1. Cluster BSBMKG502A & BSBSBM403A Marketing – Simulation © John Loftus

2. Contents – week 12 BSBMKG502A Introduction to marketing simulation –Planning framework –Decision variables –Market research –Performance monitoring –Player tutorialPlayer tutorial © John Loftus

3. Bike-world industry background RCC MTC ManufacturersDistributorsConsumers Road Mountain Youth Bike shops Sport shops Discount stores © John Loftus

4. Planning Framework © John Loftus 1. Bike-world industry background Annual turnover of $50m Two manufacturers competing with equal market share “Real Cool Cycles” and “Mountain Top Cycles” Three channels of distribution -Bike shops -Sports stores -Discount stores - Three market segments -Sport - mountain bikes ($24m) -Tour and commute - road bikes (12m) -Youth – fun ($14m)

5. Planning Framework © John Loftus 2. Mission: Delight customers with a brand of reliable bikes 3. Organisation Objective: Build shareholder value to $10m in 3 years 4. Marketing objective: Build brand image for sustainable profit 5. Task: Develop and implement a marketing strategy for “Real Cool Cycles”

6. Planning Framework © John Loftus 6. External analysis 7.PEST political promotion of healthy life-style; strong economy and disposable income; social trend towards exercise; technology enables reliable bike at lower cost. 8.Buyers want a bike for specific purpose 9.Market segments: Road, Mountain, Youth 10. Competition: (see positioning map) 11. Target markets: Road (strong brand high quality) Mountain (strong brand)

7. Positioning Road Mountain RCC & MTC © John Loftus Style 020406080100 Technical Youth

8. Planning Framework © John Loftus 12Internal analysis 13Existing target market is the Mountain bike 14 Product is similar to competition and almost meets segment needs. 15Channels: bike shops, sports, discounters 16 Communication: TV, Newspaper, Magazines, Publicity 17Pricing is $550 (same as competition) 18Mix synergy works for the Mountain segment

9. Planning Framework © John Loftus 19Analysis mapping 20 Opportunities: Niche in Road segment is price inelastic and suited for strong brand building 21Threats: competition in segment 22Strengths: Strong Marketing skills 23Weaknesses: Finance and production planning

10. Planning Framework © John Loftus 24Analysis alternative strategies 25Option 1: Expand into Road segment 26Option 2: Expand into Youth segment 27 Option 3: Expand into Road and Youth segments

11. Planning Framework © John Loftus 28Select marketing strategy 29Targeting : Road + Mountain segments 30 Product: New road bike to match buyer preferences; Improved mountain bike with cost reduction 31Place: mainly through bike and sports shops 32 Promotion: Magazines = $80,000; Newspaper = $10,000; TV = $40,000 33Price: Road $2,000; Mountain $550 34Break-even analysis (see simulation report)

12. Decision variables Market segment forecasts Product design specifications Price – recommended retail and margin Advertising > TV, newspaper, magazine Public relations > TV, newspaper, magazine Brand building Production planning Distribution support Capacity, efficiency, and quality plan © John Loftus

13. Market research Market size estimates Price range acceptable to segments Product elasticity of demand Product design consumer preferences Media viewing habits Distributor penetration Debt to Equity ratio © John Loftus

14. Performance monitoring Shareholder value Market price Income statement Balance sheet Market share Awareness Distribution Innovation, design, quality, Efficiency © John Loftus