Marketing Simulation Performance
Quarter 1 and 2
The main objective of the business in the first quarter was to establish its head office and create divisions for the organization. Equally important, it established corporate responsibilities for its management and also established the organization’s name. The company determined its name to be Marketplace Inc. Generally, this name was ideal for the business since it identified it as the main location for reliable computers. Simply, its name showed its customers that it was the main location “market” for computers. The company also appointed its president, Almutlak Meshel, who was its overall leader. In addition, he was the company’s overall brand manager. The company also established its head office in Chicago-NORAM. Finally, it identified its market segment to be Mercedes, which is a premium market for computer hardware.
The company’s name Marketplace Inc. is inclusive and enabled it to easily identify with all market segments. Since the market has three main segments; Mercedes, Traveler, and Workhorse, which were made up of individuals with different purchasing power a discriminating name such as “Affordable Computers Inc.” would have portrayed the company market segment to be the low spenders, who in this case are represented by Workhorse segment. Equally, a name such us “Exquisite Computers Inc.” would have made the company’s products to appear as if they are for the high-end market only, which is the Mercedes segment. Although such an identification has some benefits for the company, it may force the company to re-brand, especially when it entering a market that is not exemplified by its name. For example, if the company had established its name as “Affordable Inc.,” this name would have to be changed if the company decided to enter the high-end market segment of Mercedes since it would inevitably have to price its products highly.
The business established its main Head Office in Chicago- NORAM. This area was the ideal location for the company since it had the highest demand for the company’s products. The demand for computers in the Workhorse segment was 7,031, Mercedes segment had a demand of 6,004 units, and Traveler had 4,321 units. In comparison, Sao Paulo-LATAM had a demand of 6,127, 2596, and 2,132 for Workhorse, Mercedes, and Travelers markets segments respectively. Paris-EMEA had demands of 7,043, 4,722, and 3, 685 respectively for Workhorse, Mercedes, and Travelers markets segments. Shanghai had demands of 7,470, 3,335, and 2,553 from Workhorse, Mercedes, and Travelers markets segments respectively.
Market Place Inc. identified Mercedes segment as its target market. The Mercedes market segment is the premium market for computer hardware. Importantly, these products have high profit margins. Therefore, the sale of these products has a lot of contributions to the company. In addition, since these products are acquired by few high-end buyers, it will enable the company to reduce most of it marketing costs since it will focus its efforts on its identified customers. In the Mercedes Segment, the company sold the Sony product at $4150. It paid rebates of $150 per unit when ensured that it made huge margins for each sale.
Leadership and Sales Team
Marketplace Inc. appointed Almutlak Meshel to be its CEO and its senior brand manager. Accordingly, the company had leadership in its management and decision-making process. In addition, it employed three sales personnel. 1 person was to work in the support department while 2 individuals were to be directly in charge of Mercedes segment. The training cost was $3,000 for Support and $4,000 for Mercedes. Importantly, the added skills from the training would enable these sales employees to be more competitive than those working for competitors.
On the overall, the company’s efforts in the first and second quarter were successful. The company had emerged as the market leader in the Mercedes segment. In terms of the brand judgment, the company’s brand Sony was fourth in the Workhorse market segment, where it had 19 points. It was last in the Traveler segment, where it only had 1 point. In the Mercedes segment, the company was second. Shark Computers, Tiger Shark brand was 5th in the Workhorse segment and Mercedes segment. It was first in the Traveler segment. Galileo Computers brand, Callisto was 1st in the Workhorse segment, it was 5th in Mercedes segment, and 3rd in Traveler segment. Synergy Technologies, Nadamo brand was third in Workhorse segment, it was first in Mercedes segment, and was 5th in Traveler segment. Finally, Constellation PC’s brand, Orion was 2nd in Workhorse segment 3rd in Mercedes segment and Traveler’s segment.
In terms of brand advertised, the company lagged behind its main rival, Synergy Technologies in the Mercedes Segment. Marketplace ad, Unique Sony, had a rating of 16, 76, and 22 for Workhorse, Mercedes, and Traveler respectively. Synergy Technologies ad, Nadamo, had a rating of 13, 78, and 19 for Workhorse, Mercedes, and Traveler respectively. Shark Computer’s ad, Tiger, had a rating of 33, 7, and 70 for Workhorse, Mercedes, and Traveler respectively. Galileo Computers ad, Callisto had a rating of 77, 9, and 56 for Workhorse, Mercedes, and Traveler respectively. Finally, Constellation PC’s ad, Orion, had a rating of 66, 24, and 67 for Workhorse, Mercedes, and Traveler respectively.
