Strategic Marketing

FINAL REPORT OF MaCGyver

o Authors:
o DAELS Adrien
o DJEUTSOP Danielle
o FARRUGGIA Lucas
o HERMAN Louis
o KANKONDA KANKONDA Stanis
o Professor: Caroline LEROY-DUCARROZ
o Assistant : Elodie NUOTATORE
Année académique 2020-2021

UNIVERSITÉ CATHOLIQUE DE LOUVAIN

Louvain School of Management
Chaussée de Binche 151, 7000 Mons, Belgique | www.uclouvain.be/lsm
Table of contents
Presentation of the company ...................................................................................................2

Overall strategy and segmentation per brand...........................................................................2

Major adjustments ..................................................................................................................5

Major competitive advantage ..................................................................................................6

Future of the company ............................................................................................................7

Decisions taken: Successes - Failures .....................................................................................9

Our best decision ................................................................................................................9

Our worst decision ..............................................................................................................9

Conclusion ........................................................................................................................... 11

Annexes ............................................................................................................................... 12

Brand awereness ............................................................................................................ 12

Evolution of our market share (P1 and P5)..................................................................... 12

Tables used to forecast the features by segment ............................................................. 13

BCG analysis .................................................................................................................... 14

SWOT analysis ................................................................................................................. 14

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Presentation of the company

Company : MacGyver Industry : Juliet

MOST MOVE

Targeted segment(s) SAVERS SHOPPERS

Direct competitors SOFT, LOCK SOLO, ROOVER, TOTO

We also have a MOLE brand that is about to be launched (the R&D project is coming to an
end). This MOLE brand will target the High Earners segment and will compete (in the
future) with products from the TONE and ROCK brands.

Overall strategy and segmentation per brand

From a general point of view, in the context of our company MacGyver, we have
implemented a market penetration strategy. This strategy is included in the Ansoff matrix as
being a strategy where the markets exploited are existing, the technologies sold are existing but
where we can adapt our product to the expectations of consumers while remaining within the
same technology. Indeed, during the different periods, we have issued different R&D projects
in order to correspond to the expectations of our consumers (even if we have not always done
it at the right time). These R&D projects were always launched to maximize our sales in the
segments we were targeting and our market share in those segments. Let's also point out that
this Ansoff matrix strategy is the least risky to implement (which is an advantage). Does not
change the scope of the company's activities but has increased competition in the different
sectors we were targeting.

To explain this general strategic choice, it is worth going back to the first period of the
simulation. When the simulation started, we had two products at our disposal. The MOST
product had the right characteristics to be launched on the "Savers" market (notably its low
price). Our MOVE product, on the other hand, did not have any favorable characteristics. We
therefore decided to modify it to target the "shoppers" segment, which was then empty of any
competition (in P1-P2).

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Let's also highlight the fact that we focused on sonites products and not to add complexity to
our portfolio by adding a new technology on the vodite market (in which we don't know about
and which would force us to start from scratch).

Now let's look at our first product. The product we have called the "MOST" product.
According to Porter's generic strategies, in marketing this product, we have opted for a strategy
known as "cost leadership". This generic Porter's strategy is characterized by a perfect control
of its costs in order to apply lower prices than the reference offer but at a perceived value for
the customer identical to the reference offer. This strategy is only viable if the company has the
financial capacity to reduce its margins and/or has significant bargaining power with its
suppliers. Thus, minimal margins, but a gain in volume. For this type of strategy, it is important
to have a large market share.

This means reducing the production costs to lower the price for the customers without
losing any value regarding the reference offer. This strategy is advised if the firm is positioned
as a leader in market shares. It also includes that this option is sustainable in case the company
sells more products than its competitors. Indeed, given the features of this product and its low
transfer cost, we decided to focus on the "Savers" market. This market has the characteristic of
paying a lot of attention to the price of the products they buy. And we were, at the beginning of
the periods, the market leader in savers (which means that we sold a lot of volumes).

