Marketplace Simulation Executive Summary

Daydream Delivery, Inc.

XYX Student

MGMT 311 Principles of Marketing

Embry Riddle Aeronautical University

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Part I - Executive Summary

Executive Team

Daydream Delivery Chief Executive Officer (CEO) – XYZ Student

The Chief Executive Officer for Daydream Delivery assumed the predominant managerial

functions of the company with the exception of the initial Marketing Director. The responsibilities

included overseeing the entire company’s objectives, focus, and direction. XYZ Student was also

responsible for advertising, research and development, financial accounting, customer service

management, sales management, sales force management, and after the end of the 2nd quarter, he was also

responsible for the overall marketing research and brand management.

Initial Marketing Director (MD) – Mr. Iygot Fyred. The MD assumed the overall focus of the

company’s marketing department. These duties included all advertising in addition to the company’s

marketing direction and research. Mr. Fyred was terminated after the 2nd quarter due to incompetence and

a lack of Daydream Delivery vision.

Mission Statement

The mission of Daydream Delivery is to provide the highest quality computers at a competitive

rate in order to supply the demand required by our target market. Our professional and experienced staff

will combine their plethora of knowledge and expertise to fully satisfy our consumers, which will allow

our consumers to assist in advertisement. With our well trained and focused divisions within our

company, we intend on supplying our consumer with a top-of-the-line product at a reasonable price.
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Products

Daydream Delivery produces and manufactures

laptop and desktop computers. The current computer market

is divided into three segments; Workhorse, Mercedes, and Traveler. Each of the three segments has needs

that are different. Daydream Delivery’s focus during the first quarter of operation was initially directed

towards one market. Once that market was managed, Daydream Delivery branched out to each of the

other two segments. We targeted each of those markets directly by offering a separate product catered

towards that specific segment. The Nytemare line of computers was made specifically for the Mercedes

market. The Workhorse line of computers was made specifically for the Workhorse market. And the

third line of computers Daydream Delivery offered was the Traveler, which was the line of computers

that focused on the Traveler market.

Market Estimate

The market estimate for the first 12-

months of business for the Workhorse (home)

segment was approximately 28,000; the

Mercedes (business) segment was

approximately 17,000; the Traveler (travel) segment was approximately 7,000. The Workhorse segment

is the largest, while the Traveler is the smallest. The market is also separated by geographical area. The

available computer markets are located in Chicago (North America – NORAM) with 17,000; Sao Paulo

(Latin America – LATAM) with 11,000; Paris (Europe, Middle East and Africa – EMEA) with 15,500;

Shanghai (Asia and Pacific – APAC) with 13,400. Within the geographic segments, Chicago and Paris

represent the largest market share potential, while Sao Paulo and Shanghai represent the smallest.
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Financial Goal

The financial goal of Daydream Delivery was to attain $50 million in total sales revenue over

twelve months. From that total, we expected to attain a 35% net profit which equated to a total division

profit of $17.5 million.

Financial Expenditures

Our financial plan was based upon the research and development findings which dictated the

direction and focus of Daydream Delivery. We intended on continually improving our product line over

our competition and we also intended to expand our market base to all three different markets. We

expected to spend upwards of $3 million dollars towards new technology and marketing research.

Part II - Description of Business and Industry

Marketing Strategy

At Daydream Delivery, our intent was to start out our initial marketing strategy as a concentrated

marketing technique. We intended to target one specific market, and then once we were established

within that market, branch out towards the others converting from a concentrated marketing strategy to a

differentiated marketing strategy. By changing from a concentrated marketing strategy to a differentiated

marketing strategy, it allowed Daydream Delivery to shift from just targeting one of the markets to

targeting the other two as well. This helped attain a larger overall market share and thus increased

revenue.
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Products/Customers/Locations

The products Daydream Delivery produces and sells are entirely focused upon the customer

needs within each market. Within the initially targeted home segment, we analyzed not only the hardware

that the consumers needed, but the software they

required as well. Using both hardware and software

requirements, it allowed us to build a product that would

appeal to the Workhorse segment. The models within

the Workhorse segment were named accordingly, with

models ranging from the introductory Workhorse I to

the Workhorse IV. With each model change,

components and software were added or deleted based

upon the needs of the targeted Workhorse segment. With

the announcement of Workhorse I, we wanted to focus

upon making the system primarily easy to use and also

offer it at a low price. We also wanted to offer a grouping of software that was easy to use. Most of the

office applications could be done from within a consumer’s home. The goal was to target and capture the

Workhorse segment as it is the largest market.

