Markstrat Handbook

Inventory Disposal Cost

# of units disposed of x unit cost x IDL (usually greater than 20%)

Sonite Base Cost

$25+

Vodite Base Cost

$30+

production report

-# of units produced in inventory and on production costs -can be adjusted to 20%

feasibility study

-$100k -tells you how much it will cost to complete an R&D project and the base cost -takes 1 period to compete b`ut is correct

Multidimensional Scaling

-200 people -non-metric --perceptual maps contain economy, performance, and convenience --20 or + 20 scale -each dimension of past 3 years are recorded and displayed

Consumer Survey

-3,000 participants -gives awareness to purchase intentions -rep individuals with unaided recall of brand

Consumer Survey Panel

-500 consumers -market share by consumer segment and industry sales -during simulated period

Semantic Scales

-600 people -rate physical attributes on a scale (1-10 or 1-7)

Market features

-80 million inhabitants -use markstrat dollar -inflation 2% -GNP growth 3%

Followers

-Bulk of potential customers -below average income

Sonite

-all rival forms have 2 sonites -existed for several years and grow consistently -continue to grow over next 5 periods

conjoint analysis

-calculates value/utility customers have with characteristics and price -very expensive at $200, 225, 275, 350 -sum up to 100% and compares 4 levels in each dimension

Making Commercial team decisions

-can modify at no cost -calculates total size of team by brand and channel each time new numbers are entered -budget: cost of commercial team -allocation: how team is allocated across the market

Savers

-cautious in the way they spend $ -largest group -cheap, low performance product w/ average convenience

shoppers

-do a lot of shopping -good knowledge of marketed brands and do extensive product comparison -personal use and price sensitive

online queries

-estimate of budget required to compete project -can overestimate as much as 15% -only 5 per period

matching product attributes with position

-find physicals characteristics that correspond to desired position on map -copy them

Innovators

-first to use vodite -try new ideas w/ some risk -average income level

When to use Multidimensional

-get closer to ideal point of targeted segment -decide strategy, provides helicopter view -communication (economy, performance, convenience)

When to use Semantic Scales

-get closer to ideal point of targeted segments -redesign R&D products, ideal level of characteristics

High Earners

-high income, use on a private basis -motivated by social status -use less than average consumers -demand performance and convenience

Explorers

-high level of interest and know the product very well -demand high performance w/ less concern on convenience -price sensitive w/ low income -for personal use

professionals

-high quality, high performance, easy to use -can afford expensive products

Early Adopters

-larger than innovators, have high influence -average level income

Mass Merchandisers

-low price, high volume -only few units in a product line -cheaper, lower end products -low tech expertise and low service level

When to use Conjoint

-maximize overall utility of brand -validate or invalidate findings from multidimensional or systematic scalings

Production

-must specify how many units wanted made per period -can increase or decrease without penalty from period to period -automatically adjusted 20%

Share Price Index (SPI)

-net contribution generated -product market share -ability to grow org average -quality of projects successfully completed

Vodite

-none currently exist -mkt will be very attractive if right products are made at right time

multidemensional

-plot characteristics on horizontal axis and corresponding perceptions on the vertical axis -18 graphs= 1 for every characteristic x MPS

R&D

-project base cost -budget required for completion -responses from R&D department -brand intro, modification, or withdrawal

Marketing as a profit center

-revenues from sales-cost -Budget= 40%of profits from previous period -between 7-20 million $ -loan payback wont start till after 1st period

Financial report

-revenues: # of units sold x average selling price -COGS: # of units sold x transfer cost -inventory: inventory holding cost + inventory disposal cost -inventory holding cost: inventory x unit transfer cost x holding cost in % Disposal cost- Loss incurred when selling

Commercial Team

-sales reps, customer support -visit the stores, oos -can relocate at no charge

speciality stores

-small -carry broad product line -higher end items -high tech experience

Store Sizes

-speciality stores- 10,000 -mass merchandisers- 6,000 in 6 chains -online stores-1,000

R&D projects

-start with 2 brands -5 of each can be ordered per period

Distribution Panel

-tracks product sales -from cash registers and store audits -17,000 retail outlets -shows potion of stores that carry each brand

Advertising Media

-use to maintain awareness -allocate 4-8% of budget to do this

Advertising Research

-use to reposition brand -allocated 10-15% of budget -usually 4% is allocated to research

Online Stores

-web merchants -convenient -unlimited choices -privacy and security are a concern -to become more important in next 5-10 years

perception of ideal points

-where ideal points will be in the future -tracked over 3 periods -look 2-3 periods ahead of time

