close to their customers and providing a high level of service and technical support
• Broad product line including high-end products
• Preferred for Vodites
• Includes web-only merchants and retailers’ websites
• High convenience as consumers shop from home
• Almost unlimited choice and easy comparison
• Likely to become more important
• Operate on a low-price, high-volume basis
• Lower level of service than in specialty stores
• Depth of product lines usually restricted to a few units
• Distribute the cheaper, low-performance products
• Low level of service not adapted to first Vodites
• Companies’ eStores
• Direct sale to consumers with better margins
• Prices may be higher than in mass distributions
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GETTING
STARTED
MANAGING
YOUR
FIRM
THE
MARKSTRAT
WORLD
YOUR OBJECTIVE
• Maximize your Share 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!
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FROM DATA TO STRATEGY
You will need to do a certain amount of analysis before setting a strategic direction for your firm
Data Information Strategy
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TACTICAL DECISIONS PERIOD 1
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• Production planning
• Pricing
• Advertising & segmentation strategy
• Ordering industry-wide market studies
• Ordering market-specific market studies
• Size of commercial team
• Allocation across distribution channels
• Allocation across marketed brands
Introduction to the Markstrat Challenge - Part I
• Launching marketing & digital initiatives at the company level
• Initiatives have an effect on purchase funnel over 1 year can be repeated
• Allocate communication efforts between online and traditional media
PRODUCTION PLANNING
• A production plan must be submitted each period for each brand, taking into account:• The potential sales for the brand
• The existing inventory at the beginning of the period
• The flexibility of the Production department
• From one period to the next, production plans may be increased or decreased without any penalty
• Actual production levels are automatically adjusted in response to actual demand by plus or minus 20%
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MARKETING MIX
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SAMPLE PRODUCTION PLANNING DECISIONS
Inventory
ProductionPlan
(yourdecision)
PotentialSales
(market demand)
ActualProduction(reduced)
154,000150,000
30,000
124,000Lost Sales = 0
&Ending Inventory = 0
IDEAL
YourEstimated
Sales
180,000
Inventory
ProductionPlan
(your decision)
ActualProduction(Increased)
80,000
30,000
96,000
Ending Inventory = 0
Lost Sales28,000
PotentialSales
(market demand)
154,000PESSIMISTIC
YourEstimated
Sales
110,000
Inventory
ProductionPlan(your
decision)
ActualProduction(reduced)
200,000
30,000
160,000
PotentialSales
(market demand)
154,000
Lost Sales = 0
Ending Inventory
36,000
OPTIMISTIC
YourEstimated
Sales
230,000
Introduction to the Markstrat Challenge - Part I
Competitors
“Order-book”
Industry
ESTIMATING LOST SALES
Comparing purchase intentions with market shares at the end of the period can give you a feel for how many sales you have lost
PurchaseIntentions
MarketShares
Sales Lost to
20
−
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PRICING
• Every year, you set the Recommended Retail Price in $
• To decide on a price, you should take into account• The margin of the distributors• The discounts made by some channels• Consumers’ expectations• Competitive prices• Etc…
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MARKETING MIX
Introduction to the Markstrat Challenge - Part I
SAMPLE PRICES AND CONTRIBUTIONS
• Assuming a price of $400 and a transfer cost of $125
SpecialtyStores
Mass Merchandisers
eCommerce eStore
Average Discount None 10% − $40 5% − $20 None
Actual retail price $400 $360 $380 $400
Distribution margin 40% − $160 30% − $108 30% − $114 20%* - $80
Selling price $240 $252 $266 $320
Transfer cost $125 $125 $125 $125
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* For eStore there is no distributor margins, the 20% is used for the eStore server management and cost
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ADVERTISING
• To build brand awareness
• To make consumers familiar with product characteristics and price
• To develop demand for the whole market
• To influence the decision of distributors to carry or not your products
• To create a barrier to entry for your competitors
Media budget : to purchase media space and time
Research budget : to improve the quality / persuasive power of your message
MARKETING MIX
Segmentation Strategy: Indicate which consumers should be targeted & normalize to 100% to save
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DIGITAL MARKETING
• Allocate efforts across Traditional and Digital Marketing for each product.
• Specify a media strategy for each Media Category.
Media Strategy: Indicate which Media should be prioritized, You can use the
normalize button to normalize to 100%
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SALESFORCE & COMMERCIAL
• You decide your Salesforce & Commercial efforts for each channel and product:• Number of Full-Time Equivalent people in traditional channels
• Commercial budget in Digital Channels
• Your commercial team is responsible for obtaining and entering orders, and for supporting distributors• Visiting stores, distributors and wholesalers
• Enrolling customers in trade programs
• Helping stores organize and conducting promotions
• Taking orders and handling out of stock situations
• Participating in trade shows
SALESFORCE &
COMMERCIAL
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MARKETING POWERHOUSE
• Available to reinforce your overall marketing efforts.
• Some initiatives will be available later during the simulation, and some events will have a specific seasonality. You can implement up to three initiatives per year.
• The initiatives are grouped into two categories:• The Marketing Initiatives
• Trade in offers & bundles
• Partnerships
• Product placement
• Additional services
• The Digital initiatives
• Influencer & content marketing
• Paid advertising
• Organic channels
• Retargeting
• Email Marketing
• Mobile App building
• Performance marketing
• Cross selling
Introduction to the Markstrat Challenge - Part I
MARKETING BUDGET FOR THE COMING PERIOD
Budget based on the previous period’s performance
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40% of previous year EBT, with a minimum of $10m and a maximum of $20m
Loan and budget increase/decrease granted by instructor
Total available budget
Deviation from budget. Should always be positive or equal to 0
Expenses generated by your decisions
Introduction to the Markstrat Challenge - Part I
UNDERSTANDING P&L
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UNDERSTANDING BRAND CONTRIBUTION
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GETTING STARTED
Ready to get started on your first year’s decisions?• Get familiar with Markstrat and with your teammates
• Do not make any major changes in your firm's operation in the first round!
ANALYZE
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DECIDE RUN
PERIOD 2
THAT’S IT – YOU ARE READY TO START. GOOD LUCK IN ACHIEVING ALL YOUR OBJECTIVES!
PERIOD 1 PERIOD 3 PERIOD 4 PERIOD 5 PERIOD …
Introduction to the Markstrat Challenge - Part I
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ORGANISE YOURSELVES AND MANAGE THE GROUP PROCESS
INFORMATION OVERLOAD
TIME PRESSURE
CONFLICTING OPINIONS
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GETTING
STARTED
MANAGING
YOUR
FIRM
THE
MARKSTRAT
WORLD
ACCESS THROUGH WEBSITE OR DIRECT URL
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1Sign in www.stratxsimulations.com using your Participant Activation Key (PAK)
2 Click the Markstrat Logo
Enter the information given by your Instructor
1 Go to http://digitalmarkstrat.stratxsimulations.comOR
ANALYZE REPORTS AND MARKET STUDIES BEFORE MAKING DECISIONS
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CHOOSE A NAME FOR YOUR FIRM
It must start with the initial of your firm and be 8
character long maximum
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CHECK YOUR BUDGET AT REGULAR INTERVALS
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Click here to check
your budget
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CHECK YOUR ERRORS & WARNINGS AT REGULAR INTERVALS
Click here to check
your messages
ON YOUR MARKS,
GET SET, GO!
RESPECT THE DEADLINES – GOOD LUCK !
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