Market Segmentation Online Simulation
For this assignment, you will complete the “Marketing Simulation: Managing Segments and Customers” from the Harvard Business Publishing course pack. Note that you will have unlimited attempts to complete the simulation so plan ahead and allow yourself time to repeat the simulation to obtain the best results.
Context: A firm’s marketing strategy is at the heart of its overall business strategy. A key objective of any effective marketing strategy is to ensure that the firm creates and delivers superior value to customers relative to competitive offerings. A major constraint in pursuing this objective is the firm’s resource base. Therefore, choices much be made to identify the best customer segments to focus on.
In this online simulation, you will play the role of the CEO of a manufacturer of medical motors, Minnesota Microcomputers, Inc. (MM). Throughout the simulation, you will determine which market segments the company should target and how MM’s motors will be designed, priced, distributed, and promoted in the marketplace. You will also decide how to use the firm’s scare resources, such as sales-force time, and how to deploy marketing resources for market research, integrated marketing communications, and other activities.
You will make important decisions that should collectively support an overall segmentation strategy designed to achieve a combination of sustainable revenues and profits for three years (one quarter corresponds to one round of play). Performance is measured using both qualitative and quantitative criteria including profitability, revenues, unit sales, market share, and customer satisfaction. The simulation will take about 90-120 minutes to complete the multiple quarters (It will take longer if you decide to redo the simulation), plus another 60 minutes or so for foreground reading and debriefing Q & A. This is a single-player exercise and there is no single correct solution.
This simulation should be both a learning experience and a friendly, motivating competition among you and your classmates. Please take the time to review the introductory video and to familiarize yourself with the user interface. It is possible for you to get fired if your profitability for any quarter is less than -50%, or if your profitability is negative for three quarters in a row. You will have to redo the simulation in that case. There is no limit on how many times you can run the simulation.
The learning objectives of the simulation are:
using segment/customer needs analytics to make product design decisions and associated trade-offs
understanding the practice of STP
appreciating the importance of fine-tuning segmentation strategy over time due to market changes
using hard and soft metrics to measure firm performance.
Here is the general structure of the simulation:
Prepare tab (What background material do you have?): industry and company foreground reading, summary of the simulation.
Analyze tab (What information do you begin with?): historical financials, industry data, marketing of the customer base, your objectives.
Decision tab (What levers do you pull?): price, discount structure, marketing expenditures, size of sales force, account management, product customization.
Decision tab (What feedback do you receive?): financial data, market research data, customer satisfaction data, instantaneous feedback coaching, budget available for next period.
Please follow the following steps to complete the assignment:
Step 1: Prepare
You should prepare by reading the background info contained on the Prepare page and the Foreground Reading. You should also watch all of the customer interview videos to get a feel for how the different segments view MM’s products and service.
Step 2: Analyze reports
The reports, accessible from the Analyze screens, will give you more detailed info about MM’s current and historical sales, product features that are desired by its customers, how feature performance is changing for the motor products over time, and financial statements for the company.
Step 3: Enter decisions for the current quarter
Click on the Decide tab to enter your decisions for the next quarter. Among the many tactical decisions you can make are setting prices, allocating R&D spending, and determining priorities for the sales team. On the Decisions screen, you must enter your estimates and decisions for the list price of the motors and the percentage discount that MM will offer large-volume customers and distributors (channel margin). You must also enter how many budget dollars you plan to invest in the sales force (thus increasing sales-force effectiveness), in large versus small volume customers, in acquiring versus retaining large-volume customers, in market research, and in R&D. These investments are intended to improve product performance on two dimensions: the power-to-size ratio and the thermal resistance of MM’s motors. Note that for the first two quarters of play, you have access to a fixed $800,000 budget. However, in subsequent quarters, your financial performance will determine budget availability and MM’s parent company may choose to impose a limit based on this previous performance.
Step 4: Review company results and adjust decisions
After submitting your decisions, the simulation will advance one quarter. You then must return to the Analyze screens to review the results of your decisions and to read any news about the marketplace. You will continue to play by submitting quarterly decisions until you reach the end of the simulation. You must determine how to prioritize MM’s efforts in acquiring and retaining segmented customers to achieve a combination of sustainable revenues and profits. At the end of the game, the simulation will display a scorecard of MM’s performance on four key metrics and a weighted final score based on both soft and hard metrics.
Step 5: Simulation debriefing
Write a debriefing report to answer the following questions:
Who are MM’s target customers? Are all segments equally attractive to MM? If yes, why? If not, why not?
How do the different segments’ needs and expectations evolve over time? Why?
How do you balance hard performance metrics such as revenues and profits with soft metrics such as customer satisfaction?
What have you learned about analytics and metrics in the real world of decision making from this simulation?
Step 6: Uploading the assignment
Take a screenshot of the final scoreboard (four key metrics and the composite weighted score), insert the image in a Word document, answer the four questions above to debrief the simulation experience, upload the file here by the due date.
