Transcript International Business Simulation over the Internet

The following slides
are for the introduction to the
Marketplace game.
Copyright 2001 Ernest R. Cadotte
Experiencing Marketing Strategy
@ the Marketplace
Copyright 2001 Ernest R. Cadotte
The Marketplace Is a Fun Way to
Learn About Marketing.
• It is a marketing game.
• It is learning by doing.
• It brings to life marketing concepts,
principles and ways of thinking.
• It energizes the competitive spirit.
Copyright 2001 Ernest R. Cadotte
It Is Realistic!
• You do what your real-life counterparts do
– Design brands
– Design ad copy
– Schedule media
– Set selling prices
– Hire and train sales people
– Worry about profits
Copyright 2001 Ernest R. Cadotte
It Is Organized!
• The game scenario follows the logical
process of starting up a new product line.
• You are guided through the decision making
process.
• Detailed help files are available at the touch
of a button.
Copyright 2001 Ernest R. Cadotte
On the left is the step-by-step process by
which you work your way through the
information and decisions. The software
controls your progression in order to reduce
your uncertainty (and need to contact the
instructor) and to help you see the logic of the
marketing process.
The Marketplace software is all set up to print the
results for each quarter’s play, starting with the Q3
test market.
–Name, ID, balanced scorecard, profit statement,
market share, customer satisfaction ratings
Copyright 2001 Ernest R. Cadotte
Learning Strategy
Marketing war games are a form of combative
training where you pit your marketing skills
against those of formidable opponents under
the watchful eye of a training coach.
Copyright 2001 Ernest R. Cadotte
Learning Strategy:
Learn by Doing
• You learn about all aspects of marketing by
managing a simulated marketing department.
• The Marketplace scenario follows the life cycle of
a new product.
• Marketing decisions are introduced as they
become relevant in the evolution of the product.
Copyright 2001 Ernest R. Cadotte
Key Benefits
•
Develop teamwork across marketing functions.
•
Promote better decision making by helping you
see how your marketing decisions are
interconnected and need to be managed as a
whole.
•
Facilitate learning of important marketing
concepts, principles and ways of thinking
Copyright 2001 Ernest R. Cadotte
Key Benefits
•
Develop marketing planning and execution
skills within a rapidly changing environment.
•
Instill a bottom line focus and the
simultaneous need to deliver customer value.
•
Crystallize the financial implications of
marketing decisions by linking them to cash
flows and bottom-line performance .
Copyright 2001 Ernest R. Cadotte
Key Benefits
• Discover how important it is to use market
data and competitive signals to adjust the
strategic plan and more tightly focus
business tactics.
• Build marketing confidence through
knowledge and experience.
Copyright 2001 Ernest R. Cadotte
How is the business war
game conducted?
• Teams are placed in a war game scenario starting up and running a new marketing
division.
• The opposition is played out by competing
teams.
Copyright 2001 Ernest R. Cadotte
Objective is to profitably capture
a dominant market position
Opponent
Opponent
Business Team
Market
Opponent
Opponent
Copyright 2001 Ernest R. Cadotte
Marketing Team
• Each team member assumes a tactical area
of responsibility;
brand management
advertising
sales office management
overall leadership
• Everyone is responsible for marketing
research and profit management.
Copyright 2001 Ernest R. Cadotte
How Conducted?
• Marketing team receives information on current
situation.
• Current situation is evaluated, strategy
formulated and tactics set in placed.
• Tactical decisions are fed into the marketplace
simulator, along with decisions of opponents.
• Results of decisions are fed back to business
team.
Copyright 2001 Ernest R. Cadotte
How Conducted?
• The business team can acquire information on
what is happening in the marketplace:
– customer reaction to market decisions
– competitor actions
• Current situation is evaluated, strategy
formulated, and tactics set in place.
• Tactical decisions are again fed into the
marketplace simulator.
Copyright 2001 Ernest R. Cadotte
For illustration purposes, suppose
you start up a company named
“Apollo Computers”
Copyright 2001 Ernest R. Cadotte
Here is the Game Scenario
• You work for a large international electronics
firm.
• Corporate Headquarters wants to enter the
personal computer business.
• Headquarters will invest 7,000,000 in the
venture (500,000 in Q1 to Q4 and
5,000,000 in Q5).
Copyright 2001 Ernest R. Cadotte
Game Scenario
• You have been selected to head up the
new marketing division to sell
computers into Asia, North America
and Western Europe.
