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Quantum 4.0

STUDENT’S MANUAL  

Copyright © All rights reserved: Mercedes Esteban Bravo, Nora Lado Cousté and Jose Manuel Vidal Sanz.

Table of Contents 1 INTRODUCTION__________________________________________ 3 2 BEFORE STARTING _______________________________________ 5 2.1. QUANTUM REQUIREMENTS _____________________________ 5 2.2. INSTALLING QUANTUM STUDENT ________________________ 5 3 REFERENCE GUIDE _______________________________________ 6 4 THE DEVELOPMENT OF THE SIMULATION ______________________ 8 5 INTRODUCTION TO THE UNIVERSE OF QUANTUM _______________ 10 5.1. THE SUPPLY SYDE __________________________________ 10 A) Quantum products and brands _____________________________ 10 B) Costs ___________________________________________________ 12 C) Distribution Channels _____________________________________ 15 5.2. THE DEMAND SYDE __________________________________ 17 A) Market Segments ________________________________________ 17 B) The perception of the product _____________________________ 20 C) New adopter purchases ___________________________________ 21 D) Replacement purchases ___________________________________ 22 5.3. MARKETING RESEARCH IN QUANTUM ____________________ 25 A) Secondary Information (Internal and External) ________________ 25    B) Primary Information: market studies and intelligence __________ 27 6 STRATEGIC MANAGEMENT DECISIONS IN QUANTUM _____________ 35 6.1. POSITIONING ______________________________________ 35 A) Brand Positioning in the Quantum Market ____________________ 36 B) Setting positioning Goals: _________________________________ 37 D) Implementing a brand positioning goal ______________________ 38  !" "#$ %%"#$ 6.2. BRAND MANAGEMENT AND INNOVATION _________________ 39 A) R&D Projects ____________________________________________ 39 &'()*+,-. / - B) Brand Management _______________________________________ 42 C) Exportation and offshoring ________________________________ 42 7 OPERATIONAL MARKETING DECISIONS IN QUANTUM ____________ 43 7.1. MARKETING MIX ____________________________________ 43 A) Production ______________________________________________ 43 B) Pricing _________________________________________________ 44 C) Promotion ______________________________________________ 44 0(-

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0+-1 0#2+-1 D) Distribution Channels and Sales Force _______________________ 46 7.2. OTHER DECISIONS___________________________________ 46 A) Contracting Market Studies ________________________________ 47 B) Marketing Budget ________________________________________ 47 8 COMPANY PERFORMANCE EVALUATION IN QUANTUM ___________ 49 9 BRIEF SUMMARY OF INSTRUCTIONS _________________________ 51  ____________________________________________ 54

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Introduction

1 Introduction You will participate in a simulation game on the marketing strategies of a large company which operates in a highly competitive and dynamic market. Suppose you and the other members of your team have just been hired to lead the marketing department of a large company operating in a market where it has no previous experience. Quantum is a computer program to teach and to learn marketing strategies and business administration, which is based on the most recent theoretical contributions to strategic marketing and the marketing of relations, also incorporating an international approach. This simulation covers both marketing decisions to consumers (B2C) and industrial marketing (B2B). Quantum allows an interactive game between the teams to simulate the effect of marketing decisions taken in a market where up to 26 companies can compete in a single simulation. Each company is located in a country (there are between one and five countries). When there are several countries companies can export their products, and even offshore their production. The international character is a distinctive aspect of this simulation. You and your colleagues will lead the marketing department of a specific company, making successive decisions in an international and competitive marketing environment, based on the information available in each context. Each management team must apply both their theoretical knowledge and their professional experience, and must learn to distribute the marketing department's budget among the possible investments associated with alternative marketing policies. Each decision represents a year of the Quantum competition. During this period, participants will be responsible for formulating and developing marketing strategies for their businesses and for launching new products of sharpshooting technology. In particular, the members of each team will have to: Select the most attractive market segments and position their brands in a highly competitive market. Cooperate with the company’s R & D department to design and develop new products. Prepare the launching of new products, and improve, maintain or remove the existing ones. Cooperate with the department of production in planning the production.

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Introduction

Make decisions regarding pricing policies, advertising, promotion, customer loyalty, distribution and sales force, and incentives for each brand of your company. Order the purchase of market studies that will provide the necessary information to make all the decisions outlined above. The keys to the student’s success and the basic aspects that he/she should consider are: 1. Always take a marketing approach: understand and respond to the customer’s needs 2. Strategic marketing concepts are essential: segmentation and brand positioning. Basic relationship marketing concepts are also very important: customer satisfaction and customer loyalty programs 3. Developing market analysis skills by means of a market information system, which includes both primary (market research studies) and secondary information 4. Adapting the marketing strategies to the specificities of a B2C or B2B market, and to an international surrounding. 5. Adopting a medium and long term strategic thinking. As you will be able to see, teaching a course in marketing or strategic direction based on Quantum is rewarding, and highly effective.

