Executive Summary

Our two current products the SUSI and SULI are great products. SUSI is being targeted for Others and SULI is being targeted for High earners. Period 3 for Firm U was adequate. Our firm was profitable and showed improvement from last period. However, Firm E surpassed our company in the stock price index. We believe this was due to their product SEMI that was right on target for the Professionals. However, we are planning on surpassing them in the future. Through various strategies, tactics and new products we are planning on being on top. We are planning on launching two new Sonite products in period 5. Our two new products are SUCK and SUMI. SUCK is being targeted and produced for Singles. SUMI is being targeted and produced for Professionals. We chose these two targets to produce Sonites for because both of these segments are suppose to be increasing in the future. This will be a great investment and a promising outlook for our firms U future. We also are planning on starting Research and Development on Vodite Products in the near future. We dont want to be the first firm to introduce a Vodite. But we definitely dont want to be the last. We are hoping to learn from the other companies that produce Vodites and make the best product we can. We want to continue to have great brand awareness and keep our sale forces up. We will be monitoring all of these additional products and how successful they are through marketing forecast, company performance sheet and if we have taken away sales from anyone due to our introduction of new products.

Situational Analysis:
Internal Audit:
Company Firm U is one of many companies that produce electronic products. We specialize in Sonite Products which are intricate pieces of equipment. Currently, we are known for having a very good price index. We have been performing well financially every period. We feel the reason that we are excelling is because of how well our team works together. We get along great and have a positive work environment. When we have disagreements we solve them in a mature manner. We always come up with compromises and let everyones opinions be heard. Also, we are known for our two Sonites that are on the market. Our product line consists of SUSI and SULI. SUSI is a lower priced product aimed towards Others. SULI is a higher priced product aimed towards High earners. Both, SUSI and SULI are very well marketed and remarkable products. Brand Awareness:

It is clearly evident that SULI is the number one awareness product on the market as of right now. It has the highest percents at 83.7% and 81.5% in Pros and High earners respectively. SULI brand, our strongest brand has the highest recognition numbers of any brand with an average of 71.2% awareness. Our SUSI brand also has high recognition numbers compared to other low cost brands. Also the growth in the SUSI brand has been extraordinary from 28% to the current 60.8%.
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We want to be the number one company in selling Sonites and Vodites. We want to have the highest stock price index out of all the companies. Opportunities that could be very profitable are our launching of two new products in period 5. We have named these two products SUCK and SUMI. These new products are aimed towards markets that we dont even have products in yet. So these new products wont be competing with our current products on the market. If we continue to put money into advertising we believe we will be very successful with these two new products. Sales Trend for Company U:

It is very clear that we have been increasing in sales every period. SUSI has increased from period 2 to period 3 by 26.1%. SUSI increased 28,000 in sales from period 2 to period 3. SULI has been slowing down in sales based on this data. However, SULI still increased 4,000 in sales from period 2 to period 3.

Net Contribution and Revenues for Company U:

We sold 311,780 products last period with revenue of $78,832,000. We are very content with that number. However, when we launch our two new products we are expecting a dramatic increase in units sold and revenue. Our Net Contribution after all our expenses is $34,598,000. We spent $44,234,000 on production, marketing and other expenses this past period. Our next period budget is $13,850,000. Our goal to increase the bottom line is to create remarkable products that have key components that target certain segments.

Collaborators: We distribute our products in the stores were they desire our product. SUSI and SULI is distributed to all three stores. However, SUSI is more concentrated on Department Stores and Mass Merchandisers stores. This is the case because SUSI products are more in demand for
4customers

that shop at those two stores. SULI is more concentrated on Department Stores. This

is where our customers that highly demand this product shop at.

Collaborators:

Currently our firm has three distributers of our Sonite products. Our firm is in collaboration with a number of specialty stores, department stores, and mass merchandise stores. Our SULI brand is aimed more at high income purchasers so it is mainly sold in department and specialty stores. Our SUSI brand is a lower priced product and has more sales in mass merchandise and department stores. These are the distribution channels that we have chosen to use to get our products to the consumers in the correct place. The channels in use by both products are appropriate for the products being sold and the consumers buying them.

