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Charlotte H. Mason • William D. Perreault, Jr.
3rd edition
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The Marketing Game is Integrative … and Covers All Aspects of the The Marketing Game is Integrative … and Covers All Aspects of the Marketing Strategy Planning ProcessMarketing Strategy Planning ProcessThe Marketing Game is Integrative … and Covers All Aspects of the The Marketing Game is Integrative … and Covers All Aspects of the Marketing Strategy Planning ProcessMarketing Strategy Planning Process
Technology Political & Legal Social & Cultural EconomicTechnology Political & Legal Social & Cultural Economic
CompanyCompanyMission, Objectives, Mission, Objectives,
& Resources& Resources
CompetitorsCompetitorsCurrent &Current &ProspectiveProspective
S.S.W.W.O.O.T.T.
TargetMarketTargetMarket
ProductProduct ProductProduct PricePricePricePrice
PromotionPromotionPromotionPromotion
External Market EnvironmentExternal Market Environment External Market EnvironmentExternal Market Environment
Targeting &Targeting &SegmentationSegmentation
Positioning &Positioning &DifferentiationDifferentiationPositioning &Positioning &DifferentiationDifferentiation
Narrowing Narrowing downdown to focused strategy to focused strategy with quantitative and qualitativewith quantitative and qualitative screening criteriascreening criteria
PlacePlacePlacePlace
CustomersCustomersNeeds and otherNeeds and other
SegmentingSegmentingDimensionsDimensions
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OverviewOverview
You take over marketing management responsibilities for your firm. Must satisfy customers and earn profits
Focus is on marketing strategy planning. Requires integration of all strategy decisions. Requires attention to competitive environment. Considers short term and long term perspectives. Features ongoing, rapid feedback.
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The ProcessThe Process
Analysis of market situation/opportunities
Planning and budgeting
Make marketing plan DECISIONS!!!
Submit plan decisions
The marketing game! simulation
Company reports returned to firms
NextDecision
period
NextDecision
period
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Industry EnvironmentIndustry Environment
Market growth
Technological environmentNo major innovations expectedYearly revision cycle
Competitive environmentType of competition depends on firms’ decisions
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Six Key Product-Market SegmentsSix Key Product-Market Segments
HarriedAssistants
HomeUsers
High-techManagers
ModernStudents Professional
Creators
ConcernedParents
Segments have different needs, preferences, situations, sizes, growth rates.Segments have different needs, preferences, situations, sizes, growth rates.
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Past Sales By Market SegmentPast Sales By Market Segment
0
5000
10000
15000
20000
25000
0 1 2 3
Year
Assistants
Managers
Students
Home
Creators
Parents
For Voice Recognition Device
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Distribution ChannelsDistribution Channels
HarriedAssistants
HomeUsers
High-techManagers
ModernStudents Professional
Creators
ConcernedParents
Firm 1 Firm 2 Firm 3
Channel 1Traditional
Dealers
Channel 2DiscountDealers
Firm 4
Firms reach customersthrough full-servicedealers and Internet/mail-order discount dealers.
Firms reach customersthrough full-servicedealers and Internet/mail-order discount dealers.
Different segments have different shopping preferences.
Different segments have different shopping preferences.
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Product 1: Voice Recognition Device (VRD)Product 1: Voice Recognition Device (VRD)
Key ProductFeatures
Error Protection (1-10)
Number of Special Commands (5-20)
Ability to Customize (1-10)
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R&D for Product Modifications: Computing CostsR&D for Product Modifications: Computing Costs
Feature Cost to Decrease Cost to Increase
Special Commands (5-20) $0 $8,000*(change)2
Error Protection (1-10) $0 $5,000*(change)2
Ease of Learning (1-10) $3,000*change $3,000*(change)2
Example
Feature
Last period’s product
This period’s product Change Cost to Change
Special Commands 6 8 +2 $8,000*2*2=$32,000
Error Protection 4 3 -1 $0
Ease of Learning 3 5 +2 $3,000*2*2=$12,000
Total modification costs: $44,000
Note: R&D for product changes is more expensive if you have to make big changes in a short period of time…
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Product 2: Digital Vocal Communicator (DVC)Product 2: Digital Vocal Communicator (DVC)
Key ProductFeatures
Similarity of Commands (1-10)
Number of Tasks (1-10)
Ease of Learning (1-10)
Level 3
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Types of AdvertisingTypes of Advertising
Pioneering Direct competitive Indirect competitive Reminder Corporate (Institutional)
