frippery

Mar 022018
 

General Information

SWOT Analysis often becomes a quick group brainstorming approach with marketing students, rather than a discussion of what makes up a robust and detailed SWOT.

The other problem with SWOTs is that they are quite generic, often because students start with a “blank sheet”. To solve this problem I have set up a new website www.ideas4swot.com where there are over 500 ideas to include in a SWOT – but best of all I have built an Excel template that virtually automates the SWOT process – it is available for free download.

This means that we can get beyond the “building a generic SWOT” to actually working with a more detailed SWOT to start looking at strategic options.

Possible In-Class Activities

  1. Groups can develop a SWOT for a particular firm and then discuss/argue why their approach is different (or better).
  2. Students can develop SWOT’s for two or more direct competitors and identify WHY their marketing strategies NEED to differ.
  3. Students can split the SWOT into four (with a group working on each) as an overall class activities.
  4. Students can start with a “blank sheet” first, and then move to the SWOT template to see how more detailed information (closer to the first) can greatly assist the development of a SWOT.

How the SWOT Template Works

May 012017
 

In April 2017, KFC decided to introduce it’s Zinger chicken sandwich (burger) into its home American market. This is despite the product being available in KFC’s international markets for over 30 years, where it is KFC’s most popular product in 120 countries.

For this activity, students need to review the launch TV commercial featuring Rob Lowe as the new Col. Sanders. On the video below, following the TVC there is some basic information regarding the launch and why it was undertaken.

Discussion Questions

  1. What were the main reasons that KFC decided to introduce this new product?
  2. Why did they need to test market the product, given that it was already successful in over 100 countries?
  3. Did they need such an elaborate launch – which will include the launching of the chicken sandwich into space – given that it is a popular product that would probably do well anyway?
  4. Based on the information provided, can you outline the key components of their new product process?

Mar 052017
 

A Paperback Version of the Workbook is Now Available Through Amazon

Following numerous requests, I have finally published the Practical Marketing Workbook in hard copy format, as well as a downloadable PDF file.

The workbook contains over 250 worksheet style activities (and more than 400 pages), ideal for copying and providing to your students for in-class activities, discussion exercises, role plays, review tasks, and even homework and assessment tasks. Ideal for active learning and flipped classroom environments.

It covers a broad array of ‘marketing principles’ topics and concepts, and provides a broad array of choices of activities to suit your course content and your students’ learning needs.

Try Before You Buy

For a free sample chapter (in PDF form) before you decide to purchase, please visit my page on the soft-copy of the workbook (where you can purchase the PDF version for $29.95 USD if preferred).

To purchase the hard copy version, follow the Amazon link below…

 

Mar 012017
 

Introducing the  2nd Edition of the Practical Marketing Workbook

This workbook now has over 250 student activities designed in a worksheet form. This means that you can print or photocopy pages for students and use them in class as individual or group activities. It is an ideal resource for flipped classroom and active learning environments.

Each activity contains its own instructions and spaces for students to write their responses. The workbook takes many of the exercises on Great Ideas for Teaching Marketing and turns them into worksheet-based activities.

Click this link to download the first chapter of the Practical Marketing Workbook (PMW-ch1-intro topics) as a FREE sample to get a sense of the book and its layout.

Scroll down to find out more and how to purchase the marketing workbook.

Chapters of the Marketing Workbook

  1. Introductory marketing concepts
  2. Marketing strategy and plans
  3. The marketing environment
  4. Marketing research and information
  5. Consumer behavior
  6. Segmentation, targeting and positioning
  7. Customer relationship marketing (CRM)
  8. New product development
  9. Products and brands
  10. Pricing
  11. Place and logistics
  12. Integrated marketing communications

Key Features of the Practical Marketing Workbook

  • Contains over 250 activities – all with simple instructions
  • Quick and easy to use
  • Ideal for flipped classroom environments
  • The ideal resource for teaching ‘Marketing Principles’
  • Also a great resource for ‘Consumer Behavior’, ‘Promotions Management’ and ‘Marketing Strategy’
  • Provides variety and interest for students
  • Appeals to student’s different learning styles
  • Uses a mix of simple and more complex activities
  • Adaptable for both undergraduate and masters programs
  • Also suitable for use with senior high school students
  • Flexible for 1-2 hour tutorial sessions, or for longer lectures
  • Reinforces theory and enables understanding and application
  • All activities and exercises tried and tested in the classroom

How to Get the Practical Marketing Workbook

The Workbook is great value – with over 250 activities and exercises (400+pages) for just $29.95 (USD). Review Chapter One for free above first, and then when you are satisfied, click below to buy the complete Workbook.

The Practical Marketing Workbook, 2nd edition
Price: $29.95 USD

Note: Payment via PayPal only.

