Price Matters

At the beginning of the game, our group had picked the luxury market, it was based on the
findings that two of the other teams had picked the outdoor teams and others on university
students and kids. We think that we will gain most advantages without direct competition, and
it is clear that we have made the right decision.
We then shift our focus to two main markets at the time around Turn 3, including both Urban
Commuters and Luxury groups. It was since both groups share very similar levels of
purchasing power and channel. As you can view from the unit cost per unit sales price table,
at the beginning of the game our unit cost was $49 and $31, however, we find out that to be
able to widen our margin within the fashion boutiques (54%cut) and the department store
(44%cut), the main task is to lower our production cost, that is why we take out the “designer
tag” and the “water bottle” in T2 and T3 respectively.

For the rest of the game, we did not touch or change anything on both the backpack and the
sales price. It is because we believe that customer usually doesn’t like frequent change, and
in terms of marketing, if a product and its selling price are not stable, it will be easy for the
public to feel confused about our product, and hence affect brand image. With a stable cost
and price, it makes us easy to focus on our distribution and advertising strategy, which will be
discussed in the next.

Marketing Strategy
During the earlier turn of the game, our group only spend very little money on advertising, our
priority was to gain a positive net profit balance for the company. Starting from T4, we have
spent nearly 1.5 times more on our advertising and at the same time, we added the High-End
Outdoor and Direct sales channel with a sales promotion of $5 each bag. We conclude that it
is an effective way to attract new customers because everyone loves a discount.
In the cumulative graph shown above, we find out that our marketing spending has a positive
impact on interest level and units sold. The more interest we create, the more bag we sell.
Especially if you look at T8 to T10, our sales went from 568 up to 1635 units with a $5000
increase spending on 2times frequency of the Financial Journal. A second significant jump is
during T11 to T13, we spend 4 times on Social Media, Billboards, and Online News, 2 times
on New Radio, and added Billboards and Subways platform. This intense push on advertising
bust our interest level from 31 to 61.
Does satisfaction really matter?
As mentioned in the previous session, our group strategy was intentionally stable our sales
price and bag function, for any money spent on distribution and advertising will take
immediate effect.
The second graph shows that, with the advertising campaign in action, our product
satisfaction, during the whole game, has not changed more than 5%. Moreover, it is clear that
our net profits and revenue increase from turn to turn, as a result of our distribution expansion
and advertising. We can conclude that advertising doesn’t have any effect on product
satisfaction and it does not reflect the market consumption as a whole.

5. Turn Decision-Making Review:  Summarize three of your best and worse decision

turns; what you did, why, and what were the result. 
Turn 4 and 5: In T3, we remove our production cost of the bag by removing
the Designer Tag features (down $20). We adjust our sales price to $99,
which enables us to have more distributors. We added deals with online
discount retail and direct. In T4, we raised our advertising spend on Social
Media and Fashion magazines by 100%. The above changes boost our units
sold from 156 to 277, Net Profit from -$1013 to $2177.  
Turn 8: In T8, we started our discount promotion with the Department Store,
and this adjustment raise our sales from 568 to 1364 bags, Net profit from
$7279 to $27675. This is when we find out that the discount works great and
leads us to do it to more platform 
 
 3 of our WORST TURN: 
Turn 2: Net profit was at -$1482 and we have spent only $1100 in advertising,
we lost money on our distribution cut.  
Turn 6: After our group added “Professional” remove “Fashionable” from its
message and added New Radio advertising, the units sold has only increase
by 2 bags. 
Turn 12: We spent $20300 in advertising, looking at other groups from the
game, all of the groups were spending multiple times on marketing. We
believe we can boost our public interest if we act more aggressively on
advertising. 

