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Copyright 2001 Ernest R. Cadotte The following slides are for the introduction to the Marketplace game.

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1 Copyright 2001 Ernest R. Cadotte The following slides are for the introduction to the Marketplace game.

2 Copyright 2001 Ernest R. Cadotte Experiencing Marketing the Marketplace

3 Copyright 2001 Ernest R. Cadotte The Marketplace Is a Fun Way to Learn About Marketing. It is a marketing game. It is learning by doing. It brings to life marketing concepts, principles and ways of thinking. It energizes the competitive spirit.

4 Copyright 2001 Ernest R. Cadotte It Is Realistic! You do what your real-life counterparts do –Design brands –Design ad copy –Schedule media –Set selling prices –Hire and train sales people –Worry about profits

5 Copyright 2001 Ernest R. Cadotte It Is Organized! The game scenario follows the logical process of starting up a new product line. You are guided through the decision making process. Detailed help files are available at the touch of a button.

6 Copyright 2001 Ernest R. Cadotte On the left is the step-by-step process by which you work your way through the information and decisions. The software controls your progression in order to reduce your uncertainty (and need to contact the instructor) and to help you see the logic of the marketing process. The Marketplace software is all set up to print the results for each quarter’s play, starting with the Q3 test market. –Name, ID, balanced scorecard, profit statement, market share, customer satisfaction ratings

7 Copyright 2001 Ernest R. Cadotte Learning Strategy Marketing war games are a form of combative training where you pit your marketing skills against those of formidable opponents under the watchful eye of a training coach.

8 Copyright 2001 Ernest R. Cadotte Learning Strategy: Learn by Doing You learn about all aspects of marketing by managing a simulated marketing department. The Marketplace scenario follows the life cycle of a new product. Marketing decisions are introduced as they become relevant in the evolution of the product.

9 Copyright 2001 Ernest R. Cadotte Key Benefits Develop teamwork across marketing functions. Promote better decision making by helping you see how your marketing decisions are interconnected and need to be managed as a whole. Facilitate learning of important marketing concepts, principles and ways of thinking

10 Copyright 2001 Ernest R. Cadotte Key Benefits Develop marketing planning and execution skills within a rapidly changing environment. Instill a bottom line focus and the simultaneous need to deliver customer value. Crystallize the financial implications of marketing decisions by linking them to cash flows and bottom-line performance.

11 Copyright 2001 Ernest R. Cadotte Key Benefits Discover how important it is to use market data and competitive signals to adjust the strategic plan and more tightly focus business tactics. Build marketing confidence through knowledge and experience.

12 Copyright 2001 Ernest R. Cadotte How is the business war game conducted? Teams are placed in a war game scenario - starting up and running a new marketing division. The opposition is played out by competing teams.

13 Copyright 2001 Ernest R. Cadotte Business Team Market Opponent Opponent Opponent Opponent Objective is to profitably capture a dominant market position

14 Copyright 2001 Ernest R. Cadotte Marketing Team Each team member assumes a tactical area of responsibility; brand management advertising sales office management overall leadership Everyone is responsible for marketing research and profit management.

15 Copyright 2001 Ernest R. Cadotte How Conducted? Marketing team receives information on current situation. Current situation is evaluated, strategy formulated and tactics set in placed. Tactical decisions are fed into the marketplace simulator, along with decisions of opponents. Results of decisions are fed back to business team.

16 Copyright 2001 Ernest R. Cadotte How Conducted? The business team can acquire information on what is happening in the marketplace: –customer reaction to market decisions –competitor actions Current situation is evaluated, strategy formulated, and tactics set in place. Tactical decisions are again fed into the marketplace simulator.

17 Copyright 2001 Ernest R. Cadotte For illustration purposes, suppose you start up a company named “Apollo Computers”

18 Copyright 2001 Ernest R. Cadotte Here is the Game Scenario You work for a large international electronics firm. Corporate Headquarters wants to enter the personal computer business. Headquarters will invest 7,000,000 in the venture (500,000 in Q1 to Q4 and 5,000,000 in Q5).

