THE MARKETING GAME! Dr. P.V. (Sundar) Balakrishnan. Dr. P.V. (Sundar) Balakrishnan BUSINESS ADMINISTRATION PROGRAM. Objectives Served by TMG!

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1 Dr. P.V. (Sundar) Balakrishnan BUSINESS ADMINISTRATION PROGRAM THE MARKETING GAME! Dr. P.V. (Sundar) Balakrishnan September 22, Objectives Served by TMG! To develop skills in identifying marketing opportunities - encompass 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. THE MARKETING GAME!!"# $# # & '& " (# ) )* ) * ") "# $ # "# $ *"+)', " $ * -# $ # " * " $ * "# S-3 S-4 OVERVIEW. * FOCUS ON STRATEGIC ISSUES FOCUS ON MARKETING PLANNING COMPETITIVE ENVIRONMENT RAPID FEEDBACK Submit Decisions on Time: / 0 1 S-5 Balakrishnan S #6

2 ( 0 ( THE PROCESS 0! "$# "! &! $ ')(* + +,.- )/ / / 1! '2!! 3 143! ;:)< = CCCC D E;< AGF????? HDEJI7K@;LGM9FKH N3OP9Q.R3S TU V WXGY[Z[\ \ W ]B^ _G` a bbc bbyedf]bg[bh3i ]Bg j k ^ l k g[m \[neoel k\ \[k ]Bg ppzbc c mb^ ]BneYlbBl o[bb^ \ )rj( + -stsu!! 3 0Jq / "1 $43!. H H H H w1@86@c xy@cd E I z;7;c LyM;FKH Mr. Walton s Numbers We had numbers to hit. Mr. Walton was a numbers man. If he called you at eight A.M. on Saturday, you better know your sales for the week, by day. And you by damn better know what your payroll [cost] was, by percentage sales. Larry English The Wal-Mart Effect by Charles Fishman, 2006 Your Role: It is 2 A.M. Do you know your numbers? My Role: The Prez S-7 S-8 Consumer Satisfaction & &'&! &'& # 2, &! ( &!! # ''& Behavioral Response -Awareness -Interact -Purchase -Satisfaction/Loyalty '"! " # $ " #& INDUSTRY ENVIRONMENT Market Growth Technological Environment - No Major Innovations Expected - Yearly Revision Cycle Competitive Environment - Type of Competition Depends on Firms Decisions S-9 S-10 Six Key Product-Market Segments High-tech Managers Modern Students Concerned Parents Professional Creators Past Sales By Market Segment For Voice Recognition Device Harried Assistants Home Users Segments have different needs, preferences, situations, sizes, growth rates. S-11 /

3 Distribution Channels Product 1: Voice Recognition Device (VRD) Channel 1 Traditional Dealers High-tech Managers Harried Assistants Modern Students Channel 2 Discount Dealers Concerned Parents Professional Creators Home Users Firms reach customers through: Full-service dealers, and Discount Dealers. Segments have different shopping preferences. $ ) Key Product Features SC: Special Commands (5-20) EP: Error Protection (1-10) EL: Ease of Learning (1-10) S-13 S-14 Product 2: Digital Vocal Communicator (DVC) Key Product Features Number of Tasks (1-10) Level 3 Similarity of Commands (1-10) Types of Advertising Pioneering Direct Competitive Indirect Competitive Reminder Corporate (Institutional) Ability to Customize (1-10) S-15 S-16 Expanded Marketing Responsibilities Budget Items &. 3' 4 & 5! &,! * 6# *7#! ", ' #! $ *"!""! 6# *#! &+& 6# * R&D Product Modification Costs Sales Force Salaries, Severance Pay Advertising Expense Customer Service Expense Sales Promotion Expense Market Research Reports Expense,&- 8 #, & ", ' S-17 9 S-18 0

4 Marketing Response Function!"# * 9 &! ".$!! '! +# < 5 $?#! 5 # <6:= 6:=! < <6/::: $=:! / 6:= < <6>=1 $0= S-19 /:!"# *!*.! " 9 &.$!! "! #, # ( '! 5 < 3$?#4! <6;:! 5 <6;:3$=:4<6;=::! /5 <6;:3$0=4<6/0=: ""# 9 # ' #" A B # * " # / // AB5!"# *!'F' ' 9 & ' # 3*& ' 4 9 #'"* -, +# #' C=1 : 1:@.* D5 E11* '5 9 # - ## * " ' & & #!"" 3=$/:4 6: 6E):::+3 * 4 +3 * 4 3$:4 6: 6=):::+3 * 4 +3 * 4 'G *3$:4 60):::+ * 60):::+3 * 4 +3 * 4 /0 /1 1