Unit Unit
Cost Price
T2 $49.00 $100.00
T3 $31.00 $99.00
T4 $29.00 $99.00
T5 $29.00 $99.00
T6 $29.00 $99.00
T7 $29.00 $99.00
T8 $29.00 $99.00
T9 $29.00 $99.00
T10 $29.00 $99.00
T11 $29.00 $99.00
T12 $29.00 $99.00
T13 $29.00 $99.00
 Net Total Product
Marketing Units Interest Profit Revenue Satisfaction
Spending Sold level T2 -$1,482 $9,075 30%
T2 $1,100 193 16 T3 -$1,013 $7,673 28%
T3 $2,850 156 16 T4 -$1,682 $9,341 27%
T4 $4,600 187 16 T5 $2,177 $15,320 27%
T5 $4,600 277 17 T6 $3,893 $21,693 26%
T6 $5,750 390 21 T7 $3,978 $21,811 22%
T7 $5,750 392 22 T8 $7,297 $31,929 26%
T8 $7,050 568 25 T9 $27,675 $80,006 26%
T9 $7,050 1364 26 T10 $30,187 $97,014 26%
T10 $12,050 1653 31 T11 $34,490 $109,612 26%
T11 $13,150 1878 37 T12 $25,779 $111,597 26%
T12 $20,300 1927 49 T13 $29,639 $121,611 25%
T13 $20,300 2108 61
U ni ts S ol d & I nte re s t L e v e l V S Ma rk eti ng S pe ndi ng

70 $25,000
60
$20,000
50
40 $15,000
30 $10,000
20
$5,000
10
0 $-
T2 T3 T4 T5 T6 T7 T8 T9 T10 T11 T12 T13

Marketing $ Units Sold Interest level

 
 T ota l R e v e nue & N et Profi ts VS Produc t S a ti s f a c ti on

$140,000 35%
$120,000 30%
$100,000 25%
$80,000
20%
$60,000
15%
$40,000
$20,000 10%

$0 5%
T2 T3 T4 T5 T6 T7 T8 T9 T10 T11 T12 T13
-$20,000 0%

Total Revenue Net Profit Product Satisfaction

 

Turn 3 and 4: In T3, we remove our production cost of the bag by removing the Designer Tag
features (down $20). We adjust our sales price to $99, which enables us to have more
distributors. We added deals with online discount retail and direct. In T4, we raised our
advertising spend on Social Media and Fashion magazines by 100%. The above changes
boost our units sold from 156 to 277, Net Profit from -$1013 to $2177.

Turn 8: In T8, we started our discount promotion with the Department Store, and this
adjustment raise our sales from 568 to 1364 bags, Net profit from $7279 to $27675. This is
when we find out that the discount works great and leads us to do it to more platform

4. Financial & Other Results: Using the final cumulative results for the following: revenue, net
profit, return on marketing, distribution costs & promotional costs tell a story ie: how do they
relate to each other, what can you learn from these results. Include how your pricing strategy
impacted these metrics. 
     In this section be sure to include the following Primary Performance Indicators or
Leaderboard Metrics in one place so it’s easy for me to find them: Net Profit, Market Share,
Return on Marketing, Customer Satisfaction Score.
Charts should be prepared to highlight performance (sales increases/decrease, profitability
levels, growth/decline in cash balance, etc).
Account Market Units Return on Customer
Company Net Profit Revenue
Balance Share Sold Marketing Satisfaction S
Team 2 171,000.57 161,000.57 15% 11,095 107% 23% 636,790.57
 

1. Conclusion: Identify and explain 3 “lessons learned” regarding activities in marketing

planning & execution of the plan.  Part of this section may include the team
perspective if the simulation could be done again (i.e., what would you have done
differently?)

PPT

a. Final standings including rankings on revenues, units sold, market share,

and profit.
b. Analysis of decisions made – best and worse decisions made and why.
c. Highlights from all areas of the Marketing Mix.
d. Apply course concepts; theories, models, frameworks to presentation.
e. Greatest insights about marketing learned from the simulation experience.
f. Biggest challenges you encountered as a group of marketers and how they
were overcome.  Do not include ‘difficulty in getting together’ as we are a
‘plugged in’ society with many options to ‘get together’.