Final Markstrat Marketing Plan
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Transcript of Final Markstrat Marketing Plan
1
VULCAN ILea Iseli
Liz Quezada
Kendall Scheele
Kristine Spencer
Allison Stokes
2
SONITE INDUSTRY ANALYSIS
MARKET SEGMENT SIZE
3
The price insensitive segments that we originally targeted (High Earners, Buffs) now pale in comparison to our newest targeted segments that are more price sensitive (Others, Singles).
MARKET SEGMENT GROWTH
4
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 100
500
1000
1500
2000
2500
BuffsSinglesProfessionalsHigh EarnersOthers Cumulative
Singles segment size started out small but then grew significantly. High-Earners, Professionals and Buffs remained constant throughout the simulation. The Others segment surpassed exponentially in comparison to the growth of the other market segments.
AVERAGE MARKET PRICE BY SEGMENT
5
Each team tried to set their price at the ideal point for each segment; in the Vulcan industry, almost every segment had around 4 products huddled around each ideal point, making it very competitive. These average market prices therefore reflect the ideal price by segment.
6
INTERNAL ANALYSIS
7
FIRM I TOTAL COSTS
Our advertising costs (both research and media budget) accounted for the largest portion of our total costs. Sales Force was a consistent expenditure, while R&D expenditures varied greatly throughout the ten periods.
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
Inventory holding costsInventory Disposal lossAdvertising MediaAdvertising ResearchSales ForceMarket Research StudiesR&D
8
As seen below, Advertising Expenditures (59%) and Sales Forces (18%) are the highest expenditure for the Sonite costs. Advertising Research Expenditures follows closely behind with 13%.
4% 0%
59%
13%
18%2%
4%
Inventory holding costsInventory Disposal lossAdvertising MediaAdvertising ResearchSales ForceMarket Research StudiesR&D
TOTAL CUMULATIVE FIRM I COSTS OVER 10 YEARS
TOTAL SONITE COSTS
9
These are our costs broken down for just the Sonite industry, in which the advertising media budget was the largest expenditure.
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
0
2000
4000
6000
8000
10000
12000
14000
16000
Inventory holding costsInventory Disposal lossAdvertising MediaAdvertising ResearchSales ForceMarket Research StudiesR&D
10
5%0%
57%
6%
18%
3%11%
Inventory holding costsInventory Disposal lossAdvertising MediaAdvertising ResearchSales ForceMarket Research StudiesR&D
TOTAL CUMULATIVE FIRM I SONITE COSTS OVER 10 YEARS
FIRM I GROWTH SHARE MATRIX, YEAR 10
11
Our Sonite matrix has a good mix of new stars and diminishing cash cows. This should be a continual cycle, where the cash cows provide resources for the up and coming problem children and stars. SISI is our largest star, and will likely remain so for at least the next few periods. SITO will soon be a star due to increase in advertising budget that we have suggested. SIDE, once our largest cash cow, has shifted quadrants and is now a dog; SIDE should be modified in order to start the cycle all over again.
