Stratsim and Marketing Strategy

Prof. Torsten Ringberg, CBS December 2009

Course Overview

Stratsim Game Textbook Tools Class Participation Homework (short assignments) Quizzes (Stratsim) Exam (textbook)

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Components of Grade Evaluation

Your performance in this course is evaluated as follows: 1. Stratsim Marketing (35%) (influenced by group evaluation)(*) Final position Presentation 15% and Mktg. Plan 5% 2. Stratsim Quiz 3. Attendance and Participation 4. Homework & Exercises (10) 5. Textbook Exam

15% 20% 10% 20% 10% 25%

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Why a Stratsim Simulation?

I hear and I forget

I see and I remember I practice and I understand

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Marketing Learning Goals

Learn analytical tools that can be readily applied to solve real-world problems. Learn to think strategically. Apply theory to Stratsims real world situations Work in teams to enhance both individual and collective learning.

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Wars Pollution Global Warming Infectious Diseases

The Marketing Environment

Economy Legal/Political Physical/Natural Socio-Cultural Technology Demographics Marketing tactics Management Finance Operations Human Resources Accounting

Global Marketplace
MacroEnvironment
MicroEnvironment

Marketing

Organizational Skills

Consumers
Marketing Strategies Competitors Segment/markets Suppliers Potential consumers Rules and regulations
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Preferences, Values, Motives Benefits Cost

StratSimMarketing

The StratSim simulation game is designed to apply management tools to strategic marketing decisions in an active and changing environment. You will be part of a small product management team (typically 3 persons) that competes in the auto consumer market. Each group meets throughout the course (in and outside of class) where it will make strategic decisions on a number of variables (e.g., strategic direction, marketing mix, financials, production, consumer and segment positioning, distribution, R&D, ong-term product introductions).

StratSimMarketing

Ties It All Together:

Marketing Management Operations Accounting Finance HR

Integrated Long-Term Market-focused

StratSim Environment

Based on the Automobile Industry Two Markets: Consumer & Fleet (B2B) Consumer market of 150 million people B2B market of numerous fleet contracts

Currently, low GDP and inflation growth rates Demand sensitive to GDP, interest rates, and decisions that you make as an industry Maximum of 10 yearly decisions

StratSim Environment

Industry Overview
Class
Economy

Position
Smaller Low Price Mid Size Mid Price Larger, Expensive Mid Size Mid Price Larger, Mid Price Larger, Mid-High Price Mid-Large Size, Mid Price

Segments
1, 2

Vehicles
Alec, Delite

Example

Family

2, 4

Alfa, Boffo, Cafav, Defy, Efizz Beaut, Climax

Luxury

4, 5

Sports

Buzzy

Minivan

Camini

Utility

3, 5

Euro, Awesome

Truck

1, 3

Detonka, Estruck

Consumer Market
5 consumer segments (1-5) with different needs and class preferences Customer = Intersection of segment and class (e.g., 1T is a value seeker who wants a truck)

Segments

Value Seekers (1) Families (2) Singles (3) High Income (4) Enterprisers (5)

Customers

1E, 1T 2E, 2F, 2M 3S, 3T, 3U 4F, 4L 5L, 5U

New need-based segements may emerge

Consumer Market
Purchase Process
Customers have different needs and expectations with regard to vehicle characteristics Customer consideration set based on product class, size, and MSRP

Consumer Market
Purchase Process
Customers prefer a particular size vehicle Customers prefer a specific engine HP due to the trade-off between performance and fuel economy Customers prefer better (more) Interior, Styling, Safety, and Quality Customers weigh this bundle of goods against the price charged

Hints: Customers may have certain hot buttons or attributes that are particularly important to them, and some customers may be more price sensitive than others.
14

B2B Market

(optional)

New Opportunity in direct sales to Fleet Buyers: Rental Car Fleets (6) Delivery fleets (7) Other (8) (e.g. Hertz) (e.g. FedEx) (e.g. Govt)

Note: Segments designated 1-5 are consumer customers Segments designated 6-8 are B2B customers. B2B Customers have a very different purchase process from Consumer Market. Guaranteed sales are awarded to firms who meet contract requirements, preferred supplier status (2x sales) awarded to low cost supplier who meets contract requirements.

StratSimMarketing
Internal

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Tools

Integrated Long-Term Market-Focused

Consumer data
Customer (segment / preferred class) Demand Information

Preferred (expected) price, size and engine range Details on leading vehicles competing for that customer

Hot Buttons and Price sensitivity

18

Test Market

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Decisions

Stratsim Support

One of the real benefits of the simulation experience for faculty and students is the meaningful dialogue that occurs as core concepts are brought to life.

