Marketing Principles Report for Simulation PDF

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vélo-city Market Report 2020 ((tiny

eye.bikelogos,2020)

APPENDIX Executive summary..................................................................................................................................................3 Quarter 1..................................................................................................................................................................4

Quarter 2..................................................................................................................................................................4 Quarter 3..................................................................................................................................................................5 Quarter 4..................................................................................................................................................................6 Quarter 5&6.............................................................................................................................................................7 Conclusion................................................................................................................................................................8 Reference List...........................................................................................................................................................9

EXECUTIVE SUM MARY

Over the last century, the bicycle industry has been confronted with more innovation than most other industries. It was not only the scale of these demand stimulations that threatened the bicycle industry, but also the degree to which the industry needed to evolve in order to accommodate them, something that could never have been anticipated in the early twentieth century. To a large degree, it is through sporting events that bicycles have become popular. Vélo-city is bicycle company which takes a different approach when it comes to bicycles, prioritising quality over quantity with only the finest handmade material used, specialising in both recreational and speed bicycles. Before vélo-city becomes public, they agreed to conduct a marketing simulation of products and offerings that will be displayed in their physical store for testing, improving and analysing data to change certain product features or reconsider the overall approach of the company. (tinyeye. bikes,2020)

QUARTER 1

The first quarter of the simulation was an introduction including a detailed overview of the basics of the "virtual business world" and the steps to be taken before certain actions are taken, as well as the long-term effect on future performance and progression of the organisation. The first decision to make was to prioritise which product should first be launched. Vélo-city decided to concentrate on recreation. Therefore, as Amsterdam showed a strong market demand for this type of bicycle, it was decided to open the first store there.

(Marketplace® Business Simulations, 2020)

12-Month Potential Demand for all categories 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

New York City

Rio de Janeiro Recreation

Amsterdam

Mountain

Bangalore

Speed

QUARTER 2 This was the major phase of the virtual simulation. Since it was the first time vélo-city will have cemented itself as a brand. To begin with, it consisted of carefully selecting specific parts for the bicycle design while keeping in mind the cost of production in order to maximize profits. The first cycle concept was dubbed "Hybrid," an amalgamation between rough and smooth terrain such as roads and bush trails at an inexpensive price. Next came the pricing of the product. In an attempt to decipher an introductory price vélo-city focused on "price willing to pay" data that provided an insight into the benchmark that consumers would pay. "Hybrid" was marketed at a starting price of $750 with a $25 cashback.

QUARTER 3

This simulation phase was the most insightful, as it was the first time a "performance report" was introduced that provided sales, revenue, market share and analysis. Our "Hybrid" cycling line made a profit but struggled to hit the overall recreational cycling market as it only accounted for 32 percent of the market and 25 percent across all categories.

(Marketplace® Business Simulations, 2020)

It was time to consider creating a new brand to diversify into another segment to enhance income. A competitive pricing strategy was used in quarter 1 to deter competition, as the price was far below market value and other companies (as seen in the diagram below), but sadly this technique did not achieve the intended outcome. Nonetheless, by looking at the market share, Strada bikes made up just 9%, but still capitalised on the "speed" category. Strada had the highest overall price for their product plus no competition that would allow them to maximise profits, consumers had only one choice on the market. It was decided to produce a new series of bicycle known as "Speedy" to invoke competition in the speed category market while applying a communication mix, promoting a new product through various types of media such as advertisement campaigns on the media , newspapers, radio, internet marketing and personal sales with a second store opening in Bangalore.

Pricing and rebate for bicycle categories Strada Bikes (Speed)

Winged Wheels (Recreational) Wheels and Deals (Mountain)

DreamBikes (Mountain)

vélo-city (Recreational) 0

200

400 Price

QUARTER 4

600 Rebate

800

1,000

1,200

1,400

1,600

Throughout this time, there was a significant impact on the market. The earnings were 4 times higher than in the last quarter, due to the introduction of "speedy" on the market. Yet not everything was good, vélo-city lost a large amount of stake in the recreation field due to the growing pressure from other companies. As far as speed vélo-city was soaring, it was able to capture most of the sales taking a considerable market share from Strada bikes.

Velo-city concentrated primarily on seeking to take back the recreation market as a primary priority. The potential for profit was even higher for recreation bikes, as the cost of manufacturing was smaller than that of speed bikes. Hence decided to launch a new recreational product “Hybrid Cheap” to combat competition and take a greater stake in the next quarter. (Marketplace® Business Simulations, 2020)

Cost of production for all categories 593 416

590

382

100 units

414

587

380

250 units

413

542 462 378

500 units

Hybridexpensive (Recreational) Hybrid Cheap (Recreational)

370

336

1000 units

311

280

5000 units

Speedy (Speed)

With a lot to profit, it was decided to open another store that could offset profits for the 'speedy' picking New York, since the stores were already fully functioning in Bangalore and Amsterdam it had the best market potential for recreational and speed bicycles.

QUARTER 5&6 The profits for both Quarter give were the greatest with sales skyrocketing due to the two recreational models sold as well as the “speedy” taking full advantage of consumers in New York.

(Marketplace® Business Simulations, 2020)

Unfortunately, measures taken from the previous quarter impacted the business greatly due to prioritising the recreational market instead of the speed as the profits began to dip in quarter 6. The competition had already cemented itself and trying to fight by making another alternative was detrimental to vélo-city’s profits.

Sales - Total Brand

Units Sold

Sales Revenue

Rebates

Cost of Goods Sold

Gross Margin

Hybrid expensive (Recreational)

102

147,900

0

40,307

107,593

Speedy (Speed)

510

688,500

0

288,570

399,930

Hybrid Cheap (Recreational)

105

136,500

260

37,834

98,406

Total

717

972,900

260

366,711

605,929

(Marketplace® Business Simulations, 2020)

Due to the data gathered it was decided to launch another alternative speed bike and recreational bike that was more affordable then the predecessor so consumers could have more options amongst all 3 stores.

CONCLUSION Overall, Total Sales Revenue for all quarters the 1,800,000 Vélocity ex- 1,600,000 1,400,000 peri1,200,000 ence 1,000,000 gained 800,000 from 600,000 this en400,000 counter 200,000 has 0 been Sales Revenue very inHybridexpensive SpeedyExpensive Hybrid Cheap SpeedyCheap Cheapest teresting, and there is certainly room for improvement. The first two quarters were handled correctly, but the prioritization of the category should have focused on the speed category. It was one of the greatest failures, and it was clear from the third quarter that speed could make a substantial profit, but the emphasis was moved to the full focus on recreation, which had a substantial effect on the course of the profits for the company.

(Marketplace® Business Simulations, 2020)

REFERENCE LIST



Brandwatch. (n.d.). Marketing Theories: Relevant or Ridiculous? [online] Available at: https://www.brandwatch.com/blog/marketing-theories-relevant-or-ridiculous/ [Accessed 12 Jun. 2020]



Academy, P., 2020. Marketing Theories Explained | Professional Academy. [online] Professionalacademy.com. Available at: [Accessed 10 June 2020].



Perch, D. and Perch, D., 2020. 5 Marketing Theory Examples. [online] The Social Grabber. Available at: [Accessed 7 June 2020].



VAR Sales Management Blog: News, Tips & Many More By VARStreet. 2020. Competitive Pricing Strategy - Does It Work? | Varstreet Inc. [online] Available at: [Accessed 13 June 2020].



Game.ilsworld.com. 2020. Sign-Up Or Login To Marketplace® Business Simulations. [online] Available at: [Accessed 5 June 2020]. (GRAPHS AND DATA)



2020. [online] Available at: [Accessed 7 June 2020]. (cover page art)...