Markstrat Final Report

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Markstrat Final Report Andrew Auces Justin Barker Christine Chang Ashley Cohen Julia Economy December 1st, 2010 I. Markstrat Summary In our Markstrat simulation, our goal was to maximize shareholders wealth by increasing market share by targeting specific segments with specific brands. We started out by targeting multiple segments for each brand, unfortunately we had to change our focus to just one or two segments per brand because our products we underperforming. We chose our targeted segments based on consumer preferences, perceptual, maps and the ideal characteristics. All teams started out on an even playing field, unfortunately the decisions our team made in the first two periods started to decline our company’s wealth. Which eventually lead to a decline in our stock price. One aspect that contributed to our issues within our company was our sales force, in period two we hired too many employees. In the next period we had to redistribute our sales force in different distribution channels. We also had a big problem with our brand positioning and brand awareness in each period. To try to increase our brand awareness we increased our advertising for each brand to help improve our image for our target markets. Another contributing factor to our underperformance was our over production, we over produced SOLD and SONO starting out at a production level of $900,000 for SOLD and $100,000 for SONO. Regrettably this caused us to have excess inventory for both brands. By period four our inventory holing cost were extremely higher than the other firms our inventory holing cost was $1,059K for our firm O, compared to $74K for firm I. figure 1 has the comparison of the four firms inventory holding cost by a cumulative time scale. The customer perception of our bands was a problem for us, we were unable to position our brands right in order to make our

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