markstrat simulation quiz, MarkStrat, Markstrat
estimating lost sales
purchase intention - market share
Share of voice
(own advertising budget)/(industry total advertising budget)
Minimum base cost
10$
What do all firms need to engage to develop the first sonite product
R&D project
Although we speak of global markets, research by ghemawat and others best describe the world's competitive structure as
Regional or semi-global
Selling price must be higher than transfer cost: true or false?
True
Innovators (V)
willing to try things with risk, high desire for an interest in vodites. higher than average income
Production planning must take into account
• The potential sales for the brand • The existing inventory at the beginning of the period • The flexibility of the Production department
Characteristics of vodite products
- Energy - Connectivity - processing power - Apps - Resolution
Digital initiatives in powerhouse
- Influencer and content marketing - Paid advertising - Organic channels - Retargeting - Email Marketing - Performance marketing - Cross selling
Characteristics of sonite products
- Processing Power - Display - Features - Battery - Design
The company PRIZY sells 100k units of baby toys at a price of 10$ and makes a profit margin of 3% of sales. Assuming a 1% price increase does not affect sales volume and costs remain constant, what will be the impact of a 1% price increase on PRIZY's profits?
0.33
CC: Assuming market shares by segment remain the same for brand ____, how many units of ____ should the team X produce in Px?
1) Market share da consumer survey and panel 2) Number of people in the segment next period da forecast 3)
All 8 different types of analysis
1. Conjoint Analysis 2. Advertising and commercial team experiment 3. Competitive advertising and commercial team 4. Market Forecast 5. Semantic scales 6. Distribution panel 7. Consumer survey and consumer panel 8. Industry benchmarking
STEPS IN MARKETING PLANNING
1. perform a situation analysis 2. set marketing objectives 3. develop marketing strategies 4. implement and control the marketing plan
Channel discounts for mass merchandisers
10%
Research budget level
10-15% to resposition a brand
The battery life characteristic for the sonite brands is between
24-96 hour
The mds study measures brand perception along how many dimensions:
3
economy growth
4%
on average, __% of total advertising expenditures are to advertising research
4%
marketing budget is equal to
40% of the net contribution generated in the previous period
How many customer segments are in the Sonite market:
5
How many customer segments are in the sonite market
5
Consumer panel
500 consumers whose buying behaviour is believed to be representative of the entire market. market share by consumer segment as well as industry sales in the product category.
A sonite is made up of how many main attributes?
6 (5 physical + base cost)
Unit Margin
= retail price - distribution margin - base cost
in which case should a company consider repositioning its offering?
All of the above (changing segment needs, price pressure, new target segment, competitor entry)
What does the 4P's achieve when they work together?
All the above (atrget customers, profit margins, create marketing plan)
Which of those variables is not a psychographic segmentation variable?
Attitude toward product
How do you calculate the averge distribution margin of a brand?
Average of the distribution margins in each channel where the brand is distributed
Decision stages
Awareness, Consideration, Preference, Purhcase intention, Market share, Loaylty, Advocacy
Which of the following choices is not one of the market segments for sonites?
Builders
How can you have a global overview of the competitive performance of your firm vs. its key competitors?
By purchasing an industry benchmarking study
CC: How many (uno dei channels) carry brand _____ in period X?
Competitive intelligence
CC: What company is having the highest advertising budget target fotìr ________ segment?
Competitive intelligence
Where can you find market share info?
Consumer panel
CC: What is the main target segment for brand ____ ?
Consumer survey and panel
What is the 4C's marketin model, extension of the 4Ps?
Cost Consumer value Communication Convenience
The cage model identifies which type of distance?
Cultural, administrative, geographic, economic
Media Categories
Digital owned, digital paid, digital earned, traditional, outdoor
Which of the followint marketing communication tools is typically used to build up a long term image for the brand?
Direct marketing, advertising, sales promotion, after-sales services
What type of study do you need to purchase to have an estimate of the market share of a given brand in a specific distribution channel?
Distribution panel
Advantage of HORIZONTAL INTEGRATION
Economy of scale • Expand share • Less competition
Advantage of VERTICAL INTEGRATION
Efficiency • Control • Eliminate profit centers
brand modification/withdraw
Excess inventory of old brands will be sold to a trading company for a % of the transfer cost >> leads to a loss of (1-%) of transfer cost is taken on this inventory
Due to the _______, manufacturing costs tend to decrease over time
Experience effect (and economies of scale)
What does the term "brand extension" refer to
Extending an existing brand name to a new product category
An online query will be more accurate than a feasibility study for an r&d project: ture or false?
