The Marketing Game Simulation Semester Wrap-up

Simulation Details Decisions you made in various aspects influenced the outcome of the model. The following is a brief description of how some of the variables influenced the game.

Product Features The closer your product features were to a segment’s ideal point…  the higher your share for a segment relative to competitors that were not as close.  the higher the demand for that segment.

Distribution Intensity The ideal level of intensity depends on the other marketing mix variables. If you set the intensity too high for the size of your salesforce, they became overworked and less effective. Intensity set too low leads to wasted spending efforts on personal selling. Finally, the greater the intensity relative to competition, the stronger the channel “push”.

Customer Service Influences both market share and category demand. There is an expected customer service amount based on unit sales. Actual customer service spending versus expected customer service gives a ratio. Lower ratios cause sales and market share to drop. As an industry’s ratio increase, it’s sales increase (when the 2 nd product was introduced, spending in this category was split for some firms, causing the customer service ratio to drop and product 1 sales to decline).

Advertising Spending Ad spending improves brand awareness and increases category growth. Ad spending is relative so increased spending by all firms leads to a lack of INCREASED awareness. There is a saturation point for ad spending beyond which there is very little increased effect on sales and category demand.

Advertising Type Pioneering creates category demand. Direct Competitive increases current ad effectiveness for the firm, but has very little carryover influence on the firm. Indirect Competitive increases current ad effectiveness for the firm (but less so than direct), and there is more carryover effect. Reminder is only effective when brand awareness is above 50%. Corporate is useful for a firm with two products.

Number of Sales Reps The number much be managed against the distribution intensity amount. It requires an increasingly larger number of sales reps to support the effort in channel 1 than in channel 2. New sales reps are not as effective in selling, they are penalized by 20% to account for training.

Other Selling Variables Percent of Non-Selling Time  Increasing the non-selling time means obviously the salespeople spend less time selling, but it also improves the dealer satisfaction.  Dealer satisfaction is particularly important in channel 1. Commission Rate  If your firm has a higher commission rate than other firms, your salespeople will work harder than theirs. Sales Promotion Expenditures  Sales promotions reduce the retail price of the product.  Sales promotions also build goodwill and increase the dealer’s satisfaction. This point is also influenced by the level of distribution intensity.  These are relative to other firms, meaning equal spending cancels out any goodwill effects.

Market Research Reports Report 4 – Marketing Effectiveness Report provides data on the relative position of the issues just discussed. In my opinion, this would be the best report to purchase each time. It is essentially your report card. Reports 3 and 7 are useful to identify where the target segments are and how well you are reaching them. Report 6 tells you where the segments shop (it shouldn’t change much over time ) Reports 1, 2, and 5 provide you with industry level (1 and 2) or firm level (5) sales by segment (probably don’t need each every period)

Production Quantity Critical for success. There were multiple times during the game that a firm’s net contribution was negative mostly due to overproduction. The penalty for overproduction in these instances was huge for the next quarter’s budget. INDUSTRY quantities could be estimated pretty closely given the right research information, but the question of each firm’s share must also be answered.

Market Segment Ideal Points – Product 1 Segment:CommandsError Protection Ease of Learning Price Students11 (-.2)3 (+.2) $145 (+2) Home94 (+.2)8$165 Assistants1288$250 (-2) Creators14 (+.3)24$260 (+3) Managers1663 (+.3)$300 (-2) Parents63 (+.1)9 (-.1)$180

Market Segment Ideal Points – Product 2 Segment:TasksCommand Similarity Ease of Customize Price Students263$145 (-2) Home85 (-.1)5 (+.1)$210 Assistants4 (+.2)79$225 (+2) Creators937 (+.1)$240 Managers6 (-.1)86$200 Parents1101$175 (-3)

Initial Unit Sales and Growth Rates by Segment – Product 1 Segment:Initial Sales P1P2P3P4P5P6P7P8P9P10 Students20, Home15, Assistant25, Creators10, Managers22, Parents8,

Initial Unit Sales and Growth Rate by Segment – Product 2 Segment:Initial Sales P6P7P8P9P10 StudentsTBD HomeTBD88877 AssistantTBD CreatorsTBD55554 ManagersTBD ParentsTBD55050