The Markstrat simulation was created more than thirty years back by Jean-Claude Larréché, Alfred H. Heineken Professor of Marketing at INSEAD, and Hubert Gatignon, The Claude Janssen Chaired Professor of Business Supervision and Professor of Marketing at INSEAD, and has been constantly upgraded since its creation.
Used in blend with traditional training methods such as conceptual periods or circumstance studies, Markstrat is an efficient tool to learn tactical marketing ideas, such as brand profile strategy or segmentation and positioning strategy, as well as operational marketing. Similar to a trip simulator, this marketing simulation allows students and professionals to practice new skills in an intensive time frame and in a risk-free environment before trying them out in their real business environment.
The mathematical model of Markstrat is based on stable theoretical foundations, and the fundamental formulas have been extensively examined. These simulations have been used to successfully train a sizable number of participants and executives from many colleges and organizations.
OVERVIEW OF THIS MARKSTRAT WORLD
The Markstrat world is a fictitious industrialized country of 250 million inhabitants whose monetary unit is the Markstrat money ($). In such a country both inflation and GNP growth are fairly secure, no major political, sociable or monetary event is predicted soon.
The Markstrat world will not intend to stand for any particular country, market or commercial sector. However, it about behaves like most markets, and the overall management and marketing knowledge that you have bought through business experience or formal education pertains to this new world.
In the Markstrat world, there are a handful of fighting companies that make and market consumer durable goods. These goods are comparable to digital products such as hi-fi systems, telephone sets or pcs as well as office equipment, autos, books, or any other consumer durable goods. With most scenarios, each firm begins in some other situation in terms of product specification, target customer organizations, brand consciousness levels, market share, distribution coverage, success, R&D skills, etc. As a result, the online marketing strategy of each organization should be modified to its particular situation within the industry.
However, it offers a few situations where all companies start in the very same situation. These situations are called competition situation and an instructor informs the members if they are using them.
Nevertheless, no firm has a member of family advantage over others and in the beginning many characteristics are normal to all organizations. For instance, the original brand portfolio of all companies is comprised of two brands.
As discussed earlier, each organization will hold the opportunity to design and develop new R&D projects and to introduce services or up grade existing ones. All R&D departments have the same capabilities to develop new tasks, in their range of experience. Likewise, all sales causes are equally trained to handle distributor human relationships.
SONITE PRODUCTS
At the beginning of the simulation, all rival organizations market two Sonite brands. It really is now a well-established market, with several strong brands at different price items covering a variety of needs. Analysts believe the Sonite market will continue to grow over another five years.
VODITE PRODUCTS
Recently, there's been industry speculation a new kind of electric product might emerge, the Vodite. Vodite products will satisfy totally different needs from that of Sonite products so that demand for both products will be completely independent. They'll not be complementary at all and there will not be any substitution in one to the other. The expertise required of potential suppliers is similar for both market segments in terms of technology, making, marketing and syndication.
STRATEGY AND PLANNING:
Strategy:
Long Term Planning - Initial presence in good deal market, so gradually waited for higher quantity in later cycles.
Focus on Spaces - Catered to the market segments which were not targeted by competitors
Fig: OVERALL PERFORMANCE
PERIOD 1, 2:
Strategy - SELL was centered on Singles, SECT on others, both of these segments were heading to grow at high rate in 5 years, so we continuing with product with investment in marketing.
Performance - A reduction in SPI
Leanings - It is important to concentrate on Ideal placement of the product. To boost the brand awareness, marketing and sales expenses needs to be more than that of rivals.
PERIOD 3, 4:
Strategy - Changes of products as per Brand Map to obtain ideal values
SELL on basis of PSELT
SECT on basis of PSEXY
Performance - Positive expansion in SPI since P0
Learning - If the gap between the recognized product and ideal product is large then upsurge in marketing spend can't do much, when this happens R&D is necessary.
PERIOD 5, 6, 7:
Strategy - Tapping the untapped Market
Launch of SEPR for professionals
Entry in Vodite Market with VERY
Withdrawal of Bad Product SECT
High Investment in Research for ideal placement as per Ideal value craze- Regression Research (according to future prospect)
PSEY2 for others
PSEH1 for Hi-Earners
PSEP1 for Professionals
PSES1 for Singles
Performance - Exponential development in the period with the SPI index achieving the Top Position in the Industry.
Learning -
Untapped markets, though with smaller development rate are an making opportunity.
While entering a fresh market, launch something with very high primary price.
