Suggestions of past Brandmaps companies.

University Degree Business and Administrative studies

Suggestions of past Brandmaps companies

Memorandum

There are number of recommendations that our group suggests for the new management within the areas of marketing research, sales forecasting, and new product development.

Marketing Research Strategies

There are over 50 marketing research studies that were made available for our team to utilize. For the first three quarters many of the research studies were ordered, however it was discovered early on that not all the studies were useful to us. The research studies that our firm found most useful were ordered on a permanent basis which ended up saving us valuable time. Such permanent studies included customer brand awareness, brand satisfaction ratings, operating statistics reports, brand quality ratings, balance sheets of the other competitive firms, the amount of market shares we have in the industry, our overall performance report along with preference testing..

Besides the permanent studies, there are three important research studies in which our team had to make specific decisions on every time. These decisions included the conjoint analysis and both advertising and promotion experiments. The importance of the conjoint analysis and can not be emphasized enough. Having an understanding of how conjoint analysis can be useful for successful product reformulation. Further explanation of conjoint analysis is explained in the new product development section of this memorandum.

Another research study we had to do individually is the advertising experiment. Whenever we introduced a new product, we had to make decision on the amount of money we needed to spend on advertising, as well as determine the best media content and mix in order to receive the highest % of customer awareness. We also tried varieties of media content and mix in the experiments. For example, in Canada, a combination of price, product uses, together with heavy weighs on radio, newspaper and magazines yielded a very high percentage of customer awareness (around 85%). Conducting advertising experiments is an inexpensive task, which can result in grand results. At times, trying to find the right advertising strategy becomes frustrating, however, by continuously changing up variables, eventually, a suitable result can be obtained. It took our firm several quarters before finally finding a good advertising strategy for the Pacific region.

Promotion experiments are another essential part of marketing research. Like the advertising experiment, we had to determine the amount of money to allot and the promotional type for each specified region. We found for the most part that our dealer awareness experiments yielded us very positive results, as there seemed to be less variables to play around with in order to figure out the right “mix”. Some of our experiments conducted resulted in very high percentages for awareness, many in the 90 to 98 percent range. At times, these results came from little spending in the promotion department, however with a useful promotional mix.

Marketing research is an invaluable tool, which should be fully utilized by all firms. It’s costs are minimal compared to the possible end benefits of the results, when interpreted correctly. A firm should never try to cut costs on their budget at the expense of ordering marketing research. Having a fully informed firm outweighs the few thousand dollars, which may have otherwise been saved from not ordering specific research. Knowing exactly where your competitors stand in the market and your environmental situation is the bottom line. Our philosophy is that if in doubt, order the marketing research.

New Product Development

Deciding on whether or not to introduce a new product into a new or existing market is like playing with a double-edged sword. There are many possible ways to look at the situation and whether or not it is a worthwhile activity. Market and competitor analyses are two very important factors when making this critical decision. We found off hand that the more competitive and unstable the market is, the less worthwhile it is entering a new product there. Probably the most important decision that has to be made is the conception of the new product. It was discovered that creating a new product specifically tailored for a market is the best way to enter a new product. Utilizing preference testing to find out what volume of attributes are most preferred along with conjoint analysis to discover the relative importance of each attribute is what has to be used when deciding on how your new vaporware product is going to look. Ensuring that your product does not infringe upon others patent zones is equally important, as this avoidable mistake could prove costly. There are various trade-offs when deciding how to compose your new product. In order to keep costs low and stay away from stepping in another firms’ patent zones , one may want to cut a few costs, with a huge cost saver being reducing the warranty and compatibility, especially if the relative importance of that specific attribute within that specific targeted market is not considered important. In the end, having a conducive product which meets the needs of the consumer is the bottom line when taking all new product decision variables into consideration.

Introduction of a new product can be quite costly. A wise firm would initially do some prior research as to what activities are taking place within the particular targeted region, including industry growth and potential and other product formulations by competing firms. A firm would not be wise as to introduce a new product into an already over saturated or weak market. Reformulation bids are another testy item which requires intense scrutiny. Using some applicable aspects of game theory, one must anticipate what the competitors are doing in the particular targeted region, as a high Reformulation may be a complete waste of expense. This is where some calculated risk must be made. Introduction of a new product also experiences other divisional expenses which may add up, including the hiring of a sales force. Careful capacity planning should be done ahead of time so in the best possible scenario, a company will have enough capacity to produce all future ordered. In the worst possible scenario, full capacity will not be utilized and it can be sold to recover some of the capacity adding expenses incurred. Capacity planning is a touchy subject which quite frankly requires accurate long term forecasting in order for it to be cost efficient. At times, with the introduction of a new product, some short term pain must be experienced. Quite often, due to the lack of experience curve savings and presence of substantial smoothing effects, the initial cost of the product may be enormous and profit margins may be slim. Along with reformulation, sales force, initial intensive advertising and promotion expenses, there may stand to be little profit gained during an introduction. Negative profits during introduction are not a rare occurrence and a company should not be afraid to experience this. Do not worry, things will probably get better.

There are a few more tips a firm can use in order to have a successful introduction of a new product. Our firm found that initial large expenditures in advertising during the roll-out of the new product is necessary for creating awareness of the product. From our advertising experiments we found that spending more money will always increase awareness of a product. If people like this new product, they will buy it. Increasing incentives for the sales force to work harder on selling the product is another feasible technique, such as increasing sales commission or salary. Dealers can initially be pushed to carry the product by providing temporary rebates. One must remember not to give these rebates for too long of a time or they will lose their effectiveness. A firm newly introducing a product must be brave and not scared to lose a bit of money during the first small stretch of existence and should not compromise their price at the expense of generating increased initial sales as this could be detrimental for long term profit. The last very important factor which should be taken into consideration is whether or not the product should be introduced into one or several markets. Our firm’s advice is that a company should try to create a product that is perfect for one market but can be accepted within others. We found that one of our newly introduced products was perfect for the Pacific market but also was preferred in the Canada market. As sales in the Pacific area shot up, product costs decreased, which lowered the price of the somewhat less suitable but still well-liked product in Canada, making it preferred. Our advice is that a firm should try not to create a product which partially meets the needs of multiple markets or if a firm does, don’t expect it to become a grand success as it may end up flopping in all of your targeted markets. Good luck!

Sales Forecast

A good sales forecast is very important because it helps avoid stockouts on the one hand and high inventory levels on the other. To find out which sales forecast seems to be reasonable for the next term, you should first take a look at industry sales volume forecasts (#31). This study gives an overview of the past and future sales volume for all market regions. As mentioned in the book the study gives an overview, and therefore the major problem is, that it assumes current marketing activities of all firms in the industry to stay at the same level, or to continue their present course, which most often is not the case. Another problem with this study is, that especially when entering a new market the forecasts are often to optimistic.

