xcalibur The Might of Markland William Johnson Eduardo Kamisato Barbara Mulvenna

The Road To Success

Starting Position

Strengths  Initial Market Placement  High Brand Awareness in Key Market Segments –Singles and Others  Initial evaluation tools –Brand awareness –Purchase Intention –Market Share based on Unit sales

Initial Indicators  SECT  SELL

Weaknesses  Small Overall Market Share  Low Product Volume  Inferior Products (low Power)  Small Budget The company’s strong initial positioning will overcome its shortcomings.

Objectives

Initial Objectives  Growth in Singles of 24%  Growth in Others of 19%  Large potential in these markets.  Cumulative growth 226% and 135%, respectively.  Greatest potential off all market segments.  If Excalibur merely maintains its market share, it can achieve an estimated growth rate of 177% over five periods.

Evolving Objectives  Sequential market entry –Singles, Others, Pros, Buffs, High Earners  Full product portfolio  Contrarian strategy

Successes  Excalibur did maintain its market share in the key segments discussed.  In the Others and Singles markets, Excalibur had market shares of 33% and 35%, respectively in period 6.  This resulted in cumulative growth (on a unit basis) of 302% and 196% in the Singles and Others markets.  The net growth in unit sales of Excalibur by period 6 was 251%, even better than the projected value of 177%

Successes (continued) Broad product offering –Range of portfolio products –Large price range Overwhelming presence in Sonite market Leadership position in all markets

Setbacks  Too much focus on market share in terms of units sold.  Not looking for the market share in terms of dollars.  Failed to deploy strong individual brand management.  Lower profit margins.  Using advertising to seek market share, ignoring the importance of profitability of each brand.

Setbacks (continued)  Neglected to use the advertising experiment and the sales force experiment surveys in an efficient manner until the last four rounds.  Overspending in advertising and neglecting the distribution channels.  Flanking strategy was not efficient.  Needed to aim directly to target markets with exact product.  Using one brand to serve two market segments.

Key Factors Driving Demand

Factors Driving Demand Growth  Growth in Singles and Others Population  Changing market needs –Higher power needs –Changing pricing –Product obsolescence  Advertising

Competitive Barriers

Competitive Conditions  Market entrenchment –Over-crowded market segments  Lack of distribution channel coverage  High R&D costs to innovate –Low budget of Excalibur caused disadvantage  High market introduction costs –Advertising –Distribution

Expanding Market Share

Starting Position  Excalibur began as the smallest company in the Samurai industry.  Its sales were less than half of the first company and 10% smaller than the fourth company.  Low power products only nominally met the needs of the market.

Current Position  Excalibur now has the second largest dollar sales of sonites and the largest unit sales of sonites.  Excellent progress was made resulting in substantial growth in sales, product lines, and profitability.  The executives of Excalibur have left the company with products in every major sonite market segment.  All market segments are dominated by Excalibur.

Advantage Companies leaving the sonites market to focus on the vodite market gave Excalibur an opportunity to excel in its core competency.

Products

Portfolio

Enhancing Future Market Position

Recommendations  Reduce costs of SEBU and SEHE –Improve margins  Introduce new Singles product –Higher power product needed  Enter vodite market –Wait for some market stabilization –Focus on followers segment

Effectiveness of Excalibur Management

Initial roles  Specialization within Excalibur accelerated over time.  Occurring as it became obvious that there was no time for the group to make all decisions by committee.  Building trust among the individual members played an important role in later decision processes.  As the complexity of the data and the decisions grew, it was necessary to specialize, each individual contributing what was needed for the group to succeed.  By period 9, the activities of any one member could not have easily been duplicated by any other member.

What We Learned xcalibur

Conclusions  Focus on profits not market share  Focus on overall strategy –Not on individual product performance –Not individual market segments  Think big –Not just where you are now  Learn from your mistakes –Be flexible –Change your strategies as necessary