• Several other international firms are
entering the market at the same time.
Copyright 2001 Ernest R. Cadotte
Game Scenario
• Your marketing strategy will be tightly
focused on direct sales to business
customers.
– You will not sell to the home market or
through retail stores.
– You will sell through company-owned sales
offices in major metropolitan markets around
the world.
Copyright 2001 Ernest R. Cadotte
Global Marketplace
Copyright 2001 Ernest R. Cadotte
There are 5 Market Segments
(Market Structure)
Mercedes
Traveler
Innovator
Performance
Work
Horse
Cost Cutter
Price
Copyright 2001 Ernest R. Cadotte
Each market segment has its own set of needs
Copyright 2001 Ernest R. Cadotte
You must decide which 2 segments
you want to target initially.
For example, the Traveler and Cost Cutter segments
might be selected.
Once you select a segment, you must design a
brand to meet the needs of the segment.
For example, portability is important to the
Traveler segment. What features would
increase the portability of a PC?
You must design ads which appeal to
the target segment.
you decide which brand will
be featured in the ad.
You select the benefits to mention in the
ad and indicate their order of priority.
Copyright 2001 Ernest R. Cadotte
You set the selling price, decide if
you want to use a rebate, and
signal to the sales staff which
brand has the highest priority.
Copyright 2001 Ernest R. Cadotte
As the quarters progress, you
decide how you want to
expand your international
market coverage.
Copyright 2001 Ernest R. Cadotte
When your decisions are ready to be
processed through the Marketplace
simulator, a quality check is made to
make sure there were no entry errors
and nothing important was forgotten.
Copyright 2001 Ernest R. Cadotte
Immediately after processing, you find out
how profitable the division was in the
quarter that just ended.
Copyright 2001 Ernest R. Cadotte
You can see your market share by
segment and for the whole market.
Your company is Apollo,
black.
Copyright 2001 Ernest R. Cadotte
You are given market research that tells you how
satisfied your target segment is with your brand design
and those of the competition. (100 is total satisfaction.)
Your brand
Copyright 2001 Ernest R. Cadotte
If a brand is not doing well,
you can study other brands and
redesign your brand.
Your
brand
Copyright 2001 Ernest R. Cadotte
Better
brand
You are also given a profit analysis
of each brand so that you can adjust
your brand strategy.
Copyright 2001 Ernest R. Cadotte
Grading is Based upon
Achievement of Goals!
• Earn 30% in operating profits by Quarter 8.
• Capture 40% of the market in at least two market
segments.
• Achieve 90% customer satisfaction in your brand
designs and advertising copy.
• Aggressively expand markets and products to
increase demand, customer satisfaction and
profits.
• Triple Corporate Headquarters’ investment of
7,000,000.
Copyright 2001 Ernest R. Cadotte
Each quarter, you will be presented
with your balanced scorecard.
Your goal is to achieve a 90 or better by Quarter 8
in Total Business Performance.
What to turn in?
• The Marketplace software is all set up to print the
results for each quarter’s play, starting with the Q3
test market.
– Name, ID number, balanced scorecard, profit statement,
market share, customer satisfaction ratings
• Print options (starting in Q4 for Q3 test market)
– Follow the normal decision sequence, or
– Click on button labeled, “Print everything for
instructor” from the Headquarters file folder.
Copyright 2001 Ernest R. Cadotte
Chronology of Events
• Q1, organize the team, name the company and
contract for a survey of potential customers.
• Q2, analyze market information, establish
strategic direction and set up shop (design
brands and set up sales offices).
Copyright 2001 Ernest R. Cadotte
Chronology of Events
• Q3, test-market brands, prices, ad copy,
media campaigns, sales staffing.
• Q4, study end user feedback, competition,
and financial performance and make
adjustments in strategy.
Copyright 2001 Ernest R. Cadotte
Chronology of Events
• Q5, prepare a one-year marketing plan.
Present marketing plan to Corporate
Headquarters and obtain approval.
• Q5 - Q8, initiate international roll-out
campaign.
Copyright 2001 Ernest R. Cadotte
Chronology of Events
• Q9, present report to Corporate
Headquarters regarding;
–
–
–
–
–
second year performance,
deviations from plan,
justification for departures,
analysis of current market, and
plan for third year.
