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
