The following slides
are for the introduction to the
Marketplace game.
Copyright 2001 Ernest R. Cadotte
Experiencing Marketing
@ the Marketplace
Copyright 2001 Ernest R. Cadotte
The Marketplace Is a Fun Way to
Learn About Marketing.
• It is a marketing game.
• It is learning by doing.
• It brings to life marketing concepts,
principles, and ways of thinking.
• It energizes the competitive spirit.
Copyright 2001 Ernest R. Cadotte
It Is Realistic!
• You do what your real-life counterparts do
– Design brands
– Design ad copy
– Schedule media
– Set selling prices
– Hire and train sales people
– Worry about profits
Copyright 2001 Ernest R. Cadotte
It Is Organized!
• The game scenario follows the logical
process of starting up a new product line.
• You are guided through the decision-making
process.
• Detailed help files are available at the touch
of a button.
Copyright 2001 Ernest R. Cadotte
On the left is the step-by-step process that
walks you through the information and
decisions. The software controls your
progression to reduce your uncertainty (and
your need to contact the instructor) and to help
you see the logic of the marketing process.
The Marketplace software is all set up to print the
results for each quarter’s play, starting with the Q2
test market.
–Name, ID, balanced scorecard, profit statement,
market share, customer satisfaction ratings
Copyright 2001 Ernest R. Cadotte
For illustration purposes, suppose
you start up a company named
Apollo Computers
Copyright 2001 Ernest R. Cadotte
Here is the game scenario
• You work for a large international
electronics firm.
• Corporate Headquarters wants to enter
the personal computer business.
Copyright 2001 Ernest R. Cadotte
Game Scenario
• You have been selected to head up the
new marketing division to sell
computers into Asia, United States,
Canada, and Western Europe.
• Three other international firms are
entering the market at the same time.
Copyright 2001 Ernest R. Cadotte
There are three market segments that have
different price and performance requirements.
Mercedes
Traveler
Performance
Work
Horse
Price
Copyright 2001 Ernest R. Cadotte
Each market segment has its own set of needs
Copyright 2001 Ernest R. Cadotte
You must decide which segment you
want to target initially. As the
exercise progresses, you are asked
to select a second segment.
For example, the Traveler segment might be selected.
Copyright 2001 Ernest R. Cadotte
Once you select a segment, you must design a
brand to meet the needs of the segment.
For example,
portability is
important to
the Traveler
segment. What
features would
increase the
portability of a
PC?
Copyright 2001 Ernest R. Cadotte
You must design ads which appeal to
the target segment.
you decide which brand will
be featured in the ad.
You select the benefits to mention in the
ad and indicate their order of priority.
Copyright 2001 Ernest R. Cadotte
You set the selling price, decide if
you want to use a rebate, and
signal to the sales staff which
brand has the highest priority.
Copyright 2001 Ernest R. Cadotte
As the quarters progress,
you decide how you want to
expand your international
market coverage.
Copyright 2001 Ernest R. Cadotte
When your decisions are ready to be
processed through the Marketplace
simulator, a quality check is made to
make sure there were no entry errors
and nothing important was forgotten.
Copyright 2001 Ernest R. Cadotte
Immediately after processing (which takes
2 minutes), you find out how profitable the
division was in the quarter that just ended.
Copyright 2001 Ernest R. Cadotte
You can see your market share by
segment and for the whole market.
Your company is Apollo, black.
Copyright 2001 Ernest R. Cadotte
You are given market research that tells you how
satisfied your target segment is with your brand design
and those of the competition. (100 is total satisfaction.)
Your brand
Copyright 2001 Ernest R. Cadotte
If a brand is not doing well,
you can study other brands and
redesign your brand.
Your
brand
Copyright 2001 Ernest R. Cadotte
Better
brand
You are also given a profit analysis
of each brand so that you can adjust
your brand strategy.
Copyright 2001 Ernest R. Cadotte
Grading:
The Balanced Scorecard
Your final grade will be the average of your
firm’s profitability, market share, and
customer satisfaction
– Operating profit/20,000,000
– Sum of market shares in 2 target segments
– Average customer satisfaction with brand and
advertising designs in 2 target segments (scored
0 to 100)
– Quarter 6 results will be used to compute grade.
