are for the introduction to the Marketplace Marketing Strategy game.

are for the introduction to the Marketplace Marketing Strategy game.
The following slides are for the introduction to the Marketplace Marketing Strategy game. Copyright 2003 Ernest R. Cadotte,

Experiencing Marketing Strategy
Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

Copyright 2003 Ernest R. Cadotte, www.marketplace-simulation.com
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 Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

The step-by-step process walks you through the information and decisions. The software controls your progression to reduce your uncertainty and to help you see the logic of the marketing process. Copyright 2003 Ernest R. Cadotte,

Be sure to read the directions on how to use the Marketplace software

Here is the game scenario
You work for a large international electronics firm. Corporate Headquarters wants to enter the personal computer business. Copyright 2003 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. Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

You must develop an overall strategy, including which segments you want to target initially. For example, the Traveler segment might be selected as your number 1 segment. Copyright 2003 Ernest R. Cadotte,

Once you select a segment, you must design a brand to meet the needs of the segment. Portability is important to the Traveler segment. What features would increase the portability of a PC? Copyright 2003 Ernest R. Cadotte,

You must design ads which appeal to the target segment.
You decide which brand will be featured in the ad. You select the benefits to mention in the ad and indicate their order of priority. Copyright 2003 Ernest R. Cadotte,

As the quarters progress,
you decide how you want to expand your international market coverage. Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

You can see your market share by segment and for the whole market.
Your company is Apollo. Copyright 2003 Ernest R. Cadotte,

Your brand 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.) Copyright 2003 Ernest R. Cadotte,

Grading: The Balanced Scorecard
Final grade 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) Creation of Wealth (total profit/total investment); and The Final Score is a single number which combines all of these factors. Quarter 8 results will be used to compute the grade. Copyright 2003 Ernest R. Cadotte,

You can also compare your scores against industry standards.

How is the marketing game conducted?
Teams are placed in a game scenario that has them starting up and running a new marketing division. The opposition is played out by other student competitors. Copyright 2003 Ernest R. Cadotte,

Objective is to profitably capture a dominant market position
Opponent Opponent Market Business Team Opponent Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

How Conducted? At the outset of each quarter, you will receive information on the 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 you. Copyright 2003 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). Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

Chronology of Events Q6 – Q8, Refine the marketing strategy Introduce new brands with new R&D features Continue with market expansion by adding advertising, sales people and new offices. Study the market and financial data to determine how to better meet customer needs and surpass the competition through brand design, pricing, advertising, and distribution. Copyright 2003 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, plan for third year, how well the division is prepared to compete in the future. Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

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 Copyright 2003 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. Copyright 2003 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. Copyright 2003 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 Copyright 2003 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 . Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

Q1, Organize the Business
Name the company Assign organizational responsibilities Purchase survey of end users Copyright 2003 Ernest R. Cadotte,

Learning Points for Quarter 1
Managing the team Organizing the work Deciding what one wants from the learning experience Copyright 2003 Ernest R. Cadotte,

What to Turn in Each Quarter? Nothing!
The Instructor has complete access to your decisions and results. Starting in Quarter 4, you can also compare yourself to every other player in your game when you sign in each quarter. Copyright 2003 Ernest R. Cadotte,

Marketplace Is a Fun Way to Learn About Marketing!

The Following Slides Are For Quarter 2

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 Copyright 2003 Ernest R. Cadotte,

How do you decide what to design into a brand?

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? Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

What is the elasticity of the peanut?
Searching for the Market’s Response Function Copyright 2003 Ernest R. Cadotte,

Which candy bar has the most peanuts?
Milky Way Baby Ruth Snickers Payday Copyright 2003 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? Copyright 2003 Ernest R. Cadotte,

What would be your response function for the following?
Chocolate Caramel Coconut Rice Peanut butter Copyright 2003 Ernest R. Cadotte,

Here are a number of response functions. Which one applies to peanuts, chocolate, coconut, etc? Hot Cold Less More Hot Cold Less More More is always better More is good to a point and then ceases to add excitement Copyright 2003 Ernest R. Cadotte,

No reaction/indifference
Hot Cold Less More No reaction/indifference to having the feature Copyright 2003 Ernest R. Cadotte,

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. Copyright 2003 Ernest R. Cadotte,

The following slides are for Quarter 3

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 Copyright 2003 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 Copyright 2003 Ernest R. Cadotte,

Revenues will fall below costs at the outset of a new business
costs to setup & grow the business + Money Time Copyright 2003 Ernest R. Cadotte,

Profits will come latter
Revenue costs to setup & grow the business + Profit Profits Profits come latter. Time You are here. - Copyright 2003 Ernest R. Cadotte,