You should take a look at your marketing program and those of rivals. Furthermore one should also consider that the marketing research study # 31 doesn’t account for unfilled orders. Consideration should be given to the population growth and the economic figures of the region. A knowledge of the stage for the product life cycle of your product, or the market, and how accepted the product composition is, are all important points of concern.

To get information about your brand sales forecast you can use brand sales volume forecast (#32). You can also make your own calculation by multiplying the industry sales forecast with your market share forecast. In general it's better to be a conservative in your forecasts. This is because it is better to gain more profits than forecasted than visa versa.

INDUSTRY A2, FIRM 2

Well the time has come for this board to step down and make room for another to carry on with in the tradition of the New World Order. Our resignation will be effective at the end of the fourth quarter this fiscal year. In short this memo is just a brief history of the firm and some points about the market, an examination of what the new board can expect, and some suggestions as to the direction we feel the firm should take.

THE NEW WORLD ORDER

The New World Order (N.W.O) was a struggling producer and distributor of Vaporware. In the past three years the firm has done gone through some rather drastic changes. A new board was brought in, the product line was expanded there are now four different brands. The firm now sells Vaporware in three continents, generating sales of 152,904 units or $124,523,040 in revenue.

THE INDUSTRY

The Vaporware industry is a very dynamic one to say the least. The road to success is filled with countless pitfalls, and traps. If you stray too far from the original strategy you are surely going to find yourself in one of these traps. We could not stress enough how important it is to stick to your strategy. In the past The N.W.O has tried to keep a strategy of being a low cost producer of Vaporware while never compromising quality. This is a strategy that we have found to be rather successful, however one significant problem that we encountered was with profitability. This is an inherent problem when you have a low cost strategy. One suggestion that we will suggest in order to combat this situation of lower than ideal profitability is to keep some very tight controls on your spending. That is not to say run bare bones promotions and advertising and skip out on market research. What we are suggesting is that you ensure that the capital that you do invest in such endeavors be used to its maximum potential. The idea of being quite tight fisted might scare some people but it really does not have to be a painful experience. All it means is that one has to be ‘smart’ about the decisions that they make. As noted above the industry is very dynamic and there are always new areas where one can get an advantage over their competitors. At the same time the dynamic nature of the industry requires that the new board always be kept up to date and willing to modify while not completely abandoning the strategy. The best way to do this is to utilize the most relevant market research, now what exactly that is I can not say. You will have all received a company manual that lists the various types of research that is available to you along with other pieces of information about the firm. From that manual is a list of some of the research that we found to be most helpful.

Industry advertising
Industry promotion
Customer brand awareness
Brand quality ratings
Dealer prices
Dealer promotion awareness
Industry sales forecasts
Brand sales forecasts
Marketing support spending productivity
Brand satisfaction ratings
Dealer inventory analysis

So with these reports you should be able to keep up with the industry, but like every thing else in life its not guaranteed.

The N.W.O. has always tried to be a customer oriented producer, it is because of this commitment that we have always seen investment into research and development (R&D) as a very important step to staying not only competitive but ‘with the times’. As you already know the consumer makes a direct connection between R&D spending and level of quality. With a low cost strategy it is very important to maintain this spending in order to avoid being viewed as a ‘cheap’ product instead of a product that is good value. Along this same line of thought it is important to ensure that the fruits of the R&D departments labors make it off the drawing table to the production line. When you take over you will have two older but very established products (products 2-2, and 2-3) these two are our main source of revenue and profit at the moment. You also inherit two relatively new products (product 2-1, and 2-4). Each of these products is limited to one region apiece and is still trying to establish themselves in their respected markets. We feel that product 2-4 which is presently only distributed in Southern Europe is the best of the two for potential growth. This is a relatively new market and has potential to become one of the top profit producers.

One of the pitfalls that we found ourselves in at one point was operating at in a state of under capacity. This cuts very deeply into your profits and causes the firm to focus a large amount of resources to the debt that will result. Capacity issues will always be a concern of yours as they should be; it is key that you run the production facility as efficiently as possible, again because of the low cost strategy that the firm has practiced in the past. You will find that if you are able to keep a close eye ...

This is a preview of the whole essay

We mentioned before that you currently have four different products. The two that are relatively older (products 2-2, and 2-3) in our opinions should only be altered in very minor ways if at all. The thinking behind this statement is as follows. These products are very successful and very well established within their respected markets. Both of these products enjoy fairly large cost savings in their production because of there past success. These types of savings only make an already profitable product that much more profitable. However there is some room for movement within these markets and the potential for growth is definitely there.

FINAL THOUGHT

Well we feel that it cannot be stressed enough how important it is to have a strategy and a definite plan by which you intend to carry out your strategy. It is important that you set up some sort of guidelines to grade your performance on and leave room for adjustments. It is the opinion of this board that the new board stay with the current strategy of being a low cost producer within the Vaporware industry. It is our opinion that any serious deviation from this strategy at this time would have some very serious consequences. Just remember the credo of the New World Order: “we make vaporware for life”

BEST OF LUCK! THE BOARD OF DIRECTORS

Westside Vaporware Memo

To: New Management Westside Vaporware Team:

From: Current Westside Vaporware Management Team:

RE: Advice on Vaporware firm management

Well, the time has come for us to relinquish the reins of control of Westside Vaporware. We leave as our legacy a company that prides itself on innovation and quality products. During our three years of diligent work at Westside, we have encountered several ups and downs and through those times have gained valuable knowledge and experience about management of a corporation in the turbulent vaporware environment. This memo is meant to share that information with you to make your transition to management in the vaporware industry as easy as possible.

Philosophy and Structure (Angus Ng)

Our Philosophy

To ensure the highest quality product is produced for our customers. That is meeting their preferences for attributes, performance and convenience.
Have the best staff available and pay them
To the best of our ability, ensure that our products are available to any customer when demanded
accordingly
To let our products stand on their own. That is not to artificially push our product through the dealers but instead devote our resources in making the public aware of our products
To pass on savings to the consumers as production costs go down. Commonly known as price skimming.
To be the first movers in the industry. Be the leader in action, not a follower in reaction.

Company Structure:

WestSide Vaporware is one of very few companies that use the flat organic management structure. There is only one level of Hierarchy with each individual being held responsible to one specific. However, major decisions are usually made as a group in regularly scheduled meetings. That however does not mean that each manager cannot participate in another manager’s work or portfolio. Rather, we encourage all of our managers to be as well rounded as possible. These are the current positions that make up the management team.

