Essay Grade

MKT-607
Marketing Management: The Marketplace Simulation
Your instructor will assign teams. Go to www.marketplace6.com, click on “sign in as student.” Enter
the license number that your instructor has e-mailed you and follow the prompts to register for your
game/simulation. Be sure to create an account in the Marketplace Live:Advanced Strategic Marketing
simulation version.
To underscore the focus of this course, a realistic strategy exercise filled with tactical detail will allow
students to experience the marketing process. Through computer simulation, this assignment will place
you into a very realistic international business setting where you will run a marketing division for 2
years in compressed time (8 rounds of decision making, representing 8 quarters).
Learning Objectives
The Marketplace Live simulation is a transformational experience. You will learn what it will be like
to compete in the fast-paced, competitive market where customers are demanding and the competition
is working hard to take away your business.
In Marketplace Live, you start up and run your own marketing division, struggling with marketing
fundamentals and the interplay between product, price, place, promotion, budgets, and financial
performance. You are given control of a simulated business and must manage its operations through
several decision cycles. Repeatedly, you must analyze the situation, plan a marketing strategy to
improve it, select the tactical options to implement that strategy, and then execute the strategy and
tactics out into the future. You face great uncertainty from the outside environment and from your own
decisions. Incrementally, you learn to skillfully adjust your strategy as you discover the nature of your
real-life decisions, including the available options, linkages to other parts of the business, conflicts,
tradeoffs, and potential outcomes.
Here is a list of what players do:
•
Analyze market research data.
•
Design brands to appeal to different market segments.
•
Devise advertising campaigns, sales force incentives, and price option.
•
Allocate scarce funds to R&D, advertising, and distribution.
•
Select and prioritize R&D projects, leading to new product features.
•
Plan and roll out a marketing campaign.
•
Manage cash.
•
Compete head-to-head with other business teams.
© 2011. Innovative Learning Solutions. All Rights Reserved.
Adapted and reprinted with permission from “Syllabus Material for Advanced Strategic Marketing,” from Marketplace
Live: Advanced Strategic Marketing, by Ernest R. Cadotte.
•
Adjust strategy and tactics in response to financial performance, competitive tactics, and
customer needs.
The specific goal of the exercise is to develop your marketing management skills by giving you an
integrated perspective of the entire marketing operation. In terms of specifics, the exercise can:
•
Develop strategic planning and execution skills within a rapidly changing environment.
•
Form the connections between marketing decisions and financial performance.
•
Instill a bottom line focus and the simultaneous need to deliver customer value.
•
Internalize how important it is to use market data and competitive signals to adjust the strategic
plan and more tightly focus marketing tactics.
•
Develop teamwork across functions, opening up new communication links.
•
Promote better decision making by helping individuals see how their decisions can affect the
performance of others and the organization as a whole.
•
Facilitate learning of important marketing concepts, principles, and ways of thinking.
•
Build confidence through knowledge and experience.
Organization of the Exercise
Exhibit 1 contains a summary of the game scenario and a chronological listing of selected simulation
activities that you and a team of fellow students will encounter while competing in this exercise. Each
quarter or decision period has a dominant activity and a set of decisions that are linked to it. These
dominant activities take the team through the product and firm life cycle from introduction, to
development, to growth, to near maturity.
Each quarter’s activities not only result in new material being introduced, but also build upon the prior
content so that there is considerable repetition. Business activities such as leadership, team
management, value creation in product design, pricing, distribution and sales force management, ad
copy design, media planning, budgeting, profit analysis, and strategic planning and management are
not easily absorbed. They require repetitive exercise in order to set them into your natural thinking. For
each new decision, there is supporting material in the accompanying text and readings.
Team Effort
You will team up with two to four other students to form an entrepreneurial division of an international
electronics firm. During an 8-week period, you will take your business through the natural stages of
business growth, including emergence, development, and maturity. Along the way, you will learn to
develop and refine your marketing strategies and tactics.
Virtual Teams
The virtual firm is fast becoming a reality. In business today, you may work out of your home in
Dallas, confer with your management team in London, coordinate shipments from the factory in
Shanghai, all to service the customer in Montreal. You will use cell phones, e-mail, instant messaging,
the Internet, and video conferencing to communicate with everyone up and down the supply chain.
Each team can decide how they wish to communicate.
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To help you learn to work within a virtual organization, the Marketplace exercise will be delivered
over the Internet. In logistical terms, a common data set will be created for the team’s decisions and
stored on an Internet-accessible file server. Thus, your team will be able to work from any location
where there is a PC with an Internet connection.