4 steps to repositioning

1. Identify desired position on perceptual map or semantic scale 2. Estimate physical characteristics that correspond to desired position 3. Develop R&D project with the above characteristics 4. Introduce a new brand or modify existing one

Energy Efficiency

10-100 billion comp per watt-hour (bC/Wh)

Inflation rate

2%

Resolution

20-100 Lines/millimeter (L/mm)

Battery Life

24-96 hours

Connectivity

3-10

Design Index

3-10

Econ growth rate

4%

Display Size

4-40 inches

Distributor margins

40% for speciality stores and 30% for mass merch and online

Initial Vodite cost

5-10 million $ each for prototype

Application Programs

5-100

Processing Power

5-100 gigaflops

Number of Features

5-20

Carbon Footprint

5-50 Kilograms(kg)

graphs

50 in 5 different categories

net earnings

CAM-mkt research studies-interest paid-ECP

Contribution After Marketing

CBM-Ad media-reserach-comm team cost

performance

KPI's at firm level

second letter of name

O= sonite E= Vodite

Vodite Characteristics

Resolution, Energy Efficiency, Carbon Footprint, Connectivity, Apps

Contribution Before Marketing (CBM)

Revenues-COGS-inventory cost

when are units produced charged to the marketing department?

When they are shipped

repositioning strategies

ad is immediate and R&D takes one period

deviation budget

always positive or = to 0

Commercial team cost

based on decisions, given in market and comp.

estimated sales

based on market shares regardless of your production plan decisions

step 4

brand contribution

actual production

brand production considering adjusted production (+- 20%)

step 3

brand sales -calculated brand unit sales y consumer segments and total

final sales

brand sales, if red= production and inventory wont cover estimated sales

brand portfolio

brands are not launched, withdrawn, or modified automatically

When modifying/withdrawing

can adjust role, but not name

Consumer entry

change with addition of comp

when to reposition brand

changing segment needed, price pressure, new target segment, consumer entry

Industry Benchmarking

compare competitive performance and key data across teams

4 research studies in period 0

consumer survey, consumer panel, distribution panel, market forecast

uncompleted project

created in last period and budget was not sufficient to complete

completed project

created in last period and had a sufficient budget to be completed

marketing mix strategy

dat to day operational marketing decisions

new target segments

early on serve several segments w/ single brands

ending inventory

end of period, if orange=will have inventory for next period

Tools

enter in period 3

COGS

estimated unit sales x unit cost

competitive advertising and commercial team estimates

estimates of each budget

brand charts

evaluation of KPI's at brand level

bench marking

evaluation of profit and loss at firm level

exceptional cost or profit (ECP)

exceptional item -ex brand withdraw cost

competitive commercial team

experiment by increasing budget or team size for every brand and evaluating change

customer segments for sonite

explorers, shoppers, savers, professionals, high earners

Step 5

firm profit and loss statement -market research studies, R&D, exceptional costs and profits (usually 0), earnings before taxes (= to contribution after marketing)

First letter of name

identifies company

distribution KPI's

in millions of $ and %

Vodite Customers

innovators, early adopters, followers

inventory holding cost

inventory x unit cost x %IHC(usually 8%)

step 2

market share estimates (initially filled with pervious period)

Preferences

needs of consumers in segment

modified brand

new R&D project

launched brand

new brand

withdrawn brand

no longer marketed

maintained brand

no operation on brand

R&D project define

physical characteristics and unit production

average selling price

price you sell product to distributor

Sonite Characteristics

processing power, display size, design index, battery life, number of features

making marketing mix decision

production is entered in units and indicate how many units sold in pervious period and how many are in inventory -budget must = 100% -if you wanna just raise awareness no objective in needed -can be set to 1 or 2 objectives

Market and competitive news

provides general and financial data on industry, competing firms, and market brands

Step 1

segment size estimates for next period

market forecast

shows the market size in 1 and 5 periods

Distribution Channels

specialty stores, mass merchandisers, online stores

shelved project

stopped allocating budget to it, will be continued later

production plan

taken from your decisions

desired base cost

transfer cost charged to marketing department for each unit of 100,000 -can specify this

continued project

uncompleted project with a sufficient budget to complete now

base cost

unit cost decided when project developed to R&D -reduced by 15% each time production is doubled

product portfolio strategy

which brands company will market and develop

segmentation and positioning strategy

which market segments will be targeted and how products will be positioned