President

Currently held by Angus Ng

The term president does not imply any indication of power. The main role of the president is to facilitate all manager meetings to ensure that all-important issues are dealt with. Additional roles include dealing with management team conflicts and facilitating acceptable decisions making. The absolute duty of the president is to monitor the status of the company and facilitate discussion in the direction of the company. Monitoring may include reviewing budgets, financial situation, new products and entry/withdrawal of regions.

Vice President of Market Research

Currently held by Karen Raiwet

This individual is responsible for ordering all research that needs to be done. The Vice President of Market Research must also be very fluent in interpreting the market research and help other managers use this information effectively. In addition, The Vice President of Market Research in this case is also responsible for forecasting sales volume and profit based on results and marketing research.

Vice President of Advertising and Promotion

Currently held by Tammy Wolf

One of the biggest portfolios a manager can hold, the Vice President of Marketing is responsible for Advertising, Promotion and Sales Force. This includes everything from media mixes and content to amount spent in each region. Responsibilities also include monitoring sales force size, allocation and compensation.

Vice President of Product Development

Currently held by Chris Goodwin

One of the most crucial positions, the Vice President of Product Development is responsible for the creation of new products against patent zones and monitoring of current products to ensure that they are still preferable to the consumer. Additional duties include analyzing cost aiding in pricing and monitoring Research and Development.

Vice President of Production

Currently held by Brad Butterfield

Responsibilities include ordering and managing capacity, entering forecasts and reformulations.

Subsidiary duties include entering Game disk information and keeping updated pro-formas.

II. Market Research (Karen Raiwet)

With regard to ordering market research studies, our team took the approach that one can never be too informed. Consistently ordered was information regarding competitive statistics such as sales force size, advertising, market shares, dealer prices, and dealer availability. Also ordered were studies analyzing media content and reformulation activity. We also thought it was very important to know what the customers wanted, and to this end, we consistently ordered conjoint analyses and self-reported attribute preferences. On average, we ordered 32 market studies each and every year. Sometimes these 32 market research studies were accompanied with experiments involving preferences tests or promotional awareness.

Being aware of the strategy one’s team is following is very important as this knowledge will help discern which studies need to be ordered on a repeat basis. Our team was pursuing a first-mover strategy. We needed to know exactly what our competitors were doing so we could preventative measures such as erecting barriers to entry in the markets we wished to dominate. We needed to know which markets offered the greatest profitability and which niches had been left unfilled. It is also important to learn which studies need to be used in conjunction with other studies. For example, customer brand awareness can be linked with media content analysis; dealer availability with dealer rebates.

As for the overall expense of market research studies, we could not afford to be overly concerned with the cost. The cost of being caught unaware is far greater.

Advertising and Promotion (Tammy Wolf)

When doing advertising and promotions it is important to watch what effects your changes in media and promotional content have on customer and dealer brand awareness, respectively. In doing so it becomes obvious which media contents have the largest effect on consumer and dealer groups. When optimum contents are used huge increases in awareness can occur. The contents involving training are very important for having successful promotions.

For most regions expenditures beyond $2,500,000 have diminishing returns; therefore spending more than this amount has minimal benefits. Increasing expenditures can help in reducing the effects of downturns in the brandmaps economy.

You should change your media mix as the stage of the product life cycle that your product is in changes. The book suggests that it is beneficial to change the media mix often indicating that the life cycle stages in brandmaps are short, thus it is important to stay on top of these progressions.

If you are trying to compete using the sales force variables, raising commissions provides a better incentive than increasing salaries. Providing sales staff with such incentives does help with increasing the sales of your products.

IV. New Product Development (Chris Goodwin)

From a new product development perspective, Westside has closely followed a “first mover” strategy during our term in management. Our new product slogan during the past three years could be described as product quality and customer satisfaction through innovation. Profitability and growth during the past three years has been maintained through continuous innovation and intense knowledge of the market. Not only has Westside made it its goal to “be the best” in terms of product development, but it has focused on “being the best, first.” To achieve this goal, Westside has made it a habit of spending heavily on market research and constantly seeking out new market opportunities. Westside was the first firm to market in Northern Europe (currently the worlds largest vaporware market) with a product that matched consumer preferences closely. To this day, this product (3-2) has maintained its original formulation with only slight modifications to warranty and compatibility levels. Similar preemptive moves have been made in other large markets during the past three years, including the United States and Central Europe. Currently, Westside is reviewing its product strategy in several markets, most notably Canada, in order to secure market share and future profits.

When designing new products, Westside took a methodical approach to ensure the best product was delivered to the market. We first consolidated all our research that would aid in formulating a new product which includes:

Conjoint Analysis which told us which of the five attributes, compatibility, warranty and dealer price was most important and in which amounts the country we were considering entering wanted it.
Self reported attribute tests which told us which of the attributes was most important to the country or countries in question.
Research on reformulation activity, current brand formulations, and any advertising or test market experiments ordered prior to the launch date.

Utilizing this research formulations were contrived that met the wants and needs of the target market. It was decided in pricing to use a skimming strategy, then lower prices as our product costs were lowered. A bid was submitted depending on how lucrative we believed a product would be to our firm. To this end, our bids ranged from $6,556,708 for our initial formulation of 3-2 to $6 for our minor reformulation of product 3-3.

Sales Forecasting and Production (Brad Butterfield)

Sales forecasting is an important but difficult part of the management process in the vaporware industry. Poor sales forecasting can result in high overhead costs for the region in which a product is active thus cutting into net income. Two things are important to remember when sales forecasting:

Sales forecasts are only scored if market share in the quarter is greater than 2.5%. This becomes important when launching a new product as it alleviates some uncertainty of making the first forecast for a new product.

Sales forecasts must include actual sales and unfilled orders.

There are two market research studies available for forecasted industry sales volume (#31) and forecasted product sales volume (#31). These studies can be helpful in determining a starting point, but should not be relied on for the most accurate forecasts as they do not take into account unfilled orders and other factors affecting sales. It is important for each company to come up with a more accurate forecasting strategy. A strategy that has worked at Westside was the use of the market research as a base or starting point. From that base a trend index or level was added to our forecast depending on historical data on whether the product was climbing or declining. After the first year a seasonality index was also added to the forecast due to changes in volume of up to 20% depending on the season. (Refer back to MGT SC 352 notes) Forecasts for products being introduced were determined as a nominal percentage of the market (usually about 5%).

Just remember, forecasting is an art, not a science. You must find means of forecasting that fit the strategy of the firm. Test and retest to find out what works best for your company.