Hard Copy Book Also Available Through Amazon

If you prefer a printed version of the Marketing Workbook, to assist in copying worksheets and activities for your students, then the physical book is available through Amazon, please use the link below to go to Amazon and check out more details and view some sample pages.

Feb 202017
 

Introducing Simbound for Interactive Learning

Simbound is an online turnkey content creation and evaluation system developed to address the need of the modern digital marketing course leader which aims to go beyond a simple presentation centered approach with his or her course. Belonging to the experiential learning family of resources  it employs simulation, gaming and interactive e-learning functionality. The resource is made available as an easy to deploy content extension which enhances the common core of the now popular digital marketing subject.

Used by more than 100 universities

There is a growing worldwide community of teachers and trainers which have used the solution with students in over 100 universities worldwide having created millions of marketing decisions for their virtual companies inside the simulation. The digital marketing topics which the student interacts in an iterative way include:

  • contextual advertising,
  • qualitative marketing,
  • marketing campaign planning,
  • market evolution,
  • online consumer behavior,
  • creative copy-writing,
  • budget management,
  • data interpretation and
  • reporting.

Game-based Student Competition

The game can be organized as a team-based competition where each team works to outrank the other team by delegating tasks and developing systems thinking best practices.

The tool is typically introduced to students during a theoretical course or after the delivery of seminars as a means to apply learned concepts in a risk-free environment. The simulated environment creates a fail-safe environment which does not require real funds to be spent and does not backfire if one communication effort has not fulfilled its intended goal. The teaching methodology built around the simulation is currently being used both in both face to face and distance (online) course formats with comparable success.

Full Instructor Support

The system offers the marketing instructor multiple ways in which he can assess learner performance and there is a stock of specific grading or proof of learning frameworks which can be applied to each game. Secondary frameworks are emerging and Simbound rewards the most creative usage of the platform through a study case competition for teachers as well as the opportunity to host Simbound-themed seminars in various locations around the world.

Next Steps

For more information on this teaching resource, please visit the Simbound website.

NOTE: Simbound is a independent teaching resource site specializing in digital marketing. Great Ideas for Teaching Marketing is not affiliated with Simbound and simply provided this article as it is a worthwhile teaching resource to consider using to demonstrate digital marketing concepts.

 

Feb 132017
 

Following the positive feedback on the marketing simulation game, I have decided to further develop the complexity of the game and introduce a more “advanced positioning marketing simulation game”.

This is an extension of the initial game – so it has the same look and feel to students. However, it increases the complexity of decisions by introducing a number of new rule changes, such as:

  • the overall market size increases during the life of the game,
  • the center (consumer preferences) of each segment shifts over the game rounds,
  • each positioning cell may increase, decrease or remain stagnant throughout the game,
  • there are different levels of costs for developing new products as opposed to repositioning existing products, and
  • there is an ongoing product management/support cost levied on a per product basis.

Impact on Sim Game Decisions

The combination of these role changes means that the challenge and difficulty of each decision increases. Because each of the positioning cells are changing in value, along with the “center” of the market segment also shifting, teams are “forced” to review each of the product positioning decisions each round – making ongoing product management for more important (and needing to balance the investment between new products and existing products).

There is also a significant trade-off between developing products to target a segment in one go, or to develop products in two stages – as there is now a significant financial an incentive to bring a product to market and then reposition it. While this approach may provide short-term financial benefits for a team, it also signals their intended moves to competitors (which they would prefer to avoid – so a trade-off between financial impact and “strategic surprise”).

The addition of a product management/support cost also improves the need for teams to consider the financial viability of their products at all times.

Timing on Sim Game Decisions

The free simulation game – which really should be played first – allows for decisions to be made within 10 to 15 minutes per round (depending upon class level). However, with this game is possible that students can “scenario test” many possible strategic options and are likely to need longer to make their decisions – and the game could be extended into weekly decisions to be played over a term/semester if required.

Able to repeat the Sim Game with the same class

Because of the additional complexity of the game, no two variations of the game would be the same. Therefore, it would be possible to play this game multiple times with the same student class. The outcomes of the game would significantly vary based upon the team’s responses to competitor activity. This also means that there is no one generic strategy that will always prove to be successful, as teams will need to be very market oriented to perform well.

Instructor’s video on “how to run the sim game”

Fun Quiz on the Rules for Students

I’ve also developed a 20 question Kahoot quiz that can be played with the class (optionally) prior to playing the game to ensure each team has sufficient understanding of the rules. This also adds a bit of fun and excitement to the competitive spirit of the class.

