What we learned...

High contribution margin for each product was crucial for the success of our company. During the MarkStrat simulation, many of our competitors chose to enter a price war with each other, whereby they opt to lower their prices substantially. Although this did lead to a short-term increase of sales, their overall profits were still low due to their small contribution margins for each product. Therefore we decided to invest our money into R&D, where we focused on creating the perfect product for each market segment. We then priced our products at the required or even slightly higher price expectancy for each market segment. This in retrospect gave our company the image of being a premium brand, and although our sales were initially lower than our competitors in the short-run, our overall profits were always slightly higher due to our high profit margins on our products. In addition, our company benefited in the long run, as consumers were more willing to pay a premium for our brand due to their established perceptions of the brand.



Product characteristic was the most important strategy in relation to gaining sales and market share. Although the MarkStrat simulation offered a wide range of marketing strategies for our company to use, we found that modifying and creating the ideal product characteristics for each market segment was by far the most important strategy in generating sales. We learned that a big part of consumer’s decision to purchase products in this simulation was down to how the specific product fitted the specific market segment’s needs. Therefore investing into R&D and market reports such as the “semantic scales” and “multidimensional scaling of brands similarities and preferences” was absolutely critical to the success of our company. By creating the ideal product for each segment, we were able to charge higher prices and increase our sales at the same time! Another interesting learning point was that we learned to R&D our products based on the targeted segment’s ideal characteristics for 3 periods in the future. This was because we learned that the product would take at least one period to complete and another period to launch, so we didn’t want the product characteristics to be outdated as soon as it was launched. By thinking ahead and planning the product characteristics to be 3 periods in the future, we were able to launch the products at the ideal time of demand.



Increasing sales force was an important strategy in the short-run. This was highlighted in the early periods where we learned that because our products were still quite similar to our competitors, it was hard for our company to really stand out and differentiate ourselves (without having to lower our prices and thereby lower our contribution margin). Therefore, we invested heavily on a large number of sales force at the beginning, in hopes that increase sales force would increase chances of our employees luring potential customers to our products. We found this to be a very successful technique in the beginning and it really gave our company a boost in the early rounds. It was especially effective since our competitors overlooked the importance of sales force and focused all their attention on competitive advertising.

Creating products for the fastest growing segment was an important lesson. In our case it was for the market segment “Singles”. We believed that it was crucial for us to capture as much market share from the largest potential market segment, as it would lead to most overall profits in the long run. However we also learned that we could not ignore the “Others” product, which at the time was the largest current market segment and still our “cash cow”. Therefore we learned to be balanced in our strategy, where we aggressively pursued the potential markets as well as maintained our already developed markets.



Looking back in retrospect, we learned that we should be more adventurous and aggressive in our strategies. Throughout the Markstrat simulation our team played very conservatively, especially when it came down to estimating the market capture rate and calculating the potential inventory holding costs. Therefore we often weren’t aggressive enough and found ourselves losing potential sales and market share to our competitors. This was most evident in the final period of the game, where our stock price decreased significantly due to our inability to meet the high demand. To make matters worst, our main competitor actually took our lost sales thereby increasing their stock price, and winning the simulation.



Watching and keeping track of our competitors investment strategies was also an important learning point. We learnt that we could more or less anticipate our competitor’s moves based on where they decided to allocate their budgets. This was especially important in anticipating movements to the Vodite market and new product launching from our competitors. In addition, we used this observation to roughly estimate the market capture rate for our newly launched products, and more often than not was successful in predicting the right units and price for our new products to launch at.