The Quantum software has two components: the program "Quantum Student", used by the students participating in the game, and the program "Quantum Teacher" used by the instructors belonging to an institution with valid license to develop the market simulation. Both programs are autonomous, but mutually compatible. The simulation was designed to be used by universities, business schools and specialized educational institutions, who hold a current license to use the Quantum software.

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Before Starting

2 Before Starting If you wish to install the Quantum software, read carefully the instructions provided in this section.

2.1. QUANTUM REQUIREMENTS The Quantum software is designed for PC or Laptop, current versions do not support Mobiles or Tablets to work properly. Quantum can work either in Microsoft Windows operation systems (it works in most versions, at least all Windows posterior to XP), or Mac OS. The software is programmed in JAVA, so you will need to have it installed (if not, you can download it from http://www.java.com). WARNING: If you have an old version of JAVA installed in your computer, which has been updated with several patches, often the performance of JAVA is not as good as when you have directly installed the last version. Some users occasionally have experience problems visualizing some screens of Quantum. The problem is solved if you uninstall the old versions of JAVA from your computer and then install the newest version.

2.2. INSTALLING QUANTUM STUDENT Installing Quantum is easy. If you work on Windows, you must install the program Ifyou work on a Mac, you must install the program . Once downloaded the installation file, run it and choose the default installation options. The installation takes a few minutes while the files are uncompressed. Once you have completed the installation of "Quantum Student", the installation program will create a new group of programs in the manager of programs, and icons on the desktop. To open "Quantum Student", click on the icon Quantum (Student) on the desktop or the program manager. The program may open in Spanish or in English. The language changes (after saving the files you do not want to lose) after closing and reopening the program. In general, users perceive the Mac version as slightly slower than the Windows version when they do not have a powerful PC or Laptop, but the difference is not significant. You should remember that this program can only open, edit and save company files that were generated with the instructor (using the program Quantum Teacher). Note that the instructor’s program creates company files that are protected by passwords, and, in consequence, it is necessary that the instructor give the student the password for his/her company in order to open its files with Quantum Student. Welcome to the Quantum universe. You will find this experience both, challenging and fascinating. Overcoming the difficulties involved in this competition you will growth as a marketing leader. Thank you!

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Reference guide

3 Reference Guide You can access the main Quantum functions through expandable menus that appear associated with the menu bar at the top of the main window of Quantum. The main menu bar contains the menus: "File", "Analysis", "Decisions," and in the upper right corner, "Help." By selecting a specific element, a window with the required contents will be opened. By selecting a specific element from the menu, a window with the required contents will be opened. Quantum displays its elements in separate windows, you can open any number of windows simultaneously (within the resource limits of your own system) to show the tables and graphs that they contain. In the upper right corner of each window, you'll see a series of buttons that control the appearance of the window. Depending on your preferences, you can resize, move, minimize, restore the size of the window or close it (cross symbol). WARNING: if you work in a window making a specific decision, and you close it using the upper corner cross symbol, the decisions will be ignored. To keep these decisions in the RAM memory, students need to save it temporarily (pressing the “save” bottom). To save these decisions permanently the whole working file must be saved in a hard disk or external memory. More specifically, we can distinguish the following elements: The expandable menu "File" in Quantum student allow you to "open decision files" generated by the instructor, “save decision files” in the hard disk or external memory (you will save an update of the file generated by the instructor, where you have included your decisions), and the “Exit” function to abandon the program. Using the open and save options you can reopen and save a Quantum decisions file multiple times before you submit your final work to the instructor. The name of the decision file cannot be modified, so that if you save an update of your decisions file in the same directory where you are working, the original file will be overwritten. This is actually convenient to avoid mistakes. WARNING: If you save intermediate versions in different directories, it is not uncommon to mistake the file when you submit the final version of your work to the instructor, so be careful. Similar errors can happen when you work in several computers, make sure you always use the last version of your working file. The expandable menu "Analysis" shows the information received by the players. It includes: "primary information" (market research specifically ordered by the marketing department), “secondary information” (gathered by others) divided into "internal information" (from internal sources), and “external information”. The secondary information is obtained by default during all periods of the game. The primary information is received only after having bought it in the previous round of decisions. Each study of primary information must be purchased specifying the desired precision

Reference guide

(high, medium or low). The accuracy of the study determines its quality (the degree of error) and, for the cost of a study increases with the accuracy. The "Decisions" menu shows the environment where the student takes strategic and operational marketing decisions. The expandable menu includes: “brand management and innovation” (where projects of investigation and development of new products, along with basic brand management operations are decided), marketing mix decisions “product”, “price”, “distribution and sales force”, “promotion”, also “market research planning” (where each company selects primary research studies to order for the next period), and “budget control and save” (where the players can verify whether their decisions meet the budgetary limits, they can ask for credits and subsidies, and they can also save their decision file here). The “Help” menu: It provides quick basic aid for the users. For more detailed information, it is recommended to consult this manual. The general appearance of the student Quantum display is shown in the following Figure:

Many tabs cannot be opened until you open your company’s file. However, some menus like the file management menu can be used. Spend a few minutes to explore the different elements, and do not worry about those who cannot open. As you continue reading this manual, you will find the handling of the program to be simpler and simpler.