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Market based Management by Roger Best

Choice of Textbook..!?

Gains in marketing knowledge without

application are missed learning opportunities. Roger J. Best
USC UCLA Wharton Columbia UW-Madison NYU Dartmouth Vanderbilt-Owen UNC- Chapel Hill UT-Austin UW-Milwaukee

Stanford

Contents Chapter 1 Customer Focus and Managing Customer Loyalty Chapter 2 Marketing Performance and Marketing Profitability Chapter 3 Market Potential, Market Demadn, and Market Demand Chapter 4 The Customer Expereince and Value Creation Chapter 5 Market Segmentation and Segmentation Strategies Chapter 6 Competitor Analysis and Sources of Advantage Chapter 7 Product Positioning, Branding, and Product Line Strategies Chapter 8 Value-based Pricing and Pricing Strategies Chapter 9 Marketing Channels and Channel Mapping Chapter10Marketing Communication and Customer Response Chapter11Portfoli Analysis and Strategic Planning Chapter12Offensve Strategies Chapter13Defensive Strategies Chapter14Building a Marketing Plan
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Integrating Stratsim game and textbook

Initial setup
Theory Method

Book

Stratsim

Evaluation based on: Exam

Evaluation based on: Performance

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Integrating Stratsim game and textbook

Theory

Method Topics

Book

Stratsim

Discussions about Stratsim performance in light of theories

Evaluation based on: Quiz Performance Presentation 3-Year Marketing plan

Evaluation based on: Exam 10 Homework

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Integrating Stratsim game and textbook

Overall Marketing Strategy

Book

Stratsim
Market Attractivenes Competitive Advantage

Evaluation based on: Quiz Stratsim Performance Stratsim Presentation 3-Year Marketing Plan Homework (10) Exam

Marketing tactics Cash Flow Segmentation Break-Even Analysis Price Elasticity Research and Development Market Analysis Production optimization Conjoint Analysis New Market Entry
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Perceptual Mapping

NMC = Product Contribution

With product contribution, a company can compare and contrast across product lines before allocating fixed costs.

NMC

F.C.

Marketing Profitability Metrics

Marketing ROI =

Net Marketing Contribution Marketing & Sales Expenses

Marketing ROS = Net Marketing Contribution Sales Revenues

The Bigger Picture

The Marketing Strategy

Needs Customer

Market (5Cs) Marketing Strategy (STP)

Situation SWOT

Competitors Collaborators Company Target Market Selection Place/Channels Pricing Customer Acquisition Profits

Context

Strategy

Market Segmentation Product/Service

Product & Service Positioning Promotion

Marketing Mix (4 Ps and Tactics Service) Marketing Performance Assessment

Action

Customer Retention

Evaluation

Step 2: Situation & SWOT Analyses per SBU

of 5 x Cs Company Competition Consumers Collaborators Context

Strategic Alternatives Stratsim (substantiated through textbook theory/case studies)

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Steps in Segmentation Process

Stratsim Context
1. 2. 3. 4. 5. 6. 7.

Needs-based Segmentation Segment Identification Segment Attractiveness Segment Profitability Segment Positioning Segment Acid Test Segment Marketing Mix Strategy

Expand segment positioning strategy to include all aspects of the marketing mix.

Strategy Matrix
100

67

Market Attractiveness

33

0 0 33 67 100

Competitive Advantage

Strategy and Key Performance Issues

Positioning Strategy Value Proposition Channel Strategy Performance Objectives

Stratsim Segment SBU 1 Calculate Market Attractiveness Stratsim Segment SBU 2 Stratsim Segment SBU 3 Calculate Competitive Advantage

Stratsim Product-Market information uncovered in Situation and SWOT analyses Competitive Advantage and Market Attractiveness Scores.

1 StratSimMarketing The final position will affect your grade to some extent as follow No. 1 = 100, No 2 = 95, No 3 = 90 No. 4 = 87, and No 5 = 84. Each team prepares a detailed final presentation. A detailed presentation outlined will be handed out. Your team is also required to produce a short but detailed marketing plan (outline will be provided). The marketing plan includes a 5-year strategy (Periods 11-15 in Stratsim) for the Stratsim company that you are in charge of. 2. Stratsim Quiz A Stratsim quiz is given approx. half-way through the semester. This quiz covers the entire Stratsim manual and tests your understanding of the Stratsim game --a thorough understanding will not only help improve your quiz grade but also compete more efficiently in the game.

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Excerpts from Syllabus Capstone Undergraduate Course at University of Wisconsin Madison

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The End

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