In order to defeat its greatest rival, Marketplace Inc. decided to focus on the following areas:
- Mention the company’s brand name in the advertisement.
- Link PCs with network/ the internet.
- Include features of manufacturing apps.
- Include features of engineering apps.
- Include a picture of engineers/ scientists in its advert.
Analysis to Find Opportunities
Market Demand and Share
In the Mercedes segment, which was of main interest for Marketplace Inc., the company controlled 57.82% of the market. The remaining 42.18% was controlled by Synergy Technologies. It is important to note that although Marketplace Inc. had a lower score that Synergy Technologies in brand advertisements, it performed better than the latter due to its superior pricing tactics. In order to reinforce its market position, the Marketplace Inc. will ensure that its adverts have the brand name so that they are clearer to the audience. In addition, they will have pictures of engineers and scientists in order to convince the market that its products are appropriately developed. In addition, the inclusions of engineering and manufacturing apps in the company’s improved products ensured that they will be superior to those of Synergy Technologies. Finally, the linking of PC’s with network and the internet ensures that Marketplace Inc. computers can easily fit into the existing workplace infrastructure.
Marketplace Inc. product, Sony, has high-profit margins. This product had profit margins of $1562 per unit. Although the net profits for the company were below the desired levels for each quarter, as set by the company’s management, the performance was not too bad since it was from the sales of the second quarter. The selling price of $4150 per unit ensures that the company can significantly increase its revenues if it increases its sales. Moreover, the rebates of $150 per unit, is a minimal and fair charge for the company, since it is only 3.6145% of the selling price. In order to increase its revenues and profits in the second quarter, Marketplace Inc. increased its market share by increasing its advertisements in Paris-EMEA and Shanghai-APAC. Accordingly, the company incurred more sales offices cost of $280,000. Nonetheless, these new markets present Marketplace Inc. with more opportunities of increasing its sales and market presence in the world.
To improve customer satisfaction, Marketplace Inc. introduced new features in its current Sony brand, which are the introduction of the capability of the PC to link with network/ the internet, the introduction of features of manufacturing applications, and the inclusion of features of engineering applications. Accordingly, the company’s PC’s will become more likable and usable to individuals in the Mercedes market segment.
In order to become more competitive than rival businesses, the company has diversified its market. In particular, the business has established new sales offices in Paris-EMEA and Shanghai-APAC, which will enable it to increase its market in these regions. In addition, the increase of Marketplace Inc. sales region and market will enable it to enjoy economies of scale, which will, in turn, enable it to ensure that the prices of its commodities are less than that charged by its main competitor, Synergy Technologies.
In the previous quarter, Marketplace Inc. had decided to increase its market size but still continue offering one service to its customers. On the contrary, its main competitor, Synergy Technologies diversified on the number of markets that it serves. In particular, it introduced Valema brand, which enabled it to diversify in the number of markets that it serves. Similarly, Shark computers introduced Tiger Shark + to its current line, Galileo Computers introduced Ganymede, and Constellation PC introduced Orion II. Marketplace Inc. continued to sell its computers at a premium while Synergy Technologies reduced the cost of its PCs $3470 apiece. Due to the changes in the strategy by the companies’ market share changed. The Marketplace Inc. reduced to 0.07% and 35.57%, Workhorse and Mercedes segment respectively. Shark Computers share was 100% in Travelers segment. Galileo Computers had a share of 22.84% and 0.08% for Workhorse and Mercedes segment respectively. Synergy Technologies had a share of 10.25% and 64.35% for Workhorse and Mercedes market segments respectively. Finally, Constellation PC had a market share of 66.85% respectively.
In order to remain competitive Marketplace Inc. improved on its business by introducing two more PCs to its current line. It introduced Dell, which was sold at $2600 and it targeted the Workhorse market segment and Mac, which was sold at $3250 and it targeted the Traveler market segment. Accordingly, the company increased its sales personnel for both Workhorse, Mercedes, and Traveler market segments. It increased its sales personnel to 6 in the Support department, 16 for the Workhorse segment, 15 for Mercedes segment, and 12 for Traveler segment. In terms of allocation of employees, 18 were in Chicago-NORAM, 16 were in Paris-EMEA, and 15 were Shanghai-APAC.