Copyright 2001 Ernest R. Cadotte
Funding
• The initial funding is 2,000,000 which is being
invested by Corporate Headquarters in 500,000
increments over the first 4 quarters.
• Corporate Headquarters will provide another
5,000,000 in Quarter 5 if it approves your
marketing plan for the second year.
Copyright 2001 Ernest R. Cadotte
Total Performance Evaluation
• Marketing plan
• Report to Corporate Headquarters
• Strategic thinking and tactical execution
• Market performance
– profitability
– customer satisfaction
– market share in targeted markets
– investments in the firm’s future
– creation of wealth for Headquarters
• How well company is prepared for the future
Installation
• 5 minutes to set up
• Home computer
– hard drive installation
– always need CD
• Computer lab
– mobile installation
– select high density disk option (Zip disk, do not use the
floppy disk installation)
– purchase Zip disk – files saved on Zip disk
– always need CD and Zip disk
Copyright 2001 Ernest R. Cadotte
Q1, Organize the Business
• Name the company
• Assign organizational responsibilities
• Purchase survey of end users
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarter 1
• Managing the team
• Organizing the work
• Deciding what one wants from the learning
experience
Copyright 2001 Ernest R. Cadotte
The Following Slides Are For
Quarter 2
Copyright 2001 Ernest R. Cadotte
Q2, Establish Strategic Direction
• Analyze market information,
• Establish strategic direction
– select 2 target segments
– decide on competitive posture
• Set up shop
– develop distribution strategy
• open initial sales offices for test market
– design 2 brands, 1 for each target segment
Copyright 2001 Ernest R. Cadotte
View Software
Copyright 2001 Ernest R. Cadotte
How do you decide what to
design into a brand?
Copyright 2001 Ernest R. Cadotte
The most important rule
in brand design:
“Customers Buy Benefits,
Not Features”
Copyright 2001 Ernest R. Cadotte
Once you select a segment, you must design a
brand to meet the needs of the segment.
“Using the computer on the road” is
important to the Traveler segment. What
features would provide this benefit?
How far do you go in giving the
customers what they say they want?
• Is more speed, software applications,
memory, keys on the keyboard, etc. always
valued?
• Could “more of some feature” even make a
customer unhappy?
• Let’s take a look at this question in another
industry – candy bars.
Copyright 2001 Ernest R. Cadotte
What is the elasticity
of the peanut?
Searching for the
Market’s Response Function
Copyright 2001 Ernest R. Cadotte
Suppose you could design the ideal
candy bar. How many peanuts would
you put in the candy bar to make you
the happiest?
• A few?
• A bunch?
• A whole lot?
Copyright 2001 Ernest R. Cadotte
Which candy bar has the
most peanuts?
• Baby Ruth
• Snickers
• Payday
Copyright 2001 Ernest R. Cadotte
Which candy bar
do you like the most?
• Baby Ruth
• Snickers
• Payday
Copyright 2001 Ernest R. Cadotte
What does your response
function look like for peanuts?
• Is more always better?
• Would your happiness increase with every
new peanut we added to the candy bar?
• Is there a limit?
Copyright 2001 Ernest R. Cadotte
What would be your response
function for the following?
•
•
•
•
•
Chocolate
Caramel
Coconut
Rice
Peanut butter
Copyright 2001 Ernest R. Cadotte
Here are a number of response
functions. Which one applies to
peanuts, chocolate, coconut, etc.?
Hot
Hot
More is
always
better
More is good to a
point and then ceases
to add excitement
Cold
Cold
Less
More
Copyright 2001 Ernest R. Cadotte
Less
More
Hot
Hot
More adds
value to a point
& then takes
away value
Cold
A little is just
right, more only
takes away value
Cold
Less
More
Copyright 2001 Ernest R. Cadotte
Less
More
Hot
Hot
Any amount is bad
Little interest
until threshold
is crossed
Cold
Cold
Less
More
Copyright 2001 Ernest R. Cadotte
Less
More
Hot
No reaction/indifference
to having the feature
Cold
Less
More
Copyright 2001 Ernest R. Cadotte
Take any PC segment, how excited
will it become if you provide?
•
•
•
•
•
More memory
More speed
More functions on the key board
More software
More ….
Just like the candy bar ingredients, you must discover the
response function for each PC component.