Despite the fact, we lost a lot of market shares we decided not to back down. With our
R&D completed, we have lowered our transfer unit cost. We decided to increase our margin
with the entirety of the reduced cost because we released that our product is not too expensive
for the savers. It is perceived more expensive and to correct that we have increased our
publicity. That’s why we decided to stay on our “cost leadership” strategy despite losing market
shares. In fact, with our MOST product, we have tried to operationalize this "cost leadership"
strategy by conducting price reduction R&D in order to enjoy minimum cost. We have carried
out this minimum cost reduction R&D project (during P4) and it seems to fit perfectly with our
cost leadership strategy. On the other hand, we had to play on the perceptions and a better
valuation of our low costs. Indeed, some of our competitors whose costs were higher than ours
were perceived as lower.

At the end of the simulation (P6), we decided to launch an R&D project to improve the
characteristics of our MOST product in order to meet the new expectations of the "Savers"
segment and to regain market share from our competitors in this segment in the future. We can

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therefore consider that from the moment we launch our MOST product (which will correspond
to the expectations of the "Savers") we will be entering a new form of strategy which is the
differentiation strategy as evoked by Porter and as we are already doing for our MOVE product.

Let us now turn to our second product, the MOVE product. In marketing this product,
we have opted for a strategy of differentiation (according to Porter's generic strategies). This
differentiation strategy is based on the company's ability to develop characteristics that are
different from the products or services offered by other companies in the target market. The
company relies on non-price modes of competition, indeed, the creation of a set of
characteristics (other than the price of the good) that are perceived in the business as unique
and valued as such. Through our differentiation, we are really keen to bring value to the segment
and meet consumer expectations.

In fact, with our product MOVE, we tried to highlight a major difference with our
competitors who are also present in the "Shoppers" segment (Toto, Roover and Solo). By trying
to offer a MOVE product that perfectly matches the expectations of the "Shoppers" segment.
At the start of the company (P1), the characteristics of our MOVE product did not correspond
to any of the characteristics demanded by any segment.

In view of the competitors already present in the “Shopper” segment, an R&D project
(during P2) enabled us to match the expectations of the shoppers better than our competitors.
This enabled us to become the leader in this market segment and to allow our product to become
our "flagship" product (in terms of margin and volume and therefore in terms of marketing
contribution).

Subsequently, still with a view to a differentiation strategy, we launched another R&D

project for our MOVE (during P4) product. Indeed, consumer expectations were constantly
changing. This second R&D project allowed us to improve our characteristics compared to our
competitors. Unfortunately, we offered too many features to our consumers and this R&D was
a mixed success (offering more to consumers will result in two things, the product will be more
expensive to produce, and we will be different from consumers' expectations so at best they
don't care, at worst they go to our competitors).

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 It seems important to precise the reasoning behind the R&D we operate for MOVE. We
proposed to the market a newly adapted version of one of our existing products in order the
satisfy the evolutions of the consumer’s ideal values. We looked at what our competitors offered
in their products and copied the characteristics that we needed to offer the products that would
meet the ideal values of the segments we targeted for each product.

It should also be noted that we had thought of carrying out cost reduction R&D, but in
view of the expectations of the "Shoppers" segment and the characteristics already possessed
by our MOVE product, this was not deemed necessary, and the project was abandoned.

Major adjustments
Other than our R&D previously mentioned, we also made other adjustments such as our
commercial team and distributor. We decided to rework our commercial teams' sizes and
distribution channel for our two products. Therefore, in period 2, we changed our proportions.
Those changes were made to mimic the shopping habits of the segments we were targeting.

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 As for the advertising, since our product MOST was doing really well, we decided to
lower our contribution in advertising in order to reinject it in our product MOVE2 as we were
attacking a new segment with it. However, this decision backfired as we saw later on that our
product MOST was perceived more expensive than it was.

Major competitive advantage

A company has a competitive advantage when its factors allow it to have a lower or
higher cost when producing its goods or services. For Most having a transfer cost at its
minimum allowed us to put a low price and have a competitive advantage.

For Move the maximum adaptation of features with the expectations of shoppers, this
has allowed to increase the sales of the product move from period to period.According to
porter’s matrix, the competitive advantage for Most is Cost Leadership and Differentiation for
Move

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Future of the company
For the future, we decided to try to launch a product on the high earners segments
because we realized that a lot of competitors decided to challenge the Shoppers’s segment and
the high earners segment was not crowded. We also decided to adapt our product MOST to the
saver new values. If those decisions prove to be the right one, we would like to eventually
launch a vodite product but as of now we do not have enough money to take the risk of
launching a vodite product. We will keep a closer look at the evolution of product MOST and
see if he can be successful again. If not, we will eventually have to abandon this product. As
for our product MOVE, we will try to remain the leader of the market by always releasing a
new version of it that suits the ideal value of the shoppers and that differs from what our
competitor would propose.