False
In Markstrat, Market Research Reports are free:
False
There are 4 distribution channels available: specialty stores, mass merchandisers, online stores and direct sales force. True or false?
False
Your firm will benefit by having several well-performing brand before introducing Vodites
False
the dimensions used in the mds study are the same for the sonite and vodite market: true or false?
False
the higher the resolution the lower the base cost: true or false?
False
Baby Boomers
Highly interested in Sonite product Demand high performance products Quite price sensitive
What does a perceptual map reveal on marketed brands?
How consumers perceive marketed brands
The two markets in Markstrat are:
Independent
Vodite customers
Innovators, Early adopters, Followers
How to match consumers needs into physical characteristics?
Interpolate
Professionals
Look for high quality, high-performance and easy-to-use products Can afford expensive products
goal
Maximize SPI
Does a company's market rank affect its marketing communication mix?
No
Do vodites take over the demand from sonite products?
No, they are independent
Where is markstrat world?
None of the above, it is a simulated territory for the purposes of the simulation
Commercial team is responsible for _________ & _________ orders
Obtaining and entering
What is selling price?
Price at which you sell to distirbutors
Sonite characteristics
Processing power, display size, Design index, Battery life, features
Initiatives to increase awareness
Product Placement Organic Channels Performance Marketing (FIFA) Performance Marketing (LoL) Retargeting Email Marketin (+/-)
CC: Which are the 2 most impotant characteristics excluding price for the ____ segment?
Semantic scale
Which 3 studies give info on how to reposition a brand to provide more values to customers?
Semantic scale, multidimensional, conjoint analysis
The second letter of the name of your brand identifies
Sonite or vodite
Price increases or decreases should
Stay inder 30%
Your overall objective in markstrat is to maximize:
Stock price index
What is a high share of voice required for?
Successful new brand launch or repositioning
Millennials
Tech dependent, have good product knowledge through extensive product comparison. Demand high quality- price ratio.
What does distribution coverage refer to?
The number of stores carrying a given brand
Brand purchase intentions provide information on
The percentage of potential consumers in each segment who intend to buy a given brand
Which of the following descriptions provides the best definition of the marketing mix?
The way a business combines the main marketing elements to selle products that meet the needs and wants of customers
A niche strategy is a concentration strategy: true or false?
True
Base cost is a characteristic for a vodite brand: true or false?
True
Budget depends on how successful you were last period. True or false?
True
The bcg matrix can only be used to analyze a company's existing brand portfolio: ture or false?
True
Share of voice
Your budget / budget of others
Early adopters
adopt carefully most influential opinion leaders
What 4 categories do we spend budget on
adv, commercial team, R&D and market reports
Your marketing budget is used each period to invest in
all of the above
what are the key advantages of being the first company to enter a new market (also called pioneer advantage)?
all of the above (monopolistic profits, distribution support, production experience)
Competitive advertising
competitive advertising budgets of firms broken down by brand and consumer segment
what are the two key pillars of competitive advantage?
cost leadership and product differentiation
Market forecast
estimates of expected market size in one period and 5 periods. whole market and individual consumer segments.
Feasibility studies
information: minimum base cost at which the product can realistically be manufactured, and the budget required to guarantee its completion at the currently requested base cost
The phases of the product lifecycle are
introduction, growth, maturity, decline
MDS (Mutidimensional Scaling)
is my preferred positioning tool because it boils all the different features and price down to the three dimensions consumers care about when shopping for Vodites. Also, it is easier to think in 3 dimensions than 7.
Multidimensional scaling
joint space configuration. gives perceptual maps, ideal position on the map. To decide on your strategy
Innovators
least growing adventurous, cosmo, wealthier willing to try/risk
Do vodites take over the demand from sonite products?
no, demand is independent.
