The Marketing Game: What is It?

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The Marketing Game What is It?

• A living case, where you learn about a
  situation, evaluate opportunities, develop a
  strategy, and make marketing plan decisions.
• In which you get regular feedback, in a report
  that summarizes your marketing outcomes and
  related financial results, based on both your
  plan and competitors decisions.
• Where you analyze what youve learned by doing
  to figure out answers to what you do not know
  (and could not know!) at the beginning.
• That challenges you to improve your strategy in
  light of the learning...

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A Little Background

• Originally developed as the first PC-based
  marketing strategy simulation in 1985
• Routinely revised and updated since that time.
• Now one of the most widely used teaching
  simulations in the world.
• Used in hundreds of universities, exec programs
  and companies, international competitions, etc.
• Well be using the third edition
• Youll need the student manual and accompanying
  CD-Rom (which has Windows software)
• The Marketing Game!, by Charlotte H. Mason
  and William D. Perreault, Jr., 3rd edition,
  published by McGraw-Hill/Irwin, Burr Ridge,
  Illinois, 2001.

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Special Objectives Served by TMG

• To develop skills in identifying marketing
  opportunities. This encompasses knowledge of and
  the ability to apply key marketing frameworks and
  tools for analyzing customers, competition, and
  marketing strengths and weaknesses.
• To develop insights about creative selection of
  target markets and making integrative strategy
  decisions concerning product, price, promotion,
  place and the needs of a target market.
• To develop skills in marketing analysis.
• To provide meaningful, practical experience in
  translating qualitative and quantitative analysis
  into conclusions about profitable marketing
  strategies and programs.

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The Role of the Marketing Game

• The Game offers unique learning advantages,
  compared to other learning approaches (like
  reading texts and articles, lectures, guest
  speakers, case analysis and presentation,
  projects) because it
• Is dynamic, like most business situations.
• Brings the competitive aspects of marketing to
  life.
• Highlights the need for integrative planning
  based on qualitative and quantitative analysis of
  the market environment.

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The Marketing Game is Integrative and Covers
All Aspects of the Marketing Strategy Planning
Process
Narrowing down to focused strategy with
quantitative and qualitative screening criteria
Customers Needs and other Segmenting Dimensions
Targeting Segmentation
Product
Price
S. W. O. T.
Target Market
Company Mission, Objectives, Resources
Positioning Differentiation
Promotion
Place
Competitors Current Prospective
External Market Environment
Technology Political Legal Social
Cultural Economic
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Overview

• You take over marketing management
  responsibilities for your firm.
• Must satisfy customers and earn profits
• Focus is on marketing strategy planning.
• Requires integration of all strategy decisions.
• Requires attention to competitive environment.
• Considers short term and long term perspectives.
• Features ongoing, rapid feedback.

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The Process
Analysis of market situation/opportunities Plannin
g and budgeting Make marketing plan
DECISIONS!!! Submit plan decisions The marketing
game! simulation Company reports returned to
firms
Next Decision period
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Industry Environment

• Market growth
• Technological environment
• No major innovations expected
• Yearly revision cycle
• Competitive environment
• Type of competition depends on firms decisions

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Six Key Product-Market Segments
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Past Sales By Market Segment
For Voice Recognition Device
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Distribution Channels
Firm 1
Firm 2
Firm 3
Firm 4
Firms reach customers through full-service dealers
and Internet/mail-order discount dealers.
Channel 1 Traditional Dealers
Channel 2 Discount Dealers
Different segments have different shopping
preferences.
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Product 1 Voice Recognition Device (VRD)
Number of Special Commands (5-20)
Key Product Features
Error Protection (1-10)
Ability to Customize (1-10)
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RD for Product Modifications Computing Costs
Feature Cost to Decrease Cost to Increase
Special Commands (5-20) 0 8,000(change)2
Error Protection (1-10) 0 5,000(change)2
Ease of Learning (1-10) 3,000change 3,000(change)2
Example Example Example Example Example
Feature Last periods product This periods product Change Cost to Change
Special Commands 6 8 2 8,0002232,000
Error Protection 4 3 -1 0
Ease of Learning 3 5 2 3,0002212,000
Total modification costs Total modification costs Total modification costs Total modification costs 44,000
Note RD for product changes is more expensive
if you have to make big changes in a short
period of time
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Product 2 Digital Vocal Communicator (DVC)
Level 3
Number of Tasks (1-10)
Key Product Features
Similarity of Commands (1-10)
Ease of Learning (1-10)
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Types of Advertising

