3rd edition
Charlotte H. Mason • William D. Perreault, Jr.
1
The Marketing Game: What is It?
 A “living” case, where you learn about a situation,
evaluate opportunities, develop a strategy, and make
marketing plan decisions.
 In which you get regular feedback, in a report that
summarizes your marketing outcomes and related
financial results, based on both your plan and
competitors’ decisions.
 Where you analyze what you’ve learned by doing …
to figure out answers to what you do not know (and
could not know!) at the beginning.
 That challenges you to improve your strategy in light
of the learning...
2
A Little Background
 Originally developed as the first PC-based
marketing strategy simulation in 1985 …
 Routinely revised and updated since that time.
 Now one of the most widely used teaching
simulations in the world.
 Used in hundreds of universities, exec programs and
companies, international competitions, etc.
 We’ll be using the third edition
 You’ll need the student manual and accompanying CDRom (which has Windows software):
The Marketing Game!, by Charlotte H. Mason and
William D. Perreault, Jr., 3rd edition, published by
McGraw-Hill/Irwin, Burr Ridge, Illinois, 2001.
3
Special Objectives Served by TMG
 To develop skills in identifying marketing
opportunities. This encompasses knowledge of and
the ability to apply key marketing frameworks and
tools for analyzing customers, competition, and
marketing strengths and weaknesses.
 To develop insights about creative selection of target
markets and making integrative strategy decisions
concerning product, price, promotion, place and the
needs of a target market.
 To develop skills in marketing analysis.
 To provide meaningful, practical experience in
translating qualitative and quantitative analysis into
conclusions about profitable marketing strategies and
programs.
4
The Role of the Marketing Game
The Game offers unique learning advantages,
compared to other learning approaches (like reading
texts and articles, lectures, guest speakers, case
analysis and presentation, projects) because it:
 Is dynamic, like most business situations.
 Brings the competitive aspects of marketing to life.
 Highlights the need for integrative planning based on
qualitative and quantitative analysis of the market
environment.
5
The Marketing Game is Integrative … and Covers All Aspects of the
Marketing Strategy Planning Process
Narrowing down to focused strategy with quantitative and qualitative screening criteria
Customers
Needs and other
Segmenting
Dimensions
Company
Mission, Objectives,
& Resources
S.
W.
O.
T.
Targeting &
Segmentation
Positioning &
Differentiation
Product Price
Target
Market
Promotion
Place
Competitors
Current &
Prospective
External Market Environment
Technology
Political & Legal
Social & Cultural
Economic
6
Overview
 You take over marketing management responsibilities
for your firm.
 Must satisfy customers and earn profits
 Focus is on marketing strategy planning.
 Requires integration of all strategy decisions.
 Requires attention to competitive environment.
 Considers short term and long term perspectives.
 Features ongoing, rapid feedback.
7
The Process
Analysis of market situation/opportunities
Planning and budgeting
Make marketing plan DECISIONS!!!
Next
Decision
period
Submit plan decisions
The marketing game! simulation
Company reports returned to firms
8
Industry Environment
Market growth
Technological environment
 No major innovations expected
 Yearly revision cycle
Competitive environment
 Type of competition depends on firms’ decisions
9
Six Key Product-Market Segments
Concerned
Parents
High-tech Modern
Managers Students Professional
Creators
Harried
Assistants
Segments have different needs, preferences,
situations, sizes, growth rates.
Home
Users
10
Past Sales By Market Segment
For Voice Recognition Device
25000
Assistants
20000
Managers
Students
15000
Home
10000
Creators
Parents
5000
0
0
1
2
3
Year
11
Distribution Channels
Firm 1
Firm 2
Firm 3
Channel 1
Traditional
Dealers
Firm 4
Channel 2
Discount
Dealers
Firms reach customers
through full-service
dealers and
Internet/mail-order
discount dealers.
Concerned
Parents
High-tech
Managers
Modern
Students
Harried
Assistants
Professional
Creators
Different segments
have different shopping
preferences.