Your goal is to speed up the adoption rate.
maturity Demand Time decline growth introduction You are here, high costs-low demand Copyright 2003 Ernest R. Cadotte,

What will the market bear?
You must discover the market response function regarding price. Copyright 2003 Ernest R. Cadotte,

What is the market’s price response function?
Your Demand Price Inelastic (price is not a big factor.) Elastic (demand drops fast with increasing prices) Copyright 2003 Ernest R. Cadotte,

Or, maybe it looks like this.
Your Demand Price Demand drops slowly with small price increases and then drops dramatically with larger price increases. Copyright 2003 Ernest R. Cadotte,

How will the market respond to competitor prices?
Your Demand Competitor’s Price Low competitor prices will kill your demand Copyright 2003 Ernest R. Cadotte,

Low price How to create ads? Easy to use More productive Fast
Office applications Picture office workers Most important Your Ad Least important Order of priority implies importance of message to customer Order of priority tells the ad agency what to stress in the ad Copyright 2003 Ernest R. Cadotte,

How much to say in an ad? (number of benefits)
Which response function is at work? or Hot Cold Less More Hot Cold Less More More is good to a point and then ceases to add excitement More adds value to a point & then takes away value Copyright 2003 Ernest R. Cadotte,

How often do you advertise?
Your Demand Number of ads Diminishing returns Too little Copyright 2003 Ernest R. Cadotte,

But it also depends on what your competitors do
Demand Competitor’s Advertising Strong competitor advertising will steal away your customers Copyright 2003 Ernest R. Cadotte,

The response function is dynamic!
Your Demand Number of sales people Shift the response function upwards with better brands, prices, advertising, sales force placement Copyright 2003 Ernest R. Cadotte,

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 Copyright 2003 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 view and print the results for each quarter’s play, starting with the results of the Q3 test market. Copyright 2003 Ernest R. Cadotte,

The following slides are for Quarter 4.

Quarter 4 - The Skillful Adjustment

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 Copyright 2003 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 Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

Goal of Monitoring Customer Satisfaction
Give the customer what it wants and do so better than the competition. Copyright 2003 Ernest R. Cadotte,

Deduce the market’s many response functions
Hot Cold Less More Hot Cold Less More Hot Cold Less More Hot Cold Less More Hot Cold Less More Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

Competitor Benchmarks
Brand and ad designs Prices and sale priorities Sales staffing Ad placements Demand by brand by segment Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

Financial Performance
Division profitability Brand profitability Region profitability Return on investment Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

Measurement of the Division’s Performance The Balanced Scorecard

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. Copyright 2003 Ernest R. Cadotte,

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. Copyright 2003 Ernest R. Cadotte,

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 Copyright 2003 Ernest R. Cadotte,

The following slides are for Quarter 5.

Quarter 5, Making Plans for the Future

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. Copyright 2003 Ernest R. Cadotte,

Your goal is to speed up the adoption rate.
maturity Demand Time decline growth introduction You are here. New brand features and new sales offices will push you into the growth phase. Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

The best-planned strategies will not survive the test of battle
Gen George Patton Copyright 2003 Ernest R. Cadotte,

Plans are worthless, but planning is everything
Gen. Dwight D. Eisenhower Copyright 2003 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? Copyright 2003 Ernest R. Cadotte,

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 Copyright 2003 Ernest R. Cadotte,

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 Copyright 2003 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 timing price strategy margins by brand by target market new versus established brands Copyright 2003 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 Copyright 2003 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? Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

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? Copyright 2003 Ernest R. Cadotte,

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) Copyright 2003 Ernest R. Cadotte,

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) Copyright 2003 Ernest R. Cadotte,

The following slides are for Quarters 6, 7, and 8

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 Copyright 2003 Ernest R. Cadotte,

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. Copyright 2003 Ernest R. Cadotte,

Skillfully adjust your marketing strategy to expand your position in the market
maturity Demand Time decline growth introduction You want to move in this direction. Copyright 2003 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? Copyright 2003 Ernest R. Cadotte,

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) Copyright 2003 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) Copyright 2003 Ernest R. Cadotte,

The Following Slides Are Used for the Final Summary

Experiencing Marketing Strategy

When we work strictly in our functional silos, we are like a bunch of blind people trying to understand what an elephant is. It’s a snake. It’s a tree trunk. It’s a sheet of rawhide. It’s a steel tube. Please tell me what it is.. Copyright 2003 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 Brands Research Pricing It is a marketing organization! Advertising Distribution Copyright 2003 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 Copyright 2003 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 . Copyright 2003 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. Copyright 2003 Ernest R. Cadotte,

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