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Markstrat Simulation Game

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  • 1. SUBMITTED TO Dr. anita basalingappa January, 2012Firm E- Marketing Plan 1
  • 2. FINANCIAL IMPACT  Net contribution 32000 1284 28000 3957 24000 20000 1581 16000 SEXY 27983 2848 25735 SEM1 12000 1355 SEBI 8000 16209 1572 SELF 11287 4000 1,944 SEMI 7313 2239 5,173 0 1,064 -3127 -1205 Period 0 Period 1 Period 2 Period 3 Period 4 Period 5 period 6 -4000 -4,346 -5090 -4,035 -3046 -2,184 -8000 -3,657 -12000 In period 0 aggregate net contribution was $14134.Period 1- It started increasing dueto increase in sales revenue. Other expenditures remained slightly high. Period 2- salesrevenue reached $69370. This further increased net contribution, expenses remained almostsame. Period 3- sales revenue increased slightly but cost of goods sold increased and otherexpenses also increased. Because of this Net contribution decreased and came to $28610.Period 4- Advertising expenditures and ad research exp. Increased but sales revenuedecreased drastically. Eventually net contribution decreased drastically and reached to$25258. Period 5- A little increase in sales revenue along with advertising and sales forceexpenditures resulted in a little increase in net contribution. Period 6- sales revenue, cost ofgoods sold and other expenditures all decreased which resulted in the level of net contributionto $10074.Firm E- Marketing Plan 2
  • 3.  ROI ROI 5 4.3 4 3 2.54 2.73 2.67 2 ROI 1 0.75 0.5 0 -0.57 Period Period -1 Period Period 0 1 Period Period 2 3 period 4 5 6 As it is clear from the graph that the trend of ROI is slightly similar to Netcontribution. In period 2 the sales revenue was high at $69370. Due to this high sales revenuethe ROI is highest in this period (despite Cost of goods sold and other expenses being higherthen period 1). After period 2 it started decreasing due to sudden increase in totalexpenditures. After this another point to notice is Period 4. In this period ROI was negative@ -0.57 which was due to drastic decrease in sales revenue and increase in advertising andresearch expenses. In period 6 it came to positive @ 0.5.  Stock price index stock price index 1400 1200 1224 1137 1061 1000 1000 970 938 800 721 600 stock price index 400 200 0 Period Period Period Period Period Period period 0 1 2 3 4 5 6Firm E- Marketing Plan 3
  • 4. Stock price is highest @ $1224 in period 2. The reasons for this can be many. Inperiod 2 sales revenue increased. Expenses were slightly higher than previous periods. ButROI and Net contribution is highest in period 2, which resulted in highest stock price. The stock price was lowest @ $721 in period 4. This was due to direct relationshipbetween Stock price, Net contribution and ROI. The net contribution and ROI are lowest inthis period. This poor performance of company leads to lower stock price. In period 6 stockprice came to $938.  Market Share 100% Market Share 0.60% 1.80% 90% 2.70% 4.40% 5.80% 2.60% 80% 4.50% 3.30% 3.50% 70% 0.80% VEET 60% 1.90% 1.10% SEXY 50% 1.10% 3.20% SEM1 40% 12.50% SEBI 10.60% 10.70% 2.10% 0.70% SELF 30% 10.30% 0.90% SEMI 20% 5.40% 10% 2.20% 4.50% 0% Period 0 Period 1 Period 2 Period 3 Period 4 Period 5 period 6 In period 0 there were two brands SEMI & SELF in Sonite and their market sharewere 10.6% and 4.4% respectively. Team A’s SAMA brand market share was highest @12.2% in this period. In period 1 both brand’s market share increased slightly. But in period 2SEMI’s market share increased but SELF’s market share started decreasing. In period 3 SEBIwas launched. And its market share remained at 1.8%. In period 4 and period 5 SEM1 andSEXY brands were launched respectively. In this period SEMI’s market share was lowest @2.2 % this was due to Team U’s better market strategy for brand SULI. SULI was at highest@ 21.1% in this period. SELF and SEBI’s market share remained lowest in period 6. WhileFirm E- Marketing Plan 4
  • 5. SEM1 started with 2.6% market share in period 4 and came to 3.5% and 3.2% in period 5 & 6respectively with its better marketing strategy, advertising and R&D. SEXY started with0.6% market share in period 5 and came to 0.8% in period 6. VODITE’s VEET brand was launched in period 6 with 4.5% market share.  Profit Net Profit 35000 30000 28610 25000 25258 20000 17295 17260 15000 15182 13890 10000 10074 5000 0 Period 0 Period 1 Period 2 Period 3 Period 4 Period 5 period 6Firm E- Marketing Plan 5