Home
Users
12
Product 1: Voice Recognition Device (VRD)
Number of Special Commands (5-20)
Key
Product
Features
Error Protection (1-10)
Ability to Customize (1-10)
13
R&D for Product Modifications:
Computing Costs
Feature
Cost to Decrease
Cost to Increase
Special Commands (5-20)
$0
$8,000*(change)2
Error Protection (1-10)
$0
$5,000*(change)2
Ease of Learning (1-10)
$3,000*change
$3,000*(change)2
Example
Last
period’s
product
This
period’s
product
Change
Cost to Change
Special Commands
6
8
+2
$8,000*2*2=$32,000
Error Protection
4
3
-1
$0
Ease of Learning
3
5
+2
$3,000*2*2=$12,000
Feature
Total modification costs:
$44,000
Note: R&D for product changes is more expensive
if you have to make big changes in a short period of time…
14
Level 3
Product 2: Digital Vocal Communicator (DVC)
Number of Tasks (1-10)
Key
Product
Features
Similarity of Commands (1-10)
Ease of Learning (1-10)
15
Types of Advertising
Pioneering
Direct competitive
Indirect competitive
Reminder
Corporate (Institutional)
16
Marketing Decision Responsibilities
(Level 1)
PRODUCT
Features
(and R&D for product modifications)
PRICE
Wholesale price
PLACE
Distribution intensity in each channel
PROMOTION
-Advertising
$ Spending
-Personal selling
Number of sales reps in each channel
CUSTOMER SERVICE
$ Spending
MARKET RESEARCH
Demand forecast/
production order
6 reports may be purchased
Number of units
17
Expanded Marketing Responsibilities
(Level 2)
PRODUCT
Features (and R&D for product modifications)
PRICE
Wholesale price in each channel
PLACE
Distribution intensity in each channel
PROMOTION
-Advertising
-Personal selling
$ Spending
Type
Number of sales reps in each channel
Percent non-selling time
Commission rate
-Sales promotion
$ Spending per Channel
CUSTOMER SERVICE
$ Spending
MARKET RESEARCH
Demand Forecast/
Production order
7 Reports May be Purchased
Number of Units
18
Expanded Marketing Responsibilities
(Level 3)
2 PRODUCTs
Features (and R&D for product modifications)
PRICE
Wholesale price in each channel
for each product
PLACE
Distribution intensity by channel, product
PROMOTION
-Advertising
$ Spending for each product
Type for each product
-Personal selling
Number of sales reps in each channel
Percent non-selling time in each channel
Commission rate
-Sales promotion
$ Spending per channel, product
CUSTOMER SERVICE
$ Spending
MARKET RESEARCH
7 reports may be purchased
Demand forecast/
production order
Number of units for each product
19
Production Economies of Scale
Percent of Base Unit Cost
102
99
96
93
90
87
84
81
78
75
72
0
100,000
200,000
300,000
400,000
500,000
Cumulative Units Produced
If the president decides to invest in new equipment,
unit production costs will decline as cumulative production
increases:
20
Response Functions and Marketing Spending
Sales
Saturation
Level
Threshold
Level
Marketing Spending
Spending too little may have little effect, but
spending too much just increases costs
and reduces profit.
21
Marketing Budget Items (Level 1)
R&D product modification costs
Sales force salaries and severance pay
Advertising expense
Customer service expense
Market research reports expense
BUDGET FOR FIRST PERIOD: $984k
22
Marketing Budget Items (Level 2 and 3)
R&D product modification costs
Sales force salaries and severance pay
Advertising expense
Customer service expense
Sales Promotion Expense
Market research reports expense
BUDGET FOR FIRST PERIOD: $984k
23
Discretionary Budget
Policy on initial discretionary budget.
Unspent money carries to future periods and
earns interest.
“When it’s gone, it’s gone.”
Policy on special budget requests.
