Indian Institute of Management, Indore PGP-1, 2013-2015

MID-TERM REVIEW REPORT (As a part of course Marketing Management III, PGP 2013-2015)

Submitted on February 20, 2014

Prepared by: Group 1, Section B Alka Borogaon 2013PGP028 Anirudh Srikant 2013PGP042 Devang Jain 2013PGP123 Lavanya D. Karanth 2013PGP198 Wazeem M A 2013PGP456

MID-TERM REVIEW
Marklabs simulation replicates the dynamic nature of the real world electronics industry. The simulation mainly concentrates on the computer products business within the electronics industry. Success in this sector is a function of technological changes, pace of innovation and cost management in order to provide the best possible products at the most competitive prices. We are focussing our review on the changes in the market over the three periods, expenditure over the three periods and the changes that we made in terms of our portfolio, product positioning, production capacity planning, promotion mix, human resource and R&D spending while attempting to increase profitability and market share.
SEGMENT PRODUCT

Hermits
ANDY

Pragmatists
ASER

Wanderers
APLE

Bluebloods
ALKA

Tech Geeks
ANI

PERIOD 1:
Alphas Strategy: At the end of period 1, Alpha stood at position 1 with high sales and revenue margin across the three product portfolio Aser, Andy and Aple. Going by the segment growth rate and segment share of the total industry, Alpha repositioned Aple to target the wanderers as they were willing to pay a higher price for features, portability and style. Aser targeted pragmatists and Andy targeted Hermits. We set the features and portability of Aser and Andy very high to capture the respective segments when they mature in 2 years time and attain the ideal age desired by the consumers in the segment. Aple was positioned with ideal features and portability to cash in on sales in this period. Production Strategy & Financials: Alpha utilized full production capacity in the first period and was successful in selling all the units manufactured and held in inventory. With the net profit margin of 11.36% during the period, the overall performance of the company was more than satisfactory. Competitor Analysis: The competitors had targeted the two of the biggest segments i.e. Hermits and Pragmatists mostly and very few had targeted the Wanderers which in fact gave Alpha a competitive edge.

PERIOD 2:
Alphas Strategy: During this period, Alpha was provided with added capabilities of R&D, capacity planning, NPD and the option to raise external finance through debt. In this period, since the market predicted slow growth for the industry, Alpha was a little conservative in its forecasts. Aser and Andys attributes were not changed in order to reap the benefits of product age and large market share. However, Aples features and portability were increased along with its price. Production Strategy & Financials: With the strategy to cater to every segment in the best manner, Alpha launched two new products Alka and Ani targeting Bluebloods and TechGeeks respectively. With the expectation of a boom in the near future, Alpha also increased the production capacity of Aser and Andy by 250 and 300 respectively. The net profit margin fell to 6.93% due to decreased market share and investment in extra capacity. Pitfalls & Learnings: Alpha kept the advertisement spending minimal and did not change it from the last period. This cost Alpha its sales and market share in this period. In addition to this, the pricing policy for Andy which was targeted at Hermits was too high, hence Alpha was left with excess inventory resulting in high holding costs and low turnover. Competitor Analysis: The competitors increased their expenditure on advertisement and hence were able to command huge shares of the market. Since, Alpha did not increase the spending on advertisement, competitors started eating into Alphas market share and the awareness level also dropped.

PERIOD 3:
Alphas Strategy: This period presented the challenges of planning for sales target, sales force and sales margin allocation across three different mode of distribution Modern Retail, Company Owned and Distributors and also Human Resource planning in terms of remuneration and number of employees. In case of sales target planning, the strategy was based on the shopping habits of the segment, sales force planning was based on the total production % and the sales target planning and margins were decided based on industry trends with modifications based on selling strategy, i.e. push / pull. Since Alpha had introduced two new products and added a number of units, the sales force also had to be increased proportionately and training level had to be adjusted accordingly. Production Strategy & Financials: The production was reduced a little taking the gloomy market condition into account. Net profit margin fell by 2.99 % due to the recessionary trend. Pitfalls & Learnings: However, since recession had hit the markets Alpha was unable to sell all the units produced. Learning from last periods experience, Alpha increased the expenditure on advertising of all products and reduced the price of Andy computer and increased its production which helped to increase the sales of the product. Competitor Analysis: The competitors in the segment of Bluebloods and Tech-geeks had positioned their products well in terms of features and portability. As Alpha had just entered these segments, we were a little conservative with our offerings in terms of features and portability. This led to low market share and high inventory at the end of the period.

FUTURE STRATEGY
We will continue to focus on providing the best features as per the customers requirements. We plan to follow a strategy of diversification in the long term in order to minimize risks. This is because we are operating in a technology driven industry where pace of innovation is high and obsolescence costs are large.