Business to Business

Simulation Report

Submitted by: - Aaron C T

P22164

PGDM B
Simulation results

Decision History

Sales Force Emphasis: - in the first few quarters we have seen that there is equal
distribution among each category the eventually I focused on segment A B & C. our main
focus is on these few groups. segment is D is small customers and we are allocation only
few as per the requirement.

List Price: The list price remains constant at $142 throughout the four years.

Discounts: Segment A shows a shift in discounts. Initially, there were no segment-specific

discounts offered (Y1 - Y2). In later years, a consistent 12% discount was applied.
Segment
B increased discounts from 4% to 8% in Y2 and maintained that level throughout. Segment
C discounts remained at 4% throughout the period. Segment D discounts fluctuated
throughout the four years. The discount in Segment D was increased because they where
price sensitive of I have increased their discount gradually to 18%.

Distributor Discounts: There is a consistent 12% discount offered throughout the period.

Sales Force: The number of sales staffs increased steadily from 11 in Y1 to 14 in Y4. This
was done only because the profits were increasing if not we will not be able to increase
the sales force.

Spending on Small Customers: Spending on small customers decreased from 50% in Y1 to

30% in Y2 and remained steady throughout the period. Our main target is to focus on the
big customers in order to do so we had to reduce the spending on small customers.

Spending to Retain Large Customers: Spending increased significantly from 50% in Y1

to 80% in Y4. There was a sharp increase in spending in Y3 ($100,000) and Y4
($150,000). First step is to attain the customers. Ones it is done the most of the income
comes form the loyal customers and it is also expensive to attain more customer. Hence
the spending on retaining the customer.

Integrated Marketing Communication and Training: Spending in this area increased

steadily from $80,000 in Y1 to $200,000 in Y4.

Spending on Market Research: This remained constant at $50,000 throughout the period.

Social Media Persuasion Spending: Spending started at $0 and gradually increased to

$15,000 in Y4. This was done to attract more customers.

Direct Customer Communication: Spending also started at $0 and increased to $15,000

in Y4.

All the below changes in investment was according to customers’ needs and
their recommendation as they suggest.

Battery Life Feature Spending: Spending remained constant at $60,000 throughout

the period, except for an increase to $65,000 in Y4.

Manufacturing Efficiency Improvement: Spending fluctuated throughout the period.

There was a significant drop in Y3 (SO and $10,000) followed by an increase in Y4
($95,000).
Sensor Size Feature Spending: Spending remained constant at $50,000 throughout most
of the period, with an increase to $60,000 in Y4.

Latency Reduction Spending: Spending started at $0 and gradually increased to $50,000

in Y4.

Financials

The net income, also referred to as net profit, of the company in the image shows a
positive trend over the four years (Y1 - Y4).

Year 1 (Y1): Net Income was $390,994.

Year 2 (Y2): Net Income increased to $600,195.

Year 3 (Y3): Net Income further increased to $667,463.

Year 4 (Y4): Net Income reached its highest at

$1,099,682.
Customer Satisfaction

Question and answer

1. Who are MM’s target customers? Are all segments equally attractive to MM?
If yes, why? If not, why not? How do the different segments’ needs and
expectations evolve over time? Why?
The target clients consist of both large and small customers, and they come from a
variety of different groups. It would appear that MM has segmented its client base
into four distinct groups (A, B, C, and D), each of which provides a different level of
attention on the sales force, discounts, and spending allocations. Having said that,
we do not find all of the segments to be equally appealing.
Initially, it is possible that all categories were considered to be equally appealing.
This is demonstrated by the reasonably consistent distribution of sales force and
discounts across segments during the initial quarters of the marketing campaign. On
the other hand, as the simulation went on, I became aware that certain customer
segments were more lucrative or simpler to serve than others.
Throughout the course of time, adjustments have been made to the emphasis placed
on the sales force, discount rates, and spending allocations in order to target
segments that have larger profit margins and stronger growth potential. I have
concentrated more on segments A, C, and D, and I have acted in accordance with
those segments.
2. How does customer satisfaction change over time? How do you balance
hard performance metrics such as revenues and profits with soft metrics
such as customer satisfaction?
The level of satisfaction experienced by customers appears to have improved, as can
be seen. This indicates that there is a good level of client engagement and retention,
as evidenced by the constant growth in revenue, particularly from both large and
small customers. The fact that the net income has been growing over time is another
indication that the consumers are probably pleased with the items and services that
are being offered. On the other hand, additional measures such as customer feedback,
retention rates, and brand loyalty could provide deeper insights in order to conduct a
more comprehensive evaluation of customer satisfaction. We see that the customers
in A D and small customer are satisfied from the Y1Q4 and eventually the customer
in segment C attained the 5 stars eventually. We have completely ignored the b
section as it is very difficult to maintain them.
The utilization of a holistic approach is necessary in order to achieve a balance
between hard performance indicators such as revenues and profits and soft metrics
such as customer happiness. Neglecting the satisfaction of customers can have long-
term negative repercussions on both the reputation of the brand and the loyalty of
customers, despite the fact that revenue and profit are vital for the continuous
operation of a firm. Consequently, it is of the utmost importance to align corporate
plans with the requirements and preferences of customers, and to make investments
in areas that improve the overall experience of customers. An example of this would
be the enhancement of product quality, the improvement of customer service, and the
implementation of individualized marketing strategies. Businesses have the ability to
encourage sustainable growth and build a client base that is loyal for the future if they
discover a way to strike a balance between their financial success and the satisfaction
of their customers.

