Markstrat Handbook

The second letter of the name of your BRAND identifies:

"O" for Sonite or "E" for Vodite

Market report

(for each category) - brand characteristics useful for pricing and R&D decisions

Sonite Customers

- Explorers - Professionals - Shoppers - High Earners - Savers

Estimating lost sales

- comparing purchase intentions with market shares at the end of the period can give you a feel for how many sales you have lost purchase intentions - market shares = sales lost to competitors

What MUST you buy each period?

- consumer survey and consumer panel

How to match product attributes with position? (Reconstruction via R&D)

- copy the leader

R&D is required when?

- develop and launch brand in a new market (ex: Vodite), in a new segment (ex: shoppers), or in a segment you're not present in yet - to modify brand if its characteristics do not march consumers' expectations - reduce the manufacturing unit cost of an existing product

competitive ad and commerical team estimates

- estimates of advertising budgets and commercial allocations spent by all the companies, by brand, by segment, by channel

Market Forcast

- estimates of the expected market size in one period and in 5 periods (total and by segment) - for vodite, estimates are based on interviews of potential customers. hence, less accurate and somewhat optimistic

Attributes of High Earners

- high income tax - demand performance and convenience - purchases expensive products - motivated to spend by social status, tend to use their Sonites less than the average consumer.

Brand Awareness

- portion of indvs who have unaided recall of a brand name

Purchase Intention

- portion of indvs who would select a brand as first choice if they were buying within a year - give info for each brand currently on mkt

A production plan must take into account:

- potential sales for the brand - existing inventory at beg of period - flexibility of production department

How is the production level adjusted for each period?

- production levels may be increased or decreased without any penalty - actual production levels are automatically adjusted in response to actual demand by plus or minus 20% - if you're holding a high level of inventory you can set production plan to 0

Marketing Mix

- production planning - pricing - advertising and segmentation strategy

Consumer Panel

- provide market shares and industry sales by CONSUMER SEGMENT

Market and Competitve News

- public info 1. industry dashboard 2. industry info 3. market report

Sonite Segments: price sensitivity High to Low

- savers - shoppers - explorers - professionals - high earners

Sonite Segments: quality High to Low

- savers - shoppers - explorers - professionals - high earners

Commercial Team

- size of commercial team - allocation across distribution channels - allocation across marketed brands

Consumer Survey

- to check brand awareness, purchase intentions and shopping habits

Online Stores

- web-only merch and retailers website - low but significant sales from web - high convenience - almost unlimited choices and easy comparision - likely important in 5 to 10 yrs

Which 3 studies give info on how to reposition a brand to provide more values to consumers

-*** 3 studies (semantic scales, multi, and conjoint) give info on how to reposition brand to provide more value to consumers

Mass Merchandisers

-low price, high volume - lower level of service than specialty stores - product line= few units - distribute cheaper, low performance products

SHopping Habit Data

-useful for channel choice and commercial team decision

What are the two key ways to re-position brands ?

1. R&D investment 2. Advertising

Pricing Decisions

1. price decisions should be entered for each brand 2. brand prices must be set once a year (MUST set Recommended Retail Price) 3. advertising decisions should be entered for each brand

Semantic Scales

2X2 graphs - data about physical attributes based on a semantic differential questionnaired - brand perception (rate each brand on a scale 1 to 7) - useful in brand upgrade planning and repositioning - *Ideal values and relative importance of each characteristics for each segment **perceptual maps provide graphical representation of ideal values and brand perceptions on price and 5 physical attributes

Max number of Sonite brands a firm can market

5 - can market up to 5 in each category at a time

where can you access all the marketing budget decisions?

Decision Home

What letters are there for company names?

M, R, S, T, L

Where can you find market shares info?

Market Research Consumer Panel

Where can you find purchase intentions?

Market Research Consumer Survey

What are your distribution channels?

Online Stores - Amazon Mass Merchandisers - Walmart, Target Specialty Stores - Radioshack, Bestbuy, HH Gregg

The two product categories

Sonites and Vodites - independent - not substitutes - not complements

Repositioning via Advertising

better to use multi-d

Attributes of Followers

bulk of potential consumers, they see more risk in in buying a new product.

