Strategic Marketing Plan
...re in that segment at 52% and I thought that if VRCD2 started targeting the assistants, it would cut into the sales of BCBG and help increase profits for VRDC2 in the upcoming periods. That decision totally backfired and while losses during both periods were at its lowest, VRDC2 did not get much higher of a market shares in the assistants category which was a major disappointment. In the Period 5 marketing research report, it was observed that out of all the segments, VRDC2 had its highest market share in the home users segment at 11.1%. As a result, VRDC2 decide to target the home users segment from Period 6 through Period 8. Despite targeting the Home Users segment during those three periods, VRDC2 was being bypassed by its competition, BCBG and elite and it only had a 13.3% market share in the home users segment at the end of Period 8. VRDC2 saw a glimmer of hope after observing the Product Positioning report in the Period 8 results. As shown in Figure 4 above, VRDC2’s distance (excluding price) toward the segment ideal or preferred product was at 1.3, the lowest of all firms in the industry in that segment and in all segments. Based on this product positioning report shown in Figure 3, lower numbers are closer to ideal than higher numbers. As a result, VRDC2 decided to actively target the student segment. Despite losses still being quite high, there is a lot of hope for VRDC2 in the student target market segment. **********Exhibit 1: Report 1: Market Share By Segment In Period 10********** VRD Brand Students Home Users Assistants Creators Managers Parents ----- -------- ---------- ---------- -------- -------- ------- BCBG 0.279 0.370 0.212 0.500 0.541 0.353 VRDC2 0.200 0.162 0.099 0.120 0.106 0.165 VRDPlus 0.087 0.126 0.531 0.133 0.129 0.182 elite 0.433 0.342 0.159 0.248 0.224 0.301 Sales(units) 25,839 18,592 29,298 15,178 22,990 7,950 Sales(units) 25,839 18,592 29,298 15,178 22,990 7,950 As shown above in Exhibit 1, VRDC2 in Period 10 had a 20% market share in the student market segment, up 7% from Period 8. In addition, unit sales in Period 10 catapulted to its highest mark, since period 1 as shown below in Figure 5. B. Sales and Profits: VRDC2 failed to meet expectations when it came to making sales($) and profits. VRDC2 came out with a loss in every period totaling a net contribution of (-2,985,147.50) as shown below in Figure 6. Figure 6 There were many factors that contributed to consistent losses in each of the ten periods. In Period 2 and Period 3, there was a significant amount of transfer charges due to overproduction which only increased expenses. In addition, the other firms in the industry spent significantly more money on advertising and continued to make modifications toward their product. As a result, VRDC2 fell behind and just could not recover. From Periods 4 through Period 6, Unit sales hit an all time low as shown in Figure 5. Due to expensive transfer charges due to overproduction, VRDC2 produced significantly less VRD’s hoping that there would be no overproduction or transfer charges. In addition, Periods 5 and 6 consisted of a major shakeup with numerous employees being fired so that the money could be put into advertising. That decision truly backfired because while losses were at its lowest, VRDC2 had trouble selling its products as little to no product modifications were made, while the other firms in Industry C continued to modify and update their products. In addition, VRD spent very little on customer service compared to its competitors and that decision also truly backfired upon them. The decision periods between Period 7 and Period 10 consisted of another major shakeup as VRDC2 decided to boost up the customer service and also start making product modifications in order to keep up with its competitors. Despite the fact that losses have been relatively high these last few periods, there is still hope as unit sales have continued to increase consistently from Period 7 onward. C. Costs: As shown below in Figure 7, Unit costs started off at $53.00 in Period 1. After that Period 1, unit costs decreased methodically until Period 7, when it was at its lowest. During Period 8, Unit Costs increased and then really spiked up by Period 9. Overall, there was a 20% increase of Unit Costs between Period 1 and Period 10. One factor that contributed to the increase in Unit Costs between Period 1 and Period 10, were the product modifications that took place during Period 8, Period 9, and Period 10. The time frame between Period 1 and Period 7 had very little to no product modifications which explain why during those periods, the unit cost went only slightly lower. Product modifications cost a lot of money and the more product modifications a firm makes, the higher the unit cost will be. During Period 8, Period 9, and Period 10, VRDC2 boosted the special comments, added higher levels for error protection, and higher level of learning in order to boost sales. D. Distribution: VRDC2, for the most part, focused the distribution of VRDs in Channel 2. Due to having a specific chosen product being sold in channel 1, prices were set higher in channel 1 than in channel 2. In addition, there were more dealers in Channel 1 than Channel 2 because the dealers in channel 2 offered more limited service and it was direct distribution. In Channel 1, dealers deal with the local customers which are why there were more employees in Channel 1 than in Channel 2 in each of the ten periods. As shown below in Figure 8, VRDc2 has consistently had more sales in Channel 1 than in Channel 2. However, the gap is starting to close as in Period 9 and in Period 10, as there have