Had to release a fresh product with same settings but higher price in
Vodite Market.
When something is bad, investment in it's marketing is misuse of money,
therefore it will better be withdrawn from the marketplace.
Fig: PERIOD 5
Fig: PERIOD 6, 7
PERIOD 8, 9
Strategy -
Monitoring the Ideal values of the products.
Entry in High earners with SEHI
Improvement in Others & Hi-earners market through PSEY1, PSEHI
Performance - A drop in market share due to improved upon positioning and heavy marketing of competition.
Learning -
When arriving with a much better product high investment in Marketing is also necessary.
With every improvement in product, the inventory is sold to the investments. To reduce loss, either raise the production or unveiling upgraded product as a new brand (though it'll require heavy marketing)
PERIOD 10, 11
Strategy - Investment in centered Heavy Advertising and Sales causes of the products.
Performance - Exponential Upsurge in SPI
Key Concentrate Areas throughout the overall game:
Expenditure on Sales Force management (Highest in the Industry)
Expenditure on Research and Development (Highest in the Industry)
Expenditure on Advertising (Highest in the Industry)
Loans taken on the regular basis to boast R&D projects
SWOT Analysis:
Strengths
Weaknesses
Largest Sales Force
Largest Budget allocations for many years
Largest R&D expenses
Largest Advertising Expenses
Very High Brand Recall across brands
Very high syndication across brands
Brands designed for specific MARKET with minimum overlap
Low base prices for several products across industries
Lack of focus on specific audiences
Out-of stock situations for several years, leading to lack of sales revenues
Inventory pile-up for few years leading to high inventory positioning and disposal costs
Very low brand purchase intentions
Inability to quickly follow changing tendencies in various customer segments
Opportunities
Threats
Focussing on Vodite markets
Gaining maximum market talk about amongst sonite players
Increasing profitability and sustaining earnings and market shares
Competition from other clubs (organizations) with specific products for specific customer segments
Increasing marketing budgets for other clubs (organizations)
Higher turn-around of R&D
Quicker changes in customer ideal values
MARKET Evaluation WITH THE TRUE WORLD
COMPETITION: A business most simliar to your scenario currently is the detergent and soap market.
Industry Overview
The soap and detergent industry includes companies that are primarily engaged in manufacturing soap, synthetic organic and natural detergents, inorganic alkaline detergents, and crude and processed glycerin from veggie oils and pet fats. It really is a global industry, and through the early years of 1990, world demand because of its products has increased 1 to 3 percent every year. Many of the participants on the market competed on a global basis. According to analysts, there is a firm correlation the standard of living of the nation and its usage of soap and detergent products. The analysts are expecting the industry to continue to grow in both the industrialized as well as expanding nations.
According to recent trends, liquid cleaning products are outpacing the traditional bar cleaning soap and powder cleaning products. In addition to environmental and health considerations, societal change has propelled the changes in the cleaning soap and detergent industry
Population progress, especially households with children, drives demand in the buyer sector, while expansion in current economic climate drives demand in the industry sector. The success of individual companies depends upon several factors, such as reliable functions and effective sales and marketing
.
Large companies have scale advantages in domains like buying, manufacturing, syndication, and marketing. Small companies can effectively compete with large companies by formulating specialised products, offering superior customer service, or catering an area market
The modifications in the cleaning products were also spurred by complex innovation, availability of improved ingredients, such as bleach chemicals, better optical brighteners, and improved technologies to increase the performance of cleaning soap and detergent products. Marketers packed products in different ways to meet up with the needs and requirements of specific users like homes with babies or with men performing jobs that are customarily associated with women.
To meet up with the requirements of different market segments, the industry found a development of brands and types. For example, a particular large super-market might contain much more than 40 different types of soaps and detergent detergents including both liquids and powders.
Category
Houseware -> House provides -> Basic Laundry Accessories -> Laundry Detergents
Laundry Detergents
Laundry detergent, or washing powder, is a material which is a type of cleaning agent that is added when an example may be washing laundry to aid in getting the laundry solution. Laundry detergent has customarily been in a powdered or stable granular format, but the use of liquid laundry detergents has little by little increased over the years, and the attractiveness of liquid detergent now rivals that of sound detergent.