3. What does a focus on customer satisfaction illuminate and obscure in your

marketing strategy? How does customer satisfaction relate to customer
loyalty? In order to increase loyalty, positive word-of-mouth, and repeat business,
it is important to focus on customer satisfaction. This will reveal the importance of
meeting consumers' wants and expectations. Here, the benefit of retaining current
clients is recognized by allocating money to retain major customers. You may show
 that you care about your customers and want to establish great relationships with
them by investing in customer satisfaction activities including marketing
communication, training, and product updates.

Yet, if you limit your marketing efforts to only satisfying customers, you risk losing
sight of the need to innovate and stand out. Attracting new clients and being ahead
of competition are just as important as satisfying present customers. You have
shown a well-rounded strategy that takes into account both customer happiness and
market competitiveness by investing in product feature updates and marketing
communication.

Loyalty is a key indicator of client satisfaction. When consumers are happy with a
product or service, they are more inclined to buy it again and tell their friends about
it. Customers will trust and be loyal to your brand if you continually provide value
and go above and beyond their expectations. Not only does happiness play a role in
determining client loyalty, but so do things like pricing, brand reputation, and the
quality of the customer experience as a whole. Customer pleasure is essential, but a
comprehensive strategy for managing relationships with customers is even more so
for fostering loyalty.

4. How do you expect MM’s competition to respond to changes you make in

MM’s marketing and sales efforts? Why?
Competitors of MM will most likely react strategically to shifts in MM's sales and
marketing initiatives, based on the presented data and choices. If MM decides to put
more of its sales force's focus on particular types of customers, its rivals may decide
to do the same or ramp up their efforts in other areas. In a similar vein, MM's
pricing or discounting efforts could prompt competitors to match or even undercut
MM's prices in an effort to maintain market share. Also, in response to MM's
moves, MM's rivals may step up their own marketing and promotional efforts.

To add insult to injury, MM's rivals will surely be watching MM's every action,
planning their own counterattacks to safeguard their own market fortunes.
Particularly if MM's moves cause major changes in market dynamics or consumer
tastes, this will be the case. Large, well-funded competitors may be better able to
adapt quickly to
 MM's shifts in the market, while newer, smaller players may find it difficult to keep
up. If MM's marketing and sales initiatives are successful, its rivals will need to
adapt their methods to stay ahead of the competition. This means that the
competitive environment will be ever-changing.

5. How do you expect to gain a competitive advantage over time? Is it

worth sacrificing short-term profits to gain long-term differentiation?
Looking at data from the first quarter of the year (Y1Q4) to the fourth quarter of the
year (Y4Q4), it's clear that a strategy has been implemented to gradually gain an
advantage over the competition. Differentiation in the market is the goal of the
company's ongoing investments in product development, marketing, and customer
involvement. Spending more on marketing, making production more efficient, and
upgrading product features are all signs of a dedication to growth and competition
in the long run.

In the ever-changing corporate world, it may be important to forego short-term gains

in order to differentiate yourself in the long run, even though it may seem like a
daunting task. Achieving long-term success requires investing in a solid brand, a
dedicated consumer base, and cutting-edge product offers. Company success in the
face of intense competition depends on its ability to maintain and grow its client
base.

A company can increase its future earnings and sales by investing in marketing
communication, market research, and customer engagement activities. These
activities set the groundwork for creating brand loyalty and customer connections.
Because of the strategic and profitable potential in the long run, it is worth
making some short-term sacrifices for in the short-term.

