Tuesday, September 11, 2007

marketing strategy for decision making game

Well, the first course of electives has just finished. 15 sessions in 5 days with market simulations. 6 groups competing in two markets, starting with 2 products (similar for each group, 2 different segments). We didn't manage well - I'm not experienced in those types of games, but we made several remarkable mistakes to be mentioned and got lot's of experience. Basically, we learned how to manage a company with small budgets and were recovering every time after crisises. At the same time we launched successfully the product to a new market (correct strategy, but rather low profitability).

Some ideas.
- When all the companies have the same products, the only difference can be made by the strategy is by advertising (influencing perceptions) and allocating salesforce. First is good for pull strategy (influencing ultimate consumer), second is for push (working with channels).
- When a company start launching differentiated brands, it is important to fit into segment needs/requirements (price is included). The closer the better.
- Products become obsolete, segment's requirements are changing, and marketing is all about managing perceptions.

Pricing strategy.
- Wrong pricing can kill very successfull brand (specially when it is become obsolete). The leading on the segment can turn to total loss with one wrong pricing decision. Our wrong-priced brand couldn' recover even after drop in price and remarkable (for us, not for competitors) budget.
- While launching totally new product pricing can be made upon estimates from the most similar products margins.

We also can have a remarkable market share, but low net contribution due to higher base cost and lower margin. We did it several times until discovered the problem. Common truth, but dramatic consequenses.

Managing small budgets:
- You always need to think in advance. Investing in rnd now will require a launch money. Is it possible to manage bigger brand portfolio with existing money? And with projected profits and budget? Sometimes we postponed launching and product become obsolete.
- It is better to have less brands but well positioned rather than to spread small budget among several promosing but not very profitable brands.

One more thing. We tended to create more advanced products that exceeded segments needs. Therefore we were less competitive on price (due to less margin). How could I forget about example of perfect tent - if you create tent with best materials and techs, it will cost you around 5000 eur (don't remember when and how we made those proximations), that's why producers normally go for simpler solutions.

One more remarque upon using marketing research data will follow if I can insert table.

No comments: