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Preview text MKTG 2201 SIMULATION PROJECT FINAL PAPER The report below aims to reflect on the decisions made by my company, Ride Away, during the six quarters of the Live Marketplace Simulation. The simulation in question involved carefully creating a product to fit what customers need and value whilst applying marketing theories to aid in business success. 1. STRATEGY My initial strategy was to target the Speed market due to its highest market potential demand. By capturing a significant market share, I would be able to grow and solidify RideAway’s reputation before diversifying into other segments. From quarters 2 – 4, a product development strategy was implemented by developing diverging, recreational, carbon fiber bikes so that customers within each segment could find the product most tailored to their needs. In this manner, RideAway could establish a foothold in the market and capture significant interest from incoming consumers. From quarters 4-6, another diversification strategy was implemented in order to expand the company into other segments within the bike market seeking to increase revenue streams from other potential customers (speed and mountain). Throughout the simulation, I continuously observed the decisions of (both) my successful and unsuccessful competitors seeking a better understanding of what significant, or subtle, features and actions consumers tended to respond to. Simultaneously, I concluded that for my company to succeed, I also had to increase the price of my products. I noticed that the great majority of my competitors maintained, at least, two open stores. And so, I decided to carry the same strategy. However, it was quite challenging to find the correct balance between what was beneficial for my company while still pleasing bikers and vice versa. In several quarters, my total net profit was negative and that was quite frustrating. Still, I believe that my marketing strategy was quite effective and having four models (SpeedyBike, TrouperTurboK, Tanjo and X TrailsPlus) allowed me to fully experience all the possibilities and segments available in the simulation. 2. CONSUMER BEHAVIOUR In order to better understand consumer behavior, I constantly put myself in their shoes and reflected on how I would react to each individual business decision – especially in regards to the extent to which these decisions would make the consumer more or less inclined to purchase the good. When designing and modifying each of the brands, I thought about which segments would value which additional features and benefits for their bikes and at what cost (both for the company and for the consumer). For instance, when redesigning TrouperTurbo mountain bike as a speed bike (TrouperTurbo K), I prioritized optimal branding for the market with a durable exterior, agile, rugged design for uneven terrain over a low price point because consumers in this segment (77 vs 62). Rotterdam and Copenhagen where, approximately, 62% of inhabitants travel via bikes. 4. MARKETING MIX The 4 P’s of marketing (place, product, promotion and price) were all addressed throughout the simulation. In regards to the product, I decided to introduce a new one

every quarter. This would allow me to allocate sufficient resources to strengthen their reputation through marketing in the form of advertisements, social media campaigns etc. My approach towards developing a successful line of products was to focus on the speed segment while still targeting recreation and mountain. In this manner, RideAway could offer a variety of products including: a standard speed bike (Speedy), a cheaper alternative (TrouperTurboK) and an expensive, luxurious brand ( XTrailsPlus); appealing to a wide variety of customers. Speaking specifically on the bikes, XtrailsPlus was intended to be the bike most tied to the priority segment (speed). It offered the newest design and a greater number of features as compared to competitors at a competitive price point. The TrouperTurboK was intended as the cheapest market alternative as a form of predatory pricing to undermine CapacityBikes’s Capable model – the previous cheapest alternative. In quarter 4, I introduced my 2nd priority segment: mountain bikes. I did so to diversify and reach a new, incoming audience of consumers. I redesigned the Tanjo Bike multiple times in order to offer more benefits including improved tires and suspension – considering the market responded positively to higher quality bikes despite increased prices. If there was an additional quarter, I would definitely design a secondary product in the recreation segment in order to shift my primary focus to mountain bikes concentrating all my resources on my most profitable brand ($629 profit per unit). In regards to place, I decided to test my product in Bangalore considering the relatively cheaper initial investment required in the area. Apart from the cheaper cost of leasing a store in Bangalore ($13,000 per quarter), the general cost of living in India is much lower – meaning I could hire more employees and advertise cheaply. In addition, due to Bangalore’s vast population density, the city had the 2nd highest potential demand for recreational bikes in a global scale. I also chose to expand to Amsterdam because they had the highest potential market for recreational bikes (6830), the 2nd highest potential for speed bikes and the 3rd highest potential for mountain bikes. The third and final store location chosen based on its sky-high market potential was New York. Not only did New York rank 1st in the mountain segment, it had the second highest demand for recreational bikes. This being said, I decided not to open a fourth store so that RideAway could allocate its available resources more efficiently in the locations it was already present in – aiming to increase its market share. Promoting my bikes was definitely the most 5. FINANCIAL ANALYSIS For each quarter of the simulation, I referred and utilized the financial performance aspect of the scorecard to indicate the well – being of RideAway. After all, the primary purpose of the company is to generate profit. Following the test market, I noticed that the industry average for financial performance was -0, whereas RideAway’s was far below that; placing my company at a highly disadvantageous position. The negative overall profit could be attributed to the extremely high maintenance and initial lease costs of opening new stores in locations such as Amsterdam and New York. In addition, I believe there was a misallocation of resources that also contributed to a poor profit margin. For instance, more money could have been spent on additional salespeople and advertisements. Analyzing the financial reports from quarter three, I realized my financial performance was terrible (-8. 237) and I had to improve it rapidly. I decided to take a step back and close my New York store temporarily while also maintaining low fixed costs by conserving a reduced amount of personnel and inserting a balanced number of media placements. By the end of the simulation, however, I was still relatively frustrated with my financial performance (-5). Still, I was satisfied that RideAway was capable of, even if in the slightest, of adapting to change effectively and improving its performance as compared to the initial quarters. 6. SUMMARY

As an economics and business major with a future concentration in marketing, it is safe to say that the Live Market Place Simulation was of upmost importance for me in order to truly understand and be able to apply all the concepts explored and discussed throughout the past weeks in class. The hands – on experience offered by the simulation provided me direct contact to the financial area of marketing; which is also of infinite importance towards a successful business practice. In regards to the individual and overall performance of segments within RideAway, I must say it was a bit frustrating. In reality, I thought it was much simpler than it turned out to be and I believe that brainstorming possible market entries and strategies before actually executing them could be/ is a strong route to success in the future. Skip to document  University  High School  Books Sign in My Library      Information  AI Chat Premium Marketing Final Marketing Final Project Course Marketing (MKTG 2201) 82 documents University Northeastern University Academic year: 2022/2023 Uploaded by: Anonymous Student Northeastern University Recommended for you  6 MKTG - Chapter 5 Homework Marketing

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Coursework 100% (1)  11 Chapter 9 Marketing Lecture notes 100% (1)  2 Chapter 1 Introduction to Marketing Marketing Lecture notes 100% (1)  1 2 13 and 14 - Notes - Alex DePaoli Marketing Lecture notes 100% (1)  6 Chapter 4 mktg - Textbook notes Marketing Lecture notes 100% (1) Comments Please sign in or register to post comments. Students also viewed  Quiz 1 Topics - Summary Marketing  Marketing Sheet - Summary of chapters  Calyx flower 9-21 - Homework  Marketing Final Review  Marketing Quiz 2 Review  Marketing Quiz 1 Review Related documents  Marketing Simulation Report -

 Chapter 5 notes  MKTG2201 Cheat Sheet 2 - Exam study guide notes  Document 33 - Paragraph summary  Final exam study guide  Practice Questions for Quiz1(1)-2 Preview text MKTG 2201 SIMULATION PROJECT FINAL PAPER The report below aims to reflect on the decisions made by my company, Ride Away, during the six quarters of the Live Marketplace Simulation. The simulation in question involved carefully creating a product to fit what customers need and value whilst applying marketing theories to aid in business success. 1. STRATEGY My initial strategy was to target the Speed market due to its highest market potential demand. By capturing a significant market share, I would be able to grow and solidify RideAway’s reputation before diversifying into other segments. From quarters 2 – 4, a product development strategy was implemented by developing diverging, recreational, carbon fiber bikes so that customers within each segment could find the product most tailored to their needs. In this manner, RideAway could establish a foothold in the market and capture significant interest from incoming consumers. From quarters 4-6, another diversification strategy was implemented in order to expand the company into other segments within the bike market seeking to increase revenue streams from other potential customers (speed and mountain). Throughout the simulation, I continuously observed the decisions of (both) my successful and unsuccessful competitors seeking a better understanding of what significant, or subtle, features and actions consumers tended to respond to. Simultaneously, I concluded that for my company to succeed, I also had to increase the price of my products. I noticed that the great majority of my competitors maintained, at least, two open stores. And so, I decided to carry the same strategy. However, it was quite challenging to find the correct balance between what was beneficial for my company while still pleasing bikers and vice versa. In several quarters, my total net profit was negative and that was quite frustrating. Still, I believe that my marketing strategy was quite effective and having four models (SpeedyBike, TrouperTurboK, Tanjo and X TrailsPlus) allowed me to fully experience all the possibilities and segments available in the simulation. 2. CONSUMER BEHAVIOUR In order to better understand consumer behavior, I constantly put myself in their shoes and reflected on how I would react to each individual business decision – especially in regards to the extent to which these decisions would make the consumer more or less inclined to purchase the good. When designing and modifying each of the brands, I thought about which segments would value which additional features and benefits for their bikes and at what cost (both for the company and for the consumer). For instance, when redesigning TrouperTurbo mountain bike as a speed bike (TrouperTurbo K), I prioritized optimal branding for the market with a durable exterior, agile, rugged design for uneven terrain over a low price point because consumers in this segment (77 vs 62). Rotterdam and Copenhagen where, approximately, 62% of inhabitants travel via bikes.

4. MARKETING MIX The 4 P’s of marketing (place, product, promotion and price) were all addressed throughout the simulation. In regards to the product, I decided to introduce a new one every quarter. This would allow me to allocate sufficient resources to strengthen their reputation through marketing in the form of advertisements, social media campaigns etc. My approach towards developing a successful line of products was to focus on the speed segment while still targeting recreation and mountain. In this manner, RideAway could offer a variety of products including: a standard speed bike (Speedy), a cheaper alternative (TrouperTurboK) and an expensive, luxurious brand ( XTrailsPlus); appealing to a wide variety of customers. Speaking specifically on the bikes, XtrailsPlus was intended to be the bike most tied to the priority segment (speed). It offered the newest design and a greater number of features as compared to competitors at a competitive price point. The TrouperTurboK was intended as the cheapest market alternative as a form of predatory pricing to undermine CapacityBikes’s Capable model – the previous cheapest alternative. In quarter 4, I introduced my 2nd priority segment: mountain bikes. I did so to diversify and reach a new, incoming audience of consumers. I redesigned the Tanjo Bike multiple times in order to offer more benefits including improved tires and suspension – considering the market responded positively to higher quality bikes despite increased prices. If there was an additional quarter, I would definitely design a secondary product in the recreation segment in order to shift my primary focus to mountain bikes concentrating all my resources on my most profitable brand ($629 profit per unit). In regards to place, I decided to test my product in Bangalore considering the relatively cheaper initial investment required in the area. Apart from the cheaper cost of leasing a store in Bangalore ($13,000 per quarter), the general cost of living in India is much lower – meaning I could hire more employees and advertise cheaply. In addition, due to Bangalore’s vast population density, the city had the 2nd highest potential demand for recreational bikes in a global scale. I also chose to expand to Amsterdam because they had the highest potential market for recreational bikes (6830), the 2nd highest potential for speed bikes and the 3rd highest potential for mountain bikes. The third and final store location chosen based on its sky-high market potential was New York. Not only did New York rank 1st in the mountain segment, it had the second highest demand for recreational bikes. This being said, I decided not to open a fourth store so that RideAway could allocate its available resources more efficiently in the locations it was already present in – aiming to increase its market share. Promoting my bikes was definitely the most 5. FINANCIAL ANALYSIS For each quarter of the simulation, I referred and utilized the financial performance aspect of the scorecard to indicate the well – being of RideAway. After all, the primary purpose of the company is to generate profit. Following the test market, I noticed that the industry average for financial performance was -0, whereas RideAway’s was far below that; placing my company at a highly disadvantageous position. The negative overall profit could be attributed to the extremely high maintenance and initial lease costs of opening new stores in locations such as Amsterdam and New York. In addition, I believe there was a misallocation of resources that also contributed to a poor profit margin. For instance, more money could have been spent on additional salespeople and advertisements. Analyzing the financial reports from quarter three, I realized my financial performance was terrible (-8. 237) and I had to improve it rapidly. I decided to take a step back and close my New York store temporarily while also maintaining low fixed costs by conserving a reduced amount of personnel and inserting a balanced