  • 6. MARKET IMPACT  BRAND AWARENESS 100% 90% 80% 70% 60% Others 50% HiEarners Pros 40% Singles 30% Buffs 20% 10% 0% SEMI 3 SEMI 0 SELF 1 SEMI 1 SEMI 2 SEXY 5 SEMI 5 SEXY 6 SEMI 6 SELF 0 SELF 2 SEBI 3 SELF 3 SEBI 4 SELF 4 SEMI4 SEBI 5 SELF 5 SEBI 6 SELF 6 SEM1 4 SEM1 5 SEM1 6 SONITE Brand awareness is almost same throughout all period. So, in next periods we may not purchase this report further and save money. VEET- Brand Awareness by segment 40.00% 35.10% 35.00% 30.00% 25.00% 23.60% 23.10% 20.00% 15.00% VEET 10.00% 5.00% 0.00% Innovs VEET Adopters Followers VODITEFirm E- Marketing Plan 6
  • 7.  PURCHASE INTENTION 100% 90% 80% 70% 60% Others 50% HiEarners 40% Pros 30% Singles Buffs 20% 10% 0% SELF 1 SEMI 3 SEXY 5 SEXY 6 SELF 0 SEMI 0 SEMI 1 SELF 2 SEMI 2 SEBI 3 SELF 3 SEBI 4 SELF 4 SEBI 5 SELF 5 SEMI 5 SEBI 6 SELF 6 SEMI 6 SEM1 4 SEMI4 SEM1 5 SEM1 6 SONITE Purchase intention is really fluctuating a lot with period. We can clearly see that Buffs and professionals are the major target market segment for our firm E. VEET- Purchase intentions 10.00% 8.20% 8.00% 6.40% 6.00% 4.00% VEET 2.00% 1.70% 0.00% Innovs VEET Adopters Followers VODITEFirm E- Marketing Plan 7
  • 8.  SHOPPING HABITS 120.00% 100.00% 80.00% 60.00% Mass Merchandis. 40.00% Depart. stores Specialty stores 20.00% 0.00% Others 0 Others 2 Others 4 Others 6 Singles 1 Singles 3 Singles 5 Buffs 0 High earners 1 Buffs 2 High earners 3 Buffs 4 High earners 5 Buffs 6 Professionals 0 Professionals 2 Professionals 4 Professionals 6 SONITE Purchase intention is also fluctuating a lot with period. We will be requiring this report in all period as it help a lot in distributing our inventory according to requirement of the customers. 80.00% 73.70% 70.00% 60.00% 56.40% 50.00% 40.00% 38.20% Innovators 35.50% 30.00% 26.40% Early Adopters 24.50% 20.00% 16.80% Followers 19.10% 10.00% 9.50% 0.00% Specialty stores Depart. stores Mass Merchandis. VODITEFirm E- Marketing Plan 8
  • 9. MARKETING INVESTMENT  Sonite - Market Investment Marketing Expenditure(A+AR+SF) Product Investment(MR+R&D) 17100 16100 16246 15100 15312 14100 13100 12100 12466 11100 10100 9100 8100 8148 7100 6100 5831 5994 5100 5224 4100 3100 2100 2539 1100 1242 100 245 442 604 457 475 Period 0 Period 1 Period 2 Period 3 Period 4 Period 5 Period 6  Vodite - Market Investment Marketing Expenditure(A+AR+SF) Product Investment(MR+R&D) 13000 12000 11534 11000 10000 9000 8000 7000 6000 6105 5000 4000 3947 3000 2000 1000 0 0 21 0 21 0 32 0 0 35 444 Period 0 Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 A=Advertising Expenditure AR=Advertising Research Expenditure SF=Sales Force Expenditure MR=Marketing Research expenditure R&D=R&D ExpenditureFirm E- Marketing Plan 9
  • 10.  Price and Expenditure trend (Brand wise) SELF - Price & Exp. Trend 3500 3000 3128 Average retail price 2500 2488 2483 2548 Average selling price 2000 2112 1989 1500 Adv+Sale Force Exp. 1151 1000 500 546 446 494 493 493 491 490 348 285 318 319 317 318 318 0 Period 0 Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 SEMI - Price & Exp Trend 4500 4000 Average retail price 3343 3761 3807 3854 3500 3511 3351 3000 3112 Average selling price 2500 2000 Adv+Sale Force Exp. 1500 1000 513 513 513 444 394 500 514 395 332 331 331 332 0 284 253 251 Period 0 Period 1 Period 2 Period 3 Period 4 Period 5 Period 6Firm E- Marketing Plan 10
  • 11. SEBI Price & Exp. Trend 3500 3000 2909 2500 Average retail price 2000 1907 1840 1874 1500 Average selling price 1000 Adv+Sale Force Exp. 500 0 Period 3 Period 4 Period 5 Period 6 SEMI1 Price & Exp. Trend 6000 5000 4850 4795 4000 3447 Average retail price 3000 Average selling price 2000 Adv+Sale Force Exp. 1000 541 384 270 0 346 173 245 Period 4 Period 5 Period 6Firm E- Marketing Plan 11
  • 12. SEXY Price & Exp. Trend 4000 3500 3000 2500 Average retail price 2000 Average selling price 1500 Adv+Sale Force Exp. 1000 500 0 Period 5 Period 6 Adv. includes advertising & advertising research expenditure.Firm E- Marketing Plan 12