Student’s video on “how to play the sim game”

Small Fee for an Ongoing License

Due to the significant work involved in the back-end calculations required for this more advanced simulation game, it is necessary to charge a small fee of $39 US for the game. This fee provides an ongoing license for a single user to run the game as required.

The Advanced Positioning Marketing Simulation Game
Price: $39.00 USD

Other simulation decision games

Also check out the expert-level simulation game – more decisions, more complexity, more learning!

Feb 132017
 

Overview of the Discussion Activity

This discussion activity is a variation of an existing exercise on this website, however it has been updated by the inclusion of an interactive spreadsheet to enable students to financially forecast the impact of this strategic decisions.

Here is a link to the spreadsheet… Music Festival Strategy Exercise

The purpose of this exercise is for students to consider the financial consequences of various strategic decisions. Their goal is to increase overall profitability of this music festival event, while ensuring the foundation of a logical marketing strategy.

The spreadsheet is very easy to use and only allows students to enter future values, while providing historical information to assist with the case.

 

Case study: A country music festival

Assume that there is a “country music festival”, which is held in a regional city in a country area. This event has been able to attract around 10,000 visitors in recent years. While it has experienced good levels of attendance growth over its 10 year history, in the last few years it has only achieved slight increases in attendance numbers.

The organizers of this music festival are now quite concerned about the future viability of the event. One of the key objectives of their event is to raise money to contribute to the local community. The initial plan was to look to generate around a $500,000 profit each year. However, due to increasing cost factors and stagnant attendance levels, the event is now only on track to just break-even for the coming year.

By way of background, the music festival attracts a mix of both local and visiting people (around 50/50). This means that any potential for growth is likely to come from people from outside the regional city. Therefore, a challenge is how to interest and attract potential visitors from an array of geographic areas, but with a fairly limited promotional budget.

A recent survey of attendees indicated that there was a good mix of first-time and returning attendees, with many of the first-timers becoming aware of the event through direct word-of-mouth recommendation by a friend

The survey also indicated that the general age group of attendees last year was predominantly in the range of 15 to 30 years of age – which potentially indicates the ability to grow attendees by broadening the appeal of the event?

The event organizers use a mix of promotional methods, such as brochures, posters, a dedicated website, and they have recently started experimenting with social media advertising.

The organizers have kept the price of entrance the same over the last 10 years, at a relatively low level. Their thinking is that a lower price will help attract more attendees and hopefully these people will buy food and drink at the event (which are the only items offered for sale at the venue).

Also as the event is held over several days, the organizers are aware many people will also incur significant travel and accommodation costs, which is another reason to try and keep the entrance fee very affordable.

Your task

  1. You need to first identify the likely financial performance of the event for the coming one and two years, using the spreadsheet.
  2. You need to identify what overall profit is required by the organizers of the event and if there is a gap between the likely profit and the required profit, you need to identify simple (but realistic) changes to the marketing mix elements that may generate increased profitability.
  3. If there is still a financial gap, you should then look to identify a revised approach to both their promotional approach and other marketing strategy initiatives, as well as other potential income generating ideas.
  4. Finally, summarize your overall strategic recommendations and how your approach will impact the bottom-line of the event (using the spreadsheet).
Feb 022017
 

INTRODUCTION

While many industries have been impacted by the Internet-era, the banking sector is an industry that has faced numerous environmental challenges. They have been impacted by new competitors, changing technology, record low interest rates, different consumer buying approaches, new distribution channels, and so on.

As a result, traditional banks cannot maintain their existing marketing strategy. They need to be able to adapt to the current environment and find a suitable long-term strategy that will enable them to achieve ongoing profitability.

YOUR TASK

For this task, you will be required to assume the role of the marketing manager for a hypothetical mid-sized retail bank. You will need to identify the various trends and environmental impacts that are affecting retail banking and then decide upon a suitable course of action – that is, a competitive marketing strategy.

Because it is a hypothetical retail bank, you have some scope to determine “how” the bank will compete. Obviously, you will have no real internal environment (corporate appraisal) information to work with. But keep in mind, because they are a mid-sized bank, they will have limited resources compared to the major banks. Therefore, they cannot match everything that a large bank is able to do and offer.

Please note that the term “retail” in this banking sense refers to banking services offered to individual consumers, not businesses or corporations.

What you need to do in this task is to find a way of both differentiating the banks offering and adapting to (or taking advantage of) the various macro environment and competitive and consumer trends. Ideally, you should be looking for the firm to have a distinctive and specialized strategy that will allow them to stand out in the competitive landscape.

KEY BANKING ENVIRONMENTAL FACTORS

Interest Rates

In recent years, many countries have experienced low interest rates. This has placed pressure upon the bank’s ability to generate profits through what is known as their interest rate margin. A banks margin is the difference between the interest they pay out to depositors and the interest they receive from borrowers.