19 Copyright 2001 Ernest R. Cadotte Game Scenario You have been selected to head up the new marketing division to sell computers into Asia, North America and Western Europe. Several other international firms are entering the market at the same time.

20 Copyright 2001 Ernest R. Cadotte Game Scenario Your marketing strategy will be tightly focused on direct sales to business customers. –You will not sell to the home market or through retail stores. –You will sell through company-owned sales offices in major metropolitan markets around the world.

21 Copyright 2001 Ernest R. Cadotte Global Marketplace

22 Copyright 2001 Ernest R. Cadotte There are 5 Market Segments (Market Structure) Price Performance Cost Cutter Work Horse Traveler Innovator Mercedes

23 Copyright 2001 Ernest R. Cadotte Each market segment has its own set of needs

24 You must decide which 2 segments you want to target initially. For example, the Traveler and Cost Cutter segments might be selected.

25 Once you select a segment, you must design a brand to meet the needs of the segment. For example, portability is important to the Traveler segment. What features would increase the portability of a PC?

26 Copyright 2001 Ernest R. Cadotte You must design ads which appeal to the target segment. You select the benefits to mention in the ad and indicate their order of priority. you decide which brand will be featured in the ad.

27 Copyright 2001 Ernest R. Cadotte You set the selling price, decide if you want to use a rebate, and signal to the sales staff which brand has the highest priority.

28 Copyright 2001 Ernest R. Cadotte As the quarters progress, you decide how you want to expand your international market coverage.

29 Copyright 2001 Ernest R. Cadotte When your decisions are ready to be processed through the Marketplace simulator, a quality check is made to make sure there were no entry errors and nothing important was forgotten.

30 Copyright 2001 Ernest R. Cadotte Immediately after processing, you find out how profitable the division was in the quarter that just ended.

31 Copyright 2001 Ernest R. Cadotte You can see your market share by segment and for the whole market. Your company is Apollo, black.

32 Copyright 2001 Ernest R. Cadotte You are given market research that tells you how satisfied your target segment is with your brand design and those of the competition. (100 is total satisfaction.) Your brand

33 Copyright 2001 Ernest R. Cadotte If a brand is not doing well, you can study other brands and redesign your brand. Your brand Better brand

34 Copyright 2001 Ernest R. Cadotte You are also given a profit analysis of each brand so that you can adjust your brand strategy.

35 Copyright 2001 Ernest R. Cadotte Grading is Based upon Achievement of Goals! Earn 30% in operating profits by Quarter 8. Capture 40% of the market in at least two market segments. Achieve 90% customer satisfaction in your brand designs and advertising copy. Aggressively expand markets and products to increase demand, customer satisfaction and profits. Triple Corporate Headquarters’ investment of 7,000,000.

36 Each quarter, you will be presented with your balanced scorecard. Your goal is to achieve a 90 or better by Quarter 8 in Total Business Performance.

37 Copyright 2001 Ernest R. Cadotte What to turn in? The Marketplace software is all set up to print the results for each quarter’s play, starting with the Q3 test market. –Name, ID number, balanced scorecard, profit statement, market share, customer satisfaction ratings Print options (starting in Q4 for Q3 test market) –Follow the normal decision sequence, or –Click on button labeled, “Print everything for instructor” from the Headquarters file folder.

38 Copyright 2001 Ernest R. Cadotte Chronology of Events Q1, organize the team, name the company and contract for a survey of potential customers. Q2, analyze market information, establish strategic direction and set up shop (design brands and set up sales offices).

39 Copyright 2001 Ernest R. Cadotte Chronology of Events Q3, test-market brands, prices, ad copy, media campaigns, sales staffing. Q4, study end user feedback, competition, and financial performance and make adjustments in strategy.

40 Copyright 2001 Ernest R. Cadotte Chronology of Events Q5, prepare a one-year marketing plan. Present marketing plan to Corporate Headquarters and obtain approval. Q5 - Q8, initiate international roll-out campaign.

41 Copyright 2001 Ernest R. Cadotte Chronology of Events Q9, present report to Corporate Headquarters regarding; –second year performance, –deviations from plan, –justification for departures, –analysis of current market, and –plan for third year.