Copyright 2001 Ernest R. Cadotte
Each quarter, you will be presented with
your balanced scorecard. Your goal is to
achieve a 90 or better by Quarter 6 in
Total Business Performance.
Copyright 2001 Ernest R. Cadotte
CD Installation
• 5 minutes to set up
• Home computer
– hard drive installation
– always need CD
• Computer lab
– mobile installation
– select high density disk option (Zip disk, do not use the
floppy disk installation)
– purchase Zip disk – files saved on Zip disk
– always need CD and Zip disk
Copyright 2001 Ernest R. Cadotte
How is the marketing
game conducted?
• Teams are placed in a game scenario that has
them starting up and running a new marketing
division.
• The opposition is played out by computergenerated competitors.
Copyright 2001 Ernest R. Cadotte
Objective is to profitably capture
a dominant market position
Opponent
Opponent
Business Team
Market
Opponent
Copyright 2001 Ernest R. Cadotte
How Conducted?
• At the outset of each quarter, you will receive
information on the current situation.
• Current situation is evaluated, strategy
formulated, and tactics set in placed.
• Tactical decisions are fed into the marketplace
simulator, along with decisions of opponents.
• Results of decisions are fed back to you.
Copyright 2001 Ernest R. Cadotte
Chronology of Events
Q1, Organize the Division
• Name the company,
• Analyze the market survey,
• Choose the initial target segment,
• Schedule the opening of one sales office.
Copyright 2001 Ernest R. Cadotte
Q2, Test Market
• Design a brand for the target segment,
• Hire a few sales people,
• Price the brand, and
• Design a small advertising campaign.
Copyright 2001 Ernest R. Cadotte
Q3, Skillful Adjustment
• Review the market data from the test
market,
• Adjust the division’s strategy and tactics
(brand design, pricing, advertising, sales
force) as needed.
Copyright 2001 Ernest R. Cadotte
Q4, Expand the Market
Offering
• Select a second segment to target and design a
marketing program to go after that segment.
–
–
–
–
–
–
design a new brand,
price the brand,
add sales people,
design a new ad,
run the ad in the local media.
schedule the opening of a new sales office.
Copyright 2001 Ernest R. Cadotte
Q5, Enhance the Market Offering
• Introduce new brands with new R&D
features,
• Continue with market expansion by adding
advertising, sales people and new offices.
Copyright 2001 Ernest R. Cadotte
Q6, Refine the Marketing
Strategy
• Study the market data to determine how to
better meet customer needs and surpass the
competition through brand design, pricing,
advertising, and distribution.
Copyright 2001 Ernest R. Cadotte
Q7, Present Report to Corporate
Headquarters
• Strategic thinking and tactical execution
• Market performance (Balanced Scorecard)
– profitability
– customer satisfaction
– market share in targeted markets
• How well is the division prepared for the future
Copyright 2001 Ernest R. Cadotte
The Marketplace Is a Fun Way to
Learn About Marketing!
Copyright 2001 Ernest R. Cadotte
The following slides are for
Quarter1
Copyright 2001 Ernest R. Cadotte
Q1, Organize the Division
• Name the company,
• Analyze the market survey,
• Choose the initial target segment,
• Schedule the opening of one sales office.
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarter 1
• Image creation (company name)
• Market opportunity analysis
• Segmentation and target marketing
Copyright 2001 Ernest R. Cadotte
The following slides are for
Quarter 2
Copyright 2001 Ernest R. Cadotte
Q2, Test Market: The Goal is to
Maximize Learning and Not
Profits.
•Execute a coherent strategy
•Learn to walk before you run
Copyright 2001 Ernest R. Cadotte
Q2, Test market
• Design a brand for the target segment,
• Hire a few sales people,
• Price the brand, and
• Design a small advertising campaign.
Copyright 2001 Ernest R. Cadotte
How do you decide what to
design into a brand?
Copyright 2001 Ernest R. Cadotte
The most important rule
in brand design:
Customers Buy Benefits,
Not Features
Copyright 2001 Ernest R. Cadotte
Once you select a segment, you must design a
brand to meet the needs of the segment.
