The Markstrat Challenge III

Markstrat-2012 (for the web)

B2C Durable Goods

PARIS BOSTON
www.stratxsimulations.com

Your success will depend on your ability

to develop & position brands
Perceptual
Map
Positioning
through
Advertising
Positioning
through R&D
Modifying &
Launching
Brands
New decisions
in Period 2
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Introduction to the Markstrat Challenge -

Sucessful positioning demands longterm thinking and the ability to identify

evolving opportunities
Changing
segment
needs

Hi

New target
segment

Sh

Competitor
entry

Pressure on
margins

Pr

Sa
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Introduction to the Markstrat Challenge -

Consumers make purchase decisions

based on their perception of your
brands
Your perception of brands
Brand
A
Brand
A

Brand Brand
B
C
Brand
D

Brand
C

Brand
C

Brand
D
Brand
B

Brand Brand Brand

A
B
D

Attribute 1

Attribute 2

Attribute N

Their perception of brands

?

Brand
C

Brand
D
Brand
B

Brand
A
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Introduction to the Markstrat Challenge -

The Perceptual Map (MDS) is a valuable

tool for visualizing brand positioning
Need 2
Segment
ideal point

Need
Need 11

Perceived
position of
SOLO

Needs : Economy, Performance, Convenience, Flexibility,

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Introduction to the Markstrat Challenge -

How to match brand characteristics to

consumer needs (MDS)

CONSUMER NEEDS

Battery Life

No. of Features

Convenien
ce

Design

Display Size

Performan
ce
Processing Power

SOLO

Price

Economy

BRAND CHARACTERISTICS
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Introduction to the Markstrat Challenge -

The Brand Map (Semantic Scales) plots

perceived physical characteristics rather than
consumer needs

Segment
ideal point

Perceived
Price and
#Features of
SOLO

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Introduction to the Markstrat Challenge -

There are two key ways to re-position

brands in Markstrat
Perceived
Performance

Advertising
Perceived
Economy

R&D

1/17/17

Introduction to the Markstrat Challenge -

Your success will depend on your ability

to develop & position brands
Perceptual
Map
Positioning
through
Advertising
Positioning
through R&D
Modifying &
Launching
Brands
New decisions
in Period 2
1/17/17

Introduction to the Markstrat Challenge -

Positioning with advertising requires

setting "Perceptual Objectives"
Perceive
d
Performa
nce

20

Sh

11

Target
Position
Current
Position

10

5
Perceived
Economy

-10

-20
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-20

-10

10 12
5
Introduction to the Markstrat Challenge 0

20
10

Setting perceptual objectives in

Markstrat (MDS)
1
Enter a significant
advertising budget
and spend 10% to
15% in advertising
research

2
Decide which scales
(semantic or MDS)
you want to
communicate on

3
Select the dimensions
which you want to
communicate on

4
Input the coordinates
of the point that you
want to reach on the
map
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Setting perceptual objectives in

Markstrat (Semantic Scales)

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12

Your success will depend on your ability

to develop & position brands
Perceptual
Map
Positioning
through
Advertising
Positioning
through R&D
Modifying &
Launching
Brands
New decisions
in Period 2
1/17/17

Introduction to the Markstrat Challenge -

13

Why and when to interface with R&D ?

R&D is required in several cases :
To develop and launch a brand in a new market (eg:
Vodite)
To develop and launch a brand in a new segment (eg:
Shoppers)
To develop and launch a brand in a segment where you
are not yet present
To modify a brand if its characteristics do not match
consumers expectations
To reduce the manufacturing unit cost of an existing
product

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How to translate consumer needs into

physical characteristics ?
Option 1 Copy the leader
Adjust dimensions if the leader
is not perfectly positioned
In this example, you can copy
TONE to target High Earners as
this brand is very well
positioned in Performance
(Display Size & Proc. Power)

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How to translate consumer needs into

physical characteristics ?
Option 2 Interpolate

This graph is available in the

Semantic Scales study.
This example suggests that 55
gigaflops would match the need
of Shoppers in term of Processing
Power.
Learn more about this graph in
chapter VI of the handbook.

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16

Another option to translate consumer

needs into physical characteristics ?
In the case of the Vodite market, no competitive
offerings are available to copy and/or interpolate
For each physical attribute, the available information
includes:
In the Semantic Scale study: the expected ideal value : I
In the handbook: the minimum and maximum level : CMin
and Cmax

(Ithe
1)
Use the formula
below
calculate
ideal
C = CMin
+ (Cto

C
)
x
Max
Min
(7 1)
attribute
7
I
1
CMin
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CMax

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How to interface with R&D?

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How to interface with R&D?

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How to interface with R&D?

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How to interface with R&D?

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How to interface with R&D?

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Step 3 How to decide on the desired

Base Cost?
Option 1 Ask R&D to Develop this project at the
lowest possible base cost
You will get the required product at the lowest possible
unit cost
The project will be more expensive to develop.

Option 2 Choose a Base Cost that:

Is in line with the base cost of comparable competitive
products; see the market report
Provides you with a good Unit Margin:
Unit Margin = Retail Price Distribution Margin
Base Cost

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Step 4 determine how much budget is

needed to develop the project
Option 1 Run an online query
R&D will tell you the budget needed to develop the
project
R&D will also provide you with the project Minimum Base
Cost
You do not have to allocate the entire budget in 1 year:
you may complete the project in 1, 2 or even 3 years
Beware: budgets given by online queries are usually
overestimated

Option 2 Run a Feasibility Study

The budget needed is $100,000
The project will not be completed
After one year, R&D will tell you: (1) the budget needed
to develop the project; (2) what the project Minimum
Introduction to the Markstrat Challenge 1/17/17
24
Base Cost is

Your success will depend on your ability

to develop & position brands
Perceptual
Map
Positioning
through
Advertising
Positioning
through R&D
Modifying &
Launching
Brands
New decisions
in Period 2
1/17/17

Introduction to the Markstrat Challenge -

25

A completed R&D project may be used

to modify existing brands or introduce
new brands

New Brand
SOCCER

New SOFT
higher performance

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How to introduce new brands

1. Click here to
launch a new brand
2. Choose a name
3. Enter the role of
the new brand
4. Choose the base
R&D project
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How to modify existing brands

1. Click here to modify

a brand

2. You keep the same

name

3. Select the MODIFY

option

4. Choose the new

R&D project

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Bringing successful R&D projects onto

the market may result in obsolete
inventory
I'll buy any inventory
at a given % of its
cost

Brand
modification

MO
V

Obsolete
inventory

Brand
withdrawal
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MO
V

MO
VE

TRADING COMPANY

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Cost reduction projects should be

weighed against experience curve
effects
Transfer cost

Cumulative production

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Your success will depend on your ability

to develop & position brands
Perceptual
Map
Positioning
through
Advertising
Positioning
through R&D
Modifying &
Launching
Brands
New decisions
in Period 2
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Introduction to the Markstrat Challenge -

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New decisions introduced in Period 2

R&D
Initiating new projects
Continuing or shelving uncompleted projects

Brand Portfolio
Launching new brands
Upgrading or withdrawing existing brands

Marketing Mix
Production planning, Pricing, Communication &
segmentation strategy
Setting Perceptual Objectives

Commercial Team
Size of commercial team
Allocation across distribution channels and brands

Market Research
Ordering industry-wide market studies
Ordering market-specific market studies
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