42 Copyright 2001 Ernest R. Cadotte Funding The initial funding is 2,000,000 which is being invested by Corporate Headquarters in 500,000 increments over the first 4 quarters. Corporate Headquarters will provide another 5,000,000 in Quarter 5 if it approves your marketing plan for the second year.

43 Total Performance Evaluation Marketing plan Report to Corporate Headquarters Strategic thinking and tactical execution Market performance –profitability –customer satisfaction –market share in targeted markets –investments in the firm’s future –creation of wealth for Headquarters How well company is prepared for the future

44 Copyright 2001 Ernest R. Cadotte Installation 5 minutes to set up Home computer –hard drive installation –always need CD Computer lab –mobile installation –select high density disk option (Zip disk, do not use the floppy disk installation) –purchase Zip disk – files saved on Zip disk –always need CD and Zip disk

45 Copyright 2001 Ernest R. Cadotte Q1, Organize the Business Name the company Assign organizational responsibilities Purchase survey of end users

46 Copyright 2001 Ernest R. Cadotte Learning Points for Quarter 1 Managing the team Organizing the work Deciding what one wants from the learning experience

47 Copyright 2001 Ernest R. Cadotte The Following Slides Are For Quarter 2

48 Copyright 2001 Ernest R. Cadotte Q2, Establish Strategic Direction Analyze market information, Establish strategic direction –select 2 target segments –decide on competitive posture Set up shop –develop distribution strategy open initial sales offices for test market –design 2 brands, 1 for each target segment

49 Copyright 2001 Ernest R. Cadotte View Software

50 Copyright 2001 Ernest R. Cadotte How do you decide what to design into a brand?

51 Copyright 2001 Ernest R. Cadotte The most important rule in brand design: “Customers Buy Benefits, Not Features”

52 Once you select a segment, you must design a brand to meet the needs of the segment. “Using the computer on the road” is important to the Traveler segment. What features would provide this benefit?

53 Copyright 2001 Ernest R. Cadotte How far do you go in giving the customers what they say they want? Is more speed, software applications, memory, keys on the keyboard, etc. always valued? Could “more of some feature” even make a customer unhappy? Let’s take a look at this question in another industry – candy bars.

54 Copyright 2001 Ernest R. Cadotte What is the elasticity of the peanut? Searching for the Market’s Response Function

55 Copyright 2001 Ernest R. Cadotte Suppose you could design the ideal candy bar. How many peanuts would you put in the candy bar to make you the happiest? A few? A bunch? A whole lot?

56 Copyright 2001 Ernest R. Cadotte Which candy bar has the most peanuts? Baby Ruth Snickers Payday

57 Copyright 2001 Ernest R. Cadotte Which candy bar do you like the most? Baby Ruth Snickers Payday

58 Copyright 2001 Ernest R. Cadotte What does your response function look like for peanuts? Is more always better? Would your happiness increase with every new peanut we added to the candy bar? Is there a limit?

59 Copyright 2001 Ernest R. Cadotte What would be your response function for the following? Chocolate Caramel Coconut Rice Peanut butter

60 Copyright 2001 Ernest R. Cadotte Here are a number of response functions. Which one applies to peanuts, chocolate, coconut, etc.? Hot Cold LessMore Hot Cold LessMore More is always better More is good to a point and then ceases to add excitement

61 Copyright 2001 Ernest R. Cadotte Hot Cold LessMore A little is just right, more only takes away value Hot Cold LessMore More adds value to a point & then takes away value

62 Copyright 2001 Ernest R. Cadotte Hot Cold LessMore Little interest until threshold is crossed Hot Cold LessMore Any amount is bad

63 Copyright 2001 Ernest R. Cadotte Hot Cold LessMore No reaction/indifference to having the feature

64 Take any PC segment, how excited will it become if you provide? More memory More speed More functions on the key board More software More …. Just like the candy bar ingredients, you must discover the response function for each PC component.