  • 13. B) Explain your companys SPI to your shareholders Period 0 Period 1 Period 2 Period 3 Period 4 Period 5 Period 6Stock Price 1000 1061 1224 1137 721 970 938Budget avl. at end 7150 7300 11450 10100 7900 8200 8500 14000 11450 12000 10000 10100 8200 7150 8000 8500 7300 7900 Budget avl. at end 6000 Stock Price 4000 2000 1000 1224 1061 1137 721 970 938 0 Period 0 Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 1. We would like to thank all our shareholders for keeping faith in our company at the time when company was not performing as per expectations. 2. Currently the cash position of the company is good and we don’t have much deficits though our profits have come down. 3. We want to give you assurance that company has taken some strategic decisions that will help to improve the company performance. 4. We will discontinue our loss making brands and will focus on our strength (SEMI). 5. We are also going to change our marketing strategy for Vodite market.Firm E- Marketing Plan 13
  • 14. C) You are now leaving the company. What is your advice to the new team taking overyour company? (SWOT and learning’s from success and mistakes)Strengths  Our R&D department has continued to improve. We have built such a solid foundation that our new brand introductions and modifications have done extremely well upon entry into the market. We are confident that our R&D group has gained adequate experience to successfully guide us into a new market in the near future.  Our Brand awareness continues to increase, as we devote ample amounts of capital to our advertising.Weaknesses  Throughout our management, we have had difficulty predicting the initial production levels of our new brands, as well as those of some of our declining brands. We must request productions levels more efficiently in order to meet sales requirements and minimize inventory holding costs.  The changing preferences of the consumers continue to challenge our firm. We are forced to continually monitor and adjust the Perceptual Objectives to reposition our brands in an attempt to gain additional market share.  We would like to expand into the Vodite market. However, we do not have the necessary capital to proceed at this time. We must substantially increase our revenues in the next period in order to enter this new market and still remain competitive in the Sonite market.Opportunities  We have now gained extensive market experience. This has afforded us the opportunity to successfully reposition our brands at poorly targeted segments. As we continue to draw on this advantage, we will achieve a greater market share and higher revenues.  In Period 6, we completed a project Feasibility Study for the Vodite market. If our revenues remain stable in the coming periods, we will have the opportunity to complete this R&D project and introduce a brand into the untapped Vodite market.Firm E- Marketing Plan 14
  • 15.  We are able to purchase additional Vodite market studies to better position our brands according to the preferences of our targeted markets. This will provide us with opportunities to further increase our market share.Threats  Our brand positioning is frequently threatened by the unstable Purchase Intentions of consumers in the Sonite Market. No apparent trends have been identified to date.  Competition in the Sonite market remains constant and the ability of our competitors to better project some Ideal Values remains a constant threat to our market share.  Three of the five segments that our firm is targeting are declining in size. In addition, the growth rates are projected to decrease in all segments but one. This threat requires us to operate under more scrutinized production levels.Firm E- Marketing Plan 15
  • 16. Past Performance Learning’s  Since Period 5, our low-end brand, SEMI, has performed way above our expectations. It has been our most successful brand throughout our management. Sales have increased by as much as 164%. We have now begun to better estimate adequate production levels for this successful brand.  Our most successful brand is SEMI. Since Period 5, this brand has grown as much as 164%. We recently made modifications to reposition SEMI closer to the shifting preferences of the Buffs. Until Period 6, we had expected this brand to continue its successful sales pattern. However, it has seen unexpected drops in sales. We attribute this drop to the decline of the Professionals base, as well as the current limited growth of the Sonite market itself.  