Chunk 5: markstrat manual quiz

over the course of the simulation, ? will change and evolve

- market environment - size and growth rate of consumer segments - (more importantly) the needs of customers

Research and development:

- project base cost (target manufacturing unit cost of desired product) - budget required for completion (budget to cover r&d expenses) - responses from r&d department (project report details in company results section) - brand intro, modification, and withdrawal (projects may be used as soon as they are completed or modified)

there are several reasons why brands are not always ideally positioned:

1. changing segment needs 2. price pressure 3. new target segments 4. competitor entry

advertising to reposition steps:

1. identify desired position on perceptual map or semantic scales chart 2. enter coordinates identified in last step in perceptual objectives 3. allocate advertising media budget and advertising research budget 4. indicate how you want to allocate advertising budget across consumer segments

R&D reposition steps

1. identify desired position on perceptual or semantic scales 2. estimate physical characteristics that correspond to desired position 3. develop r&d project with physical characteristics calculated above 4. introduce new brand or modify existing one

marketing plan steps

1. segment size estimates 2. market share estimates 3. brand sales 4. brand contribution 5. firm profit and loss statement

revenues

= estimated unit sales x (price - distribution margin)

cost of goods sold

= estimated unit sales x unit cost

inventory holding cost

= inventory in units x unit cost x IHC %

inventory disposal cost

= units disposed x unit cost x IDL %

Research and development:

Equal to the sum of all budgets allocated to R&D projects in your decisions; the allocated budget is one of the many decisions which you have to make when initiating or continuing a research project.

Market research studies: .

Equal to the total cost of the market studies ordered in your decisions; the cost of each study is given in the Market studies decision form

the repositioning effect is ?

LIMITED especially when brand awareness is high

using semantic scales: figure 54 in notes

Let's suppose that you want to determine the processing power (in gigaflops) that corresponds to the coordinate 5 on the 1 to 7 scale. A graph such as the one depicted in Figure 54 will facilitate the interpolation process.

MDS: some of these charts are ?

MEANINGLESS Ex, the graph Design × Performance is unlikely to provide useful info as Design is not related to Performance. you should not use performance to determine a level in Design or Battery Life bc these dimensions are not related to one another.

R&D projects will take at least ? to complete, while repositioning through advertising has an ?

ONE period to complete, while repositioning through advertising has an immediate effect.

step 2 - market share estimates:

One of the most important aspects of marketing planning is the anticipation of the market response to a specific set of decisions or actions. expected market shares must be entered for each brand in each segment two tables to fill in, one for each market

example: assume that Innovators consumers have indicated that they are looking for products with a large number of Apps, i.e. their ideal point is at 5.5 on the 1 to 7 scale.

Our best option is to assume that there exists a LINEAR relationship between the number of Apps (from 5 to 100) and semantic scales, i.e. that the lowest number of Apps (5) would be rated 1, and that the highest number (100) would be rated 7. In this case, the formula to convert the ideal 5.5 into a number of Apps is: X= 5 + [(100-5) x 5.5-1.0 /// 7.0 - 1.0] = 76 apps ** round to nearest whole #)

general formulas: P

P is the desired value on the 1 to 7 scale

MDS interpolation steps:

Simply plot the desired coordinate on the vertical axis, 10 in our example. Follow a horizontal line until you intersect the green curve, and then follow a vertical line starting at the point of intersection. You can now read the physical characteristic (in gigaflops) corresponding to the desired position 10. This is 82 in our example.

interpolation steps with semantic scales chart

Simply plot the desired coordinate on the vertical axis, 5 in our example. Follow a horizontal line until you intersect the green curve, and then follow a vertical line starting at the point of intersection. You can now read the physical characteristic (in gigaflops) corresponding to the desired position 5. This is 69 in our example.

MDS: there are ? such graphs

There are 18 such graphs one for each couple "physical characteristic × MDS dimension"; for instance, Processing Power × performance, display size x performance, etc.

Exceptional costs & profits:

Usually equal to 0. You may incur an exceptional cost if you decide to withdraw a brand; in this case, any remaining inventory will have to be disposed of

Lowering the cost of a brand is considered ?

a brand modification

the easiest solution is to find a brand that is located at ?

a position close to the desired one, and to look at its characteristics in the figure 10 chart

REPOSITIONING can be achieved by ?

advertising or by research and development

the curve in the example is almost ?

almost a straight line, but this is NOT always the case especially when several brands have been positioned or repositioned on the market using perceptual images

if such a brand exists... this analysis may be done ??

analysis may be done attribute to attribute, looking at different brands You may copy the processing power of brand A because it is very well positioned on the map along the Power axis, and copy the Battery Life of brand B.

This situation may occur if the needs of two segments are ? or if one segment is ?

are fairly similar or if one segment is too small to allow the necessary economies of scale. as these needs change, or as the segment size increases, it may become necessary to position one brand closer to each ideal point.

For a given brand and a given segment, the optimal position on the map is ?.

as close as possible to the ideal point of that segment

the MDS and semantic scales graph are available in the ?? which is accessible through

available in additional graphs, accessible through a link at the top of the study

step 5- firm profit and loss statement

based on decisions and estimates, marketing tool can make financial projections for decision period - market research studies - research and development -exceptional costs and profits - earnings before taxes

step 4 - brand contribution

based on your decisions and your estimates for segment sizes and brand shares, the marketing plan tool can make financial projections for the decision period.

due to changing segment needs, Period after period the distance on the map bt the brand and the ideal point ?

becomes greater and greater.

actual production

brand production considering the adjusting production (default +/- 20%)

final sales

brand sales considering production plan decision and beginning inventory if value is in red, it means your production and inventory is NOT enough to cover all estimated costs

step 3- brand sales:

calculates brand unit sales, by consumer segment and in total allow u to check consistency of step 1 and 2 estimates and product plan decision consistency

segment needs EVOLVE over time, due to ?

changes in the environment or changes in consumers values and behaviors

Although consumers' perceptions are linked to the brand's physical characteristics, they can be slightly influenced by ?

communication.

past a certain point, repositioning can no longer be done by advertising alone, so you must

complete an R&D project with physical characteristics matching consumers' needs, and then to upgrade the brand.

