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Jackie Luan Fall 2010
Industry: Green Team: U
Group 5 Gaurang Desai Amir Golnabi Allison McKendry Jens Moebius Harinarayanan Ranganathan
December 1, 2010
naming the new brand “VUCK”. and order all market research studies available. Within the framework of the overall strategy. and large revenue due to the strong performance of SULI in the Sonite market. No brands were present on the Vodite market. SUSI was performing moderately and had excess production. The former two segemtents were the largest and most profitable markets due to their price insensitivity. In the short run. This brand development required a large portion of the budget. Therefore. the team determined which of the three Vodite R&D projects had the best base cost-to-required budget ratio and developed it. adjust segment targeting for both Sonite brands. and finally “Followers” in the long run. the team designed marketing schemes to increase brand awareness of SUSI and advertise POD’s for SULI apart from ordering three research and development projects for the Vodite market. the growing “Singles” and “Others” Sonite segments were targeted in order to increase overall brand market share and finance the entrance to the Vodite market in the short term. The final objective was to sustain the strong performance of SULI as a source of funding for the primary and secondary objectives. As a secondary objective. The goal of the exercise was to achieve the highest stock price at the end of the six-year period. then “Adopters”. In particular. market share and return on investment had to be maximized in the long term. In Period 2. so to conserve funds the team cut marketing and sales force expenditures for Sodite brands 1 . the team’s strategy was aimed at having a well performing and mature Vodite brand on the market that would generate large revenues and profit at the end of the six-year period as a primary objective. the team aimed for brand market shares to increase proportional to the predicted growth of the Sonite market segments. the team aimed to have this brand target “Innovators”. A summary of how the marketing mix was adjusted for each brand during each period can be found in the Appendix. the team aimed to sell all excess inventory of SUSI. However “Singles” and “Others” were expected to grow significantly over the following five years and the Vodite market was very promising in terms of both growth rate and profitability in the long term. In Period 3. the team agreed upon intermittent goals for each period. In Period 1. Specifically. The team was leading in the “High Earners” and “Professionals” markets while competitors had an edge in the “Singles” and “Others” segments.Strategies Pursued Initially the team had a relatively comfortable position with a large budget. Remaining funds were allocated to ordering market research studies.
so the team modified that existed brand according to the PSUS2 and introduced the new brand SUSO based on the project PSUSO. and the remaining budget was used for SULI marketing and the ordering of market research studies. and SULI has continuously exhibited strong performance each year in the Sonite market. Keeping this in mind. The budget more than tripled from the previous period due to a high return on investment. The team found that the “Singles” segment had slightly higher brand awareness for SUSI. SUSI had been underperforming. In Period 4. the team performance was agreed to be satisfactory. the team ordered a modified VUCK project (PVUFF) with characteristics chosen to meet the preferences of that segment apart from ordering two research and development projects for the modification of an underperforming SUSI. Starting with the highest market capitalization and the best sales as of Period 0.and only ordered the market research studies that the team deemed vital for decision making in the next period. This was attributed to a straddled brand position between the “Others” and “Singles” segments. This allowed the team to allocate a substantial amount of funds back into the marketing of the Sonite brands and for the sales forces to be re-hired. VUCK was officially launched with a marketing scheme that targeted “Innovators” and promoted brand awareness. VUCK (based on PVUFF) was a Vodite brand well-positioned for the “Followers” segment. so the small amount of budget remaining was allocated to SUSI marketing. The team’s final consideration was to maximize the long-term competitiveness of the firm with a well-position brand portfolio. Analysis of Performance Overall. Marketing schemes were set for both of these. In Period 6. SUSI (based on PSUS2) and SUSO were new Sodite brands each designed to better target “Singles” and “Others” respectively. the team found that competitors were using SULI as a benchmark and modifying their 2 . the team’s goal was to modify VUCK according to the new “Followers”-focused project (PVUFF) and adjust the marketing scheme to capture significant market share in the “Followers” segment. the team had one of the SUSI projects designed to focus on the preferences of “Others” (PSUSO) and the second project focused on the preferences of “Singles” (PSUS2). the team aimed to adjust the marketing of VUCK to target the “Adopters” segment. With the forward-looking goal of targeting the “Followers” segment in the next period. The remaining budget was spent on marketing the Sonite brands and ordering market research studies. In Period 5.