In some countries where cleaning clothes yourself is popular, detergent bars are popular. Recently, green detergents have observed a boost in popularity. Laundry detergent typically contains ionic and anionic surfactants which act as the ingredient to eliminate the dirt and grime from the clothes, perfume, phosphors which make clothes seem whiter, as well as for powders anti attacking real estate agents to avoid the powder becoming one large lump in the occurrence of wetness. For liquid detergents, the bulk of the product is normal water; for concentrated fluids, the water content is slightly smaller. Detergents may have other additives such as bleaches and cloth softeners and these are usually advertised evidently on the packets as advertising points
Solid laundry detergent is often bought from cardboard containers and plastic material tubs as a powder, although compressed tablets are also available. In lots of parts of the entire world, laundry detergent is also bought from single-use packets or sachets. This sole use allows the buyer to buy the detergent they want for the day rather than needing to spend a larger amount upfront. How big is the boxes may differ from small single-use bins to large economy-size boxes. For home use, natural powder detergent is normally sold by volume in pack sizes of around 1 kilogram (2. 2 lb) and 3 kilograms (6. 6 lb). In some instances, plastic material measuring scoops have been included inside the bins. Liquid detergent is sold in plastic bottles, usually high density polyethylene or sometimes PET or other kinds. Again, various sizes can be found. On large-size bottles, a handle to transport the bottle is often pre-formed as part of the bottle. The bottle caps are often made large enough to allow them to be used as mugs for calculating out the liquid detergent;
Types of staining : Organic, Inorganic, Pigments
Stain removal : Drinking water, Surfactants, Phosphates, Acids and Bases, Enzymes, Oxidizing Agencies, Temperature
Some types of the major brand in this category are Tide, Ariel, Surf Excel, Comfort, Sun rays, Nirma, Wheel
As a good example we go through the SWOT examination for Browse Excel
Strengths : Strong brand profile, Price number and variety, Solid company base, ground breaking aspects, Top quality manpower, Extensive Reach, Sociable responsibility, Competitive advantages, Success of its tagline
Weakness : Strong opponents, high price, substitute products, Financials, insufficient control in market segments, lack dependability of data, plan predictability, lack of competitive strength
Opportunity : Changing life-style of individuals, new marketplaces, vertical, horizontal, increasing the quantity of development, seasonal weather and fashion affects, geographical export and import, niche marketplace, Business and product development, Technology development
Threats : Politics effects, legislative effects, environmental effects, economic problems, change in lifestyle, launch of local products, Road blocks faced, upsurge in development and labor cost, chances of price conflict.
All the brands in this category are facing tight competition. Because the competition is high, the company/brands have to keep viewing the market carefully for staying away from any quick collapse for the merchandise. For surviving in the returning years, the company needs to take a whole lot of steps in expanding the merchandise by doing research and research, introducing enhancements and new solutions, producing different types of products according to the likes of the consumers etc.
Category: Personal Treatment -> Bathing Soaps
Bathing Soaps :
Personal maintenance systems are generally used for personal health and hygiene. Cleaning soap is a product that many people usually takes for granted or consider rather ordinary, but for some, lathering up can be a treasured part of your morning or nightly usual.
Scented or unscented, in bars, gels, and fluids, soap is a part of our daily lives.
India is an enormous country. Home penetration of soaps is 98%. People belonging to different income levels use different brands, which are categorized as different sections (see desk below), but all income levels use soaps, making it the second major category in India (detergents are number 1). Rural consumers in India constitute 70% of the populace. Rural demand is growing, with more and more soap brands being launched in the discount portion targeting the lower socio-economic strata of consumers.
The basic need for bathing soaps is self cleaning and a sense of freshness after bathroom. The marketers have various brands of soap with nearly similar function to perform. All of these are segmented matching to consumers inclination and choice also in line with the cost factor.
Example : Premium (Lux, Dove), Current economic climate (Nirma, Lifebouy), Popular (Cinthol, Nirma), Others ( Rexona, Dove, Santoor) Godrej, Fiama Di wills, Nivea, Pears
The two major players in personal wash (cleaning soap) market are HUL, Nirma, P&G
Soap price in Rupees (per 75 gm cake)
Carbolic : 5 ; Discount : 7 ; Popular : 11 ; Superior : 17 ; Super Premium : 35
Soap is primarily targeted towards women, as they are the principle decision-makers in terms of soap purchase. Medicated positionings like germ killing and anti-bacterial are marketed to families.
About 75% of cleaning soap can be purchased through these different kinds of stores:
Kirana Store: This is the most frequent source for buying soap, which usually forms an integral part of the month's grocery store list (which is bought from these Kirana Stores). Consumers exhibit loyalty to these stores, which is basically dependent on proximity to consumers' homes. Here consumers buy over the counter, nor have an option of browsing through display racks.