65 Copyright 2001 Ernest R. Cadotte Learning Points for Quarter 2 Market opportunity analysis Segmentation and target marketing Strategic and tactical planning Game theory - competitive positioning

66 Copyright 2001 Ernest R. Cadotte Learning Points for Quarter 2 Brand design – –linking product features to customer benefits –finding the customer’s response functions

67 Copyright 2001 Ernest R. Cadotte The following slides are for Quarter 3

68 Copyright 2001 Ernest R. Cadotte Q3, Go to Test Market The Goal is to Maximize Learning and Not Profits.

69 Copyright 2001 Ernest R. Cadotte Q3, Go to Test Market Set selling prices Develop advertising campaign –design 2 ads, one for each brand –determine number of placements per ad Develop distribution strategy –hire sales force for quarter –open new sales offices for Q4

70 Copyright 2001 Ernest R. Cadotte Q3, Test Market Contract for market research on customers and competition Check pro forma financial position

71 Copyright 2001 Ernest R. Cadotte View Software

72 Copyright 2001 Ernest R. Cadotte How to Set Price? Costs (production, marketing, overhead) Profit goals What market will bear Competition

73 Copyright 2001 Ernest R. Cadotte In the beginning, you will not be able to price above your costs. There are many startup costs which will exceed your revenues. Your production volumes will be very low, resulting in high per unit costs

74 Copyright 2001 Ernest R. Cadotte No early profits Money 0 Time costs to setup & grow the business +

75 Copyright 2001 Ernest R. Cadotte Revenues will fall below costs at the outset of a new business Money 0 Time costs to setup & grow the business Revenue +

76 Copyright 2001 Ernest R. Cadotte Profits will come later Profits come later. You are here. Profit Profits 0 Time costs to setup & grow the business Revenue + -

77 Copyright 2001 Ernest R. Cadotte Your goal is to speed up the adoption rate. Demand Time introduction growth maturity decline You are here, high costs-low demand

78 Copyright 2001 Ernest R. Cadotte What will the market bear? You must discover the market response function regarding price.

79 Copyright 2001 Ernest R. Cadotte What is the market’s price response function? Your Demand Your Price Elastic (demand drops fast with increasing prices) Inelastic (price is not a big factor.)

80 Copyright 2001 Ernest R. Cadotte Or, maybe it looks like this. Your Demand Your Price Demand drops slowly with small price increases and then drops dramatically with larger price increases.

81 Copyright 2001 Ernest R. Cadotte How will the market respond to competitor prices? Your Demand Competitor’s Price Low competitor prices will kill your demand

82 How to create ads? Low price Easy to use More productive Fast Office applications Picture office workers Most important Order of priority implies importance of message to customer Order of priority tells the ad agency what to stress in the ad Your Ad Least important

83 Copyright 2001 Ernest R. Cadotte How much to say in an ad? (number of benefits) Hot Cold LessMore More is good to a point and then ceases to add excitement Hot Cold LessMore More adds value to a point & then takes away value Which response function is at work? or

84 Copyright 2001 Ernest R. Cadotte How often do you advertise? Your Demand Number of ads Diminishing returns Too little

85 Copyright 2001 Ernest R. Cadotte But it also depends on what your competitors do Your Demand Competitor’s Advertising Strong competitor advertising will steal away your customers

86 Copyright 2001 Ernest R. Cadotte How many sales people? Your Demand Number of sales people Too many Diminishing returns Too few

87 Copyright 2001 Ernest R. Cadotte Your Demand Number of sales people Shift the response function upwards with better brands, prices, advertising, sales force placement The response function is dynamic!

88 Copyright 2001 Ernest R. Cadotte Learning Points for Quarter 3 Execution of a coherent strategy Management of cash in the face of great uncertainty Learning to walk before you run

89 Copyright 2001 Ernest R. Cadotte Learning Points for Quarter 3 Marketing strategy - coordinating a host of tactics Pricing - balancing costs, profit, what the market will bear, and competition Advertising – deciding what to say, how to say it and how frequently to say it Sales force – hiring and targeting the sales staff Testing the market - discovering the market’s many response functions

90 Copyright 2001 Ernest R. Cadotte What to turn in after Q3 decisions have been run through the Marketplace simulator? Q3 results are available at the start of Q4. The Marketplace software is all set up to print the results for each quarter’s play, starting with the results of the Q3 test market. –Name, balanced scorecard, profit statement, market share, customer satisfaction ratings Print options –Paper copy –Electronic copy

91 Copyright 2001 Ernest R. Cadotte Paper Copy of Results Follow the normal decision sequence, or Click on button labeled, “Print everything for instructor” from the Headquarters file folder. Click on “Print” button.