12
SIDE PROFIT MARGINSRetail Price Distributor margin UTC Cont. Before Marketing (Adverting $/ product) Contribution af ter Marketing
Year 1 495 0.35 166 155.75 12.97$ 142.78$ year 2 495 0.35 146 175.75 8.68$ 167.07$ year 3 495 0.35 132 189.75 6.41$ 183.34$ year 4 495 0.35 126 195.75 8.79$ 186.96$ year 5 495 0.35 126 195.75 10.15$ 185.60$ year 6 495 0.35 128 193.75 10.63$ 183.12$ year 7 525 0.35 131 210.25 14.05$ 196.20$ year 8 525 0.35 132 209.25 15.03$ 194.22$ year 9 540 0.35 132 219 16.75$ 202.25$
year 10 545 0.35 133 221.25 19.69$ 201.56$
13
SIGH PROFIT MARGINS
Retail Price Distributor margin (35%) UTC Contribution Before Marketing(Adverting $/product)Contribution after Marketing
Year 1 540 0.35 205 146 35.79$ 110.21$
year 2 520 0.35 198 140 29.06$ 110.94$
year 3 380 0.35 194 53 16.01$ 36.99$
year 4 330 0.35 181 33.5 23.04$ 10.46$
year 5 330 0.35 177 37.5 28.52$ 8.98$
year 6 330 0.35 176 38.5 14.00$ 24.50$
year 7 360 0.35 178 56 8.35$ 47.65$
14
SISI PROFIT MARGINS
Retail PriceDistributor margin (35%) UTC Contribution Before Marketing (Adverting $/product)Contribution after Marketingyear 4 340 0.35 165 56 25.00$ 31.00$ year 5 335 0.35 121 96.75 11.16$ 85.59$ year 6 335 0.35 105 112.75 12.17$ 100.58$ year 7 335 0.35 101 116.75 11.16$ 105.59$ year 8 350 0.35 97 130.5 14.48$ 116.02$ year 9 350 0.35 80 147.5 10.23$ 137.27$
15
SIPR PROFIT MARGINS
Retail Price Distributor margin (35%) UTC Contribution Before Marketing (Adverting $/product) Contribution after Marketingyear 4 385 0.35 196 54.25 29.98$ 24.27$ year 5 385 0.35 150 100.25 23.31$ 76.94$ year 6 383 0.35 149 99.95 20.16$ 79.79$ year 7 375 0.35 146 97.75 26.77$ 70.98$ year 8 405 0.35 149 114.25 -$ 114.25$
16
SITO PROFIT MARGINS
Retail Price Distributor margin (35%) UTC Contribution Before Marketing (Adverting $/product) Contribution after Marketingyear 7 235 0.35 85 67.75 18.40$ 49.35$ year 8 235 0.35 72 80.75 11.16$ 69.59$ year 9 235 0.35 64 88.75 10.70$ 78.05$
17
EXTERNAL ANALYSIS
18
COMPETITIVE ADVERTISING BY SEGMENTYEAR 10
SELL SEXY SIDE SISI SOAP SAKE SEXY SIDE SELL SEPS SISI SOAP SELL SISI SOAP SECT SITOBuffs: HI: PR: SI: OT:
0
500
1000
1500
2000
2500
3000
3500
Competitive Advertising
$K
These are the advertising expenditures for the top performers in each segment. As you can see, our main advertising competitor was firm E, and we were constantly trying to meet or exceed their advertising dollars in order to gain the largest share of voice.
19
DISTRIBUTION COVERAGE YEAR 10
SIDE SISI SITO SELL SEXY SEPS SECT SAKE SAVE SOAP SOLOI E A O
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Specialty StoresDepartment StoresMass Merchandisers
We have steadily increased our sales force throughout the simulation. Our main objective was to raise our distribution coverage in order to increase our sales. Our strategy has shifted from a focus on specialty stores and department stores to a more even distribution in all three channels following the growing popularity of the mass merchandisers channel.
20
COMPETITOR ANALYSIS
TOTAL SONITE MARKET SHARE
21Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Team ATeam ETeam ITeam O
Here are the total Sonite market share from period 0-10. Our market dipped from years 6-8, but we were able to recover our first place position.
SONITE RETAIL SALE (K$)
22
Due to not capturing as much market share as we had expected in periods 6-8, our sales fell accordingly. However, we were able to gain back the lost sales and end ahead of firm E.
TOTAL CUMULATIVE SONITE RETAIL SALES (K$)
23Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
Team ATeam ETeam ITeam O
Our firm had by far the highest cumulative Sonite sales. This is in partly due to our strong initial position in the industry and our continued momentum.
24
COMPETING BRANDS BY SEGMENT
BUFFS UNIT MARKET SHARES
25
We were once by far the highest leader of market share, but our withdrawal of our specifically positioned product, SIGH, accounted in the loss of our demanding lead. We decided to withdraw our product due to the decreasing growth of the segment and diminishing profitability. Due to a small allocation of advertising media budget from the popular brand SISI, we were able to hold our lead in the segment.
