1. M A R K E T I N G M A N A G E M E N T Course Overview The Capstone Simulation Structure & Assignments Expectations & Grading University of Alaska-Anchorage College of Business & Public Policy Marketing Management- Semester 1 * 2008

2. M A R K E T I N G M A N A G E M E N T Professor Ed Forrest Telephone: –(O)786-4161 –(H) 694-4674 Email : –EdwardF@cbpp.uaa.alaska.eduEdwardF@cbpp.uaa.alaska.edu W3site : http://www.cbpp.uaa.alaska.edu/afef/ http://www.cbpp.uaa.alaska.edu/afef/

3. M A R K E T I N G M A N A G E M E N T After Graduation?

4. M A R K E T I N G M A N A G E M E N T What JOB?

5. M A R K E T I N G M A N A G E M E N T BA460 Gerbil Studies Philosophy Research History A c B A A Do Poorly in this course and ….

6. M A R K E T I N G M A N A G E M E N T “Yeah- she’s the one who got a C in BA460”

7. M A R K E T I N G M A N A G E M E N T To date -your “study” of marketing has been piece-meal and in isolation!

8. M A R K E T I N G M A N A G E M E N T OVERARCHING COURSE OBJECTIVE To “call-upon,” integrate & apply all the marketing, finance & business knowledge you have accrued to date!

9. M A R K E T I N G M A N A G E M E N T Course Format

10. M A R K E T I N G M A N A G E M E N T Lecture-Learning ‘ Find-Facts Store Facts Spit facts ‘ Find-Facts Store Facts Spit facts Superficial short-term knowledge Superficial short-term knowledge

11. M A R K E T I N G M A N A G E M E N T Ultimately- Real Learning Occurs Not from parroting information gleaned from books & lectures! ….But from the consequences of your own actions

12. M A R K E T I N G M A N A G E M E N T

13. M A R K E T I N G M A N A G E M E N T Course Format Capstone Business Simulation

14. M A R K E T I N G M A N A G E M E N T THE CAPSTONE SIMULATION Adopted by major Fortune 500 companies - General Motors, General Electric, Honeywell, Dell, John Deere, Citibank, Microsoft, Alcoa, BP, Allstate, Samsung, Goldman Sachs… Used by 100’s of colleges around the world w/ ~50,000 students/semester Most widely used Business – Simulation Program in the World

15. M A R K E T I N G M A N A G E M E N T ? And How Have We Fared in this World- Wide Competition?

16. M A R K E T I N G M A N A G E M E N T 2001 Top Ten Teams, World-Wide, for Round 8 Top Ten Teams, World-Wide, for Round 8 by success measurement There are currently 940 active teams that have played Round 8. For a team to make this list: Cumulative Profits above 0 Overall Market Share (in dollars) greater then 5.0% Asset Turnover less then 8.0 Profit for Round 8 Round 8 - Mean - $ 25,324,003 Top Ten Active Teams Professor School/Course Simid Team Value 1 Dr. Minu Afza College of Business - Bloomsburg University 93 481 Business Policy & Strategy CAP1742 Digby $ 238,235,245 2 Mr. Bill Gardner Penn State University -Fayette Campus Contemporary Business Seminar CAP1513 Andrews $ 193,853,427 3 Dawn DeTienne University of Colorado at Boulder Senior Seminar CAP1656 Andrews $ 184,258,599 4 Prof. Howard Feldman University of Portland Managerial Decisions and Policy-Undergrad B CAP1787 Erie $ 181,422,390 5 Dr. Ed Forrest University of Alaska Marketing Management CAP1611 Baldwin $ 163,281,864 6 Dr. Eric Wiseman University of Colorado at Boulder Business Senior Seminar CAP1818 Chester $ 157,930,382 7 Dr. Murrow Drury College Strategy and Policy Formulation CAP1838 Erie $ 149,235,238 8 Dr. Pettus Millikin University Business Policy CAP1748 Baldwin $ 147,967,873 9 Doug Mayer Hartwick College Management VII-secA CAP1811 Digby $ 137,339,216 10 Dr. Bruce A. Schooling Point Loma Nazarene University Strategic Management CAP1794 Digby $ 121,289 5 th

