If you find this blog. You win 50% of markstrat, the other 50% is read and apply in the markstrat simulation.
Markstrat has so many reports, therefore, you can spend half an hour reading this guide and take notes to save many hours when you set decisions in Markstrat.
Pls start with right decisions from round 1 and 2, because wrong decisions require 2-3 rounds to fix and will be left behind by competitors.
1. Read the Marktrat manual
Again, download and read the Markstrat manual 1-2 times to get the overview of the game.
2. Know what decisions have to make each round
- Set R&D decisions to update products (reduce cost, update specifications, launch new products)
- Set marketing mix decisions (set prices, demands/production plan, advertising, select the target markets)
- Set decisions for Commercial teams
- Check the plan for sales and profit
- Also have to read about 10 reports to have basis and information to make decisions for each round, including Financial report, Production report, R&D report, Industry Dashboard, Industry Information and Market report.
- Also note to buy reports needed to find information to make decisions for next round, including Benchmark, Consumer Survey, Semantic Scales, market forecast, competitive advertising, competitive commercial team. Again, note to buy reports, so you can have information to make decisions for the next round.
- Do not ever set decisions without knowing the basis or reasons, do not just try and wait for results, because wrong decisions require 2-3 rounds to fix.
3. Again, before setting any decisions in Markstrat, spend 15 minutes to read this post and win 50% of the game.
- Understanding Markstrat: To get a better understanding about how Markstrat works, etc.
- Strategy: Set a long term strategy, and tactic to win all rounds
- R&D: is always the key to win (the same as in the real business life)
- Market reports: The reports are your source of information number 1, so I want to make sure you know what each report includes and what you can use it for!
- “How to”: Apply in the Markstrat decisions table: setting the right characteristics for your research projects, where to find demand forecast, how to find ideal products, prices, commercial team, production volume, advertising budget of competitors...
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Marketing Strategy Simulation Game – FREE Winning Guides and Tips 2018 -LINK
4. Markstrat strategy
It’s best to do the planning of your strategy even before you start the Markstrat competition. The problem with that is usually that you don’t know much about Markstrat.
TIP: Spend 15 minutes reading this post.
TIP: WINNING STRATEGY - USE 2-3-4 SONITE PORDUCTS AND 2-3 VODITE PRODUCTS - ALWAYS WIN
First you need to get an overview what Markstrat is and how it works. Read the manual!
TIP: Round 1 is important - start quick but careful. Next round decisions depend on previous round results
5. A quick story to exemplify how strategies work
Round 1 use 2 default Sonite products to sell in 2-4 segments
Need to think about which segments will be the key for next 5-6 rounds
When to update products (round 2)
When to launch new Sonite products (round 3)
When to launch new Vodite products (round 4-5)
What reports needed to find information to update and launch new products (Semantic)
What reports needed to calculate sales forecast (market forecast)
What reports needed to view competitors products (market report)
What reports for advertising, commercial team of competitors (industry benchmark)
What reports for purchase intention to select target markets (consumer survey)
TIP: Read reports of the last round before setting decisions for a new rounds.
6. What to consider for your Markstrat strategy
Business dictionary defines strategy as:
” 1. A method or plan chosen to bring about a desired future, such as achievement of a goal or solution to a problem --> Top Sales and Profit
2. The art and science of planning and marshalling resources for their most efficient and effective use. The term is derived from the Greek word for generalship or leading an army.” --> You Have limited Funds and Time but need to Win Competitions with strong competitors
So at first the strategy in Markstrat is about setting up a plan to achieve your long-term goal, which is most likely to be at the top of your industry in the last period.
Secondly, strategy is also about using your LIMITED available resources most effectively and efficiently. As your budget will be limited, you can’t do EVERYTHING, you need to focus your investments on the most profitable actions.
7. So we have already the first clues what needs to come into a strategy:
- Define how you plan to reach your long-term goal –> To win Markstrat you need to have the highest SPI in the last period. (Top SPI depends mostly on Top Sales and Top Profit)
To achieve this you need to build strong brands, that lead the industry in terms of volume and sales.
Also the contribution or net profit is important for the SPI, so decreasing the cost is highly important, too.
Plan in your strategy which segments you want to target and when you want to enter them. Select 2-3-4 of 5 segments to target
Vodite is a big factor here for sure, but also the other segments have the potential to drive your success. It all depends on what your competitors are doing and where the market offers attractive opportunities. Vodite is the key to win Top sales and profit in the later rounds (5-10)
Ask yourself which segments you will want to dominate at which point of time – maybe some are attractive now and others in the future?
Plan key segments from round 1. Eg, Saver and Shopper
Plan R&D for new products form round 1. Eg Round 3 launch new product to target High Earner or Professional
TIP: Need to check Markstrat to know how to R&D new project - Cost of new project - How much to spend for a project.
- Define how you will use your resources, that means how you want to spend your budget.
Is advertising more important than the sales team?
Which importance do you give to R&D or the market reports?
Define how you will allocate the budget, what you will prioritize over other things. I
Is it the sales volume, the sales value, the net contribution, the market share, etc.