26
BUFFS
SELL SISI SIDE SOAP0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Distribution %
Specialty StoresDepartment StoresMass Merchandisers
% o
f D
istr
ibuti
on C
overa
ge b
y
Channel
37%
51%
7% 5%
Share of Voice
SELL
SISI
SIDE
SOAP
SELL SISI SIDE SOAP0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
Brand Awareness vs. Purchase Intentions
Brand AwarenessPurchase intentionsMarket Share by Segment
21%
28%
12%
11%
28%
Market Share
SELL
SISI
SIDE
SOAP
ALL OTHER BRANDS
Buffs is a highly fragmented segment due to the lack of profits available. We feel as though our budget from the brand SISI has a high return on investment due to our minimal investments and the relatively large market share, distribution, and brand awareness in the segment.
SINGLES UNIT MARKET SHARES
27
Singles was a market that we had set out to conquer, which we achieved. We were constantly updating our product SISI in order to reap the profits of this growing segment and cater to the Singles’ ideal points, which lead to the success of our product.
28
SINGLES
Spec
ialty
Sto
res
Depar
tmen
t Sto
res
Mass M
erch
andi
sers
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%
Distribution %
SISISOAPSELLAxis Title
Brand Awareness
Purchase intentions
Market Share by Segment
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Brand Awareness vs. Purchase Intentions
SISISOAPSELL48%
7%
44%
Share of Voice
SISI
SOAP
SELL
55%
11%
31%
4%
Market Share
SISI
SOAP
SELL
ALL OTHER BRANDS
SISI has the highest distribution %, purchase intentions and resulting market share. SISI is our new star product.
PROFESSIONALS UNIT MARKET SHARES
29
We initially sought out to target professionals, yet as we monitored the forecasts of the diminishing professional segment, we chose to back away from this segment. We abandoned our professionals product, SIPR, and essentially gave our market share to firm E who revealed a professionals product not long after.
30
PROFESSIONALS
SOAP SISI SEPS SELL0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Distribution %
Specialty StoresDepartment StoresMass Merchandisers
Brand
Awar
enes
s
Purc
hase
inte
ntio
ns
Marke
t Sha
re b
y Se
gmen
t0.0%
20.0%40.0%60.0%80.0%
Brand Awareness vs. Purchase Intentions
SOAP
SISI
SEPS
SELL
18%
27%47%
8%
Share of Voice
SOAPSISISEPSSELL
33%
20%32%
9% 5%
Market Share
SOAPSISISEPSSELLALL OTHER BRANDS
We still were able to carry a significant market share of professionals with our singles product, SISI, due to the merging ideal points of the two segments. This significantly reduced costs for our firm. We have the highest relative distribution %, as well as the highest brand awareness.
HIGH EARNERS UNIT MARKET SHARES
31
SIDE was our High Earners product for the duration of the simulation and was a steady source of significant income throughout. Our market share started to slowly decline due to increased competition from firms E and A, as well as the shifting of ideal points away from SIDE’s attributes.
32
HIGH EARNERS
Brand
Awar
enes
s
Purc
hase
inte
ntio
ns
Marke
t Sha
re b
y Se
gmen
t0.0%
20.0%40.0%60.0%80.0%
Brand Awareness vs. Purchase Intentions
SEXY
SIDE
SAKE
Spec
ialty
Sto
res
Depar
tmen
t Sto
res
Mass M
erch
andi
sers
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Distribution %
SEXYSIDESAKE
54%34%
12%Share of Voice
SEXY
SIDE
SAKE
42%
41%
16% 1%
Market Share
SEXY
SIDE
SAKE
ALL OTHER BRANDS
By year 10, the newly introduced SEXY had taken over the market. SEXY had attributes that were closer to the current ideal points of the High Earners segment, which increased their sales. Our product was no longer as attractive, hence the lower distribution %, purchase intentions, and market share.
OTHERS UNIT MARKET SHARES
33
We began by not targeting the Others segment at all, but due to the high projected growth, the segment became extremely attractive to us. We were able to deliver a product that was appealing to the Others. Yet due to E’s established presence in the segment, we were never able to surpass them. We did, however, become a strong competitor in the segment causing E’s market share to decline.
