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CBU MBA graduate class of 2010. Also known as Erin Wiles.

Markstrat Lesson 101


markstratvodite

CMBA 607 | Strategic Marketing


I put in my time for my CMBA 607 class, so why am I still harping on it by writing a blog?  Well, I want to make sure the up-and-coming CBU MBA students are prepared for the insanely intense (yet ironically fun) Markstrat Simulation game.

I won’t go into the details of the simulation (read the instruction manual), instead I will list my Baker’s dozen (13) pointers that students should take note of if they wish to succeed in the game.  They may not make sense now, but get through one round and your team should quickly be able to relate.

1)  Hey, Guess what? Markstrat doesn’t run on Mac so if you are in Apple’s court, use a teammate’s PC or get a virtual machine.

2)  Be sure to use your noggin! Have a reason or strategy behind each decision your team makes.  Don’t pull numbers out of your head.  “120,000 units sound like a good number of units to order.”  NO!  We don’t use phrases like “it sounds good” or ” I think” with Markstat.  You are an MBA in training.  Think like it!

3)  On the other hand, try to avoid analysis paralysis. Markstrat gives your more information than you can handle.  Determine as quickly as possible what data your team needs to focus on.  If your team starts developing a bunch of products, assign product managers to monitor individual results, changing trends, and be the decision maker behind any R&D modifications.

4)  Don’t cheap out on Advertising. Give generously in both in media and market research budgets to insure your product’s success.  We always gave 7-15% of our media budget to market research.  Advertising is a real key to the game, your brand awareness, and ultimately, your sales.

5)  Decide in the first round if you want to go into Vodite. If you want to go Vodite, start saving money.  Just a little tip: It will take around $8,000 to create a Vodite project.  That is alot in the Markstrat world.  Our team’s average budget for a given period was about the same amount.

6)  Go into Vodite. My team researched other games outside our own.  There is a lot of money to be made in Vodite.  The winner in our game and in other games usually had at least one Vodite in the market.

7)  Speaking of R&D, think about it and plan two/three periods in advance.  It takes one period just to develop or modify a product, two periods if you want to develop it at the lowest cost.

8)  When doing R&D, Always, Always, Always check the box to develop your product at minimum base cost.  One of our teams forgot to check it.  The base cost for their product was $1000, everyone else’s was $300.  Let’s just say their margins were in the negative.

9)  Sales Force is tricky, costly, and offers little return. Sales Force is most needed in new markets, not as much in established ones.  Give real thought if you start hiring people because it costs twice as much to fire them.  Use that money instead on R&D or Advertising.

10)  Production and Inventory is a real balancing act. Over producing leads to very high holding costs and under producing leads to missed sales.  Our team learned that it was better to over produce by a certain amount than run out of inventory completely.  We missed around 200,000 unit sales in one period because we didn’t order enough.  Bad for us, good for the other team who happily filled the orders.

11)  Pay attention to your holding costs, not to mention all your accounting figures.  Just because they don’t have pretty colors and graphs doesn’t mean they are not EXTREMELY informative.

12)  Target each product for one market segment.  If your product fits the needs of what Professionals want, then target that group 100%.  Splitting target segment percentages goes against you.

13)  Don’t create the most basic product possible. Let’s just say our team had a plan to create the most basic Vodite and utilize a skimming strategy (charge a very high price and drop it slowly to gain more market shares).  No one will buy scrap medal, Period!  Even if you are one of the first to the Vodite market, it’s not a good idea to spend $8,000 to develop a tin can.  Best to stay in the middle when putting together your R&D specs.


Our team’s overall performance versus the teams was second place in net contribution.  We held our own, but also made some big mistakes.  I hope these pointers help your team avoid some of the same mistakes our team did.  If you have already participated in a Markstrat simulation, share some of your own pointers in the comments section below.

Erin M. Wiles
Self-Employed Marketing Professional
MBA Concentration: Project Management
Graduating: May 2010

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