The convenience of a brand is based mostly on:
none of the above (design, feature and battery life)
Followers (V)
see more risk in buying new products. income level is below average.
how to request a project from R&D
specify: -project name -budget -phtiscal characteristics -base cost
what is a high share of voice required for
successful new brand launch or repositioning
Base Cost
the cost at which each unit will be produced based on an initial production batch of 100,000 units
what should be the end result of a successful positioning strategy?
the creation of a customer-focused value proposition, a cogent reason why the target market should buy the product
base cost
the transfer cost corresponding to the avg unit of production cost for the first 100k units produced
customers make purchase decisions based on:
their perception
Benchmarking study
to anticipate whether competition will launch new brands
product portfolio strategy.
which brands the company will develop and market;
Vodite Products
- Satisfy different needs from that of Sonite products so that demand for the 2 products will be completely independent. - Wont be complementary or any substitution from 1 to the other. - It is anticipated that the Vodite market will be quite attractive if the right products are made available at the right price. - The expertise required of potential suppliers is similar for both markets in terms of technology, manufacturing, marketing & distribution. Therefore, ur division & competitors are the most likely suppliers of Vodites. - Although Sonite & Vodite technologies are similar, all firms will have to engage substantial R&D resources to develop their 1st Vodite product. - Investment of $5 - $10 million may be required 4 each Vodite. . 5 most important physical characteristics 1. Resolution (L/mm): Relates to the sharpness or clarity of the images processed by the Vodite product. A higher level of details can be observed & processed w/ high resolution products. - Resolution isn't definition = total size of the image. - Expressed in lines per millimeter - Range: 20 - 100. 2. Energy Efficiency (bC/Wh): (efficient energy use), About using less energy to provide the same level of performance & convenience. - Higher energy efficiency = Less electricity is used. - Energy efficiency is usually improved w/ more efficient technologies (smaller gates & lower frequency in microcircuits). - Measured in billion computations per watt-hour - Range: 10 - 100. 3. Carbon Footprint (Kg of CO2 released): (greenhouse gas emission) Weights the carbon impact of the product through its lifecycle: manufacturing, transportation, use, recycling and/or discarding. Depending on the scenario selected by your instructor, a "greenhouse gas emission" tax may be put in place by the Markstrat government. In this case, you will be notified 1 or 2 years in advance of the amount that you will have to pay if you market a Vodite product with a Carbon Footprint level above a certain threshold value (in kilograms of CO2). This tax will appear as an exceptional cost, proportional to the kilograms of CO2 emitted by your product above the threshold value. This tax has a fixed amount and will not depend on your volume sales. 4. Connectivity (Index b/w 3-10): Measures the ability of the product to connect to varying networks and/or databases as well as the speed of the connection. - Higher connectivity indices guarantee that the product will be able to connect to a network in almost any situation and to exchange data at a fast pace. - Range: 3 - 10 5. Application programs or Apps (#): # of application programs that can be set up & used w/ the Vodite product. Applications allow user to customize the product & to adapt it to their own needs. - Although there are only a handful of basic applications that each Vodite product must offer, some products offer a very large catalog. - Range: 5 - 100 - - Base Cost ($): 30 +
What is a salesforce experiment?
A study that evaluates expected brand results with an increased salesforce, all other variables remaining constant
A firm brand equity often represents
A substantial portion of its overall value
Initiatives to increase action
Additional services Cross selling (+/-)
Marketing Mix Strategy
Day-to-day operational marketing decisions such as pricing, production, communication and distribution.
What is the reccommended retail price?
List price for customers
The two industries in markstrat include sonites and
Vodite
Explorers (S)
knowledgeable, among the first to use sonite products, looking for high performance, less for convenience, are price-sensitive.
4 overall performance metrix
market share, sales, firm contribution, stock price index
Marketing
set of processesaimed at generating exchanges and relationshipsamong individuals and organizationsin order to create economic and social value as well as to offer customersfunctional and emotional benefits
If objective is to reposition a brand:
should spend significant park of budget in advertising research (10-15%)
Base Cost ($)
(Part of Sonite) Cost at which each unit will be produced, based on an initial production batch of 100,000 units. - decided jointly by the Marketing department - which is mainly concerned w/ margin & profitability- & by the R&D department -which is mainly concerned w/ product feasibility.
The battery life characteristic for the Sonite brands is between:
24-96
The MDS study measures brand perception along how many dimensions?
3 (economy, performance and convenience)
The maximum number of Sonite brands a firm can market at any given time is:
5
The maximum number of sonite brands a firm can market at any given time is
5
Channel discounts for online stores
5%
Where can you find purchase intention?
Consumer survey
Market research reports are free: true or false?