34
OTHERS
Brand
Awar
enes
s
Purc
hase
inte
ntio
ns
Marke
t Sha
re b
y Se
gmen
t0.0%
20.0%40.0%60.0%80.0%
Brand Awareness vs. Purchase Intentions
SAVESECTSITO
Spec
ialty
Sto
res
Depar
tmen
t Sto
res
Mass M
erch
andi
sers
0.0%10.0%20.0%30.0%40.0%50.0%60.0%
Distribution %
SAVESECTSITO
20%
33%
48%
Share of Voice
SAVE
SECT
SITO
10%
52%
36%
2%
Market Share
SAVE
SECT
SITO
ALL OTHER BRANDS
This product is relatively new, so we feel as though this product can still achieve more. We have lower purchase intentions than we had hoped, yet this product was very good for our company.
35
CHANNEL DISTRIBUTION BY FIRM
SONITE SPECIALTY STORE DISTRIBUTION
36
Through the duration of the simulation, we have had a focus toward specialty store distribution. Because of our initial focus on High Earners (SIDE) and Buffs (SIGH), we had strong distribution %’s from years 0-10.
SONITE DEPARTMENT STORE DISTRIBUTION
37
Our products that we introduced in the middle/end of the simulation relied more heavily on department store distribution, hence our efforts to increase our distribution %. Brands SISI, SITO, and SIPR were the brands that had a high presence in Department Stores.
SONITE MASS MERCHANDISER DISTRIBUTION
38
Our brands SISI and SITO relied heavily on sales from Mass Merchandisers. Although this channel was not our initial focus, we reassessed our strategy due to the increasing segments of Singles and Others, which have strong shopping habits in Mass Merchandisers.
39
VODITE: INDUSTRY ANALYSIS
40
VODITE AVERAGE MARKET PRICE BY SEGMENT
Many entrants in the Vodite market were not expecting the sudden and severe drop in pricing demands by the Innovators, Early Adopters, and especially the Followers. We fortunately had a strong enough product for the Followers, VIFA, that our product was successful and profitable. Our Innovator product, VINO, was not as successful as we had predicted due to the slower growth of the segment.
41
VODITE MARKET SIZES
The Followers were the most attractive segment in the industry in terms of size. We introduced ourselves into the Innovator segment, and by doing so were able to gain knowledge of the market. This was vital to the success of our Follower product, which was very profitable.
42
INTERNAL ANALYSIS
FIRM I VODITE COSTS
43
1 2 3 4 5 6 7 80
2000
4000
6000
8000
10000
12000
Inventory Holding CostsAdvertising ExpendituresSales Force Operating CostsMarket Research Research and Development
The initial investment to enter the Vodite industry was enormous, accounting for a large portion of our costs in the earlier years. Once our products were introduced and gained momentum, our cost structure began to reflect that of the Sonite industry, where advertising was our highest expenditure.
44
8%
48%
15%
4%
25%
Inventory Holding CostsAdvertising ExpendituresSales Force Operating CostsMarket Research Research and Development
TOTAL CUMULATIVE VODITE COSTS
Due to the large capital investment required for R&D, our cost structure is more heavily allocated toward R&D than it will be in a couple of years, when advertising costs will be even more dominant.
45
FIRM I VODITE GROWTH MATRIX: YEAR 10
VIFA is profitable and is a star; we have hopes that this product will remain a star for a number of periods, before slowly becoming a cash cow. VINO did not realize our expectations.