In a lower interest rate environment, there is generally pressure to reduce this margin. This occurs through competitive pressures, as well as the inability for the bank to reduce the interest rate it pays on savings accounts (because often they are around 0% anyway) – so when they reduce their loan interest rates, there unable to match it with a decrease in the interest rates that they pay out.

This dampening of their interest rate margin (revenue) has forced many banks to look for cost savings and efficiencies through technology.

Substitute Competitors for Deposits and Savings

Interest rates for larger deposits are now typically quite low. Consumers with significant amounts of money to invest and now able to get better “interest rate” returns by investing in blue-chip shares, where the dividend may be much higher than banking deals.

This means that the low interest rate environment, has made blue-chip shares a more viable “substitute competitor” for larger savings and deposits.

Substitute Competitors for Loans and Credit Cards

Not only do banks face competition for generating savings and deposits, they also have significant competition in trying to attract borrowers.

There has been an emergence of “payday” lenders. These types of organizations provide very small loans – usually under $1,000 – for a short-term emergency period. Collectively, they have managed to grow to a reasonable market size, which takes many small loans away from banks.

In some countries, major supermarket chains have launched their own credit cards. They already have significant access to consumers who regularly use various credit cards at their stores. These retailers are able to use personal selling methods in the store along with various forms of digital and email marketing to push credit cards onto the supermarket customers.

Additionally, other retailers such as department stores may also offer “store cards”, which operate like a credit card within that particular store. Credit cards usually provide a good form of profit for banks, so these retail competitors pose a threat to this business.

Some other retailers may offer “interest-free repayments” for major purchases. This means that the consumer can buy – say furniture – with free credit from the retailer. Obviously, the “free” credit is usually embedded in the purchase price or provided by the base manufacturer of the product. Either way, it provides an attractive alternative to borrowing money from a bank.

In a similar vein, many new cars are now sold with very low interest rate offerings – which are provided by the car manufacturer (or in some cases by a large dealer). This means that it is very difficult for a bank to compete in the new car lending market.

Therefore, as you can see that banks are facing numerous challenges from array of competitors.

Substitute Competitors for Transactional Business

Most consumers would have some everyday transaction account where money goes in and out. New competitors have emerged in this regard, such as Apple Pay. Samsung, Google and Amazon also have products (either existing or planned) which are designed to take transactional business away from banks.

While typically there are not significant profits to be gained from holding transactional business (due to the smaller account size and the transactional costs involved), transactional business does provide a key “relationship” between the bank and consumer. Therefore, losing this particular offering would potentially put the balance of the customer relationship at risk.

Although not a mainstream concern at the moment, in the longer-term alternative digital currencies (such as Bitcoin) they also pose a threat to a bank’s ability to hold its customer relationships.

Mortgage/home loan Brokers

A growing proportion of mortgage loans are delivered through independent mortgage brokers. These are “usually” independent firms that research the best home loan offerings in the market. Many consumers prefer this way of purchasing a home loan because it is at no cost to them (the bank will pay a commission to the broker) and the broker does all the work for the consumer.

The downside of this arrangement for a bank is that they will have loyal customers using a broker who is more than likely to place the consumer with another financial institution. Also it means that the bank has to be constantly competitive with its interest rate offerings and its commissions to brokers.

Online Interest Rate Directory Comparison Sites

Like many industries, banking consumers will undertake their own research prior to a major purchase decision (such as a mortgage or a large deposit). There are numerous interest rate comparison sites in the market that compare all or some of the offerings available. This means that, as with mortgage brokers, banks have to be increasingly price and package deal competitive.

These interest rate comparison sites usually make their income through offering advertising or sponsored positions on these sites. The financial institutions will usually pay per click, in the same way as they would with Google advertising.

Again the concern for a bank is that there is a reduction in overall consumer loyalty, particularly for larger transactions, and the availability of online comparison sites creates increased price sensitivity among consumers.

Decline in the Importance of Bank Branches

Online banking is becoming quite common. In the old days, bank branches were widely located and were the main tool for acquisition of new customers. However, a branch’s effectiveness in this regard has been significantly reduced through alternative methods of customer acquisition.

This creates a significant cost structure for a bank, particularly competing against new entrants which may have adopted an online-only model. The challenge remains of how to “reinvent” bank branches away from transactional facilities to sales and relationship facilities. There are many different types of branch design models that have been tried throughout the industry.

Fraud Issues

With many consumers moving to online banking, there is a growing threat from the risk of fraud for consumers. There are some organized groups who seek to trick consumers into revealing their passwords (through fake emails and/or fake websites representing banks) or some other form of hacking the consumer’s computer system.