If such a brand exists, then all you have to do is ?

copy the level of this brand along the desired attributes.

the next step is to find the PHYSICAL CHARACTERISTICS that correspond to ?

correspond to the desired position on the map

MDS: each marketed brand corresponds to a ?

corresponds to a data point on the graph

using semantic scales: Each marketed brand corresponds to a ?

corresponds to a data point on the graph.

marketing plan tool will help you estimate ?

estimate your revenues, expenditures and contribution for the decision period.

estimated sales

estimated brand sales based on market shares (step 2) regardless of production plan decisions

it is extremely important to adopt optimal segmentation and positioning strategies, especially because a Markstrat company cannot market more than ? in a given period in each market.

five brands segmentation and competitive strategies are NOT addressed in the manual !!!!

repeat the process above for each dimension for which

for which you need to find the physical characteristic corresponding to a desired coordinate.

semantic scales and MDS unit

gigaflops

if no such brand exists, then you will have to ?

interpolate, using the best positioned brands in the market

To respond to these changes, companies will have to ? and ?

introduce new Sonite or Vodite brands and reposition or withdraw existing ones.

beginning inventory

inventory at beginning of period

ending inventory

inventory at end of period if value is orange, it means you will have inventory for the next year

Matching product attributes with position: we now assume that the coordinates where the product should be positioned are ?

known

price pressure: As price is the most important dimension in the Sonite market, manufacturers should expect ?

manufacturers should expect pressure from consumers to lower prices, especially in the low-end segments

Ideal points on the perceptual map or on the semantic scales' chart, reflects the ?

needs of consumers, or the price that they are ready to pay to get a product that fits their needs.

R&D must also be used to introduce ?

new brands since all marketed brands must be based on R&D projects

MDS example curve is ?

not exactly a straight line This is the case when several brands have been positioned or repositioned through advertising and perceptual objectives.

MDS: The segment ideal values are indicated ?

on the vertical axis.

general formulas: P and X

p = 1.0 + [6.0 x x-lb / ub-lb] x = lb + [(ub-lb) x p - 1.0 / 6.0] methods allow you to make approximations until more data becomes available over time.

because of changing segment needs, a brand which was well positioned when it was introduced to the market may be perceived ?

perceived as low-performance or as having an unnecessarily high number of features a few periods later.

production plan

production plan (taken from your decisions)

if a competitor introduces a new brand that fits these consumer needs better, it may become necessary to ?

reposition the old brand closer to the ideal point.

brands must be repositioned to adapt to new environmental conditions; however, a brand does not always need to be ?

repositioned on all dimensions. ex: a two or three-year-old brand may be perceived as low-performance, but as having the right convenience level. In this case, there is no reason to change the perception along the convenience dimension. Repositioning can be achieved by changing the brand's price, through advertising or via R&D.

the interpolation may be done using the ?

semantic scales or multidimensional scaling

For a new market in its early stages, a good strategy may be to ?

serve several segments with a single brand.

when a desired coordinate is comprised between multiple gigaflops, you ?

should use your judgement for both semantic scales and MDS

MDS: It is obtained by plotting ? on the horizontal axis and the ? on the vertical axis.

the actual characteristics of all marketed brands on the horizontal axis the corresponding perceptions on the vertical axis.

using semantic scales: It is obtained by plotting the ? on the horizontal axis and the ?on the vertical axis.

the actual characteristics of all marketed brands on the horizontal axis the corresponding perceptions on the vertical axis.

if brand prices are not adjusted accordingly, the distance between ? is likely to ?

the brand and the ideal point along the price or economy axis is likely to increase

MDS example: performance is strongly linked with processing power and display size. Hence, the desired coordinate in performance will be used in ?

the desired coordinate will be used in two interpolations, one to determine the matching processing power and one to determine the display size.

a brand must be repositioned through R&D when ?

the distance between the desired position on the perceptual map or on the semantic scales' chart and the brand is too large.

step 1 - segment size estimates

the estimates concern the size of each consumer segment there are 2 tables to fill in, one for each markets

general formulas: LB and UB

the lower and upper limits of the physical characteristic's feasible range.

HOWEVER, you may still obtain information on segment needs from ?

the semantic scales study

using semantic scales: the segment ideal values are indicated on ?

the vertical axis

main difference between multidimensional scaling and semantic scales

there is not a one-to-one relationship between MDS dimensions and physical characteristics. Instead, each dimension is related with two or more physical attributes.

using semantic scales: There is ? for each dimension:

there is one such graph for each dimension processing power, display size, etc.

advertising in markstrat is mainly used ? but it can also be used to

to build brand awareness and inform customers about products physical characteristics can also reposition a brand

marketing plan tool

useful tool to check the consistency of decisions and to easily anticipate their possible financial consequences. The marketing plan tool is NOT based on a Markstrat mathematical model. It is a sophisticated spreadsheet that uses the information you provide to make the calculations.

case of a new market: the perceptual map is not available when ?

when no brands are marketed

MDS: repeat the process above for each dimension where you need

where you need to find the physical characteristic corresponding to a desired coordinate

general formulas: X

x is corresponding physical value

Your department will be faced with the following strategic issues on market segmentation and product positioning:

•Which segments to target •How to design products satisfying the needs of these segments •How to position new brands effectively •How to reposition existing brands to better fit customers' needs