the team was able to increase stock price by a margin of 120. Working within a budget. The diverse mix also opened a panorama of ideas to achieve the same target. including the 3C’s. STP. In such a competitive scenario. With the right mix of risk takers. and the 4P’s. two additional teams entered this market in the “Green” industry. moderates and conservatives. teaching an important lesson in prioritizing objectives. Marksrat enabled the team to understand and implement prominent concepts of marketing management. the marketing team must study the market behavior and expectations exhaustively (3 C’s) and come up with a viable marketing strategy (STP) before launching a new brand. the team learned a lesson that only developing a new brand is not sufficient to be successful in a growing and promising market. which was an extremely enriching experience to all the members of the group. company and competitor. Key Points Learned The team believed that the key success factor in the simulation was the long-term strategy to enter the Vodite market with a well-developed brand that suits customers’ needs and expectations. Also. the team’s strategy effectively countered the threats to a creditable extent. During the competition. In terms of improvement. as exemplified by team A which achieved a remarkable turnaround after period 1.6% which was one of the primary goals of the company. and as a result. Teams ‘I’ and ‘U’ spent more time and money on R&D before entering to the Vodite market. their performances were significantly superior to team “E. however it was not well-suited toward the market needs. but accounted for it by pursuing an effective marketing strategy based on the three critical factors of customer. the team learned that all competitors are constant threats to the company stock price index and underestimating any one of them may jeopardize the company’s financial situation. the team was exposed to an extensive brainstorming of ideas and results were arrived at on a quantitative basis. Examining the 3 C’s provided the team with a strategic look at the factors 3 .” Here. namely “E” and “I. it helped sharpen decision making skills of the team members. The group dynamics were excellent.respective brands targeting the SULI market share. In order to be a leading company. During the 6-year period simulation. SUSS was not improved as well as the team would have liked.” Team “E” was the first team to develop a Vodite brand.
simplifying strategy and decision making processes. Regarding product. The STP framework was used to develop an overall strategy for the simulation. the data from customer and market analyses were used to decide the specifications for introducing new Vodite and Sonite brands and modifying existing brands. considering price. Finally. in terms of place.needed for marketing success. Overall. Considering promotion. in terms of positioning. with every period the team came to know how the customer segments perceived the company (and individual brands) which further helped the team in understanding strengths and weaknesses and in defining objectives. MarkStrat allowed for the adjustment of key brand characteristics and defining of perceptual objectives in order make the brand more appealing to particular segments. and implement the basic concepts and frameworks of marketing management. considering competition analysis. Issues such as customer segment required price range. In regard to segmentation. for company analysis. Finally. Finally. targeting played an important role when the team was deciding how to allocate marketing efforts and expenditures to particular groups. Market research reports we used extensively to ensure each brand was correctly targeted for particular segments of interest. the MarkStrat simulation provided the team with a great opportunity to further learn. the defined market segments enabled the team to decide which customers to target. Market Forecast helped the team to keep a track of customer needs and requirements over the periods which in-turn enabled the team to plan strategies in advance as the simulation moved forward. and market forecast were evaluated in order to make informed decisions when defining the recommended retail price of each brand. various distribution channels were pre-defined in the simulation and research studies provided feedback about channels preferences by segment. Next. Next. The team used the 4 P’s to determine how each brand could best satisfy customers in their target markets. advertising expenditures and reports were adjusted to analyze the advertising impact on brand awareness. the team recognized that many factors are to be taken in to account before deciding the price for a particular brand. In regard to customer analysis. Competitive Sales Force and Competitive Advertising gave the team a picture of where and how well the other competitive brands were placed in the market in terms of customer segment. reports on Semantic Scaling. price and brand specifications. 4 . research studies such as Consumer Survey and Consumer Panel helped the team to understand how the brands were perceived by the targeted consumer segments. competitor’s price. experience. Next. distributor margin.