• Pioneering
• Direct competitive
• Indirect competitive
• Reminder
• Corporate (Institutional)

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Marketing Decision Responsibilities (Level 1)
PRODUCT Features (and RD for product
modifications) PRICE Wholesale
price PLACE Distribution intensity in each
channel PROMOTION -Advertising
Spending -Personal selling Number of sales
reps in each channel CUSTOMER SERVICE
Spending MARKET RESEARCH 6 reports may be
purchased Demand forecast/ production
order Number of units
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Expanded Marketing Responsibilities (Level 2)
PRODUCT Features (and RD for product
modifications) PRICE Wholesale price in each
channel PLACE Distribution intensity in each
channel PROMOTION -Advertising
Spending Type -Personal selling Number of
sales reps in each channel Percent non-selling
time Commission rate -Sales promotion
Spending per Channel CUSTOMER SERVICE
Spending MARKET RESEARCH 7 Reports May be
Purchased Demand Forecast/ Production
order Number of Units
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Expanded Marketing Responsibilities (Level 3)
2 PRODUCTs Features (and RD for product
modifications) PRICE Wholesale price in each
channel for each product PLACE Distribution
intensity by channel, product PROMOTION -Adver
tising Spending for each product Type for
each product -Personal selling Number of sales
reps in each channel Percent non-selling time
in each channel Commission rate -Sales
promotion Spending per channel,
product CUSTOMER SERVICE Spending MARKET
RESEARCH 7 reports may be purchased Demand
forecast/ production order Number of units for
each product
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Production Economies of Scale
If the president decides to invest in new
equipment, unit production costs will decline as
cumulative production increases
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Response Functions and Marketing Spending
Spending too little may have little effect, but
spending too much just increases costs and
reduces profit.
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Marketing Budget Items (Level 1)

• RD product modification costs
• Sales force salaries and severance pay
• Advertising expense
• Customer service expense
• Market research reports expense
• BUDGET FOR FIRST PERIOD 984k

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Marketing Budget Items (Level 2 and 3)

• RD product modification costs
• Sales force salaries and severance pay
• Advertising expense
• Customer service expense
• Sales Promotion Expense
• Market research reports expense
• BUDGET FOR FIRST PERIOD 984k

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Discretionary Budget

• Policy on initial discretionary budget.
• Unspent money carries to future periods and earns
  interest.
• When its gone, its gone.
• Policy on special budget requests.

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Computing Prices
Computing Retail Prices from Wholesale
Prices Expected Retail Price Wholesale
price/(1- Markup) Example Wholesale price
105 Channel 1 Retail Price (105/(1-.50))
210 Channel 2 Retail Price (105)/(1-.35)
161.54 Computing Wholesale Prices from Desired
Retail Prices Wholesale Price Retail Price (1
- Markup) Example Desired Retail Price
190 Channel 1 Wholesale Price 190/(1-.50)
95.00 Channel 2 Wholesale Price
190/(1-.35) 123.50
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Retail Prices Charged Final Consumers

• The retail price set by a dealer depends on
• The wholesale price in the dealers channel.
• The customary markup used in the channel.
• The portion of any sales promotion deals that
  the dealer passes along to consumers as a price
  reduction.

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A Good Wholesale Price

• Should cover the unit cost of the product (given
  its features).
• Should result in a retail price that will appeal
  to target consumers.
• Should result in a profit margin that will
  contribute to other expenses and profit.

