Markstrat Final Report PDF

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Markstrat Final Report Industry Bravo Team S

Submission Date: 27 November 2018

Introduction About the company Period Decisions Periods 1 - 3 Decisions on period 4 Decisions on period 5 Decisions on period 6 Decisions on period 7 Decisions on period 8 Decisions on Period 9 Decisions of Period 10

2 2 3 3 3 3 4 4 5 6 7

Recommendations:

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Conclusion:

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Appendixes:

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TO FROM

: Vice-President of Sales and Marketing : Leadership Team of Markstrat

DATE : 27th November, 2018 SUBJECT : Report and analysis on Markstrat decisions to help new leadership team

Introduction We are the marketers of Markstat company managing its market and sales operations. In the following report we will be discussing about our strategies which we undertook in each period and what were the results of each period and how they impacted our strategies for the coming year. Also we will give some recommendations to the new leadership team so that they learn about the market and learn from our mistakes and take some idea on how to make their company most successful in the industry.

About the company Markstrat is industrial market place in which we have to compete with our competitors for the highest share price index (SPI). The environment in terms of inflation is 2% which is pretty stable with no influential factors involved. We are given a budget according to which we have to take all the decisions and allocate our resources. We have to research, market, strategize and develop our own products. There are majorly two industries that we compete in: 1. Squazol 2. Trigol According to information given by our supervisors, the Squazol market has great potential in the next five years and we start with having two Squazols in their product portfolio. Squazol products have about fifty attributes but the most important characteristics are: Power, Maximum Pressure, Servicing, MTBF(Mean Time Between Failures)and Volume. To decide the products specifics, it is critical to know the base cost. The Squazol has a base cost of $30. This helped teams to set the price, labour and allotment of budget. Squazols cater to the needs of : Public Utilities, Construction industry, Oil industry, Chemical industry and Manufacturing industry. The Trigol is a new product and is expected to perform well in the robotics, sensing and machine vision systems. This product is entirely different than the Sqauzol in terms of expectation and target market. Extensive research and development goes into launching the first Trigol. Similar to Squazols, Trigols also have characteristics like: Accuracy, Energy efficiency, Robustness to hostile environment, maximum frequency and weight (Kgs).The Trigols target completely different customers : Space agencies, Aircraft industries and Automotive industries. !2

The channel to get the products to the market for both the products is the same. The products can be sold through Direct distribution, Technical specialists and General Line distributors. Each round had challenges for teams and crucial decisions related to price, research, distribution and production had to be made. This document entails the various decisions made in each round by our team Bravo S. This would be a great asset to you in terms of analyzing the performance and performing better.

Period Decisions: Periods 1-3 The first two periods seemed basic in terms of entering and launching the products. We were getting acquainted with the market environment. We had two Squazols in the beginning and we just adjusted the commercial team and bought market research studies to get an insight of how the market would change with competitor decisions. We were performing really well with respect to our competitors. The industry in the period 3 became dynamic and drastic changes were observed, our team started to feel the pressure but we still weren’t sure what kind of decisions would work. We tumbled after the second period. Most of the companies had launched products in the other industry “Trigol” but we hadn’t yet started the research project to back up the launch. Instead we launched another Squazol to keep our company in the game. Our resource allocation wasn’t according to the needs of the product and we lost a lot of sales due to it. We lost a lot of sales by under producing in one product and paid for extra stock for the other product. Moving forward, the competition became intense and each round saw a substantial change in the share prices and hence ranks.

Decisions on period 4 Beginning of Period: We were given a budget of thousand dollars in period 4 and we allocated $11243 towards Squazols $100 towards Trigols. We allocate our resources in terms of functions mostly towards commercial team which was $9135. In this periods we had 3 products in the market SAME, SAVE and SALT with customer price of $550, $490, $300 respectively. Period Overview: Period 4 was a major setback for our company as our revenues dropped significantly from period 3. Not only we suffered in terms of revenues but also earnings before taxes, SPI, Market share. Our only product which was earning revenues for us was SAVE whereas SAME was contributing only 1%. So now we know which product we had to focus on in the upcoming periods.

Decisions on period 5 Beginning of Period: We started focusing on Trigol market from ;period 5 because we believed that Trigol can take us back to our market position. We got rid of our least performing product ”SAME” and focused on two products SAVE and SALT. Our distribution strategy and !3

resource allocation strategy was almost similar as we did not make any major changes in those decisions. Period Overview: This strategy was also not successful for us as our revenues, earnings before taxes, SPI, market share had dropped even more. SAVE was still performing, but our products were not performing well in comparison to other products in the industry as SAVE and SALT had 9.3% of the of the unit share.