Learning Points for Quarter 2
•
•
•
•
Market opportunity analysis
Segmentation and target marketing
Strategic and tactical planning
Game theory - competitive positioning
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarter 2
• Brand design –
– linking product features to customer benefits
– finding the customer’s response functions
Copyright 2001 Ernest R. Cadotte
The following slides are for
Quarter 3
Copyright 2001 Ernest R. Cadotte
Q3, Go to Test Market
The Goal is to Maximize
Learning and Not Profits.
Copyright 2001 Ernest R. Cadotte
Q3, Go to Test Market
• Set selling prices
• Develop advertising campaign
– design 2 ads, one for each brand
– determine number of placements per ad
• Develop distribution strategy
– hire sales force for quarter
– open new sales offices for Q4
Copyright 2001 Ernest R. Cadotte
Q3, Test Market
• Contract for market research on customers
and competition
• Check pro forma financial position
Copyright 2001 Ernest R. Cadotte
View Software
Copyright 2001 Ernest R. Cadotte
How to Set Price?
•
•
•
•
Costs (production, marketing, overhead)
Profit goals
What market will bear
Competition
Copyright 2001 Ernest R. Cadotte
In the beginning, you will not be
able to price above your costs.
• There are many startup costs which will
exceed your revenues.
• Your production volumes will be very low,
resulting in high per unit costs
Copyright 2001 Ernest R. Cadotte
No early profits
+
costs to setup
& grow the
business
Money
0
Time
Copyright 2001 Ernest R. Cadotte
Revenues will fall below costs at
the outset of a new business
Revenue
+
costs to setup
& grow the
business
Money
0
Time
Copyright 2001 Ernest R. Cadotte
Profits will come later
Revenue
+
Profit
costs to setup
& grow the
business
Profits
0
Time
You are here.
Copyright 2001 Ernest R. Cadotte
Profits
come
later.
Your goal is to speed up the
adoption rate.
maturity
decline
Demand
growth
introduction
You are here,
high costs-low demand
Time
Copyright 2001 Ernest R. Cadotte
What will the market bear?
You must discover the market
response function regarding price.
Copyright 2001 Ernest R. Cadotte
What is the market’s price
response function?
Your
Demand
Inelastic
(price is not a big factor.)
Elastic (demand drops fast
with increasing prices)
Your
Price
Copyright 2001 Ernest R. Cadotte
Or, maybe it looks like this.
Your
Demand
Demand drops slowly with small
price increases and then drops
dramatically with larger price
increases.
Your
Price
Copyright 2001 Ernest R. Cadotte
How will the market respond to
competitor prices?
Your
Demand
Low competitor prices
will kill your demand
Competitor’s Price
Copyright 2001 Ernest R. Cadotte
How to create ads?
Your Ad
Low price
Most important
Easy to use
More productive
Fast
Office applications
Picture office workers
Order of priority
implies importance of
message to customer
Least important
Order of priority tells
the ad agency what to
stress in the ad
How much to say in an ad?
(number of benefits)
Which response function is at work?
or
Hot
Hot
More is good to a
point and then ceases
to add excitement
Cold
More adds
value to a point
& then takes
away value
Cold
Less
Less
More
Copyright 2001 Ernest R. Cadotte
More
How often do you advertise?
Your
Demand
Diminishing
returns
Too little
Number of ads
Copyright 2001 Ernest R. Cadotte
But it also depends on what your
competitors do
Your
Demand
Strong competitor
advertising
will steal away
your customers
Competitor’s Advertising
Copyright 2001 Ernest R. Cadotte
How many sales people?
Your
Demand
Diminishing
returns
Too many
Too few
Number of sales people
Copyright 2001 Ernest R. Cadotte
The response function is dynamic!
Your
Demand
Shift the response function
upwards with better brands,
prices, advertising, sales
force placement
Number of sales people
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarter 3
• Execution of a coherent strategy
• Management of cash in the face of great
uncertainty
• Learning to walk before you run
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarter 3
• Marketing strategy - coordinating a host of tactics
• Pricing - balancing costs, profit, what the market
will bear, and competition
• Advertising – deciding what to say, how to say it
and how frequently to say it
• Sales force – hiring and targeting the sales staff
• Testing the market - discovering the market’s
many response functions
Copyright 2001 Ernest R. Cadotte
What to turn in
after Q3 decisions have been run
through the Marketplace simulator?
• Q3 results are available at the start of Q4.
• The Marketplace software is all set up to print the
results for each quarter’s play, starting with the
results of the Q3 test market.
