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SM91.87 Business Simulation Part II. Strategy. Positioning. R&D. Your success in Markstrat will greatly depend on your ability to manage the development and positioning of brands. Customers make purchase decisions based on their perception of your brands. Your perception of brands. Brand

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slide2
Strategy

Positioning

R&D

Your success in Markstrat will greatly depend on your ability to manage the development and positioning of brands
customers make purchase decisions based on their perception of your brands
Customers make purchase decisions based on their perception of your brands

Your perception of brands

Brand

A

Brand

B

Brand

C

Brand

D

Technical quality

Their perception of brands

?

Brand

B

Brand

D

Brand

C

?

Brand

A

the perceptual map is a valuable tool for visualizing brand positioning
+20

SONO

SELF

Bu

SEMI

SULI

Pr

Hi

SOLD

-20

+20

Si

SALT

SUSI

Ot

SIBI

SAMA

SIRO

-20

The "Perceptual Map" is a valuable tool for visualizing brand positioning

Need 2

Perceptual Map

based on MDS Study

Need 1

Key

Segment ideal point

Ot

Perceptual positioning

of brands

there are two key ways to re position brands in markstrat
There are two key ways to re-position brands in Markstrat

Perceived

Performance

Advertising

Perceived

Economy

R & D

physical positioning involves matching brand characteristics to customer needs
Customer Needs

Economy

Performance

Convenience

Physical positioning involves matching brand characteristics to customer needs

Price

Power

Max. Freq.

Weight

Volume

Design

SAMA

Brand Characteristics

positioning with advertising requires setting perceptual objectives
Positioning with advertising requires setting "Perceptual Objectives"

Perceived

Performance

20

10

Si

9

5

Perceived

Economy

0

5

11

-10

-20

-20

-10

0

10

20

slide8
Your success will greatly depend on your ability to manage the development and positioning of brands

Strategy

Positioning

R&D

r d success demands long term thinking and the ability to identify evolving opportunities
R&D success demands long-term thinking and the ability to identify evolving opportunities...

Hi

Si

New target

segments

Changing segment needs

Pressure onmargins

Pr

Ot

Competitor entry

and also requires working effectively with your r d department
Number

of Projects

Similarityof Projects

. . . and also requires working effectively with your R&D department

R&D = Profit Center

Experience

  • Provide sufficient budgets
  • Set realistic expectedunit costs
when doing r d keep in mind both positioning and economic factors
SONITE

Weight

Design

Volume

Max.

Freq.

Power

  • Market needs
  • Competitive brands
  • Feasible range
  • Project budget
When doing R&D, keep in mind both positioning and economic factors

C

Base Cost

(at 100K units of production)

Most important physicalcharacteristics

  • Target margin
  • Cost in other projects
  • Project budget
  • Impact of physical characteristics

Economic Factors

Positioning Factors

impact of physical characteristics on base cost
Base

cost

TheHIGHERthe

requested

characteristic

the LOWERthe

base cost

  • Volume
  • Weight
  • Diameter

Requested characteristic

Impact of physical characteristics on base cost

Base

cost

The HIGHER the

requested

characteristic

the HIGHER the

base cost

  • Design
  • Max. Frequency
  • Power
  • Autonomy

Requested characteristic

the budget required to complete an r d project is a function of several factors
to find out more:

accuracy

feasibilitystudy

vs.

speed

on-linequery

The budget required to complete an R&D project is a function of several factors

R&Dexperience

R&Dbudget requiredfor completion

Physicalcharacteristics

Requestedbasecost

there are two possible outcomes of any r d project
Project submitted to R&D:

Minimum base cost is calculated

at an early stage in the project.

Minimum base cost = $110

weight

design

volume

max.

freq.

power

17

6

85

35

70

Case A1

Case A2

Case B1

Case B2

Budget allocated by team for this period:

Budget allocated by team for this period:

$ 1,000

$ 300

$ 1,000

$ 300

Project is available at base cost = 110

Project unsuccessful

Project is available at base cost = 130

Project unsuccessful

There are two possible outcomes of any R&D project

Case B

Requested Base Cost = $130

Budget required for completion = $ 550

(at base cost = $ 130)

Case A

Requested Base Cost = $80

(requested base cost is below minimum, but the R&D will try to develop the project at the minimum base cost)

Budget required for completion = $ 800

(at base cost = $ 110)

Budget required for completion is also calculated at an early stage in the project

a completed r d project may be used to modify existing brands and or introduce new brands
A completed R&D project may be used to modify existing brands and/or introduce new brands

Performance

Bu

Si

Pr

Hi

Economy

New Brand

"SAMY"

New SAMA

more performance

Ot

Old SAMA

bringing successful r d projects onto the market may result in obsolete inventory
Bringing successful R&D projects onto the market may result in obsolete inventory

I'll buy any product

at a given % of its

transfer cost

Brand

modification

(name kept)

Inventory

disposal

SAMA

Obsolete inventory

SAMA

SAMA

SAMA

SAMA

SAMA

Brand

withdrawal

TRADING COMPANY

cost reduction projects should be weighed against experience curve effects
Cost reduction projects should be weighed against experience curve effects

Transfer cost

A

Base cost A

Current product

(initial experience curve)

Base cost B

B

A1

Current

transfer cost A1

Cost reduced product

(new experience curve)

225 KU

100 KU

Cumulative production

the mds study measures brand perception along three composite dimensions
The MDS study measures brand perception along three composite dimensions...

SONITE market

Influence of brand characteristics on MDS dimensions in P0

Perceived Economy increases

if Price decreases

Perceived Economy increases if Max. Freq. increases

Product

charac.

Composite

dimensions

which are more or less influenced by the various brand attributes
... which are more or less influenced by the various brand attributes

VODITE market

Influence of brand characteristics on MDS dimensions in P0

Perceived Efficacy

increases if Max. Freq. increases

Perceived Flexibility increases

if Weight decreases

Product

charac.

Composite

dimensions

new decisions introduced in period 2
New decisions introduced in Period 2:
  • Brand portfolio
  • Perceptual objectives (on semantic scales or MDS)
  • R&D
you can now extend your portfolio by introducing new brands
You can now extend your portfolio by introducing new brands ...

Click here to display the completed R&D projects and their features

you can also modify existing brands
... you can also modify existing brands

Keep the same name

Select a new R&D project

slide23
To convey the right message to the market, you can set perceptual objectives for each of your products

1

Do you want to communicate on the semantic scales or on the MDS composite dimensions?

2

On which dimensionsdo you want to communicate?

3

Input the coordinates of the point that you want to reach on the map

slide24
You can initiate up to five R&D projects per period and per product type (five Sonite and five Vodite)

Click here to obtain an estimate of the minimum base cost and budget required for completion of this project

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