Marketplace live simulation answers

Quiroga 8

Herman Quiroga

MKT 300 10:45 – 11:35

Eaton

Marketplace Live Summary

To start matters off on the Marketplace Live simulation, for the Quarter 1 decisions, the name that was chosen for company was Infinitech. This name seemed appealing for it was supposed to associate the infinite possibilities the company could provide through the use of superior technology compared to the other market competitors. Concerning Infinitech’s target market segment, analyzing the wants, needs and prices willing to be paid of Workhorse, Mercedes and Traveler, Workhorse ended up being the market segment of choice . Following this decision, the responsibilities I assigned to myself pertaining to the company were President of the company as the primary and the VP-Brand Management as the secondary. For the final decision for Quarter 1, and also with the company still being in its infancy, expenses were kept to a minimum so out of the four open available sales offices in Chicago, Sao Paolo, Shanghai and Paris, Sao Paolo was chosenm since at $80,000 it was the least expensive for its quarterly lease.

As the time came to make decisions for Quarter 2, so did the time to design Infinitech’s first product. The wants, needs, and prices willing to be paid by Workhorse were once again analyzed to have a better idea of what decisions should be made prior to the design process. Having decided on the decisions, Infinitech’s first product was to be a desktop given the name Novacon. With all the features included on the PC, choosing the ones that seemed fit for the demands of Workhorse, the component cost came out to $1044, but in order to make profit off the product, the sales price chosen was $1825 with a $115 rebate. Upon designing the ad for Novacon, it was entitled “True Efficiency” which would lead consumers to see how truly efficient our product was when compared to other products on the market. In addition the special deal on the desktop and some of its features were also emphasized. The cost of the ad came out to $30,000. Twenty of Novacon’s ads were placed locally in Sao Paolo with expenses for the ads coming up to $5,000 with a combined total ad costs resulting in $74,113.Following the advertising decisions were the decisions to hire sales people. Four sales people were hired for Workhorse and 1 person for service support to start off which lead to an additional $86,000 quarterly cost thus ending the decisions for Quarter 2.

When it came to see the results of the previous quarter on Quarter 3, they were far from promising. Infinitech’s PC Marketing Division’s performance based off the balanced scorecard was below average on all levels of performance giving the notion that the product and its advertising were quite unsuccessful to say the least. Not everything was a complete failure though, for on a more positive note; Infinitech was at least in 3rd place for total market shares at 18% with first place going to Galileo Computers at 26% and last going to Shark Computers at 13% . Analyzing Infinitech’s revenues and expenses, gross profit was at $-39,152 and total operating expenses came out to $330,113 resulting in a net profit of $-369,265 and a -63% sales revenue. Much work and revision for Infinitech’s next product was to be made in order to turn the losses into gains. The second PC that wasdesigned, named Centurion to let it have a more aggressive feel to it was supposed to be everything its predecessor the Novacon PC lacked and more, but it also ended up with a higher component cost of $1539. Since the Centurion model included more features than the Novacon, the sales price had to be increased to a price of $2,500 a unit with a $200 rebate. The price increase seemed to be appropriate for the included features, but this was only an assumption. Upon reviewing the advertising of Infinitech and its competitors’ products, I noticed that their ad titles simply had their brand name and not any specific type of caption such as mine which appeared to give them more success in their advertising. Noticing this, for the second attempt at advertising, I adopted my competitors’ approach and had the ad title be the brand name and proceeded to place 5 advertisements in Sao Paolo and 5 in Shanghai since a sales office was added there as well. To complete the quarter, an additional 2 sales people were added for Mercedes in Sao Paolo and Shanghai which resulted in a total of 14 sales people for Quarter 3.