To keep up with the 25% growth in “Pros” and “HiEarners” segments.APPENDIX: MARKETING MIX Period 1 I. we back calculated from 63 KU according to +/-20% due to production level fluctuation and subtracted the 26 KU already in inventory [x-x/5+26=63. which translates to $3.250K. Our minimum achievable target is 63 KU because last period we sold 54 KU. Inventory Sold: We do not have any inventory. If we do not change the product. we can expect to sell 63 KU due to forecasted growth rate for the next period in the segment: “Pros” (23. This leaves 20% to be distributed between “Buffs” and “Singles”. Research: We maintained Advertising research budget at 5% of the overall advertising budget. 2. and 26 KU in inventory) to 46 KU. 2. so we are not selling anything to a trading co. We're increasing the targeting percentage for “Pros” and “HiEarners” (to 40% each) because they have the highest purchase intentions and they are growing segments. None selected in order to promote brand awareness. we can expect to sell 63 KU due to forecasted growth rate for the next period in the segment: “Singles” (23. Pricing 1. and if we do not change marketing spending. SUSI A. and then averaged to get about 25% expected increase in units purchased.6%) and “HiEarners” (33.2% change and is close enough to 33%. and we decreased the “Buffs” level to 10% because that segment is shrinking and maintained the 10% level for “Singles” from the previous period. C. Pricing 1. Recommended Retail: Did not change. Level: Decrease Brand Production Level from 100 (which lead to 80 KU actually being produced. D. Targeting: We are changing the segment targeting to focus mostly on “Singles” and “Others”. our sales should minimally increase by 20%. II. which translates to 30.600K.9%) These were weighted by the relative market size of each segment. B. We aim to beat that by improving marketing which will lead to an increase in our sales by 33% (which is the average of the production level range already determined 63-81KU). try to sell the 26 KU inventory at full price B. SULI A. Due to the growing “Singles” and “Others” segments.4%) These were weighted by the relative current market size of each segment. Recommended Retail: Do not change price ($520) because the next closest competitor (SELF) has a higher price ($550) and we want to maintain our advantage. Media: We are producing too much. Media: We are producing an amount appropriate for current demand. Level: If we do not change marketing spending. 2. Advertising 1.6%) and “Others” (18. so we chose a round number for Advertising Media = $1. our marketing should minimally increase by 25%. Targeting: “Others” were not targeted because their purchase intention was too low compared to the other segments. Production 1. Perceptual Objectives 1. Production 1. Advertising 1. This will allow us to satisfy everything between 63-81 KU. 3. Research: We maintained Advertising research budget at 5% of the overall advertising budget. 3. so our marketing spending needs to be increased by at least 33% also. Inventory Sold: None. and then averaged to get about 20% increase in units purchased. the only way we can increase demand for the product is through a pull strategy. To determine the brand production level. 5 . C. x=46]. 2.