TIP: CHECK THE REPORT TO SEE SALES AND PROFIT OF EACH PRODUCT. SPEND MORE FOR BETTER PRODUCTS
8. Define key segments to target
Which segments will determine about winning Markstrat.
Segments with higher volume and sales
TIP: Segments with higher purchasing intention for your products
TIP: You can change target segments, depends on sales, profit, competition
In the beginning are more limited and will probably focus on the segments your existing brands are closest to right now already
Later on you can target more segments when you increase your budget.
TIP: plan WHEN you want to enter target segment, then invest early 1-2 rounds for R&D.
9. Decreasing costs to increase profitability
In order to win Markstrat you need to have the highest SPI
Higher profit and sales increases SPI
Reduce cost to increase contribution or net profit
Therefore, think about how you can lower the costs per unit of each brand as much as possible!
TIP: The more you produce, the lower the costs will become.
So in segments with high volume (which are usually lower in value / price) your unit cost will typically drop over time.
NOTE:
Segment preferences change over time, that means having the perfect product for segment A today is not guaranteeing a perfect product in the next period or in 3 periods.
We need to adapt your product and make new R&D projects. Only negative aspect about that: Your cost curve will start from the beginning again and your cost advantage will be gone.
10. Some tips on strategy:
Invest in R&D – in almost every period! enter as the first company (the benefits are obvious I think), as a fast second (so you have already some knowledge about the before unknown market in terms of price, production size, advertising objectives, etc.) or
quite late, so you can focus your whole expenditures on dominating the Sonite market first and also might be able to sneak peak the best product characteristics for your Vodite project.Advertising objectives:
Commercial team: Do you want to grow your team along with the market average? Or do you want to be the market leader when it comes to the size of the sales team? And how do you allocate them to the different distribution channels? According to the current shopping behavior of your target segment or the expected future one? In the beginning my experience is that the advertisement is slightly more valuable but neglecting the sales team is a huge mistake, because then yourproduct will be popular, but not widely available in the shops – that’s digging the grave for your brand and sales arenot as high as they could be!
11. Blue Ocean Strategy in Markstrat
When you hear your prof talking about the Blue Ocean Strategy in the lecture it seems so easy: Avoid the busy segments, where you compete against many competitors for a limited market – the so called Red Oceans – and look for unoccupied spots to settle with your company / brand.
Like this you have to compete with less others and therefore enjoy much more effective investments (relatively low investment leads to relatively high rewards) and more market share in the segment.
Yet when many students get to play Markstrat they seem to forget about this!
12. Red Oceans seem more attractive at first sight
The reason for that – I think so at least – is that many focus only the attractiveness of a segment, be it segment size (volume) or value (sales). And because this is quite easy to find out, many teams focus on the same segments.
This in turn makes these segments much less attractive than they might seem at first. You need a lot of investment to get a piece of the cake and even to maintain the market share once you gained it. The rewards can sometimes not justify these efforts. Or you would simply be more effective in another market, meaning less investment needed to achieve similar outcomes.
The funny thing is: In Markstrat it is so easy to identify the Blue Oceans!
TIPS: Take a quick look at the Semantic Scale report and count the brands that are close to each segment. The segment with the fewest brands around could be the first Blue Ocean, right?
13. Typically a Blue Ocean: The Explorers segment
One classical example of a Blue Ocean in Markstrat is the Explorers segment. Typically, the participants tend to neglect it as it doesn’t seem attractive on first sight. Relatively small volumes and the growth forecast prognosticating slight decrease over the years really are not that tempting for investment.
But you can’t be fooled, can you?
If you don’t have competitors in that segment on the other hand, then you’ll quickly grab a huge part of the segment. Which makes it quite attractive again. Find the segments that have low competition, because your investment can have a greater impact there.
14. But be aware of competitors having the same plan!
One or two competitor would decrease the attractiveness of the Explorers segment significantly. But it might be worth a try. Conquering a segment that no one else is targeting is usually a good idea, but check for the viability of your investment. That means, whether you can generate enough profit to justify your investment. A segment of 1.000 highly specialised customers paying double the price than usually does not necessarily have to be profitable for you.
So do the math first!
15. Identifying Blue Oceans: Evaluating segment attractivity
It seems like the two prominently used variables (sales volume and sales value) are not enough to evaluate the attractiveness of a segment.
You have to take into account other factors, like the competition for example (measured in competing brands). The more competing brands, the higher is competition and thus, the less attractive gets the segment. Also take into account the expected segment growth to evaluate the segment’s attractiveness.
If you plan to enter a segment it’s also important to consider the entry barriers. Entry barriers would be strong competitors with a lot of market share or high Marketing & Sales spendings (make sure to check how much the brands are investing through Advertisement and Sales Team with the Market research reports).
Also keep in mind that you have to calculate at least 2-3 periods after market entry to make your product known and available in the shops. Another entry barrier is the approximate cost for the R&D project to develop a suitable product to target the segment.
I’m planning to write a detailed article about how exactly you evaluate segment attractivity in detail. Sorry, but I didn’t have the time yet to write it!