17. M A R K E T I N G M A N A G E M E N T 2003 Top Ten Teams, World-Wide, for Round 8 For a team to make this list: Cumulative Profits above 0 Overall Market Share (in dollars) greater than 6% Asset Turnover less then 8.0 Your class was ranked: with 711 Capstone ® teams completing round 8 by Apr 12, 2003. teams per game of 6 Category: All URL: http://www.capsim.com/prof/viewtopten.cfm?round=8&simid=C4806&version=K Date/Time: 04/12/2003 10:07:35 eNote:http://www.capsim.com/prof/viewtopten.cfm?round=8&simid=C4806&version=K Text: Cumulative Profit for Round 8 - Mean - $ 125,355,000 Top Ten Active Teams Professor School/Course Simid Team Value 1 natalie marsh Strayer University Business Policy & Strategic Planning C4779 Baldwin $ 459,411,986 2 John Hall University of Florida Global Strategic Management I2MBA 2002 C4923 Baldwin $ 386,472,583 3 natalie marsh Strayer University Senior Seminar - Business Administration C4778 Erie $ 382,697,422 4 Peter Stanwick Auburn University Strategic Management C5095 Chester $ 353,185,127 5 John Pearce Villanova University Policy Administration C5033 Ferris $ 348,535,130 6 Gavin Fox Georgia Southern University BUSINESS SIMULATION C5041 Digby $ 343,761,703 7 Shirley Schooley Birmingham-Southern College Strategic Management Senior Project Course Sec B C5356 Digby $ 341,865,002 8 natalie marsh Strayer University Senior Seminar - Business Administration C4778 Ferris $ 339,568,171 9 Edward Forrest University of Alaska Marketing Management C4806 Chester $ 333,620,198 10 Donald Kreps Kutztown University mba capstone C4797 Digby $ 327,188,363 9 th

18. M A R K E T I N G M A N A G E M E N T 2005 - # 1

19. M A R K E T I N G M A N A G E M E N T 2006- 5 th

20. M A R K E T I N G M A N A G E M E N T and 8 th

21. M A R K E T I N G M A N A G E M E N T Last Year 3 rd

22. M A R K E T I N G M A N A G E M E N T

23. SHAKE UP IN SENSOR INDUSTRY Management Teams Fired “After poor results, lackluster sales and angry customer reports……….. New dynamic leadership teams needed to take industry into the future!”

24. M A R K E T I N G M A N A G E M E N T YOUR HIRED!

25. M A R K E T I N G M A N A G E M E N T You Da’ Boss of ~ $100m Corporation

26. M A R K E T I N G M A N A G E M E N T Your Product Line: SENSORS:

27. SENSOR INDUSTRY ANALYST PROJECT ONGOING GROWTH Sees the next 8 years as consistent growth. All market segments increase at a nice “clip,” according to market analyst. “I see the entire market growing at around 14% or 15% per year. The High Tech market alone will be growing at a whopping 16%.” I hope those companies out there are ready for that kind of expansion!”

28. M A R K E T I N G M A N A G E M E N T YOUR JOB Take on key management positions w/in your corporation Make the myriad of intertwined decisions necessary to create, produce & successfully market your products… Take on key management positions w/in your corporation Make the myriad of intertwined decisions necessary to create, produce & successfully market your products…

29. M A R K E T I N G M A N A G E M E N T You will engage in: Marketplace analysis – incl: situation analysis, competitor analysis, SWOT analysis & performance assessment. Strategic planning – develop your corp. mission, vision, core competencies & competitive advantage Cross functional integration – of Marketing w/ R&D, Production, HR & Finance Tactical execution of your decisions - measured against competitors– in class & worldwide… Marketplace analysis – incl: situation analysis, competitor analysis, SWOT analysis & performance assessment. Strategic planning – develop your corp. mission, vision, core competencies & competitive advantage Cross functional integration – of Marketing w/ R&D, Production, HR & Finance Tactical execution of your decisions - measured against competitors– in class & worldwide…