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The next segment was the Mercedes market. Within the business segment we analyzed not only

the hardware that the consumers required, but the

software as well. Using both hardware and software

requirements, it allowed us to build a product that

would appeal to the business segment. The Nytemare

line was introduced with successive models, from

Nytemare I to Nytemare IV, with each upgrade adding or deleting software or hardware based upon

consumer needs. The Nytemare line of computers was

fast

and

powerful carrying top of the line technology and

networking ability. The software offered was geared towards the business professional. The Nytemare

computers were designed and geared towards larger mass quantity contracts within the business

community.

The last targeted segment was the Traveler market. With the introduction of the Traveler line of

computers, we were able to focus this line towards people who were always on the go and needed

something that was portable and affordable, yet still fast and powerful. Travelers needed to have a

computer that was also easily able to network. The

software that was offered on the Traveler line of

computers was varied and at most, basic. With each

successive model of the Traveler (Traveler I through

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Traveler III) software and hardware were added or deleted based upon consumer needs. The Traveler line

also had the potential of appealing to the other two groups based upon the need to have portability. The

Traveler I-III was competitively price, slim and stylish, yet rugged while featuring office applications.

Due to the high average of demand produced within the North American market, our choice for

our first target area was easily decided. Our first office was opened and based in Chicago. During the

next three quarters, we expanded our geographical reach by opening up offices in each of the remaining

areas starting in Paris, then Shanghai, and finally, Sao Paulo. With the success of Daydream Delivery, we

plan on expanding to other geographic areas, and possibly other segments, depending upon research and

market size.

Objectives

The objective of Daydream Delivery is to provide high quality computers at a reasonable price.

By offering numerous products that cater towards the entire computer market, Daydream Delivery was

able to insert itself as the premiere leader in the computer market. Daydream Delivery is committed to

increasing net income from 35% to 50% within the next year. We want to prove to the consumer that not

only can a computer be top of the line, but affordable as well. Before long, Daydream Delivery will go

together with computers as Root Beer goes together with vanilla ice-cream.

History of Daydream Delivery

Daydream Delivery was founded by XYZ Student in November 2009. Daydream Delivery is

headquartered in Dothan, Alabama and has grown exponentially over the last 6 quarters to become an

international powerhouse in the computer industry. Daydream Delivery initially started out as a small

computer company that focused primarily on home computers. At the end of the second quarter, the

Marketing Director had to be terminated due to incompetence. After receiving the 2nd quarter
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unsatisfactory results, an investigation was started. The result of the findings were that even though XYZ

Student was the C.E.O. and had immense responsibility, the direct cause of the company’s negative

profits were due to building a computer for the Mercedes market with no advertisement and at the same

time, advertising and setting a priority for the Traveler market with no computer being offered. This was

a direct act of negligence and a lack of understanding of the intent of Daydream Delivery to initially

target the Workhorse market. As a result, the Marketing Director (MD), Mr. Iygot Fyred, was terminated.

Once XYZ Student took over the additional responsibilities as Marketing Director (MD), Daydream

Delivery was able to grow exponentially within each of the three target segments, producing a staggering

and beneficial financial growth.

Current Industry Status and Prospects

After six quarters of business,

Daydream Delivery had total sales

revenue of $132 million. Our

cumulative net profit is currently

$50.2 million. The initial intent was

to achieve total sales revenue of $50

million, which not only did we attain,

but we almost tripled. Our initial intent for a net profit was $17.5 million, which yet again, not only did

we attain, but we nearly tripled. We have more than accomplished our initial goals and have set our

sights high for the upcoming year. With the guidance and direction of our experienced and well versed

staff, we should have no problem attaining total sales revenue in excess of $200 million and a total net

profit in excess of $75 million. All three of our products are either at the top, or a close second in their

respective segments. Judging by the sales within the last year, we can expect an increase in brand identity

and perception. New products and technologies are still being developed and should carry our company

well into the future.