16. Competition is just one factor to consider
In the end, the Red and Blue Ocean Theory is all about the competition in a market sector. But the competition is just one factor to consider as shown above. And it depends on the individual situation whether it’s the most important factor or not. Ideally you weigh each factor according to their importance for your decision which segments are the most attractive.
And it’s needless to say that you should invest into and launch brands for the most attractive segments, right?
17. Markstrat Vodite Strategy
In this article I’ll explain all I know about the best Markstrat Vodite Strategy to win Markstrat and following topics:
- How to anticipate your competitors Vodite launch
- When to launch Vodites
- Ideal Vodite characteristics
- Which Vodite segment to target
- How to determine Vodite production
- Which Vodite price to claim
- Vodite market research reports
Markstrat Vodite Strategy
Many participants realise quickly, that the Vodite market in Markstrat is one of the most important things in order to win. And I would lie if I said that this is not true!
Vodite has without doubt a huge importance in Markstrat, but I want to stress, that it’s not ONLY depending on Vodite. But as everything in Markstrat is interdependent, you have to consider Vodite in the bigger picture of your strategy (check out my tips for your Markstrat strategy).
18. Best strategy for Vodite in Markstrat
In my experience it is crucial that you have a plan for the Vodite market right away from the beginning. That includes a few questions you need to answer for your Vodite strategy, which I will cover in the following.
But independently of everything, you want to know when your competitors will launch their first Vodite (especially if you want to be the first in the new market).
Therefore you need to analyse your competitors actions very closely and anticipate their next moves.
How to anticipate the first Vodite launch (if it isn’t your company that launches first)
To anticipate when your competitors will launch their first Vodite, you have to keep a close eye on the R&D expenditure of your competitors in the Vodite market. You can see that in the market research report “Industry Benchmarking“. If the R&D investment in the Vodite market of any competitor adds up to 6-8 Million $ in total (in all previous periods), you need to expect this competitor to launch their Vodite in the coming period.
It’s essential that you know when your competitors launch their first Vodite and it’s fairly easy to see this in Markstrat.
Now read carefully what else I recommend for your Markstrat Vodite Strategy.
19. When to launch Vodite
When to launch your first Vodite in Markstrat is a good question many participants ask themselves. In my experience I have always tried to be the first company to launch a Vodite, but I think there are two more valid Vodite strategies to succeed in Markstrat:
Markstrat Strategy Vodite: Be the first company to enter the Vodite market
The benefits of being the first company to enter the Vodite market are obvious: You enjoy a monopoly and therefore 100% market share! This also allows you to claim a higher price compared to a competition situation. I’ve written about Blue Ocean Strategy in Markstrat in another article, it’s worth to check that out, too!
Naturally, there are some negative sides to this strategy:
You need to invest a higher share of your budget into the Vodite R&D project than your competitors in the periods prior to your Vodite launch. That means, that your position in the Sonite market will be weaker, because you can’t spend as much as you could in order to strengthen your position.
You need to start investing into your Vodite project right away after the first period. And you won’t know whether you will actually manage to be the first one to launch your Vodite, because you can’t influence what your competitors do. Just keep an eye on their moves and R&D expenditures.
The secret to this strategy: You need to try to build a solid position in the Sonite market and at the same time invest as much as you can in the Vodite project. So your first priority should be to maintain a good position in the Sonite market, otherwise you sacrifice your profits and will end up with less budget in future periods to spend on your R&D.
I don’t think it would be worth to totally neglect your Sonite position just to be the first one to launch your Vodite. Your Vodite entry should base on a solid Sonite position.
Markstrat Strategy Vodite: Be the fast second company to enter the Vodite market
Following the negative aspects of the strategy explained above, the second strategy is to enter the Vodite market not necessarily as the first company, but still be one of the first teams to launch a Vodite.
The basis of this strategy is to acquire a fairly strong position in the Sonite market first and then build up on your strong position by entering the Vodite market.
The reason why this strategy can be beneficial: In the beginning, the Vodite market is still developing and growing a lot. Thus the profits to be gained in the beginning are small compared to the profits later on. The most important segment is the Followers segment, which will grow immensely after 2-3 periods after the first Vodite has been launched. Therefore you can still dominate the Vodite market even though you haven’t been the first one to enter.
And besides, you can finance your Vodite entry and the R&D projects necessary to develop a strong position through your strong position in Sonites.
Markstrat Strategy Vodite: Enter the Vodite market rather late
Another valid strategy is to focus completely on the Sonite market at first and ideally dominate this markt, because your competitors already split their budget to invest in Vodite R&D projects. Therefore, you have an advantage over them in the Sonite market, because you can spend your budget completely on your Sonite brands. More investment usually goes along with higher market share, sales and profits (if done right).
For this strategy to work out, you need to invest into better Sonite brands (–> new R&D projects) and then market your brands with heavy Marketing expenditures (advertisements and sales team).
Another reason why this strategy is worth considering: If you follow strategy or , you have to create your Vodite project without knowing which characteristics your brand should have. However, if you just create your Vodite project once the first competitor has launched their Vodite, you can discover the right characteristics easily by buying the market reports Semantic Scales or Multidimensional Scaling and then creating a much better product than your competitors (because they couldn’t know the characteristics when they created their first project). However, your competitors will probably try to create an improved Vodite immediately after they have these information. So you still need to be fast and get your project finished within 1 or maximum 2 periods.
