The Marketing Game Simulation

Semester Wrap-up

Simulation Details

Decisions you made in various aspects influenced the outcome of the model.

The following is a brief description of how some of the variables influenced the game.

Product Features

The closer your product features were to a segment’s ideal point…

the higher your share for a segment relative to competitors that were not as close.

the higher the demand for that segment.

Distribution Intensity

The ideal level of intensity depends on the other marketing mix variables.

If you set the intensity too high for the size of your salesforce, they became overworked and less effective.

Intensity set too low leads to wasted spending efforts on personal selling.

Finally, the greater the intensity relative to competition, the stronger the channel “push”.

Customer ServiceInfluences both market share and category

demand.There is an expected customer service amount

based on unit sales.Actual customer service spending versus

expected customer service gives a ratio.Lower ratios cause sales and market share to

drop.As an industry’s ratio increase, it’s sales increase

(when the 2nd product was introduced, spending in this category was split for some firms, causing the customer service ratio to drop and product 1 sales to decline).

Advertising Spending

Ad spending improves brand awareness and increases category growth.

Ad spending is relative so increased spending by all firms leads to a lack of INCREASED awareness.

There is a saturation point for ad spending beyond which there is very little increased effect on sales and category demand.

Advertising Type

Pioneering creates category demand.Direct Competitive increases current ad

effectiveness for the firm, but has very little carryover influence on the firm.

Indirect Competitive increases current ad effectiveness for the firm (but less so than direct), and there is more carryover effect.

Reminder is only effective when brand awareness is above 50%.

Corporate is useful for a firm with two products.

Number of Sales Reps

The number much be managed against the distribution intensity amount.

It requires an increasingly larger number of sales reps to support the effort in channel 1 than in channel 2.

New sales reps are not as effective in selling, they are penalized by 20% to account for training.

Other Selling VariablesPercent of Non-Selling Time

Increasing the non-selling time means obviously the salespeople spend less time selling, but it also improves the dealer satisfaction.

Dealer satisfaction is particularly important in channel 1.Commission Rate

If your firm has a higher commission rate than other firms, your salespeople will work harder than theirs.

Sales Promotion ExpendituresSales promotions reduce the retail price of the product.Sales promotions also build goodwill and increase the

dealer’s satisfaction. This point is also influenced by the level of distribution intensity.

These are relative to other firms, meaning equal spending cancels out any goodwill effects.

Market Research Reports

Report 4 – Marketing Effectiveness Report provides data on the relative position of the issues just discussed. In my opinion, this would be the best report to purchase each time. It is essentially your report card.

Reports 3 and 7 are useful to identify where the target segments are and how well you are reaching them.

Report 6 tells you where the segments shop (it shouldn’t change much over time )

Reports 1, 2, and 5 provide you with industry level (1 and 2) or firm level (5) sales by segment (probably don’t need each every period)

Production Quantity

Critical for success.There were multiple times during the game that

a firm’s net contribution was negative mostly due to overproduction.

The penalty for overproduction in these instances was huge for the next quarter’s budget.

INDUSTRY quantities could be estimated pretty closely given the right research information, but the question of each firm’s share must also be answered.

Market Segment Ideal Points – Product 1

Segment: Commands Error Protection

Ease of Learning

Price

Students 11 (-.2) 3 (+.2) 3 (+.2) $145 (+2)

Home 9 4 (+.2) 8 $165

Assistants 12 8 8 $250 (-2)

Creators 14 (+.3) 2 4 $260 (+3)

Managers 16 6 3 (+.3) $300 (-2)

Parents 6 3 (+.1) 9 (-.1) $180

Market Segment Ideal Points – Product 2

Segment: Tasks Command Similarity

Ease of Customize

Price

Students 2 6 3 $145 (-2)

Home 8 5 (-.1) 5 (+.1) $210

Assistants 4 (+.2) 7 9 $225 (+2)

Creators 9 3 7 (+.1) $240

Managers 6 (-.1) 8 6 $200

Parents 1 10 1 $175 (-3)

Initial Unit Sales and Growth Rates by Segment – Product 1

Segment: Initial Sales

P1 P2 P3 P4 P5 P6 P7 P8 P9 P10

Students 20,028 15 15 14 12 10 8 5 3 3 3

Home 15,084 15 15 12 10 10 8 8 5 4 4

Assistant 25,104 10 8 7 4 3 3 3 3 3 3

Creators 10,240 14 12 10 9 8 7 6 6 6 5

Managers 22,056 11 9 6 5 4 4 4 3 3 3

Parents 8,092 5 5 0 5 0 5 0 5 0 5

Initial Unit Sales and Growth Rate by Segment – Product 2

Segment: Initial Sales P6 P7 P8 P9 P10

Students TBD 15 15 14 12 10

Home TBD 8 8 8 7 7

Assistant TBD 14 12 10 9 8

Creators TBD 5 5 5 5 4

Managers TBD 11 10 8 6 5

Parents TBD 5 5 0 5 0