MARKSTRATIndustry 1Team U

Erica Kreer

Jeremy Fletcher

Joseph Avila

Francis Marantal

Final Numbers

Cumulative Net Contribution = $661,056 (1st place)

Total Market Share (SUSI, SULI, & VURT) in Period 10 = 25.4%.

Market Share of Sonite = 30.3% and Vodite = 19.3%

Table of Contents Overview

Goals Target Segments R&D Timelines

Analysis Weighted Delta’s Advertising Sales Force

Conclusion SWOT Marketing Objectives Takeaways

Goals

Focus on two (Others and Pros) and possibly three (Vodite) target segments plus maintain at least 40% market share.

Meet ideal characteristics of target segments as defined by overall weighted deltas.

Leverage production economies of scale and optimize Advertising / Sales Force spending.

Target Markets

Others: largest Sonite in P1 with a 5-period growth rate at 135%.

Pros: high margin Sonite and P1 weighted delta of 6.94 requiring less R&D for modification.

Hi-Earners: unsuccessful, reactionary move resulted in 1.6% market share (discontinued product).

Adopters: high margin Vodite exploited by fast follower strategy (R&D spread over P6-8).

R&D Timelines

Weighted Delta – SUSI / Others

19.55 20.1612.74

6.97 5.25 5.82 6.87 6.42 6.67 6.28

19.55 18.98

16.50

16.4915.91

10.82 9.815.50 5.19 2.83

19.55 19.36

9.26

6.976.07

6.41 7.92

8.39 8.929.06

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.000.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

1 2 3 4 5 6 7 8 9 10

Delta WeightsM

arke

t Sha

re

Market: Sonite Others

SUSI delta SEMI delta SEMY delta SIRO delta SUSI % SEMI % SEMY % SIRO %

P3 modification resulted in a 6.97 weighted delta and market share of 43%.

Weighted Delta – SULI / ProsP2 & P5 modification resulted in a 2.55 weighted delta and market share of 30%.

6.945.10

3.00 3.25 2.55 2.79 2.72 2.05 3.18 2.82

6.94

6.77

2.42 2.31 2.67 3.105.13 6.45

8.737.31

6.94

6.98

4.482.97

5.87 4.11

5.807.41

0.00

5.00

10.00

15.00

20.00

25.000.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

1 2 3 4 5 6 7 8 9 10

Delta WeightsM

arke

t Sha

re

Market: Sonite Pros

SULI delta SELF delta SALT delta SULI % SELF % SALT %

Weighted Delta – VURT / Adopters

9.944.65 2.63

44.61

31.71

29.76

24.2220.22

25.28

28.79

28.09

0

10

20

30

40

50

60

700.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

1 2 3 4 5 6 7 8 9 10

Delta WeightsM

arke

t Sha

re

Market: Vodite Adopters

VURT delta VOLT delta VACA delta VURT % VOLT % VACA %

P8 launch for Adopters resulted in 9.94 weighted delta and market share of 48%.

Advertising – SUSI / Others

0

500

1000

1500

2000

2500

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

1 2 3 4 5 6 7 8 9 10

Mar

ket S

hare

Ad Spending: Sonite Others

SUSI ad SEMI ad SEMY ad SIRO ad SUSI % SEMI % SEMY % SIRO %

Spent $1.25M in order to maintain 40% market share.

Advertising – SULI / Pros

0

200

400

600

800

1000

1200

1400

1600

1800

2000

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

1 2 3 4 5 6 7 8 9 10

Mar

ket S

hare

Ad Spending: Sonite Pros

SULI ad SELF ad SALT ad SULI % SELF % SALT %

Spent $1.25M in order to maintain 30% market share versus 3 competitors.

Advertising – VURT / Adopters

0

500

1000

1500

2000

2500

3000

3500

4000

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

1 2 3 4 5 6 7 8 9 10

Mar

ket S

hare

Ad Spending: Vodite Adopters

VURT ad VOLT ad VACA ad VURT % VOLT % VACA %

Spent $2.8M to only adopters resulted in 48% market (fast follower strategy).