False
Industry Benchmarking study
General information from the annual reports about each of the markstrat competitors. Allows comparison of competitive performance. Sales, production costs, marketing expenditures and other expenses including R&D
Professionals (S)
High quality, high performance, and easy to use products. can afford expensive products and often view price as an indication of quality
A completed R&D project can be used to modify existing brands and:
Introduce a new brand
A completed r&d project can be used to modify existing brands and
Introduce a new brand
Distribution channels
Mass Merch, specialty store, ecommerce, estore
Number of consumers who own the product/total potential population
Product's penetration rate
Marketing Mix decisions
Production planning, price, advertising and segmentation strategy
Sonite Customers
Professionals, Baby Boomers, Gen X, Millenials, Gen Z
Vodite characteristics
Resolution, energy efficiency, carbon footprint, connectivity, apps.
Return on marketing investment (ROMI):
Revenue generated by investment in a given marketing program divided by the cost of the program at a given level of risk
MARKET POTENTIAL
The maximum (ideal) level that the market demand can reach in a given period of time and in a given spatial context, under the hypothesis that all cumulated marketing investments (i.e., those of all companies operating in that industry) are at their highest possible level.
What is brand awareness?
The percentage of potential consumers who can recall a given brand name
The higher the price elasticity, the grater the sale volume growth with 1% price reduction: true or false?
True
Unit cost will increase if you try to reduce carbon footprint of your products: true or false?
True
the similarity of r&d projects will have an impact on costs: true or false?
True
A sonite r&d project requires more time than a vodite r&d project: true or false?
Unknown
Gen Z
Value performance and convenience But very price sensitive
The two industries in Markstrat include Sonites and:
Vodites
Economic Environment
You operate in an economy that currently has an average inflation rate of 2%. Inflation affects the production, advertising, commercial and market research costs of your company. - It is unlikely that inflation will reach much higher levels in the future. Should this be the case, the gov may decide to impose price control on all brands. The Gross National Product (GNP) provides u w/ information about trends in the Markstrat economy. In the recent past, the overall economy has been growing at a rate of 4%.
Flobalization risks include
a, b & c are all globalization risks ???
Maming R&D projects
always 5 letters -start with P -second letter s for sonite or v for voldite
what are the different stages typically observed among adopters of new products?
awareness => interest => evaluation => trial => adoption
feasibility studies
get estimates for base cost and R&D budget -cost $100k -info is very accurate and not overestimated -takes time to complete
Shoppers (S)
good knowledge of marketed brands and do extensive product comparison. High quality to price ratio. Av. levels of performance and convenience.
High earners (S)
high incomes, purchase partially motivated by social status. demand performance and convenience.
which of those positioning strategies do you believe is the most effective?
the combination of both positioning methods
How can you assess the relationship between a tangible product charatcteristic and its perception by potential customers?
using multidimensional scaling studies
Please choose the correct statement in the options below. in a conjoint analysis:
utilities of various levels are provided for each of the five physical characteristics of a product and for each segment
The segmentation and positioning strategy
which market segments will be targeted and how products will be positioned;
MarkStrat is Marketing Analytics based Strategy
•Wealth of data •Many different paths you can take on strategic decisions The Example •I took over running of company T in Industry Bravo in the second turn of the practice round. •At this point, T had the lowest share price index (920) •My first step was performing a situation analysis using SWOT (Strengths, Weaknesses, Opportunity, Threats.
Varaiation between the production plan and the actual production is due to the automatic adjustment of ___% depending on market demand
+- 20%
Gen X
Like premium quality products, and price can be seen as an indication of quality
physical characteristics and base unit production cost are defined by a project's
base R&D project
The two markets in markstrat are
independent
The performance of a brand is based mostly on
processing power and display size
Production cannot be considered as an external supplier: true or false?
False
The product MOST is manufactured by firm:
M
Savers (S)
cheap, low performance products with average convenience.
Semantic scales
data based on semantic differential questionnaire. semantic scales corresponding to physical attributes of products, show brand perceptions, ideal value and its evolution, brand maps and ship between brand attributes and brand perceptions. for R&D study design
Advertising experiment
increasing advertising budgets in a selected regional market - projecting the level of awareness and market share that would be achieved nationwide by each brand with the same increase in advertising and if competitive landscape remained unchanged. impact on brand contribution
CC: Which of these brands is best positioned to the _____ segment?
market share, consumer survey and panel
Ideal attribute
minimum level + (max level - min level) x [(ideal on semantic scale - 1)/(7-ideal)]
Followers
most consumers wait until hearing from others
Which of the following makes up the marketing mix?