92 Electronic Copy of Results Your instructor might want an electronic copy in place of, or in addition to, the paper copy. Click on the button, “Copy Performance Data to Floppy for Instructor”.

93 Copyright 2001 Ernest R. Cadotte The following slides are for Quarter 4.

94 Copyright 2001 Ernest R. Cadotte Quarter 4 - The Skillful Adjustment

95 Copyright 2001 Ernest R. Cadotte Q4, Evaluate Performance, Skillfully Adjust Strategy Check customer reaction to brands, prices and advertising Check financial performance Check out competition –strategic direction –tactics –market’s response to their prices, brands, ads

96 Copyright 2001 Ernest R. Cadotte Q4, Skillfully Adjust Strategy As needed, adjust –strategy –brand designs and prices –advertising –sales office locations –sales force management Check finances Feed decisions into Marketplace simulator

97 Copyright 2001 Ernest R. Cadotte Measures of Customer Satisfaction Brand judgment (0 to 100) Price judgment (0 to 100) Ad judgment (0 to 100) 100 indicates complete satisfaction. 70 would be a good brand and ad rating for the first year. New technology will be available in Quarter 5. The new features will make customers happier and yield higher ratings. Price ratings should be near 100 in all quarters.

98 Copyright 2001 Ernest R. Cadotte Goal of Monitoring Customer Satisfaction Give the customers what they want and do so better than the competition.

99 Copyright 2001 Ernest R. Cadotte Deduce the market’s many response functions Hot Cold LessMore Hot Cold Less More Hot Cold LessMore Hot Cold LessMore Hot Cold LessMore Hot Cold LessMore

100 Copyright 2001 Ernest R. Cadotte Based upon customer feedback, skillfully adjust marketing tactics Revise brand designs or create new ones Revise ad copy Adjust prices Hire more sales people or deploy them differently Add or take away elements to find the sweet spot in the customer’s response function.

101 Copyright 2001 Ernest R. Cadotte Competitor Benchmarks Brand and ad designs Prices and sale priorities Sales staffing Ad placements Demand by brand by segment

102 Copyright 2001 Ernest R. Cadotte Goals of Competitive Benchmarking Reverse engineer the strategy of each competitor Determine who is a threat and who is not Determine strengths and weakness of competition Emulate good decisions Predict direction of competitive moves Adjust strategy and tactics in reaction to competitor strengths and weaknesses and in anticipation of future moves.

103 Copyright 2001 Ernest R. Cadotte Financial Performance Division profitability Brand profitability Region profitability Return on investment

104 Copyright 2001 Ernest R. Cadotte Goals of Financial Management Discover which brands and markets are making the greatest and weakest contribution to the bottom line. Deploy resources to correct weaknesses and take advantage of strong performers.

105 Copyright 2001 Ernest R. Cadotte Measurement of the Division’s Performance The Balanced Scorecard

106 Copyright 2001 Ernest R. Cadotte Why Use a Balanced Scorecard? It is too easy to get caught up in market share and short-term profits. Long-term viability requires that managers also deliver customer satisfaction and invest in the future. The balanced scorecard measures both the long-term and the short-term. The best managers will be good in all areas measured.

107 The Balanced Scorecard Final performance will be computed based upon: –Financial Performance (profit as percent of sales); –Market Performance (market shares in 2 target segments); –Marketing Effectiveness (customer satisfaction with brand and advertising designs in 2 target segments (scored 0 to 100) plus unit sales per sales person); –Investments in the Future (spending on new offices and research and development as percent of sales); and –Creation of Wealth (total profit/total investment). –The Final Score is a single number which combines all of these factors. Quarter 8 results will be used to compute the final score.