Capacity planning is another important issue in vaporware management as it can cause exponentially increasing costs when not managed properly. All plant capacity strategy undertaken by the firm should be designed to minimize costs associated with over and under utilization of capacity. Throughout the course of the last three years I have come up with several key points that should aid in future capacity planning decisions:

It is important to remember that only 30% of current plant capacity can be ordered without paying the premium plant capacity costs.
It is not wise to operate over 100% capacity for any length of time due to the increased variable depreciation associated with overcapacity situations. If you find yourself operating over capacity, you can use marketing mix variables such as price to reduce demand for your product while increasing your margin.
It was our belief that emergency production limits should be kept low, again due to the increased variable depreciation associated with an emergency production run. Keeping the limit set low (1%-3%) allowed for any miscalculations in forecasts so as to prevent some unfilled orders while preventing too much depreciation due to the run itself.

This completes our memo on advice for the future management team at Westside Vaporware. We wish you all the best and hope you continue the legacy of success we have passed on.

To: New Management Team

From: Nouveau Zeocom Management Team

Subject: Brandmaps Memo

Since you are taking over the firm upon our departure, we would like to take this time to offer you some comments about marketing research strategies, sales forecasting, new product development or introduction, capacity planning, leadership and managing your company, etc.

The first area that could require some time to become efficient in is with a Market Research Strategies. From our experience, it is important to keep you research studies applicable to your firm’s objectives. If you allow for deviation from your objectives, this could cause excess expenditures. When you have decided on what research to order, make sure you take into account a few factors:

1) Plan ahead, usually, 3 quarters in advance gives you good market projections.

2) As well as your own objectives being reflected in your studies, analyzing what the region/market leaders are doing in comparison to yourself (Research Study #41: Regional Summary Analysis) may add additional value. This type of comparison using research is much cheaper than trying to forecast market changes through industry decisions each quarter.

3) Use research extensively to determine the customer brand awareness (Research Study #11), brand quality ratings (Research Study #17) and dealer promotion awareness (Research Study #27). These studies give feedback on how your product is doing relative to the competition and can give you on going performance during the product life cycle.

4) Use research for advertising and promotion experiments (Research Study #35 and #38 respectively), which are invaluable in making wise decisions. In turn, will relate back to higher profits.

It is imperative that you do not rely 100% on the sales forecasting studies. While they are a useful guide for your intuition and can provide a greater understanding of all market forces, they should not be used as the basis for your sales forecasting. There are several main factors to consider when forecasting sales volume. This would include; industry sales trends, competitor spending on advertising and promotions, population changes, stage of the product life cycle, and potential new entrants.

By using several research studies (Research Study #31 and #32) demonstrate possible forecasting of brand volume forecast and industry volume forecast respectively.

Forecasting can be done through compiling various information from other sources. For example, use information about the region - total volume size, the CPI, PCI, population, industry averages, and volume market shares (can be obtained from Research Study #41).

In conjunction with the Research Study, it is advantageous to use several spreadsheets to forecast revenues and expenditures for a period of quarters in advance (See Appendix A). These spreadsheets will help in determining accuracy of forecasting and provide insights in decision making.

There are several major points that one should consider when attempting to formulate a new product. First, by looking at the attributes and preferences of the region(s) in questions (Research Study #47) will provide a customer’s preference. Then, Research Study #10 and #34, Conjoint analysis will allow you to narrow the range down for each product in each of the areas - product attribute mix, warranty, compatibility and price - for each desired region. Once a product is initially designed, it would be a good idea to utilize spreadsheets once again to test it against existing brands to check for violations. Here is an additional spreadsheet that will help you to test product design, it is based on accumulating data from Research Study #33 and/or Research Study #2 plus Research Study #40 (See Appendix B). (Note: you do not have to order all these studies each time, just enough to make the tables complete. A minimum of Study #33 is required to complete the table).

Capacity planning is one of the most important aspects of decision making. We have seen numerous other firms that had major capacity problems due to their lack of proper inventory planning. Capacity planning is accomplished by clearly understanding the fixed depreciation and variable depreciation after production each quarter. Variable depreciation is the focus that must not be ignored. Variable depreciation is directly linked to plan usage. By being aware of the units you are producing and the ratio they generate when applied against capacity, this will demonstrate what levels your plant is running at. If it is greater than 100%, this could lead to excess expenses, you may want to use emergency production to deter this, but emergency production is expensive too. In essence, it is important to order at least the total depreciation (fixed plus variable) to maintain your plan capacity from one quarter to the next and reduce excess expenditures.

There are also several key points to mention with regards to how you organize and manage your company. First of all, it is very time-efficient to get one person to manage each region. As each person can develop explicit knowledge of the entire market such as, the competition, market trends, and other product specific factors. Through experience we have found that mistakes can be made when no one is personally involved in a specific region. By giving one person responsibility over a region we found that our profit and sales forecasting accuracy increased dramatically. This led to higher profits and better company performance. It may also be helpful to develop a structured plan for all meetings as this helped us to make more efficient use of our time.

Thanks and good luck

Nouveau Zeocom Management Team.

Memorandum

TO: New Board of Directors

FROM: Management

RE: Recommendations to new management

These are some recommendations to the new management based on our previous experiences. The basis of our strategies has been on what we think is going to happen in the industry and what our competitors have done. We use marketing strategies and new product developments to stay ahead of our competitors. By introducing one product for each region we enter, we can create the perfect product, based on their preferences.

Marketing research gives you the information you need to make informed decisions. If you were to order all the marketing research it would be a waste of money. By ordering only certain marketing research you can maximize your cost-benefit ratio. We ordered some marketing research studies every time; these help to monitor our position. These were #11(Customer Brand Awareness) which shows how well your product is known. This also gives you an indication about how your advertising is doing. If your awareness is low then you have an ineffective advertising program. Also you can see how your competitors are doing and comparing this with Research #36 in order to see how effective their advertisement is. Using #36 you can compare advertising spending, media content, and media mix and using #11 you can see the awareness at those levels.

Dealer Availability (#28) is also an important monitoring research study. It will tell you how available the product is to your customers. Dealer availability will help your product's convenience levels as well as good promotion spending. Another really good way to increase your dealer availability is to give a dealer rebate. This is especially important if you have a product with the lowest margin.

Reformulation Activity although it can be expensive early in the game will tell you all the reformulation activity so you know the product compositions of your competition. It will also tell you what the high, low and average bid for reformulation was. We found that our bid of 800,010 was always accepted and we were always lower than the average bid. Firms that were bidding in the millions of dollars were throwing away potential profits.

Advertising experiment #36 (Competitive Information – Brand Marketing Program Profiles) is one of the most important research studies we did. This gave us a comprehensive look at what other firms were spending on advertising, promotion and what types they were using; also it told us the sales force they were using. When we made our decisions, we wanted to know what the competition was doing. It is very important not only to know what you are doing but to know your competition as well. We didn’t necessarily match their spending but it did give us an indication on how we were spending in relation to everyone else. To save money make sure to order it only for the regions you are in because it is very expensive.

Regional summary analysis (#41) provides most of the information about what is happening in the region. It provides industry R&D, population forecasts, industry sales, and how much market shares you and your competition have and their performance perceptions, and convenience. Also this is how you find out how much the customer is actually paying for your product.

The last one was Brand Satisfaction Ratings. This is important just to see how people like your product. No matter what you do, if the product stinks then no one will by it, so this will show changes over time how people like your product and your competition’s. Remember preferences change over time so make sure to watch the ratings over time.

And of course order #51 in order to see how you are doing in the course. It will show you where you are doing well and where you are doing poorly.

Other Marketing Research Studies

Some other marketing research studies that are a good idea is #1 (competitive information – Dividend and Earnings). This study is good so you can see what dividends the other groups are giving out and their earnings. Dividends are given out in order to satisfy the shareholders and improve your Return on Investment.

Advertising and promotion (#35 & #38) experiments are maybe the most important research of all because with out the proper types the money spent could be a waste. You are given 10 experiments a turn and I would advise you to use them every time a new region opens in order to find the right media mix, spending and type to maximize your exposure and minimize your spending.

Also you will need a conjoint analysis (#10) and self-reported attributes (#47) in order to formulate a new product. These studies together will tell you the needs and wants of the region so you can tailor a product that is right for the customer.

Managing Our Company

Our philosophy is to have a slightly lower product cost lowest and a mid-range of about five for compatibility and warranty. Also we want to have one product for one region in order to maximize the satisfaction of that product. By having close to the optimum product we can then outperform products that are designed for more than one region.

The pricing of our product was a function of covering our costs and making it attractive to the customer. We wanted to have the lowest price but only by a slight margin because we didn’t want to have a drastic cut in profit. We then used the experience curve to our advantage and as we produced more, our profits got larger and larger. By using the Skimming philosophy instead of the penetration strategy we were the lowest cost producer while not cutting into our profits too much.

Capacity Planning

I think the best strategy for you to implement is to order 30% of your total capacity every turn. If you don’t then you could run into the same problem we did when we didn’t have enough capacity to produce all the orders for the Pacific region. If you order 30% every turn you should be able to cover your depreciation and growth and won’t have to have unfilled orders or purchase capacity at a premium.

New Product Development

As we stated above, our philosophy was to have a custom tailored product for each region we entered. To find out what they wanted we used marketing research study (#10) and (#47). These two studies will tell you what and how much of each product the customer wants. Then we used $800,010 as our bid for reformulations and our bid was excepted everytime and we didn't have to spend the millions of dollars the other groups did.

We also used the performa spreadsheet in order to do a quasi profitablility forecast. By using the spreadsheet you can see the potential of the product and if it is economical to introduce it in the target region.

Forecasting

We didn't use any marketing research for our sales or profitability forecasts. We found that they were based on what would happen if everything remained the same and especially at the begginng of the game every was changing very rapidly. We made our forecasts based on our last quarter sales and our estimation of what was going to happen. The only study we used was the industry sales over time from marketing research study #41.

The most important tool we used was the performa spreadsheet in calculating our profits. By using forecasts that were conservative not overly optimistic we could estimate our profitiablility very well using the spreadsheet. It is our recommendation that you continue to use the spreadsheet for all your profit forecasts.

Memo & Recommendations to New Management:

Capacity Planning

Introduction

Capacity planning is one of the most important components in Brandmaps. These decisions should be made with consideration to many factors. Factors such as sales forecasts, production order, inventory, current capacity, marketing plans and many other factors influence capacity planning. Thus you must take into account what each attribute of the factors is or have reasonable estimates of them.

Capacity Management

Producing one unit of product requires one unit of plant capacity regardless of brand or region. The key is to have plant capacity equal to current sales volume and total production orders. Sales volume forecasts can be determined by ordering marketing research study # 32 or as in the case of new product introductions, use the sales forecasts from marketing research study # 20. Since these forecasts are based on current conditions not future conditions, discretion should be used when examining this information.

The plant depreciates according usage rate. This depreciation consists of a variable component with a standard value of 12% and a fixed 3% component. Plant capacity depreciation is calculated by the formula:

Usage rate * standard variable depreciation rate

Thus, due to the quarterly depreciation of 15%, assuming 100% capacity utilization, you must order 15% plant capacity to maintain the current capacity. This is essential to the operation since low capacity has very grave consequences, which will be discussed later.

You are permitted to order a maximum of 30% of the current capacity without paying premium costs. However, the higher the plant capacity, the more plant capacity you must order to maintain the current capacity.

Plant additions are not available until the end of 2 quarters after ordering and costs $750 per unit plus $250,000 in fixed costs. These costs show up as non-operating income deductions in Current Division Operating Statement due to loans taken out if there isn’t enough cash to pay for the order currently.

When the firm is successful and making profit, there is little problem with having to borrow large loans to cover the production needs. This is because the profit increases cash levels, which is used to pay for the plant capacity. However, if you have negative income, then the cumulative costs from interest of the loans can be substantial. In addition, the higher the amount of the loan, the higher the interest rates.

Two situations occur with plant capacity. Either there is too much capacity or not enough capacity relative to demand. The following are possible courses of actions that can be used to correct the undesired situation and the associated advantages and disadvantages of each course of action. Consequently, all factors should be taken into consideration before making the final decision:

A. If sales are less than capacity (ideal situation), some of your options are:

1. Don’t order capacity and let depreciation decrease capacity

2. Maintain current capacity by ordering 15% of current capacity

3. Sell plant capacity to competing firm

1. Don’t order capacity and let depreciation decrease capacity:

Advantages:

Increasing operating efficiency by reducing unused plant capacity
Minimize decrease to net profit from non-operating income loan repayments

Disadvantages:

Vulnerable to over capacity utilization due to sudden increases in demand
Losses of additional capacity ordering ability since you are allowed to order 30% of current plant capacity. Thus as capacity decreases, so does the ability to increase capacity.

2. Maintain current capacity by ordering 15% of current capacity:

Advantages:

Keep plant depreciation rate and product costs (by keeping variable depreciation rate small) at a minimum
If demand suddenly rises, the current capacity will be able to produce needed products
Additional capacity ordering ability will be maintained in case of emergency over capacity

Disadvantages:

Waste cash by ordering unnecessary and unused capacity
Reducing profits by loan repayment amounts

3. Sell plant capacity to competing firm:

Advantages:

Regain cash needed to repay loans which are currently reducing net profit
Increasing operating efficiency by reducing unused plant capacity

Disadvantages:

Helping the competition fulfill customer demand while losing your potential customers that could have been acquired from the competitors’ unfilled orders
Increasing competitor’s market share and profit while reducing your market share and profit potential

B. If sales exceed plant capacity, some of your options are:

1. Produce at plant capacity and set emergency production limit to 0% thus not meeting consumer demand and foregoing potential sales

2. Set emergency production limit to non-zero(1-10%) thus meeting small demands above plant capacity

3. Temporarily reduce demand through increases in price and/or reduction in advertising and stopping promotion activities

4. Produce above capacity

5. Order more plant capacity at 30% of current capacity

6. Order more plant capacity than 30% of current capacity

1. Produce at plant capacity and set emergency production limit to 0% thus not meeting consumer demand and foregoing potential sales:

Advantages:

Minimize product costs by minimize variable costs
Minimize plant depreciation

Disadvantages:

Forgoing potential sales that could be had by meeting demand
Decrease perceived customer satisfaction and convenience which plays a large role in product quality ratings
Reduce potential loss of sales in the future

2. Set emergency production limit to non-zero (1-10%) thus meeting small demands above plant capacity:

Advantages:

Meeting a small amount (max. of 10%) of demand over current production
Preventing loss of customers to competitors if demand is met
Preventing loss of perceived brand satisfaction, convenience, quality and future sales
Minimize over capacity utilization by setting a production limit
Sales predictions are more accurate

Disadvantages:

Unit costs on emergency production are 25% above standard production costs, thus total variable costs increase 25% for all brands using emergency production due to the overtime and opportunity costs associated with diverting efforts from other products
Still vulnerable to stock out if demand is greater than 10% of current capacity

3. Temporarily reduce demand through increases in price and/or reduction in advertising and stopping promotion activities:

Advantages:

Minimize over capacity utilization and costs associated
Reduce the possibility of a stock out and resulting consequences

Disadvantages:

Decrease customer satisfaction due to increase in price
Subsequent reduction in price at a later time can be viewed as frequent price changes and increase customer satisfaction thus resulting in potential loss of future sales

4. Produce above capacity:

Advantages:

Meeting forecasted demand
Preventing negative consequences of stock out

Disadvantages:

Increase in variable costs and thus costs per unit due to cost premiums as dictated by Table 8 in Chapter 4 page 38
Increase in plant depreciation thus reducing total plant capacity and loose additional capacity order ability

5. Order more plant capacity at 30% of current capacity:

Advantages:

Increasing capacity and additional capacity ordering ability

Disadvantages:

Decrease in net income by increasing non-operating income costs from borrowing
Takes 2 quarters for the order to arrive

6. Order more plant capacity than 30% of current capacity:

Advantages:

Vastly increasing capacity and additional capacity ordering ability

Disadvantages:

Plant capacity ordering is very costly between 31% and 60% of current capacity, a 50% premium is charged above regular costs per unit. Thus increasing the loan amount and non-operating costs

To: New Management

From: Prior Management (Firm A1-6)

Subject: Recommendation

Welcome to a great company, Microsoft Inc., we sincerely hope that you will have as great of a success record as we have experienced over the past eleven quarters. To assist you in leading the company into the future here are some pearls of wisdom that we have acquired over the years. We will discuss planning strategies, marketing strategies, new product development or introductions, capacity planning, sales forecasting, leadership and managing the group process.

Planning Strategies:

Planning strategies are important in the initial stages of the Brandmaps simulation. An idea is to regroup and refocus the corporate strategy and product distribution. We removed our product 6-1 from the initial five regions, reformulated it and introduced it into only two regions which had similar customer preferences. This allows you to focus marketing efforts more effectively by providing the customer with a product that is desired and suits their preferences.

Marketing Strategies:

When marketing the Brands products you must target the product to suit customer preferences and the demographics of the specific region. You have to obtain research on customer wants and needs in the product, as well as, price sensitivity, the per capita income, economic growth and population size of the region. Each product should be formulated to target a specified region. We have found that marketing a generic product formulation to all regions is ineffective and usually results in losses later on as customers would prefer a product that suits their needs. The media content and media mix should be based on the demographics of the region (ie. Canada is a developed country, therefore they have a well established television network, so you gear your media mix towards television.). Advertising expenditure should be an increasing amount, approximately 4-9% of sales, with varying media messages focusing on what the product does well (ie. Price, uses, benefits, etc.). Promotional expenditure should be pulse, with a large expenditure at the launch of the product and varying throughout the product life cycle. Promotions should vary depending on which stage of the product life cycle the product is in, from dealer training and trade shows to merchandise and prize giveaways.

New Product Development and Introduction:

Use conjoint analysis and self reported attribute preference studies to determine the most suitable product for the region that you are looking at introducing a product into. The conjoint analysis tells you what attributes the customers prefer and the preference levels of each attribute in the product. The self reported attribute preferences describe how much of each attribute the customer wants in the product for that region. Ensure that the product formulation is feasible and cost effective, by researching patent zones and pricing levels. The product formulation bid should be high enough to ensure that your product would be accepted, weigh future expected gains for the product formulation against current formulation costs.

Capacity Planning:

By forecasting realistically and conservatively you can build up capacity to meet current and future demand. This will allow the company to save money by avoiding emergency production runs which are costly. If the sales expand too quickly for the expansion of capacity, raise price or possibly order premium capacity. It is more cost effective than emergency production runs and allows for a quicker expansion of the company.

Sales Forecasting:

Conservative and rational sales forecasting aids in capacity planning, by allowing you to determine production planning for each brand. By looking at market trends and economic predictions you can determine future demand for the product.

Leadership and Managing the Group Process:

For the group to work well it is important to get along and assign tasks. You do not necessarily need to declare a leader for the group, but you need to be willing to share responsibilities. Share the workload equally, try to place people with tasks that they enjoy and do well. Be open to criticism and differing opinions of group members, keeping in mind that you have a common goal, working towards betterment of the company.

Good luck in running the company and we hope that these pearls of wisdom will help in making the transition as smooth as possible.

Sincerely,

The Previous Management Group

Firm A1-6

MEMORANDUM

To: Future Brandmaps Management

RE: Recommendations to the new management.