so we increased production by 20%. Recommended Retail: According to the Semantic Scales Brand map for Price vs. Production 1. Media: We will be increasing the overall advertising budget by 100% to keep up with the increase in segment growth and really promote brand awareness (we are 50% and we want to get to about 70%. Using the 3. and it is predicted that the segments will grow by about 20% again. so we changed the targeting levels to 40 and 60. This calculation was made based on the number of units actually sold last period. The ratio between those two numbers is 3. None selected. but our product is of overall higher quality II. 2.1% and for “Others” it is 17. SUSI A. which will be translated into the segment targeting. Research: Advertising research was set at 10% of the overall advertising budget. Production 1. we are targeted “Singles” with 25% and “Others” 75%. Thus. brining our new level to 147. C. a) Power: Our product is the best b) Price: We just lowered our price to meet that of our closest competitor. at $495. so we want to decrease our price to be more appealing for both of them. 3. respectively. SULI A. Level: Production level was increased to keep pace with the forecasted increase in the “Singles” and “Others” segments. we noticed that our product was priced too high for both of our target segments. This will allow marketing to focus on increasing brand awareness. Recommended Retail: We are increasing because based on SS “Singles” are willing to pay more. Of the current segment. Level: Production level was increased by 20% because the target segments are forecasted to grow by 20%. Pricing 1. C. We decided to meet the price of SEMI. “Buffs” are also not being targeted because they have a low purchase intention (3%) and their segment is forecasted to decrease in the future. so we should use perceptual objectives to advertise our POD's from competitor products. because that is a POP and our product is superior in perceived quality. and “Singles” are forecasted to increase more than the “Others”. Targeting: “Singles” have a stronger future than “Others”. Price. Targeting: No change in targeting spread D. the purchase intention for “Singles” is 8. Calculation was made similar to last period. Advertising 1. and for the forecasted segment sizes for next period.4 ratio. Research: Advertising research was set at 10% of the overall advertising budget. Pricing 1. 2. Perceptual Objectives 1. Period 2 I.9%. “Pros” and “HiEarners” are not being targeted because their purchase intentions are both less than 1%. we are left will 100% of the targeting to be distributed between “Singles” and “Others”. this is for “Singles” and “Others”) 2.17 KU and “Others” 48.The Consumer Survey: Purchasing Intentions and Market Forecast: Segment Size and Growth Rates were used to determine the targeting levels. so we increased the advertising budget by about 20% 2. not the amount we produced last period (because we had an inventory to tap into in that period). Inventory Sold: None B. 6 . D.6 KU. Inventory Sold: None B. 3. We already have high brand awareness. Media: We would like to increase the advertising budget to keep pace with the increase in target segment sizes. “Singles” are forecasted to purchase 14. Advertising 1.4. Perceptual Objectives 1.
None selected. This will allow marketing to focus on increasing brand awareness. Recommended Retail: We seem to be straddling the “Pros” and HiEarner's market. Production 1. SUSI A. sales force reduction. Remember that last period we sold 130 despite having great marketing (SALT stole our market!) 2. Pricing 7 . but because we are not spending any money in marketing. so we used Brand Maps to determine which dimensions to advertise. and we hope to grow with it) but we have 19 KU in inventory. Inventory Sold: None B. SULI A. Perceptual Objectives 1. SULI already has good brand awareness. Perceptual Objectives 1. Period 4 I. and market research purchasing. Pricing 1.79) and then compared it to the Relationship between PRICE and perceived PRICE to translate that into the final price of $450. Production 1. Level: We decided to keep production the same because we are not increasing marketing. Period 3 I. Production 1. Level: Producing 120 units because the HiEarner's market is set to grow at about 20%. None selected in order to promote brand awareness. Media: We removed almost all money from advertising in order to conserve for Vodite R&D. Targeting: No change in targeting spread D. Recommended Retail: Keeping it the same because we like our positioning between “Singles” and “Others”. Advertising 1. The only money put into this was the little amount remaining in our budget after Vodite R&D. we can not expect to be meeting this growth level. and we lowered the price. 3. and SELF. Research: K$1 was allocated for advertising research 3. Targeting: No change in targeting spread D. Media: No money will be spent on advertising in order to conserve funds for the vodite launch. SULI A.5%. Advertising 1.D. Inventory Sold: None B. Pricing 1. Level: Our target was set at 91 (based on the market which is growing at 7. C. Thus. we are choosing to compete with SALT. so we are dropping the price to meet the expectations of “HiEarners” because we cannot compete with the closest competitor in the “Pros” market (SEMI). There was small amount of funds remaining in the budget after allocating all other company expenses for the period. Perceptual Objectives 1. II. which ended up being Frequency and Power. 2. Our closest competitor is SAMA. Inventory Sold: None B. so hopefully it will sell itself! 2. C. and we still have a sale force. 2. SOLD. Research: None. We are used the Market Research: Ideal Values (5. so we set the production level to 72 KU 2. allowing for K$11 to be allocated here. because SUSI falls closer to “Singles” and “Others” ideal than SAMA in those dimensions.