108 Copyright 2001 Ernest R. Cadotte View Software

109 Copyright 2001 Ernest R. Cadotte Learning Points for Quarter 4 Using the tools of management –market feedback –competitive benchmarking –profitability analysis (activity based costing)

110 Copyright 2001 Ernest R. Cadotte Learning Points for Quarter 4 The management of strategy –learning from your customers –learning from your competition –learning from your financial information –skillfully adjusting your strategy and tactics Management of financial resources

111 Copyright 2001 Ernest R. Cadotte The following slides are for Quarter 5.

112 Copyright 2001 Ernest R. Cadotte Quarter 5, Making Plans for the Future

113 Copyright 2001 Ernest R. Cadotte What is new in Quarter 5? 5,000,000 in additional funding Ability to invest in R&D for new brand features

114 Copyright 2001 Ernest R. Cadotte Corporate Headquarters is willing to invest another 5,000,000 Demand is up for the entire industry Your firm has established itself as a viable competitor New sales offices would greatly expand distribution, drive up unit volume, and thereby reduce unit costs. New brand features could be brought on the market if you invest in R&D. These brand features will increase customer satisfaction, and thereby demand.

115 Copyright 2001 Ernest R. Cadotte Your goal is to speed up the adoption rate. Demand Time introduction growth maturity decline You are here. New brand features and new sales offices will push you into the growth phase.

116 Copyright 2001 Ernest R. Cadotte Before it makes its investment, Corporate Headquarters wants a marketing plan for the second year

117 Copyright 2001 Ernest R. Cadotte A strategy is a plan of action A strategy is a series of interconnected tactics purposely organized to be executed in a particular order in time and space for the purpose of achieving specific goals.

118 Copyright 2001 Ernest R. Cadotte The best-planned strategies will not survive the test of battle Gen. George Patton

119 Copyright 2001 Ernest R. Cadotte Plans are worthless, but planning is everything Gen. Dwight D. Eisenhower

120 Copyright 2001 Ernest R. Cadotte The devil is in the details. Adm. Rickover

121 Copyright 2001 Ernest R. Cadotte It is better to have a class-A team with a class-B plan than to have a class-B team with a class-A plan. Almost any senior executive

122 Copyright 2001 Ernest R. Cadotte Headquarters Wants a Plan History of firm Market assessment Performance to date Marketing strategy Financial strategy Pro forma income statements What is in it for the company?

123 Copyright 2001 Ernest R. Cadotte Market Assessment Nature of business opportunity Market potential Competition

124 Firm’s Performance After 1 Year Market position –segments –geography –competition Market performance –demand and market share –customer satisfaction (brands, prices, reliability) Financial performance –cash –profitability

125 Marketing Strategy Target markets Distribution – –geographic market expansion –timing and order of new markets Sales force staffing –number by quarter –percent allocation by segment and service Advertising (timed to match new offices, brands) –themes/messages –frequency (volume) by region –emphasis on regional versus local

126 Copyright 2001 Ernest R. Cadotte Marketing Strategy Brand strategy (portfolio management) –selection of R&D features target segment cost and timing of availability –introduction of new brands target segment timing –price strategy margins by brand by target market new versus established brands

127 Copyright 2001 Ernest R. Cadotte Financial Strategy Cash flow requirements –Amount to be invested by quarter in R&D –Amount to be invested by quarter in new sales offices Profitability –Projections of profits by quarter –Return on investment by end of second year Sources of money –Corporate Headquarters –Profits

128 Copyright 2001 Ernest R. Cadotte Oops Factor in Strategic Planning Develop tactical plan Check available cash Oops! Check available cash Revise tactical plan

129 Copyright 2001 Ernest R. Cadotte What is in it for Corporate Headquarters? How will its money be spent? How much will it earn and when will it earn it?

130 Copyright 2001 Ernest R. Cadotte Procedure for Presentation to Corporate Headquarters Each team is given 15 minutes to present its marketing plan to Corporate Headquarters. Corporate Headquarters will take15 minutes ask questions about the division’s performance to date, assessment of the current situation and strategy for the future. The executive team can not proceed until the plan has been approved by Headquarters.

131 Copyright 2001 Ernest R. Cadotte Learning Points for Quarter 5 Strategic and tactical planning –time phasing decisions into the future –working investment money to support tactical plans Understanding cash flows –cash is king –how is profit different from cash?

