The Markstrat Challenge I

1
The Markstrat Challenge I
2
Markstrat is a simulation designed to focus on
strategic marketing issues

• Understanding customer needs
• Long-term perspective
• Marketing as a profit center
• Competitive environment
• Marketing strategy is based on segmentation,
  positioning, and resource allocation...
  marketing mix decisions are secondary

3
The Markstrat World
Managing your firm
Getting started
4
The Markstrat World A large territory with a
highly developed economy

• The Markstrat World
• Population 250 million
• Currency Markstrat Dollar ()

5
The basic scenario begins with firms starting in
different positions
6
Each firm can compete in TWO product markets

• independent
• not substitutes
• not complements

VODITES
SONITES

• Maximum 5 brands/firms marketed at a time

7
The Sonite market is already developed, each
product having 6 determining product
characteristics
Volume
Weight
Design
Index
Kg
dm3
10 - 20
3 - 10
20 - 100
Base Cost
Power
Max. Frequency
W
kHz

5 - 50
5 - 100
min. 10
8
Vodites will likely also have 6 main physical
characteristics, but the market is as yet untapped
Diameter
Max. Frequency
Autonomy
m
mm
kHz
5 -100
5 -20
10 -100
Base Cost
Weight
Design

Kg
Index
3 -10
10 -100
min. 10
9
It is easy to recognize the origin of the brands
from their names
S
I
B
I
10
Sonite customers have traditionally been
classified into 5 segments
11
...whereas initial studies for Vodites have
pointed to a different segmentation scheme
Typical segment size evolution over time
sales
Followers
Early adopters
Innovators
time
12
Sonite Vodite customers have the choice of
purchasing through 3 distinct distribution
channels
13
Summary of the Markstrat World Environment
Market Growth
Technology
Economic Environment
14
The Markstrat World
Managing your firm
Getting started
15
Your objective in managing your company is to
maximize your Share Price Index

• To do that, you will have to optimize
• Market share
• Sales growth
• Net contribution
• Cumulative net contribution
• R D investments
• .but the main objective is to LEARN!

16
You will need to do a certain amount of analysis,
before setting a strategic direction for your firm
Strategic Options

17
Market research studies provide market data it
is up to you to prioritize, digest, and interpret
them

• Consumer survey
• Consumer panel
• Distribution panel
• Semantic scales
• Multi-dimensional scaling (MDS)

• Industry benchmarking
• Market forecast
• Competitive advertising
• Competitive sales force
• Advertising experiment
• Sales force experiment
• Conjoint analysis

18
Once your strategy is clear, you should proceed
to make a number of tactical decisions each year

• Production planning
• Inventory disposal
• Pricing
• Mass communication
• Sales force distribution
• Market research

19
Your production department will automatically
adjust production levels up to 20 ( or -)
against your plan
Marketdemand
(assuming zero inventory level)
Inventory build-up
Lost sales
Number of Units
Production
QP (1-20)
QP (120)
QP
Requested production level
20
Comparison of purchase intent with market share
can give you a feel for the size of "lost sales."
Market Share
Purchase Intent
Lost Sales
-
?
Competitors
Order-book
?
Lost to industry
21
Pricing in Markstrat is fixed once a year
Recommended Retail Price 100
22
Each firm receives a marketing budget for the
coming period, based on the previous periods
performance
Budget
23
Brand results
24
Company performance
25
The simulation starts at the end of the initial
period, the new management (you!) making
decisions for the next period
START
MSPH
26
The decisions for the first period are limited in
scope, so that your team can familiarize itself
with Markstrat

• Gather information
• Do not make any major changes in your firm's
  operation
• Do not introduce new brands, modify or withdraw
  existing ones
• Do not start RD projects
• Do not give perceptual objectives for advertising

27
Organize yourselves and manage the group process
Time pressure
Information overload
Conflicting opinions
28
The Markstrat World
Managing your firm
Getting started
29
When you return to your team room, the Main Menu
will be on your screen
Click here to open a session access the
decisions screen
30
Within the Decision Screen, you will start making
decisions for the coming period
Click here to make Production, Price
Advertising decisions
The decisions you will make
31
Decisions on production, price and advertising
should be entered for each brand
Switch from Sonites to Vodites
You are making decisions for the brand SAMA
Switch from one brand to the other
32
The sales force is organized by channel type to
better meet the specific needs of the channels
Click on the assistant to help you allocate to
sales forces automatically
33
Buying market research studies will help you make
sound decisions
The cost of each study appears as you make your
selections
34
You can monitor the status of your decisions at
any time
35
Don't forget to transfer your decisions to your
instructor by closing the session
You can close your session by clicking on
Interface/Close Markstrat Session
36
On your marks, get set, GO!

• Give a name to your company
• Respect the deadlines

Good luck!