Pan-Beedi Retailers: These are really small outlets, almost like handcarts, and they are primarily setup to dispense tobacco and chewing tobacco. However, one would find such a shop at every part and they're the main resources of soap purchase for the low socio-economic classes. These varieties of shops can be found by the dozen in rural areas.
Department Store: In India, there are very few shops and the "Indianised" version of shops are called "Sahakari Bhandars. " It is still a fairly new theory. However, shops have good screen counters and this is the only place where consumers get a first hand connection with shopping and choosing from available choices. Here soap prices are also discounted below the retail prices.
Similarities between real and markstrat world
Understanding customer needs
Long term perspective
Marketing as a revenue center
Competitive environment with major players discovering different brands concentrating on different customer segments
Marketing strategy is based on segmentation, setting, and source of information allocation
Large territory with highly developed economy
Firms attended into existence at different time details in various respects
Distribution channels
Objective : To increase share price index by optimizing market share, sales growth, net expansion, cumulative net contribution, R&D investments
Market research to understand consumer review, consumer panel, circulation -panel, semantic scales, multi-dimensional scaling, industry benchmarking, market forecast, competitive advertising, competitive sales team, advertising test/research, conjoint analysis
Tactical decisions regarding Development planning, Inventory removal, rates, mass communication, sales team and syndication, market research
Each company has a marketing cover the current time based on the previous years performance
It can be done to take a loan amount
The Sonite is the only real product type presently marketed because of your company. Sonite brands are differentiated mainly in conditions of physical characteristics as well as bottom cost. Inside our chosen industry we can look at Bathing soaps as a sonite product.
We can recognize five sections in the Sonite and hence Bathing soaps market with different characteristics and significantly different purchasing action:
Buffs (Bu) - People who are enthusiastic and very knowledgeable about the merchandise. They are generally concerned with quality and specialized features. e. g. Nirma, Lifebouy
Singles (Si) - People in this section live by itself. Although they are less officially proficient than Buffs, they demand good performance from a product that they could use more than the common consumer. E. g. Pears, Nivea
Professionals (Pr) - People who have a bigger degree of education and income. They tend to be indie in their occupations also to engage in many sociable activities. Their purchase of the merchandise is partially encouraged by social status needs. E. g. Dove, Fiama di wills
High earners (Hi) - Individuals who have high incomes but do not have got the higher level of education or occupational independence of the individuals in the Professionals portion. E. g. Lux, Cinthol
Others (Ot) - Consumers who do not participate in any of the above communities. This segment presents the largest proportion of the populace. E. g. Rexona, Santoor
Although the medical bases are known and available, large R&D efforts are likely to be required for the introduction of a Vodite product. Inside our industry, Detergent soaps can be comparable to Vodites.
COMPANY MOST SIMLIAR TO OUR COMPANY IN MARKSTART
The company chosen is Hindustan Unilever Pvt. Ltd.
The Similarities discovered are:
Aggressive Marketing and Syndication Strategy:
HUL places its consumers and customers at the heart of its business. HUL actively engages its consumers and customers, translating their needs and requirements into products and services, thus creating consumer value wherever it positions its products.
This was the foundation of its creativity process. Similarly, our company E possessed a very ambitious distribution and marketing strategy.
Throughout the 12 times, we have constantly focussed on marketing as a means to reach our consumers. Our products were kept after much research keeping in mind the consumers' product needs in conditions of product characteristics. Thorough research was done on every consumer portion and the entire profile was created. Based on this segment profile, the product development process was completely predicated on this analysis.
Even during cycles of low income, we have never shifted our concentrate from the consumer in order to keep up profitability. HUL also creates products evidently targeted at a particular target section and creates the setting and marketing with regards to the consumer section and what attracts them in terms of product characteristics. The syndication in our products was well defined predicated on where our consumers for that product shop. As the shopping behavior changed, our circulation changed with it to ensure that the product meant for a specific segment come to them according to their convenience.
Today, HUL has one of the best marketing spends. Our company got the highest marketing spends almost through most of the 12 times. We have even taken loans to invest in our marketing. Even though competition was focussed more on product research and development, we managed our give attention to marketing along with R&D. Our sales team volumes were always one of the highest in the market and led others to check out our strategy of providing aggressively.