Upon witnessing what the result of the Quarter 3 decisions in Quarter 4, what was witnessed was not at all promising. The Company’s PC Marketing division performance continued with below average results on all levels. Infinitech’s total market share remained at 18%, but it also moved to 4th place and with its target market segments, possessed 17% market share for Workhorse and 26% market share for Mercedes. Constellation PC would also replace Galileo Computers for 1st place in total market shares at 31%. It became of upmost importance that Infinitech increased its total market share in order to at least be able to return to the top 3. Examining the Division Profitability for my company, the net profit for the division decreased to $-544,718 and the cumulative net profit came out to $-913,982. The overall Brand Profitability increased from -63% sales revenue for the Novacon PC to -5% with the Centurion PC also resulting in the same percentage. Although an increase was experienced, it was not enough to give the company positive returns and thus came to decide how to fix this problem for the upcoming quarter. To begin the decision making process, Infinitech’s primary market segment was switched from Workhorse to Mercedes and Traveler was added as the second target market segment in hopes that this would lead to improved results. Next Infinitech’s target market segments prices that were willing to be paid were observed and it came to my light that the negative revenues were a result of under costing the company’s products. At its current price, the Centurion PC was experiencing decent success at 71 for Mercedes so with an increase in price and possible other adjustments it could be even more successful, but the Novacon failed to have the same success with it only being at 52 for Workhorse and only 44 for Mercedes. As a result the Novacon PC was to be dropped and replaced. For the Novacon’s replacement, I wanted Infinitech to appeal to Traveler by designing a laptop. The laptop, given the name Seraph was to be essentially everything that the Centurion consisted of, but in laptop form. The component cost of the Seraph came out to $1,494 and having discovered that the primary reason for negative revenues was under costing the products, the Seraph’s retail price was set at $3,500, $300 above the price Traveler was willing to pay, with a $150 rebate. For the modifications that the Centurion was to undergo, the retail price was increased to $4,600 from its original price of $2,500 and its advertisement claims were dropped from 9 claims to 6 to mention primarily the important claims as well as having the name of the advertisement switched from “Infinitech” to “Next Episode.” For the advertising of the Seraph, the name the ad was given was “3rd Installment” due to it being Infinitech’s third product, also being given a reduced number of only 5 claims. Having been somewhat careless however with the advertising for the Seraph laptop, it came to my attention that at the end of the quarter I forgot to put up any advertisements for the Seraph laptop making it relatively unknown to the market. Finalizing the decisions for Quarter 4, no additional sales people were hired for the purposes of minimizing costs since the company was experiencing negative revenues. The dropping of an unsuccessful product, the introduction of a new one, the increasing of product prices and the adjustment of advertisements seemed to be what was causing Infinitech trouble and thus hopefully improved results were to be what followed in the next quarter.

What was to be seen from the Quarter 4 results in Quarter 5 was entered was the exact opposite of what was expected. The balanced scorecard results were actually worse for this quarter than the previous. In Quarter 4, Financial Performance was at -2.724, Market Performance was at 17.00, and Marketing Effectiveness was at 55.00 with a Total Performance of 23.092. Quarter 5’s balance scorecard resulted in an overall Total Performance of 17.501, Market Performance of 5.00, Marketing Effectiveness of 48.250 and a slight increase in Financial Performance to -.747. One of the suspected reasons for this was the mistake of forgetting to set up advertisements for the Seraph laptop since it paled in comparison to Centurion’s sales revenue of $1,067,200 at 36% as opposed to its meager $24,500 at -344%. The net profit for the division increased from $-544,718 in the previous quarter to $-149,299 in Quarter 5, but experienced a staggering cumulative net profit of $-1,063,282. Profit began to increase for Infinitech in this quarter, but still at a decreasing rate. Because of this, even more drastic measures were to be taken place if the company were to be able to survive in the market. To add on to the problems the compnay was experiencing, Infinitech dropped to last place for total market share at only 2% and 5% market share remaining for Mercedes. At this next attempt to increase the company’s performance, the Centurion and the Seraph were to be upgraded and renamed as well as a new laptop given the name Tempest was to be introduced. The Centurion was renamed to Sagittarius and was upgraded in all available categories as well as had its price increased to $5,000. The Seraph was renamed to Nebulon and also was given the same upgrades as the Sagittarius and a new retail price of $3,600 with a $100 rebate. The new laptop that was introduced was named Tempest and was essentially identical to the Nebulon, but with an increase in size given a price of $3,750 with no rebate. The advertising problems were fixed and media placement of the products was set to 2 ads for the Sagittarius and Nebulon PCs in Shanghai and Sao Paolo and 3 ads for the Tempest’s ad named “Oncoming Storm” in the same locations. Still trying to keep costs low, no additional sales people or sales offices were added.

