B2B Marketing

Marketing Game:
Team-5 Orange: The Underdog
Professor: S. Gounaris

Team: Katakis Thomas,

Mourouti Ioanna,
Papakonstantinou Sotiris,
Spyridakis Markos,
Vagiokas Nikolaos

Athens, June 2010

Marketing Mix
Product
Innovative: launch new products with new technology
Price
Use of products with high market share and same technology as benchmarks
-> Parity pricing or lower compared to them due to our
a) Penetration strategy (as our products had weak market share)
b) Products’ characteristics were considered average vs benchmarks
Promotion
Defend market share with same levels of promotional intensity and depth
Increase of promotion and advertisement only when product news became available
Place
Keep our firm set on a geographical critirion via consulting a market research
Products
Products Tech Resistance Suspension Density Base List Price
Conductiv. Cost

KUST 1 4000 30 750 388 630

KUZZ 1 3500 40 550 362 550

KUTE 3 3000 75 600 323 400

KURE 3 3000 50 650 375 500

Period 1 Decisions
Production
• Same Prices (no inflation readjustment)
• Same Production
Macro-Segmentation
• Focus on Central (40%) and West (35%), due to better market shares in these regions
• Focus on Large (60%) and Medium (25%) Clients, as per the 80/20 Pareto logic
• Focus on Communication (40%) & Consumer Goods (35%), as per the Industrat tool depiction
DMU Sales Force
Eng. 40%, Prod. 20% Purch. 20% Gen. 10
DMU Technical Force Lack of hard facts for most
50% Prod., 50% Purch. parameters due to purchase of
Other: 1-2 researches each year
Hiring of 2 Salesmen
Period-1 Results
Stock Price
26$ -> 15$. Huge drop and last player on the block
Net Mktg Contribution
8,338$
Inventory Holding Costs
1,622$. Huge inventories
3 Products with high Inventory -> minor production quantities forecasted
KUTE sold out
Period-2 Decisions
Production
Increased KUTE production (40->45)
Inventory depleted to the rest. Small reduction forecasted
Decrease Promotion for: KUZZ(200->80), KURE(150->110)
Pricing
Adjustment of prices according to competitive product characteristics
KUST (630->545), KUTE(400->425)
Macro-Segmentation
Lack of hard facts for
most parameters due
Improvement of focus in terms of size due to market research
to purchase of 1-2
Large (60->50%) and Medium (25->30%) Clients
researches each year
DMU Sales Force
Absence of research. Fine-tuning in the dark as the MS in testing and primary source were very low
Eng. (40->35%), Prod. (20->25%) Purch. (20->30%) Gen. 10
Period-2 Results
Stock Price
15 $ ->10 $
Net Mktg Contribtion
•8,338m->846
•Inventory Holding Costs
1,622m->3,138m
Period-3 Decisions
Production
•Increase KUTE production (45->50)
•Big reduction to the rest products (due to promotion?)
R&D
Decided to invest in Technology-4 KOREX (no competition)
Investment - 2700000
Prices
KUST (545->500), KUZZ(550->550), KUTE(425->450), KURE(500->500)
Macro-Segmentation
•Focus on Large (36%) and Small (38%) Clients Lack of hard facts for
DMU Sales Force
most parameters due
Eng. (40%), Prod. (25%) Purch. (30->25%) Gen. (10->15%)
to purchase of 1-2
Market Research
researches each year
•Demand Analysis - Geographic Segmentation
Period-3 Results
Stock Price
•10->5$
Net Mktg Contribtion
•846-> -2,435m
•Inventory Holding Costs
3,138m->1,411m
Period-4 Decisions
Production
•Increase KUTE production (45->50)
•Big reduction to the rest products
R&D
Investment in Technology-4 –> 5,500,000!
Prices
KUST (500), KUZZ(550), KUTE(450), KURE(500)
Macro-Segmentation
Lack of hard facts for
•Large (60%) Clients
most parameters due
to purchase of 1-2
DMU Sales Force
researches each year
Eng. (40%), Prod. (25%) Purch. (30->25%) Gen. (10->15%)
Market Research
•Supplier Survey - Geographic Segmentation
•Awareness Intentions - Geographic Segmentation
Period-4 Results
Stock Price
•5$->1$
Net Mktg Contribtion
•-2,435m$ -> -7,633m$
•Inventory Holding Costs
1,411m$ -> 247k $
Period-5 Decisions
Low Awareness and Preference in the GM was identified and solved -> Increased focus on General Manager (25%)
Prices were increased by ~25% to reach profitability again
KUST (500->670), KUZZ (550->700), KUTE (450->570), KURE (500->635)
New product was released KUAA (technology 4) with exceptional characteristics
Top price in the portfolio was set for the new product (710) due to new technology
Bulk promotion (200) was invested in the new product
30% of the technical support was allocated to the new product
Sales force was increased (62->70)
Increase technicians 30->35 to support the new product
Sales training was increased
Focus on Consumer Goods (45%)
Market Research in several areas:
Awareness Intentions - Aggregate Information
Demand Analysis - End Use Segmentation
Market shares - Geographic Segmentation
Org. Buying Process - Size Account Segmentation
Market Forecast - Size Account Segmentation
Period-5 Results
Stock Price
•1 $ ->9 $
Net Mktg Contribution
•-7,633m->-346k (close to positive)
•Inventory Holding Costs
1,446m mainly due to the new product.
Only 4,4k out of 25k KUAA were sold
Period-6 Decisions
Increase prices according to Inflation
No Production of the KUAA in order to sell the stock
Increase Promotion of KUAA from 200->400$ (!!!)
Increase Advertisement of KUAA to 70$ (!!!)
Increase Sales training (90$)