– Name, balanced scorecard, profit statement, market
share, customer satisfaction ratings
• Print options
– Paper copy
– Electronic copy
Copyright 2001 Ernest R. Cadotte
Paper Copy of Results
• Follow the normal decision sequence, or
• Click on button labeled, “Print everything for
instructor” from the Headquarters file folder.
• Click on “Print” button.
Copyright 2001 Ernest R. Cadotte
Electronic Copy of Results
• Your instructor might want an electronic copy in
place of, or in addition to, the paper copy.
• Click on the button, “Copy Performance Data to
Floppy for Instructor”.
The following slides are for
Quarter 4.
Copyright 2001 Ernest R. Cadotte
Quarter 4 The Skillful Adjustment
Copyright 2001 Ernest R. Cadotte
Q4, Evaluate Performance,
Skillfully Adjust Strategy
• Check customer reaction to brands, prices
and advertising
• Check financial performance
• Check out competition
– strategic direction
– tactics
– market’s response to their prices, brands, ads
Copyright 2001 Ernest R. Cadotte
Q4, Skillfully Adjust Strategy
• As needed, adjust
–
–
–
–
–
strategy
brand designs and prices
advertising
sales office locations
sales force management
• Check finances
• Feed decisions into Marketplace simulator
Copyright 2001 Ernest R. Cadotte
Measures of Customer
Satisfaction
• Brand judgment (0 to 100)
• Price judgment (0 to 100)
• Ad judgment (0 to 100)
100 indicates complete satisfaction. 70 would be a good brand
and ad rating for the first year. New technology will be
available in Quarter 5. The new features will make customers
happier and yield higher ratings.
Price ratings should be near 100 in all quarters.
Copyright 2001 Ernest R. Cadotte
Goal of Monitoring Customer
Satisfaction
Give the customers what they want
and do so better than the competition.
Copyright 2001 Ernest R. Cadotte
Deduce the market’s many
response functions
Hot
Hot
Hot
Cold
Cold
Cold
Less
More
Less
More
Hot
Hot
Hot
Cold
Cold
Cold
Less
More
Less
More
Copyright 2001 Ernest R. Cadotte
Less
More
Less
More
Based upon customer feedback,
skillfully adjust marketing tactics
•
•
•
•
Revise brand designs or create new ones
Revise ad copy
Adjust prices
Hire more sales people or deploy them
differently
Add or take away elements to find the sweet spot in
the customer’s response function.
Copyright 2001 Ernest R. Cadotte
Competitor Benchmarks
•
•
•
•
•
Brand and ad designs
Prices and sale priorities
Sales staffing
Ad placements
Demand by brand by segment
Copyright 2001 Ernest R. Cadotte
Goals of Competitive
Benchmarking
•
•
•
•
•
•
Reverse engineer the strategy of each competitor
Determine who is a threat and who is not
Determine strengths and weakness of competition
Emulate good decisions
Predict direction of competitive moves
Adjust strategy and tactics in reaction to
competitor strengths and weaknesses and in
anticipation of future moves.
Copyright 2001 Ernest R. Cadotte
Financial Performance
•
•
•
•
Division profitability
Brand profitability
Region profitability
Return on investment
Copyright 2001 Ernest R. Cadotte
Goals of Financial Management
• Discover which brands and markets are
making the greatest and weakest
contribution to the bottom line.
• Deploy resources to correct weaknesses and
take advantage of strong performers.
Copyright 2001 Ernest R. Cadotte
Measurement of the
Division’s Performance
The Balanced Scorecard
Copyright 2001 Ernest R. Cadotte
Why Use a Balanced Scorecard?
• It is too easy to get caught up in market share and
short-term profits.
• Long-term viability requires that managers also
deliver customer satisfaction and invest in the future.
• The balanced scorecard measures both the long-term
and the short-term.
• The best managers will be good in all areas
measured.
Copyright 2001 Ernest R. Cadotte
The Balanced Scorecard
• Final performance will be computed based upon:
– Financial Performance (profit as percent of sales);
– Market Performance (market shares in 2 target
segments);
– Marketing Effectiveness (customer satisfaction with
brand and advertising designs in 2 target segments
(scored 0 to 100) plus unit sales per sales person);
– Investments in the Future (spending on new offices
and research and development as percent of sales); and
– Creation of Wealth (total profit/total investment).
