I.

Executive Summary

Team 1’s chosen target market is the lucrative segment of outdoor enthusiasts. Although

not big in terms of population compared to other backpack segments, they were deemed an attractive

segment by the group given their high average purchase price and decent growth rate. Given and

timely strategic moves by the group, we were able to capitalize on this segment and dominate the

backpack market gaining 29% cumulative market share after 5 years upon launch in the market. The

team was able to balance its marketing spending with an average of 81% return on marketing and

maintain a customer satisfaction level of 41%. The group was able to drive growth to earn a revenue of

$ 2,101,644.39 and a net profit of $ 407,021.09 over the course of 5 years. Ahead of its all its

competitors with the closest competitor (Team 3) that earning 1,491,597.03 in revenues and only

337,089.42 in profit with only 20% share of the market.

II. Strategy

Our team strategy was to prioritize profit. This can be seen in the design of our backpack

that had enough qualities to satisfy the needs of our target market and set it at a price that was slightly

higher but still acceptable to our target market. During the game, we made very slight changes to our

product and played around with various promotional activities to increase the awareness for our

backpack. Towards the start of the game, it was clear to our group that awareness of our product should

be built first but that needed to be balanced against what we were earning per turn. Towards the middle

of the game, the group started to consider more aggressive promotions as our revenue grew.

III. Target Market Choice

We chose Outdoor Enthusiasts as our target market as we believed that we would be able

to create a backpack which could have several features to meet their needs based on each member’s

interest in outdoor activities. Moreover, the group took a look at the market research and what attracted
the group to this segment was that it had the highest average purchase price ($90) and had a decent

growth rate of 5% despite the target segment not being one bigger segment in terms of population. Our

team stuck with our target market choice throughout the entire game without fearing our competition.

This shows that we were able to understand the market and implement effective pricing and marketing

actions while other teams chose to change their target market.

IV. Marketing Mix

During the first quarter we saw that there was a lot of competition in the outdoor space but we

believed that we would be able to sell better than our competitors. The product did not change

significantly throughout the sales period. Over the period of the sales period we changed the color of the

bag and added a water bottle pocket to keep our backpack continuously changing to meet our customers’

preferences and keep our market excited. The shape of our backpack was dual-purpose. First, it enabled

us to have wider margins against competitors who designed their bags to have a bigger capacity. Second,

this shape also enabled our backpack to somehow appeal to other segments such as commuters as a sort

of sub market to increase our customer base.

We started at a price of $120 because we wanted to enter the game with high margins but with

still a bit of room for slight increases in price as the game went on. As the game went on, our team went

ahead with these planned increases. First, we then increased our price to $125 in the 6th quarter, $127 in

the 7th and stayed consistent at $129 from the 8th quarter onwards. Our team implemented these price

increases to gain a larger profit margin and cover for unexpected costs (such as an unexpected increase

in materials to make the bag).

 The distribution we chose was intensive distribution which is to be in as many stores as possible

that would sell at our price point to maximize our reach. Any purchase from those stores would have

given us revenue. Knowing that Department store only has a maximum price of $130, our group agreed

that we will not price our backpack above this price as we would lose significant sales coming from this

channel. Our goal was to increase our market share at the beginning and maintain a high market share

over the course of the selling period. The group offered price discounts in sales channels where it had

high margins & availed of MDF in strategic sales channels where a considerable amount of sales was

coming from. As the game went on, the group extended MDF to 4 outlets (high-end outdoor, online

retail, department store, and direct).

 We focused on radio ads and billboards. The radio ads were to reach a large audience of our

target market and the billboards were a cheap way to have consistent marketing. We saw a shift in

marketing in other teams and saw them invest a lot into marketing at a pretty substantial loss. We did not

want to increase our spending to compete with them for one or two quarters. We made this decision to

conserve our capital and make larger more impactful marketing campaigns in the future when the

environment became more profitable. Turn 16 and onwards is when our company saw large returns on

our marketing and we started to pull ahead of our competition. We took advantage of this and slowly

increased our marketing with the focus of consistency for the future turn.

V. Competitive Analysis

After each turn, the team has made it a habit to examine its performance versus its competitors.

We tracked changes the competitors made to examine why each team performed better or worse for that

turn. At the start of the game, 5 out of the 6 teams had the same target market. As the game went on, 1

team (Team 3) changed their target market and strategy.

Having 4 teams target the same segment throughout the game, was difficult as the group needed

to ensure that group decisions were more efficient versus others. One of those decisions were for our
product design and price. We noticed that team 7 priced themselves at $130 and had a more superior

shape and capacity. Although we had price increases planned, we made sure to maintain our product

design and keep our price below theirs to maintain our wide margins which contributed towards our

team having an easier time maintaining and growing net profit.

Second, towards the end of the game, the team also made sure that it was spending more than

most of its competitors to grow awareness and interest for the brand. The team’s measured response to

the stiff competition and the unpredictable environment within the simulation can be seen by how it was

able to grow and maintain its market share relative to our competitors.
VI. Turn-Decision Making Review

Beginning in turn two, the team saw sales slightly decline. In order to combat this, the color of

the bag was changed each turn onwards in hopes to excite our target market. After this, no drop in sales

was seen. During turn 2, the team noticed that Team 7 had higher sales in the High-End Outdoor sales

channel due to them availing of MDF in their turn two. Our team was conscious in our choice to delay

availing of MDF until turn six in order to minimize the amount of spending early on and use prioritize

awareness building through advertising. Availing of MDF in High-end Outdoor channel in turn 6,

resulted in increasing our market share to 25% and increased our net profit to $1,931.25.

T2 T3 T4 T5 T6 T7 T8 T9 T10 T11 T12 T13 T14 T15 T16 T17 T18 T19 T20 T21
Chg in Units Sold -22 2 21 33 55 69 62 108 90 168 137 183 239 247 559 343 555 400 500 4
Growth Rate (%) -16.2 1.8 18.1 24.1 32.4 30.7 21.1 30.3 19.4 30.3 19.0 21.3 22.9 19.3 36.6 16.4 22.8 13.4 14.8 0.1

In turns seven and eight, as was initially planned, the team pushed through with the last of its two

minimal price increases (two dollars each turn) in order to create better margins and contribute to an

increase in net profit. In turn fifteen, our team decided to invest in advertising on TV, as we had the

profit to support it ($28,833.19). We chose to do this to boost increase awareness, interest in our

backpack which likely contributed towards an increase in sales.

VII. Lessons Learned

Overall, we have learned that it is important to have an initial strategy at the start that can serve

as a guide whenever confronted with uncertainty such as when the team started off the game and the

team was not the top performer. However, the team may continuously revise this plan if they see that a

certain aspect of the plan may not be as effective such as when the team quickly decided to at least

change the color of the bag at each turn.

The team saw the importance of continuously monitoring our competitors since sometimes, it’s

not your strategy which is the source of a decrease or decline in growth but rather it might be your

competitor/s’ (i.e., competitor availing of MDF in a certain channel or a competitor changing its strategy

or its target market). Moreover, watching competitors may also provide learnings simply by observing

so that the team may replicate their moves if their decisions prove to bring positive results and be a

cautionary tale in times that their decisions lead to a loss in profit. Next, we learned that balance is key

when it comes to ad spending as we saw some of our competitors have a hard time recovering in-game

for spending too much on marketing. Lastly, having differing opinions within a group is good as it

pushes all of the members to look at differing perspectives and make the best decision possible.