Analysis to Find Opportunities
Increased Investment in New markets
Marketplace Inc. decides to enter into the Workhorse and Traveler market by introducing suitable PCs that are suitable for each of these markets. In the Workhorse market segment, the company introduced Dell desktop. The marketing expense for Dell computers was $166, 251. For the Traveler’s market segment, the company introduced Mac. The marketing expense for Mac laptops is $210, 153. The business spent $143,080 in Unique Sony brand. Generally, the high expenses in Dell and Mac were because these commodities were new on the market and required more publicity than the existing brand. In addition, the company marketed all its products in its major markets: Chicago-NORAM, Paris-EMEA, and Shanghai-APAC. The rebates expenses for Unique Sony, Dell, and Mac were low, at $150, 100, and 50 respectively. Therefore, the Marketplace Inc. would make more profits if it sold more of its items.
The introduction of two new products into Marketplace Inc. enabled the company to significantly increase its revenues and gross margins. To elaborate, the company sales amounted to $41,748,800 and it had a gross profit margin of $22,843,658. Due to its huge sales volume, the company issued rebates worth $640,100, which were paid as $313,350 for Sony”, $231,600 for Dell, and $95,150 for Mac. Similarly, the company incurred a lot of costs of goods sold, which were $18,265,042. Due to the excellent business performance after the introduction of new products that served the Workhorse, Mercedes, and Travelers market segments, the business decided to similarly introduce new products in this quarter. It introduced Unique Sony 2, Dell 2, and Mac 2. In addition, the business also increased the size of its market by establishing and office in Shanghai-APAC. Importantly, this office would enable it to access the large Asia-Pacific market. Finally, the business spent significant amounts of capital in the advertisement. On the overall, it spent $ 1,785,180. Unique Sony, Dell, and Mac had an advertisement expense of $96,016, $115,912, and $141,124 respectively. More cash was spent in new products since they needed more publicity. Unique Sony 2, Dell 2, and Mac 2 had an advertisement expense of $414,860, $465,813, and $551,455 respectively.
Analysis to Find Opportunities
Generally, the establishment of a sales office in Shanghai-APAC created an opportunity for the business to increase its market presence in the Asia-Pacific region. This new office would enable Marketplace Inc. to increase its presence in this region. In addition, it will enable the company to reduce its logistics and operational costs, which it incurs when delivering its products to customers in this region.
The introduction of new and improved products will enable the company to increase its dominance in the Workforce, Mercedes, and Traveler market segments. In practice, the introduction of new products from Marketplace Inc. will enable its clients to have a variety of products that they can choose. Since these products are an improved version of the current products, they are sold at a higher price than the initial products. Therefore, they will enable the company to earn more profits. For example, Sony” is sold at $4,000 while Sony” X is sold at $4300. Dell is sold at $2500 while Dell X is sold at $2750. Finally, Mac is sold at $3000 while Max X is sold as $3500.
The introduction of new technological features in the new products enabled the businesses to increase its market share and presence in all the market segments. The new products introduced in this market were essential in enabling it to increase its market presence. In order to increase its market presence, the Marketplace Inc. increased the advertising expenditures used on its products. More importantly, there was more spending in Unique Sony 2, Dell 2, and Mac 2, which had a large client base. On the overall, the advertisement for this quarter was $2,071,249. Unique Sony, Dell, and Mac incurred an advertisement expense of $96,016, $115,912, and $141,124. The advertisement expense for the new products was $506,993, $569,929, and $641,275. Due to the high number of sales, Marketplace Inc. increased the number of salespeople to 24, 19, 22, and 20 in Chicago-NORAM, Sao Paulo-LATAM, Paris-EMEA, and Shanghai-APAC. The sales cost during this period was $2,134,000.
Marketplace Inc. also restructured its key market of interest. Traveler became the 1 segment, Workhorse was the 2nd, and Mercedes was 3rd. Generally, the business restructured its business in order to exploit opportunities in new unsaturated markets.
Analysis to Find Opportunities
The prioritization of the business segment towards the Travelers and Workhorse segment would enable the business to access a large number of clients in this market. To elaborate, although Workhorse market segment has a low purchasing power, they are the largest consumers. Therefore, they can increase the number of buyers that consume the company’s products. Similarly, Traveler market segment constitutes a significant market segment. Therefore, it will enable the business to increase its revenues and profits. To sum, Marketplace Inc. concentration in the new market segments will enable the company to dominate the entire computer market.