Transcript Musci2Go Introduction

Music2Go:
A Battle Between CD Player Mfrs
Music2Go 1
© Bill Swinyard
Overview




Medical education
Beyond lecture, cases
Systems thinking
Lessons for
 strategy formulation
 tactics
Music2Go 2
© Bill Swinyard
Business School Critics
Assert that we Place . . .
 Too much emphasis on quantitative




analysis, tools, models, and theory
Too little emphasis on qualitative thinking,
complex tradeoffs, execution, and
creativity
Too much emphasis on short term
performance
Too little attention on interpersonal
relationships and social ethics
Not enough on long term success 
Music2Go 3
© Bill Swinyard
How We Learn:
Passive vs Active Learning
Act
Observe
Decide
Update mental model,
Evolve strategy and rules
Music2Go 4
Adapt,
Reflect
© Bill Swinyard
Active Learning with
The Marketplace
Decisions
Results
Music
to
Go
Modify
Decisions
Make
Decisions
Music
to
Go
Observe
Results
Modify
thinking
Reflection
Repeat as often as you wish
Music2Go 5
© Bill Swinyard
Planning, Implementation,
Control
Corporate Level
Feedback
Define the
Mission of
the Organ.
Determine
Organ.
Objectives
SWOT
Analysis
Marketing Department
Monitor and
Implement
Adapt Strategies
Strategy
Formulate
when Necessary
Through
Strategy
Based on
Operating
Feedback
Plans
Feedback
Music2Go 6
© Bill Swinyard
Game Scenario
Consumer Electronics Mfr
You are:
Portable CD Player (PCDP)
VP Marketing
Competitor: EWS Audio
Has stronger
market position & resources
than you
Music2Go 7
1996 – 2001
Market
GrowthStage
Product
U.S. Only,
40mm HH
© Bill Swinyard
Game Overview
 Two PCDP firms – you & EWS Audio
 You will make decisions relating to all four
areas of the marketing mix
• promotion
• pricing
• product design
• distribution
 2 consumer market segments
differentiated by
• age
• income
• family
• tastes
Music2Go 8
• lifestyle
© Bill Swinyard
Marketing Mix & Targets
2 Competitors
• EWS Audio
• You
For Control of
Product Design
2 Market
Segments
Promotion
Standard
Pricing
Objective:
Higher
Mkgt Contrib.
than EWS
Distribution
Music2Go 9
Youth
© Bill Swinyard
Technical Specs
Product Strategy:
Attributes, Segments, & Evolution
• Less active
• Price conscious
• Want simple tech
• Newspapers
• Fashion conscious
• Price sensitive
• Want avg tech specs
• TV, Radio
Standard
Youth
Style
Note Attributes
Segment position
Segment size & evolution
Music2Go 10
© Bill Swinyard
Promotion Strategy
Advertising
Sales
Promotion
 Media selection  Trade
shows
 Television
 Radio & station  Sales
format
 Newspapers
 Magazine &
category
training
 Premiums
 POP
displays
 Rebates
Music2Go 11
Optimizing
the Mix
 Market
segments
- lifestyle
- demographics
 Product life
cycle
 Media type &
char’s
© Bill Swinyard
Promotion Strategy
Advertising
Product
Awareness
Consumer
Demand
(Sales)
Distribution
coverage
Distributor
performance
Sales
Promotion
Music2Go 12
© Bill Swinyard
Distribution Strategy
Distribution
Channels
Optimizing
Distribution
 Consumer
 Market Segments’
Electronics Stores
(e.g., Circuit City)
 Department Stores
(e.g., Sears)
 Discount Stores
(e.g., Wal-Mart)
- purchase behavior
- demographics
 Channel
characteristics
 Sales Rep support
Music2Go 13
© Bill Swinyard
Distribution Strategy
# Sales
Reps
Rep
Salaries
Distributor
Support
Coverage
Segment
Demand
Consumer
Demand
(Sales)
Potential
Sales
Channel
match
Music2Go 14
© Bill Swinyard
Pricing Strategy
Market Conditions
Optimizing Price
 Established
 Segment
product
 Price ranges
dictated by market
 Ability to reduce
variable costs
through R&D
characteristics
- price elasticity
- price ranges
 Product life cycle
stage
 Prices vary by
channel
- discount stores
- electronics stores
Music2Go 15
© Bill Swinyard
Pricing Strategy
Manufact’g
Cost
R&D
Spending
Retail
Markup
Base
Cost
Competitor’s
Price
Preferred
Price Range
(by segment)
Discount
Recommended
Retail Price
(RRP)
Music2Go 16
© Bill Swinyard
Market Segments
Demographics
• 18 years and less
• Fashion conscious
• Purchases made by
Youth
Segment
Promotion
• Mass media
• Point of sale
promotion
parents
Distribution
• Deep product
Product
• Emphasis
on style
Pricing
• $50- $60
• Relatively price
assortment
• Want customer
service (purchase
advice)
sensitive
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© Bill Swinyard
Market Segments
Demographics
Standard
Segment
Promotion
• Broad reach
• 19-34 yrs old
• Less active
media
• Distributor sales
force training
lifestyle
• No dependents
• High disposable
income
Distribution
• Broad product
Product
• Newspapers,
magazines, TV
• Average styling &
technology
Pricing
• $60-$100
• Not too price
line (accessories)
• Want customer