6. How should you manage MM pricing? What does it take to justify

price increases? How does price discounting affect the outcome?
A method that strikes a balance between maximization of revenue and maintenance
of competitiveness is necessary for managing MM pricing. Market demand, product
uniqueness, and rival pricing are critical considerations when trying to rationalize
price hikes. Your customers' perceptions of your offerings' worth can be uncovered
by analysing their readiness to pay and the types of customers you serve.
 Several ways can the outcome be affected by price discounting. In the short term,
discounts can boost sales and attract customers, but in the long run, they can hurt
profits if utilized too often. You must calculate the effect of discounts on your net
income and gross margin. In addition, customers may perceive a lack of quality in
the product and the business as a whole if sales are frequent.

Use a dynamic pricing approach that considers market circumstances, consumer

segmentation, and product positioning to successfully manage MM pricing. Keep an
eye on how your competitors are pricing their products and services, and change
your prices as needed. It is necessary to show that the product's value has increased
due to changes in features, quality, or service in order to justify a price rise. To make
your higher rates more reasonable, think about adding value-added services or
bundles together.

Maximizing revenue, sustaining profitability, and satisfying customer expectations

are the three pillars around which successful MM price management rests. To be
competitive, it's important to regularly analyse financial data, market trends, and
consumer input to influence pricing decisions.

7. How do you balance short-term and long-term investments?

A company's ability to expand and remain profitable depends on its ability to strike a
balance between investments with a shorter and longer time horizon. You appear to
have struck a good mix between short-term profits and long-term sustainability
based on your financial data and decisions made over the quarters.

You have, for the time being, concentrated on maximising sales by modifying the
emphasis of the sales force and providing discounts that are segment-specific. It is
highly probable that this strategy contributed to the rapid increase of income and the
preservation of market competitiveness. Your commitment to both short-term
revenue growth and long-term client retention is reflected in your decisions to
allocate expenditure on both small and large customers.
 Your marketing, product development, and operational efficiency strategies all
show that you're thinking about the future. Efforts to raise brand recognition,
strengthen consumer engagement, and improve product quality have been steadily
increasing in recent years, as have investments in marketing communication, the
rise of social media and direct customer communication, and the improvement of
product features and manufacturing efficiency.

You possess a strategic mindset that seeks to achieve sustainable growth and
market competitiveness, as seen by your balanced approach to both short-term
revenue generating and long-term value creation. Your organization is well-
positioned for sustained development and resilience because you consider both the
short-term and long-term effects of your decisions.

8. How do investments in market research affect your management of MM?

Managing the marketing mix (MM) is greatly influenced by investments in market
research. When companies invest in market research, they learn more about
consumer tastes, industry tendencies, and rival tactics. Decisions on product
development, price, advertising campaigns, and distribution methods, among other
MM components, can be based on this data.

For instance, companies can efficiently fulfill rising consumer demands and
preferences by evaluating market research data to detect them. This data then guides
product development activities. Optimal pricing plans are developed with an
awareness of market dynamics, which guarantees competitiveness and maximizes
profitability. Brand recognition and consumer involvement can both be boosted
with the help of well-researched promotional programs that speak directly to certain
demographics of consumers.

In addition, spending money on market research helps find new opportunities and
hazards in the market, so you may make proactive changes to your MM to take
advantage of opportunities or avoid risks. For better marketing mix management and
long-term company success, market research equips companies with the knowledge
they need to make data-driven decisions, maximize the use of available resources,
and adjust their plans in response to shifting market conditions.
9. How does channel conflict figure into your pricing decisions? How do
you minimize channel conflict?
It is critical to strike a balance between the demands of various distribution
channels while guaranteeing uniformity and fairness when thinking about channel
conflict in pricing decisions. Based on the information given, channel conflict may
be exacerbated by the variable percentage discounts offered to different types of
customers and distributors. For example, animosity or rivalry could arise among
distribution channels if one channel believes another is getting preferential pricing.

There are a number of approaches that can be taken to lessen channel conflict.
First and foremost, it is crucial to have clear pricing policies. Make sure all
channels understand and can work together by explaining the reasoning behind
pricing decisions. To further reduce the appearance of bias, it is recommended to
apply a uniform discount structure across all channels. Another way to keep
problems from getting worse is to keep an eye on how well the channel is doing
and deal with any problems or concerns as soon as they arise. Moreover, a healthy
relationship can be fostered by offering incentives or rewards for channels to
collaborate and operate together.

In order to create an environment where all distribution channels can work

together for the benefit of all, it is important to prioritize open communication,
fairness, and transparency in order to prevent channel conflict.