– The Final Score is a single number which combines all
of these factors. Quarter 8 results will be used to
compute the final score.
View Software
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarter 4
• Using the tools of management
– market feedback
– competitive benchmarking
– profitability analysis (activity based costing)
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarter 4
• The management of strategy
–
–
–
–
learning from your customers
learning from your competition
learning from your financial information
skillfully adjusting your strategy and tactics
• Management of financial resources
Copyright 2001 Ernest R. Cadotte
The following slides are for
Quarter 5.
Copyright 2001 Ernest R. Cadotte
Quarter 5, Making Plans
for the Future
Copyright 2001 Ernest R. Cadotte
What is new in Quarter 5?
• 5,000,000 in additional funding
• Ability to invest in R&D for new brand
features
Copyright 2001 Ernest R. Cadotte
Corporate Headquarters is willing
to invest another 5,000,000
• Demand is up for the entire industry
• Your firm has established itself as a viable
competitor
• New sales offices would greatly expand
distribution, drive up unit volume, and thereby
reduce unit costs.
• New brand features could be brought on the
market if you invest in R&D. These brand
features will increase customer satisfaction, and
thereby demand.
Copyright 2001 Ernest R. Cadotte
Your goal is to speed up the
adoption rate.
maturity
decline
Demand
growth
introduction
You are here.
New brand features and new sales offices
will push you into the growth phase.
Time
Copyright 2001 Ernest R. Cadotte
Before it makes its investment,
Corporate Headquarters
wants a marketing plan for the
second year
Copyright 2001 Ernest R. Cadotte
A strategy is a plan of action
A strategy is a series of interconnected
tactics purposely organized to be executed
in a particular order in time and space for
the purpose of achieving specific goals.
Copyright 2001 Ernest R. Cadotte
The best-planned strategies will
not survive the test of battle
Gen. George Patton
Copyright 2001 Ernest R. Cadotte
Plans are worthless,
but planning is everything
Gen. Dwight D. Eisenhower
Copyright 2001 Ernest R. Cadotte
The devil is in the details.
Adm. Rickover
Copyright 2001 Ernest R. Cadotte
It is better to have a class-A team
with a class-B plan than to have a
class-B team with a class-A plan.
Almost any senior executive
Copyright 2001 Ernest R. Cadotte
Headquarters Wants a Plan
•
•
•
•
•
•
•
History of firm
Market assessment
Performance to date
Marketing strategy
Financial strategy
Pro forma income statements
What is in it for the company?
Copyright 2001 Ernest R. Cadotte
Market Assessment
• Nature of business opportunity
• Market potential
• Competition
Copyright 2001 Ernest R. Cadotte
Firm’s Performance After 1 Year
• Market position
– segments
– geography
– competition
• Market performance
– demand and market share
– customer satisfaction (brands, prices, reliability)
• Financial performance
– cash
– profitability
Marketing Strategy
• Target markets
• Distribution –
– geographic market expansion
– timing and order of new markets
• Sales force staffing
– number by quarter
– percent allocation by segment and service
• Advertising (timed to match new offices, brands)
– themes/messages
– frequency (volume) by region
– emphasis on regional versus local
Marketing Strategy
• Brand strategy (portfolio management)
– selection of R&D features
• target segment
• cost and timing of availability
– introduction of new brands
• target segment
• timing
– price strategy
• margins by brand by target market
• new versus established brands
Copyright 2001 Ernest R. Cadotte
Financial Strategy
• Cash flow requirements
– Amount to be invested by quarter in R&D
– Amount to be invested by quarter in new sales offices
• Profitability
– Projections of profits by quarter
– Return on investment by end of second year
• Sources of money
– Corporate Headquarters
– Profits
Copyright 2001 Ernest R. Cadotte
Oops Factor in Strategic Planning
Develop
tactical plan
Check available
cash
Oops!
Revise
tactical plan
Copyright 2001 Ernest R. Cadotte
Check available
cash
What is in it for Corporate
Headquarters?
• How will its money be spent?
• How much will it earn and when will it earn
it?
Copyright 2001 Ernest R. Cadotte
Procedure for Presentation to
Corporate Headquarters
• Each team is given 15 minutes to present its
marketing plan to Corporate Headquarters.
• Corporate Headquarters will take15 minutes
ask questions about the division’s
performance to date, assessment of the
current situation and strategy for the future.
