1.0 Introduction
The project report encompasses the analysis of marketing decisions in a smartphone marketing company as well as product mix utilizing the simulation game. Firstly, it will give brief background information on the online marketing tool, Simbrand, and the marketing company, Team Grey. After that, it will outline the methodologies used in the report. Subsequently, the study will analyze the market by evaluating its environment, segmentation and the targeting strategy. Afterwards, the study will embark on a comprehensive analysis of six rounds over which the company collected market and products data and eventually produced relevant reports. In the analysis, the report will look at the characteristics, individual markets and segments as well as a summary of each round, first to the sixth. Still, it will analyze the market mix and use the BCG matrix to explain the decisions made concerning the market share and market growth. Finally, it will conclude and make a five-year plan to fuel the company’s growth after the end of sixth round.
1.1 Background information
1.1.1Cesim SimBrand online program
CesimSimBrand capitalizes on the development of a comprehensive understanding of the marketing processes to optimize on the decisions made by various smartphone markers riding on simulation technique. The program enables the participants to simulate different market conditions to assess the varied market outcomes as well as maintain the autonomy and independence of the decisions made. Notably, the participants start the simulations without any operation history to boost creativity and uniqueness of the decisions applied in the marketing strategies. Finally, the program generates reports for further analysis and benchmark to rate the current and previous performances.
1.1.2 Team Grey Company
The company comprises of three members oriented to understand the smart phone market environment in two different markets, that is, Europe and Asia. Further, the team structured each of the two locations to four different segments; which are households, companies, high-End households and high-End companies. The main objective of the team is to obtain trends and outlook. Notably, the millennia’s sense of identity and recognition has changed consumers demand with regard to product’s reception shown by Leary and Tangney (2005).
2.0 Methods
The marketing team carried the research for six years, since the year 2010. The data processed through simulation were summarize to reports applied in this study. Therefore, information used in this report is the property of the Grey Team Company and, thus, any reproduction of the report or a part of it should be subject to the team authorization.
3.0 Market analysis
3.1 Market environment and the consumer behavior theory
Market environment encompasses factors and forces influencing establishment of relationship between consumers and the firm as discussed by Ogujiofor (2014). Market environment has three subdivisions; internal environment, non-marketing and macro factors as indicated by Fitzen (2009). The team adopted the consumer behavior theory to understand the tastes and preferences, social influences, purchase motives as well as the spending patterns of potential customers. The theory assumes that consumers aim at maximizing utility and thus, prefer high-quality product to low product holding prices constant as noted by Wells and Foxall (2012). Secondly, resources are limited, thus, consumers have alternatives uses for their money. Lastly, consumer makes optimal decisions by matching satisfactions derived available resources as clarified in the Organisation for Economic Co-operation and Development (2010). Therefore, market segmentation should conform to resources endowment in the targeted market. For instance, the high-end households should be the target for the most expensive smartphones.
3.2 Market segmentation
The study targets Asian and European markets with each having four segments. The main purpose is to maximize on the sales revenue through micro needs satifactions. Likewise, it conforms to the consumer behavior theory that, utility increase with increase income as discussed by Herendeen (2008). For instance, high-end market requires high-quality smartphones due to availability of disposable income and excess cash flow. Of note, if the marketers mismatch the products with their designated markets, the outcome will be undesirable. Therefore, marketing techniques should adjust to the changes in tastes and preferences based on social classes.
3.3 Current market tastes and preferences
European market, Households
European market, High-End Households
(Cesim, 2016)
European household and the high-end markets graphs show different utility functions based on the income. As disposable income increases, the consumers shift to higher preferences such as the photo/video, extra memory navigation and security. Indeed, the demand for quality and superior features is higher in all categories in high-end households in comparison to households. Similarly, the Asian household and high-end households markets move to higher preference as shown by the two graphs below. This illustrates the consumer behavior.
Asian market, Households
Asian market, High-End Households
(Cesim, 2016)
However, the markets should heed to differing tastes and preferences in the Asian and the European markets; in both cases of households and the high-end households. For instance, the European smartphone market shows higher preferences for photo/video and extra memory in equal measures while security features are the least preferable. On the other hand, the Asian households and the high-end households show significant inconsistencies. For example, households prefer premium display while the high-end households favor extra memory. In summary, the markets should meet the micro needs of every unit in market to maximize on the sales and profitability.
About the results of the market share in all the European market, Team Grey adhered to the differences in the marketing ventures in both markets; hence, they have the largest market share in all the market segments market currently, as shown by the pie charts below.