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Competitor Analysis

• Estimate competitors net contribution
• Analyze past strategies likely changes.
• Evaluate positioning and target segments.

Firms
1 2 3 4
1 2 3 4 5 6
X
?
X
X
Segments
?
X
?
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Industry Sales Report
Brand Unit Sales Share (units) Sales (retail)
Firm 1 25,151 .250 4,292,964
Firm 2 25,151 .250 4,292,964
Firm 3 25,151 .250 4,292,964
Firm 4 25,151 .250 4,292,964
Total 100,604 17,171,854

Channel Unit Sales Dollars Sales
1 56,296 10,696.240
2 44,308 6,475,614
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Product Features and Prices Report
Error protect- ion 3 3 3 3
Ease of learning 3 3 3 3
Retail price channel 1 190.00 190.00 190.00
190.00
Retail price channel 2 146.15 146.15 146.15 1
46.15
Brand of VRD Firm 1 Firm 2 Firm 3 Firm 4
Special commands 8 8 8 8
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Market Activity Report (Level 2)
Adv. Dollars Adv. Type Sales Promotion
Channel 1 Channel 2 No. Sales Reps Channel
1 Channel 2 Commission Customer Service
Firm 1 250,000 0 0 10 10 5 92,500
Firm 2 250,000 0 0 10 10 5 92,500
Firm 3 250,000 0 0 10 10 5 92,500
Firm 4 250,000 0 0 10 10 5 92,500
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Market Research Reports (Level 1)

• 1. Market share by segment (all brands)
• 2. Market share by channel (all brands)
• 3. Consumer preference study
• 4. Marketing effectiveness report
• 5. Sales by segment by channel (own brand)
• 6. Consumer shopping habits study

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Market Research Reports (Level 2)

• 1. Market share by segment (all brands)
• 2. Market share by channel (all brands)
• 3. Consumer preference study
• 4. Marketing effectiveness report
• 5. Sales by segment by channel (own brand)
• 6. Consumer shopping habits study
• 7. Product positioning report

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Market Research Reports (Level 3)

• 1. Market share by segment (all brands)
• 2. Market share by channel (all brands)
• 3. Consumer preference study
• 4. Marketing effectiveness report
• 5. Sales by segment by channel (own brand)
• 6. Consumer shopping habits study
• 7. Product positioning report

Note separate reports are available for each
product, Except for the consumer shopping habits
study
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TMGPlan Software
Easy to use for preparing and evaluating plans,
managing reports
View, print, and manage password protected
reports
Select directory
Enter Plan Decisions
Evaluate spending and profit forecast
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Submitting Marketing Plans

• Submitting marketing plans decisions
• Policy on paper form
• Policy on electronic file
• Each firm has a distinct industry and firm
  identification
• Need to keep it straight!
• Passwords and the TMGPlan software
• Remember password used to create Plan
• It is case sensitive (upper and lower case make a
  difference)
• Best to stick to one password!

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Overview of Market Research Reports

• Market share by segment (all brands)
• Market share by channel (all brands)
• Consumer preference study
• Marketing effectiveness report
• Sales by segment by channel (own brand)
• Consumer shopping habits study
• Product positioning report (Level 2 3)