In its market, HUL too is the first choice in distribution and is well known because of its strong selling strategy. Our actions were exemplary for opponents so much so that people could visit a sharp rise in sales force sizes of other companies following the period whenever we increased our sales team strength for a specific brand.
Focus On Innovation and Product Research
HUL has always maintained it give attention to creating value for the consumers through well explored products. The business has always taken care of its attention on well engineered procedures and products. Likewise, our company E has always attempted to divert more funds towards research and development. We conducted multiple research and development assignments for a single brand so that our products fit well with the consumers' changing needs. Whenever we could not commission payment a research task, we brought fewer models of the brand in to the market so that our individuals are not supplied with products they don't prefer (in conditions of characteristics).
We were the first ever to commission a study job on the Vodite market. Our approach is definitely to provide the best products to our consumers by having a well researched couple of product characteristics. We innovated in conditions of balancing product characteristics and intelligently provide what the buyer needs.
Brand Management and restructuring
We possessed one brand administrator given to each brand in our team of ten people in order to have a detailed review on past years brand performance and steps to be studied to enhance the brand value for our consumers. HUL also offers a very complete brand management team for each brand and has an extremely strong approach towards effective brand management. When the business had low money, we gone the HUL way in restructuring our brand stock portfolio in the Vodite market to be able to streamline operations and direct cash to vital areas (electricity brands).
We shelved two of our Vodite brands so as to target our attention on other power brands (brands accomplishing well). At the start of each period, our research focussed on an in depth yet quick analysis of every brand's performance versus its rivals and whether there were any new opponents on the market. The examination was done remember syndication, marketing, product characteristics, sales rep allocation, amongst various other parameters.
Differences:
Quality as the essential to HUL's Business Success
Quality of products has always been the focus of HUL's business strategy and at no point has HUL got any case wherein consumers lost trust in its brands. Though our company do employ a high goal for product development and characteristics, constraints in the game didn't allow us to control processes to check on for quality of the products being delivered on the market to the consumer.
HUL as an environmentally sensible organisation
Again this difference was because of the limitations of competing virtually alternatively than in the real world where such initiatives are possible. Though our company could have been inclined to attempt such activities, we were tied to the possible activities in the overall game, and so we are different from HUL in this area. Real life poses such problems where a company can take on activities beyond its perview to add in bettering the surroundings. This could also serve as CSR (part of marketing) for HUL, which is something we're able to not achieve due to game constraints.
HUL's presence in numerous product categories
HUL is a very big entity and has high muscle capacity to contend in multiple product categories. Our company could compete in two product categories - Sonites & Vodites. HUL also offers been market leader consistently for the past many years. Although working and working strategies have many similarities, performance-wise we've not had the opportunity to complement up to HUL's benchmarks.
SINGLE BRAND Evaluation AND Contrast WITH REAL WORLD
Sonite market - SELL
A brand that is comparable to SELL in terms of its performance, operations and environment is Frooti
Particulars
Frooti
SELL
Product Characteristics
Unique drink in a non-carbonated beverage
Unique product characteristics that suits the needs of singles and others
Initially targeted
Children years 6-14 years
Singles
Gradually concentrate on shifted to
Teens and Adults
Others
Reason for focusing on a newer group of audience
Want for a larger consumer base
Want for a more substantial consumer foundation and match of product characteristics
First set-back
Launch of competition products like Mazaa and Slice
Launch of brands like SURF which are better suited to customer needs
One of the major known reasons for set-back
Complacency with a mind-set that customer actually like their products
Complacency with a mind-set that customer actually like their products
Corrective measures
Change in costing, communications trying to improve consumer perception
Change in pricing, communications and sales force management for increased sales. Did not end up being as effectual as it was likely to be
DECISIONS BASED ON ENVIRONMENTAL VARIABLES
Market Competition (Brand Characteristics)
Change of retail price of products based on competitors product in the same segment
Modifications through R&D in our product based on Ideal Value development of the consumers in several segments.
Economy (Economic Variables)
Increase in cost based on inflation rate of the period
Inventory deal decisions based on forecasted Inventory Holding Costs
Shift in sales team allocation
FUTURE Tips AND CONCLUSION
Based on forecasted requirements in particular markets
Taking into consideration un explored market segments
On current brand understanding levels of a product
Future planning of 2 yrs ahead, as it requires a year to Research of new product, and another to Develop and launch
Sonite Market
Target the unexplored growing Professionals market
Consolidation of existing successful products
Vodite Market
As R&D has been conducted on few brands, Launching a fresh product for Innovators