24
Computing Prices
Computing Retail Prices from Wholesale Prices:
Expected Retail Price = Wholesale price/(1-% Markup)
Example:
Wholesale price = $105
Channel 1 Retail Price = ($105/(1-.50)) = $210
Channel 2 Retail Price = ($105)/(1-.35) = $161.54
Computing Wholesale Prices from Desired Retail
Prices:
Wholesale Price = Retail Price (1 - % Markup)
Example:
Desired Retail Price = $190
Channel 1 Wholesale Price = $190/(1-.50) = $95.00
Channel 2 Wholesale Price = $190/(1-.35) = $123.50
25
Retail Prices Charged Final Consumers
The retail price set by a dealer depends on:
 The wholesale price in the dealer’s channel.
 The customary markup used in the channel.
 The portion of any sales promotion “deals” that the
dealer passes along to consumers as a price
reduction.
26
A “Good” Wholesale Price
Should cover the unit cost of the product
(given its features).
Should result in a retail price that will appeal
to target consumers.
Should result in a profit margin that will
contribute to other expenses and profit.
27
Competitor Analysis
Estimate competitor’s net contribution
Analyze past strategies & likely changes.
Evaluate positioning and target segments.
Firms
Segments
1
1
X
2
?
3
4
5
6
2
3
4
X
X
?
X
?
28
Industry Sales Report
Brand
Firm 1
Unit Sales Share (units) $ Sales (retail)
25,151
.250
$4,292,964
Firm 2
25,151
.250
$4,292,964
Firm 3
25,151
.250
$4,292,964
Firm 4
25,151
.250
$4,292,964
Total
100,604
Channel
1
2
$17,171,854
Unit Sales Dollars Sales
56,296 $10,696.240
44,308
$6,475,614
29
Product Features and Prices Report
Brand
of
VRD
Firm 1
Firm 2
Firm 3
Firm 4
Retail
Retail
Error Ease
price
price
of
channel channel
Special protect1
2
commands ion learning
8
8
8
8
3
3
3
3
3
3
3
3
$190.00
$190.00
$190.00
$190.00
$146.15
$146.15
$146.15
$146.15
30
Market Activity Report (Level 2)
Firm 1
Firm 2
Firm 3
Firm 4
$250,000
$250,000
$250,000
$250,000
Sales Promotion
Channel 1
Channel 2
$0
$0
$0
$0
$0
$0
$0
$0
No. Sales Reps
Channel 1
Channel 2
Commission
Customer Service
10
10
5%
$92,500
10
10
5%
$92,500
10
10
5%
$92,500
10
10
5%
$92,500
Adv. Dollars
Adv. Type
31
Market Research Reports (Level 1)
1. Market share by segment (all brands)
2. Market share by channel (all brands)
3. Consumer preference study
4. Marketing effectiveness report
5. Sales by segment by channel (own brand)
6. Consumer shopping habits study
32
Market Research Reports (Level 2)
1. Market share by segment (all brands)
2. Market share by channel (all brands)
3. Consumer preference study
4. Marketing effectiveness report
5. Sales by segment by channel (own brand)
6. Consumer shopping habits study
7. Product positioning report
33
Market Research Reports (Level 3)
1. Market share by segment (all brands)
2. Market share by channel (all brands)
3. Consumer preference study
4. Marketing effectiveness report
5. Sales by segment by channel (own brand)
6. Consumer shopping habits study
7. Product positioning report
Note: separate reports are available for each product,
Except for the consumer shopping habits study
34
TMGPlan Software
Easy to use for preparing and
evaluating plans, managing reports
View, print, and
manage
password
protected reports
Select
directory
Enter
Plan
Decisions
Evaluate
spending
and profit
forecast
35
Submitting Marketing Plans
 Submitting marketing plans decisions
 Policy on paper form
 Policy on electronic file
 Each firm has a distinct industry and firm
identification
 Need to keep it straight!
 Passwords and the TMGPlan software
 Remember password used to create Plan
 It is case sensitive (upper and lower case make a difference)
 Best to stick to one password!
36
Overview of Market Research Reports
Market share by segment (all brands)
Market share by channel (all brands)
Consumer preference study
Marketing effectiveness report
Sales by segment by channel (own brand)
Consumer shopping habits study
Product positioning report (Level 2 & 3)
37
Market Share by Segment Report
Segment
Brand
1
2
3
4
5
6
Firm 1
Firm 2
Firm 3
Firm 4
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
Total
Sales
(units)
20,028
15,084
25,104
10,240
22,056
8,092
Who’s selling to whom?