Any member of the team will be able to log onto the server, review the current situation on the web,
make decisions, and then save them for the next student to work on. As members complete their areas
of responsibility, they will report the analysis and decisions to the rest of the team for consideration.
You and your team will still need to confer on your analysis, strategy, and tactics via virtual meetings.
The advantage of this Internet system is that each team member will be able to work on the most up-todate decision file so that everyone is looking at the same data set.
The file server setup will also facilitate the coaching role of the instructor. Just as you log on to
Marketplace Live, the instructor will be able to log on at any time to review the current situation with
any team or the exercise as a whole. Thus, the instructor can monitor activity and results, and adjust
the content of any team or individual coaching efforts. It is requested that if communications occur by
telephone, face-to-face, or instant messaging, minutes of the meeting be posted to the Team Forum so
that the Instructor can keep abreast of a team’s activities.
Software Demos and Signup Procedures
Three flash demos have been prepared to introduce you to the Marketplace software. Please go to
http://www.marketplace-simulation.com/sample-screens/flash-demo.php for:
1. Student’s Overview
2. Student’s Signup
3. Simulation specific demo for Marketing Live: Advanced Strategic Marketing
Please ensure that you are signing up for the correct version on this program.
Reports
Each team will deliver a written marketing plan (following Q-4 results, coincident to the Q-5
decisions) and a written Final Report to the Board of the parent company (following Q-8 results) with
summary/lessons learned.
Individual Effort vs. Group Effort
Each student must participate equally. Both the individual and the group will be graded on all
assignments. Individuals can raise one letter grade above the group effort or drop one or more letter
grades below the group grade depending upon their individual contribution to the team, as measured by
peer reviews and time invested in the game.
Peer Evaluations
A peer evaluation will be completed during the course for each person on the team. Significant
deviation in performance above or below the norm will be used to adjust individual student grades for
the activity being evaluated. That is, your grade on the Final Report to the Board and Simulation
performance could be adjusted up or down depending upon the feedback the instructor receives from
the rest of the team for each assignment.
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You Can Be Fired
It is permissible to fire a team member who is not making a substantive contribution to the success of
the team. Missed meetings (e.g., absent from meetings, not participating in conference calls, failing to
respond to e-mails or text messages, or not participating in the Team Forum, depending on the
communications protocols agreed to by the team), poor preparation, and failure to complete
assignments are all indicative of underperformance. Before a person can be fired, the team must give
the student an opportunity to correct the identified deficiencies.
In terms of protocol, the team must provide the student with a written statement of the problems
associated with the student’s work. A peer evaluation may be used in conjunction with this statement
and submitted to the instructor.
A person who is fired will be assigned to compete in another simulation where the student is
responsible for all the firm’s activities, including weekly decisions and executive briefings, and the
preparation of a Business Plan and Report to the Board. This new simulation will begin in Quarter 1
and continue through Quarter 8.
Being fired will also limit the student’s maximum potential grade for the simulation by one-and-onehalf letter grade. Specifically, points will be deducted from the student’s final point score for the
simulation assignment. Thus, if the student earned a final score of 95% (an “A”), then the adjusted
final score would be 80% (a “B-” ). The final grade would be based upon the adjusted final score.
The same conditions will be applied if a person quits a team.
Odds and Ends
Questions to the Instructor
The HELP files in the software contain all of the directions you will need to participate in the
marketing strategy simulation.
Computation of Simulation Performance
A Balanced Scorecard will be used to measure your firm’s performance. (See the assigned article,
“Using the Balanced Scorecard as a Strategic Management System” on this subject for more
information on the scorecard concept). The team’s total business performance will be based upon its
financial performance, market effectiveness, marketing performance, investments in the firm’s future,
and creation of wealth. A total score will be computed for each firm competing in Marketplace, with
the final 4 quarters making up the final score.
At the end of the exercise, each team will be ranked in the order of performance for the total score. A
letter grade can be assigned depending upon your team’s ranking and how close it is to the team(s)
above or below you. A scoring rubric will be provided.
Workload
The course requires a normal workload for any reading and lecture course. Once the simulation begins,
the work on the simulation will vary according to the activities within the exercise. During the first
quarter of play, the work is fairly light. However, it will increase each week up through the
presentation of the Marketing Plan. Students report spending 3 to 7 hours per week in the simulation
during Quarters 3 and 4. During the preparation of the Marketing Plan, each student might spend as
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much as 10 hours on the plan itself. It is not likely that an individual would gain much from the
experience by spending less than 3 hours per week in the simulation during this time period.
