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Team I - Markstrat Final Presentation at UC Davis

Found this on an old thumb drive, brings back good memories

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Team I - Markstrat Final Presentation at UC Davis

  1. 1. Markstrat Lessons Learned Team I (“The Incredibles”)
  2. 2. Agenda <ul><ul><li>Philosophy, Guiding Principals and Organization </li></ul></ul><ul><ul><li>Product Portfolio </li></ul></ul><ul><ul><li>Research & Development </li></ul></ul><ul><ul><li>Advertising and Sales Force Decisions </li></ul></ul><ul><ul><li>Pricing Effects </li></ul></ul><ul><ul><li>Competitor Dynamics </li></ul></ul><ul><ul><li>New Product Launches </li></ul></ul><ul><ul><li>Production Planning and Inventory Management </li></ul></ul><ul><ul><li>Financial Focus </li></ul></ul><ul><ul><li>Conclusion </li></ul></ul>
  3. 3. Our Goals <ul><ul><li>Become the Stock Price and ROI Leader </li></ul></ul><ul><ul><li>Dominate the Vodite market </li></ul></ul><ul><ul><li>Moderate presence in the Sonite market </li></ul></ul><ul><ul><li>Be the first to innovate in every area </li></ul></ul>
  4. 4. The Team I Secret Formula <ul><ul><li>Data and Dollars </li></ul></ul><ul><ul><li>Build a better mouse trap and the world will beat a path to your door </li></ul></ul><ul><ul><li>Number one or two </li></ul></ul><ul><ul><li>Show me the money </li></ul></ul><ul><ul><li>Repeat after me…. R & D </li></ul></ul><ul><ul><li>It’s all about the end-game </li></ul></ul>
  5. 5. The Team I Process Quick Data Aggregation Component Analysis Group Consensus Smart Decisions R&D Strategy Production & Marketing Competitive Intelligence
  6. 6. The Sonite Portfolio SIRO Quantity SIBI Quality
  7. 7. Vodite Portfolio VIKI The Game-Changer 1 Product – 2 Segments VITO The Godfather 6 Periods – 7 Projects
  8. 8. We thought we could SING <ul><ul><li>Being a niche player is harder than you think </li></ul></ul><ul><ul><li>Target segment could not be convinced easily </li></ul></ul><ul><ul><li>Can’t match the marketing money of the mass-market products </li></ul></ul><ul><ul><li>Avoid over-production </li></ul></ul>
  9. 9. Taking Control with VIKI <ul><ul><li>First mover advantage </li></ul></ul><ul><ul><li>Market entry with no precedent </li></ul></ul><ul><ul><li>Ability to charge a premium </li></ul></ul><ul><ul><li>Throw-off competition for two periods </li></ul></ul><ul><ul><li>Once-in-a-market opportunity </li></ul></ul>
  10. 10. The Keys To R&D Success <ul><ul><li>T + 3 </li></ul></ul><ul><ul><li>The Outcome Vs. Risk dilemma </li></ul></ul><ul><ul><li>What’s in the pipeline does matter </li></ul></ul><ul><ul><li>One Path or Multiple Paths </li></ul></ul><ul><ul><li>Keep the inputs simple </li></ul></ul><ul><ul><li>Incremental Vs. One-time </li></ul></ul><ul><ul><li>Patience is a virtue, wait for the end-game </li></ul></ul><ul><ul><li>Voice of the customer </li></ul></ul>
  11. 11. Advertising Decisions <ul><ul><li>No point having a perfect product if the target market does not know about it </li></ul></ul><ul><ul><li>Balance of quantity and quality </li></ul></ul><ul><ul><li>Law of diminishing returns </li></ul></ul><ul><ul><li>Be opportunistic – increase advertising when the competition is squeezed for money </li></ul></ul><ul><ul><li>Allocate the money to the products with the most return </li></ul></ul>