46
VINO PROFIT MARGINS
Retail Price Distributor margin (35%) UTC Contribution Before Marketing(Adverting $/product) Contribution after Marketingyear 5 485 0.35 273 42.25 24.41$ 17.84$ year 6 485 0.35 245 70.25 23.48$ 46.77$ year 7 465 0.35 255 47.25 18.51$ 28.74$ year 8 465 0.35 254 48.25 12.81$ 35.44$ year 9 455 0.35 253 42.75 17.64$ 25.11$ year 10 435 0.35 254 28.75 29.56$ (0.81)$
47
VIFA PROFIT MARGINS
Retail Price Distributor margin (35%) UTC Contribution Before Marketing (Adverting $/product) Contribution after Marketingyear 7 359 0.35 241 -7.65 39.34$ (46.99)$ year 8 359 0.35 214 19.35 13.96$ 5.39$ year 9 349 0.35 189 37.85 6.67$ 31.18$
year 10 347 0.35 176 49.55 5.63$ 43.92$
48
EXTERNAL ANALYSIS
49VEGY VINO VIFA VEGY VINO VIFA VANS VIFA VANS VACKInnovators Early Adopters Followers
0
500
1000
1500
2000
2500
3000
K$
COMPETITIVE ADVERTISING
Due to lack luster profits in the industry, most firms were unable to allocate a large advertising media budget toward their Vodites. As a result, the profitable VIFA has by far the most advertising behind it.
DISTRIBUTION COVERAGE YEAR 10
VANS VACK VEGY VINO VIFA VOLO0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Specialty StoresDepartment StoresMass Merchandisers
%
50
The success of our product has lead to the high demand and distribution % of VIFA, which in turn increases sales. Our highest coverage was in Department Stores and Mass Merchandisers, reflecting the shopping habits of our target customers, the Followers.
51
VODITE RETAIL SALES (KU)
Our timing for entering the market was ideal; we had some knowledge of the industry due to not being the first mover, but did not enter late enough to have to fight intensely for market share. Our timing combined with desirable attributes contributed to the success of our firm.
TOTAL UNIT RETAIL SALES
52
The high retail sales of our firm was mostly due to VIFA’s success. VINO did not contribute as many sales.
53
VODITE CUMULATIVE SALES
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 100
50000
100000
150000
200000
250000
300000
350000
400000
450000
Team ATeam ETeam ITeam OTotal Industry Sales
Our firm had by far the highest cumulative Vodite sales. This is in partly due to our strong initial position in the industry and our continued momentum with VIFA.
TOTAL VODITE MARKET SHARE (%)
54
Firm O’s initial success was not sustained and our firm was able to capture this market share, and then some.
INNOVATOR UNIT MARKET SHARES
55
Our Innovator product, VINO, has very high retail sales, yet did not make us a profit. The sales only dropped from there due to competition, lack focus and resources behind the doomed product.
EARLY ADOPTERS UNIT MARKET SHARES
56
We were hoping that VINO would travel through the product life cycle and eventually gain a significant portion of the Early Adopters. This was not the case. Our stellar Followers product, VIFA, however, managed to make a strong presence in the segment.
FOLLOWERS UNIT MARKET SHARES
57
VIFA was the star of the Followers segment, and was the most profitable in the industry. We foresee VIFA having a long product life!
58
COMPETITOR ANALYSIS
59bran
d aw
aren
ess
purc
hase
inte
ntio
ns
Marke
t Sha
re b
ased
on
Unit S
ales
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
VIFAVANSVACK
19%
12%
7%
3%
54%
6%
Market Shares (%)
VANS
VACK
VEGY
VINO
VIFA
VOLO
TOTAL VODITE INDUSTRY
As you can see, our Followers product, VIFA, has over half of the total industry. VIFA also has great awareness and purchase intentions. VINO does not fare as well.
60
INNOVATORS
0.00%20.00%40.00%60.00%80.00%
VEGY
VINO
VIFA
64%
36%VEGYVINO
Share of Voice
VEG
Y
VIN
O
VEG
Y
VIN
O
VEG
Y
VIN
O
Specialty Stores
Department Stores
Mass Mer-chandisers
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Distribution %
Brand Awareness vs. Purchase Intentions
78%
17%5%
Market Share
VEGY
VINO
ALL OTHER BRANDS
VINO became less and less of a priority as we saw our other Vodite taking off and earning a significant amount of revenues. We were not very concerned with this due to our confidence in our other product and knowledge that this product would soon be dumped.