External Audit
Context: The operating context of Company U is the Markstrat World; the Markstrat world is an industrialized country with roughly 250 million inhabitants. The monetary unit of the Markstrat world is the Markstrat dollar. Economically in the Markstrat world inflation and GNP growth are fairly stable. No major political, social, or economic event is anticipated in the near future. Politically the Markstrat world is very stable and no political events should interfere with the operations of Company U. Economically the Markstrat world outlook has positive stable inflation and GNP rates indicate good economic conditions, which can contribute to market growth correlating in higher profits and net contributions. Technologically, the operating context of the Markstrat world is changing. Currently all firms are selling Sonite products, however, there is a new emerging market in the Markstrat world. Recently, there has been industry speculation that a new type of electronic product might emerge, the Vodite. Industry experts have a good idea of what future Vodite products might resemble and the release of Vodite products is in the foreseeable future and will have to be addressed by our company. Market Forecast

The market forecast for the future periods shown in the graph above concerns which segments will be growing, at which rates, and the total size of the segments. As seen above the market growth for Others and Singles will be the highest both in the upcoming period and in total growth. Pros and High earners will also experience growth, but at much slower paces. The Buffs segment will contract in both the next period and in total market contraction.

Customers: Sonite consumers are adults who purchase the products for personal or professional use. The consumers of the Sonite product can be broken down into segments based on their purchasing habits and ideal performance and economy for their desired products. The five segments of the Sonite product are Buffs, Singles, Professionals, High earners, and Others. Consumer Breakdown and Shares of Total Purchases by Segments

Buffs Buffs have a high level of interest in Sonites and other similar products, they are extremely knowledgeable. Buffs demand high-performance products, but are less concerned by the convenience of the product. Buffs are quite price sensitive, since they use Sonite products for their personal use and do not necessarily have high incomes. Our SUSI product brand currently represents 2.6% of all Buff purchases this is currently the third lowest brand purchased by Buffs. However, is not a major concern as SUSI is not marketed towards this segment. The SULI product brand represent 13.8% of all Buff purchases which is a higher than anticipated number. Our SULI brand is a high performance product which is why it may be attractive to Buffs. However, this brand was not entirely meant for Buffs because of the high price. Buffs are currently underrepresented in the market, but are difficult to produce a brand for because of their high performance, low price needs.

Singles Singles live alone; they demand average levels of both performance and convenience in Sonite products. They use Sonite products for personal use and are quite price sensitive. Our SUSI and SULI brands currently represent 11.6% and 10.3% of single purchases. These are currently the 3rd and 4th highest percentages for the singles segment. These numbers are fairly strong, but do not represent as large of a percentage that we believe other future products could represent. As seen on the perceptual map the Singles ideal values are not currently represented as strongly as possible. Professionals Professionals may use Sonite products for both personal and professional reasons. They are looking for high-quality, high-performance and easy to use products. They can afford expensive products and often view price as an indication of quality. Our SUSI and SULI brands currently represent .1% and 11.1% of Professional purchases. The minuscule percentage represented by our SUSI brand is not concerning as our product is not at all marketed at this segment and there is almost no potential to sell SUSI to this segment. Our SULI brands numbers are average, but have been shrinking in recent periods from 26% in period 0 to 11% in the most recent period. This is concerning and needs to be addressed in our strategy and tactics. High Earners High earners have high incomes, using Sonites on a private basis. High earners buy fairly expensive products, which they can afford, and their purchases are partially motivated by social status. High earners demand performance and convenience from the products. Our SUSI and SULI brands currently represent .4% and 42% of High earner purchases. Again, the minuscule percentage represented by our SUSI brand is not concerning as our product is not at all marketed at this segment and there is almost no potential to sell SUSI to this segment. SULI representing 42% of High earner purchases is encouraging and a strength. However, this percentage has shrunk by 3% from the previous period. We hope to gain more High earner purchases in future periods; this should be addressed through future advertising and sales efforts.

Others This segment includes all consumers who do not belong to any of the above groups. This segment is the largest and is composed of consumers with similar needs. They are looking for cheap, low performance products with average convenience. The penetration of this segment is both as high as the other segments; as a consequence future growth rates could exceed forecasts. Our SUSI and SULI brands currently represent 25.8% and 1.9% of Other purchases. The SUSI brand commanding 16.2% of Others purchases is encouraging, especially considering that it has increased from 16.2% to 25.8%. This percentage will hopefully continue to grow in future periods. The small percentage is not a huge concern because the SULI brand is not being extensively marketed to the other segment. Shopping Habits

In terms of shopping habits and where they shop we see a higher percentage of Buffs shopping at specialty and department stores. 66.4% of Buffs shop at specialty stores, 24.1% at department stores and 9.5% at mass merchandise. Singles buy fairly evenly through the three distribution channels. 38.2% of Singles shop at specialty stores, 38.2% at department stores and 23.6% at mass merchandise. Professionals have a high percentage of purchases at specialty stores. 47.3% of Professionals shop at specialty stores, 29.1% at department stores and 23.6% at mass merchandise. High earners have a high percentage of purchases at department stores. 23.6% of High earners shop at specialty stores, 50% at department stores and 26.4% at mass merchandise. Others tend to purchase at department stores and mass merchandise. 47.3% of others shop at specialty stores, 29.1% at department stores and 23.6% at mass merchandise Purchasing habits of consumers will affect how our products will need to be distributed.