Decisions on period 6 Beginning of Period: We did not make any drastic changes in period 6 because we thought our strategy would give us results in the long-term. In this period we had a new product SITE, it was a product of Trigol market. Period Overview: In period 6 our strategy worked and our revenues, SPI, earnings before taxes and market share started to increase. SAVE and SALT had also started to perform better than the previous two periods. The unit share in the industry had also increased from 9.3% to 11.5% which was a good sign.

Decisions on period 7 Beginning of Period: This period was the first period in which we had all 3 of our products maintained. Our two Squazols; SALT and SAVE and our one Trigol, SITE. Which was successfully launched in period 6 from the R&D project we had invested in period 5, became available. Our initial goals were to successfully price each product at its ideal point to hopefully land the largest market share in the automotive segment in our Trigol department and the largest share in the construction segment for both our Squazols. We set our segmentation strategy for the Trigol to 50% on the automotive industry. We did spread ourselves thin with our SAVE segmentation as we allocated 10+% on each segment, rather than targeting a specific segment to dominate. For our Squazol, SALT we had produced 88,000 units and sold 95,000 units. We began with 21,000 left over from the previous period and were left with 14,000 units in our ending inventory. No sales were lost, but we did have to incur the inventory holding penalty of $100,000. We had overproduced for SALT in period 7. For our Squazol, SAVE we had produced 120,000 units as we had no holding inventory and this product was doing very well for us. We misjudged the needed production levels as we sold 126,000 and lost some valuable sales at the end of this period. Our Trigol, SITE sold 47,000 units in period 7. We had produced 32,000 but we already had a beginning inventory of 30,000 units and were left with 15,000 units at the end of the period. Our price was set at $2,500, for our Trigol, the reason we set it at that was due to our two competitors in the market; RIPPER and MICRO had their prices set at $3000 and $900 respectively. We believed as the Trigol market was still developing we could undercut the

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RIPPER, without losing too much of a profit, and settle in the middle between both competitor price points, as $900 seemed relatively low for such a young Trigol market. Period Overview: We were successful in this as our market share increased from 8% to 18% in the Trigol Market. Our market share had also slightly increased in the Squazol market from 12% to 14%. Overall, we saw large increases in SPI, Total Market share, and Revenues. Our decisions in this period, had propelled us to from 4th position in period 6 to 3rd in period 7. We attribute this to our ability to price our Trigol correctly, and identifying key segments, such as the automotive industry to market towards. We could have better assessed our production needs, as inventory holding costs affected our budget for the upcoming period. Assessing the semantic scales report, a bit more closely would have allowed us to notice the pricing needs for the Squazol segments. In conclusion, this period was our best to date, as our Share price index improved from 1,062 to 1,693 reaching our highest SPI to date. Our revenue increased from $87 million to $169 million and our total market share jumped from 11% to 19%.

Decisions on period 8 Beginning of Period: Coming off a very strong period, we knew this was our chance to make up some ground on our top two competitors; Raptors and MAPLES. They contained the largest market share in both Squazol and Trigol markets, though our percentage in the Trigol market was very competitive. The Trigol market was split between us three. Raptors contained 48% of the market well MAPLES and our Trigol SITE contained 27% and 25% respectively. However, they did have an extensive lead in SPI, revenue and cumulative net contribution. Our Trigol, SITE was competitive in the top selling products in customer sales as the RIPPER and MICRO were at $195 million and $178 million compared to our $170 million. Our best products were in stride of our competitors but where we lacked in volume of products they strived. Having a small set of products, left us short-handed. In this period, we had some vital decisions to be made. As a company, we were succeeding in the Trigol market but our Squazols were lacking. Our production was a large misstep in this period. We under produced on all 3 of our products. Our units sold for SALT were at 115,000, for SAVE were 134,000 units, and for our Trigol, SITE we sold 81,000 units. Under producing on items, was due to a lack of foresight into markets getting larger and as a company we did not produce progressively. Lost sales affect the bottom line and give our competitors the ability to take some of our market share. That’s what they did as our Trigol market share dropped from 28% to 25%. This could have also been due to a lack of an appropriate price change. We did drop our price from $2,500 to $2,100 which should have signaled us to produce more than we ended up producing as a drop in price usually includes an increase in units sold. We were successful in our average brand awareness strategy as both SALT and SAVE were at 60%, thanks to our commercial team, which tied us for second in given charts. So the public was aware of our products, but our purchase intentions were minimal we

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placed 7th and 9th in average purchase intentions. Our competitors, were targeting segments that we or other companies were not pursuing. MAPLES had 69% of the chemicals segment and 40% of the oil segment for Squazols. Our inability to be consumers first choice or target the right segments, affected our ability to attack their market share and take some of it for ourselves. There were clear areas that we could have improved as a company and we did not take them aggressively enough when it mattered. Period Overview: Though, we were successful in increasing our SPI from 1,693 to 1,933, our Revenue from $169 million to $211 million, our Total Market shares from 19% to 20%, we missed out on some key opportunities. As a company, we could have done better in targeting specific segments and launching more products to compete with the industry leaders.