Round 6 European market
Round 6 Asian market
(Cesim, 2016)
Similarly, the Asian market pie charts indicate that team applied the appropriate products to the different markets, which lead to the high market share and market growth.
4.0 Targeting strategy
This activity entails selecting the prospective customers that will consume the products the company is marketing. More particularly, the markers have to segment the target market and determine the products fitness as observed by Ferrell and Hartline (2014). Thereby, based on marketing segmentation above, the marketers should match product features to identified market. For instance, match Asian high-end households with large memory capacity while low-end market goes with premium display to increase sales.
The consumer behavior theory is applicable in definition of market needs for different segments, determination of price range and consumption pattern as put across by Rajagopal (2013). Based on Asian market graph below, rate of price change in the high-end households and the high-end companies is higher than the households and the company. Still, high-end clients are seeking social status; hence, the assumption that price implies quality. However, low-end consumers seek basic utility such as convenience. Similar trends occur in European market although average prices in high-end markets and low-end variance is lower than in Asian market. Impliedly, consumers’ behavior is homogeneous in Europe.
Asian market
European market
(Cesim, 2016)
5.0 Analysis of the marketing rounds
5.1 Round-1
This stage is synonymous with scanty customer information, limited resources and the marketers do not realize the full potential of the market since the customers are not aware of the products. Moreover, the return on the marketing and the advertisement expense is unviable.
5.1.1 European and Asian market analysis
European market
(Cesim, 2016)
The graph above shows that the high-end households segment in the Europe offered the largest market for the products while the companies have the least purchase volume for the Grey team company. The leading company regarding units sold is the Red team. From the analysis of the entire bar graphs, the European market favored product 1 in the first round.
5.1.2 Products
In first round, team Grey did not launch any product in the Asian market while in Europe it specialized in Ray products. Other products in the market included product 1 and two as well as Bivvyone and Bivvy.
5.1.3 Summary of the ratios
(Cesim, 2016)
In the first round, the Grey team had the highest share prices among the five teams that were conducting market research. However, its gross profit was quite low due to poor information on the consumer behavior and its newness in the market. As such, considering that the company had not conducted marketing and advertisement activities, its sales are apt to be low. Nonetheless, the marketing in round one will lead to more sales in the future due to the awareness created and the repeated purchase from original customers as marked by Lamb, Hair and McDaniel (2013). In the European market, the team is in the position four while in the Asian market it did not launch any products. Impliedly, the company is at the stage of making market strategy planning for the purpose of the next round.
5.2 Round-2
The marketers executed plans in response to the market gaps while conducting other relevant surveys that will facilitate the improvement of sales. Notably, team Grey opted for developed markets to minimize on the marketing activities such as the European marketing. Additionally, the consumers in the market have high disposable income and market barriers are nonexistent due to a large number of firms in the smart phone industry.
5.2.1 Asian and European market analysis
In this market, Red, Blue and B-connected team companies have large market shares in comparison to Grey team in all segments.
This stems from the fact that some teams such as the B-connected deals with more than one product, which provides the consumers with varieties. This improves the sales volume since those who might not favor one product are apt to prefer the other as proposed by Parry and Graves (2008). However, team Grey focuses on one product that will lead to both its growth and market share in the long-term. The pie charts below shows the market share information in the European market. Notably, team grey did not participate in the Asian market even in the second round, which is rational since it has not realized the full potential of the current market. Besides, the demand patterns and the price elasticity in the two markets are different, thus, making the European market desirable to the less experienced marketers
(Cesim, 2016)
Team Grey European market share
(Cesim, 2016)
The progress of Grey team performance in this market is quite healthy concerning the bar graph above. Of note is that it increased the sales unit in all the segments of the market. However, it stuck with the same product and carried out more advertisement to promote it to improve on growth and European market share. Notably, high-end households offered quarter demand for all the sales in the market. Similarly, the segment had the biggest demand change from the last period since it increased by 16, that is, from 9.3 in the first round to 25.3 in the current round. This implies that the high-end market in this market has high disposable income in comparison to other segments. Secondly, high-end companies were the second largest consumer of the product based on the selling units. The demand of high-ends in European segments is less sensitive to changes in prices of the products as shown by the line price graph below, that is, low gradients as compared to the steep gradients of the households and companies. This implies that the high-ends demand responds to prices to a lesser degree since their disposable income is higher. Hence, the company can earn more revenue by increasing the unit prices without losing the market share since they base their purchase more on the utility features and design as shown by Gore (2013).
