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MKT 440: Markstrat Presentation
- 1. Markstrat Monday, April 20th 2015 Laura Frias, Michael McBride, Alex Sugano, Travis Shirley 1
- 2. Target Segments 2 ROUND 1 ROUND 7
- 3. RICH: Singles Originally targeted low income (and singles) Rationale: largest segments, unaware customers in low income By period 3, realized that private brands would always have low income Switched to Median Income and Singles Supreme made a perfect product for median income Immediately switched to focus solely on singles with both R&D and advertising 3
- 4. RISE: 50/50 Affluent and High Earners We decided early on to drop its price, drop its advertising, and relatively ignore it. Assumed the high margin competition would be too strong. False assumption Split segment expenses 50/50 between affluent and high earners Minimized promotion 4
- 5. RUNWAY: Health Conscious Targeted health conscious because they were early adopters and we expected to be first to market Did not expect to capture every segment Only product in industry took all sales (first mover advantage) This was crucial, because we knew that early sales would fund more R&D and expansion 5
- 6. RUMBLE: Families Family segment in Nutrites grew to twice the size of health conscious or elderly by round 6 We knew this represented a threat from Supreme We decided to preempt the competition and develop a product that would target families in order to prevent entrants from gaining market share 6
- 7. RICH (Clinite) PRODUCT: Usability (69) Pleasure (60) Packaging (51) PRICE: $12 PLACE: Specialized Mass (47%) Mass Merchandise (33%) PROMOTION: Advertising Media: $7,500K Advertising Research: $800K 7
- 8. RICH (Clinite) 8 IDEAL VALUES BRAND PERCEPTIONS
- 10. RISE (Clinite) PRODUCT: Safety (78) Efficacy (69) Pleasure (49) PRICE: $19 PLACE: Department stores (33%) Specialized mass (33%) PROMOTION: Advertising Media: $100K Advertising Research: $50K 10
- 11. RISE (Clinite) 11 IDEAL VALUES BRAND PERCEPTIONS
- 12. RUMBLE (Nutrite) Product: Clinical Benefits (72) Packaging (69) Variety (60) Price: $26 Place: Specialized mass (40%) Department Stores (37%) Promotion: Advertising Media: $2,357K Advertising Research: $800K 12
- 13. RUMBLE (Nutrite) 13 IDEAL VALUES BRAND PERCEPTIONS
- 14. RUNWAY (Nutrite) Product: Clinical Benefits (63) Flavor (57) Price: $25 Place: Specialized Mass (42%) Department Stores (42%) Promotion: Advertising Media: $3,150K Advertising Research: $500K 14
- 15. RUNWAY (Nutrite) 15 IDEAL VALUES BRAND PERCEPTIONS
- 17. Game theoretical decision to launch Nutrite 17 Our Prediction Expected Opponent Prediction Refresh Opp. Opp. Refresh 10m, 10m 12m, 20m 20m, 12m 10m, 10m 10m, 10m 25m, 20m EnterDon’t Don’t Don’t Don’t Enter EnterEnter 20m, 25m 10m, 10m
- 18. Period 2: R&D Into The Nutrie Market 18
- 19. Period 3: Continuation of R&D 19
- 20. Period 4: Nutrite Initial Launch 20
- 21. Period 5: Further R&D Into Families 21
- 22. Period 6: Clinite Advertising 22
- 23. Overall Industry Trends Price sensitive customers entering market at faster pace Profit margin trade off 23
- 25. Successes and Failures SUCCESSES: 1. First mover advantage in the Nutrite market 2. Targeting singles with Rich and lots of advertising 3. Underfunding Rise 4. Preempting competitors entrance into Nutrite market and their strategies FAILURES: 1. Not anticipating Supreme targeting singles in Period 1 2. Not anticipating Supreme would target median income in Period 4 3. Targeting low income with Rich in Period 1 25
- 26. Key Learning Experiences 1. Focused on Semantic Elements that had most importance a. Advertising and pricing 2. Bold choices paid off, but required trade-offs 3. Paid close attention to competitor’s maneuvers Eg. Noticed the amount of money Supreme spent on R&D 4. Short and long term goals - stayed consistent with our plan 5. Competitive Advertising and Commercial experiment study a. Avoided diminishing marginal returns (most people were overspending) 26
Editor's Notes
- Target Segments Rich- At first we wanted to target low income and singles-- we saw there was a large untapped market in low income, and both groups liked a low price point. We did this because we thought it was a very “unsexy” strategy that others would not imitate. We were wrong on two fronts; first, private brands pretty much cornered low income, and Supreme heavily targeted singles. This led to decreased profits at first. Then, we switched to target middle income for one round, still with same product, because we thought Supreme had decided to target singles and they were our biggest competitor. However, again, we miscalculated, and that same period, Supreme launched a product perfect for middle income-- our advertising didn’t really compete with their superior product for that segment. Then, we looked at market forecasts and saw how quickly the singles demographic was growing. We instantly researched and developed the ideal product for singles, and put the vast majority of our advertising budget there. Ironically, being forced back into singles ended up benefitting us greatly. Rise We knew that rise was a more expensive product, and therefore split our advertising between affluent and high earners-- other than this, we didn’t put much thought into it because we generally spent so little on promotion and sales were low. Runway Health conscious because they were initially the largest segment, and we needed immediate profits to fund further expansion. We had no idea that every segment would buy it because it was all that was available. Rumble Since families would be twice the size of either health conscious or elderly in Round 7 we thought that represented a threat from Supreme, since they had the chance after seeing Runway launch to target a new demographic. We wanted to preempt this expansion-- additionally, we knew that even if they didn’t launch we’d only be cannibalizing ourself. This ended up being wise-- Supreme launched a family product modification in round 7 which we were able to combat with Rumble.
- Add: Contribution Before and After Marketing
- Add: Contribution Before and After Marketing
- Promotion - going for singles change and promotion changes reflected in consumer perception customer perceptions matched our goals in terms of product image
- Added on Period 5
- Added on Period 5
- Added on Period 3
- Added on Period 5