The majority of students report spending about 2 to 2 ½ hours in the simulation per week following
acceptance of the Marketing Plan. This reduction of time is due to familiarity with the software, game
procedures, market, and having a plan of action that requires modification rather than creation. That
said, some students spend considerably more time as they dig deeper into the data available each
quarter. There have been students who invested 10 or more hours per week throughout the simulation.
It is noteworthy that there is a very definite positive correlation between team time invested and final
Balanced Scorecard results. Note that the “time in the simulation” means time working in the practice
or decision files and does not reflect time spent analyzing data transferred to excel spreadsheets, team
meetings (conference calls, etc.), or the like.
Time Management
Time management will be vital to your success in participating in the Marketplace Live simulation.
There is more work than any one person can do. In addition, it is not wise for everyone to participate in
all aspects of the business. Too much time would be wasted. Therefore, it is necessary to divide up the
work. There are suggestions on how to divide up the responsibility in the help files within the software.
Feel free to depart from these guidelines if individual preferences, experiences, or workloads would
allow a more equitable allocation of tasks. Also, do not hesitate to reallocate responsibility if conflicts
arise or the workload is unevenly distributed.
Leadership
Consistent with the MBA program, one of the goals is to develop the leadership skills of all students.
For this reason, it is suggested that the leadership position change systematically during the course of
the semester. A new leader could be selected for each of the following time periods and activities:
1. Start-up phase of the business (up through Quarter 4).
2. Preparation of the marketing plan.
3. The growth phase of the business (Quarters 5 through 8).
4. Preparation of the Report to Executive Board.
Changing leaders is not a requirement but a suggestion. Each team can organize as they see fit.
The president should preside over each executive meeting, making sure that the discussion does not
wander from the business at hand. Each team meeting should begin with an agenda and a timetable.
Conference calls or face-to-face meetings should not last more than 2 hours. Long drawn out meetings
are not productive and raise frustration levels about not getting things done. The meeting should
conclude with a set of action items for each executive. The outcome of these actions should be
reviewed at the start of the next meeting. This may apply to synchronous Team Forums as well.
To facilitate executive meetings, each team member should prepare his/her work in advance. The
executive should know the ins and outs, problems, and tradeoffs of his/her area of responsibility. When
the executive committee meets as a whole, each executive should have a plan of action to recommend
to the team. The executive should be prepared to thoroughly discuss the options open to the company
and be flexible on the final decision of the executive team.
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Exhibit I: Decisions by Quarter
Quarter 1: Organize team to do the job.
• Focus on process of working as a team to achieve goals.
– Assess team members’ skills, personalities, and work styles.
– Set organizational and personal goals.
– Organize the work.
– Determine how to manage the organization.
– Establish leadership.
• Determine desired image of company.
– Designate a company name.
Quarter 2: Evaluate market opportunities, set up operations, and prepare for test market.
• Analyze market opportunities—evaluate segments, geographic markets, and potential competition.
• Establish corporate goals and strategic direction.
– Specify and rank order corporate goals.
– Write mission statement.
– Select target segments.
– Establish strategic direction.
• Create customer value—design initial brands for test market.
– Match components to benefits desired (Quality Function Deployment [QFD]).
• Select test markets—set up sales offices.
Quarter 3: Go to market to test strategy, and market assumptions.
• Marketing strategy—evaluate tactical options and choose marketing mix.
– Pricing and price promotions.
– Sales force management—number employed, training, and incentives.
– Advertising—ad copy design, media placement, and ad frequency.
• Market research—budget collection of information.
Quarter 4: Evaluate test market performance, revise strategy, and become a learning
organization.
• Evaluate performance.
– Financial performance—profitability analysis.
– Market performance—customer opinion of brand designs, prices, advertising, and sales force.
– Competitor tactics—segments targeted and selection of marketing tactics.
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• Revise marketing tactics as needed, and continue test marketing.
Quarter 5: Seek external funding—prepare marketing plan.
• Evaluate performance—financial, marketing, and competitive.
• Develop 2-year marketing plan (to be submitted to the instructor).
– Goals—marketing and financial.
– Marketing strategy.
– Financial strategy.
• Invest in R&D for new technology.
• Begin roll out of marketing plan.
Quarter 6: Monitor, improve, and execute.
• Evaluate performance—financial, marketing, and competitive.
• Skillfully adjust strategy.
• Marketing—make incremental changes in tactics.
– Use Activity-Based Costing (ABC) to evaluate profitability of brands and sales offices.
– Conduct demand analysis to estimate brand, price, advertising, and sales force elasticity.
– Continuously improve brand features (R&D).
Quarters 7 and 8: Monitor, improve, and execute (continue).
• Manage strategy.