20. Ideal Vodite characteristics
A problem you face when you want to launch the R&D project to develop your first Vodite is how to set the ideal Vodite characteristics.
If you follow launch strategy or you don’t know anything about the market, because there is no Vodite available yet. So you don’t have any other choice than guessing the characteristics you should set. Following strategy you wait with the creation of a Vodite R&D project until another competitor has already entered the market and you can copy their characteristics and the ideal characteristics of each segment.
There is no point in me telling you exactly which characteristics you should set. First, I want you to learn and thus come up with a strategy you could also apply in reality. And second, every competition is different and the ideal characteristics are depending on what happens in YOUR competition, thus ideal characteristics will vary.
I’ll tell you what I always tried to do: We launched a Vodite that is somewhat medium in many characteristics. Our plan was to launch the Vodite and then after the market entry, once we had some information on the segment preferences
Consider two things:
The carbon footprint of your product can become subject to fines from the government (in later periods), if the emissions are too high. Thus, I would recommend to go for rather low carbon characteristics.
The segments in Vodite are more volatile than the Sonite segments and the ideal characteristics will change more and faster. Therefore you will need to change your brand through subsequent R&D projects anyway.
Therefore it’s not as important to find the ideal characteristics already for the first Vodite when you enter the market.
21. Which Vodite segment to target
Vodite has three segments. As in the Sonite market you can’t serve all segments perfectly with just one brand. Thus, you need to create several brands anyway, if you want to target more than one segments (which I would recommend if you enter the Vodite market early). Consider which segment will be the best to target at the moment when you enter. In the beginning the Innovators are the biggest segment, but the Early Adaptors catch up soon. In the end, these segments are rather small compared to the Followers, which will be the biggest segment by far in the end.
Depending on when you enter the market, you should target different segments. With strategy and I’d recommend you to target the Innovators and Early Adaptors first and then the Followers later on with a new brand. Following strategy you should buy the market forecast report and see which segment to target first (but I think it makes most sense to target the Followers directly).
22. Production volume Vodite
Once you finished your Vodite project and are about to launch, you ask yourself how much you should produce. This is a fairly normal question and you won’t know that for sure.
In general, I would recommend you to rather produce too much than too litte, because lost sales hurt more than inventory.
The demand for your Vodite product will depend on 2 things:
Your price. The higher, the less demand (usually). However, the Innovators and Early Adaptors are rather price insensitive, that means they really want to have your product and don’t care too much about whether it costs 100$ more or less.
The second important factor is, whether you enjoy a monopoly situation (=you are the only brand available) or whether your competitors have already entered or will enter the market in this period. As described above, keep an eye on your competitor’s moves and estimate, whether they will enter the market together with you as well.
Usually, the total demand for Vodites when they become first available is between 50.000 and 150.000 units (depending on the quality of your product and the price). The subsequent periods you can see how the demand develops approximately through the market forecast report.
23. Markstrat Vodite launch price
After setting the production volume, you ask yourself which price to determine.
It depends on whether you are the only company that is on the Vodite market or not. If you are the only brand on the market you can fix higher prices, because you don’t compete with other brands. If not, you need to take into account how high your competitors will fix their price.
The first customers for Vodite (Innovators and Early Adaptors) are not price sensitive. Therefore you can rather fix a high price, but of course depending on the quality of your product.
A good guideline for setting the price is roughly the cost of your Vodite R&D project divided by 5.000. So if your project costed 6 Million $, my advice would be a price around 1.200$. But as I said, this depends on the possible competition. Having a monopoly, you could claim a lot more!
24. Vodite market research
The same market research reports that are available for the Sonite market you can also buy for the Vodite market. It doesn’t make sense to buy any in the beginning when there has not yet been any brand launched, because you won’t get any information.
Just when the first Vodite has been launched, it makes sense to buy the Vodite market reports. And you want to know quite exactly when the first product will be launched, because you need to anticipate the market entry in order to have the report available. The reason: To have the report available in the right period, you need to purchase it before you even know for sure whether a competitor will launch or not. So, as described in the beginning of this article, you need to monitor your competitors!
25. MARKSTRAT MARKET REPORTS
General usefulness of Markstrat Market Reports
Information is power! That is not only true in real life, but also in Markstrat. And your only way to get information in Markstrat is through the market reports.
There are a number of free reports, that you get every period automatically and which give you several insights into your company’s performance.
Other reports, the market research reports, you need to buy in the period before in order to have the information in this period.
So you have to always think and plan ahead in order to know which information you need in the next period
26. Free Markstrat market reports
In every period, you get free Markstrat market reports automatically. You find these in the sections Company Results and Market & Competitive news in the menu on the top.
Company Results
In the company results you find several reports about the performance of your company.
Company dashboard
In this report you find information about the development of your SPI, revenues, earnings as well as market shares. Additionally, you see the revenues and contribution of each of your brands.
You can easily determine which is your most important brand and thus where you should invest your budget!