Quarter 6 took a turn for the better for the decisions made in Quarter 5 ended up becoming a massive success. The results on the balanced scorecard were at the highest they had ever been. Financial Performance was no longer negative now being at 7.288, Market Performance was at 20.000, Marketing Effectiveness was at 83.500 and Total Performance came out to 36.929. Infinitech was still in last place for total market share, but increased from 2% in the previous quarter to 6% and had 5% market share for Mercedes and15% market share for Traveler. The net profit for the division came out to $1,457,664 and cumulative net profit came out to $394,383 finally ending the company’s negative returns. The Sagittarius (previously named Centurion) continued to be Infinitech’s most profitable product with a Brand Profit of $1,189,903 with 43% sales revenue while the Nebulon and Tempest were in the middle $300,000 range for Brand Profit with virtually the same percentage of sales revenue at roughly 30%. Since this was the final quarter, every decision that was to be made had to count. For the final decisions, a new desktop was introduced named Gemini to try and once more appeal to Workhorse. The Gemini was essentially a lesser version of the Sagittarius having only the essentials that Workhorse needed and not all of the unnecessary extras. It was given a retail price of $2,950 with a $150, $450 more than their price of preference. For the advertising of the Gemini, its ad name was “New & Improved” and had only the important claims listed. For its media placement, there were 5 of its ads placed in Sao Paolo and Shanghai. As for the remainder of the products, 4 ads were placed in Sao Paolo and 6 in Shanghai for Sagittarius and Tempest and 4 ads were placed in the same cities for Nebulon. Additional sales people were also added to both locations as both were given 3 support people and roughly the same amount of sales people for the 3 target segments with both cities resulting in 17 sales people for a combined total of 34. No additional sales offices were open since it was the last quarter and since more sales people were hired expenses would also increase. If these decisions weren’t beneficial, Infinitech would return to losing money. Quarter 7 would ultimately determine if the company finished in success or failure.

At the 7th and final quarter it would fortunately turn out that the decisions made in Quarter 6 resulted in additional success. The results on the balance scorecard once more improved as Financial Performance was now at 26.441, Market Performance was at 38.000, Marketing Effectiveness was at 86.000 and Total Performance came out to 50.147. Due to the inconveniences suffered in the earlier quarters, the cumulative balanced scorecard was not as successful. Cumulative Financial Performance was 7.565, Cumulative Market Performance was 20.000, Cumulative Marketing Effectiveness was 68.188 and Cumulative Total Performance came out to 31.917. Infinitech’s total market share increased to 14% being in 4th place with first place going to Constellation PC at 30%. Infinitech also had 18% market share for Workhorse, 7% for Mercedes, and 20% for Traveler. The net profit for the division came out to $5,288,277 and cumulative net profit came out to $5,682,660. All products resulted in profits of over $1,000,000 with Sagittarius earning $1,597,438 in profit with 49% from sales revenue, Nebulon earning $1,095,078 in profit with 44% from sales revenue, Tempest earning $1,316,870 in profit with 44% from sales revenue and Gemini earning $2,113,392 in profit with 30% from sales revenue. For Brand Judgment, Sagittarius and Gemini were in Workhorse’s top 8 with Gemini being in 2nd place and Sagittarius in 4th, for Mercedes’s top 8, Sagittarius was in 3rd place while Gemini was in 7th, and for Traveler’s top 8, Tempest was in 1st and Nebulon was in 3rd. Although a decent amount of success was achieved at the end of the decision, many unnecessary mistakes based on carelessness and not fully analyzing everything available before decisions were made. The primary sources of lack of success in the simulation were underpricing the products in the first half of the situation and forgetting to post advertisements of one of the products right after it was produced. Had these errors been avoided, the ending results of the simulation would have been far more successful.