Week 14 in Review

Getting down to the wire in marketing!
   
     This Tuesday we started off with a gallery walk.  We had previously noted in our blogs that the concept maps are getting harder as we no longer have the structure of the book to guide us.  I didn't find this map too hard because I was able to look at my situational and market analysis to help guide me and help me find terms to use.  Next week we should plan to do a cumulative concept map that will have us pick 6 really important marketing concepts and put them on the map.  After talking about the maps we started looking an equations sheet that was handed out to us.  We talked about the fixed and variable costs a company has as well.  We reiterated that fixed costs are something a company pays every month and it is exactly the same where as a variable cost is a cost that changes from one price to another.  We talked about sales revenue too and we were regaled with a story of how a senior marketing major had no idea how to calculate sales revenue!  It's very simple I think I even knew it before I took this class it's just the unit sales multiplied by the price per unit.  We also talked about contribution margin because it is important to know because it looks at your overall business performance.  We then moved on to talking about the simulation.  We started off by talking about price elasticity and we looked to see if our simulation was price sensitive.  Doctor Spotts had printed off a paper that showed the changes in the price of a product.  In order to see if a market is price sensitive, we needed to see if the lowest priced product had the highest sales.  It did not so that is a good indicator that the market is not price sensitive.  On the paper we got, it showed the price of a product going up and down.  When the price was increased, the unit sales went down but the total revenue increased slightly.  At a 10 percent increase sales went down and revenue began to fall.  This was the same for every price increase after the three percent increase.  When the price is lowered by 20 percent thereis a 19 percent increase in units but a decrease in revenue.  The decrease in revenue does not start until you drop the price by 20 percent.  This happens because when you lower your price, the margin gets smaller and smaller.  Since we are a cold medicine company, we need to be aware of our prices.  Our consumers will only buy our product if they are sick.  This is not a product you stock up on as medicines expire.  If we were to raise the price very high, people would either tough out their cold or go with another product.  We need to find a price that matches up with our consumers level of need for old medicine.  After talking about this we continued working on our marketing plan and we worked on our objectives.  These objectives will help us determine and check how well we did in the simulation.  We were advised to give our strategy a couple of periods in order to see the full effect of our strategy before changing it.  If it works, there's no need to change it and we can just tweak it in order to get the maximum effect of our strategy.  The performance dashboard will be used to keep a record of what we did and how we did it so we can stay organized and so we can look to see if we need to change anything.  For Thursday, we needed to finish our strategy and make our first period decisions.

     Before Thursday, Jon, Julia, and I made our decision.  We clearly did something right as we ended up in first for the first period.  I don't want to disclose what we did in case anyone from the class reads my blog this week.  We learned in class that day that net income is not something we as mid level managers should be worrying about and we should really be focused on the contribution after marketing.  We then looked at our objectives to see if we met all of them.  We ended up meeting all of our objectives except for our profit objective.  We wanted a 2 percent increase in profits and instead we got a negative 7 percent increase.  What ended up happening was because we dropped our MSRP price by 90 cents and increased our promotional allowance, a lot more money made its way to the ads and we also had a smaller margin.  We were able to tweak all of that and we found ourselves maintaining a constant stream or revenue, profit, and contribution.  We saw either slight decreases or slight increases in the 3 periods we did in class with our last period being our best one yet.  We have to do period five for class on Tuesday and I really hope we find ourselves in first place again because right now we are hovering around second or third behind the Matt team.  We missed an opportunity to reformulate Allround in order to make it non drowsy.  The Matts capitalized on this and their revenue and unit sales skyrocketed because of it.  We need to find a way to match their massive growth in these next few periods.