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Expanded Marketing Responsibilities (Level 2)Expanded Marketing Responsibilities (Level 2)
PRODUCT Features (and R&D for product modifications) PRICE Wholesale price in each channel
PLACE Distribution intensity in each channel
PROMOTION
-Advertising $ Spending
Type
-Personal selling Number of sales reps in each channel
Percent non-selling time
Commission rate
-Sales promotion $ Spending per Channel
CUSTOMER SERVICE $ Spending
MARKET RESEARCH 7 Reports May be PurchasedDemand Forecast/Production order Number of Units
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Expanded Marketing Responsibilities (Level 3)Expanded Marketing Responsibilities (Level 3)
2 PRODUCTs Features (and R&D for product modifications) PRICE Wholesale price in each channel
for each product
PLACE Distribution intensity by channel, product
PROMOTION-Advertising $ Spending for each product
Type for each product-Personal selling Number of sales reps in each channel
Percent non-selling time in each channelCommission rate
-Sales promotion $ Spending per channel, productCUSTOMER SERVICE $ SpendingMARKET RESEARCH 7 reports may be purchasedDemand forecast/production order Number of units for each product
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Marketing Budget Items (Level 2 and 3)Marketing Budget Items (Level 2 and 3)
R&D product modification costs Sales force salaries and severance pay Advertising expense Customer service expense Sales Promotion Expense Market research reports expense
BUDGET FOR FIRST PERIOD: $984k
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Discretionary BudgetDiscretionary Budget
Policy on initial discretionary budget. Unspent money carries to future periods and
earns interest. “When it’s gone, it’s gone.” Policy on special budget requests.
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Computing PricesComputing Prices
Computing Retail Prices from Wholesale Prices:Expected Retail Price = Wholesale price/(1-% Markup)
Example: Wholesale price = $105Channel 1 Retail Price = ($105/(1-.50)) = $210
Channel 2 Retail Price = ($105)/(1-.35) = $161.54
Computing Wholesale Prices from Desired Retail
Prices:Wholesale Price = Retail Price (1 - % Markup)
Example: Desired Retail Price = $190 Channel 1 Wholesale Price = $190/(1-.50) = $95.00
Channel 2 Wholesale Price = $190/(1-.35) = $123.50
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Retail Prices Charged Final ConsumersRetail Prices Charged Final Consumers
The retail price set by a dealer depends on:
The wholesale price in the dealer’s channel.
The customary markup used in the channel.
The portion of any sales promotion “deals” that the dealer passes along to consumers as a price reduction.
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A “Good” Wholesale PriceA “Good” Wholesale Price
Should cover the unit cost of the product (given its features).
Should result in a retail price that will appeal to target consumers.
Should result in a profit margin that will contribute to other expenses and profit.
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Industry Sales ReportIndustry Sales Report
Brand Unit Sales Share (units) $ Sales (retail)
Firm 1 25,151 .250 $4,292,964
Firm 2 25,151 .250 $4,292,964
Firm 3 25,151 .250 $4,292,964
Firm 4 25,151 .250 $4,292,964
Total 100,604 $17,171,854
Channel Unit Sales Dollars Sales
1 56,296 $10,696.240
2 44,308 $6,475,614
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Product Features and Prices ReportProduct Features and Prices Report
Brandof
VRD
Firm 1Firm 2Firm 3Firm 4
Specialcommands
8888
Errorprotect-
ion
3333
Ease of
learning
3333
Retailprice
channel 1
$190.00$190.00$190.00$190.00
Retailprice
channel2
$146.15$146.15$146.15$146.15
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Market Activity Report (Level 2)Market Activity Report (Level 2)
Adv. DollarsAdv. Type
Sales Promotion Channel 1 Channel 2
No. Sales Reps Channel 1 Channel 2CommissionCustomer Service
Firm 1
$250,000
$0$0
10105%$92,500
Firm 2
$250,000
$0$0
10105%$92,500
Firm 3
$250,000
$0$0
10105%$92,500
Firm 4
$250,000
$0$0
10105%$92,500
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Overview of Market Research ReportsOverview of Market Research Reports
Market share by segment (all brands) Market share by channel (all brands) Consumer preference study Marketing effectiveness report Sales by segment by channel (own brand) Consumer shopping habits study Product positioning report (Level 2 & 3)
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Market Share by Segment ReportMarket Share by Segment Report
Brand
Firm 1Firm 2Firm 3Firm 4
Total Sales(units)
1
0.2500.2500.2500.250
20,028
2
0.2500.2500.2500.250
15,084
3
0.2500.2500.2500.250
25,104
4
0.2500.2500.2500.250
10,240
5
0.2500.2500.2500.250
22,056
6
0.2500.2500.2500.250
8,092
Segment
Who’s selling to whom?Who’s buying what? What is each firm achieving?Which segments are buying?