Therefore, banks need to invest in appropriate technology and staff – at a cost – to minimize the risk of fraud in order to protect their brand’s security image with the market. In some cases, banks will be liable for the loss of money and will have to repay it to the customers.

Increasing Legislation

Following the GFC period, where banks were perceived to be reckless in some of their activities, there has been an increased scrutiny by governments on financial institutions. This has resulted in increased regulation, compliance, restrictions, and the need for greater financial capital.

Collectively, these measures usually have the effect of increasing the bank’s cost of compliance, as well as limiting its growth potential in certain areas.

Economic Outlook

Interest rates have already been discussed above, but many countries face reduced economic growth prospects in future years. This reduces the ability of the bank to grow “naturally” with the size of the economy (with larger incomes and wealth).

There is also increasing income inequity in many countries. This may create a situation for a bank where they may need to have distinct offerings for both wealthier and poorer consumers.

Social Media Use

Many consumers tend to be heavy users of social media, across various platforms. Social media provides a good opportunity for organizations to create brand engagement, strengthen customer loyalty, leverage customer advocacy, and win new/first-time customers.

However, while this may be generally an attractive marketing and promotional opportunity, banking is usually not seen as an overly exciting type of brand to engage with. So the challenge here is to how to make a bank’s brand “interesting and engaging” while still maintaining the appearance of security and stability expected from a bank.

Customer Database Analytics

Marketing is moving towards more data-driven decisions. Banks have an enormous amount of customer information on their customer database. Not only do they have precise demographic information, but they also are able to generate a very clear picture of their customer’s lifestyles and behavior through analysis of their financial purchases.

Many banks are gaining an advantage through the analysis of their customer database, developing precise target market segment profiles, and even engaging in predictive behavior modelling. This information can then be fed into the firm’s promotional activities, hopefully with much greater cost and result effectiveness.

Other Environment Factors?

There are also other environmental factors worth considering, which you may choose to identify through further Internet research.

Jan 312017
 

New website dedicated to the product life cycle launched. It covers lots of theory, but also includes a free Excel template that enables students to quick map products onto the product life cycle curve.

This is ideal for simple activities or homework. You could provide them with a list of products and ask them to map them onto the PLC curve. Alternatively you could get them to identify products that fit into the different stages of the product life cycle and create their own graph of products.

The site also outlines the strategic considerations of each stage of the PLC. This allows you to extend the task into the key strategic marketing considerations for the product’s life cycle journey.

Here is a link to the free Excel download page.

Jan 312017
 

I have modified an existing activity on this website – perceptions of marketing – by converting it into a Kahoot online quiz.

In case you are not familiar with Kahoot (and probably other similar websites) it is a quiz or survey that students undertake live in class by using their mobile phones or other Internet connected devices.

I have used this system across numerous subjects over the past year and have found the level of engagement dramatically increases – so I will be progressively adding surveys and quizzes.

This survey is designed for new students to marketing to gauge their initial understandings and perceptions of the marketing profession. Because it is conducted through a simple online voting system, student’s answers are anonymous hopefully resulting in honest responses.

There are 10 questions in the survey, and wherever there is a distinct difference of opinion across the class, then leads into a natural discussion activity. Usually out of the 10 questions you will find four or five quite controversial ones and a couple of questions whether students generally have a perception or understanding – which you can then discuss further.

Here is a link to the quiz – you do not need sign up. However, if you do register you are able to construct your own quizzes and surveys over time.

Perceptions of Marketing Online Survey

Once you start the game – projected onto the class screen – get the students to go to Kahoot.It and enter your game code (which is automatically generated and shown on the screen) – they then enter any nickname and you are set to go, usually within 1-2 minutes.

Jan 272017
 

This article discusses how the instructor can coordinate and manage the “logistics” of the marketing and positioning simulation game. This fun and engaging teaching activity is available for free download on this website – please see the article on the simulation game itself. Please note that this article does not discuss how the game works – that is discussed in this article. Instead, it is an article that provides classroom management tips for running the game.

NOTE: It is highly preferable to provide the student groups with direct access to their own copy of the spreadsheet. This will greatly enhance the engagement in each group and lead to a much better learning and teaching outcome. This can be achieved by uploading each round’s spreadsheet to your LMS or by using a few blank USB memory sticks to pass around the file after each decision round.

This can be easily achieved by using a computer lab room if available, or alternatively if the students tend to bring their own laptops to class. If direct access to the spreadsheet is not possible, then the game can still be played – however, the instructor will need to spend more time projecting the results onto the screen and going back and forward between the various outputs as required.

Step one

The first step in the game is to explain how the game works. There is a video available on this website and on YouTube which highlights the mechanics of the game. There are also some PowerPoint slides that you can download and add to your presentation, if you would prefer to discuss the game directly.

