Transcript Why BRANDSTRAT?

Introduction to BRANDSTRAT




Why BRANDMAPS?
BRANDMAPS Overview
Decision Variables and Financial Statements
Take-Home Quiz Distributed

DUE: Wednesday, September 10
Why BRANDSTRAT?




Learning best by doing (not by listening, by
seeing or by reading)
Less risky than the real thing
Compression of the time dimension
But, is the “flight simulator” an adequate
representation of reality?

Realism, not perfection, is required
“Good Judgment comes from experience,
and experience comes from poor
judgment.” {source unknown}



Simulators accelerate “learning by doing”
experience-based knowledge development.
Participants receive performance feedback
and see the consequences of their actions.
Simulation games are fun to play, which
increases interest which increases learning.
Trial-and-error learning and learning from
one’s mistakes are highlighted.
Traits of an Ideal Team member





Intelligent, learns quickly, uses time efficiently
Marketing, finance, and operations experience
helpful
Open-minded, able to concisely voice and
defend decisions
Accepts criticism and rejection well
Flexible and adaptable
BRANDSTRAT Overview


Explaining how the game works, not how to
best play the game
Competitive team-based marketing exercise:
Face real competition
 Process market feedback – and learn
 Plan – and implement plans


“Vaporware” product sold through dealers
BRANDSTRAT OVERVIEW
(continued)

Marketing Mix Elements:
Product design and positioning
 Product-line management


Multiple brands and multiple markets
Pricing
 Advertising and Promotion
 Sales Force
 Research and Development

BRANDSTRAT Overview
(continued)




Extensive marketing research capabilities
Interrelationships between controlled inputs
generate demand and determine performance
and profitability
Do not actually implement operations decisions:
others (such as ad agency, sales manager, etc.)
handle the details.
Need to balance “forest” and “trees”
BRANDSTRAT Overview
(continued)

Inputs (Decision Variables for Products and
Market Regions)

Advertising; Dealer Rebate; Manufacturer Price;
Marketing Research Ordering; Media Content; Media
Mix; Plant Capacity; Product Formulation;
Production; Promotion; Promotional Type; Research
and Development; Sales Force Commission Rate,
Salary, Size and Time Allocation; and Sales Forecast

Outputs (Firm-Wide and Product-Specific
Performance Measures)

Firm Wide Performance


Debt:Equity Ratio; Market Share (by Revenue and
Volume); Net Income; Operating Efficiency; Returnon-Assets; Return-on-Investment; Revenue; Sales
Volume
Product-Specific Performance

Brand Quality Rating; Brand Satisfaction Rating;
Convenience Perception; Customer Brand Awareness;
Dealer Availability; Dealer Promotion; Awareness;
Market Share; Operating Income; Performance
Perception; Product Preference; Revenue, Sales Volume
BRANDSTRAT Themes








Need to plan
Coordination of marketing programs and
operations capabilities
Importance of product/service design and
positioning
Balancing all marketing mix elements
Competition and competitive analysis
Designing and Interpreting Market Research
Information Management
Maintaining consistent effort
Decision Quarter Logistics
1)
2)
3)
4)
Receive previous quarter’s financial and marketing research results
Individual review and analysis of results
Group meeting to discuss previous quarter’s results and plan for the next
quarter
Record all decision variable changes and marketing research pre-order
requests on webpage
Make copies of all relevant reports (financial statements and market
research). Next quarter’s results will copy over last quarter’s results.
Previous quarters’ data will be very useful for written assignments.
Team Formations



By Friday (8/29), submit up to 2 preferred
teammates (or e-mail me your selections,
including e-mail address and phone number). I
will try to honor your preferences as much as
possible.
Each team consists of 4-6 members.
Team assignments made next Wednesday (9/3).
Time-Out for some R&R

“Partial Repeat Bidding in the Name-YourOwn-Price Channel” by Scott Fay

http://companysimulations.com/simulations/manu
ales/fay2004.pdf
What does “partial repeat bidding” mean?
 How does it affect Priceline?

Progression of Sophistication



Quarters 1-3: 1 active product; fixed formulation
(30/30/30/5/5/5/5); 4 market regions
Quarters 4 -6: 2 products with reformulation
possible
Quarters 7-12: 3rd product available
Decision Variables and Financial
Statements



Identical starting point for all firms
Only know Quarter 1’s information (nothing
known about past performance of the firm)
Do not know how good these current decisions
are
Marketing Decision Variables for
Quarter 1



Only one active product
All choices the same for all regions
Media Content = 1
1 = advertise price
 Could choose 1-21 to emphasize quality, user
benefits, availability, performance guarantees, or
some combination of these (see p. 32)

Marketing Decision Variables for
Quarter 1 (continued)

Media Mix = 55555
5 types of media (direct marketing; magazines;
newspapers, radio; TV)
 Choose integer (1-9) for each to decide distribution
of total advertising spending
 All same number => same amount for each
 92229 is more heavily weighted toward direct
marketing and TV.

9/24 = 37.5% of advertising on the first and last
 2/24 = 8.33% spent on each of the other 3 media types

Marketing Decision Variables for
Quarter 1 (continued)

Promotional Type = 10
Directs how promotion budget is spent
 10 = Regional Sales Manager’s discretion
 Value = 1-100 (p. 27-28). 10 basic types directed at
dealers, sales force or customers
 Can choose combination with 65/35 split

Marketing Decision Variables for
Quarter 1 (continued)

Emergency Production Limit = 0%
Integer (0-10) determining the maximum percentage
of sales that can be satisfied by emergency
production
 If sales > finished good inventory + production this quarter,
then an emergency production run
 If do not meet demand, then a stock-out results


Possible bad will from dealers and customers
Marketing Decision Variables for
Quarter 1 (continued)

Vaporware formulation: 30/30/30/5/5/5/5
5 raw materials (Syntech, Plumbo, Glomp, Trimicro,
and Fralange)
 Plus compatibility and warranty (on scale 1-9)
 Raw materials cost $25, $35, $15, $10 , $5
respectively per pound (p. 45)
 Cost adjustment premium (Table 9, p 47)
 Total weight = 3 lb. if sum to 100 => standard



Light or heavy vaporware possible
No reformulations currently allowed!!!
Decision Variables and Financial
Statements (continued)

Sample output is basis for Quiz
Take-home; open-book; open-friends
 Due: Wednesday, September 10
 May submit joint quiz (No more than 2 names may
appear on any submission)
 Objective: become acquainted with the game and
the output generated; learn terminology; begin to
understand link between decisions made and firm
performance

Decision Variables


See sample output
Direct (short-term) impact


Indirect (long-term) impact


May be uncertain => learn by trial and error, market
research (to be discussed next Wednesday), and/or
spreadsheet tracking
Consumer loyalty, capacity depreciation, production
experience
Example: Sales Forecasting

Accuracy score, inventory, capacity management