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Market Share by Segment Report
Segment
4 0.250 0.250 0.250 0.250 10,240
Brand Firm 1 Firm 2 Firm 3 Firm 4 Total
Sales (units)
1 0.250 0.250 0.250 0.250 20,028
2 0.250 0.250 0.250 0.250 15,084
3 0.250 0.250 0.250 0.250 25,104
5 0.250 0.250 0.250 0.250 22,056
6 0.250 0.250 0.250 0.250 8,092
Whos selling to whom? Whos buying what? What
is each firm achieving? Which segments are buying?
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Market Share by Channel Report
Brand Firm 1 Firm 2 Firm 3 Firm 4 Total
Sales (units)
Channel 1 0.250 0.250 0.250 0.250 56,296
Channel 2 0.250 0.250 0.250 0.250 44,308
Whats selling where? Whos buying what?
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Consumer Preference Study
Price Range low low high high high low
Special Commands 10-13 7-10 10-13 12-15 13-16 5-8
Error Protection 2-4 2-4 6-8 2-4 6-8 2-4
Ease of Learning 1-3 6-8 6-8 4-6 2-4 7-9
Segment Students Home Assistants Creators Manage
rs Parents
What kind of product would a segment prefer? What
reference price seems typical for the
segment? How are segments similar and different?
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Marketing Effectiveness Report
Competitors with lower Index 0 0 0 0 0
Competitors with equal or higher
Index 3 3 3 3 3
Brand Awareness Customer Service Consumer
Group Rating Industry Average Rating Channel
1 Sales Rep Workload Dealer
Satisfaction Channel Strength
(Push) Channel 2 Sales Rep Workload
Dealer Satisfaction Channel Strength
(Push)
Index 0.550 100 100 100 1.00 .500 100 1.
00 .500
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Detailed Sales Analysis
Segment
Firm Channel 1 Channel 2
1 896 5,269
2 1,109 3,337
3 5,602 1,396
4 1,808 1,196
5 4,363 1,865
6 1,086 1,074
Unit sales by segment and channel Are you
reaching your target?
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Customer Shopping Habits
Segment Students Home Assistants Creators Manage
rs Parents
Percent of Shopping in Channel 2 ? ? ? ? ? ?
Percent of Shopping in Channel 1 ? ? ? ? ? ?
Who shops where? How do shopping patterns match
distribution focus?
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Product Positioning Report
Segment
3 ? ? ? ?
5 ? ? ? ?
6 ? ? ? ?
Brand Firm 1 Firm 2 Firm 3 Firm 4
1 ? ? ? ?
2 ? ? ? ?
4 ? ? ? ?
Which brands are closest to which segments?
Which segments have no close brands?
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Recommendations

• Analyze the reports as you would analyze a case.
• Make intentional changes.
• Find a balance in marketing research spending.
• Be integrative--think carefully about how each
  decision impacts each of the others.
• Have some fun!

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List of All Slides (with Hyperlinks)
1. Title slide 2. The Marketing Game What Is
It 3. A Little Background 4. Special Objectives
Served by TMG The Role of the Marketing Game 6.
Integrative Marketing Strategy Planning
Process 7. Overview 8. The Process 9. Industry
Environment 10. Six Key Product-Market
Segments 11. Past Sales by Market Segment
(VRD) 12. Distribution Channels 13. Product
Features Voice Recognition Device 14. Computing
Costs of RD for Product Mods 15. Product
Features Digital Vocal Communicator 16. Types
of Advertising 17. Marketing Decision
Responsibilities Level 1 18. Expanded Marketing
Responsibilities Level 2 19. Expanded Marketing
Responsibilities Level 3 20. Production
Economies of Scale 21. Response Functions 22.
Budget Items Level 1 23. Budget Items Levels
2 and 3
24. Discretionary Budget 25. Computing Prices 26.
Retail Prices Charged Final Consumers 27. A
Good Wholesale Price 28. Competitor
Analysis 29. Industry Sales Report 30. Product
Features and Prices Report 31. Marketing Activity
Report (Sample) 32. Market Research Reports
Level 1 33. Market Research Reports Level 2 34.
Market Research Reports Level 3 35. TMG
Software 36. Submitting Marketing Plans /
Policies 37. Overview of Market Research Reports
38. Market Share by Segment 39. Market Share by
Channel 40. Average Customer Preferences 41.
Marketing Effectiveness Report 42. Detailed Sales
Analysis 43. Customer Shopping Habits 44. Product
Positioning Report 45. Recommendations 46. Blank
side (end of show) 47. This list