The spreadsheet also includes visuals – of the positioning map and the various cost structures – that you could print out and provide to the student groups.

Generally, you find that some students grasp the concept of the game virtually immediately, whereas other students will have a series of questions. The best way to handle this is to provide, where possible, the student teams with direct access to a copy of the simulation game – which runs on Excel and is easy to use without much spreadsheet knowledge.

Therefore, after discussing the general principle of the game, provide time for the student groups to “play around with the spreadsheet” and for the group to try and discuss and further understand how the game works between themselves. At the end of this period, you should call for any questions on how the game works as part of the overall class discussion.

As an estimate this first step of understanding the mechanics of the game would generally take 10 to 20 minutes, depending on the age/level of the student group.

Step two

The next stage of the simulation game is for groups to make their first decision. In many cases this is the hardest decision because it is a decision made without any knowledge or understanding of what the competitive teams will do. When students have direct access to the spreadsheet, they can scenario test various possible approaches.

When the groups have made their positioning decision, they need to fill in a decision sheet for “round one” and hand it to the instructor. You will need to provide a time limit for this and every other decision – otherwise some groups will keep changing their mind and asking for more time. Depending upon the age/level, 10 to 20 minutes per decision round would be appropriate.

If you notice any groups making very quick decisions, it is worthwhile checking in with that group. If that is the case, there is a possibility that they do not really understand the game and are just making quick general decisions.

Step three

Once you have the completed decision sheets for all groups, then you enter it into your “master” spreadsheet. The spreadsheet has a built-in “budget check” (which is discussed in this article on how simulation game works) – therefore, a budget check issue may indicate you have keyed in the wrong decision or that you are playing the game “manually” and the student groups have miscalculated budget. Either way this situation needs to be rectified.

You should then project onto the screen the decision page only. You then ask each group to confirm if this is their correct decision. This is to check for any potential keying areas that the instructor may make.

It is important that only keying errors are corrected at this stage. Do not allow student groups to change their decision because they can now see the other teams/competitors decisions. You will need to go back and check their decision sheet – if they made an error that is their concern and you can highlight that businesses make mistakes in real life too.

Step four

Once you have confirmed the decisions are correct – if the student groups have direct access to the spreadsheet, then they can enter the same decisions, so everybody has a live copy of the current state of the market/game.

You then need to project onto the screen the market results/sales/profits. And before the teams get carried away in making the next decision, ask the teams to confirm that they have the same results as the ones that you are projecting, in order to check for any keying errors that individual group may make.

Alternatively, if you have access to some live learning management system, then you could actually post the updated game result spreadsheet – saving it as “game round one” (for example) – that the individual teams could then download.

Step five

Once each team has their own copy of the results – or if you’re playing manually they have written down the key results – then teams need to make the next decision.

At this stage, the teams now have access to some basic competitor information. However, the budget is often reduced because they have usually “invested” in positionings that will take several rounds to achieve payback. However, usually at this stage, all the teams have a good understanding of the mechanics of the game.

Therefore, you can now repeat the above steps over and over. The simulation game is set to run up to eight rounds – but you can stop early if required. Usually various an element of competition and if the results are close, most teams want to continue the game until the end.

Step six

This is that the conclusion of the game, we you should engage in class/group discussion as per some of the ideas listed in this article. There are numerous marketing topics that will be identified by the students, so usually the discussion is relatively rich and engaging – particularly if you give the groups time to formulate their ideas prior to a full class discussion.

Any feedback?

I would love to hear your experiences with running the game and any possible improvements that you may suggest. Please email me at geoff@greatideasforteachingmarketing.com

Jan 222017
 


Note: Also refer to the base information on the Marketing and Positioning Simulation Game for lecturers, as well as the “how to play guide”.

Teaching and discussion ideas

While the simulation game is quick to learn and relatively simple for students to understand, it does provide an insight to numerous marketing concepts and topics – making it an excellent learning activity.

The following is a suggestion of possible breakout discussion topics and questions that you could use to get further value from the game and reinforce marketing learning/topics.

Overall marketing concepts

Potentially one of the simplest ways to approach the discussion – after playing the game, which may take hours or potentially several classes – is to simply ask each team to discuss the key marketing concepts that they believe the game has highlighted to them. Each group would then report back about the key findings and how the game has helped them understand and reinforce various marketing concepts.

This is a great approach to self-learning and getting the students to reflect on the various tasks and activities have undertaken during the game.

Market segmentation and positioning

The game is constructed around a perceptual map, which represents four key market segments. Any of these market segments can be selected as target markets. The numbers within the market demand perceptual map represent sales volume/revenue for different aspects of positioning.