European market price
Asian market price
(Cesim, 2016)
The price elasticity of the two markets is sparser than in the European market, and thus it would require more distinct price elasticity. Moreover, the customers respond more to prices, thus, increasing price would reduce market share. Investment in this market at the early stage of the company is unviable, as the business requires liquid cash flow to meet the short-term requirements and engage in price wars. However, in future rounds, the company will invest in the product differentiation to cater for the market customization and price elasticity in the Asian market.
5.2.2 Products
The company still specializes in one product in the European to promote growth and market share before embarking on new markets and additional products.
5.2.3 Summary
(Cesim, 2016)
The summary of the second round ratios and share prices show that B-connected grew at highest rate while the rate of team Grey remained constant. Single product and one market operation lead to the constant share prices for the company. On the other hand, B-connected dealt with variety of products and ventured in both the Asian and European markets, hence, improving its grossing profit and the shares price performance.
5.3 Round-3
The stage showed evidence of significant information and appropriate response to the market demand. Consequently, most of the teams experienced market growth, increasing share prices and gross profit as well as venturing in new markets as observed by Pride and Ferrell (2014). Besides, marketing and advertisement conducted earlier are responsible for the increased products sales volume. The discussions of individual activities in the third round ensue below.
5.3.1 Asian and European market analysis
. European market
(Cesim, 2016)
The market show growth in the units in the products sold. More particularly, the high-ends cater for the most sales owing to their high disposable income, low price elasticity and excess liquid cash flow in the case of companies. Looking at the results of team Grey, it shows that the companies had the least growth while the households' products purchase has grown drastically, 70.3, which indicate positive corporate image due to marketing and advertisement. Moreover, the team embarked on exhausting the opportunities in the European market before venturing into the Asian market. Notably, though team Grey team is in the fourth place in overall performance, its sale products to the companies surpassed that of team Red while the sales to households exceeded the sales of the B-connected's Bevvy. The success of the both the lower and high-ends market is due to the product customization due to the improving financial performance, hence satisfaction of all the customers in the segments
Asian market
(Cesim, 2016)
Additionally, the financial performance of the Grey team has fueled entrance in the Asian smartphone market for the first time since its inception. The records are quite appealing since it performed better than Green, Red and Orange in the high-end companies segment. Similarly, it posted better results than Orange, B-connected and Blue teams in the case of the households. Therefore, conducting the relevant market research enabled the firm to turn the low growth products to high growth through market study, hence, evasion of limitations faced by the previous firms as noted by Wenzel (2012). Additionally, the team chose to accumulate resources to cover the demands of the Asian customers who are more responsive to prices change which was infeasible at the first and second stages due to heavy initial capital. As such, the market shows potential, and the team will continue investing to achieve optimum sales and profitability. The European market is large and more viable than the Asian market, throughout the first three rounds.
5.3.2 Products
The company maintained the same product in the European market in the third round and introduced it to the Asian market. This saved on the marketing cost since the product has been on the market for two rounds.
5.3.3 Summary
The summary of the third round results indicates that all the firms’ experiences growth apart from Green team, which dropped from 3.7 to 3.66. Therefore, diversifying market and satisfying the market needs yields growth of both the gross profit and the share prices. Consequently, the company will witness growth and market share supported by the share prices and profitability.
(Cesim, 2016)
5.4 Round-4
Wide customer information, product differentiation and customization, innovation and market growth are evident here. The firm has wide investments and its profitability lead to improvement of products’ quality.
5.4.1 Asian and European market analysis
European market
(Cesim, 2016)
Team grey has come of age, and past investment in the market research in the European market gave it the best results. More particularly, its market customization with references to the customer income led to the highest performance in both households and high-end households segments as confirmed by Dymitrowski and Wydawnictwo (2014). Clearly, the team approaches the market from specialized technique as it first concentrated on the household products to increase its market growth and market share.
Asian market
(Cesim, 2016)
Similarly, the team approached the market from the households’ angle since it supplied the highest units. The increase in the market share of the Asian market has resulted in better economic performance leading to customization of the market to increase market share Gwartney (2013).
5.4.2 Products
The company maintained the Ray product in the European but replaced in the Asian market with Ray 2 that lead to increase of sales unit from the fifth position to the second best product overall in the Asian market. Factually, Ray 2 is a star in the Asian market.
5.4.3 Summary
(Cesim, 2016)
The share prices growth rates show that the markets are yet to reach saturation, thus, investments in the product improvement and marketing activities will create more sales in future as indicated by the positive gradients of the line graphs above.
5.5 Round-5
This period represents continued growth from previous rounds as the team advance to the market specialization due to years of market research.. This helped to improve on the quality of these products due to limitations noted in the product life cycle theory.