132 Copyright 2001 Ernest R. Cadotte Learning Points for Quarter 5 Management of strategy –discover the causes of performance shortfalls –adapt to new opportunities and problems –work on the margin to improve performance where should money be spent next? how can we get more out of our current investments? –manage the future (taking the initiative now by expending resources that will shape the events and opportunities of the future)

133 Copyright 2001 Ernest R. Cadotte Learning Points for Quarter 5 Management of strategy (continued) –discover and exploit the market’s many response functions –learn from smart competitor decisions –You can not go to Hawaii on market share (at the end of the day, wealth creation is the goal)

134 Copyright 2001 Ernest R. Cadotte The following slides are for Quarters 6, 7, and 8

135 Copyright 2001 Ernest R. Cadotte Quarters 6, 7, and 8 Skillful Adjustment

136 Copyright 2001 Ernest R. Cadotte Your goal is too manage your division’s total performance The best marketers are good at managing –Financial Performance –Market Performance –Marketing Effectiveness –Investments in the Future –Creation of Wealth

137 Use the Balanced Scorecard Final performance will be computed based upon: –Financial Performance (profit as percent of sales); –Market Performance (market shares in 2 target segments); –Marketing Effectiveness (customer satisfaction with brand and advertising designs in 2 target segments (scored 0 to 100) plus unit sales per sales person); –Investments in the Future (spending on new offices and research and development as percent of sales); and –Creation of Wealth (total profit/total investment). –The Final Score is a single number which combines all of these factors. Quarter 8 results will be used to compute the final score.

138 Copyright 2001 Ernest R. Cadotte Skillfully adjust your marketing strategy to expand your position in the market Demand Time introduction growth maturity decline You want to move in this direction.

139 Copyright 2001 Ernest R. Cadotte Learning Points for Quarters 6, 7, 8 Strategic and tactical planning –time phasing decisions into the future –working investment money to support tactical plans Understanding cash flows –cash is king –how is profit different from cash?

140 Copyright 2001 Ernest R. Cadotte Learning Points for Quarters 6, 7, 8 Management of strategy –discover the causes of performance shortfalls –adapt to new opportunities and problems –work on the margin to improve performance where should money be spent next? how can we get more out of our current investments? –manage the future (taking the initiative now by expending resources that will shape the events and opportunities of the future)

141 Copyright 2001 Ernest R. Cadotte Management of strategy –discover and exploit the market’s many response functions –learn from smart competitor decisions –You can not go to Hawaii on market share (at the end of the day, wealth creation is the goal) Learning Points for Quarters 6, 7, 8

142 Copyright 2001 Ernest R. Cadotte The Following Slides Are Used for the Final Summary

143 Copyright 2001 Ernest R. Cadotte Experiencing Marketing the Marketplace

144 Copyright 2001 Ernest R. Cadotte When we work strictly in our functional silos, we are like a bunch of blind people trying to understand what an elephant is. Please tell me what it is.. It’s a snake. It’s a tree trunk. It’s a sheet of rawhide. It’s a steel tube.

145 Copyright 2001 Ernest R. Cadotte With business war games, you can crawl all over and under the marketing organization to help you to see and understand the whole thing It is a marketing organization! Brands Distribution Research Pricing Advertising

146 Copyright 2001 Ernest R. Cadotte Key Benefits Develop teamwork across marketing functions. Promote better decision making by helping students see how their marketing decisions are interconnected and need to be managed as a whole. Facilitate learning of important marketing concepts, principles and ways of thinking

147 Copyright 2001 Ernest R. Cadotte Key Benefits Develop marketing planning and execution skills within a rapidly changing environment. Instill a bottom line focus and the simultaneous need to deliver customer value. Crystallize the financial implications of marketing decisions by linking them to cash flows and bottom-line performance.

148 Copyright 2001 Ernest R. Cadotte Key Benefits Discover how important it is to use market data and competitive signals to adjust the strategic plan and more tightly focus business tactics. Build marketing confidence through knowledge and experience.

149 Copyright 2001 Ernest R. Cadotte Course Evaluation Experiencing Marketing the Marketplace


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