M-450 final paper PDF

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Final Report MARK 1120...

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The Avengers

Practice Marketing Simulation Report

For: Kim Saxton

By: Ryan Cutter, Seth Reinhard, Ashley Knartzer, Jasneet Kaur

5/6/15

Introduction Our team played simulation game that is a real world simulation that shows the user how to create a product, price the product, place the product and promote the product. Our team was made up of Senior Kelley School of Business students Ryan Cutter, Seth Reinhard, Ashley Knartzer and Jasneet Kaur. We made our big hairy audacious goal to not only win our industry but also try to accumulate as many “extra points” or M-450 bucks as possible. Given that we were in a niche industry and we did not foresee having many teams to compete against early in the game we wanted to start out by gaining early profits and market share. Knowing that the urban commuters segment grew at a rate of 3% per round we wanted to start out with a profit in the early rounds and try to grow our profit by a minimum of 10% each round. This number was calculated from the 3% steady growth plus a 7% added income from learning more about our industry and our target customers. We opted to name our team after the hit Marvel movie, The Avengers. This was a fun play on the name not only because we all loved the superhero movie but also the fact that we wanted to emphasize teamwork and togetherness.

Customer segmentation Our initial target segment was commuters. Our reasoning for choosing commuters is because we thought it would be a niche market and one that would not be selected by another team. By not fighting over a segment early we could avoid price wars while also dominating sales to this segment. We looked through the segments to choose from and we knew that a couple teams would go to children, since it is the largest segment and others would go for university students, since it is the most relatable.

Means End Chain

High capacity, comfortable pack, with features designed towards commuters

Makes travel to work more efficient and comfortable

Less stress during the work week

Consumer happier during work week

Consumer is more productive

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Jeremy is a 27 year-old account manager for a large firm in downtown Chicago. He has a thirtyfive minute commute by train to work every single day. He packs his MacBook, IPad, and professional folder for work uses everyday as well as his lunch and workout clothes for after work. Usually he does work on his laptop on the way to the office, so having an easily accessible sleeve would be a major bonus. He needs a backpack that can carry everything he needs without putting strain on his back making him uncomfortable throughout the day. Jeremy is single and has a comfortable income so paying extra to get exactly what he wants isn’t a big deal to him.

The urban commuters persona wants mostly comfort. However, they would love to have waterproofing and capacity. In addition, special features that the urban commuters would like to have is:    

Laptop Sleeve Audio Bundle Designer Tag Color needs to be black

These features along with the preferences to the comfort and capacity make the persona of the urban commuter. Although it would make the backpack perfect we elected to avoid the

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designer tag and audio bundle. The audio bundle’s cost of $15 as well as the designer tag’s added cost of $20 we felt would cut far too much into margins. We stuck with urban commuters. The reason for this is because we were the only ones in the industry that was targeting them and had the backpack that they wanted, as our satisfaction score was 92 the majority of the game. Our secondary target was Luxury. The reason why we targeted luxury was because they wanted their bag to be comfortable and have enough capacity just like urban commuters. Early on, we struggled to gain market share with any industry.

Means End Chain Expensive Designer Bag with all the bells whistles and style.

Makes user able to show their status and brag to friends.

Consumers friends are envious of bag

Consumer is pleased and feels good about themselves

Jill Is a 31 year old stay at home mother of one. Her husband is an investment banker in New York who does very well for his family. Jill loves to spend her afternoon’s spending money on the latest trends. She wants the nicest, most expensive bag to show off to her friends that also from the most labels. She demands a large, comfortable pack that not only is practical but also looks great.

Luxury persona wants mostly comfort and capacity. However they would also like durability in their bag. In addition, the special features that they would like to have is:   

Designer Tag Audio Bundle Expensive 4



Recognizable status

These features align perfectly with urban commuters, which is the reason why they were our second target market.

Product Design

Our first debate was if we should opt to go with the rounded top pack or square pack. The rounded top pack gave us a +4 attribute score in both capacity and comfort while costing $3. The square backpack design gave a +6 score to capacity while raising +3 to comfort. Capacity and comfort were both crucial to the segment so deciding between the two was difficult. After researching the segment we realized that comfort had a higher importance when compared to capacity, this combined with the added $7 incurred cost led us to decide to go with the rounded top design. Going with the wide padded strap design was fairly straightforward for our plan as it had the highest rating of comfort and durability we could go with (the wide chest straps and advanced support straps were both unavailable with our design). At the start our features were the laptop sleeve and water bottle, for $12 total dollars. We felt that these features would help sell our pack without us having to add more expensive features. Later on in the game we came to the realization that the water bottle was not helping to add sales and was only cutting into our margins. We also came to realize urban commuters did indeed like the audio bundle and designer tag features. We decided we needed to add one of the two as they both boosted the quality of our product a significant amount. Adding both would incur $35 to our bag costs and cut deeply into our margins. We went back and forth with what to pick. The audio bundle was $5 cheaper then the designer tag, but the designer tag appealed more to the luxury trend followers segment. Due to the luxury trend followers segment’s continued growth at a 7% (the

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highest rate of any target segment by 2%). The new additions had a marginal added effect as they did slightly boost our sales and market share, but not by how much we really expected. Picking a material was also very straightforward as the advanced material and eco-friendly materials did not really appeal to our target market while the luxury would have added too much in costs. These variables made it easy for us to go with the cheap synthetic material for our backpack. Finally the generic black backpack gave our consumers the color they wanted in the backpack.

Pricing the product To start we wanted to have an estimated margin of around 30%. This percentage we felt would allow us to operate within our means but price within our target markets ideal price range. We ran into the issue that no matter where or how heavily we priced the product (we were almost nearing double our target market’s average price) we could still not sell more to our target segment. Because of this we focused more on a high net profit instead of sales and share. Still, getting a high net profit proved difficult as even though our margins raised to over 50% our sales were so low that we continued to struggle. We made sure that the urban commuters never felt uncomfortable, always referring to our prices to “high, but still in my budget”. This could likely be contributed to being the only company attacking the urban commuter segment. Westerndorp Four Price Points Too Expensive->$100 So Inexpensive...