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The development of the simulation

4 The Development of the Simulation In the following part the dynamics of the game is briefly described. Each student or group of students is assigned a company. The game takes place in several stages (typically between 6 and 10), but a different length can be established. A stage is equivalent to one year in the Quantum Universe. At the beginning of each round of decisions you will have primary data (market research) and secondary (internal and external) available in the option analysis. The market studies will correspond to those required in the previous period, the secondary data include internal data, results of the company, sales data, stock and performance indicators. External secondary data include economic and market conditions. The team should begin by analyzing this information and reach an agreement on the strategy that the company must follow. Once determined the marketing objectives, the next period’s decisions are taken. The game is started when the instructor provides you with the file of your company (either on CD, memory stick, email or by placing it on an intranet) and also with the password you need to open your file. This password cannot be changed once the game has started, so if your instructor uploads all files in a common intranet folder you must be careful not to lose your password or other competitors might be able to open your files.

4.1. THE FLOW OF THE GAME The flow of the game is as follows: 1. 2. 3. 4.

The professor will send you the files with your company’s data. Save the files in a folder with the name 3""". Analyse the information that is relevant for your company in each period. Think about the most appropriate marketing strategy for your company and about the objectives that you want to achieve. Discuss the proposed decisions with your group. Then you think about tactical decisions. 5. You must reach an agreement among the team members on the distribution of tasks. All team members must participate in making all the decisions, and they all must put forward proposals. Decisions for the next period must be based on a consensus among team members. 6. Save the Decisions in a folder called 3"""". If you develop your work in several days, always save the updated files in the same folder (overwriting previous files) to avoid errors. 7. Once you have finished, submit the final Decision file to the instructor. 8. The course facilitator will collect your decisions, along with those of your competitors, and input them into the 3""/  software that will generate the results file for the next decision period. These files will be sent to you by the instructor. 9. 10.You will save the new file in the folder Quantum input. 10.Analyse the results, and review your marketing objectives. Then repeat the same steps as before: Decide if you want to maintain or adjust the 8

The development of the simulation

strategy, and plan the marketing mix decisions. Continue with the same steps until the game is over. WARNING: DO NOT CHANGE THE NAME OF THE DECISION FILE THAT YOU SAVED. If you do this the instructor will not be able to identify or read the file that you give him/her. You should also try to save the file with your decisions in a different directory from the one where you saved the file given by the instructor. This will prevent overwriting, and you will be able to start again from the beginning when you want to change your previous decisions. The performance of each marketing direction team will be evaluated in relative terms. The grading function of Quantum measures each company based on the following indicators: company revenues, ROI, market share in units, market share in value. But the instructor can actually modify the grading using some other key features (for example the growth of the company’s revenue, volume and quality of the R&D projects portfolio, company debt, volumes of stock that cannot be sold, etc.). Students need to take all of these features into account when they made their decisions. Remember that the ultimate goal is to learn, but also to enjoy the experience. Being competitive does not mean to be mean. Enjoy and let others to do so, growing yourself into an inspiring leader.

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Introduction to the universe of Quantum

5 Introduction to the Universe of Quantum First of all, it should be emphasized that a Quantum simulation does not represent any specific country, market, or industrial sector. Nonetheless, it has been developed on the basis of empirical findings provided by rigorous studies, which represent the essential literature on strategic marketing. Thus, it is possible to apply in the simulation the knowledge acquired throughout work experience and theoretical marketing lessons. In this simulated market, there is a group of virtual companies that produce and release durable goods, called Quantums, based on a stateoftheart technology. All the companies market the same kind of product and operate in the same industrial sector. The simulation takes place in a specific scenario, which can differ from simulation to simulation. You will find a summary of the specific parameters that correspond to the simulation in the Scenario Screen, including the number of countries in which the simulation takes place, the number of companies competing, the size of the market, and some details on marketing costs and other constraints of the simulation.

5.1. THE SUPPLY SYDE Quantum is an advanced technological product (for example, you might conceptualize it as a 4"" " autonomously powered by atomic fusion energy contained in an internal magnetic field, consuming deuterium and tritium, and producing residual materials with relatively low doses of neutron and gamma radiation). They are equipment goods with a limited lifetime, used for home and industrial purposes (in B2C and B2B markets). Although the needs of both type of...