Here is the detailed version of the decision we took in period 6 and what we had in mind
when we took them. We decided not to remove our MOST product because we want to continue
to benefit from our notoriety on which we have been working for 6 sessions. Indeed, given our
"brand awareness" with savers (69% in P5), it would be a shame to leave this market (see
appendix). Nevertheless, for the future, it would be preferable to review our communication
because being the cheapest on the market we are perceived as being more expensive than the
market leader.

Then, considering the mistakes made in the previous periods concerning our product
"MOST", we decided to carry out an R&D in order to meet the expectations of the savers.
Indeed, we modified all the characteristics of our product in order to make its features as close
as possible to the ideal values expected by the savers. With this decision, we hope to regain the
position we used to have and regain the market share we lost in this segment. Regarding our
MOVE product, we have decided for the time being not to modify our product as its
characteristics still correspond to shoppers' expectations.

Indeed, with the evolution of customer expectations, we are well on our way to meeting
shoppers' expectations. But it doesn’t mean we would not modify those characteristics should
the ideal values of the shoppers change in the future. We will always propose a new version of
MOVE as soon as our version should become outdated. We have also reassessed future demand
given the slight stock-outs of the last two periods.

Now let’s move to our new product ‘MOLE’. When we decided to launch this product
as said in our little introduction we went after the high earner segment. There are a few reasons

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behind this. First, we saw that they were not many competitors in this segment as opposed to
the shopper's segments. Based on the presence of competitors we could either choose the high
earner segment or the explorer's segment.

We choose the high earner because their ideal product cost less to realize than the
explorers one and are likely to generate more incomes for our company. It also has a better
growth rate than the explorers or the profs.

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 To sum up our plan for the future, we would like to bring up an eventual VODITE
project. We would have liked to launch VODITE project in period 6. However, due to our
company result, we have decided to postpone this decision as we found it very risky. If the
decision we made a period 6 are proven successful as we hope it they would be. We would
focus on the creation of a VODITE project.

Decisions taken: Successes - Failures

Our best decision
Our best decision took place when we oriented our Move product to the shopper's
segment. This decision enabled us to exploit a customer segment that is easier to penetrate than
the other, as the market shares of competitors in this segment were low and no competing
products really fit the expectations of this segment at the beginning. Considering this, through
the launch of an R&D project, we have created the new product by being attentive to the
expectations of the shopper’s characteristics and trying to get as close as possible to them.
This decision was the best because it allowed us to regain partly our total lost market
share (Most – Move). While the market share of Most product decreased from 16,8% (in
P2) to 9,5% (in P3). This was partially offset by the increase of the market share
of Move product from 4,9% (in P2) to 7,3 % (in P3). This growth continues over time. In
addition, this decision makes our company a ‘leader’ in the shopper’s market; its market shares
swelled from 16% in period 2 to 33% in period 3 and 36% in period 4.

Our worst decision

Our worst decision concerned the fact that we didn’t adapt the characteristics of the
Most product to the ‘savers’ target segment whereas it was the market leader. This caused a
considerable loss of market shares. However, given the fact we remained the market leader in
the ‘savers’ segment (= 48% in period 2), we did not analyze if it was necessary to adapt the
features of Most product to match better the ‘savers’ expectations which increased over time.

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Instead of that, we decided to lower the price of the product from $260 to $220 (in period
2), and following this price decrease, we decided to increase production from 180k units to
220k units. We also increased our advertising expenses from a total budget of $1,500k to
$2,100k. However, despite these changes, a continued reduction in market share is observed
over the periods: from 16,8% in period 2 to 5% in period 4.
In period 3, we remained on the same strategy and applied the “cost leadership” strategy
since we were leaders and we could afford to reduce our margins in order to gain more market
share and burry the competition. This wrong decision did not have the expected effects. Besides
the loss of market shares, MOST was no longer the leader in the ‘savers’ target segment 20%
in period 4 against 49% for its direct rival product Soft. This last one met much better the
‘savers' needs. We also did not realize that we needed to do more advertising as our product
was perceived as more expensive than what it was. When we realized it, we decided to make
more communication about the price and the convenience. But when we decided to make this
adjustment, we took the wrong segment into consideration and so our advertising was not
pertinent and we lost more market share. To conclude, we can see that we acted a lot as KODAK
did for our product MOST. We thought we would stay the leader in the market and were too
confident about its success which ultimately caused its downfall.
We should then conclude by saying that we have tried (often), we have made mistakes
(sometimes) but we have always picked ourselves up and learned from our mistakes
(try/fall/stand up again).