Production 1.7 to split among SULI. price brand map (where VELV was located at about 6. so this was set to K$140 3. M$1. price to mean the retailers price. Targeting: No change in targeting spread D.316 price tag. so we set the production level to 40 KU 2. M$1. Level: Last period we probably could have sold more than 105 KU. SUSI A. Market for “Pros” and “HiEarners” is growing at about 10% which would correspond to being able to sell about 120 KU and because we are increasing advertising we estimate that we can 8 . Level: We used the Market Forecast-Segment Size and Growth Rates to estimate the size of the “Innovators” market (92. C. by lowering our price we decreased the profit margin for retailers. Research: K$69 (about 5%) in order conserve for ordering marketing researching 3.000. Media: We have M$5. Inventory Sold: None B.300 2. which we are rounding up to 110 KU. not the base cost. SUSI.7 to split among SULI. Production 1. Targeting: No change in targeting spread D. III.5 and “Innovators” value price at 6) and decided to set our price at $2. Recommended Retail: Only competitor (VELV) is priced too high for all three segments of the market. None were selected in order to promote brand awareness Period 5 I. and we hope to grow a bit more than it) We have 24 KU in inventory. Media: K$1. We have decided to split this 20-20-60 or about M$1. lowering there incentive to sell our product. Perceptual Objectives 1. C. Recommended Retail: Kept the same C. Advertising 1. None selected in order to promote brand awareness.400 allocated here 2. so we set our production at 50.5. and VUCK advertising. “Adopters”: 30. SULI A. None selected in order to promote brand awareness. II. and VUCK advertising.800 allocated here 2. We estimated the price preference level for this segment using the price vs. We have decided to split this 20-20-60 or about M$1.5. M$2 respectively (leaving K$200 for market research) K$1. Media: We have M$5. Pricing 1. “Followers”: 10 D. Perceptual Objectives 1. Recommended Retail: Increasing from $450 to $480 because we misinterpreted the brand map of price vs.5. SUSI. Thus.038.000) and we estimate that we will gain about 50% of this segment because our product is good and we're pricing it lower than the initial VELV price. M$2 respectively (leaving K$200 for market research) K$1. Level: Our target was 64 (based on the market which is growing at 20%. Research: 10% of media budget. Perceptual Objectives 1. Our target segment for this period is the “Innovators”. Advertising 1. Pricing 1. Research: K$180 (10% of media budget) 3. VUCK (Based on PVUCK) A. Inventory Sold: None B. 2. Production 1.5.1. so we know we want to price our product less than their $2. Targeting: “Innovators”: 60. Advertising 1.
Perceptual Objectives 1. Media: We decided to allocate about 50% of remaining total budget to Vodite advertising and about 50% to Sonite advertising. about 10% 3. VUCK (Based on PVUCK) A. Inventory Sold: None B. Pricing 1. “Innovators”: 30. Recommended Retail: Did not change C.actually sell 135 KU (which is about 20% increase from last period). “Followers”: 35 E. None selected in order to promote brand awareness. Inventory Sold: None B. 2. Advertising Media = K$3. Research: K$300. We recognize that this is taking a risk because we are assuming no new vodite products are being introduced to the market. so we can expect to outpace the market. Advertising 1. 2. Thus.Market Shares based on Units Sold we decided “Singles”: 10. we feel that losing out on potential profits from failing to meet demand levels is a greater threat. and we are decreasing price while increasing marketing efforts. “HiEarners”: 25 D.750 D. “Adopters”: 35. Advertising 1. Research: K$370 (10% or media budget) 3. Perceptual Objectives 1. “Others”: 70 D. Targeting: Based of Brand Purchase Intentions: “Singles”: 30.500 2. SUSI A. Level: The market for “Singles” and “Others” is set to grow at 15% and we hope to increase along with the market. So we decreased the price by about 13% by $250 to $1. II. Perceptual Objectives 1. Recommended Retail: Maintained price at $480 C.700 2. Order new project (PVUFF) so we can modify VUCK and target “Followers” in Period 6 B. “Pros”: 65. Advertising 1. However. so Advertising Media: was set to K$2. Research: K$550 (10% of overall advertising media budget) 3. Level: The market is going to grow by almost 70%. so we increased production by 36 KU up to 75 KU 2. None selected in order to promote brand awareness. Period 6 9 .93 for price and “Adopters” have SS=5.13 which is about a 13% difference.750 2. None selected in order to promote brand awareness. III. we set production level at 110. Recommended Retail: values says “Innovators” have SS=5. Pricing 1. Media: We decided to allocate 50% of remaining total budget to Vodite advertising and 50% to Sonite advertising. We are estimating that we're going to grow by 80% above the 60 KU that we actually produced last period. Media budget set to K$5. Targeting: Using the Consumer Panel . Targeting: We considered the Market Forecast for predicted size of the market for next period and found that “Adopters” and “Followers” will be our key segments. Production 1. Media: We decided to allocate about 50% of remaining total budget to Vodite advertising and about 50% to Sonite advertising. Inventory Sold: None C. Pricing 1. Production 1. This is not too aggressive because there is a +/-20% buffer in the actual number of unit produced.