Ideal Value Evolution The demands and ideal values of the market segments are changing every period. Overall all segments of the industry are demanding better prices and economy. Also, most groups are demanding the same performance or better performance. All market segments also want better convenience. Ideal Values for Segments

The ideal values for consumers are important to making decisions on current products, price, and future products offered. As seen in the above chart the aspect of economy is not of high importance to Pros or High earners. We can charge a higher price for these segments. However, the same is not true for Others, Singles, and Buffs which are price sensitive and have elastic demand. Performance is least important to Others and is of not high importance to High earners or Singles. Buffs and Pros demand high performance goods. Pros and High earners demand a high level of convenience form the product, Singles demand a lower level, and convenience is not of large importance to Buffs and Others. This requires our firm to look at whether or not we are meeting the consumers needs. Currently our SULI brand seems to satisfy High earners in terms of a high convenience, luxury product. Our SUSI brand satisfies Others because of its good economy relative to convenience and performance. Pros may not be buying as much of our SULI because it does not satisfy performance demands. SEMI produced by Firm E is right on top of Professionals on the perceptual map. This is taking away our Pros sales. Singles and Buffs are not being satisfied by any product currently offered.

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Competitors Market Shares by firm

There are four other competing companies in the Sonite market. Currently our company controls the highest share of the Sonite products with 23.6 percent of the market. Companies competing with us for the highest share of the market is Firm E with 23.3 percent and company O with 21.7 percent. Companies A and I also compete in the Sonite market with 16.1 percent and 15.3 percent respectively. Currently company E is a main competitor for our highest priced product of SULI. Company E sells SELF which is a main competitor for high priced products and has been stealing sales from our SULI product. SEMI has dramatically decreased the amount of sales we see from Pros from 26% to 11%. The only other major competitor to our high priced SULI brand is SOLD which competes for sales from High earners and Pros. The competition with the SUSI brand is much more evenly distributed. There is not one or two firms competing with SUSI rather there are 6 or 7 other firms. However our competitive advertising and sales force is raising our revenues and brand awareness for our SUSI brand in key market segments.

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Firm/Segmentation Matrix Buffs Firm A Firm E Firm I Firm O Firm U SONO SELF SIBI SOLD SULI SUSI Singles SALT SEMI SIRO Pros High earners Others SAMA

As demonstrated in the chart above our SULI product has two main competitors for the segmented markets of High earners and Pros. Also our SUSI product competes with several products for the others segment. While there are products in the buffs and singles segments we do not believe that these products are adequate to fulfill these segments needs. Competitive Sales Forces

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Competitive Advertising Budgets

Our competitive advertising and sales force are the largest in the industry. We have the highest advertising total budget and the largest sales force for our products. We believe, this is the reason why our brand awareness is so high and is a focal point of strength.

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S.W.O.T
Strengths o SULI High end product, wanted by High earners. o SUSI Lower end product but is selling well with Others. o As a team we all work very well together. o As a team if we do not all agree on a topic we all find a compromise. o Brand Strength/ Awareness Weaknesses o We do not have a product that is selling well with Singles, Buffs, and Professionals. Opportunities o SUMI A product that we are developing that is for Professionals o SUCK A product that we are developing that is for singles. o We plan to make a Vodite in the future. Threats o Firm E They have a product that is selling really well with the Professionals and we would potentially want to take away some of their customers. o Firm O o Firm I Their low end product could possibly sell their product cheaper than ours and could possibly take away some our customers.

