Cluster BSBMKG502A & BSBSBM403A

Marketing – Simulation

© John Loftus

Contents – week 12 BSBMKG502A

• Introduction to marketing simulation– Planning framework– Decision variables – Market research– Performance monitoring– Player tutorial

© John Loftus

Bike-world industry background

RCC

MTC

Manufacturers Distributors Consumers

Road

Mountain

Youth

Bikeshops

Sportshops

Discountstores

© John Loftus

Planning Framework

© John Loftus

1. Bike-world industry background• Annual turnover of $50m• Two manufacturers competing with equal market share

“Real Cool Cycles” and “Mountain Top Cycles”• Three channels of distribution

- Bike shops- Sports stores- Discount stores

- Three market segments- Sport - mountain bikes ($24m)- Tour and commute - road bikes (12m)- Youth – fun ($14m)

Planning Framework

© John Loftus

2. Mission:

Delight customers with a brand of reliable bikes

3. Organisation Objective:

Build shareholder value to $10m in 3 years

4. Marketing objective:

Build brand image for sustainable profit

5. Task: Develop and implement a marketing strategy for “Real Cool Cycles”

Planning Framework

© John Loftus

6. External analysis

7.PEST political promotion of healthy life-style; strong economy and disposable income; social trend towards exercise; technology enables reliable bike at lower cost.

8.Buyers want a bike for specific purpose

9.Market segments: Road, Mountain, Youth

10. Competition: (see positioning map)

11. Target markets:

• Road (strong brand high quality)

• Mountain (strong brand)

Positioning

Road

MountainRCC & MTC

© John Loftus

Style0 20 40 60 80 100

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Youth

Planning Framework

© John Loftus

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Internal analysis

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Existing target market is the Mountain bike

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Product is similar to competition and almost meets segment needs.

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Channels: bike shops, sports, discounters

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Communication: TV, Newspaper, Magazines, Publicity

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Pricing is $550 (same as competition)

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Mix synergy works for the Mountain segment

Planning Framework

© John Loftus

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9Analysis mapping

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Opportunities: Niche in Road segment

is price inelastic and suited for strong

brand building

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1Threats: competition in segment

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2Strengths: Strong Marketing skills

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Weaknesses: Finance and production

planning

Planning Framework

© John Loftus

24 Analysis alternative strategies

25 Option 1: Expand into Road segment

26 Option 2: Expand into Youth segment

27Option 3: Expand into Road and Youth segments

Planning Framework

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28 Select marketing strategy

29 Targeting : Road + Mountain segments

30

Product: • New road bike to match buyer preferences;• Improved mountain bike with cost reduction

31Place: mainly through bike and sports shops

32Promotion: Magazines = $80,000;Newspaper = $10,000; TV = $40,000

33 Price: Road $2,000; Mountain $550

34 Break-even analysis (see simulation report)

Decision variables

Market segment forecasts

Product design specifications

Price – recommended retail and margin

Advertising > TV, newspaper, magazine

Public relations > TV, newspaper, magazine

Brand building

Production planning

Distribution support

Capacity, efficiency, and quality plan© John Loftus

Market research

Market size estimates

Price range acceptable to segments

Product elasticity of demand

Product design consumer preferences

Media viewing habits

Distributor penetration

Debt to Equity ratio

© John Loftus

Performance monitoring

Shareholder value

Market price

Income statement

Balance sheet

Market share

Awareness

Distribution

Innovation, design, quality,

Efficiency© John Loftus