Capsim Strategies Round 1

Differentiation Strategy with a Product Life Cycle Focus strategy PRACTICE ROUND 1

Decision Guidelines

You are free to pursue any strategy you wish, but you might try this during the Practice rounds at any time you can abandon the Product Lifecycle Differentiation strategy entirely. R&D 1) Traditional– tweak positioning to reduce age. Leave reliability (MTBF) unchanged. Example: Increase Traditional’s Size by 0.1. Traditional will eventually become a Low End product. 2) Low End – no changes. The customer wants an older product that trails the segment. 3) High End – improve positioning and reduce age. Leave reliability (MTBF) unchanged. Example: reduce High End’s Size by 1.2, and increase Performance by 1.2. 4) Performance – begin migration towards Traditional segment. Leave reliability unchanged. Example: Reduce Performance’s Size by 1.0, and reduce Performance by 0.3. 5) Size – begin migration to Traditional segment. Leave reliability unchanged. Example: Increase Size’s Size by 0.3, and increase Performance by 1.0. Make certain that the projects complete during this year before December 31st. Under the rules, a new project can only begin on January 1st. If these projects do not complete before the end of this year, we cannot begin follow-up projects next year. MARKETING 1) Traditional– significantly increase promotion and sales budgets. Implement a modest price increase. Forecast sales as a modest improvement over last year, driven by an improved design and marketing expenditures. Example: price $28.50, promotion budget $1500, sales budget $1800, and sales forecast 1500. 2) Low End – increase price, increase promotion and sales budgets. Forecast flat unit sales growth. Example: $22.00, promotion budget $1500, sales $1800, and sales forecast 1600. 3) High End – increase price, increase promotion and sales budget. Forecast flat unit sales. Example: $39.50, promotion budget $1500, sales $1500, sales forecast 400. 4) Performance – increase price, increase promotion...