Macro-Segmentation
• Focus on Central (45%) and West (26%), due to better market shares
in these regions derived from the market research
• Focus on Large (40%) and Small (35%) Clients, triggered from the
marketing research results
• Focus on Instrumentation (43%) & Consumer Goods (34%) according
to the demand revealed by the market research
DMU Sales Force
Focus on Purch. Managers (22%) and Gen. Managers (20%) in order to
shift our clients from Supplementary to Primary
Period-6 Results
Stock Price boom
9$ ->19$ (!!!)
Net Mktg Contribution -> extremely positive results
-346k$ -> 9,407$
Very low Inventory Holding Costs (115k $) due to precise forecast
New product KUAA sold out!!! -> sales increase from 4,4$->24$
Our Firm reached the 2nd place in sales
Period-7 Results
• Stock Price boom
19$->25$
• Net Mktg Contribution:
extremely positive results
9,407$->15,801$
• Zero Inventory Holding Costs
• All products sold out!!!
• Our Firm reached the 1st place in sales and stock
price
Lessons Learned
Market Research is extremely important in order to take the correct decisions

Inflation was NOT taken into account in the beginning

Up to period-4 we only focused on Market Share and not on the profitability of the
company.

Investment in new Technology (4) which no other Firm possessed, boosted our sales and
stock price.
Overview Charts
Stock Price Inventory Cost

30 3500

25 3000

20 2500

2000
15
Stock Price Inventory Cost
1500
10
1000
5
500
0
0
Period-1 Period-2 Period-3 Period-4 Period-5 Period-6 Period-7
Period-1 Period-2 Period-3 Period-4 Period-5 Period-6 Period-7

Big increase after correction in prices and High Inventory Costs in the beginning and after
introduction of new technology -> Fist Place the first launch of the new product (P5).
among all Firms
Net Mktg Contribution

20000

15000

10000
Negative Contribution in the early phases due to
5000
wrong pricing policy and high inventories.
Net Mktg Contribution

0
Corrective actions boosted the contribution
Period-1 Period-2 Period-3 Period-4 Period-5 Period-6 Period-7
-5000

-10000
Overview Charts 2

Big increase in prices in Big increase in sales after

period-4. Follow inflation introducing the new
in next periods innovative product KUAA
Overview Charts 3

Big increase in sales after Boosted contribution after

introducing the new prices correction and
innovative product KUAA introduction of KUAA
Thank you!!!

Team: Katakis Thomas,

Mourouti Ioanna,
Papakonstantinou Sotiris,
Spyridakis Markos,
Vagiokas Nikolaos