Marketing Simulation
- 1. MERCURY – Team U Arundhati Govekar (PGP-10-012) Ekta Banka (PGP-10-017) Rajat Jain (PGP-10-53) Jaikishan Gianani (PGP-10-123) Siddharth Shah (PGP-10-169)
- 2. Analysis of Past Performance (Round 1 – Round 4) Performance Reasons •Highest Net Contribution •Good Forecasting R1 •Highest Market Capitalization •Adequate Ad Spend & Expenditure on Sales Force •New product based on existing project - •Inadequate Ad-spend and sales support R2 Targeting professionals segment for the new product •High inventory pile up •Very high inventory pile-up across all products •We played only on improving the •The R&D project for the new product which was ‘perceptions’ but the ideal spot for the R3 introduced in R2 was not completed segments changed significantly poor sales •Low contribution margins •Couldn’t introduce newer products due to poor cash flows •Discontinued the poorly positioned ‘SUSA’ which also had high inventories •Very conservative forecasting leading to R4 •Repositioned old product & introduced a new one lost sales and lost market share too •Stock Outs in all products! •Couldn’t
- 3. Analysis of Past Performance (Round 5 – Round 8) Performance Reasons R5 •Regular R&D projects to ensure good product placement R6 Process followed: •Improved forecasting • Look at the drift R7 •Only one instance of inventory pile-up Do R&D for improvement of product • Consistent expenditure on Ads and R8 sales force expansion 120000 100000 80000 60000 years 40000 inventory 20000 0 0 2 4 6 8 10 -20000
- 4. Main Strategies Pursued • Aggressive experimentation for growth • SUSA introduced for professionals Period • Multiple R&D projects started for Sonite and Vodite products 1-3 • Once bitten twice shy - very conservative forecasting • Number of new product launches decreased because of paucity of funds to Period 4 support marketing • ‘Course correction’ mode • Focus shifted to improving sales for existing products • Advertising spends for the existing products maximized and maintained Period 5-8 Advertising research expenditure to the tune of 10%
- 5. Main Adjustments Made in Response to the Environment Sales Force Advertising Expenditure 300 10000 250 9000 8000 200 7000 6000 150 5000 4000 100 3000 50 2000 1000 0 0 1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 Team U Market Leader – Team E Marketing = Sales force + Ad Spends 1. Had constantly high Ad spends to beat competition 2. Consistently hired newer sales force but the rate of hiring outpaced the demand 3. Constantly upgraded products to ensure right positioning The journey can be thus described as:- Aggressive forecasting without SG&A support Conservative forecasting with improved SG&A support Prudent forecasting with optimal SG&A support
- 6. Recommendations for the Future Short Term Long Term 1. The Vodite market is now 8 1. Try and grow the existing years old. The market is big brands into market leaders in enough with sizeable the segments that they are population of followers. The catering to. market is now ready to be tapped. 2. The advertising budget should be concentrated on the 2. Singles and others segment is segment being targeted. It growing rapidly. Thus new should not be spread out. products should be introduced targeting these segments. We 3. Sales force allocation has been can have a basket of products. the biggest problem. The hiring should be in tune with the demand.
- 7. Learnings from the Markstrat Experience 1. Conditions for Success Having the Right product – Necessary Condition (but far from sufficient) Other pre-requisites: Adequate ad spends, proper sales force allocation and right forecasting 2. What matters is the perception of the buyer and not the producer’s perception of the product 3. Brand are like babies – they need constant care! •Just as the younger ones need more attention, new brands need higher upfront investments • As brands grow, they might become more stable and might be easier to manage with lesser expenditures 4. Brand Awareness is not enough, buying intentions can change the game! 5. Once a while a ‘not so great’ product can do well if it is backed by superior advertising & sales force support to make up for it, thus: Value perceived = f (Advertising, Sales Force, Product Quality)
- 8. Predicted Net Contribution & SPI Net Contribution Major factors affecting Net Contribution seem to be: Right product placements Production forecasts Ad Expenditure Expenditure on Sales Force Over the last few rounds, the above factors have been taken care of. So, we can expect the SPI to increase over the R7 value at a rate of at least 16.67% (since we have increased production of all products by at least 16.67%) to ~$15800 SPI Major factors affecting SPI seem to be: • Net Contribution • Cumulative Market Share In addition to the net contribution, the cumulative market share is likely to increase in this round on account of our apt product placement and production. So, we can expect the SPI to increase at the same rate as in R7 R8 i.e. 16.67% So, we can expect the new SPI to be ~ $830
- 9. Thank You!
Editor's Notes
- #6: Consistently had high ad spends to ensure better sales.We constantly hired but the rate of hiring did not meet the demand for sales forceMarketing= sales force + ad spendConsistently upgraded products to ensure right positioning.Aggressive forecasting without SG&A support-conservative forecasting with improved SG&A support-prudent
- #7: Try and grow the existing brands into market leader(short term).Concentrate on spending the advertising budgets on segments you are targeting. Don't spread it around.Work on sales force-increase them and distribute them properly.Long term.Introduce Vodite products for Followers since the market is already 8 years old and various brands already exist in the market.Introduce Sonite products to create a basket of products for singles and others as they are growing.
- #8: Necessary condition- great product but it is not sufficient- adequate ad spends, proper sales force allocation and right forecasting.What matters is the perception of the buyer and not your perception of the product.Brands are like babies. You need to constantly nurture them.New brands are like small babies, they need more care compared to bigger babies.Once a while you can win against competition with a lower quality product if you have excellent marketing.Value perceived= Advertising +Product Its 50% gut feeling and 50% right work