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number of media placements. By the end of the simulation, however, I was still relatively frustrated with my financial performance (-5). Still, I was satisfied that RideAway was capable of, even if in the slightest, of adapting to change effectively and improving its performance as compared to the initial quarters. 6. SUMMARY As an economics and business major with a future concentration in marketing, it is safe to say that the Live Market Place Simulation was of upmost importance for me in order to truly understand and be able to apply all the concepts explored and discussed throughout the past weeks in class. The hands – on experience offered by the simulation provided me direct contact to the financial area of marketing; which is also of infinite importance towards a successful business practice. In regards to the individual and overall performance of segments within RideAway, I must say it was a bit frustrating. In reality, I thought it was much simpler than it turned out to be and I believe that brainstorming possible market entries and strategies before actually executing them could be/ is a strong route to success in the future. EXECUTIVE SUMMARY Considering the target market choice, which is Outdoor Enthusiasts, its size has 16, individuals and a growth rate of 5%. In regards to the financial results, in figure 1 it is possible to see that all indicators reached positive values in the final turn. In addition, final balance and total revenue followed an upward trend during the final turns reaching $56,14 and $111,60 respectively. Net profit remained stable reaching $ 17,60. Practice Marketing Simulation (McGraw Hill,2012) As figure 2 depicts, return on marketing experienced a drastic change and settled at 23%. Market share and customer satisfaction decreased over time resulting in 20% and almost 40% respectively. STRATEGY would be school children and university students, so we strayed away from those. Furthermore, these markets focused on appealing to the aesthetics of the customer by way of university logo, design, etc. whereas, we could focus solely on figuring out ways to improve the two logistical aspects of our backpack (durability & waterproofing). Our target market, the outdoor enthusiasts, have a decent market size which we could capitalize on by securing more market share if there are not many competitors. Additionally, outdoor enthusiasts had the highest average purchase price among all the other markets which meant that projected revenues will be high given a high enough sales level. Moreover, the outdoor enthusiasts had the 2nd highest growth rate which is a good sign for growth. MARKETING MIX With respect to the 4 Ps of the Marketing Mix, we initially designed our product to be a premium product that goes above and beyond the customer’s wants and needs. Consequently, we charged a high price – the highest we could without breaking the consumer’s budget level. After seeing the market feedback and financial data, we decided to adjust our strategy to creating a decent backpack that uses cheaper inputs but maintains a decent quality and passing the savings onto the customer. We meticulously adjusted our product to still meet consumer needs and give them a good price within their budget, which was much more efficient and increased our profits. As for pricing, we priced it at $ (premium quality) initially, but we lowered it to $80, which was a little lower than our competitors in the market because we were showing net losses and a low gross margin. When we lowered to $80, we started becoming profitable and showing net income rather than losses thus, we maintained this price.