“Using the computer on the road” is
important to the Traveler segment. What
features would provide this benefit?
Copyright 2001 Ernest R. Cadotte
How far do you go in giving the
customers what they say they want?
Is more speed, software applications,
memory, keys on the keyboard, etc.
always valued?
Could “more of some feature” even
make a customer unhappy?
Let’s take a look at this question in
another industry – candy bars.
Copyright 2001 Ernest R. Cadotte
What is the elasticity of the
peanut?
Searching for the
Market’s Response Function
Copyright 2001 Ernest R. Cadotte
Suppose you could design the ideal
candy bar. How many peanuts would
you put in the candy bar to make you
the happiest?
• A few?
• A bunch?
• A whole lot?
Copyright 2001 Ernest R. Cadotte
Which candy bar has the
most peanuts?
•
•
•
•
MilkyWay
Snickers
Baby Ruth
PayDay
Copyright 2001 Ernest R. Cadotte
Which candy bar
do you like the most?
•
•
•
•
MilkyWay
Snickers
Baby Ruth
PayDay
Copyright 2001 Ernest R. Cadotte
What does your response
function look like for peanuts?
Is more always better?
Would your happiness increase with
every new peanut we added to the
candy bar?
Is there a limit?
Copyright 2001 Ernest R. Cadotte
What would be your response
function for the following?
•
•
•
•
•
Chocolate
Caramel
Coconut
Rice
Peanut butter
Copyright 2001 Ernest R. Cadotte
Here are a number of response
functions. Which one applies to
peanuts, chocolate, coconut, etc?
Hot
Hot
More is
always
better
More is good to a
point and then ceases
to add excitement
Cold
Cold
Less
More
Copyright 2001 Ernest R. Cadotte
Less
More
Hot
Hot
More adds
value to a point
& then takes
away value
Cold
A little is just
right, more only
takes away value
Cold
Less
More
Copyright 2001 Ernest R. Cadotte
Less
More
Hot
Hot
Any amount is bad
Little interest
until threshold
is crossed
Cold
Cold
Less
More
Copyright 2001 Ernest R. Cadotte
Less
More
Hot
No reaction/indifference
to having the feature
Cold
Less
More
Copyright 2001 Ernest R. Cadotte
Take any PC segment, how excited
will it become if you provide?
•
•
•
•
•
More memory
More speed
More functions on the keyboard
More software
More ….
Just like the candy bar ingredients, you must discover the
response function for each PC component.
Copyright 2001 Ernest R. Cadotte
How to Set Price?
•
•
•
•
Costs (production, marketing, overhead)
Profit goals
What the market will bear
Competition
Copyright 2001 Ernest R. Cadotte
In the beginning, you will not be
able to price above your costs.
• There are many startup costs which will
exceed your revenues.
• Your production volumes will be very low,
resulting in high per unit costs
Copyright 2001 Ernest R. Cadotte
No early profits
+
costs to setup
& grow the
business
Money
0
Time
Copyright 2001 Ernest R. Cadotte
Revenues will fall below costs at
the outset of a new business
Revenue
+
costs to setup
& grow the
business
Money
0
Time
Copyright 2001 Ernest R. Cadotte
Profits will come later
Revenue
+
Profit
costs to setup
& grow the
business
Profits
0
Time
You are here.
Copyright 2001 Ernest R. Cadotte
Profits
come
later.
Your goal is to speed up the
adoption rate.
maturity
decline
Demand
growth
introduction
You are here,
high costs-low demand
Time
Copyright 2001 Ernest R. Cadotte
What will the market bear?
You must discover the market
response function regarding price.
Copyright 2001 Ernest R. Cadotte
What is the market’s price
response function?
Your
Demand
Inelastic
(price is not a big factor.)
Elastic (demand drops fast
with increasing prices)
Your
Price
Copyright 2001 Ernest R. Cadotte
Or, maybe it looks like this.
Your
Demand
Demand drops slowly with small
price increases and then drops
dramatically with larger price
increases.