• Skillfully adjust strategy to unanticipated competitive moves.
• Continuously improve brand features (R&D), pricing, promotions, and sales force.
• Adjust strategy within financial capability.
Final Quarter: Report to the Executive Board.
• Report on operations since presentation of marketing plan (submit to instructor).
– Market and financial performance.
– Departures from plan, justification.
• Present plan for the future.
•
Lessons learned.
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Outline for the Marketing Plan
The Marketing Plan should include the following components:
1. Executive Summary
2. Financial and Market Performance – Review of financial and market performance during the past
year
3. Situation/SWOT Analysis – Assessment of current situation and the market
A.
Customers
B.
Competition
C.
Company’s strengths and weaknesses
D.
Major problems/opportunities to be dealt with next year
4. Marketing Strategy for the next year in business (What will it take to get ahead or stay ahead?)
A.
Brand strategy
B.
Pricing strategy
C.
Advertising strategy
D.
Sales channel
5. Pro forma financial projections (Quarters 1 to 8). Hint: Copy the pro forma in the simulation for
Quarters 1 to 4 into Excel and then add information/data for Quarters 5 to 8.
6. Tactical plan (Quarters 1 to 8). Hint: The tactical plan should articulate in plain language what is
planned for each quarter, e.g., Q6 – open three offices, Paris, London, New York. Staff with five
each, one service and four sales personnel, with two sales staff for priority 1 and 2 target markets,
at a cost of $xx,xxx. The reader should then be able to see the cost entry on the pro forma. In
effect, every planned expenditure shown on the pro forma should have an explanation in the
tactical plan. Revenue should be tied-out: How many units, at what price, are projected? What is
cost of goods sold? The tactical plan can—in fact, should—be provided using an easy-to-read
bullet presentation.
Report to Executive Board of Corporate Headquarters
The Report to the Executive Board should include the following components:
1. Performance Review-Review your financial and market performance during the second year.
2. Marketing Strategy – Highlight the key features of the business plan that was presented to the
venture capitalists:
A.
Brand strategy
B.
Pricing strategy
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C.
Advertising strategy
D.
Sales channel
3. Assess your business strategy and performance during the second year.
A.
Compare actions taken in regards to the marketing plan.
B.
Discuss departures from the marketing plan, justification, and outcome.
C.
Review significant events that affected the company and market.
4. Assess your current situation and the market. (What are your firm’s strengths and weaknesses?)
5. Investments in the future – Summarize how you have prepared your firm to compete in the future.
6. What were the lessons learned and recommendations?
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Marketplace Live 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.
Marketplace Live 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.
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
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.
How is the Marketing Game Conducted?
Teams are placed in a game
scenario in which they start
up and run a new marketing
venture.
The opposition can be
played out by computergenerated competitors or
other student teams.
The Objective is to Profitably Capture
a Dominant Market Position
opponent
Business Team
Market
opponent
opponent
Game Scenario
You work for a large
international electronics
firm.
Corporate Headquarters wants
to enter the personal
computer business.
Game Scenario
You have been
selected to head up
the new marketing
division to sell computers
into Asia, the Americas,
the Middle-East/Africa region,
and Europe.
Several other international firms
are entering the market at the
same time.
Game Scenario
Your marketing strategy
will be tightly focused
on direct sales to
business customers.
You will not sell to the
home market or through retail stores.
You will sell through company-owned sales offices in major
metropolitan markets around the world.
Available Market Segments (market structure)
Sales Office Options
Marketing Team
Each team member assumes a tactical area of responsibility:
Brand Management // Advertising
Sales office management // Overall Leadership
Everyone is responsible for marketing research and profit
management.
How Conducted?
At the outset of each quarter,
you’ll receive information
on the current situation.
The current situation is
evaluated, strategy
formulated, and tactics
set in place.
Tactical decisions are fed into
the Marketplace Live simulator, along with decisions
of opponents.
Results of decisions are fed back to you.
Chronology of Events
Q1: Organize the team, name the company, and contract
for a survey of potential customers
Q2: Analyze market information, establish strategic
direction and set up shop (design brands and set up sales
offices.)
Chronology of Events
Q3: Test-market brands, prices,
ad copy, media campaigns,
sales staffing.
Q4: Study end user feedback,
competition, and financial
performance, and make
adjustments in strategy.
Chronology of Events
Q5: Prepare a one-year marketing plan. Present
marketing plan to Executive Board from Corporate
Headquarters and obtain its approval.
Chronology of Events
Q6-8: Refine the marketing strategy
-Introduce new brands with new R&D features.
– Continue with market expansion by adding advertising, sales
people and new offices.
