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Dos and Donts in Markstrat:

Read the manual: even though it is long, and tedious. IT IS THE BEST GUIDE to
SUCESS.

Make an excel sheet to keep all the data about the competitors. This will help you analyze
and predict what the competitors are up to.

Be the first one in the Vodite market. Do not be afraid that your product wont be good
enough. You can always change it later through R&D. Consumers awareness and
perceptions are the most important factors to gain the market share in the Vodite market.

Use your resources: talk to the professor early in the period, or others who already played
this game.

Continually have R&D to improve the products because the PRODUCT LIFE CYCLE in
Markstrat is real.

A product should only target one segment. Trying to target more segments with one
products will be the disadvantage for the long run.

Take a risk. Dont be afraid to take short term losses for long term gains. Be creative but
smart about your decision.

Make sure that you have enough money to keep your product in the portfolio
competitively. Too many products without management will decrease the market share in
the long run.

Map out your team decisions. Know why you are doing what you doing, have data, and
numbers to support it. Do not go with I think we should. Thats vague and dangerous.

Performances in the later periods determine your win or loss, so do not get too
comfortable with the initial success.

People said buy all the reports. But I think it is redundant. A couple of research reports I
suggest buying are:
o Industry benchmarking: you will be able to see what other teams spend on R&D,
thus predict their next steps.
o Market Report: shows how much product did other teams sold, their prices, and
based costs
o Consumer Panel: shows the market share each product gains in each segment.

o Distribution Panel: market share per distribution channel. This will help to
allocate the commercial team
o Semantic Scales: Brand perceptions, important characteristics that consumers
want.
o Market Forecast: Helps you calculate production plan. ( I will have more detail
on how to calculate this next blog)
o Competitive advertising and competitive commercial teams: shows how much
competitors spend on these two categories. Help you determine how much you
should spend to gain more market share.

How to calculate opportunity cost in


Markstrat?
Why do we want to calculate the cost per product?
We want to know how much do we lost by not producing enough. This will help your report to
be more clear and concise with numbers and data. This will not be helpful until you have a
period that the inventory equal zero.

Step 1:
Choose two consecutive periods, in which one of them has zero inventory (Px) and the other one
has left-over inventory (Py). ( the market share of the period with left-over inventory has to be
bigger than that of the period with zero inventory). If the market share of zero inventory period is
bigger , that means the segment is shrinking, and you produce less next period.
Step 2:

Subtract market share of the products target segment of Py and Px. (Py-Px).
The market share of the product for each segment will be found in the consumer panel.
Step 3:
Multiply the difference by segment size.
The segment size will be found in market forecast.
Step 4:
Multiply the number you got in step 3 with the price of the product in Px.
Below is the example:
Segment size: 312,000

So we lost about $714,480 for not produce enough for period 2.

CMBA 607 | Strategic Marketing

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 teams 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 elses was $300. Lets 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 didnt 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 dont have pretty colors and graphs doesnt 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) Dont create the most basic product possible. Lets 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, its 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 teams 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