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Market Share by Channel ReportMarket Share by Channel Report
Brand
Firm 1Firm 2Firm 3Firm 4
Total Sales(units)
Channel 1
0.2500.2500.2500.250
56,296
What’s selling where?Who’s buying what?
Channel 2
0.2500.2500.2500.250
44,308
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Consumer Preference StudyConsumer Preference Study
Segment
Students
Home
Assistants
Creators
Managers
Parents
SpecialCommands
10-13
7-10
10-13
12-15
13-16
5-8
ErrorProtection
2-4
2-4
6-8
2-4
6-8
2-4
Ease ofLearning
1-3
6-8
6-8
4-6
2-4
7-9
PriceRange
low
low
high
high
high
low
What kind of product would a segment prefer?What reference price seems typical for the segment?How are segments similar and different?
What kind of product would a segment prefer?What reference price seems typical for the segment?How are segments similar and different?
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Marketing Effectiveness ReportMarketing Effectiveness Report
Brand AwarenessCustomer Service Consumer Group Rating Industry Average Rating
Channel 1: Sales Rep Workload Dealer Satisfaction Channel Strength (“Push”)
Channel 2: Sales Rep Workload Dealer Satisfaction Channel Strength (“Push”)
Index0.550
100%100%
100%1.00.500
100%1.00.500
Competitorswith lower
Index0
00
00
Competitorswith equal orhigher Index
3
33
33
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Detailed Sales AnalysisDetailed Sales Analysis
Firm
Channel 1
Channel 2
1
896
5,269
2
1,109
3,337
3
5,602
1,396
4
1,808
1,196
5
4,363
1,865
6
1,086
1,074
Segment
Unit sales by segment and channelAre you reaching your target?
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Customer Shopping HabitsCustomer Shopping Habits
Segment
Students
Home
Assistants
Creators
Managers
Parents
Percent of Shopping
in Channel 1
?
?
?
?
?
?
Who shops where?How do shopping patterns match distribution focus?
Percent of Shopping
in Channel 2
?
?
?
?
?
?
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Product Positioning ReportProduct Positioning Report
Brand
Firm 1Firm 2Firm 3Firm 4
1
????
2
????
3
???
?
4
????
5
????
6
????
Segment
Which brands are closest to which segments?Which segments have no close brands?
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RecommendationsRecommendations
Analyze the reports as you would analyze a case.
Make intentional changes. Find a balance in marketing research
spending. Be integrative--think carefully about how each
decision impacts each of the others. Have some fun!
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Market Research Reports (Level 2)Market Research Reports (Level 2)
1. Market share by segment (all brands) 2. Market share by channel (all brands) 3. Consumer preference study 4. Marketing effectiveness report 5. Sales by segment by channel (own brand) 6. Consumer shopping habits study 7. Product positioning report
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Market Research Reports (Level 3)Market Research Reports (Level 3)
1. Market share by segment (all brands) 2. Market share by channel (all brands) 3. Consumer preference study 4. Marketing effectiveness report 5. Sales by segment by channel (own brand) 6. Consumer shopping habits study 7. Product positioning report
Note: separate reports are available for each product,Except for the consumer shopping habits studyNote: separate reports are available for each product,Except for the consumer shopping habits study
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Submitting Marketing PlansSubmitting Marketing Plans
Submitting marketing plans decisions Policy on paper form Policy on electronic file
Each firm has a distinct industry and firm identification Need to keep it straight!
Passwords and the TMGPlan software Remember password used to create Plan It is case sensitive (upper and lower case make a difference) Best to stick to one password!