– Study the market and financial data to determine how to
better meet customer needs and surpass the competition
through brand design, pricing, advertising, and distribution.
Chronology of Events
Q9: Present Report to the Executive Board from Corporate
Headquarters regarding:
Second year performance
Deviations from plan
Justification for departures
Analysis of current market
Plan for third year
How well the division is prepared to compete in the future
Funding
The initial funding is 2,000,000 which is being invested by
Corporate Headquarters in 500,000 increments over the first
4 quarters.
Corporate Headquarters will provide another 5,000,000 in
Quarter 5 if it approves your marketing plan for the second
year.
Total Performance Evaluation
Marketing plan
Report to Executive Board from Corporate Headquarters
Strategic thinking and tactical execution
Market performance
Profitability
Customer satisfaction
Market share in targeted markets
Investments in the firm’s future
Creation of wealth for Headquarters
How well company is prepared for the future
Learning Strategy
Marketing simulations are a form
of combative training where
participants pit their marketing
skills against those of formidable
opponents under the watchful
eye of a training coach.
When we study one discipline at a time, we are like a bunch
of blind people trying to understand what an elephant is.
It’s a sheet
of rawhide.
It’s a
steel
tube.
Please tell me
what it is?
It’s a snake.
It’s a
tree trunk.
With marketing simulations, you can crawl all over and under the
new venture to help you to see and understand the whole thing.
Brands
Research
Pricing
It is a
Marketing
organization!
Advertising
Distribution
Learning Strategy: Learn by Doing
You learn about all aspects of marketing by managing a
simulated marketing department.
The Marketplace Live scenario follows the lifecycle of a new
product.
Marketing decisions are introduced as they become relevant
in the evolution of the product.
Key Benefits
Develop teamwork across marketing functions.
Promote better decision making by helping you see how your
marketing decisions are interconnected and need to be
managed as a whole.
Facilitate learning of important marketing concepts, principles and
ways of thinking.
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 cash flows and bottom-line
performance.
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.
Q1: Organize the Business
Name the company
Assign organizational
responsibilities
Purchase survey of end users
Learning Points for Q1
Managing the team
Organizing the work
Deciding what one wants from the learning experience
What to Turn in Each Quarter? Nothing!
The Instructor has complete access to your decisions
and results.
At the end of each quarter, the instructor will receive a
report on how each player is performing.
You can also compare yourself to every other player in
your game when you sign in each quarter.
Q2: Establish Strategic Direction
Analyze market information
Establish strategic direction
Select 2 target segments
Decide on competitive posture
Set up shop
Develop distribution strategy
open initial sales offices for test
market
Design 2 brands, 1 for each target
segment
How do you Determine the Design
of each Brand?
Customers Buy Benefits, Not Features
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?
To answer these questions, you must understand the
elasticity of your components.
What is the Elasticity of the Peanut?
Searching for the Market’s Response Function
Suppose you took a job at one of the major candy
companies and you were asked to design the ideal
candy bar for this class.
How many peanuts would you put into the candy bar?
Which Candy Bar has the Most Peanuts?
Baby Ruth // Snickers// Payday // Milky Way
Which Candy Bar Do You Like the Most?
Baby Ruth // Snickers // Payday // Milky Way
What does the response function
look like for peanuts for this class?
Is more always better?
Would everyone’s happiness increase with every new
peanut you added to the candy bar?
Is there a limit?
Influence of Peanuts on Candy Bar Enjoyment
Um-um good
Level of Enjoyment
Yuk
None
Few
Bunch
Number of Peanuts
Whole lot
What Would Be Your Response Function
to the Following?
Chocolate // Caramel // Nougat
Coconut // Rice // Peanut Butter
Here Are a Number of Response Functions.
Which One Applies to Peanuts, Chocolate,
Coconut, Etc?
Hot
More is
always better
Hot
OR
Cold
More is good to a
point then ceases
to add excitement
Cold
Less
More
Less
More
Response Functions
Hot
More adds value to a point
& then takes away value
Hot
OR
Cold
Cold
Less
More
A little is just
right, more only
takes away value
Less
More
Response Functions
Hot
Hot
Little interest
until threshold
is crossed
Any amount is bad
OR
Cold
Cold
Less
More
Less
More
Response Functions
Hot
Cold
No reaction/indifferent
To having the feature
Less
More
Learning Points for Quarter 2
Market opportunity analysis
Segmentation and target
marketing
Strategic and tactical
planning
Game theory – competitive
positioning
Learning Points for Quarter 2
Brand design
Linking product features to customer benefits
Finding the customer’s response functions

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