Your
Price
Copyright 2001 Ernest R. Cadotte
How will the market respond to
competitor prices?
Your
Demand
Low competitor prices
will kill your demand
Competitor’s Price
Copyright 2001 Ernest R. Cadotte
How to create ads?
Your Ad
Low price
Most important
Easy to use
More productive
Fast
Office applications
Picture office workers
Order of priority
implies importance of
message to customer
Least important
Order of priority tells
the ad agency what to
Copyright 2001 Ernest R. Cadotte stress in the ad
How much to say in an ad?
(number of benefits)
Which response function is at work?
or
Hot
Hot
More is good to a
point and then ceases
to add excitement
Cold
More adds
value to a point
& then takes
away value
Cold
Less
Less
More
Copyright 2001 Ernest R. Cadotte
More
How often do you advertise?
Your
Demand
Diminishing
returns
Too little
Number of ads
Copyright 2001 Ernest R. Cadotte
But it also depends on what your
competitors do
Your
Demand
Strong competitor
advertising
will steal away
your customers
Competitor’s Advertising
Copyright 2001 Ernest R. Cadotte
How many sales people?
Your
Demand
Diminishing
returns
Too many
Too few
Number of sales people
Copyright 2001 Ernest R. Cadotte
The response function is dynamic!
Your
Demand
Shift the response function
upwards with better brands,
prices, advertising, sales
force placement
Number of sales people
Copyright 2001 Ernest R. Cadotte
Q2 results will be available at the
start of Q3.
Copyright 2001 Ernest R. Cadotte
What to turn in after Q2
decisions have been run through
the marketplace simulator?
• Q2 results are available at the start of Q3.
• The Marketplace software is all set up to print the
results for each quarter’s play, starting with the
results of the Q2 test market.
– Name, balanced scorecard, profit statement, market
share, customer satisfaction ratings
• Print options
– Paper copy
– Electronic copy
Copyright 2001 Ernest R. Cadotte
Paper Copy of Results
• Follow the normal decision sequence, or
• Click on button labeled, “Print everything for
instructor” from the Headquarters file folder.
• Click on “Print” button.
Copyright 2001 Ernest R. Cadotte
Electronic Copy of Results
• Your instructor might want an electronic copy in
place of, or in addition to, the paper copy.
• Click on the button, “Copy Performance Data to
Floppy for Instructor”.
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarter 2
• Execution of a coherent strategy
• Learning to walk before you run
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarter 2
• Marketing strategy - coordinating a host of tactics
• Brand design – linking product features to
customer benefits
• Pricing - balancing costs, profit, what the market
will bear, and competition
• Advertising – deciding what to say, how to say it
and how frequently to say it
• Sales force – hiring and targeting the sales staff
• Testing the market - discovering the market’s
many response functions
Copyright 2001 Ernest R. Cadotte
The following slides are for
Quarter 3.
Copyright 2001 Ernest R. Cadotte
Q3, Skillful Adjustment
• Review the market data from the test
market,
• Adjust the division’s strategy and tactics
(brand design, pricing, advertising, sales
force) as needed.
Copyright 2001 Ernest R. Cadotte
Q3, Evaluate Performance
• Check customer reaction to brands, prices,
and advertising
• Check financial performance
• Check out competition
– strategic direction
– tactics
– market’s response to their prices, brands, ads
Copyright 2001 Ernest R. Cadotte
Q3, Skillfully Adjust Strategy
• As needed, adjust
–
–
–
–
–
strategy
brand designs and prices
advertising
sales office locations
sales force management
• Feed decisions into Marketplace simulator
Copyright 2001 Ernest R. Cadotte
Measures of Customer
Satisfaction
• Brand judgment (0 to 100)
• Price judgment (0 to 100)
• Ad judgment (0 to 100)
100 indicates complete satisfaction. 70 would be a good brand
and ad rating for the first year. New technology will be
available in Quarter 5. The new features will make customers
happier and yield higher ratings.
Price ratings should be near 100 in all quarters.
Copyright 2001 Ernest R. Cadotte
Goal of Monitoring Customer
Satisfaction
Give the customer what it wants and
do so better than the competition.
