BUS4098 Week 4

Marketing Decisions

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Business Simulation

©2016 South University

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Marketing Decisions

At this point in the simulation, several teams may still be looking for the ideal mix in each market and are trying to adjust their offerings accordingly. If your team is doing the same, then you must remember that other teams are also looking to target the highest percentage of the customers in the same markets. If this is the case, then consider the discussion on strategic groups in a Week 3 lecture—many different groups of customers exist in the same differentiation markets. By looking for segments that may be small but are not hotly pursued by rival firms, you may be able to find a preferable segment for your positioning in that market. This will require a tailoring of traits for this market. However, the absence of intense rivalry will allow you to gain more profit.

The one "wild card" you have, even with a differentiation strategy, is the private label markets that are available in each region. A private label allows you to have longer production runs in your plants and reduces the cost per-unit of production. With lower unit costs, your team can be more competitive in the differentiation markets. You still have to sell those private label shoes; if your bid is unsuccessful, then you don't get the volume and the unit cost reductions. But in private label markets, you only need to cover your marginal costs to gain the unit-cost reduction for branded shoes. This is not a strategy if you are looking at a private label as a market in which you can directly earn profits. This approach works to absorb overheads and fixed costs that would otherwise have to be borne by branded shoes.

You may visit the Webliography of this course to learn more about private label manufacturers.

Coordinating Production and Marketing

We discussed earlier how important it is for firms to coordinate their production and marketing strategies. Clearly, the decisions discussed above not only have to be coordinated across geographic regions for each function—production and marketing—but also between the functions. In some ways, making one set of decisions dictates what the other would ideally be. Also, the limitations on each function provide limitations on the others. Often, teams do not understand this. They formulate production and marketing strategies independently, and then they feel disappointed when one strategy is not able to serve the other's goals.

This is one of the reasons you are working together as teams rather than as groups of individuals. You can engage in iterative decision processes that look at the insights and recommendations of one specialist, say in marketing, and analyze them in the context of production and vice versa. In turn, you can iterate through the financial considerations and limitations of your firm. A cross-function coordination results through this iterative process. This allows firms to effectively coordinate across regions. It also more closely resembles the processes businesses follow when making these types of decisions.