61
EARLY ADOPTERS
42%
21%
25%
12%VEGY
VINO
VIFA
VANS
Share of Voice
VEG
Y
VIN
O
VIF
A
VA
NS
VEG
Y
VIN
O
VIF
A
VA
NS
VEG
Y
VIN
O
VIF
A
VA
NS
Specialty Stores Department Stores
Mass Mer-chandisers
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%Distribution %
VEGY VINO VIFA VANS0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Brand Awareness vs. Purchase Intentions
Brand awareness
Purchase intentions
Segment market share based on unit sales
37%
23%18%
14%8%
Market Share
VEGY
VINO
VIFA
VANS
ALL OTHER BRANDS
Considering that we did not make a product to specifically target this segment, we were surprisingly successful, due to VIFA.
62
FOLLOWERS
0.00%
20.00%
40.00%
60.00%
VIFA
VANS
VACK
60%8%
32%VIFA
VANS
VACK
Share of Voice
Brand Awareness vs. Purchase Intentions
VIF
A
VA
NS
VA
CK
VIF
A
VA
NS
VA
CK
VIF
A
VA
NS
VA
CK
Specialty Stores Department Stores
Mass Mer-chandisers
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Distribution %
59%20%
13%8%
Market Shares
VIFA
VANS
VACK
ALL OTHER BRANDS
Our product VIFA was wildly successful. Before we entered the market, the brand VOLO was targeting the Followers. We were able to look at their product and adapt their attributes in order for our product to outsell theirs.
63
Specialty Stores Department Stores Mass Merchandisers0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
VIFAVANSVACK
VODITE DISTRIBUTION COVERAGE
The success of VIFA spurred the demand in distribution coverage.
VODITE SPECIALTY STORE DISTRIBUTION
64
We initially focused on Specialty Stores due to VINO’s target toward Innovators.
VODITE DEPARTMENT STORE DISTRIBUTION
65
Our shift in focus toward Followers lead us to increase our sales force, and resulting distribution %, toward Department Stores.
VODITE MASS MERCHANDISER DISTRIBUTION
66
Followers had strong shopping habits in Mass Merchandisers, thus the efforts to have high distribution.
67
TOTAL FIRM PERFORMANCE
STOCK PRICE INDEX (BASE 1,000)
68
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 100
500
1000
1500
2000
2500
3000
3500
4000
AEIO
Although we ended up in second place, behind E, in the Stock Price index, we have greatly improved our business model during the last four years. We were hoping to win in this aspect as well, because we had finally surpassed E in year 9. We are still very happy with our results and have learned that stock price is not the most valid determinant of success.
CURRENT RETURN ON INVESTMENT
69
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
-2
0
2
4
6
8
10
AEIO
Our ROI could drastically change from year to year. Our large investments in R&D were one factor that contributed to this instability. Also, we failed to accurately monitor our profit margins until well into the simulation, which also contributed to our inconsistencies.
CUMULATIVE RETURN ON INVESTMENT
70
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 100
1
2
3
4
5
6
7
AEIO
Our large expenditures from years 3-7 ultimately helped us to surpass firm I in the end.
TOTAL INDUSTRY RETAIL SALES (K$)
71
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 100
100000
200000
300000
400000
500000
600000
Team ATeam ETeam ITeam O
The success of our more streamlined product mix allowed our sales to skyrocket to victory.
TOTAL INDUSTRY UNIT MARKET SHARES
72
Our success in both the Sonite and Vodite industry allowed our total market share to end in the highest position.
TOTAL CONTRIBUTION BEFORE MARKETING
73
By dumping our less profitable products, our contribution before marketing rapidly increased.
TOTAL CONTRIBUTION AFTER MARKETING
74
Because our advertising expenditures were comparable to that of firm E, the contribution before and after marketing look very similar.
CUMULATIVE RETURN ON INVESTMENT Y10
75
76
Firm AStrength Firm A imitated the attributes of the products very well, showing strong competitive awareness. Predominately remained second largest market share for the Vodite Market ending at 32.2% in year 10. WeaknessThey have the overall smallest market share in the Sonite industry. Their cumulative return on investment is the lowest of all firms. They also have the lowest net contribution of all the firms.