5.5.1 Asian and European market analysis
European market
(Cesim, 2016)
Asian market
(Cesim, 2016)
The similar trend is evident in the Asian market where the team specialized in the households and the companies segment. This stemmed from the fact that the number of high-ends consumers is fewer compared to low-ends consumers. Therefore, the team will benefit from the economy of scale through specialization in this sector
5.5.2 Products
The products introduced in the fourth round run through the fifth round to increase the market share and growth through advertisements and marketing. Additionally, the consumers favored them due to their superior quality; hence, introduction of new products would upset the current demand.
5.5.3 Summary
(Cesim, 2016)
The ratios and the share prices gradients indicate a mature market where the prices have stabilized and the market is nearing saturation with the Smartphone products. Therefore, to increase the share prices and the gross profit the company should invest more on the innovation of quality products by addressing the design and the utility of the products in the next round.
5.6 Round-6
At this stage, both markets reach saturation and the marginal changes in the share prices, volume of units sold for old products as well as the profitability is less than in round 4 and 5 where the industry experienced most of the growth in market shares and revenue as confirmed by Pichop and Mndiga (2007).
5.6.1 Asian and European market analysis
European market
(Cesim, 2016)
Although team Grey’s Ray is the leader in the European market, the number of units sold is less in comparison to the fifth round due to market saturation. As such, the team responded by introducing a new product, Ray Run, to inject freshness and uniqueness in the market. This helped the team to win new customers. The trend is also evident in the Asian market as indicated by the graph below.
Asian market
(Cesim, 2016)
5.6.2 Products
The company introduced new products to maintain the market share since the old products sales dropped in the sixth round in comparison to the fifth round. As such, the company launched Ray Run in the European market and Ray 2 Run in the Asian market. .
5.6.3 Summary
(Cesim, 2016)
Owing to the product varieties in the market, team Ray has the fastest growing shares prices explained by the product sales volume and strategies that make its products desirable to large numbers of consumers.
6.0 Sales and profitability
European market
Asian market
(Cesim, 2016)
7.0 Marketing mix
Stages that deal with more than one product required marketing mix, thus, cutting on cost and improving efficiency in marketing as shown by Bowman and Gatignon (2010). The two products satisfied large markets since they focused on the households and companies segment in larger proportions than the high-ends. Similarly, the same technique was applied in the Asian market..
8.0 BCG matrix
The Boston Consulting group’s product portfolio matrix (BCG) entails comprehensive analysis of products to aid in long-term strategic planning as discussed by Daft, Kendrick and Vershinina (2010). In the first two rounds, it offered single product in Europe, avilable resources were too limited to spread over many product or enter new market. Thus, the company invested Ray. The product led to high market share and high market growth, hence star, as explained by Schermerhorn (2011).
In the third round, the company introduced Ray in the Asia market, the reception of the product was low, and thus, it led to high market growth but low market share. Hence, in the fourth round, the company launched a new product that emerged position two in the Asian market, Ray 2, and withdrew Ray. In the sixth round, the smartphone market reached saturation and marketing expense led to low growth but high market share (Cash Cow) as highlighted by Doyle (2011). Therefore, the company introduced Ray Run in European market and Ray 2 Run in the Asian market. These two products became stars since they led to high growth of both the market share and market growth. The analysis references the diagram below
Where;
Star; high growth, high market share, Cash cow; low growth', high market share, Question marks'; high growth, low market share and Dog'; low growth, low market share
Source: www.smartinsights.com/marketing-planning/marketing-models/use-bcg-matrix/'
9.0 Conclusions
The performance of the company resulted from satisfying the markets needs through adoption of consumers’ tastes and preference in our products at affordable prices. The report also found that the Asian price elasticity is a superior factor to consider when producing the smart phones. Finally, the data showed that saturation of the European market and the earlier products such as Ray led to losing of product’s attractiveness.
10.0 Five plan
About the market share growth in the last round, it shows that the company will have the highest growth rate in the seventh round and beyond. Therefore, the company should embark on eliminating dogs by eighth round. For instance, since Ray product has been on the European market since round one and its sales are decreasing, the company should consider new product. As such, in the eighth round, the company will introduce Ray 3 in European market. Moreover, the Asian population is larger than European, thereby, the company will introduce high-end products for the Asian market due to the projected increase of the middle class. Moreover, in the tenth round, the company will withdraw the Ray 2 Run from the Asian market to counter the projected low sales units and replace it with Ray 3 Run.
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