BRANDMAPS

1
BRANDMAPS

• Spring 2000
• Competitive Marketing Strategy

2
Why simulation?

• Adult learning principle 1
• Adults learn best by doing (not by listening,
  seeing, or by reading).
• Non-destructive and low risk exercise
• Time compression
• Widely varying environmental conditions can be
  presented

3
How realistic is the simulation to real life?

• Quite realistic, but not perfect
• Need to adhere to some rules
• Underlying models based on academic research
• Some experimentation is possible

4
Overview

• Competitive team-based marketing exercise
• Real competition
• Process market feedback and learn
• Prepare marketing strategy and plan
• Implement and control direction
• Vaporware product sold through dealers

5
Management decisions

• Product design and positioning
• Product line management
• multiple brands
• multiple markets
• Pricing
• Communications
• advertising and promotions
• sales force
• Research and development
• Production

6
Decisions

• Extensive market research reports available
• Choose which reports to order
• Order special research
• Need to balance broad strategies and trends and
  market/financial analysis and details

7
Inputs

• Advertising - budget, media content, media mix
• Dealer rebate
• Price
• Order market research
• Plant capacity
• Product formulation
• Production (units)
• Promotion budget and type
• Research and development
• Sales force management - commission, salary,
  size, allocation

8
Outputs

• Firm wide performance
• Debt-equity ratio
• Market share
• Net income
• Operating efficiency
• Return on assets
• Return on investment
• Revenue
• Sales volume

9
Outputs

• Product specific performance
• Brand quality rating
• brand satisfaction ratings
• Customer awareness
• Dealer availability
• dealer promotion
• Product preference
• Revenue, sales volume and net income
• perception of products
• share

10
Logistics

• Every Friday
• Teams to submit decisions on a floppy to Sharon
  (responsibility of team captain)
• Every Saturday (in class)
• Teams to receive previous quarters financial and
  marketing research results
• Review and analysis of results

11
Themes you will learn

• Interrelationship between strategy and tactics
• Need to plan - at a detailed level
• Coordination of marketing programs and operations
  capabilities
• Importance of positioning and product design
• Balancing all marketing mix
• competitive and market analysis
• Information management

12
Objective

• To win the Competitive Marketing Strategy game
• Market Share
• Profits
• New product launch success
• New market development success
• By Design, not Luck !

13
Product Category

• Vaporware - durable, capital good
• Used in industry and consumer settings
• Mature category
• Five raw materials
• Syntech (1-99) Compatibility1-9 pt scale
• Plumbo (1-99)
• Glomp (1-99)
• Trimicro (1-99)
• Fralange (5) Warranty 1-9 pt scale
• Typical Product specification
• 40/6/14/15/5/5/5
• SPGT should be between 70 and 195.

14
Competitive conditions

• Six firms competing in the industry.
• All firms start with identical products and
  financial positions.
• Four markets open at the current time. Each
  market may have different needs.
• In future, more markets may be opened.

15

• Every firm may have 3 brands - or formulations
• Start with 4 markets. Later can go upto 6
  markets.

16
Market Demand

• There is seasonality. Winter (quarter 1) has low
  demand by 20-30 relative to the summer quarter.
• Demand is a function of the population, GNP, and
  competitors actions.
• Customers tradeoff product design
  characteristics, price, and product quality.
• Customers perceptions and beliefs about the
  brands influence their choice.

17
Markets

• Four markets
• Study their market research reports to understand
  the demographic profile of the markets.
• Common currency
• Use information in the simulation - Europe may
  not resemble European markets in real life.

18
Law

• Anti-trust and anti competitive behavior is
  illegal.
• No price fixing.
• No discussion of company strategies with
  competitors.

19
Patent laws

• Closeness sum of absolute difference between
  attributes (7) of two products
• Closeness should be greater than 7.
• If a firm bids more and gets a reformulation, it
  has a patent zone of 25. Other products should be
  farther. Each quarter the patent zone will
  decrease by 3 till it reaches 7.

20

• One reformulation per quarter
• Costs - 500,000 for minor (1-5 pts) and 2.5
  million for major reformulation (gt5 pts)
• Can submit 3 formulations each quarter.
• Bid high to get first priority.