30. M A R K E T I N G M A N A G E M E N T The Big Picture C ompanyC ompany C onsumersC onsumers C ompetitorsC ompetitors C onditionsC onditions PEST PEST Growth & Competitive Strategies Finance HR Production R&D Marketing Functional Integration  Profits  Mrkt Share  ROA  ROS  ROE  Asset T/O  Stock  Mrkt Cap Situation/SWOT Analysis Strategic Planning Functional Integration Performance Assessment

31. M A R K E T I N G M A N A G E M E N T You are completely responsible for: Planning, implementing & controlling your marketing strategy Target & Position ProductPlace Promotion Price

32. M A R K E T I N G M A N A G E M E N T The Key Lesson for Marketing Majors In order to successfully execute your marketing decisions/strategy… you must be in alignment w/ every decision made in every other contributing component of the corp./organization

33. M A R K E T I N G M A N A G E M E N T Must Coordinate Decisions w/ all Functional Areas Marketing Production Finance R&D HR

34. R&D-re: Product Development Quality Positioning Marketing Must Coordinate w/: Marketing Production Finance R&D HR

35. Production- re: Buy or sell capacity Market segment growth- Buy or sell capacity Schedule production Sales forecasts- Schedule production Marketing Must Coordinate w/: Marketing Production Finance R&D HR

36. HR- re: Levels of personnel training & support Marketing Must Coordinate w/: Marketing Production Finance R&D HR

37. Finance-re: Overall projections of sales, margins & profits Marketing Must Coordinate w/: Marketing Production Finance R&D HR

38. Marketing Manager must become one- w/ Relationships betw Price & demand Price & margin Promotion budget & awareness Sales budget & accessibility A/R policy & demand Price & demand Price & margin Promotion budget & awareness Sales budget & accessibility A/R policy & demand

39. MARKETING MANAGERS SIMULATION SPREADSHEET

40. Build customer awareness through promotion Establish a sales force and distribution channels Set price of your products in the marketplace Set Credit Policies AR/AP Set the sales forecast for our products

41. Marketing also selects media vehicles & message weights AND determines composition of sales/distribution staff..and allocation of their efforts by segment & Brand

42. R&D MANAGERS SIMULATION SPREADSHEET

43. Establish product positioning to meet customer demand Build quality & reliability (MTBF) into products Ensure age of product meets customer demands Create new products

44. PRODUCTION MANAGERS SIMULATION SPREADSHEET

45. Establish your workforce complement Buy or sell capacity of product lines Purchase machinery to automate our facilities Schedule production for each line

46. M A R K E T I N G M A N A G E M E N T Human Resource Managers Responsible for: Recruitment, Hiring, Training & Firing of all labor Recruitment, Hiring, Training & Firing of all labor 2 groups: 2 groups: – Assemblers – Technicians Wages Wages Benefits Benefits

47. SIMULATION SPREADSHEET

50. M A R K E T I N G M A N A G E M E N T Acquire Capital Acquire Capital –Issue Stock –Short Term Debt –Issue Long Term Bonds Set Dividend Set Dividend Retire Long Term Bonds Retire Long Term Bonds Retire Stock Retire Stock Responsible for Emergency LoansResponsible for Emergency Loans Big AL The Loan Shark Finance Managers Responsibilities:

51. M A R K E T I N G M A N A G E M E N T FINANCIAL MANAGERS SIMULATION SPREADSHEET

53. BA460 Marketing Management Spring 2008

54. 1 st Reorganize Company: & Re-allocate responsibilities: Marketing Production R&D Finance HR

55. M A R K E T I N G M A N A G E M E N T 3 Co- CEO’s

56. M A R K E T I N G M A N A G E M E N T Incorporate- register w/ your assigned Capstone : Sim ID#’s: Incorporate- register w/ your assigned Capstone : Sim ID#’s: C23256 or C23257

57. M A R K E T I N G M A N A G E M E N T Begin Business Plan R&D  Capstone-Developing a Business PlanCapstone-Developing a Business Plan  SBA-Writing a Business PlanSBA-Writing a Business Plan  Business Plan Software, Samples, and StrategyBusiness Plan Software, Samples, and Strategy  Center for Business Planning Center for Business Planning

58. M A R K E T I N G M A N A G E M E N T (I) Mission & Vision Statement (II) Situation Analysis Market Structure: Consumer Segments & Product Attribute Preferences Consumer Pricing & Positioning Expectations Consumer Demand Company Situation Financials Production Marketing (III) SWOT Analysis (IV) Strategic Planning Growth & Competitive Strategies Functional Strategy – Objectives & Tactics Marketing Production Financial (V) Tactical Decisions FY2009 ……….