Firm OStrengthsTheir brand Solo is ahead of the trend that Others is following in terms of Power and Weight, so minor modifications can help to improve their existing product. Their Vodite, VOLO, had the 2nd highest brand awareness at 52.6.WeaknessesLowest stock price index of all of the firmsTheir brand SOLO was the weakest performing Sonite in period 10.Overall lowest unit retail sales of all of the firms.Lowest return on investment in Period 10. Their brand awareness does not translate into purchase intentions reflecting poor products.
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Firm EStrengthsAt the end of period 10, Firm E had the highest stock price index out of all the brands. Firm E had the second highest unit sales.Firm E had strong competitive intelligence and was very successful in imitating their competitors. At the end of the simulation Firm E had a slightly higher market share than Firm I based on volumes sold.Firm E maintained the highest distribution coverage by channel in the specialty stores throughout their time in Vodite. Firm E was our main competitor in the Sonite market. WeaknessThey came into the Vodite market later than I, A, O; if they had come into the Vodite industry earlier they might have been more successful.
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FIRM I’S TOP THREE MISTAKES
1. Overall we made quite a few mistakes with our R&D decisions beginning in Year 2. Our two R&D projects that we initiated in Year 2, PSIWO and PSICK, were initially designed to replace SIGH. We shelved PSIWO after realizing that the attributes were too identical to SIGH, although we were intending for the design attributes to be better. PSICK was a waste of time and money, therefore we completely got rid of this project. This cost our firm in Year 2 alone, $200,000 dollars, creating no benefit. Since Year 2, was our first R&D project, we were in process of learning how to match the attributes with the desired segments. This was the most unsuccessful year for R&D projects, but gave an example of how wasteful R&D can be if not correctly planned.
2. We didn’t start using perceptual objectives until later in the simulation. Perceptual objectives are a tool to further emphasize our marketing efforts. We did not begin to use perceptual objectives until Year 5, and felt a great deal of pain for not recognizing our that we could use this tool after Year 2.
3. In Year 8 we decided to not allocate any money into advertising for SIPR, in addition to not allocating any sales force to this brand.
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SONITE SUGGESTIONS SIDE should be modified if it wants to see any more success. Sales and market share
are decreasing and the ideal points are slipping farther away from the current attributes. Since Firm I has completed a large number of R&D projects, the costs should be relatively low to modify and release a new, improved SIDE. Due to firm E’s market share gain, advertising should be increased and perceptual objectives should be utilized to communicate to the potential consumers.
SISI can only temporarily hold its current market share. New brands should be created to capture the Singles and the Professionals segments, which have switched positions and are now moving in opposite directions. SISI should be modified for Singles, while the Professionals segment’s growth should be analyzed to see if it is a worthy venture.
SITO is an important brand due to the large size of the target segment. It is important to allocate a large budget to SITO due to the intense rivalry in the Others segment. In 2-3 periods, the Others’ ideal points will need to be analyzed and SITO will need to be modified to continue to grasp this segment.
New Research and Development projects and modifications need to be constant and staggered so that new products are available when needed and cost expenditures are not too high.
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VODITE SUGGESTIONS Beware of your profit margins: even if you are willing to spend the
large capital investment, you will have to sell a large number of units in order to drive down the base cost to an affordable range.
Be conscious of when your competitors will complete R&D for a Vodite. The release of a new product can lead you to quickly loose your place in the market.
VINO: remove VINO from market and cut all resources to this product. Try to sell the remaining units in inventory because the innovators are a drastically shrinking segment.
VIFA: Allocate enough resources toward this product in order for it to be successful. Constantly be aware of where the ideal values of your target segment are shifting, and modify your product to meet those needs every couple of years. It might be wise to develop another product for the followers in order to capture more of this huge segment.
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OVERALL SIMULATION SUGGESTIONS R&D- Think two periods ahead when it comes to
Research and Development. Analyze and calculate the attributes so that you can release your product ahead of the trend not behind it.
Be aware of your actual profit margins and how much money you are truly making. A high market share means nothing is you aren’t making any money.
Keep track of competitor spending. The differences between Contribution after Marketing and the Net costs will give you an indication if your competitors are completing any R&D projects.
Use all of the tools Markstrat has to offer. It can be overwhelming and the tools are there to help guide you through the process and achieve what your firm wants to achieve.