been an increasing amount of buyers in Channel 1. E. Competitors VRDC’2 had different competitors throughout different periods. When VRDC2 targeted the Home Users in Period 2 and Period 3, its major competitor was firm C1, known as BCBG. The reason why VRDC2 decided to target the Home Users and Periods 2 and 3 is because in Period 1, VRDC2 had a 39.8% market share in that segment, the highest of all firms in that segment. As a result, VRDC2 decided to actively target the home users segment during those periods. However, BCBG came right in by adding features to their product while VRDC2 stood pat. As a result, BCBG literally took over the home users segment and had a 43.3% market share in that segment in Period 3. After observing that BCGB had a 52.5% market share in the harried assistants, the highest market share of any segment, VRDC2 decided to target the assistants for Period 4 and Period 5. That decision truly backfired and set VRDC2 at least two steps backward. VRDC2’s market share in the assistants segment increased only from 5.7% in Period 3 to 8% in Period 5 and BCGB’s market share in that segment only went down from 52.5% in Period 3 to 42.5% in Period 5, still the highest market share segment in the harried assistants. From Periods 6 through 8, VRDC2 switched gears by targeting the Home Users, and that resulted in a new competitor. That new competitor was firm C4, known as elite. In each of those three periods, elite had the highest market share in the home users segment with market shares of 40.2% in period 6, 37.6% in period 7, and 34.8% in period 8. Despite switching target segments from the home users to the students in Period 9 and Period 10, VRDC2 continues to have elite as its major competition. While elite continues to have the highest market share in the students segment at 43.3% in Period 10, it is a slight decrease from Period 8s market share which was at 47%. In addition, the market share for VRDC2 has increased from 18.8% in Period 9 to 20% in Period 10. The reason why elite has the highest market share in the student target market segment is because they updated their product a little more than VRDC2 and have one more special command(12) than VRDC2 does at 11. Based on Figure 9 above, elite continues to be VRDC2’s competition in the student market segment in that based on Period 10’s product positioning report, both firms have very close distances when it comes to the students ideal product, with VRDC2 slightly ahead. 3. Strengths-Weaknesses-Opportunities-Threats A. Strengths Despite the fact that VRDC2 came out with losses in every period, it did have some positive aspects. One strength of VRDC2 was its product positioning, particularly in Period 8 and Period 10. As shown in Figure 4 and Figure 9, VRDC2 had the best product positioning in the student target market segment with a distance of 1.3. This goes to show that the product somewhat closely resembles the students ideal product and with a few more modifications, the distance will get even lower. While the firm elite is catching up with a distance of 1.4 in Period 10, VRDC2 continues to lead all firms in the student target market segment with a distance of 1.3. One more strength of VRDC2 was that its prices were that its retail prices were reasonable and affordable for the most part. As shown in Figure 10 above, Retail prices in Channel 1 and Channel 2 started off very low in Period 1 and then started to increase until it hit its peak in Period 6. There was a sharp decline in retail prices in both Channel 1 and Channel 2 in Period 7, and then retail prices stayed mostly consistent from Period 7 until Period 10. One major reason that the market share in the student target segment has increased from 14% in Period 7 to 20% in Period 10 is because of the low and affordable prices that VRDC2 has set. B. Weaknesses One reason why VRDC2 came out with losses in all 10 periods was because it did not set just one target market through all ten periods. It was the lack of patience that did VRDC in and caused losses in every period. In Period 1 VRDC2 targeted the Students, in periods 2 and 3 it targeted the home users, in periods 4 and 5 it targeted the assistants, in periods 6, 7, and 8 it targeted the home users, and in periods 9 and 10 it targeted the students. If VRDC2 targeted just one segment, it may have been hit with losses in the early periods. However, there would major gains and profits toward the latter periods and as a result, VRDC2’s net contribution would be positive instead of negative. Another reason why VRDC2 failed to make any profits during all 10 time periods is because of its poor advertising to sales ratio. From what is observed in Figure 11 above, VRDC2 Advertising to Sales Ratio is very high and in this case, the higher the ratio is, the less amount of retail sales($) that the firm is getting from advertising. Ideally, lower numbers mean that advertising has been very effective in garnering retail sales($) for a firm. In VRDC2’s case, the advertising to retail sales($) ratio was consistently high which means that the advertising efforts did not produce that much sales. C. Opportunities: Despite a poor showing and failure to reach expectations from Period 1 through Period 10, there is still a lot of hope for VRDC2. Based on the latest product positioning report shown in Figure 9, VRDC2 had the best product positioned within the students segment of all firms with a distance of 1.3. As a result, VRDC2 has found a steady target market in the students and will continue to target toward them and as a result, sales and profits could very well increase in the long term. D. Threats Students are very price...