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Objectives

Unit Objectives Sell 225,000 units in period 4 Sell 140,000 units of SUSI in period 4 Sell 180,000 units of SULI in period 4

Revenue Objectives Earn $80,000 of total revenue in period 4 Earn $61,000 of revenue from SULI in period 4 Earn $19,000 of revenue from SUSI in period 4

Net Contribution Objectives Contribute at least a net amount of $34,000

New Product Objectives Continue development of Sonite products SUCK and SUMI Introduce SUCK and SUMI in period 5 Begin research and development on Vodite products

Stock Market Price Objectives Increase Stock Price Index from last period to above current level of 1466

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Strategy:
Segmenting: Buffs- Demand high levels of performance and low prices in their Sonites. Not concerned with convenience. Singles- Demand low prices, average performance and convenience. Professionals- High quality, high performance and high convenience. Can afford higher prices. High Earners- Motivated by social status. High performance and convenience. Others- Largest group. Look for cheap, low-performance with average convenience.

Targeting Strategy:
Current Sonite Products: SUSI- The SUSI is targeted toward the Others group. SULI- Targeted towards the High-Earners, those with larger incomes. Future Sonite Products: SUMI- Professionals is the target market for this product. SUCK- Aimed towards the Singles Group.

Positioning Strategy:
SUSI- We would like customers to view this product as a great value. The Others seems to be the perfect target group for this product because they arent extremely concerned with performance or convenience but seek a lower price. SULI- We want customers to view this product as the high class Sonite.

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New Product Development Strategy:

SUMI- The SUMI is our first research product that we were able to set the specifications on. We would like this product to be viewed as the best product on the market for people who need a Sonite for work as well as personal use. We want people to think that it has great performance and convenience levels and is worth the money for businesses. SUCK- We would like our SUCK product to be viewed as the perfect personal use Sonite. We would like this to be seen as the best Sonite with a low price, with average levels of convenience and performance.

Rationale:
SUSI- We are aiming this product towards the Others because they are looking for the least expensive Sonite that still gets the job done. We were given this product at the beginning of the simulation, thus we werent able to choose the specifications for it. However, we are able to control the price of the product. So, because the SUSI has fairly low ratings in performance as well as convenience, it doesnt cost a great deal of money to produce. This enables us to lower the selling price of the SUSI so we can hit the lower-income markets. We are looking to sell a high number of SUSI products for a low price to make a profit. SULI- We want SULI to be a high class flashy product that is a quality Sonite but also a status symbol. We are aiming this product at the High earners for that reason. We chose High earners as our target market for this group because, though SULI has pretty good performance and convenience ratings, they are still below what the Professionals group is looking for. High earners are happy with a little less in performance and convenience ratings. With that information we chose to target this product towards High earners. We felt this way because it has a little bit higher performance than what the High earners are looking for. Another reason we chose this target market for the SULI is because they too base a pretty significant portion of their preferences on the price. Their preferences are inversely related to the Others group because they are looking for a more expensive product that can be a status symbol. Not being able to modify the product as easily as we can modify the price, we decided that we could inflate the price,

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making our product more of a status symbol. The ability to easily bump the price helped us in deciding to market this to the High earners. SUMI- We are aiming this product at the Professionals for a few reasons. A big reason is because one of our competitors, Team E with their product SEMI, has a stranglehold on the Professionals market and wed like to cut into their market share. We believe that this new product, the SUMI may even be more appealing to the Professionals market than the SEMI because of the specifications we are applying to our product. We are going to match the SEMIs high power and max frequency but we lowered the weight, design and volume specifications in order to make the product a little bit more convenient. SUCK- You get a good quality product that is pretty easy to use but for a fairly low price. We are aiming this at Singles because there isnt a product that is near the performance desired by the Singles for the price the Singles group are willing to pay. We noticed that the Singles market is growing significantly over the next few periods and we want to take advantage of this. If we are able to get a good product on the Singles market before anybody else we could make a huge profit.

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Tactics (4Ps)

Products As a company in this marketplace we strive to be known as the manufacturer that offers products that best match the needs and wants of all our targeted consumers. In our quest to be a world-leading manufacturing company in Sonites and Vodites we offer high-end quality products to High earners and Professionals. We also offer low priced affordable products that will be targeted towards the Singles and Others. The products we currently are producing are called the SUSI and SULI. The SUSI is our product that is targeting towards the Others segment. The consumers within this segment are looking for a product that is cheap, has low-performance with average convenience. Our SULI product is targeted towards the High earners segment of the market. High earners normally buy products based on high performance and price since they view having the most expensive item as being socially acceptable. However, overtime we are aware that preferences may change. In this case we work as best we can to acknowledge and accommodate those changes for our consumers. In addition to these products we are also Research and Developing two additional Sonite products. These products are named SUMI and SUCK. SUMI was designed and developed for the Professionals segment of the market. It was designed for the consumers who wish to have a high performance, high quality, and easy to use product. SUCK was developed for the Singles segment of the market. It was designed for the consumers who want average levels of performance and convenience, and at an affordable price. Also in the future we plan on introducing a Vodite product. We havent yet started Research and Developing the Vodite since we did not want to be the first firm to start producing the product because of the severe initial costs of creating the product. Thus, we plan on Research and Developing the product once other companies start to initiate the research and development process.