5 R&D for Product Modifications: Computing Costs Feature Special Commands (5-20) Error Protection (1-10) Ease of Learning (1-10) Cost to Decrease $0 $0 $3,000*change Cost to Increase $8,000*(change) 2 $5,000*(change) 2 $3,000*(change) 2 Computing Costs of R&D for Product Modifications Example Old Brand New Brand Change Cost Example $8,000 x 2 x 2 = $32,000 Feature Special Commands Last period s product 6 This period s product 8 Change +2 Cost to Change $8,000*2*2=$32, $ $3,000 x 2 x 2 = $12,000 Error Protection Ease of Learning $0 $3,000*2*2=$12,000 $44,000 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 S-26 Production Economies of Scale Percent of Base Unit Cost , , , , ,000 Cumulative Units Produced Competitor Analysis Estimate Competitor s Net Contribution Analyze Past Strategies / Likely Strategies Positioning and Target Segments If the president decides to invest in new equipment, unit production costs will decline as cumulative production increases: S-28 TMGPlan Software Easy to use for preparing and evaluating plans, managing reports Submitting Marketing Plans Select directory Enter Plan Decisions View, print, and manage password protected reports Evaluate spending and profit forecast Submitting marketing plans decisions 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) me with group membership. Best to stick to one password! =

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

7 , *",! *" / 0 1 = >." :/=: :/=: :/=: :/=: :/=::/=:."/ :/=: :/=: :/=: :/=: :/=::/=:."0 :/=: :/=: :/=: :/=: :/=::/=:."1 :/=: :/=: :/=: :/=: :/=::/=: 3 4 /:):/E =):E1 /=):1 :)/1: //):=> E):;/. $4! 5$6. $4)( 5$6. $ $" $ * 6. $ $ )( 6 0;!! /." :/=: :/=:."/ :/=: :/=:."0 :/=: :/=:."1 :/=: :/=: =>)/;> )0:E 5@ *- M 5@, *-M 1: Consumer Preference Study Segment Students Home Assistants Creators Managers Parents Special Error Commands Protection Ease of Learning Price Range low low high high high low What kind of product would a segment prefer? What reference price seems typical for the segment? How are segments similar and different? S-41 Report 3:& *!" ' Special Error Ease of Approximate Segment Commands Protection Learning Price Range Students $ $ Home $ $ Assistants $ $ Artists $ $ Managers $ $ Parents $ $ #", //) 1/ *' & # K' K'!"#!"# :==: : 0!" &! " # * ::? & * * ::? &$!/ #5 ::? ' :: : 0! * =:: : 0 3AB4 ' / / 0 1 = >! E;> ):; =)>:/ )E:E 1)0>0 ):E>! / =)/>; 0)008 )0;> );> )E>= ):81 &$!0 #5 ::? ' :: : 0! * =:: : 0 3AB4 10!)( &$! ($ (6 11 8

8 !" ## *D, '## * '## * *"!! / M M D" M M M M M M * M M M M C. $ $ 6 C-55!(!"6 1= * # / 0 1 = >." M M M M M M."/ M M M M M M."0 M M M M M M."1 M M M M M M 5, - *" M 5 *" &, M 1> +"# ( * # N N3 + *# 4 *" ' 3G- ", * ", 4 D" * $$$$$ $$$$$$$$ $$$$ $$$$$$ $$$$$$$ $$$$$$$ E >1 E8 ; //> 1E E; =1 = D E; =1 = /: >; 18 /: /:= =: 18 S-48 Soft Drinks 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0 JUL 2003 AGO 2003 SEP 2003 OCT 2003 NOV 2003 DEC 2003 JAN 2004 Market Share () FEB 2004 MAR 2004 APR 2004 MAY 2004 JUN 2004 JUL 2004 BRAND A BRAND B S-49 S-50 E

9 Suggestions, Guidelines Develop a spreadsheet tracker Make sure of your submission No Redo s Failure is a good teacher Business Law and Ethics LBE to win Live, Breath, Eat!"# To Develop the business Mission/Vision Statement Grow and run the business: Adapt to changes in the environment by monitoring: changes in customer needs changes in competition changes in the company s own skills / resources looking for Opportunities & Threats that arise from these changes initiate Tactical actions that fit the company s offering to these opportunities / threats. S-51 Balakrishnan S #52. * Submit Decisions on Time: / 0 1 Balakrishnan S #53 ;