BA 162: Marketing Strategy

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BA 162 Marketing Strategy

• Fall 2000
• Lisa Cain

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What is MARKSTRAT 3?

• Marketing Strategy Simulation
• 2 Industries, 5 firms per industry
• different starting positions so you will not be
  graded on firm performance
• we will be able to compare the 2 similar firms
  across industries however

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The MARKSTRAT World

• Each firm starts with 2 Sonite products
• A sonite is a consumer durable good comparable to
  an electronic entertainment product (think CD,
  DVD, etc.)
• You will be able to modify the characteristics of
  these products and introduce new ones.
• You will also be able to enter a new product
  market for Vodites

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Market Segments for Sonites

• The Buffs (30)
• The Singles (15)
• The Professionals (20)
• The High Earners (16)
• Others(19)
• Sonite Market has grown at an average rate of 35
  over the last 3 years

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Distribution

• Specialty Stores (30,000)
• Department Stores (15 chains, 6,000 POS)
• Mass Merchandiser (8 chains, 10,000 stores)

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Pricing

• List price is the price at Specialty Stores and
  Department Stores
• Mass merchandisers charge 10 less than list
• Price increases of 30 or more have not been
  received well by consumers- even if the brand has
  been significantly changed
• Average price increases over the last 3 years 3

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Sales Force

• Sales representatives are allocated by channel
  and by brand
• The same representatives can be reallocated quite
  easily across brands and channel
• The number of representatives can be increased or
  decreased for a cost associated with hiring,
  firing, training and salary

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Advertising

• Advertising is allocated by brand and there is no
  company identity advertising
• Average advertising expenditures as a percentage
  of sales over the last 3 years 6
• Average advertising research expenditures as a
  percentage of total advertising expenditures over
  the last 3 years 5

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Market Research

• 12 different studies are available
• Costs are listed in the newsletter each period
• Lets take a minute and go through whats
  available
• Make sure you think about how you will use the
  research that you choose

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Consumer Survey

• Brand awareness for each brand
• Purchase intentions by segment for each brand
• Shopping habits by channel for each segment

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Consumer panel

• market shares based on unit sales, total and by
  segment, for each brand
• Industry sales by segment

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Distribution Panel

• Market shares based on unit sales, total and by
  channel, for each brand
• Industry sales by channel
• Distribution coverage by channel

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Semantic Scales

• Brand map
• Average evaluation of each brand on perceived
  product characteristics
• Ideal values of each segment on the three most
  important product characteristics
• Evolution of ideal values
• Relationship between product characteristics and
  perceptions

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MDS of brand similarities and preferences

• Perceptual map
• Average position of each brand on MD perceptual
  space
• Ideal values of each segment on MD space
• Evolution of ideal values
• Influence of characteristics
• Relationships between product characteristics and
  perceptions

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Competitive Advertising Estimates

• Estimated total advertising expenditures for each
  brand

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Competitive Sales Force Estimates

• Estimated number of salespeople, by channel, by
  firm

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Industry Benchmarking

• Performance and cost structure of competitors
• Overall performance of firms
• Performance of firms by market

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Advertising Experiment

• What happens to expected awareness and market
  share, by segment and brand if the advertising
  budget had been increased by a certain percentage

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Sales Force Experiment

• What happens to the number of distributors and
  market share, by channel and brand if the sales
  force had been increased in each channel by the
  specified number

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Market Forecast

• Expected market size, by segment, for the next
  period for the product category as a whole
• Expected market growth, by segment, for the next
  period for the product category as a whole

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Conjoint Analysis

• Utility graphs for each segment in each product
  category
• Utilities associated with levels of product
  characteristics
• Relative importance of product characteristics

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Research Development

• Existing brands can be improved
• New brands can be developed
• Team decides
• project name, budget, values of the physical
  characteristics, targeted base cost
• Up to 5 projects for each market at one time
• Use feasibility studies to your advantage

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Naming Conventions

• Brand names (4 characters)
• 1st letter S for Sonite or V for Vodite
• 2nd letter identifies the company (A, E, I, O or
  U)
• 3rd and 4th- chosen by the team as long as they
  all have different names

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Naming Conventions

• RD Project names (5 characters)
• 1st character is always the letter P
• 2nd character is either an S or a V
• 3rd, 4th, and 5th are chosen by the team and need
  not have any relationship to the brand name

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So, now we need 10 teams!

• Most teams should have 5 members (a few may have
  4 or 6)
• If youre not sure if youre going to remain in
  this class- let your group know- try to keep
  undecideds to 2 or less per team- so each team
  will end up with at least 3 or 4 people by the
  end of the semester

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Once youve gotten your team together-

• let me know and Ill give you the password
• and the form that I need back with your team
  member info

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Next week,

• Wednesday- more Markstrat- please prepare with
  your group well spend part of the class time in
  S300T making sure everyone is competent with the
  Markstrat software
• Friday- a regular lecture -)