59. Situation & SWOT Analysis C onsumer C ompany C ompetitors C onditions Initial Situation Step # 1

60. Situation Analysis Team Member Guide- Chapter 4 Help > Managers Guide > Situation Analysis

61. Situation Analysis Goals: 1. Discern marketplace dynamics 2. Calculate base info necessary for strategy development 3. Become familiar w/ The Capstone Courier 1. Discern marketplace dynamics 2. Calculate base info necessary for strategy development 3. Become familiar w/ The Capstone Courier

62. To Do List: Download starting conditions … Open Capstone.xls -- print Capstone Courier & Annual Report. Begin your Analysis of the Situation Download starting conditions … Open Capstone.xls -- print Capstone Courier & Annual Report. Begin your Analysis of the Situation

63. Situation Analysis Strategic Planning C ompanyC ompany C onsumersC onsumers C ompetitorsC ompetitors C onditionsC onditions PEST PEST The Marketing Mix: Marketing Strategy P’s Growth & Competitive Strategies

64. Company Competitors Economic Analysis (margins,, profitability, Fin. Structure) Company, goals, resources- production, HR…) Economic Analysis (margins,, profitability, Fin. Structure) Company, goals, resources- production, HR…) Customers Market Potential (size, growth rate) Customer Behavior (needs & wants/ segmentation, price sensitivity) Market Potential (size, growth rate) Customer Behavior (needs & wants/ segmentation, price sensitivity) Conditions Political Economic Socio-cultural Technological Political Economic Socio-cultural Technological Industry Structure Analysis (entry/exit barriers, buyers, sellers, substitutes) Competitor Response Profiles (capabilities, current and future actions) Industry Structure Analysis (entry/exit barriers, buyers, sellers, substitutes) Competitor Response Profiles (capabilities, current and future actions)

65. M A N A G E M E N T M A R K E T I N G SWOT Analysis Identifies: ©South-Western College Publishing S S W W O O T T Things the company does well. Things the company does not do well. Conditions in the external environment that favor strengths. Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness. Internal External

66. Specifically…determine  Strengths & weaknesses w/in & across all functional areas; Profile of current product portfolio…  How market is segmented; relevant factors that influence consumer demand & purchasing decisions  Your competitors relative market positions..  Macro-E considerations especially technological trends … C onsumer C ompany C ompetitors C onditions

67. Portfolio Analysis Which Brands should receive more/ less/ no investment-Based on:  Product Position/ Potential  Profitability/ Margins  Market- Growth/Market- Share Matrix Which Brands should receive more/ less/ no investment-Based on:  Product Position/ Potential  Profitability/ Margins  Market- Growth/Market- Share Matrix

68. Boston Consulting Group’s Growth-Share Matrix High Relative Market Share HighLow LowDOGS CASH COWS Product-Market Growth (%) STARS PROBLEMCHILD 10x 4x 2x 1.5x 1x.5x.2x.1x

69. Capstone Exercises Key Questions Answered Perceptual Map How technology will reshape customer expectations over next eight years Demand & Capacity Analysis How demand will increase & impact your investments in Capacity Consumer Report How customers perceive you …and your competitors Situation Analysis Guides: Margins Working Capital Financial Structure Financial Structure Wealth Creation Productivity Customer Satisfaction Customer Satisfaction Situation Analysis - Resources

70. Capstone Exercises Key Questions Answered Perceptual Map How technology will reshape customer expectations over next eight years Demand & Capacity Analysis How demand will increase & impact your investments in Capacity Consumer Report How customers perceive you …and your competitors

