The Marketing Game Simulation

Semester Wrap-up

Simulation Details
Decisions you made in various aspects influenced the outcome of the model.
The following is a brief description of how some of the variables influenced the game.

Product Features
The closer your product features were to a segments ideal point
the higher your share for a segment relative to competitors that were not as close. the higher the demand for that segment.

Distribution Intensity
The ideal level of intensity depends on the other marketing mix variables. If you set the intensity too high for the size of your salesforce, they became overworked and less effective. Intensity set too low leads to wasted spending efforts on personal selling. Finally, the greater the intensity relative to competition, the stronger the channel push.

Customer Service
Influences both market share and category demand. There is an expected customer service amount based on unit sales. Actual customer service spending versus expected customer service gives a ratio. Lower ratios cause sales and market share to drop. As an industrys ratio increase, its sales increase (when the 2nd product was introduced, spending in this category was split for some firms, causing the customer service ratio to drop and product 1 sales to decline).

Advertising Spending
Ad spending improves brand awareness and increases category growth. Ad spending is relative so increased spending by all firms leads to a lack of INCREASED awareness. There is a saturation point for ad spending beyond which there is very little increased effect on sales and category demand.

Advertising Type
Pioneering creates category demand. Direct Competitive increases current ad effectiveness for the firm, but has very little carryover influence on the firm. Indirect Competitive increases current ad effectiveness for the firm (but less so than direct), and there is more carryover effect. Reminder is only effective when brand awareness is above 50%. Corporate is useful for a firm with two products.

Number of Sales Reps

The number much be managed against the distribution intensity amount. It requires an increasingly larger number of sales reps to support the effort in channel 1 than in channel 2. New sales reps are not as effective in selling, they are penalized by 20% to account for training.

Other Selling Variables

Percent of Non-Selling Time
Increasing the non-selling time means obviously the salespeople spend less time selling, but it also improves the dealer satisfaction. Dealer satisfaction is particularly important in channel 1.

Commission Rate
If your firm has a higher commission rate than other firms, your salespeople will work harder than theirs.

Sales Promotion Expenditures

Sales promotions reduce the retail price of the product. Sales promotions also build goodwill and increase the dealers satisfaction. This point is also influenced by the level of distribution intensity. These are relative to other firms, meaning equal spending cancels out any goodwill effects.

Market Research Reports

Report 4 Marketing Effectiveness Report provides data on the relative position of the issues just discussed. In my opinion, this would be the best report to purchase each time. It is essentially your report card. Reports 3 and 7 are useful to identify where the target segments are and how well you are reaching them. Report 6 tells you where the segments shop (it shouldnt change much over time ) Reports 1, 2, and 5 provide you with industry level (1 and 2) or firm level (5) sales by segment (probably dont need each every period)

Production Quantity
Critical for success. There were multiple times during the game that a firms net contribution was negative mostly due to overproduction. The penalty for overproduction in these instances was huge for the next quarters budget. INDUSTRY quantities could be estimated pretty closely given the right research information, but the question of each firms share must also be answered.

Market Segment Ideal Points Product 1

Segment: Students Home Assistants Creators Managers Parents Commands 11 (-.2) 9 12 14 (+.3) 16 6 Error Ease of Protection Learning 3 (+.2) 3 (+.2) 4 (+.2) 8 2 6 3 (+.1) 8 8 4 3 (+.3) 9 (-.1) Price $145 (+2) $165 $250 (-2) $260 (+3) $300 (-2) $180

Market Segment Ideal Points Product 2

Segment: Students Home Assistants Creators Managers Parents Tasks 2 8 4 (+.2) 9 6 (-.1) 1 Command Ease of Price Similarity Customize 6 3 $145 (-2) 5 (-.1) 7 3 8 10 5 (+.1) 9 7 (+.1) 6 1 $210 $225 (+2) $240 $200 $175 (-3)

Initial Unit Sales and Growth Rates by Segment Product 1

Segment: Students Home Assistant Creators Managers Parents Initial Sales 20,028 15,084 25,104 10,240 22,056 8,092
P1 P2 P3 P4 P5 P6 P7 P8 P9 P10

15 15 15 15 10 8

14 12 7 10 6 0

12 10 4 9 5 5

10 10 3 8 4 0

8 8 3 7 4 5

5 8 3 6 4 0

3 5 3 6 3 5

3 4 3 6 3 0

3 4 3 5 3 5

14 12 11 5 9 5

Initial Unit Sales and Growth Rate by Segment Product 2

Segment: Students Initial Sales TBD
P6 P7 P8 P9 P10

15

15

14

12

10

Home
Assistant Creators Managers Parents

TBD
TBD TBD TBD TBD

8
14 5 11 5

8
12 5 10 5

8
10 5 8 0

7
9 5 6 5

7
8 4 5 0