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SWOT Analysis

Daydream Delivery’s strengths are based upon our internal capabilities, resources, and positive

situational factors that have helped our company serve its customers and achieve our objectives. With the

early identified problem within the marketing department, Daydream Delivery was quickly able to

determine where the problem was and adjust accordingly to alleviate the problem. This quick analysis of

the problem proves that the staff at Daydream Delivery is very motivated and goal-oriented. This not

only shows flexibility, but an overall understanding of business in general. The only identifiable

weakness of Daydream Delivery was quickly and decisively remedied at the end of the 2nd quarter. With

our focus in each of the three segments, it doesn’t limit our company to just one segment allowing us the

freedom of flexibility within the market. The opportunities that can help Daydream Delivery in the future

are focusing more on brand marketing. By focusing on brand marketing, it allows our company to use the

large sales volume to attract new customers due to the high degree of customer satisfaction attained by

our current customers. We will count on a “word of mouth” benefit that can be attained by having a very

high level of satisfaction from our current customers. One possible threat that we face would be if an

introductory company can somehow offer a similar product at a lower price than what we are charging.

As long as our brand name continues to be synonymous with high quality and affordability, this should be

avoided. Another possible threat is if another company develops a new product that is deemed “cutting

edge”. We can avoid this by continuing to commit assets and resources to our Research and Development

division.

Sales offices

Daydream Delivery currently

operates sales offices in four major

cities; Chicago, Paris, Shanghai, and

Sao Paulo. With the continued growth

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of our company, we can afford to branch out and expand our offices to other areas that have a demand for

high quality computers at an affordable price. Daydream

Delivery currently has a dedicated service and support division in each of the four cities. In addition to

service and support, we also have a very well trained and experienced sales staff. The flexibility and

knowledge of our business allows are sales staff the ability to bounce from one segment to another based

upon need or direction. The total sales budget was approximately $350,000 for the year and is expected

to rise as we branch out to other geographical areas.

Part III – Market Opportunity Analysis

Overall Unit Demand for Products

The unexpected demand for our

products has been a key indicator for our

success. The demand that the three

products have produced have far

outweighed our initial assessments. The

Workhorse computers have outsold the

Nytemare and Traveler models by quite a

bit. However, due to the home segment

being very dependent on price, the total

sales revenue approaches the lowest model

by a mere separation of $2 million dollars.

The overall model profit for the Nytemare line is a staggering $2,208 per unit sold, while the Workhorse

line is only a $386 per unit model profit. This is something we will address within the very near future.
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Our market research indicates that now that we have established ourselves within the home computer

market, we can expect our Workhorse line of computers to average a higher profit per unit in the future.

With each of our three models outselling their initial projected sales numbers, we can only expect better

numbers in the future.

Market Segments Selected

The initial market selected upon Daydream

Delivery’s introduction was supposed to be the

Workhorse (home) segment due to it having the largest

demand, followed by the Traveler (traveler) segment,

and last but certainly not least, the Mercedes (business) segment. The first target segment, Workhorse

was initially selected based purely upon the large demand for home computers. The research

showed it to be the largest segment with the potential of having the largest profit. We were hoping for

large sales numbers with minimal profit per unit making up for the difference for an overall larger profit.

One thing we didn’t factor in enough was the market’s dependence upon price. After we received the

results of the 2nd quarter, and subsequently terminated Mr.

Fyred, we decided to rethink our Workhorse approach. We

then analyzed the other two brands for a better profit margin.