service (sales
advice)
sensitive
Music2Go 18
© Bill Swinyard
The Product Life Cycle
Marketing
Variable
Product
Goal
Growth
 Improve
Maturity
product
specifications
Price
 Reduce over
Goal
time
Distribution  Intensive
Goal
Promotion  Build brand
Goal
preference
Decline
 Differentiated  Minimize cost
 Reduce
product cost
 Lowest
 Increasing
 Intensive
 Selective
 Get a
 Counteract
purchase
commitment
Music2Go 19
substitution
© Bill Swinyard
Think of Early Spending
as an Investment
Revenue
$$$ Costs to set up
& grow the
business
Profits to
investors
Time
Venture capital
to cover losses
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© Bill Swinyard
Teams
 Up to 3 people
 Can change teams at any time
 Good mix of skills
 Computer-literate
 Good record-keeping
 Planning-oriented
 Customer-oriented!
 Thorough reading of in-game
documentation!
Music2Go 21
© Bill Swinyard
Plan of Action for M2G I
 Form a group
 Review the M2G tutorial pps file
 Read/review the Student Manual – teach
each other
 Download & install the simulation
 Complete three years (to 1999) using
frequent rollbacks
 Goal after rollbacks & trial experience:
as close as you can get to EWS in NMC
after three rollovers
 Expect 4-6 hours of time together/alone
Music2Go 22
© Bill Swinyard
Key Benefits of Playing
 Develop teamwork
 Refine your decision-making skills
 Facilitate learning of basic
marketing concepts
 Develop strategic planning &
execution skills
Music2Go 23
© Bill Swinyard
Key Benefits of the Game
 Instill a bottom line focus and the
simultaneous need to deliver
customer value
 Discover the importance of market
data & competitive signals to adjust
the strategic plan & tactics
 Build confidence through
knowledge & experience
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© Bill Swinyard
This is the screen
capture to include
in your paper.
Music2Go 25
© Bill Swinyard
Being able to report the exact amount
These are the numbers to
add up to get the exact
Cumulative contribution
Music2Go 26
© Bill Swinyard
Music2Go:
Various Perceptions
What a
waste of
time!
I wish I
had
thought
more
This has
been
stupid
Music2Go 27
© Bill Swinyard
Best Practices
 Strategy definition. Understand the
difference between strategy and
tactics … & have a clear approach
for each quarter.
 Systematic thinking. Create a
strategy that is balanced between
present decisions and future
outcomes.
 Execution. Use consistent & faithful
execution of strategy.
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© Bill Swinyard
Best Practices
 Rollback, rollback, rollback. See how
things work, rollback, change
 Understand the market. Know the fine
details of what your segments want
 Reporting. Document key learning
points during & between runs in a
“game log.”
 Team structure. Try to match team
strengths to the tasks of decision
making.
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© Bill Swinyard
Hints
Find out what people want or
what competitors have
Marketing
research
Develop what people want
Product design
& pricing
Tell them you have what they
want
Advertise in the
right media
Get retailer support
Sales force, in
the right stores
Close the sale
•Retailer support
•Advertising
•Product mix
Music2Go 30
© Bill Swinyard
Reactions to a Characteristic
High
eg., advertising spending
More is good,
Some adds value,
High to a point of
High
too much is bad
diminishing
returns
More is
better
Low
Low
Less
More
Low
Less
More
Less
A little is
High just right
Little response
High ‘til threshold
is crossed
High
Low
Low
Low
Less
More
Less
Music2Go 31
More
More
Any amount
is bad
Less
More
© Bill Swinyard
Hints
 Work with a group. Group decisions are
much better than solitary ones; most
who didn’t work in groups say they
wished they had.
 Read, know, & understand the
documentation.
 Use your strategy as the guide in
making decisions. Stick to your strategy,
but still be flexible enough to revise.
 Follow the Hints.
 Maximize the customer experience.
Music2Go 32
© Bill Swinyard
Maximize the Customer Experience
2. How
smoothly
do you
solve your
customers’
problems?
1. How well
do you meet
customer
needs?
Source: “The Customer Experience,”
Net Company, Fall 1999.
3. How
quickly do
you anticipate
what they’ll
want next?
Music2Go 33
& do all
these things
better than
the competition
© Bill Swinyard
Plan, Implement, Control
Corporate Level
Feedback
Define the
Mission of
the Organ.
Determine
Organ.
Objectives
SWOT
Analysis
Marketing Department
Monitor and
Implement
Adapt Strategies
Strategy
Formulate
when Necessary
Through
Strategy
Based on
Operating
Feedback
Plans
Feedback
Music2Go 34
© Bill Swinyard