Organizational Structure

Assign regional manager for each geographic region at the beginning of

the game. Each manager would be responsible for product development,

recognizing trends in their region, cost analysis, interpreting market

research studies, forecasting sales and operating income, and determining

media mix and content and promotional type. Each manager would be required

to come prepared with these numbers to complete the decision variables.

Managers would be advised to establish a strong product line early on.

These products should be specifically developed for each region before

focusing on other decision variables such as sales force size, advertising

and promotion. Our management team jumped into the game with many ideas but

not a solid product.

Marketing Research

Maintain a number of consistent research studies each quarter so that

managers can recognize significant changes and trends in their operating

environments. For example, we regularly ordered study #41, Regional Summary

Analysis. This provided mangers with a brand performance statistics chart,

summarizing the current status of all actively distributed brands in a

specified market region. This provided us with insightful information

regarding volume market shares, dealer prices and brand perception ratings

of performance and convenience. This information assisted in forecasting

and sales and marketing decisions. Consumers place a lot of importance on

performance and convenience in choosing which Vaporware brand to purchase.

This also allowed us to monitor our competitors. It incorporated industry

advertising expenditures and promotion expenditures which allowed managers

to calculate average expenditures in each region.

We also regularly ordered study #32, Brand Sales Volume Forecasts.

They provided next quarter brand sales volume forecasts for all our active

products in all regions. We used this information as a guideline only for

forecasting sales volume but also studied seasonal trends. We realized

there was possible error in the forecasts and managers were expected to use

their own discretion in forecasting future sales.

Study #28, Dealer Availability was useful in determining estimates of

the percentage of dealers who sell each brand in the current and previous

four quarters. This was used as an indicator of sales force effectiveness

and where to allocate promotional spending.

Study #24, Market Shares provided dollar and volume market share

estimates and was a useful comparison to competitors.

Customer Brand Awareness, study #11 was another useful indicator of

where to allocate advertising dollars and more effective media content.

We also tried to time ordering of marketing research studies and order

them on a syndicated basis rather than off-peak quarters when they were more

expensive. Other research studies such as #10, Conjoint Analysis, are

valuable only periodically.

Forecasting

When forecasting sales look for industry and regional seasonality

trends. Look for price sensitivity in each region, overall industry demand,

where the product is in the life-cycle. Also take into account whether you

have increased or decreased advertising and promotions in that quarter.

Increased exposure due to advertising will usually result in higher sales.

Sales force size, time allocation and commission were important factors in

forecasting sales.

Profitability forecasts should be prepared in advanced using concrete

numbers and financial analysis. A modified pro forma statement can be

useful in obtaining these numbers.

Advertising and Promotion

Managers will want to maintain some consistency in advertising

objectives through appropriate media mix and content and promotional type.

For example if a manager wants to be a low cost leader in a particular

market focus on price, do not switch advertising focus to performance

guarantees. Also do not change too many of these variables at once. This

consistency will help to explain changes in sales and what they are

attributed to.

In maintaining a consistent marketing plan you won't be tempted to

follow market leaders and emulate their strategy. What works in one quarter

won't necessarily work in the next because consumers have already been

exposed to it. Each company has its own distinct advertising and promotions

strategy to reflect their own product line.

New Product Development and Introductions

Don't concentrate your efforts on developing one product that will

satisfy the customers in all regions. Only introduce products into regions

where consumers have indicated a preference for your product as indicated

by study #47, Self-Reported Attribute Preferences and use #10, Conjoint

Analysis to determine the weighting of each attribute. Only distribute

products in multiple regions if consumers prefer similar attributes. Do not

attempt to make it fit with high advertising and promotional expenditures

because consumers won't buy a product they don't want.

Miscellaneous

Capacity Anticipate problems with capacity in early quarters. Sales

will increase faster than expected. Keep in mind that over capacity

increases the rate of depreciation. Unfilled orders cost more than

inventory in terms of lost business. The only time to worry about inventory

is if you plan to drop a product. Drop your product at a time when

inventory is lowest to avoid inventory disposal costs.

Reformulations Don't bid too high. Often a huge bid isn't necessary

to obtain the reformulation. An excessively high bid will result in huge

losses in the following quarter that may be difficult to regain. Don't

attempt a minor reformulation to try to save a dying product. It should

only be used to improve an already successful product. Prior to bidding

make sure you do a patent zone search to ensure the product is available.

Lots of money can be lost on failed bids.

Competitive Awareness Be aware of what your competitors are doing. We

did not pay close enough attention to competitors sales force size, salaries

and commissions. As a result, we failed to motivate employees and lost

potential sales and dealer availability. It's also important to know what

competitors are spending on advertising and make sure it is consistent with

your own spending to ensure your product receives equal exposure.

Memorandum

To: New Management

From: Old Management

Re: Recommendations to new management of Smathmouth Inc.

The past 11 quarters has been a rough ride for Smashmout Inc. However, we are now facing a much brighter future according to recent marketing research studies and financial statements. There is a good possibility that Smashmouth will begin to experience excellent profits due to many factors in which new management must focus their attention on. The following are a few off the critical factors and a briefing of each:

Better understanding and use of the Brandmaps market research studies.

There are many marketing research studies that can be purchased and each comes with a pricy tag. However, the benefits of using each study effectively does offset the cost. Certain research studies that are strongly recommended are Industry Advertising, Conjoint Analysis, Market Shares, Customer Brand Awareness, Preference Testing, Patent Search, Dealer Prices, Industry Sales Volume Forecasts, Brand Sales Volume Forecasts, and Advertising Program Experiment.
The studies listed above will greatly enhance decisions if used appropriately and with understanding. For example, Industry Sales Volume Forecasts, Brand Sales Volume Forecasts, and Market Shares can combined to predict close to accurate sales forecasts.

Learning experience from past mistakes.

Through many bad decisions, we are now able to make good decisions. Learning what NOT TO DO, was a most beneficial experience. There were many product reformulations and product introductions that we did not consider in depth. Our strategy was to make a product that fit a certain regions criterias but we left out the idea that other firms were also ready to introduce a competitive product to the same region. We only thought that if our product was good and accepted, we would be able to dominate the market. However, even if a product is the “ideal” product, a particular region can accept many different products. Not the other way where one product is accepted by many regions.
In making a bid and submitting a formulation, it is important to consider what the competitor will do. Ask yourself, “If I do this and think it is good, wouldn’t others think the same as I do and do the same thing?”. Instead of going forth with the most popular strategy, use a strategy that someone else would not think of and make sure that strategy is possitively feasible.

Short term sacrifice for long term benefits.

