Welcome to the Marketing Simulation Game Class!
Dr. Satyendra Singh

• Long-term Perspective
• Focus on Marketing Planning
• Focus on Strategic Issues
• Competitive Environment
• Rapid Feedback

• Analysis of Company Results
• Planning and Budgeting
• Marketing Plan DECISIONS!!!
• Turn in Decision Forms
• THE MARKETING GAME SIMULATION
• Company Reports Returned to Firms

• Market Growth
• Competitive Environment
– Type of Competition Depends on Firms’ Decision
• Technical Environment
– No Major Innovations Expected
– Yearly Revision Cycle

• There are Six Product-Market Segments
– High-tech Managers
– Modern Students
– Concerned Parents
– Commercial Artists
– Harried Assistants
– Home Producers

• Channel 1
– Traditional Dealers
– 50% Margin
• Channel 2
– Discount Dealers
– 35% Margin

Product Features - Multimedia
• Number of Special Commands ( 5-20 )
• Error Protection ( 1-10 )
• Ease of Learning ( 1-10 )

• Pioneering
• Direct Competitive
• Indirect Competitive
• Reminder
• Corporate (Institutional)

• Product 
Features

Modify

Do Not!
• Price 
Wholesale Price in Each Channel?
• Place 
Distribution Intensity in Each Channel?
• Production 
How many units?
• Customer Service 
$ How much?

• Promotion
– Advertising
• $ Spending 
How much?
• Type 
P, D, I, R, or C ?
– Selling
• # of Sales Reps in Each Channel.
• % Non-Selling Time
– Sales Promotion
• $ Spending 
How much?

• Market Research - 7 Reports 
Which?
#1 Mkt. Share by Segment (all brands)

$15,000
#2 Mkt. Share by Channel (all brands)

$12,000
#3 Consumer Preference Study

$30,000
#4 Marketing Effectiveness Report

$25,000
#5 Detailed Sales Analysis (own brand)

$15,000
#6 Customer Shopping Habits

$7,000
#7 Product Positioning Report

$30,000

• R & D Product Modification Costs
• Sales Force Salaries and Severance pay
• Advertising Expense
• Customer Service Expense
• Sales Promotion Expense
• Market Research Reports Expenses

• Retail Prices from Wholesale Prices:
– Expected Retail Price = (Wholesale price/1-% Margin)
– Example: Wholesale price = $105
• Channel1 Retail Price = ($105/1-.50) = $ 210.00
• Channel 2 Retail Price = ($105/1-.35) = $ 161.54
• Wholesale Prices from Desired retail
Price:
– Wholesale Price = Retail price (1-% Margin)
– Example: Desired Retail price = $ 190
• Channel 1 Wholesale Price = $190 (1-.50) = $95.00
• Channel 2 Wholesale Price = $190 (1-.35) = $123.50

Retail Prices Charged Final Consumers
• The retail price set by a dealer depends on:
– The wholesale price in the dealer’s channel
– The customary margin used in the channel
– The portion of any sales promotion “deals” that the dealer passes along to consumers as a price reduction.

• Should cover the unit cost of the product (given its features).
• Results in a profit margin that will contribute to other expenses and profit.
• Result in a retail price that will appeal to target customers.

Computing Costs of R & D for Product Modifications
• Feature Cost to Decrease
• Special Commands (5-20) $0
Cost to Increase
$8,000 x (change)
2
• Error Protection (1-10) $0 $5,000 x (change)
2
• Ease of Learning (1-10) $3,000 x change $3,000 x (change)
2
•
•
•
•
• Example:
• Old Brand New Brand
6 8
4 3
Change Cost
+2 $8,000 x 2 x 2 = $32,000
-1 = $ 0
3 5 +2 $3,000 x 2 x 2 = $12,000
Total Costs = $ 44,000

• Looking forward to receiving your quality decisions!