Hopefully this makes it clear to the students, that different consumers have different market needs – that consumers are generally similar within the segments (although not exactly identical) – that different positioning will generate different levels of sales and profits.

Therefore, it is possible to construct questions around what is market segmentation, what is positioning, why they are important, and so on.

Marketing and competitive strategy

Success in this particular game is often centered around the firm’s ability to construct a long-term plan and to make decisions relative to the competition. Therefore a good understanding of the competitors and their strategy is a key attribute of success. Therefore, you could have discussions around the importance of monitoring competitors, how easy it is it is to predict the behavior, and how this may be helpful in generating future profits for the firm.

Marketing metrics and financial metrics

The simulation game output is provided in a numerical and graphical form. The graphical form represents a “mini marketing dashboard”, while the numerical output represents various marketing and financial metrics. In this regard you could discuss the importance of marketing and financial metrics in helping the team make its future decisions. Likewise, you discuss the value of presenting data in a visual versus numerical/table form.

Marketing return on investment (ROMI)

One of the key challenges is to position/invest in new products while generating a positive return over time. Some of the positioning cells are quite expensive for the firm to develop and then may not provide a positive payback in the course of the game if they challenged by competitors.

Therefore, if appropriate, you could discuss the importance of considering payback on your marketing investment – what is an appropriate time frame? What calculations should the firm consider – such as possibly net present value?

Even if your class is not in a position to undertake some form of financial analysis, it should be fairly apparent that the concept of “payback” is critically important. Therefore you get them to discuss what is meant by payback and how that would factor into some of their investment decisions.

Customer lifetime value

In conjunction with the return on marketing investment above, is the discussion of customer lifetime value. This means that customers have value over time. In the simulation game, teams received a 20% bonus on their sales from the previous round – which is designed to represent a loyalty and price premium advantage.

Obviously, not all products will be profitable – so the discussion can turn to the importance of loyalty and generating a long-term sales/profits following a marketing investment.

Other ideas?

Depending upon the game in the mix of competitors in their approach, I often find that the marketing topics and concepts are pushed into new and unexpected directions – which you may also find. Therefore, please feel free to email me with your particular success and approaches and innovative ways of teaching marketing that you have been able to discover by the use of this marketing simulation game.

Jan 222017
 

How to Play the Marketing and Positioning Simulation Game

Welcome to the instructions on the Marketing and Positioning Simulation Game. This simulation game is designed for students of marketing, strategy, and business. Please note that the game is available for free download on this page… free marketing simulation game download page. Please note that this linked page also includes instructional videos and other information, primarily designed for the lecturer/teacher.

Objective of the Simulation Game

The goal of the simulation game is to make the most money (points). In marketing, marketing staff are normally hired to maximize the profitability of a firm – therefore, your team should look to maximize accumulated profits over the (up to) eight rounds of the simulation.

At the end of each decision round in the decision game, you will be provided with both numerical and graphical output (please refer to the diagram) of your profits to date (known as accumulated profits).

This is simply your revenue (sales) less positioning costs each round added together over the game rounds. In other words, it is the total amount of profit you have generated over the life of the game.

Your team goal is to be the leading team/firm at the end of the game. For example, in this image, Team 8 is the clear winner (with the most profits), while Teams 1 and 7 are the poorest performers.

Keep in mind that this simulation game is designed as a learning activity for marketing and strategy. Therefore, another objective of the game is for you to understand various marketing and strategic concepts. There are multiple business concepts that you will be exposed to when playing the game – and your instructor/teacher will help you in identifying and exploring these concepts further.

Main Decision: Where to Compete? (Positioning)

At the outset, this game appears to be “relatively” simple and straightforward – but don’t be fooled by this – like any game of strategy, it is quite complex and requires a good understanding of competitive behavior and payback on marketing investment (ROI).

You are competing in a market where consumers make decisions mainly based upon two attributes – namely quality and style/look. Therefore, this market could be: clothing, shoes and/or fashion accessories, household furniture, and so on.

Each positioning “cell” (as seen in the perceptual map), represents the level of market demand (sales/points) for every combination of positioning (using the two attributes of quality and style/look).

Your team has to decide “where to compete” (where to position) your products. Looking at the perceptual map, you can see that positioning cell “A10” is the most attractive (with 1,5000 points/sales) – but keep in mind that this could be the most competitive and it is more expensive to develop a product with the highest quality and the best style/look. In other words, while “A10” appears the most attractive at first glance, it might end up being a “profit trap” – it depends upon competitive actions and other possible opportunities.

Four main market segments

As you can see from the perceptual map above, there are four key target markets. These sit in cells “A10”, “D3”, “H3” and “I8”. These positioning cells are color-coded in a green color, indicating that they are quite attractive (yellow is moderately attractive and red is less attractive – in terms of base market demand/sales).