  12. 12. Sales Force <ul><ul><li>Based on two factors: </li></ul></ul><ul><ul><ul><li>Contribution </li></ul></ul></ul><ul><ul><ul><li>Shopping Habits </li></ul></ul></ul><ul><ul><li>Targeted sales force to increase presence in particular channel </li></ul></ul><ul><ul><li>No firing </li></ul></ul><ul><ul><li>Consistent increase </li></ul></ul>
  13. 13. The Dark Art Of Pricing <ul><ul><li>Innovators can charge a premium </li></ul></ul><ul><ul><li>Risk-Taking or Risk-Averse </li></ul></ul><ul><ul><li>Economies of scale take time </li></ul></ul><ul><ul><li>Excess price-cutting reduces perception of quality </li></ul></ul><ul><ul><li>How to price </li></ul></ul><ul><ul><ul><li>Ideal: Demand, Competition and Cost </li></ul></ul></ul><ul><ul><ul><li>Markstrat: 80% Demand, 20% Cost </li></ul></ul></ul>
  14. 14. Competitor Dynamics <ul><ul><li>Anticipating the competition's moves </li></ul></ul><ul><ul><li>R&D expenditures tell a rich story </li></ul></ul><ul><ul><li>Create barriers to entry </li></ul></ul><ul><ul><ul><li>Have multiple products (with the risk of cannibalization) </li></ul></ul></ul><ul><ul><ul><li>Build the cost advantage </li></ul></ul></ul><ul><ul><li>Seek the next Blue Ocean market </li></ul></ul>
  15. 15. New Product Launches <ul><ul><li>Product Roadmaps </li></ul></ul><ul><ul><li>Marketing Budget is a trade-off </li></ul></ul><ul><ul><li>Entering without a cash-cow </li></ul></ul><ul><ul><li>Initial demand and price </li></ul></ul><ul><ul><li>Be prepared to lose money </li></ul></ul><ul><ul><li>New Vs. Existing Markets </li></ul></ul><ul><ul><li>Invest in your Sales Force </li></ul></ul>
  16. 16. Production Planning <ul><ul><li>The accuracy of market size forecasts </li></ul></ul><ul><ul><li>Surveys of Purchase Intentions might not always be right </li></ul></ul><ul><ul><li>Major mistakes </li></ul></ul><ul><ul><ul><li>SING over-production </li></ul></ul></ul><ul><ul><ul><li>VIKI under-production </li></ul></ul></ul>
  17. 17. Inventory Management <ul><ul><li>Under-Produce or Over-Produce? </li></ul></ul><ul><ul><li>Best-Case Vs. Worst-Case Modeling </li></ul></ul>
  18. 18. Financial Focus <ul><li>Our key metrics - Net Contribution and ROI </li></ul><ul><li>R&D ROI > Net Contribution > Market Share > Revenues </li></ul><ul><li>The choice to not enter the Singles market was based on break-even analysis </li></ul><ul><li>Focus on Variable Costs vs. Fixed Costs </li></ul><ul><li>Keeping the Contribution as % of Sales at least constant is important in justifying additional marketing budget </li></ul><ul><li>Contribution Analysis vs. P&L </li></ul>
  19. 19. Conclusions <ul><li>Sleep with financial analyses under your pillow </li></ul><ul><li>Be the best critic of your product and know your competitors </li></ul><ul><li>Well-planned and controlled innovation = Competitive Edge </li></ul><ul><li>“ Strategic Focus” from the start to finish </li></ul><ul><li>“ Tactical Prowess” along the way </li></ul><ul><li>The right balance is most important </li></ul><ul><li>Finally – Its not a one-man show </li></ul>
  20. 20. There is no “I” in Team I <ul><ul><li>Lots of bloodshed but no mutinies </li></ul></ul><ul><ul><li>Three is not a crowd </li></ul></ul><ul><ul><li>Confront your issues upfront and early </li></ul></ul><ul><ul><li>Be open to new perspectives </li></ul></ul><ul><ul><li>Reward success </li></ul></ul>
  21. 21. Fini