Financial report
This report gives you – you might guess it – financial information about your company in total, the your financial performance split up by Sonite / Vodite market and also split up for each of your brands. You can see how your company’s performance has developed in the last periods and how each of your brands has performed in terms of revenue and contribution.
Further down, you see the unit and value market shares of each brand (within its market (Sonite / Vodite) – not only the targeted segment), as well as the units sold through each of the three channels (Specialised stores, mass merchandise and online stores).
Like that you can determine which distribution channel is most important for each brand.
The financial report also includes the distribution coverage of each brand in each distribution channel.
This helps you determine how good your sales team has pushed the brand into the market. You can have the best product, but if it’s not available in the stores, the customers can’t buy it. So you can see which brand might need more sales people!
A distribution coverage of 40% can already be considered quite decent, more than 50% is splendid. It’s very hard and probably not worth the effort to try to reach more than 60% coverage (I think me and my team never had 60% coverage in any market).
The financial report furthermore shows you how much you effectively get for each unit sold. You might know already, but depending on the channel, the shops get discounts on the sales price you determine (5 or 10%) and also they of course take a margin of the sales price of 30 – 40 %. So be aware if you fix your prices in the decision interface, that you get much less than the price you determine.
Production report
This report shows you in a nice graphic how many units you have produced last period and how many you have sold – leaving you with an inventory in case of overproduction. You can also see in a note below the graphic if you haven’t produced enough of a brand à lost sales!
In the table below the graph you see your original production plan as well as the real production. Remember that the production size you decide on can be adjusted by 20% – higher and lower depending on the actual demand.
Consider this information for your next decision round. Especially lost sales are annoying and hurt you more than you might think because the customers buy a competitor’s brand instead!
In the lowest table you see the unit costs per brand and the inventory costs.
R&D reports
These reports – one for Sonite and one for Vodite if you have a vodite product already – show you which projects you have finished in the last period as well as your already existing projects.
You see the physical characteristics of each project, the current and minimum base cost and also how much the project has cost you. Furthermore, you see which brand you have associated to a project.
This information can be helpful when you want to determine the characteristics of a new project, because you can check where on the perception map (semantic scales or Multidimensional scaling – I’ll explain these reports further down) your current brands are. Then it’s easier to determine good characteristics for your new project. I have a special article about how you can determine the ideal project characteristics, check it out!
Decision review
These reports show – split up by market – how you have allocated your budget in the last period – in case you forget or want to check it in future periods (the reports of each period are all available throughout the whole competition). So you can see which amount of your budget you have allocated for what exactly.
Market & Competitive news
In these reports, you get information about your industry and the Sonite and Vodite market.
Industry dashboard
You will open this report immediately once the period has been simulated and the results are available because here you can see how your company has performed in the last period in comparison to your competitors!
First, you see each company’s SPI, revenue, net contribution and the cumulated net contribution. Then you also see the SPI evolution in a graphic.
You see in two graphics the development of the market sizes of Sonites and Vodites (in terms of sales) as well as the sales by company. The next two graphs show the distribution of market share per sales and value for each company for Sonite and Vodite market. In the bottom you see the best performing brands in terms of sales and sold units.
Use this market report to determine where you are standing in your industry compared to your competitors. You can’t see much detailed information but it gives you a quick overview of the overall situation.
Industry information
This report gives you some less important information about the average growth and inflation rate, the cost for hiring, and firing sales people as well as what the market reports cost (this can change – but not by much)
IMPORTANT: This report can entail information about government fees for too high Carbon Footprint of your Vodite product! The limit is likely to decrease with every period played, so make sure your brands are below it or you will pay fines (which are not super high, to be honest).
Market reports Sonite and Vodite
Here you will see the important information about each brand in the respective market (Sonite or Vodite). You see the market share and absolute numbers in terms of value and sold units and also the variation to the previous period. You can also see whether a brand has been launched new in the last period or whether it has been modified (= a new project has been associated with the brand, thus the brand characteristics have changed).
In the bottom of this report you see the physical characteristics of each brand as well as the price the company has fixed for the brand and the base cost (not the actual costs). You can calculate the current, actual cost of each brand, which I will show in another article.
27. Markstrat Market Research Reports you have to buy
These reports you have to buy and you have to decide the period before which reports you will need in the next period. So you need to plan ahead!
Knowing what each market report entails and what it can be useful for is essential, so read in the following my explanations about each report.
I will give you recommendations, whether I would buy this report in every period (if you can afford it) or whether I would only buy the report selectively, if you need the information in the next period:
= Always buy these reports if you can somehow manage to invest the budget
= Buy selectively – Nice to have but if you are really tight on the budget you can save here
Industry benchmarking
I think it’s one of the most important market reports in Markstrat. I bought this report every period I played, because the information is especially valuable if you want to foresee your competitors next moves and cut their plans. The report displays various kinds of information, which I will explain you now and show you how you can use this information.
Which information is shown
First the report shows the overall revenues and expenditures of each company. You don’t see how your competitor’s revenues come together, but you can estimate that with the free market reports I showed above.
More interestingly, the Industry Benchmarking report gives a very good overview which expenditures your competitors have – even for each market! Using the information on their production expenditures you can check and improve your calculations on the costs per unit of each brand. This information gives you deep insight into your competitors and allows you to plan your next steps strategically. In this article I show you how and why you should do that!