After thorough research, we decided to target the Mercedes

segment. The Mercedes segment had a high demand but was

not limited on price like the Workhorse segment. We then

modified the current Nytemare product line to more envelop

the Mercedes segment needs. The Nytemare had the potential

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for being a high seller due to it being a business focused model. Our research department used a

combination of the needs required for the Mercedes segment and what Synergy Technology was offering

in their computers. We took the results from our research and offered a newly revised Nytemare that was

top of the line and yet slightly lower priced than it’s one and only competitor. The results moved

Daydream Deliver from being barely an issue in the Mercedes segment to being a front-runner in the high

price segment.

The Traveler segment was targeted next. The Traveler segment had

the lowest demand but the competition amongst that segment was the

lowest. All it took for a complete takeover of that segment was to provide a

slightly better product than the only competitor and offer it at a slightly

lower price. The results were staggering. Within a span of one quarter,

Daydream Delivery, with our Traveler brand of computers, was able to

instantly control the Traveler segment of the market which dramatically increased our overall company

revenue. With the limited resources needed for the Traveler segment, the Workhorse segment was also

targeted using the same approach. The results were very similar to the Traveler results just not as

dramatic. The Workhorse went from a measly 18% in the 4th quarter to 47% in the 5th quarter. Needless

to say, the 5th quarter was a high yield quarter for Daydream Delivery.
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Future Outlook

The future for Daydream Delivery in the computer market has a very positive outlook. Our

company has shown the ability to not only dominate any market that we have chosen to do business in,

but also maintain a clear cut edge within that market for a long time to come. We plan on continuing to

provide customers with top of the line computers at a price that is very reasonable and competitive. With

the demand that is still available within each segment, we can, with 100% certainty assure that Daydream

Delivery will continue to be in the forefront of computer technology and sales. Daydream

Delivery will be able to achieve our modest goal of $200 million for the next 12 months.

Projected Growth Rate

The projected growth rate within Daydream

Delivery will continue to climb as the models are

refined. The negative profit during the 2nd quarter

was due to the company advertising one product

that didn’t exist and building one product that

wasn’t marketed. The Mercedes brand platform

(Nytemare) was the platform built, yet the Traveler

segment was the segment targeted in advertisement. With the problem in the 2nd quarter remedied,

Daydream Deliver will continue to grow.

Industry Trends

The current industry trends indicate that the computer market is stable and reliable. The

predominant rise in demand has been in the Mercedes segment and Travelers segment respectively. The

sales numbers within those two markets continue to rise. The remaining Workhorse market shows the
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potential to continue to rise as well. The large demand that is associated with the Workhorse segment can

be captured if the right products are offered at the correct price.

Product Market Fit

Daydream Delivery’s three product

lines have established themselves as the

leaders in computer design and technology.

The graph shows the current trend of sales

throughout the first seven quarters as well as

sales projected through the 10th quarter. The

only hiccup in the total units sold was during

the 6th quarter which can be attributed to a refocus of assets towards the Workhorse segment. While

converting assets towards the Workhorse segments, the other two segments suffered. Now that we have

gotten a stronghold in the Workhorse segment, we can start refocusing on the two segments that have

provided good results for our company.

Benefits Customers Seek

The benefits and offerings that each segment desires have been addressed and become a key

feature which separates Daydream Delivery from our competition. The Workhorse segment wants a

platform that is fast, powerful, and yet affordable. The Mercedes segment requires a platform that has

state of the art technology with all the upgraded office software allowing them the ability to use have a

state of the art computer that assists them in the workplace. The ability to use high capacity software and

high speed graphics are what the Mercedes brand desires. The Traveler segment is first and foremost

about portability. They need to have the ability to network as well as having a design that is trendy but

yet functional and easy to use.

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Product/Profile Fit

The key to a company’s survival is how well the product matches a customer’s profile.

Daydream Delivery has a brand judgment score that is among the top in each of their markets. In the

Mercedes market, Nytemare IV has attained a brand judgment score of 91 out of a possible 100 points. In

the Workhorse market, Workhorse IV has attained a brand judgment score of 79 out of a possible 100

points. In the Traveler segment, Traveler III has attained a brand judgment score of 95 out of a possible

100 points.

