The Markstrat Challenge I

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The Markstrat Challenge I
StratX The Key to Strategic Excellence
Tour Pacific, 92977 Paris-la-Défense cedex,
France, Tel [phone], Fax (33-1)
47.78.18.44 Boston - London - Munich - Paris
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Markstrat is a simulation designed to focus
onstrategic marketing issues

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

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The "Markstrat World"a large territory with a
highly developed economy

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

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The competing firms start in the same positions
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Each firm can compete in TWO product markets

• independent
• not substitutes
• not complements

• Maximum 5 brands/market

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

5 - 50
5 - 100
min. 10
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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
g

3 -10
10 -100
min. 10
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It is easy to recognize the origin of the brands
from their names
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Sonite customers have traditionally been
classified into 5 segments...
Singles
Professionals
Si
Pr
Buffs
High Earners
Others
Hi
Bu
Ot
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...whereas initial studies for Vodites have
pointed to a different segmentation scheme
Typical segment size evolution over time
sales
Followers
Early adopters
Innovators
time
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Sonite Vodite customers have the choice of
purchasing through 3 distinct distribution
channels
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Summary of Markstrat World environment
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Your objective in managing your company is to
maximize your Share Price Index

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

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

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Market research studies provide market data ...
it is up to you to prioritize, digest and
interpret them (cont'd)

• Industry benchmarking
• Market forecast
• Competitive advertising
• Competitive sales force

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Market research studies provide market data ...
it is up to you to prioritize, digest and
interpret them (cont'd)

• Advertising experiment
• Sales force experiment
• Conjoint Analysis

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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

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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
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Comparison of purchase intent with market share
can give you a feel for the size of "lost sales"
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Pricing in Markstrat is fixed once a year
Recommended Retail Price 100
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Each firm receives a marketing budget for the
coming period, based on the previous periods
performance
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The simulation starts at the end of the initial
period, the new management (you!) making
decisions for the next period
MS3 Pn1
...
MSPH
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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

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Organize yourselves and manage the group process
Information overload
Time pressure
Conflicting opinions
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On your marks. Get set. Go!

• Give a name to your company
• Respect the deadline

Good luck!