The Industry Benchmarking report further shows you the Marketing expenditures as well as sales team costs of your competitors. These are interesting but the information overlaps with another report you can buy, the competitive intelligence. The difference is, that the competitive intelligence report shows you an estimation of how the total expenditures of the competitors divide among their brands and even the segments / channels. This information is more powerful than the one from the Industry Benchmarking.
So in this regard, the competitive intelligence report is much better.
Unique insights from Industry benchmarking report
In another area however, the Industry Benchmarking report is gold:
You see your competitors’ expenditures for market reports, which tells you approximately how much information they have for the next period. You don’t see exactly which reports they bought, but if one competitor only spend 200.000$ he must know much less than another competitor who spend 600.000 on market research.
Here comes the extreme value of the industry benchmark report:
The report also shows your competitors’ R&D expenditures. That’s very interesting information right here!! This information alone makes it worth buying this report.
In the report you even see whether the R&D investments are for the Sonite market or Vodite – or both. It tells you in which area your competitor is investing, thus gives you an impression of their strategy.
Foresee competitors’ strategic moves
Is your competitor heavily investing into Vodites? Surely, they want to launch a Vodite brand soon. To enter the Vodite market you need to spend around 6-7 Million $ on the first project, but you can split it over a few periods. Does the R&D expenditure of one competitor over the last periods add up to approximately 6 or 7 Million $? Then you must assume that they will launch their Vodite in this period!
With investments in Sonites it’s a bit more difficult to foresee the moves. In general, the more sophisticated projects cost more. Costs of around 2 Million will bring out a project for the high-end market (Professionals / High Earners), around 1 Million R&D projects are for the low-end market (Savers / Shoppers).
The tricky thing is, that you could see an expenditure of 1 Million in the Sonite market, but this competitor is barely dividing the costs for a high-end Sonite on two periods.. Or 2 Million in Sonite R&D expenditure come out with two projects in the low-end sector. So you can’t be as sure here, but the information is still very valuable to make assumptions and foresee your competitors moves.
Why is it so valuable to know what your competitor will do?
Well, there are many areas this information helps you! For instance to determine the production of your brands, whether your brand will be growing because you have the best product or does your competitor launch another brand / better brand that will compete with your brand? In the article on competitor intelligence I explain much more of these scenarios!
How much money do your competitors have this period?
But the Industry Benchmarking report gets even better: It shows you exactly your competitors’ budget for the next period.
This information becomes very valuable if you think about the next possible moves your competitors will do. In the article Competitive Intelligence I explain in which directions you have to think and how you beat your competitors easily by foreseeing their next steps.
Consumer Survey & Panel
This market research report consists of two reports (which you have to buy separately).
Consumer Survey
In the section of consumer survey, you see the brand awareness of each brand on the market (Sonite / Vodite – it’s two reports you have to buy if you want either information), both on average including all segments (not so important) and also the awareness in each segment.
The higher the awareness for a brand, the more people could potentially buy the product! If one doesn’t know about a brand, you can’t buy it. Makes sense? Good. It’s not so important to look at the overall awareness, because you usually don’t target all segments with a brand. It’s more important that the brand has a high awareness in the targeted segment.
Compare your brand’s awareness to the awareness of competing brands in that segment. To dominate the segment you want to have the highest awareness. Usually, an awareness above 65% is already really good, if the brand has been long in the market (for instance your starting brands) the awareness can also build up above 70% and up to 80%! I noticed that the high-value segments tend to have a higher awareness than the low-value segments.
To increase the awareness you have to advertise – classic, right?
Further down, you see the purchase intentions, again in average including all segments and further down for each segment.
This information is very important!
The purchase intentions state, how many percent of the segment bought this brand in this period (if it was available and they were aware about it). So the purchase intentions are closely related to the market share. Be aware that this information was for the current period and not for the following one.
If the purchase intentions are higher than the brand awareness, than you have to invest more into advertising, because you could have had higher sales if more people were aware of the brand.
The purchase intentions tell you a lot about how well this brand suits the needs of the segment. If the brand entails exactly the characteristics the consumers of the segment are looking for, then the purchase intentions are high. Of course this also depends on the competitor products, because if there are two quite similar brands, the consumers split up.
Having high purchase intentions means that you have a really good product for this segment and also that there are not many good competitor’s products in this segment.
The last thing the consumer survey reveals are the shopping behaviors of each segment. Which distribution channel do the consumers in each segment tend to use?
This information is valuable to determine how to allocate the sales team of your brand that targets the segment. A good approach is to take the share of shopping behavior and match it in your sales team allocation.
But be aware, that the shopping behavior also changes towards the next period. So, if you can even recognize a trend how the shopping behavior will probably shift, then apply it to your sales team allocation.
Consumer Panel
This report tells you the market shares of each brand for each segment.
This information is nice, because you can determine exactly how much each brand has sold in each segment by combining this information with the free market report telling you the sales & volume of each brand. Use an excel sheet to calculate this easily by exporting both data sets and then calculating the sales per segment per brand with a multiplication formula.