Advertising 1.25% 2. Level: 157. The Brand Awareness for “Singles” and “Others” of SUSI was about the same (~53%). SUSI (Modified according to PSUSO) A. Targeting: 100% targeted at “Others” F. Research: K$400. Advertising 1. SULI A. Research: K$200 3. Used Semantic Scales to estimate ideal Sodite products targeted at the “Others” segment (PSUSO) and the “Singles” segment (PSUS2).000 targeting a minimum expected market share of 17. II. Level: 120. independently B. Level: Set at 150. IV. Inventory Sold: None B. such that “HiEarners”=35% and “Pros”=65% D. Targeting: 100% targeted at “Singles” D. Pricing 1. so that was automatically sold to a Trading Co at 80% recommended retail price D. Media: M$2 2. 10% of media budget 3.1% Oth=8%) and decided to MODIFY SUSI according to PSUSO in order to better target “Others” while maintaining the SUSI brand awareness C. Inventory Sold: None B. Targeting: Shifting targeting from “Singles” to “HiEarners”. Production 1.I.000 with the target of capturing 50% market share of “Adopters” and “Followers” 2. None selected in order to promote brand awareness.5% and maximum of 26. which using semantic scales we calculated to be $825. SUSS (Based on PSUS2) A. Perceptual Objectives 1. Inventory Sold: We had 5 KU of the original SUSI left from last period. Perceptual Objectives 1. Media: Increase by only 10% to M$4 2. Recommended Retail: We wanted to drop the price to meet the ideal prce for “Followers”. Production 1.3%) and Purchase Intentions (Si=1. Production 1. Inventory Sold: B. Production 1. Power III.7 2. this was set to $220 E. None selected in order to promote brand awareness. Perceptual Objectives 1.000 targeting a minimum expected market share of 13% and maximum of 20% 2.2% Oth=17. Recommended Retail: Catering to the ideal value of “Others”. value set at 150 2. VUCK (Modified according to PVUFF) A. Research: K$300 3. Pricing 1. so we considered Market Forecast (Si=12. Recommended Retail: Maintained price at $480 C. Pricing 1. Level: Increase by only 10%. Recommended Retail: Catering to the ideal value for “Singles”. but the program did not allow for more than a 30% 10 . this was set to $290 C. Media: M$2. Advertising 1. Pricing 1. because market is almost stagnant.
we decided to allocate an extra M$2. Perceptual Objectives 1. so the price was set at $1210 C. None selected in order to promote brand awareness. 11 . “Adopters”=25%. Media: Of the M$5. which increased the total advertising media budget to M$6. Research: 10% of media budget.5M here.price reduction. Targeting: Adjusted to better reach “Followers” and “Adopters” such that: “Followers”=65%. Advertising 1. “Innovators”=10% D.5 2.5 budget available. so it was set to K$650 3.
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