The Markstrat Challenge II

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The Markstrat Challenge II
STRATX Licensing Division
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Your success in Markstrat will greatly depend on
your ability to manage the development and
positioning of brands
3
Customers make purchase decisions based on their
perception of your brands
Your Perception of Brands
Brand A
Brand B
Brand C
Brand D
Technical quality
Their Perception of Brands
?
Brand B
Brand D
Brand C
?
Brand A
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The "Perceptual Map" is a valuable tool for
visualizing brand positioning
Need 2
Perceptual Map based on MDS Study
Need 1
Key
Segment ideal Point
Ot
Perceptual positioning of Brands
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There are two key ways to re-position brands in
Markstrat
Perceived Performance
Advertising
Perceived Economy
R D
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Physical positioning involves matching brand
characteristics to customer needs
Price
Max. Freq.
Power
Weight
Design
Volume
SAMA
Brand characteristics
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Positioning with advertising requires setting
"Perceptual Objectives"
Perceived Performance
20
10
Si
9
5
Perceived Economy
0
5
11
-10
-20
-20
-10
0
10
20
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Your success will greatly depend on your ability
to manage the development and positioning of
brands
Strategy
Positioning
RD
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RD success demands long-term thinking and the
ability to identify evolving opportunities...
Hi
Si
New target segments
Changing segment needs
Pressure onmargins
Pr
Ot
Competitor entry
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. . . and also requires working effectively with
your RD department
Number of Projects
Experience
Similarityof Projects
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When doing RD, keep in mind both positioning and
economic factors
C
Base Cost (at 100K units of production)
Most important physicalcharacteristics

• Target Margin
• Cost in other projects
• Project Budget
• Impact of physical characteristics

Economic Factors
Positioning Factors
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Impact of physical characteristics on base cost
Base cost
The HIGHER the requested characteristic the
HIGHER the base cost

• Design
• Max. Frequency
• Power
• Autonomy

Requested characteristic
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The budget required to complete an RD project is
a function of several factors
RDexperience
RDbudget requiredfor completion
physicalcharacteristics
Requestedbasecost
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There are two possible outcomes of any RD project
Case A Requested Base Cost 80 (requested base
cost is below minimum, but the RD will try to
develop the project at the minimum base
cost) Budget required for completion
800 (at base cost 110)
Case B Requested Base Cost 130 Budget
required for completion 550 (at base cost
130)
Budget required for completion is also
calculated at an early stage in the project
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A completed RD project may be used to modify
existing brands and/or introduce new brands
Performance
Bu
Si
Pr
Hi
Economy
New Brand "SAMY"
New SAMA more performance
Ot
Old SAMA
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Bringing successful RD projects onto the market
may result in obsolete inventory
I'll buy any product at a given of
its transfer cost
Brand modification (name kept)
SAMA
Inventory disposal
Obsolete inventory
SAMA
SAMA
SAMA
SAMA
SAMA
Brand withdrawal
TRADING COMPANY
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Cost reduction projects should be weighed against
experience curve effects
Transfer cost
A
Base cost A
Current product (initial experience curve)
Base cost B
B
A1
Current transfer cost A1
cost reduced product (new experience curve)
100 KU
225 KU
Cumulative production
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The MDS study measures brand perception along
three composite dimensions...
SONITE market Influence of brand characteristics
on MDS dimensions in P0
Perceived Economy increases if Max. Freq.
increases
Perceived Economy increases if Price decreases
Weight
Design
Volume
Max. Freq.
Power
Price
Product charac.
Composite dimensions
moderate
moderate
Economy
slight
slight
slight
strong
Performance
slight
slight
slight
strong
strong
moderate
Convenience
slight
slight
slight
moderate
strong
moderate
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... which are more or less influenced by the
various brand attributes
VODITE market Influence of brand characteristics
on MDS dimensions in P0
Perceived Flexibility increases if Weight
decreases
Perceived Efficacy increases if Max. Freq.
increases
Autonomy
Max. Freq.
Diameter
Design
Weight
Price
Product charac.
Composite dimensions
slight
moderate
Efficacy
slight
very strong
slight
slight
Flexibility
strong
slight
moderate
slight
moderate
slight
Economy
slight
slight
very strong
slight
slight
slight
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New decisions introduced in Period 2

• Brand portfolio
• Perceptual objectives (on semantic scales or MDS)
• RD

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You can now extend your portfolio by introducing
new brands ...
click here to display all completedRD projects
and their features
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... you can also modify existing brands
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To convey the right message to the market, you
can set perceptual objectives for each of your
products
1 Do you want to communicate on the semantic
scales or on the MDS composite dimensions?
2 On which dimensionsdo you want to communicate?
3 Input the coordinates of the point that you
want to reach on the map
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You can initiate up to five RD projects per
period and per product type (five Sonite and five
Vodite)
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You now know everything. From here on, it's
down to your strategy...
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