Optimal Sales Force Size – Sonite

R² = 0.9263

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

0 5 10 15 20 25 30 35

Mass Merch Coverage %

Mass Merch Coverage % Poly. (Mass Merch Coverage %)

R² = 0.8592

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0 5 10 15 20 25 30

Dept Stores Coverage %

Dept Stores Coverage % Poly. (Dept Stores Coverage %)

R² = 0.9292

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

0 5 10 15 20 25 30 35 40

Specialty Stores Coverage %

Specialty Stores Coverage % Poly. (Specialty Stores Coverage %)

Sales Force – SUSI / Others

0

10

20

30

40

50

60

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

1 2 3 4 5 6 7 8 9 10

Sales ForceM

arke

t Sha

re

Sales Force: Sonite Others

SUSI sales SEMI sales SEMY sales SIRO sales SUSI % SEMI % SEMY % SIRO %

40 sales people to maintain 40% market share.

Sales Force – SULI / Pros

0

10

20

30

40

50

60

70

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

1 2 3 4 5 6 7 8 9 10

Sales ForceM

arke

t Sha

re

Sales Force: Sonite Pros

SULI sales SELF sales SALT sales SULI % SELF % SALT %

50 sales people to maintain 50% market share.

R² = 0.8044

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

0 5 10 15 20 25 30 35 40

Mass Merch Coverage %

Mass Merch Coverage % Poly. (Mass Merch Coverage %)

R² = 0.5688

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0 5 10 15 20 25 30

Dept Stores Coverage %

Dept Stores Coverage % Poly. (Dept Stores Coverage %)

R² = 0.7813

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0 10 20 30 40 50 60

Specialty Stores Coverage %

Specialty Stores Coverage % Poly. (Specialty Stores Coverage %)

Optimal Sales Force Size – Vodite

Sales Force – VURT / Adopters

0

10

20

30

40

50

60

70

80

90

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

1 2 3 4 5 6 7 8 9 10

Sales ForceM

arke

t Sha

re

Sales Force: Vodite Adopters

VURT sales VOLT sales VACA sales VURT % VOLT % VACA %

50 sales people to maintain 40% market share (fast follower strategy).

Economies of Scale – All Teams

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

1 2 3 4 5 6 7 8 9 10

COGS as % Sales

A E I O U

Cost of Goods Sold was 5-7% less versus all competitors over time.

COGS – 15% Reduction

-200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 2,200,000 2,400,000 2,600,000 2,800,000 3,000,000 3,200,000 3,400,000

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

1 2 3 4 5 6 7 8 9 10

Economies of Scale

SUS2 SUL3 VURT U

15% decrease in transfer cost with every doubling of production.

Economies of Scale – Team U

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

1 2 3 4 5 6 7 8 9 10

COGS vs. Profit (% Sales)

U Net Contribution

Maintained fairly flat COGS which led to increasing profit.

Strengths

Dominated target segments of Others (45%), Pros (72%), and Adopters (60%).

Constructed a R&D timeline that allowed us to follow a specific plan of action for Sonite and Vodite products.

Achieved economies of scale (low transfer cost) and matched shopping habits to channels (i.e. SULI consumers shopped primarily in Specialty Stores).

Weaknesses

Consistent under production limited sales and profit.

Manufacturing of SURF led to 1.6% of total market (Advertising and Sales Force resources spread too thin).

Confusion on Sales Force spending until Period 8.

Opportunities

Forecasted growth of Singles (33%) and Followers (95%) in the next 5 periods.

Modification of SUSI, SULI, and VURT to maintain single digit weighted delta.

Increase budget for Advertising and Sales Force spending.

Threats

Team O’s Advertising Spend of $11,250 and Sale Force Size of 110 in Vodite market.

Team E’s Advertising Spend of $9,300 and Sale Force Size of 180 in Sonite market.

Trade off of modifications to current products in exchange for economies of scale.

Marketing Objectives

Purchase Team A (Market Cap of $543M) for $600M because of SAKI / Hi Earners and VACA / Followers products

Allocate 20% of budget over the next 3 periods of SUSI, SULI, and VURT feasibility studies and modification to meet needs as ideal values shift.

Match 2nd highest competitor Advertising and Sale Force spend for each target segment.

Takeaways

Joey: utilization of weighted deltas

Francis: prioritization of spending

Jeremy: product quality vs. marketing

Erica: unpredictability of competitors