Decisions on Period 9 Beginning of Period: Period 9 is the period where we saw our inability to take advantage of areas that may have propelled us further in this industry, come to fruition. We dropped in almost all measures of company and product success. Our hold of the Trigol market was weakening and our Squazol market was dwindling fast. After a period of increases across the board we came across several challenges. As a company we saw a decreases in SPI, revenue, and total market share. This should have set off an alarm that something was an issue. Our pricing had been stagnant for our Squazol, SAVE and our Trigol, SITE. The competitive Trigol market was being flushed out, and as this happened more competitors joined the Trigol market, prices should have been adjusted. Also, looking into the semantics scale report to understand the ideal values for the segments we were targeting could have helped further our market share. Alas, neither were done sufficiently and we fell flat with our pricing. In relation, our production took a hit as well. Our products were not selling as expected which caused us to hold inventory fees for our SALT and SITE products. We had overproduced for both. We did however surpass the RIPPER in top selling products and were now only second to MICRO. In this position, launching a new Trigol may have helped our ability to enter another target segment, and dropping our underproductive Squazol, SALT could have helped our company. We should have read the market better and further pushed to enter segments and been more aggressive in taking market share from competitors. Period Overview: We had a chance to use this period to adjust our pricing and production, while looking at the market around us and anticipating our competitors moves. We did not do this. As a company, we made relatively safe decisions this period, that only inhibited our chances of catching the industry leaders and gaining market share. This caused our SPI to decrease from 1,933 to 1,732, our Revenue to decrease from$211 million to $196 million, and our Total Market share to decrease from 20% to 18%. Going into period 10 we were at a crossroads, either we were going to be successful or fall further back from the industry frontrunner !6

Decisions of Period 10 Entering the period where we were at the borderline had its own challenges and responsibilities. Either we could get successful or we were going to fall back in the industry charts. Keeping the past decisions in mind we made a change in the pricing of our products and increased their production with a hope of getting back on the track. After facing a downfall in our period 9 we were expecting a growth in our Share price index by the end of the round 10 which was our last round of the simulation game. Relatively we took decisions on being on the safer side expecting to catch up with the other companies in the industry. The results of the period were not as what were expected by our team. Our share price index fell down from 1,732.488 to 1,477.392, our revenues fell by 196.065 to 150.533 and our total market share decreased from 18% to 13%. Therefore we should have utilized this period in a more better way by studying about the market more and by taking effective decisions rather than being on the safer side. To sum up our company Bravo S finished on 4th position in the industry with a share price index of 1,477.392. Therefore all of our products ended up being in the question marks category in the Growth share matrix.

Recommendations: As our management of the company is coming to an end, we have valuable information to share with the new leadership team set to take over. As a company, we saw the ups and downs of business throughout our time managing. We recommend learning from our mistakes. Firstly, resting on your laurels will only set you back as a company. When we did succeed in the Trigol market, we were not aggressive in taking more market share. We did not adapt to the changing environment around us. Adapting to your competitor’s price adjustments and using market research studies to understand their target segments is a must if you want to be an industry leader. Another recommendation would be, do not be afraid to drop underperforming products! Underperforming products inhibit your ability to gain market share, and affect you SPI incredibly. Launching multiple products especially in the Trigol market was an issue for us. We had one of the top Trigols in the market, but were being suffocated by companies with more volume. We had great brand awareness, as 2 of our 3 products were in the top 3 in awareness, yet were much lower in purchase intentions. This was due to inconsistency in understanding what our target segments wanted. They were aware of our products but did not have any intention to purchase as they did not fit their buying criteria. Overall, as a management team we learned a lot this term in how to market toward segments, and how important it us to understand your consumer. We hope you can learn from our successes and mistakes and have a successful term managing the company.

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Conclusion: As the main objective of each company in the industry was to maximize and stabilize their share price indexes .Our company managed to have a growth in the share price index in the initial periods and in the middle periods it faced a downfall and once the downfall began it became very busy to get up back on the track. Though our SPI kept on fluctuating after the third period and we ended up with a SPI of 1,477.392 by the end of our Markstrat simulations.

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