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List of All Slides (with Hyperlinks)List of All Slides (with Hyperlinks)
1. Title slide2. The Marketing Game: What Is It3. A Little Background4. Special Objectives Served by TMGThe Role of the Marketing Game6. Integrative Marketing Strategy Planning Process7. Overview8. The Process9. Industry Environment10. Six Key Product-Market Segments11. Past Sales by Market Segment (VRD)12. Distribution Channels13. Product Features – Voice Recognition Device14. Computing Costs of R&D for Product Mods15. Product Features – Digital Vocal Communicator16. Types of Advertising17. Marketing Decision Responsibilities – Level 118. Expanded Marketing Responsibilities – Level 219. Expanded Marketing Responsibilities – Level 320. Production Economies of Scale21. Response Functions22. Budget Items – Level 123. Budget Items – Levels 2 and 3
24. Discretionary Budget25. Computing Prices26. Retail Prices Charged Final Consumers27. A “Good” Wholesale Price28. Competitor Analysis29. Industry Sales Report30. Product Features and Prices Report31. Marketing Activity Report (Sample)32. Market Research Reports – Level 133. Market Research Reports – Level 234. Market Research Reports – Level 335. TMG Software36. Submitting Marketing Plans / Policies37. Overview of Market Research Reports 38. Market Share by Segment39. Market Share by Channel40. Average Customer Preferences41. Marketing Effectiveness Report42. Detailed Sales Analysis43. Customer Shopping Habits44. Product Positioning Report45. Recommendations46. Blank side (end of show)47. This list
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Marketing Decision Responsibilities (Level 1)Marketing Decision Responsibilities (Level 1)
PRODUCT Features(and R&D for product modifications)
PRICE Wholesale price
PLACE Distribution intensity in each channel
PROMOTION
-Advertising $ Spending
-Personal selling Number of sales reps in each channel
CUSTOMER SERVICE $ Spending
MARKET RESEARCH 6 reports may be purchasedDemand forecast/production order Number of units
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Marketing Budget Items (Level 1)Marketing Budget Items (Level 1)
R&D product modification costs Sales force salaries and severance pay Advertising expense Customer service expense Market research reports expense
BUDGET FOR FIRST PERIOD: $984k
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Market Research Reports (Level 1)Market Research Reports (Level 1)
1. Market share by segment (all brands) 2. Market share by channel (all brands) 3. Consumer preference study 4. Marketing effectiveness report 5. Sales by segment by channel (own brand) 6. Consumer shopping habits study
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TMGPlan SoftwareTMGPlan SoftwareEasy to use for preparing and evaluating plans, managing reports
Select directory
Select directory
Enter Plan
Decisions
Enter Plan
DecisionsEvaluate spending and profit forecast
Evaluate spending and profit forecast
View, print, and manage
password protected reports
View, print, and manage
password protected reports
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A Little BackgroundA Little Background
Originally developed as the first PC-based marketing strategy simulation in 1985 … Routinely revised and updated since that time.
Now one of the most widely used teaching simulations in the world. Used in hundreds of universities, exec programs and
companies, international competitions, etc. We’ll be using the third edition
You’ll need the student manual and accompanying CD-Rom (which has Windows software):
The Marketing Game!, by Charlotte H. Mason and William D. Perreault, Jr., 3rd edition, published by McGraw-Hill/Irwin, Burr Ridge, Illinois, 2001.
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Competitor AnalysisCompetitor Analysis
Estimate competitor’s net contribution Analyze past strategies & likely changes. Evaluate positioning and target segments.
? XX
X
?
?X
1 2 3 4
Firms
1
2
3
4
5
6
Seg
men
ts
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The Marketing Game: What is It?The Marketing Game: What is It?
A “living” case, where you learn about a situation, evaluate opportunities, develop a strategy, and make marketing plan decisions.
In which you get regular feedback, in a report that summarizes your marketing outcomes and related financial results, based on both your plan and competitors’ decisions.
Where you analyze what you’ve learned by doing … to figure out answers to what you do not know (and could not know!) at the beginning.
That challenges you to improve your strategy in light of the learning...
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The Role of the Marketing GameThe Role of the Marketing Game
The Game offers unique learning advantages, compared to other learning approaches (like reading texts and articles, lectures, guest speakers, case analysis and presentation, projects) because it:
Is dynamic, like most business situations.
Brings the competitive aspects of marketing to life.
Highlights the need for integrative planning based on qualitative and quantitative analysis of the market environment.
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Special Objectives Served by TMGSpecial Objectives Served by TMG
To develop skills in identifying marketing opportunities. This encompasses knowledge of and the ability to apply key marketing frameworks and tools for analyzing customers, competition, and marketing strengths and weaknesses.
To develop insights about creative selection of target markets and making integrative strategy decisions concerning product, price, promotion, place and the needs of a target market.
To develop skills in marketing analysis. To provide meaningful, practical experience in
translating qualitative and quantitative analysis into conclusions about profitable marketing strategies and programs.
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Response Functions and Marketing SpendingResponse Functions and Marketing Spending
Sales
Marketing Spending
ThresholdLevel
SaturationLevel
Spending too little may have little effect, but spending too much just increases costs and reduces profit.
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Production Economies of ScaleProduction Economies of Scale
If the president decides to invest in new equipment,unit production costs will decline as cumulative production increases:
72
75
78
81
84
87
90
93
96
99
102
0 100,000 200,000 300,000 400,000 500,000
Cumulative Units Produced
Pe
rce
nt
of
Ba
se
Un
it C
os
t