Segment Size

This chart depicts potential demand over a

twelve month period for the three associated brands;

Workhorse, Mercedes, and Traveler.

Price Sensitivity of Segments

All three segments are somewhat sensitive to price. Price is more important for the Workhorse

segment as opposed to the Mercedes segment where it is not as important. The Traveler segment is nicely

nestled between the price dependant Workhorse and the price flexible Mercedes.

Price vs. Performance

Each of the three market segments has

different requirements for price and different

requirements for performance. The Workhorse

segment isn’t dependent on performance and is very

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dependent upon price. In contrast, the Mercedes segment requires high performance and is much more

elastic concerning price. The Traveler segment is nestled snugly between the Workhorse segment and the

Mercedes segment.

GBC Sales Volume and Market Share

Daydream Delivery had sales volume for the 6th quarter at 14,039 units. With the total computers

sold at 37,944, Daydream Delivery is number one in the market with a total market share of 37%. The

closest competitor is Constellation Computers with 8,728 units sold. Within the Workhorse segment, we

controlled 32% of the total market segment, ranking us second behind Constellation Computers. The

Mercedes segment has the Nytemare line of computers at the top with 33% of the target segment, while

the Traveler segment has the Traveler III at the top of the pack with a staggering 51% of total sales.

Competitors Strategies

The competitors’ strategies varied with the majority of companies forming a concentrated

strategy where the company targets one segment of the market. Some of the companies restricted

themselves environmentally by only opening up offices in three world markets.

Competitors Strengths/Weaknesses/Future Actions

The strengths of our competitors can also become their weaknesses. By only opening offices in

three geographical regions, this allowed our competition to focus more on customer service and that

specific region, which could be considered strength. At the same time, this may also prove to be a

weakness because their worldwide access was limited by restricting their product to a certain

demographic. Another strength is having a concentrated strategy where the company can focus on one

key model and its placement within that segment. This can also be considered a weakness because while
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they are focusing so much time and effort into that one segment, they are neglecting the sales available in

the other two segments.

Part IV – Marketing Plan and Sales Tactics

Targeted Markets

Within the computer marketplace, there were initially three choices of segments to target. The

Workhorse segment is representative of the home computer, the Mercedes segment is representative of

the business/work computer, and the Traveler segment is representative of the traveler. Daydream

Delivery wanted to target the Workhorse segment first, but ended up targeting the Mercedes and Traveler

segments at the same time. After our internal problems were fixed, we focused upon the Mercedes

segment, followed by the Workhorse and Traveler segments. Through aggressive market research, we

were able to identify the top four customer needs within each market. The Workhorse segment needed

ease of use, low price, office applications, and customer service and support. The Mercedes segment

needed a platform that was fast and powerful, with engineering applications, a need for networking, and

also a platform that was easy on the eyes due to the large amount of time that would be spent on it. The

Traveler segment focused on portability. It also required networking, office applications and competitive

pricing.

Product Line

Daydream Delivery’s product line consists of three changing models within each of the three

segments. The Nytemare line is the platform that targets the Mercedes (business) segment. The

Workhorse line is the platform that targets the Workhorse (home) segment. The Traveler line is the

platform that targets the Traveler (traveler) segment. Each of our three lines continues to be top of the

line with technology. We also believe that technology should be able to be attained at a reasonable price.
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Each of our three models are not only superior technologically, but superior by being the lowest in price.

The brand that Daydream Delivery is trying to achieve is superior technology at a great price. I believe

we have accomplished that.

Research and Development

Daydream Delivery will continue to invest aggressively in our research and development

department. In the computer business, the company with the newest technology is usually towards the

top as far as sales are concerned. Each of our models has changed over each quarter based solely upon

customer needs and wants. We need to continue to keep our products at the top of the technology

mountain so as to not slip behind our competition. The higher investment on R&D will initially reduce

our profit margin, but in the long run will increase our net profit by safeguarding our position as the

market leader.

Pricing

Pricing is a very important factor for Daydream Delivery. We have said that our intended

company brand was to have top of the line technology at an affordable price. We will continue to provide

the highest technology at a lower price which will continue to allow Daydream Delivery grow.