The consumer panel further shows the size of each segment in percentage of the whole industry volume. So you can easily see which segments are the biggest ones and thus most important for the industry.
However, you can also get this information through the market forecast report (which I will explain further down), so you don’t need the consumer panel for this information.
Distribution panel
This report shows you the market share of each brand for each of the three distribution channels.
Furthermore, it shows you the distribution coverage of each brand in each store. That means, how many stores offer this brand. You have this information about your brands from the free report as explained above, but it’s important to have this information also about your competitors’ brands.
Compare the distribution coverage of your brands with the coverage of the competing brands (only relevant brands that target the same segment). This information can help you for your competitive strategy, meaning how you want to fight your competitors.
Stores only have a limited space and if you increase your sales team to push in your products, the stores will carry less of the competitors’ products. So, you can see whether you have to invest more in a sales team of one of your brands. Awesome!
Semantic Scales
One of the most important reports, because it shows you several awesome information.
First the report shows you how the consumers perceive each brand in their physical characteristics. This does not mean that the brand has exactly these characteristics, but the perception is far more important than that.
The reason? Well, if you think this product has an awesome power, than you will buy it, no matter whether this is actually true or not.
Perceptions can be changed through advertisements. In the decision on advertisement spending, you can choose which characteristics you want to advertise. By doing that you can change the perception. But be aware, that you can’t fool the consumers too much, just a bit: You can’t make them believe your brand has a huge display if it’s actually quite small.
I cover how you can change the perceptions of a brand in another article.
The semantic scale report further shows you which characteristics the segment wants, the ideal characteristics. These change over the course of periods and the ideal value “moves” across the perception map. At the bottom of this report you see how the ideal value has developed over the last three periods.
That’s why you have to revise your brands from time to time and adapt them to the new requirements of your segment.
These ideal characteristics are very important when you create a new project, because of course you want to create exactly the product the consumers want, right? I cover how to do this in another article.
Further down you see how important each characteristic is for the consumers, so their relative importance so to speak. Price is usually very important, but also other characteristics play an important role when consumers decide for a brand.
This information helps you to focus your advertisement on the most important characteristics. It’s awesome if your product has exactly the battery life the segment wants, but advertising on this might not be valuable, because it is not one of the deciding factors for them. Or would you buy your next smartphone by only looking which device has the best battery? Exactly, and the Markstrat consumers are similar.
Then, the semantic scale report shows a perceptual map for each characteristic. On the X-scale there is the most important characteristic (in Sonites usually the price) and on the Y-scale for each perceptual map, there is another characteristic.
Like that you can see how well your brand suits a segments’ needs for the respective characteristic and which other brands you compete with. Useful, isn’t it?
Multidimensional Scaling
This report contains similar information like the semantic scales, only that the Multidimension scaling several segments are combined into a category.
That’s why I would recommend to either buy the semantic scales report or the Multidimensional scaling.
I always bought the semantic scales report because it is more detailed and thus more valuable. But the MDS is also valuable.
I am not 100% sure about this, but I will make a guess:
When you base your advertisement on the Multidimensional Scaling, you are not just telling the customers that your brand is awesome atthis characteristic, but on this category (including several characteristics). That’s why I could imagine, that you can change the perception of your brand faster and in more than one characteristic at a time.
But I don’t have proof for that and as I didn’t buy the MDS report, I am not so experienced how to interpret it properly.
Competitive Intelligence
This report shows you the advertisement spending of each brand and per segment as well as on which characteristics they focus their advertisements. You also see the size of your competitors sales team and even in which channels they send their sales representatives-
You gain powerful knowledge about where your competitors invest the most. This makes it possible for you to make assumptions about their strategy and focus!
Take note of the competing brands for your targeted segment and compare the investments. Your competitor is heavily investing in advertisement for a segment in which you are the market leader? Well, better be prepared for loosing market share then or stock up your investments, too!
The competitive intelligence report contains powerful and valuable information, no question about that! So why do I put a here?
You only need to buy it if you want to use the information entailed to make different decisions.
You should only spend your budget on the most important reports and this one is nice to have, but maybe you rather want to invest that budget elsewhere if you don’t plan to use this information.
Market forecast
The market forecast report does exactly what it says: It shows you how the market is (probably) going to develop. It is based on the current development and a different behavior of the market participants can cause the market to develop differently.
You see the market size of the industry right now, for the next period and in 5 periods- for the market in total and per segment. You also see how the segments are expected to develop.
The reason that I rated this report with just a is, that you don’t need to buy it every period. Me and my team sometimes skipped to buy it for one period (not in the beginning though!), because we just took the average growth rate and extrapolated it to the future. So we had a “good enough” information and didn’t need to buy it in every period!
This can be a bit risky, because as I said the market can change unexpectedly, but we didn’t have any problems with that.
You see the market size of the industry right now, for the next period and in 5 periods- for the market in total and per segment. You also see how the segments are expected to develop.