71. 5 4 2 3 1 Performance PERCEPTUAL MAP Drift Demonstration

72. Cheaper too-$.50 drop in price/year

73. PERCEPTUAL MAP Plot the drift of each segment circle as simulation proceeds thru 8 rounds ("Fine Cut" circles have a radius of 2.5 units, "Rough Cut" circles have a radius of 4 units)

74. Capstone Exercises Key Questions Answered Perceptual Map How technology will reshape customer expectations over next eight years Demand & Capacity Analysis How demand will increase & impact your investments in Capacity Consumer Report How customers perceive you …and your competitors

75. Key Demand Consideration: Overall market growing @ ~ 14%/yr “Average” company should/could double - sales in 6 years Key Capacity Consideration:

76.  This analysis examines growth of customer demand as simulation proceeds thru 8 rounds.  For this exercise you need the Market Segment Analysis pages (pages 5 - 9) of The Capstone Courier- Round 0  W/in Segment Statistics-Use the Industry Unit Demand - top left corner DEMAND ANALYSIS

78. Demand Analysis 7387 7387 X 1.092=8067 Page 30 TMG Traditional Statistics Total Industry Unit Demand 7,387 Actual Industry Unit Sales 7,387 Segment % of Total Industry 32.4% Growth Rate 9.2% Page 5 capstone Courier

79. CAPACITY ANALYSIS This exercise requires the Production Analysis (page 4) of The Capstone Courier. The analysis asks:  What Would it Cost to Double Capacity;  What Would it Cost to Maximize Automation?

80. CAPACITY ANALYSIS To successfully manage your company-- need to know the cost of increasing the number-of- units you can manufacture. Need to decide how best to increase output: 1. Increase manufacturing capacity; or 2. Increase automation (which allows you to profitably run a line on overtime ).

81. CAPACITY ANALYSIS #units * ($4 *( 10 - Current Auto-level)= Cost CostDC= (# unitsDC) * ($6 Floor + $4 autopt *Auto-level) (X 6) 4 $39.6m $43.2m

82. INTERNAL EXTERNAL S T O W What are the S & W’s w/ respect to your company’s production lines capacities & efficiencies What are the O & T’s w/ respect the nature, direction and magnitude of consumer demand

83. Capstone Exercises Key Questions Answered Perceptual Map How technology will reshape customer expectations over next eight years Demand & Capacity Analysis How demand will increase & impact your investments in Capacity Consumer Report How customers perceive you …and your competitors

84. Your Consumers

85. Consumer Buying Criteria Determinant Attributes

86. Strive to meet customers preferences on top two criteria Don’t spend limited resources (time & $) meeting lesser concerns KEY POINT

87. Traditional customers seek proven products using current technology Low End customers seek old, simple & cheap tech. High End customers seek cutting-edge sensors in both size & performance Performance customers seek advanced tech., w/ high reliability & performance Size customers seek advanced sensors that focus on small size

88. INTERNAL EXTERNAL S T O W

91. Evaluation Scheme: AttributePoorFairGood PriceTop1/3Mid1/3Bttm1/3 ReliabilityBttm1/3Mid1/3Top1/3 Age+1yr.6-1yr~.5yrs Position+1.5 units.6-1.5w/in.5 Awarenes s <50%50-80%80%+ Access<50%50-80%80%+ OverallHow RateOn Top 2 Attributes Customer Satisfaction

92. INTERNAL EXTERNAL S T O W From results… can determine Strengths & Weaknesses of current marketing mix: Product - Product - Positioning; age & quality (reliability)-- Current levels of support w/ respect to: Promotion Promotion Distribution Distribution (accessibility) Pricing - Pricing - policy/competitiveness

93. December Survey… Compare your results w/ the December Survey… Wherein: <25 = Poor 26-50= Fair 50+ = Good Evaluation results Classifications:

94. Finally-evaluate your Current Financial Structure and levels of success

95. Key Measures Key Measures  Cumulative Profits  Market Share  ROA  ROS  ROE  Asset Turnover  Stock Price  Market Capitalization

96. M A R K E T I N G M A N A G E M E N T Questions ?