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Conclusion
As a conclusion, we can recall various elements. Firstly, in terms of success, we
managed to put our MOVE product (which was initially only a "dead weight") in the leading
position in the "Shoppers" market. This product is now the product that allows MacGyver to
survive and is our major marketing contribution (in terms of sales volume and margins). We
still have high expectations for the future of this product in the shopper market in the periods
to come. Let us emphasize that this segment will continue to grow in the future, so we can
therefore have a certain level of expectation for the future of this product.

Let's now look at the conclusion of the MOST product which, despite a good start in
terms of sales volume, ended up "falling" in the "Savers" market. On the other hand, we have
carried out R&D and we hope that this will allow our product to go up the slope in the future
periods of the company. Let us emphasize that this segment will also continue to grow in the
future, so we can remain optimistic. Considering the seriousness with which we launched our
last product "Mole", the market in which we launched this last "High Earners" as well as the
development of the latter, we also hope that this product will be developed efficiently and will
quickly find its place in the "High Earners" market, thus allowing our company to continue to
evolve.

As a general conclusion on this simulation, we can say that our company went through
different stages, we tried, we took risks, we made mistakes, we failed, but we think that these
mistakes allowed us to learn and that if we were to continue this simulation until the end of the
quadrennium, we would manage to get back on track.

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Annexes
Brand awereness

Evolution of our market share (P1 and P5)

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Tables used to forecast the features by segment

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BCG analysis
SWOT analysis
Strengths
• Most : Low product price
• Most : R&D which allows us to
still play on prices (low transfer
cost)
• Move : Success on the
shopper’s segment
Opportunities
• Continuously growing markets
• Good market share in
the “shopper” market
• Few competitors on high
earners segments
• New version of our product
MOST
As part of our SWOT analysis, we can highlight various strengths (characteristics of the
company that give us an advantage over others). Firstly, our company enjoys with its MOST
Weaknesses
• MOST : low advertising
budget and low brand awareness
• MOVE : does not totally fit
with what de “shoppers” want.
• Lack of adjustment for our
product MOST
• Low starting budget
• Low marketing contribution
• Misconception about MOST’s
price
Threats
• highly competitive markets
• new products and product
improvements of our competitors
• Our competitor on the high
earners segment is well installed
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product a low cost product which allows us to stick with our low cost strategy. This is one of
the strengths of our company and we hope to regain the lost market share thanks to the R&D
for price reduction that we have carried out on Most. Another of our company's strengths is our
MOVE product, which enjoys relative success in the shopper segment thanks to its low price
and which nevertheless gives us a decent margin (and which represents the major part of our
marketing contribution). Let us now turn our attention to our weaknesses. First of all, we have
a low starting budget (compared to our competitors) but we also have a low interest rate which
pumps our budget at each period. We also had a low advertising budget for our MOST
product. Another of our weaknesses is that consumers perceive our MOST product as more
expensive than our competitors (although we have a lower price).A last weakness is the fact
that our MOVE product does not perfectly match the expectations of our consumers and they
might prefer a competing product in the future. A last weakness is our low marketing
contribution (low volume and low margin).
In terms of external elements, let's look at the threats that could present themselves to
our company. Firstly, the shopper market is going to be highly competitive (and is already
highly competitive). A second threat is the new products and product improvements that
our competitors have launched after us and which could prove to be more in line with the
expectations of the segments we are targeting. The last threat concerns our new product. Indeed,
our competitor is well installed on the high earner segments and it will be therefore a challenge
to compete with him.
Let's take a look at the opportunities available to us. The two markets in which we are
present are continuously growing. We can therefore expect an increase in our sales volume for
both products. There is a good market share in the shopper market and this market will continue
to be very competitive. As for our new product MOLE, the fact that the high earners segment
has not many competitors is a good opportunity for our company.

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