28. Master R&D and you are on a good way to master Markstrat 
R&D in Markstrat – explained
So here is the structure of what I will cover in this article:
- R&D strategy
- Importance of R&D in Markstrat
- How to do R&D in Markstrat
- Expert advice
29. R&D Strategy
Before you even start to think about R&D, you need to think about your overall Markstrat strategy. R&D is one of the main factors you need to think about in your strategy, but by far not the only one! Everything is interconnected and interrelated, therefore you can’t tackle one topic individually. I’ve written a very detailed article about strategy in Markstrat, which I would highly recommend to read! I give you a lot of advice there
Your R&D strategy has to fit into your overall strategy!
R&D in Markstrat consists of research projects, which you have to finance with your budget. As your budget is limited, you need to prioritise what is most important to you (advertising and sales team for each brand, market reports or R&D projects)
Following I’ll explain you why R&D is one of the most important factors in Markstrat.
30. Importance of R&D in Markstrat
I can’t stress enough how important R&D is in Markstrat: Do R&D wrong and you can never win Markstrat!
With successfully finished R&D projects you can launch new brands or adapt and improve old brands.
Every successful company I know is big in these areas: Improving your existing products (for example so they serve the customer needs better or in terms of production costs) and creating new products to serve the needs of your customers better and target new customer segments.
31. Markstrat goal Number 1:
You want to grow your company as much as possible. What do you need to do to achieve that?
- Serve as many customers as you can –> increase your customer base by launching new brands and targeting new segments
- Create the ideal product for the customers, so they choose to buy your brand over your competitor’s brand
- Decrease your costs as much as possible
R&D is so important, I would advise you to invest into R&D projects in every period!
I found this statement in the StratX FAQ regarding the connection of R&D and SPI (The SPI is like the “stock value in Markstrat”. The more SPI points you have, the more successful you are and win in the end): An SPI increase “cannot be accomplished without high level of R&D activities.” Bam! Here you have the proof, right from the developers of Markstrat. So make sure to invest continously and develop the best products targeted at the segments.
The best product wins
Well, maybe it’s more complex than that. Neither in Markstrat nor the real business world a good product is the only thing you need. There are plenty of examples that show you need more than a great product in order to be successful. But good products are still important!
What means best product
A product serves a need, thus it symbolises a benefit for the user. A product usually also costs something. Simplified you can say the net value for an user is the product’s benefit minusits costs.
Net value = product benefit minus costs
Important for Markstrat and reality is also another phenomena: perception. Benefits, values and costs don’t come absolute (even one might think so),but relative depending on one’s perception. So neither in reality nor in Markstrat you should think in absolute terms but always in relative terms according to the consumer’s perception.
32. How to do R&D in Markstrat
In Markstrat you are doing R&D by creating research projects, which you can use as a base project for any existing or new brand you have – once the project has been finished successfully.
So there are 2 questions:
- Question 1: Which projects should you do?
- Question 2: How should you set up the projects?
Answer 1: Figure out, which segments you want to target.
You want to serve the most profitable segments, right? The ones where you can make the most money and ideally don’t have to invest a fortune? Well, then you have to figure out which segments fulfil these criteria and are most attractive for you!
I show you how to analyse the attractiveness of a segment in another article, which I recommend you should read if you are not sure about it (click here to open the article in a new window).
Answer 2: What are the primary goals of your brands (or better: what should they be)? To ideally serve the consumer needs! GIVE THE CUSTOMER WHAT THEY WANT! 
= 
This is much harder to determine in reality than in Markstrat, because in Markstrat you can buy the Semantic Scales or Multidimensional Scaling market reports (read here what these Markstrat market reports include).
With the help of these market reports you can easily see what kind of product the consumer segment wants in terms of each characteristic. Then you just need to transfer this information into the research project you are creating and 
BOOM 
- you just created the next star product that the targeted segment will LOVE! 
33. How to determine the right project characteristics
As I already pointed out above, you have to find out which product the targeted segment wants to have = Their ideal product.
Once you found this out, you just need to create a project that entails exactly these ideal characteristics! Easy, right? Well, I have seen many teams fail to do this, so I guess it’s not that easy after all.
You can use the “tools” in the Markstrat interface (once they are available – typically they are not available in the first periods so you don’t get overwhelmed by all the possibilities in Markstrat)
Consider this:
- The ideal characteristics change over time. You can see the movement of the ideal product of a segment in the market reports and you want to anticipate where the ideal characteristic will move in the future periods! I have always tried to develop new projects so it has the ideal characteristics of a segment in 2-3 periods (depending on whether you plan to create another project and improve your product or not). Because you will need at least 1 period to develop the product and then you don’t want to be outdated already! So plan ahead and estimate what the consumers of a segment will want in the future periods!
34. Expert-Tips regarding R&D in Markstrat
Here I have some special advice for the experts among you:
- When you are planning to launch a new, important brand with a new project you are just developing, think about launching the brand name itself already one period before your project is finished (using another project, which should be the most similar you have available)
- Why? Building brand awareness and distribution coverage takes time and is crucial to your success! Therefore you can kickstart your new brand in these two areas by investing already a bit of advertisement and sales team before you actually launch the real product.This strategy is not always clever, but if you can afford it and you have another project, that is somewhat similar to the one you want to launch, then I would recommend it!
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Email: mbagame2017@gmail.com
Blog: https://marketingsimulation2012.blogspot.com
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