product, price, promotion, place
what is the ideal life-cycle of a sbu (strategic business unit) based on the bcg model?
question mark => star => cash cow => dog
Unit cost will increase if you try to _______________ of your products
reduce the carbon footprint
Company results
- Company dashboard - Financial report - Production report - R&D report - Decision review
Marketing initiatives in powerhouse
- Trade in offers and bundles - Partnerships - Product Placement - Additional services
Strategic Planning Steps
1. Define the Mission 2. Evaluate external and internal environment 3. Set organizational or SBU objectives 4. Design the Business Portfolio 5. Develop growth Strategy
SBU (Strategic Business Unit) is characterised by:
1. One single stream of activity or different streams that are connected 2. Internally build competitive system and practices 3. Managed by responsible and experienced leaders
In Markstrat, if you have no units in inventory, you ask your production department to produce 100,000 units and the demand is 140,000, you will be able to sell:
120,000 (Hence, if you did not order enough units to cover the demand, the production will be automatically increased by up to 20%. On the contrary, if you ordered too many units and cannot sell them in the period, the production will be automatically reduced by up to 20%.)
If you have no units in inventory, you ask your production department to produce 100,000 units and the demand is 140,000 units, you will be able to sell
120,000 units
Transfer cost should be reduced by __% each time the cumulative production of a product is doubled
15%
transfer cost should be reduced by __% each time the cumulative production of a product is doubled
15%
Average inflation rate
2%
Initiatives to increase interest
Additional services (+/-) Performance Marketing Tennis (+/-)
Naming Conventions
Brand names are made up of up to 6 characters. - 1st letter identifies the firm marketing the brand (M, R, S, T, L or N). - 2nd letter must be an 'O' for a Sonite or an 'E' for a Vodite. - Other characters can be letters or #'s & can be freely chosen by each firm to generate different brand names. - Ex: brands TONE & TOPS would be Sonites marketed by firm TIGERS, while MEGA and MEMO would be Vodites marketed by company MARMOTS. - All new brands must follow these conventions & have different names. - The selected name has no influence on the market response to the brand.
How can you assess the relationship between a tangible product characteristic and its perception by potential consumers?
By using multidimensional scaling studies
CC: Which brand will benefit the most if company X decides to hire 10 new salesppl in each channel (assuming that competitive actions remain unchanged)?
Experiment
The higher the resolution, the lower the base cost: true or false?
False
there is only one way to re-position a brand: through advertising. True or false?
False
In Markstrat, there are 4 distribution channels available: Specialty Stores, Mass Merchandisers, Online Stores and Direct Sales Force.
False (3: Specialty stores, Mass merchandisers, Online stores)
CC: How many units of brand _________ have been sold in (one of the channels) in Px?
Financial report
The first letter of the name of your brand identifies
Firm
The product most is manufactured by firm
M
CC: Which of those segments is likely to become the largest segments on the sonite market over the next 5 periods?
Market forecast
What are sematic scales?
Market research studies aimed at assessing consumer's needs and estimating how brands are perceived
What are semantic scales?
Market research studies used during the advertising concept testing phase to assess how consumers rate different sets of advertising messages on a scale from 1 to 7
Share price index takes into account
Market share Sales growth Net contribution each period R&D investments
Markstrat currency
Markstrat dollar
The obsolete inventory is sold to a
Trading company
Consumer survey
brand awareness, purchase intentions, shopping habit data for each consumer segment in the market.
Conjoint analysis
calculated the value attached by customers to varying levels of physical characteristics or price. to validate findings in semantic scales and MDS, see if maximizing value/uility
R&D online query
can check with R&D dept how feasible a project is at any time and they'll respond immediately w/ estimated base cost and budget -best estimates and no cost and without investigation -include an over-estimation factor
Which of the following is not one of the "imperatives" that drive companies to become more global?
currency exchange
Primary data are
data freshly gathered for a specific purpose or for a specific research project
Which of the following piece of research is a qualitative one?
focus group
Commercial team experiment
increasing the size of the commercial team in each channel in a selected regional market. project the additional number of distributors and market share that would be achieved nationwide by each brand with the same increase in commercial budget and if competitive actions have remained unchanged.
Early adopters (V)
influence on other consumers is high, average income level
Online queries
information: estimate of the budget required to complete a project. Usually over estimate as much as 15%
To be useful, market segments should be
measurable, substantial, accessible, differentiable and actionable
Why is strong brand equity an asset?