We have always kept in mind the short term actions and what effects they will have in the long run. Conclusion? Sacrifice for long term benefits! When we believe in a particular product we were not hesistant about bidding enough so as to gaurantee us the patent on that product. Although we experienced failures from successfully bidding for a product that ended up unprofittable, we are happy to say that there are also products that are critical to our success and it was critical that we got it!

Greater understanding of the impact that advertising and pricing strategies has on product success.

In depth project studies (assignment 4 and 5) have resulted in a better undertanding of the impact that effective advertising strategies and pricing strategies have on product performance. After doing these project studies, we have discovered, or shall I say we are enlightened by the dramatic effects that pricing and advertising have on costs and benefits. After doing these studies, we were able to generate better customer brand awareness and market shares started to increase.
It is important to focus on forecasting accuracies but it is just as important to focus on how these forecasts are to be met. Effective pricing and advertising will allow better and positive forecasts to become actual sales.

Ability to understand and predict actions of competitors.

Throughout the game, it was exetremly improtant to make predictions about competitor actions and why they would perform such actions. One thing important to realize is that even if u come up with something u think as the perfect strategy, always be conservative and remember that someone else may well have the same idea or their idea could be better.
We used market studies about our competitors to make our own decisions. In one scenario, although we were confident that region 7 would be dominated by our existing product that was a sure winner, we still made room for doubt and the possibility that some new product may have a chance to beat out ours.
There are two important ideas here. First, try to understand what your competitor is doing and second, be alert and conservative!

This lists only a few of many critical success factors in which the new management of Smashmouth must focus their attention on. In conclusion, it is the actions of your competitors and the events of the market that should be the determining factors of your decision. Understand the market and the competitors and your decisions will reflect your understanding. Most importantly, the marketing research studies are extremely effective if you can understand them and know how to use them! If you are not completely sure about how to use them (which was our mistake, but we needed time to learn) then devote as much time as you can to learn them early on in the game.

CJM corp.

Memo

To: Professor Peter Popkowski

From: CJM corp.

Re: Recommendations

Managing a company requires a lot of time, work, planning and patience. Moreover, as we have experienced, taking over where someone has left off is not at all easy. In fact, you may go through many hours of preparations just to make decisions that can either have a positive or negative outcome. To help you get started, below is a list of recommendations on how to go about making your decisions with regards to new product development, marketing research, advertising and promotions, and pricing strategies.

Because new product development is not an easy task, some things should be taken into consideration. For instance, you should carefully select the region in which you wish to enter. You should take into account population growth, industry growth, taxes to be paid, check to see if you have enough capacity to handle the demand should your product do well, see what products are currently in that region and determine whether you have a good chance of capturing a significant market share. You should also determine what that particular region wants, see how much it would cost to produce that product, and find out whether or not it would be profitable to enter that region.

After you have carefully selected the region (or regions) in which you wish to enter, you will also need to determine how to select a product that best suits the region(s) you are entering. The most important step is to make sure you order enough research that will help you develop a product. Market research studies you should order include (but not all at the same time nor the same order): Market Research Study #10 - Conjoint Analysis, MkRS #12 - Concept Testing, MkRS #13 - Preference Testing, Two Existing Brands, MkRS #14 - Preference Testing, One Existing and One Hypothetical Brand, and MkRS #47 - Self Reported Attribute Preferences. These are the minimum marketing research studies you should order at least two or three quarters before the introduction of your new product. Once you have received your research, you should use the results of Study #47 in conjunction with Study #10 to tailor your product. After this, you should do some further testing to obtain optimal levels of each attribute. This can be done using Studies #12 and #14. Finally, Study #13 can be used to test your final proposed product against the leading competitor's product.

Concerning marketing research studies, as stated above, you must order enough research studies in order to make your next decisions. As a general rule, it is better to order more research than it is to under order research. As each quarter goes by, you will get a feel of what research you should order every quarter and which ones you should order every four quarters. For instance, a research study that should be ordered every quarter is MkRS #32, which are the Brand Sales Volume Forecasts. This will assist you in forecasting sales for the next quarter although you must take into account seasonality, as these figures do not. With some researches, you can organize it so it takes the form of a decision tree. For example, if customer brand awareness has decreased since the last quarter, then we should order MkRS #35, which is the Advertising Program Experiment. Because if customer brand awareness has decreased by X amount (in percentages), it may be that you are not spending enough money on advertising, you have a wrong media mix or a wrong media content. By ordering this research study, you can determine what went wrong and perhaps choose something that would be more efficient in that (those) region(s).

This leads us to the discussion of advertising and promotions. Advertising and promotions are important in creating brand awareness. There are many different methods that can be used in an advertising strategy. They are continuity, flighting and pulsing. You must decide which method would better suit your company's goals and objectives. As a rule of thumb, research on advertising (spending, media mix and media content) should be conducted as explained in the previous paragraph. The same goes for promotions. If dealer availability and dealer promotion awareness has decreased since the last quarter, then MkRS #38 - Promotion Experiment, should be conducted. In addition, if you are introducing a new product or an existing product in a new region(s), advertising expenditure should be high in order to create brand awareness amongst your customers and dealers. Promotions need not to be high, as you want to create brand awareness first. However, advertising spending should not be so high that we end up with advertising saturation, where spending an extra X amount of dollars does not increase customer brand awareness. Furthermore, if your product is in the more mature stage, advertising and promotion expenditures should be high. In a mature stage, increase advertising expenditure will help to remind consumers of your product and to increase brand loyalty. Promotions should also be higher in order to maintain the momentum of the brand and to encourage repeat buying and frequent use of the products.

Lastly, careful consideration should be given to pricing strategy. There are two primary product/ market introduction-pricing strategies. They are skim pricing strategy, which sets the price high relative to your competitors and the second is the penetration pricing strategy, which involves setting the price low and using other elements of the marketing mix to reach the mass market. Both strategies have their advantages and their disadvantages; thus, you must look to see which of the two is better suited to your product. For example, if your product has a strong relative advantage over your competitor's product, then it might be better to look into the skim pricing strategy but there are other factors that you should consider such as the elasticity of demand, if the region(s) are price sensitive, whether the competition is strong or weak, and so on. If your product is the most preferred product in the (those) region(s), and then your price should take into account your competitor's price, price sensitivity of the region(s), and whether or not profit margins are significant. The pricing strategy should maximize a firm’s profits. What good is a low price if its profits and margins are minimal that it barely clears your costs, especially if your product is the one that most customers prefer? Since your product is preferred, you could probably afford to charge them a premium price because the customer will pay for a product, which is exactly or very similar to their desire.

In conclusion, we hope you will review these recommendations and use them to aid you in your future decisions. We wish you the best of luck and much success in your future endeavors.