For distribution, we looked at the data on which stores have the highest purchase rate from outdoor enthusiasts. These distributors turned out to be the online discount retailer, department store, and high-end outdoor shop. We chose these channels to maximize the reach to our target market. Additionally, we also distributed our products to university stores and fashion boutiques to perhaps get secondary sales income from our 2nd target market, urban commuters, who had a decent purchase rate from these stores. There was no cost to direct selling, so we included this channel as well. One of the more complex aspects of this simulation was the promotion method. We tried to position our product with the keyword "peak performance" and continued to put it up for the following turns to maintain consistency and clarity for our target markets - outdoor enthusiasts and urban commuters. For advertising, at first, we chose TV to promote our product, but we figured that using the same cost, we could reach more of our target market with a savvier combination of print, internet, and radio media. This change showed good results as we ended up cutting our advertising costs and even reaching out to more people. COMPETITIVE ANALYSIS Our target market initially was only outdoor enthusiasts, however along with the game we realized that Commuter was another segment where we had the potential to grow. In this way, we had 2 main competitors, Team 4 and Team 8. In the beginning, we reduce our backpack price according to our competitors, however, because of this decision we end up having negative net profit. So the solution found was to remodel our product and set the price at $80, so we could have a positive net profit and still be in line with our competitors. As comparing ourselves with Team 4, we could see that we shared the outdoor enthusiast, we also had the same message as Peak performance, and our distributions were similar as well, both teams had online retailers, direct, department store and High end outdoor. Our features awareness of our brand, so we advertised at National Network and Sports Talk Radio. Later on Gym and Sports Locations, Outdoor Adventure Magazine, Top 40, Newspaper. We ended the game choosing to maintain advertising at Top 40 and Social Media, since they were low cost and seemed to be effective. We also invested in some $5,00 discount on most profitable retailers and invested MDF mainly on Online Discount Retailer, Department Store and High End Outdoor. LESSONS LEARNED Promotional Mix: we used a combination of promotional tools—including advertising in diverse media, investing in points of distribution and offered discounts in most profitable retailers (sales promotion). Price Skimming: our first strategy of price, setting a high introductory price that was gradually reduced. Status quo pricing: we also based our price in our main competitor (team 4), with the objective of meeting the competition’s price margin. Multisegment targeting strategy: a strategy used when we realized we had another market interested in our product, the commuters. Based on that we redesign our product, message and price to reach both segments, since we could not create another product item in the game. The importance of promotional strategy: a combination of strategies to reach our target marketing, that involved advertising, right point of distribution, sales promotion, direct-response communication, and social media. Through the game we realize that a combination of these factors was responsible for building the awareness of our product and gradually increasing our revenue. The importance of competitive advantage: always looking at competitor's strategy was something that we tried to do to build a competitive advantage. We tried to include unique features in our products in order to make customers think our product was superior to competition. Great use of brainstorming: It wasn't easy to gather our group, especially with different time zones and the avoidance of personal meetings due

to the pandemic. Even with this barrier, we managed to talk briefly every day we had to make a decision, in order to brainstorm ideas on how to improve our strategy and get better results. Awareness of product life cycle (PLC): we had some difficulty in making decisions and maintaining our marketing strategy because at the beginning of the game you start losing a lot of money and enter into a negative net profit margin. But as the game and the learning on marketing progressed, we understood that there is a product life cycle that is inevitable, so take some time for things to happen and you start the growth and maturity peak of your product. Sometimes repositioning might be a way out: when we saw that we were losing market share and another market was also buying our product, we decided to reposition our product, changing the consumers’ perceptions by defining new messages, price and product features. We end up reaching 42% of commuters and 32% outdoors. REFERENCES Practice Marketing Simulation. (2012) (Online Version) [Video Game simulation]. Dave McCool. McGraw-Hill Education. Retrieved from mhpractice/products/Practice_Marketing

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