Who’s buying what?
What is each firm achieving?
Which segments are buying?
38
Market Share by Channel Report
Brand
Channel 1 Channel 2
Firm 1
Firm 2
Firm 3
Firm 4
0.250
0.250
0.250
0.250
0.250
0.250
0.250
0.250
Total Sales
(units)
56,296
44,308
What’s selling where?
Who’s buying what?
39
Consumer Preference Study
Segment
Students
Home
Assistants
Creators
Managers
Parents
Price
Range
Special
Error
Ease of
Commands Protection Learning
10-13
7-10
10-13
12-15
13-16
5-8
2-4
2-4
6-8
2-4
6-8
2-4
low
low
high
high
high
low
1-3
6-8
6-8
4-6
2-4
7-9
What kind of product would a segment prefer?
What reference price seems typical for the segment?
How are segments similar and different?
40
Marketing Effectiveness Report
Index
Brand Awareness
Customer Service
Consumer Group Rating
Industry Average Rating
0.550
Competitors Competitors
with lower
with equal or
Index
higher Index
0
3
100%
100%
Channel 1:
Sales Rep Workload
Dealer Satisfaction
Channel Strength
(“Push”)
100%
1.00
.500
0
0
3
3
Channel 2:
Sales Rep Workload
Dealer Satisfaction
Channel Strength
(“Push”)
100%
1.00
.500
0
0
3
3
41
Detailed Sales Analysis
Segment
1
2
3
4
5
6
Channel 1
896
1,109
5,602
1,808
4,363
1,086
Channel 2
5,269
3,337
1,396
1,196
1,865
1,074
Firm
Unit sales by segment and channel
Are you reaching your target?
42
Customer Shopping Habits
Segment
Students
Home
Assistants
Creators
Managers
Parents
Percent of Shopping
Percent of Shopping
in Channel 1
in Channel 2
?
?
?
?
?
?
?
?
?
?
?
?
Who shops where?
How do shopping patterns match distribution focus?
43
Product Positioning Report
Segment
Brand
1
2
3
4
5
6
Firm 1
Firm 2
Firm 3
Firm 4
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Which brands are closest to which segments?
Which segments have no close brands?
44
Recommendations
Analyze the reports as you would analyze a
case.
Make intentional changes.
Find a balance in marketing research
spending.
Be integrative--think carefully about how each
decision impacts each of the others.
Have some fun!
45
46
List of All Slides (with Hyperlinks)
1. Title slide
2. The Marketing Game: What Is It
3. A Little Background
4. Special Objectives Served by TMG
The Role of the Marketing Game
6. Integrative Marketing Strategy Planning Process
7. Overview
8. The Process
9. Industry Environment
10. Six Key Product-Market Segments
11. Past Sales by Market Segment (VRD)
12. Distribution Channels
13. Product Features – Voice Recognition Device
14. Computing Costs of R&D for Product Mods
15. Product Features – Digital Vocal Communicator
16. Types of Advertising
17. Marketing Decision Responsibilities – Level 1
18. Expanded Marketing Responsibilities – Level 2
19. Expanded Marketing Responsibilities – Level 3
20. Production Economies of Scale
21. Response Functions
22. Budget Items – Level 1
23. Budget Items – Levels 2 and 3
24. Discretionary Budget
25. Computing Prices
26. Retail Prices Charged Final Consumers
27. A “Good” Wholesale Price
28. Competitor Analysis
29. Industry Sales Report
30. Product Features and Prices Report
31. Marketing Activity Report (Sample)
32. Market Research Reports – Level 1
33. Market Research Reports – Level 2
34. Market Research Reports – Level 3
35. TMG Software
36. Submitting Marketing Plans / Policies
37. Overview of Market Research Reports
38. Market Share by Segment
39. Market Share by Channel
40. Average Customer Preferences
41. Marketing Effectiveness Report
42. Detailed Sales Analysis
43. Customer Shopping Habits
44. Product Positioning Report
45. Recommendations
46. Blank side (end of show)
47. This list
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