Financial Report

company profit and loss stmt - rev, cogs, contr b4/a4 mkt - inventor costs (inventory holding cost + inventory disposal loss)

Company Resuts

confidential 1. Company dashboard 2. Financial report 3. Production report 4. R&D report 5. Decision Review

Attributes of Innovators

demonstrate a high desire for the Vodite; will be the first users of the product

Research budget

improve quality/persuasive power of your message (4-8 to maintain or increase awareness, 10-15% of total ad budget to reposition brand)

Segmentation Strategy

indicate which consumers should be targeted

Production report

info on production levels and costs

How to translate consumer needs into physical characteristics?

interpolate

Recommended Retail Price =?

list price for customers

industry info

market research costs, hiring/firing costs, inventory holding units

goal/objective

maximize your Share Price Index (SPI)

Multidimensional scaling of brand similarities and preferences

perceptual map 3 dimensions = (sonite) economy, performance, convenience) for vodite market it is not available until 3 vodite brands are launched

What is selling price in MarkStrat?

price at which you sell to distributors

Media budget

purchase media space and time

which two studies provide maps of brand perception and ideal values for each target segment?

semantic and multi

Base Cost

the cost at which each unit will be produced based on initial production ex: shorten battery life --> decreasing base cost

The first letter of the NAME of your brand identifies:

the firm marketing the brand.

Attributes of Early Adopters

will not adopt Vodite products as quickly as innovators but will certainly do so before a majority of people have accepted the new technology. As this group is usually much larger than the previous one, its influence on other consumers is fairly high.

Market Research Studies

(available only when you purchase them) 1. Industry Benchmarking 2. Consumer Survey 3. Consumer Panel 4. Distribution Panel 5. Semantic Scales 6. Multidimensional scaling of brand similarities and prefernces 7. Conjoint Analysis 8. & 9: Competitive Advertising & Commercial Team Estimates 10. & 11. Ad and Commercial Team Experiments 12. Market Forecast

Who are the Vodite customers?

- Innovators - Early Adopters - Followers

Characteristics of Sonite Products

- Processing power - Display size - Design - Battery life - Number of features

What do all firms have to engage in order to develop their first Vodite product

- R&D resources (min is 5 to 10 million)

Characteristics of Vodite Products

- Resolution - Energy efficiency - Carbon Footprint - Connectivity - Apps

Specialty Stores

- are usually small and may not necessarily belong to organized chain -located close to customers and provide high level of service and tech support - broad product line including high end products

Repostioning via R&D

- better to use semantic scales

Attributes of Savers

- cautious in the way they spend their money - demand cheap, low-performance and average convenience products - future growth rate exceed forecasts looking for cheap, low-performance products, with average convenience.

Successful positioning demands long term thinking and ability to identify evolving opportunities like:

- changing segment needs - new target segment - competitor entry - pressure on margins

Industry Benchmarking

- comp profit/loss stmts - anticipate launch of new brands

Company Dashboard

- company info only - SPI, Rev, Earnings b4 tax, total market share, brand rev, bran cont.

Attributes of Explorers

- high level of interest in Sonite product - demand high performance products - quite price sensitive, less concerned with product convenience - do not necessarily have high incomes

Attributes of Shoppers

- look for high quality to price ratio - quite price sensitive - good product knowledge through extensive product comparision

What do you need to take into account when setting Recommended Retail Price?

- margin of distributors - discounts made by mass merch and online stores - competitive prices

Share Price Index takes into account

- market share - sales growth - net contribution each period - R&D investments

Distribution Panel

- market shares by channel and brand, relative sizes of channels, etc.

Marketing Budget Decisions

- marketing mix - commercial team - market research - R&D investments

Commerical Team Decisions

- must decide size of commerical team for each channel and brand - cost is proportional to number of allocated ppl (salary, company car, insurance... slaes budget used in commercial activities/tools: trade programs, catalogs, permanent or temporary POS materials, gifts, etc.) - hiring and firing costs

Market Research

- ordering industry-wide market studies - ordering market-specific market studies

Conjoint Analysis

- stat techniques to calc relative importance of attributes - ask consumers to sort a set of ficticious products in the order of preference -*** 3 studies (semantic scales, multi, and conjoint) give info on how to reposition brand to provide more value to consumers

industry dashboard

- stock market data (SPI), retail sales, market shares by brand (not segment), top selling brands, etc.

Why must you make advertising decisions each period for each brand?

- to build brand awareness - make consumer familiar with product characteristics and price - develop demand for whole market - influence decision of distributors to carry or not your products - create barrier of entry to your competitors

competitive ad and commerical team experiements

- to project lvl of awareness, market share, brand contribution that wouldve been achieved by a brand with the same increase in advertiging ad: if its ad budget had been increased by 20% what market share would it have achieved comm: if the number of sales ppl had been increased by 10 in each channel, what market share would've been achieved

Attributes of Professionals

- use Sonites for personal and professional. - view price as a measure of quality - look for high quality, high performance and easy to use products - can afford expensive products

Market Research Studies

•Consumer survey •Competitive Commercial team estimates •Consumer panel •Industry benchmarking •Distribution panel •Advertising experiment •Semantic scales •Commercial team experiment •Multidimensional scaling •Market forecast •Competitive advertising estimates •Conjoint analysis