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This graphic display above is the Growth Share Matrix for Firm U. Our SULI product is doing really well in the High earners category. It is in the middle of being a star and a cash cow for High Earners. This is the ideal state for products. Also, we are getting a great response with SULI in the Singles market. SUSI is starting to slowly move over to the star and cash cow area. This graphic display is very promising for our firm. Price In terms of prices that we set for our products it depends on the segment we are targeting. Since we will have four different products in which each targets a different segment we want the price to directly reflect how much the consumer is able and willing to pay for our products. We want to offer high quality products to all of our targeted segments. Different segments however have different prices based on the price sensitivity of that segment. However, we want to be
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known for giving the best value for the price that is paid by the consumer. This being said, the SUSI since it is targeted towards the Others we felt was a good idea to keep cost low when we set it at $212. The SULI since it is targeted towards High earners is set at a higher price which would be $525. Since the SUMI and SUCK are still being researched we have yet to decide what price we should set those products at to yield a profitable return.

Promotion Promotion is very vital in the successful awareness of our brand and our products. This is why we have decided to promote a great deal as opposed to exclusive advertising. We feel we will be able to achieve higher sales, increase brand awareness, and increase market share. By advertising to everyone within the market, we believe this will yield the greatest possible outcome and allow us to have frequent repeat customers even if the segments preferences change to a higher priced model. Place Since we have decided that as a company we want to appeal to all segment groups within the market we also in turn have to make our products available to all consumers within the market. Like our promotion strategy we want to accommodate the masses. Thus we wanted to make sure that the number in our sales force be the highest in the market. That way all segments would have the ability and willingness to come to our stores to purchase our products that suite their needs.

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Implementation Plan Period 4 Period 5 Period 6 Period 7 Period 8

New Product

R&D for SUCK and SUMI

Introduce SUCK and SUMI/ Leftover R&D Vodite Increase for New Product

Investing Money into Vodite

New Vodite

Advertising

Increase for Vodite

Sales Force

Increase for New Product

Increase for Vodite

The implementation plan will be carried out through every member of the group. We have divided each product among our group members. As a group we decided that Kirsten Ferch would be in charge of the new product line SUCK. She will make sure that it is produced and ready for sale in a timely manner by period 5. Julie Kemp is in charge of the new product line SUMI. She will be in charge of making sure the product is made and ready for sales in period 5. Our advertising department is now being run by Samuel Heston. He is in charge of overseeing all the advertising and making sure our brands are well known. Sales force is led by Michael Rubel. He is in charge of making sure we have adequate numbers in sales force. Andrew Brown is in charge of the Vodite development. He is in charge of making sure that our Vodite computer is released by period 7.

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Budget
Profroma: Period 4

Sales Units sold average retail price average selling price Revenues Production units produced cost of goods sold inventory holding cost inventory disposal cost Contribution before marketing Marketing Advertising Advertising research sales force Contribution after marketing other expenses market research studies research and development interest paid exceptional cost or profit Net contribution Next period budget

325,000 375 250 81,250

296,000 -33,125 -300 0 48,125

-7001 -1864 -2780 36,480

-455 -1350 0 0 34,675 13,900

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Control Procedures
In order to control how we do in this simulation, as a group we will look at many graphs and charts to understand what new decisions we need to make for the upcoming periods. The first chart that we will look at is the Overall Marketing Budget, which shows how much money we will be able to spend to make changes for the next period. Then as a group we will look at our Research and Development to see if it will be possible for us to put out our new product, because that is one of our main concerns. Next, we will look at the Estimated Overall Performance. Where we are able to see how the other groups compare to us and we are able to also compare what they have to work with for the upcoming period. Another chart that we will look at is the Market Forecast, it has shown that the Buffs group has been declining and has not been one of our major focuses to sell to, but the Singles and Others tend to be growing a lot. Our product SUSI has been doing very well with the Others group. With Research and Development we are trying to focus on a new product more for Singles. Also, we are introducing a product for the Professionals group because there is only one group that really is targeting them, and we would like a part of that market. With our products we would like them all to be in the Star and Cash Cow categories in the Growth Share Matrix.

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