All of the above (price premium, drives customer preferences, increase customer loyalty)
ANSOFF MATRIX
A Matrix looking at growth potential of a firms products. It classifies strategies into market penetration, new product development, market development and diversification and measures the degree of risk associated with each strategy.
Which of the follwing factos should be considered when setting a brand's marketing communication mix?
All of the above (type of product market, buyer-readiness stage, rpdict life-cycle stage)
In Markstrat, your marketing budget is used each period to invest in:
All of the other alternatives (Advertising, Sales Force, Market Research)
Which of the following kpis will you learn about by conducting an advertising experiment?
Awareness, market share and contribution after marketing
Physical characteristics and base unit production cost are defined by a project's
Base R&D project
What are the two key factors affecting purchase intentions?
Brand awareness and brand positioning
the economy of a brand is based on
price
smart objectives are
simple, measurable, actionable, realistic, time-bound
If objective is to increase or maintain awareness, should:
spend bulk of budget in media space purchase and only a small amount in research (4-8%)
The perceptual map study is based on the mds study: true or false?
true
according to you, and based on the bcg matrix principles, which of those strategies makes more sense?
use the cash generated by cash-cows to turn question marks into stars
Due to the _______, manufacturing costs tend to decrease over time
experience effect
What type of study do you need to purchase to have an estimate of the number of people who know a given brand?
Consumer survey
A segmentation strategy is effective provided
segments are substantial, i.e. large and profitable enough to serve
swot analysis is a diagnostic tool often used by marketing teams, which has proven very useful for making strategic decisions. what elements is this tool based on?
strengths, weaknesses, opportunities, threat
what is the key objective of a harvest strategy?
to increase short-term cash flow regardless of long-term effect
Competitive commercial team
estimates the size of competitive commercial teams by firm, brand and channel.
which are the three key pillars of marketing strategy?
segmentation, targeting, positioning
Initiatives to increase engagement
Trade in Offers Bundels Partnership (+/-) Influencer content marketing (+/-)
Sonite Customers
Adults who purchase the products for personal or professional use. 5 groups of customers/segments w/ similar needs & purchasing behavior. 1. Explorers (Ex) - High level of interest in Sonites & other similar products. - Knowledgeable about Sonite technology & different characteristics of existing brands. Probably among the 1st to use Sonite products. - Demand high-performance products (products w/ high processing power and/or large screens) - Less concerned w/ convenience of the products (battery life, design or number of features) but are quite price-sensitive, since they use Sonite products for their personal use & don't necessarily have high incomes. 2. Shoppers (Sh) - Do a lot of shopping. - Have good knowledge of marketed brands & do extensive product comparison. Look for products w/ a high quality -price ratio & average levels of both performance and convenience. - Like Explorers, they use Sonite products for personal purposes & are price-sensitive. 3. Professionals (Pr) - May use Sonite products for both personal & professional reasons. - Looking for high quality, high-performance & easy-to-use products. Can afford expensive products & often view price as an indication of quality. 4. High Earners (Hi) - High incomes, using Sonite products on a private basis. Usually buy fairly expensive products which they can afford, & their purchase is partially motivated by social status. - Although they tend to use their Sonites less than the average consumer, they demand performance & convenience from the products. 5. Savers (Sa) - Consumers who are cautious in the way they spend their money. - Although this segment is the largest & is composed of several sub-groups, most customers have similar needs. - Looking for cheap, low-performance products w/ average convenience. The penetration of this segment is not as high as the other segments. Consequently, its future growth rate could exceed forecasts. . Each segment has specific needs in terms of physical characteristics and price. Awareness levels and purchase intentions vary significantly for existing products from one group to the other. Market forecast studies show that the sizes and growth rates of the five segments are significantly different. This is explained in part by the development stage of each segment, by the varying product offerings, and by the intensity of marketing effort targeted at each segment.
