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Marketing Strategy Simulation 

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Markstrat 150

— —

StratxSimulation,

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ALL 8 ROUNDS GUIDES AND TIPS – ROUND BY ROUND DECISIONS EXPLANATION

ROUND 1

Gain market share as high as possible.

Put 100% media spend into just one segment for each brand.

Put 10% of total ad spend for each brand into advertising research.

Check MDA map if provided.

Select to segment that is closest to product on the perceptual map.

Eg.

Low cost ad spend about $2.5 million

High cost ad spend about $1.5 million

Calculate production is important.

Keep some inventory is better than sold out/stock out.

Transfer cost about 8%

Inventory cost about $0.30 - $ 0.50

Contribution margin about $1.7 to $ 3.0 for Low cost and $ 2.3 to $4.1 for High cost products

Do not stock out, because demands will go to competitors.

Eg.

Low end production about: 2.500 - 2650K

High end production about: 1.300 - 1450K

Drop price for each product by $1.0

Note that do not spend too much on Commercial team, they do not bring much sales.

Keep total number of sales people constant. Allocate them between segments.

Estimated results:

- SPI from 1.000 to 1.400

- Gain 25% of VMS, and 27% of UMS

- Highest brand awareness, purchase intent, repeat sales.

- Revenue about $55 million

- Earning before tax $20 million

ROUND 2

Growth continuously, strong investment

Use all $ 7.3 or 8.0 million budget

Ad spend from $ 2.5 to $ 3.0

Increase about 20%

Eg.

Cost 500K will bring contribution about $1.7 million

Ad spend for high end about $1.2 to $1.5 million

Keep 9:1 for media spend (90%) and ad research (10%)

Launch new brand based on old R&D project

Commercial team spend about $ 300 - $360

Production about 800K units.

Consider investment into R&D for new market.

Cost of $8 million need saving funds

Low cost production about 5.700 units

High cost production about 2.200 units

Estimated results:

- SPI increase to 2100

- Revenue $ 85 million

- EBT $ 42 million

ROUND 3

Low end has five segment

High end has three segment: enderly EL, families FA and High conscious HC.

EL starts with 300k units, growth rate about 161%

FA starts with 1.200k units, growth rate about 55%

HC starts with 2.400k units, growth rate about 15%

Production for EL cost about $ 7.8 m

Production for FA cost about $ 8.2 m

Production for HC cost about $ 8.9 m

Budget about $ 8.6 million

Increase commercial team

Price reduced by $ 0.50 to increase sales

Again, do not stock out or out of inventory, demand will be down.

If demand is low, try drop prices to $ 13 or $ 13.50

Estimated results:

- PSI about 2.800

- Revenue: $ 110 million

- EBT about $ 55 million

ROUND 4

Keep expanding extremely.

 

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