Daydream Delivery entered into the market by using a Market Penetration strategy where we analyzed the

current segment leader and offered a similar product at a lower price. This had great and immediate

results. We were able to provide the highest quality product at a price that our competition couldn’t offer.

As time goes by and Daydream Delivery becomes more synonymous with the computer business, we can

adjust our prices slightly.

Profit Margin by Brand

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Going into the 7th quarter, Daydream Delivery had profit margins within the Mercedes segment of

50% at $2,208 per unit profit. The Workhorse segment had a 17% profit margin at $386 per unit profit.

The Traveler segment had a 38% profit margin at $1,111 per unit profit.

Prices vs. Competition

Daydream Delivery’s prices are consistently lower than our competition. The formula we used to

price our models is complex. We first took the average price each segment was willing to pay. We then

took the average price of our competitors, combined it with the average that each segment was willing to

pay and determined an expected market average/implemented market average (EMA/IMA). We wanted

to have a high yield return. In order to achieve that, we could not have our platforms undercut by our

competition. So the primary factor going into our computer pricing was to offer our product slightly

lower than our competition. Whether it is through direct pricing or offering rebates, Daydream Delivery

always remained the lowest in price.

Promotion

Daydream Delivery only used a single advertising approach up to this point; inserts within

magazines. In the future, Daydream Delivery will broaden our advertising by focusing on other avenues

of advertising: internet, television, and mail flyers. Even with our expanded advertising campaign, our

message will always remain the same. Daydream Delivery will continue to offer top of the line

technology at a low price. When our prices approach our competition, we will continue to offer rebates.

Rebates can have a positive impact on a consumer, making them feel they are getting a time-restricted

savings.
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Distribution

Based upon the potential demand, our

first office was opened in Chicago. Chicago had

the highest potential demand across all three

markets. After Chicago, we opened Paris,

followed by Shanghai, and lastly, Sao Paulo.

Daydream Delivery currently has four offices

open in each of those cities and plans on

expanding into other demographic markets based upon potential demand. Our approach to personnel is

completely dependent upon the market we are focusing on. All of our cities are alike with the exception

of our Chicago based office. This is a direct result of the Chicago market demand being significantly

larger than the rest.

Part V – Financial Plan

Profitability Results

The Nytemare model is our most mature model and

represents our highest profit ratio. The Nytemare IV has a profit

per unit at $2,208 which equates to 50% towards revenue. The

Workhorse IV has the lowest profit per unit at $386 which

equates to 17% towards revenue. Lastly, the Traveler III has a profit per unit at $1,111 which equates to

38% towards revenue. The product profit has the Nytemare line of computers as the highest with the

Traveler line being slightly behind, while the Workhorse line is the lowest. The Traveler line led sales

revenue at $15.4 million. The Workhorse line had sales revenue of $13.8 million. Lastly, the Nytemare

line had sales revenue of $11.8 million. All three products performed up to our expectations but one
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problem that does need to be addressed is the fact that the Workhorse line has large sales revenue but yet

a small profit per unit. Now that we have established the Workhorse IV within the Workhorse segment,

we can adjust our price to remain competitive and yet gain a higher profit margin per unit.

Division Profitability

At the close of the 6th quarter, the profitability of Daydream Delivery was evaluated. The low

revenue of the 2nd quarter has been addressed and our company has shown growth since with the

exception of the 6th quarter. With the problems in the 6th quarter addressed, we can expect our products

to continue to rise at the rate that we are accustomed to. We expect our sales revenue to easily achieve

$200 million with our total net profit surpassing $75 million. We will continue to offer the highest

quality products at a reasonable and competitive price.

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References

Kotler, P. 2008. Principles of Marketing/ 12th ed. Upper Saddle River, New Jersey: Pearson

Education, Inc.

Web Marketplace Business Simulator. 2009. Marketplace.

http://gm.marketplace6.com/?moveTo=1&SESSION=uhg36ac4aq0u8faemrmil7ns73 (Accessed
November 28, 2009)