Sonite Products
All rival firms market 2 Sonite brands @ the beginning of the simulation. - Existed for several years and the market has grown consistently since existence. - Now a well-established market, w/ several strong brands at different price points covering a wide range of needs. - Analysts believe that the Sonite market will continue to grow over the next 5 years. - A Sonite is a complex piece of equipment made up of several components. Although they can be evaluated along more than 50 attributes, Sonite brands are primarily differentiated by 5 physical characteristics - offering more of a certain characteristic is not necessarily better. . 1. Processing Power (GFLOPS): Measures the speed of the internal processor. High processing power is critical for applications using extensive graphics or doing a lot of calculations. It gives the ability of the Sonite product to process multiple tasks simultaneously. - Given in gigaflops (billions of floating point operations per second), a standard & respected measure that takes several factors into account: # of "cores", internal memory size, frequency, etc. - Range: 5 - 100 2. Display Size (inch): Size of the screen. Enables Sonite product to display higher quality images or videos, or more info to the user @ given time. - Range: 4 - 40 3. Design (Index): Doesnt relate to the product esthetic but the type of raw materials used (wood, plastic, metal ...), to the # of components (all-in-one type versus multiple-component type), to the aspect of its various components (position, size ...). Therefore, a product rated 8 on the design scale is not better or easier-to-use than one rated 4 on the same scale. - Range: 3 - 10 4. Battery Life (H): # of hours during which the Sonite product can operate w/o being connected to the main power. - Range: 24 - 96 5. Features (#): Total # of features offered by the Sonite product. Can be hardware related (ability to connect various devices to Sonite product, or software related). - There are a minimum # of core features that each Sonite product must offer. Additional ones are nice to have that may be of interest to some consumers. - Range: 5 - 20 - - Base Cost ($): 25 +
Distribution Channels
Sonite & Vodite consumers tend to shop in these 3 distribution channels: 1. Specialty Stores - Usually small & may not belong to organized chains. - Geographically close to their customers & can provide a high level of service & technical support. - Don't distribute many different product categories, Sonite products account for a large proportion of their sales. - Carry a broad product line for each category, including the most expensive and/or high-performance products. - Bc of their high level of technological expertise, specialty stores are likely to be the preferred distribution channel for Vodite products. 2. Mass Merchandisers - Operate on a low-price, high-volume basis & try to minimize overhead. - Level of service is lower than that of the other 2. - Carry many different product categories, the depth of each product line they carry is usually restricted to a few units. - Often distribute the cheaper, low-performance products. - Lack of technical expertise & low level of service may well prevent them from distributing Vodites in the early yrs. 3. Online stores - Includes web-only merchants (amazon.com and newegg.com) & e-commerce websites of traditional retailers (BestBuy.com, Walmart.com, etc.). - Although only a small % of consumer electronic sales are done on the web, this % is much higher for Sonites products, especially for highly connected consumers (Shoppers). - Key advantage of online stores = Convenience, as consumers may shop from their home at the time of their choice. - Have access to an almost unlimited choice & can compare features & prices very easily. - Privacy & security = primary concerns of online shoppers, but new mechanisms are put in place by banks & e-commerce sites to reduce fraud. - Online stores are likely to become more important in next 5 - 10 yrs. . - Within the Sonite market, market research studies show that all 3 distribution channels are important; therefore, each of them should be visited by the companies' commercial team. There are approximately 10,000 specialty stores, 6,000 mass merchandisers belonging to 6 different chains, and 1,000 online stores. - Differences b/w margins obtained by the stores in each of the 3 channels are mainly due to differences in the level of service & volume sold. - These margins are applied to retail prices & are constant across brands for a given channel. - In Markstrat, the distributor margins are 40% for specialty stores & 30% for the other ones.
Vodite Customers
While potential consumers for Vodites are the same individuals as those who buy Sonites, a different segmentation strategy is likely to be appropriate for Vodites. Further studies needed, but experts believe that it will be more effective to group consumers according to how they adopt new products. 1. Innovators (In) - Will be the 1st users of Vodite products. - Adventurous & willing to try new ideas w/ some risk. - Although this segment will probably be the largest 1 initially, it represents only a small % of total potential consumers. - Demonstrate both a high desire for & interest in Vodite products. - Income level = above average. 2. Early adopters (Ad) - Wont adopt Vodite products as quickly as innovators but will do so before a majority of ppl have accepted the new technology. - Usually much larger than the previous one, its influence on other consumers is fairly high. - Are opinion leaders & helpful in 'advertising' the new product to other potential buyers. - Critical to the adoption process & shouldn't be neglected by marketers. - Income level = average 3. Followers (Fo) - Bulk of potential consumers - Bc they perceive more risk in buying new products, they adopt a product innovation only after a large # of consumers have tried it. - Innovators and early adopters particularly influence followers. - Income level = Below average
2 types of attributes
ideal point: vary by segment - importance attributes: everyone can agree
Distribution panel
continuous tracking of product sales to consumers based on information gathered at the retail point-of-sale.