Copyright 2001 Ernest R. Cadotte
Deduce the market’s many
response functions
Hot
Hot
Hot
Cold
Cold
Cold
Less
More
Less
More
Hot
Hot
Hot
Cold
Cold
Cold
Less
More
Less
More
Copyright 2001 Ernest R. Cadotte
Less
More
Less
More
Based upon customer feedback,
skillfully adjust marketing tactics
•
•
•
•
Revise brand design or create new one
Revise ad copy
Adjust prices
Hire more sales people or deploy them
differently
Add or take away elements to find the sweet spot in
the customer’s response function.
Copyright 2001 Ernest R. Cadotte
Competitor Benchmarks
•
•
•
•
•
Brand and ad designs
Prices and sale priorities
Sales staffing
Ad placements
Demand by brand by segment
Copyright 2001 Ernest R. Cadotte
Goals of Competitive
Benchmarking
•
•
•
•
•
•
Reverse engineer the strategy of each competitor
Determine who is a threat and who is not
Determine strengths and weakness of competition
Emulate good decisions
Predict direction of competitive moves
Adjust strategy and tactics in reaction to
competitor strengths and weaknesses and in
anticipation of future moves.
Copyright 2001 Ernest R. Cadotte
Grading is Based upon
Achievement of Goals!
• Earn $20,000,000 in profit by Quarter 6,
• Capture 50% of the market in at least two
market segments; and,
• Achieve 90% customer satisfaction in your
brand designs and advertising copy.
Copyright 2001 Ernest R. Cadotte
Grading:
The Balanced Scorecard
• Final grade will be the average of your
firm’s profitability, market share, and
customer satisfaction
– Operating profit/20,000,000
– Sum of market shares in 2 target segments
– Average customer satisfaction with brand and
advertising designs in 2 target segments (scored
0 to 100)
– Quarter 6 results will be used to compute grade.
Copyright 2001 Ernest R. Cadotte
Why Use a Balanced Scorecard?
• It is too easy to get caught up in market share.
• Long-term viability requires that managers
also deliver customer satisfaction and profits.
• The balanced scorecard measures both the
long-term and the short-term.
• The best managers will be good in the 3 areas
measured.
Copyright 2001 Ernest R. Cadotte
The following slides are for
Quarter 4
Copyright 2001 Ernest R. Cadotte
Q4, Expand the Market
Offering
• Select a second segment to target and design a
marketing program to go after that segment.
–
–
–
–
–
–
design a new brand,
price the brand,
add sales people,
design a new ad,
run the ad in the local media.
schedule the opening of a new sales office.
Copyright 2001 Ernest R. Cadotte
Your goal is to speed up the
adoption rate.
maturity
decline
Demand
growth
introduction
You are here.
Time
New segments, brands, advertising, sales
staff and sales offices will push you into the
growth phase.Copyright 2001 Ernest R. Cadotte
Grow the Market
• Target a new segment
• Develop a second marketing strategy
targeted at the new segment.
Copyright 2001 Ernest R. Cadotte
Financial Performance
• Now that you have multiple brands, you can
evaluate your performance by brand and the
division as a whole.
Copyright 2001 Ernest R. Cadotte
Goals of Financial Management
• Discover which brands and markets are
making the greatest and weakest
contribution to the bottom line.
• Deploy resources to correct weaknesses and
take advantage of strong performers.
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarter 4
• Differentiating the marketing strategy –
multiple strategies aimed at multiple
segments
• The management of strategy
–
–
–
–
learning from your customers
learning from your competition
learning from your financial information
skillfully adjusting your strategy and tactics
Copyright 2001 Ernest R. Cadotte
The following slides are for
Quarter 5.
Copyright 2001 Ernest R. Cadotte
Q5, Enhance the Market Offering
• Introduce new brands with new R&D
features,
• Continue with market expansion by adding
advertising, sales people, and new offices.
Copyright 2001 Ernest R. Cadotte
What Is New In Quarter 5?
• Ability to design new brands with new
R&D features from engineering
Copyright 2001 Ernest R. Cadotte
Corporate Headquarters is
expecting great things from you!