Our SEXY brand has also experienced tremendous sales growth levels. Its primary target is the Professionals segment, and since its introduction in Period 5, this brand has grown as much as 40%. As sales levels continue to decline for our competitors who are targeting the Professionals, we expect our SEXY sales to increase even further.  Our newest brand, SEXY, has made a respectable entrance into the Sonite market. Since its introduction in Period 5, it has grown by 40% in period 6 to almost 8,859 units. At first we kept advertising levels and sale efforts low to determine its positioning on the Multidimensional Scaling map. Once it was determined that this brand was successfully positioned, we decided to place a greater emphasis on this brand. We expect this brand’s sales to continue to grow and provide us with the largest unit shares of the Professionals market.  Since Period 2, we have experienced tremendous drops in sales in our SELF brand (from 28,896 to 18,237 units). In response to this, we will modify this brand in Period 7. We had previously decided to let this brand simply disappear, but now feel that this would be a mistake. We believe our new modifications aimed at the Buffs and Professionals should return this brand to its previous levels of success.Firm E- Marketing Plan 16
  • 17. D) What were the most important learning’s from your competitors’ success andmistakes?These are the learning’s 1. For taking better decisions analyse the past data for many years rather thananalysing just previous year’s data. 2. Make the projections for 2-3 years in future. Rather than making strategy for just 1year. This helps in refining the mistakes for coming years and help making long term profitsand sustainable growth. 3. The available resources like funds should be used in an optimal way. This reducesthe cost and increases profit. For e.g. If we see the estimated overall performance of all theteams Team A as an exceptional cost of $630. Had this not been occurred the profit wouldhave increased by $630. 4. First see the need of an expense. Then think about the outcome of that expense. Ifthe outcome covers that expense only then expense should be made. Or the other way is if wesee the long term growth and profits by spending today, only then it should be made.Otherwise we should avoid the unnecessary expenses. For e.g. If we compare Period 3 andperiod 6 the sales revenue are almost same. But the advertising expenses are more thandouble. 5. Innovation is the key to stay in the top. Keep innovating if you want to keep yourmarket share and profits higher than the others. For e.g. In period 4 SEMI’s market share waslowest @ 2.2 % this was due to Team U’s better and innovative market strategy for brandSULI. SULI was at highest @ 21.1% in this period. 6. To become a market leader we need to stick to point 1 and 2. This means we shouldalways keep into consideration the long term perspective. Our focus should be more on longterm goals. Long term strategy always leads to sustainable growth and profits in the long run.Firm E- Marketing Plan 17
  • 18. E) Comparison of our brands similar to Sonites or Vodites product market with othercompaniesSonite The characteristics of our company’s brands are chosen as unique and match no othercompany’s brands. However, there is a similarity with respect to some characteristics withsome other brands such as SONI and SEXY. The main drawback regarding the characteristics of our brands with respect to otherbrands has been that our newly introduced brands were too similar to our existing brands.This led to an intra-brand competition within the company, and hence no clear distinctionmeant confusion and conflict within our brands. This is to be rectified in the coming years,with a concise brand distinction and targeting.Vodite As already stated, our company is still in the establishment phase of this market. Wehave invested in various Research and Development programmes for product developmentand manufacturing in this market. We will soon launch more products in this market based onthe R&D studies we have already invested in and waiting for their results. Talking of the similarity, strikingly, no other product can be identified as similar. Thishas provided our sole brand in this market, called VEET, a competitive edge. This brand hasa premium pricing @ 3100, which is marginally above any other brand. Optimistically, thisbrand has been able to fetch high revenues for its unique features and the given premiumpricing.Firm E- Marketing Plan 18