Marketing Game

As promised, I have created the attached "coaching report" spreadsheet to help you flag some common areas for improvement as you prepare to make decisions for the next quarter. Look up your company name on the left column and then see which problem areas you are marked with the X (if you have no Xs, then you didn't have any of these common issues - well done!). Now, regardless of whether you have flags or not, you should review your performance and revise your marketing mix decisions on this round. The intent of this message and file is to give some added directions to those of you that need more corrective measures in order to improve your performance.

Read below for advice on how to address these common issues:

HIGH PRIORITY

Low demand. The company generated very little demand. As a result, the per-unit production costs are likely very high, leading to a low-profit margin per unit. This one is tricky as the company needs to re-evaluate all its marketing decisions to stimulate demand. There are many possible reasons for the low demand. Brands with poor brand judgment ratings will discourage potential buyers from making a purchase. Unattractive ads or a low frequency of advertising will stifle the demand as well. An insufficient number of sales offices or salespeople can lead to a similar problem. The company should benchmark its decisions against those of its competitors and adjust its decisions to stimulate demand.

Low brand judgment: Company had low brand judgment scores for one or more brands in its target segment(s). A brand's judgment is based solely on the components (features) that are included in the particular brand. Brand judgment scores provide an indication of how closely a brand matches the basic needs of each market segment. Each brand that is sold in a particular geographic market is rated by several panels of local buyers. Each brand will receive a rating between 1 and 100 from each market segment. A rating of 100 indicates that a brand satisfies all of the important needs of the segment. A score of less than 100 indicates that the brand design is deficient in some aspects. The lower the score for a certain segment, the lower the interest in the brand, and the lower the sales in that particular segment. It is difficult to achieve a rating of 100. However, students should be able to design brands with ratings of 75 or higher in the early quarters and much higher once they are able to add R&D technologies into their products.

Low ad judgment: The company had low ad judgment scores for one or more ads in its target segment(s) in the previous quarter. The ad judgment of an ad design is driven solely by the attractiveness of the claims for the target segment, the number of claims included, and their ranking within the ad. Better ad designs will allow the firm to spend less on advertising while achieving the same advertising effectiveness. Long ads are not necessarily better than short ads. The addition or deletion of a claim or rearrangement of the claim priorities can make a noticeable improvement.

MEDIUM PRIORITY

Too few sales per sales office: The average number of salespeople per sales office is most likely too low and may be limiting the company's ability to generate demand. The number of salespeople that the company employs has a direct effect on sales. Understaffed sales offices can result in unanswered customer phone calls and lost leads. At this point of the game, you can use competitive information to see how other companies are staffing stores - particularly in your target market and location. This decision should be customized per store per segment (consider the segment's needs, market potential, and competition in the local market).

Underpriced by other companies: The company is being underpriced by other companies in one or more of its target segments. Even if a company ensures that its prices are below what potential customers reported as the "Price Willing to Pay" in its market research, lower prices by competitors can have a big impact on demand. This is especially true when combined with your product quality (i.e. a lower brand judgment score than your competition). While some market segments are more price-sensitive than others, all customers respond preferably to lower prices. A five percent difference in price between comparable products will have little bearing on demand in some segments. Such a difference could cause a substantial shift in demand from one brand to another in other segments. You should take a close look at your direct competitors' prices in their target segments. Some competitors are offering comparable products at a lower price, which could be hurting this company's demand.

Prices too high: The company priced its products above what the market was willing to pay, based on the available marketing research data for particular target segments. The initial marketing research data provided information on how much each segment is willing to pay for the ideal product that meets the segment's needs. At this stage of the industry, most products on the market do not include the technology to satisfy the customers' needs fully. Charging more than the price willing to pay is hurting the company's demand.

Salespeople training neglected: Company is not training any of its sales force staff to focus on either their primary or secondary target segments. The sales staff requires specialized training to understand the target segment's needs effectively. This can be done by assigning a certain number of salespeople to be trained to focus on specific target segments out of the total number staffed in a particular sales office. It is a good idea to train salespeople for each segment the company is selling to, emphasizing the primary and secondary target segments.

Low frequency of local advertising: The company's frequency of local advertising is too low compared to the other companies in the industry. If a company falls behind in its frequency of advertising compared to its competition, fewer customers will learn about its products, and its demand will suffer. It is important to note that your ad judgment score is independent of distribution - that is - you can have a great ad that no one saw or an inferior ad that was distributed widely (or any combination in between). The frequency decision is about media placement, not about quality.

Excessive local advertising: The company's frequency of local advertising is too high compared to the other companies in the industry. Smart companies benchmark their advertising frequency with that of their competitors to ensure they do not fall behind. There are diminishing returns on advertising, and this company may be spending excessive amounts of money in this area with questionable returns on their investment.

Demand is greater for non-targeted segments: Company generated less demand in at least one of its target segments than in other non-target segments. Students should either re-focus their marketing decisions or adjust their target segments. This is hurting the company's balanced scorecard. The Market Performance and Marketing Effectiveness balanced scorecard indicators assess the company's success only in the firm's targeted segments. When the company achieves high market performance and/or marketing effectiveness outside its target segments, this success is not reflected in the balanced scorecard. Suppose the company chooses to continue to pursue the primary and secondary segments that they previously selected. In that case, they should adjust their marketing decision to meet the needs of these segments better. If they choose to adjust their strategy and focus on different segments, they should modify the target segment's selection.

At the end of the day, the key to Quarter 3 is - skillful adjustment - even if your test market did not perform as you would have expected or wished, the absolute difference between the top and bottom performer at this point is minimal. If you listen to your customers, observe your competitors, and LEARN from the marketplace you can adjust your marketing mix for the next quarter and recover. Ultimately quarter 2 will not be part of your cumulative balance scorecard for your final grade (review the assignment guidelines). So DO NOT let this quarter beat your spirit if you missed the mark. Move forward and learn from doing!