• The executive team can not proceed until the
plan has been approved by Headquarters.
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarter 5
• Strategic and tactical planning
– time phasing decisions into the future
– working investment money to support tactical
plans
• Understanding cash flows
– cash is king
– how is profit different from cash?
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarter 5
• Management of strategy
– discover the causes of performance shortfalls
– adapt to new opportunities and problems
– work on the margin to improve performance
• where should money be spent next?
• how can we get more out of our current investments?
– manage the future (taking the initiative now by
expending resources that will shape the events and
opportunities of the future)
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarter 5
• Management of strategy (continued)
– discover and exploit the market’s many response
functions
– learn from smart competitor decisions
– You can not go to Hawaii on market share
(at the end of the day, wealth creation is the goal)
Copyright 2001 Ernest R. Cadotte
The following slides are for
Quarters 6, 7, and 8
Copyright 2001 Ernest R. Cadotte
Quarters 6, 7 , and 8
Skillful Adjustment
Copyright 2001 Ernest R. Cadotte
Your goal is too manage your
division’s total performance
• The best marketers are good at managing
–
–
–
–
–
Financial Performance
Market Performance
Marketing Effectiveness
Investments in the Future
Creation of Wealth
Copyright 2001 Ernest R. Cadotte
Use the Balanced Scorecard
• Final performance will be computed based upon:
– Financial Performance (profit as percent of sales);
– Market Performance (market shares in 2 target
segments);
– Marketing Effectiveness (customer satisfaction with
brand and advertising designs in 2 target segments
(scored 0 to 100) plus unit sales per sales person);
– Investments in the Future (spending on new offices
and research and development as percent of sales); and
– Creation of Wealth (total profit/total investment).
– The Final Score is a single number which combines all
of these factors. Quarter 8 results will be used to
compute the final score.
Skillfully adjust your marketing
strategy to expand your position
in the market
maturity
decline
growth
Demand
introduction
You want to move in this direction.
Time
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarters 6, 7, 8
• Strategic and tactical planning
– time phasing decisions into the future
– working investment money to support tactical
plans
• Understanding cash flows
– cash is king
– how is profit different from cash?
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarters 6, 7, 8
• Management of strategy
– discover the causes of performance shortfalls
– adapt to new opportunities and problems
– work on the margin to improve performance
• where should money be spent next?
• how can we get more out of our current investments?
– manage the future (taking the initiative now by
expending resources that will shape the events and
opportunities of the future)
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarters 6, 7, 8
• Management of strategy
– discover and exploit the market’s many response
functions
– learn from smart competitor decisions
– You can not go to Hawaii on market share
(at the end of the day, wealth creation is the goal)
Copyright 2001 Ernest R. Cadotte
The Following Slides
Are Used for the Final Summary
Copyright 2001 Ernest R. Cadotte
Experiencing Marketing Strategy
@ the Marketplace
Copyright 2001 Ernest R. Cadotte
When we work strictly in our functional
silos, we are like a bunch of blind people
trying to understand what an elephant is.
It’s a sheet
of rawhide.
Please tell me
what it is..
It’s a snake.
Copyright 2001 Ernest R. Cadotte
It’s a steel
tube.
It’s a
tree trunk.
With business war games, you can crawl all
over and under the marketing organization to
help you to see and understand the whole thing
Brands
Research
Pricing
It is a marketing
organization!
Advertising
Copyright 2001 Ernest R. Cadotte
Distribution
Key Benefits
•
Develop teamwork across marketing functions.
•
Promote better decision making by helping
students see how their marketing decisions are
interconnected and need to be managed as a
whole.
•
Facilitate learning of important marketing
concepts, principles and ways of thinking
Copyright 2001 Ernest R. Cadotte
Key Benefits
•
Develop marketing planning and execution
skills within a rapidly changing environment.
•
Instill a bottom line focus and the
simultaneous need to deliver customer value.
•
Crystallize the financial implications of
marketing decisions by linking them to cash
flows and bottom-line performance .
Copyright 2001 Ernest R. Cadotte
Key Benefits
• Discover how important it is to use market
data and competitive signals to adjust the
strategic plan and more tightly focus
business tactics.
• Build marketing confidence through
knowledge and experience.
Copyright 2001 Ernest R. Cadotte
Experiencing Marketing Strategy
@ the Marketplace
Course Evaluation
Copyright 2001 Ernest R. Cadotte