CAPSIM : Introduction to Marketing Strategy Alisara Charinsarn 22 June 2013
CAPSIM Marketing 4 main things to consider and Plug in in the spreadsheet Sales Forecast Sales Budget Promo Budget Price
Price Price setting for each segment Too high? Too low? How to set price? Competitors price setting Check Customer Buying Criteria in setting price
Price Check competitor s price
Price Price impacts margin. Price i decreases each year! Therefore, it pressures to manage cost. How to cut cost?
Something Extra!! You can also play with your credit terms: Check whether it will do you any good!!!!
Promo Budget PR, Advertising Awareness (& Trial) Awareness ess is? e.g. what does 50% awareness ae ess mean? Awareness drop out (33% decrease each year (Y1= 100%, Y2 = 100%-33%= 67%) Diminishing return
Promo Budget How? (Message) Media Contact point The right media At the right time Media investment/ cost e g Buzz is 25% awareness Media investment/ cost e.g. Buzz is 25% awareness with no cost
Promo Budget Reminder New product gets 25% awareness up front Analyze competitor to Why we do what we do? Monitor your margin
Sales Budget = Sales force, Distribution, Order Entry, Customer,, y, service, etc. Objective: To increase Accessibility Note that Accessibility impacts segment (people), not a particular product
Sales Forecast Total Industry Unit Demand Expected Growth (Growth Rate Next Year) Start with the same market share in the first round.
Sales Forecast Inventory carrying cost CAPSIM assumes (in the first round) that competitor has mediocre product in each segment
Sales Forecast Note (1) Gross Revenue (Price x projected sales) (2) Variable Cost (Labor, Materials) (3) Contribution Margin (Gross Revenue Variable Costs) (4) Less Promotional & Sales ( Contribution Margin ( ) ( g Promotional & Sales Budget)
CAPSIM : Advanced Marketing Module
Advanced Marketing Module Allow companies to have greater control. Explore the marketing mix 5 Media Print media, Direct Mail, Web Media, Email and Trade Shows 3 Sales channel Outside Sales, Inside Sales, and Distributors
Reach and Frequency Each segment will respond to different media type differently. The impact is driven by two factors: Reach: The potential number of customers who would see the message. Frequency: The number of time the media is repeated.
Print Media Industry-related related magazines and newspapers Potential reach varies by segment. Traditional: Good Low-end: Good High-end: Poor Performance: Poor Size: Fair Diminishing returns apply Additional awareness becomes prohibitive beyond $700 thousand per product.
Direct Mail Information about your product will be sent by mail to a purchased mailing list. Lists are selected on the basis of SIC code, job title, and similar factors which select for your customers. Potential reach varies by segment. Traditional: Good Low-end: Good High-end: Fair Performance: Poor Size: Poor Diminishing returns apply Additional awareness becomes prohibitive beyond $700 thousand per product.
Web Media Information on industry-related websites and search engines This method created many wasted hits. Potential ti reach varies by segment. Traditional: Poor Low-end: Poor High-end: Fair Performance: Good Size: Good Diminishing returns apply Additional awareness becomes prohibitive beyond $500 thousand per product.
E-mail Similar to direct mail. Readers are invited to respond directly or to click hyperlink to your website. Potential ti reach varies by segment. Traditional: Poor Low-end: Poor High-end: Fair Performance: Good Size: Good Diminishing returns apply Additional awareness becomes prohibitive beyond $600 thousand per product.
Trade Shows Allow you to meet face to face with your customers in a convention-like setting. Potential reach varies by segment. Traditional: Fair Low-end: Fair High-end: Good Performance: Fair Size: Poor Diminishing returns apply Additional awareness becomes prohibitive beyond $300 thousand per product.
Sales Budget 3 Different Sales Channels Outside Sales Inside Sales Distributors
Outside Sales Each salesperson costs $125,000, which include salary, commission, travel and support. Diminishing returns in a segment is reached at 12 salespeople.
Inside Sales Each inside salesperson costs $50,000. Diminishing returns in a segment is reached at 30 salespeople.
Distributors Distributors offer customers an opportunity to see your product, compare it with other products, and take delivery. Each distributor costs $100,000 per year. Diminishing i i returns in a segment is reached at 15 distributors.
Sales Channel Effectiveness
Final Thoughts Game s s rule vs Learning for Real-lifelife Competing with Real Competitors!! Impact from Competitors. Both our and Competitors activity impact Sales. Linked with other Function e.g. High-tech Segment requires R&D Mass requires Economy of Scale
Final Thoughts! (Cont.) Set your marketing objectives! STP 4P Short-term term vs Long-term