• Demand is up for the entire industry
• Your firm has established itself as a viable
competitor
• New sales offices would greatly expand
distribution, drive up unit volume, and
thereby reduce unit costs.
• New brand features could increase customer
satisfaction, and thereby demand.
Copyright 2001 Ernest R. Cadotte
Skillfully adjust your marketing strategy
to expand your position in the market
maturity
decline
growth
Demand
introduction
You want to move in this direction.
Time
Learning Points for Quarter 5
• Management of strategy
– discover the causes of performance shortfalls
– adapt to new opportunities and problems
– work on the margin to improve performance
• where should money be spent next?
• how can we get more out of our current investments?
– manage the future (taking the initiative now by
expending resources that will shape the events and
opportunities of the future)
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarter 5
• Management of strategy (continued)
– discover and exploit the market’s many response
functions
– learn from smart competitor decisions
– You can not go to Hawaii on market share
(at the end of the day, wealth creation is the goal)
Copyright 2001 Ernest R. Cadotte
The following slides are for
Quarter 6
Copyright 2001 Ernest R. Cadotte
Q6, Refine the Marketing
Strategy
Study the market data to determine how to
better meet customer needs and surpass the
competition through brand design, pricing,
advertising, and distribution.
Copyright 2001 Ernest R. Cadotte
Your goal is to manage your
division’s total performance
• The best marketers are good at managing
– Financial Performance
– Market Performance
– Marketing Effectiveness
Copyright 2001 Ernest R. Cadotte
Use the Balanced Scorecard
• Final grade will be the average of your
firm’s profitability, market share and
customer satisfaction
– Operating profit/20,000,000
– Sum of market shares in 2 target segments
– Average customer satisfaction with brand and
advertising designs in 2 target segments (scored
0 to 100)
– Quarter 6 results will be used to compute grade.
Copyright 2001 Ernest R. Cadotte
Skillfully adjust the marketing mix
to grow your market
maturity
decline
growth
Demand
introduction
You want
to be here.
Time
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarters 6
• Management of strategy
– discover the causes of performance shortfalls
– adapt to new opportunities and problems
– work on the margin to improve performance
• where should money be spent next?
• how can we get more out of our current investments?
– manage the tactical details
Copyright 2001 Ernest R. Cadotte
Learning Points for Quarters 6
• Management of strategy
– discover and exploit the market’s many response
functions
– learn from smart competitor decisions
– You can not go to Hawaii on market share
(at the end of the day, wealth creation is the goal)
Copyright 2001 Ernest R. Cadotte
The Following Slides
Are Used for the Final Summary
Copyright 2001 Ernest R. Cadotte
Experiencing Marketing Strategy
@ the Marketplace
Copyright 2001 Ernest R. Cadotte
When we work strictly in our functional
areas, we are like a bunch of blind
people trying to understand what an
elephant is.
It’s a sheet
of rawhide.
Please tell me
what it is..
It’s a snake.
Copyright 2001 Ernest R. Cadotte
It’s a steel
tube.
It’s a
tree trunk.
With business war games, you can crawl all over
and under the marketing organization to help you
to see and understand the whole thing.
Brands
Research
Pricing
It is a marketing
organization!
Advertising
Copyright 2001 Ernest R. Cadotte
Distribution
Key Benefits
•
Facilitate learning of important marketing
concepts, principles, and ways of thinking.
•
Promote better decision making by helping
students see how their marketing decisions are
interconnected and need to be managed as a
whole.
Copyright 2001 Ernest R. Cadotte
Key Benefits
•
Develop marketing planning and execution
skills within a rapidly changing environment.
•
Instill a bottom line focus and the
simultaneous need to deliver customer value.
•
Crystallize the financial implications of
marketing decisions by linking them to
bottom-line performance .
Copyright 2001 Ernest R. Cadotte
Key Benefits
• Discover how important it is to use market
data and competitive signals to adjust the
strategic plan and more tightly focus
business tactics.
• Build marketing confidence through
knowledge and experience.
Copyright 2001 Ernest R. Cadotte
Experiencing Marketing
@ the Marketplace
Course Evaluation
Copyright 2001 Ernest R. Cadotte