The “A10” cell represents the “status seekers” segment. They want the best quality product, with the best style/look and are happy to pay for it. That’s why they are the largest segment (most points) in the market. You should also note that the surrounding cells are also quite attractive in terms of game points.

The “C3” cell represents the “fashion conscious” segment. This segment of consumers want a good looking (relatively high style/look) product that is quite appealing and socially acceptable, but are happy to forego a high level of quality in order to purchase a more affordable product.

The “H3” cell represents the “budget conscious” market segment. This segment is happy to accept both a lower level of quality and more basic style/look, most likely to purchase a lower cost and more affordable product.

The final segment is centered around the “I8” positioning cell. This segment is the “quality focused” segment – as they are seeking high quality products, but are less concerned with the style/look (fashion) aspects of the product.

Note: When playing the simulation game, try to avoid qualitative assessments of where you would like to position your products. Instead, look at the market based upon profit/points opportunities, return on investment and the current and likely future behavior of your competitors.

Product Development and Positioning Costs (200 points per square)

Like most things in marketing, making decisions in the game costs money (or, in this case, points). You start with a basic generic product (please see the “START” cell) for free. This product has base level quality and base level style/look and no market demand either.

In order for your team to improve and develop the product (add quality and style/look attributes) it will cost you 200 points for every cell you choose to move (position). Please note that you can only move horizontally or vertically – not diagonally.

For example, if you want to position a new product in cell “H3: – the budget conscious segment – then this will cost your team 800 points (moving up two squares and then across two squares = four squares X 200 points each = 800 points in total.

Repositioning Costs (still 200 points per square)

Your team may choose to reposition your existing product/s at any time. You might choose to do this because your product is in a very competitive positioning cell or you might need two or more moves to develop your product to its desired positioning goal.

Either way, to keep the game consistent and simple, each cell that you choose to move costs the same 200 points per cell – as per the example diagram here.

Even if you reduce quality and/or style/look, there is still a 200 point cost in the game. This is because you need to both redesign the product and re-educate the market about the product and its particular attributes.

Your decision sheet

Here is a copy of your team’s decision sheet for the game – which your instructor will provide for you.

As you can see, your main decision is to decide on how many products to have in the market and where to position (which cells) to position your products.

In round one of the simulation game, your team starts with 5,000 points – this is your budget, to spend on positioning your products (as per the cost discussion above).

In your decision sheet , you need to enter (for each existing and proposed product) the positioning cell that you wish to target. Each of these decisions – if differ to the previous round – will cost your team points (as discussed above). If you have an existing product AND you don’t move it during that round, then there are no costs incurred.

You should carefully think about your marketing spend. In round one you have 5,000 points to spend. From round two onward, you have your accumulated profits in total to invest. But please ensure that you will get a financial payback on your investment – this is more critical near the end of the game (up to eight rounds maximum) as you will have less years/rounds to recoup your investment.

Please ensure that you maintain your products in the same sequence on the list in each decision round – otherwise the computer calculation will consider that you are repositioning the product and you will be charged points for repositioning – remember that one of your goals is to make your marketing investment as effective as possible.

Your only other entries on your decision sheet is your team number – that will not change during the game – and the round number and your budget for the round (which is provided to you at the start of each decision round – it is your accumulated profits at that time).

Game outputs and metrics

Here is most of the game outputs/results per round (please click to enlarge the image). The results for each team is provided. Take the time to consider and analyze the information – as a key part of success in the simulation is to understand your competitors’ strategies and to even predict their likely decisions.

As you can see, you are provided with: total team sales (revenue/points), resultant market share, sales/points of each team’s best selling product, total positioning costs (marketing investment), and revenue less costs gives you “net profit” for that round and how your team ranks for net profit.

Underneath we have the key metric for the simulation game, which is accumulated profits. The “winner” of the game is the team with the most accumulated profits by the end of the rounds. This is also ranked in order of best team performance.

On the right hand side of the individual team results, we have the total market and the average market results. This gives you a good understanding of how the total market is expanding and how you compared to the average team within the simulation game.

The next main section of the results output page is the individual sales result of each product within the marketplace by team. This is helpful information to understand which teams are performing well and why. You can then compare their sales results for an individual product back to the particular positioning cell that they are targeting in order to identify their success.

Armed with this information you may choose to directly target and compete with these successful competitors, or you may choose to seek out opportunities with less competition. Either way it is helpful information.

At the bottom of this section you’ll see total sales for each team – repeated from above – as well as the number of products that team has in the marketplace. Please remember that you have a maximum of 20 products to use and introduce during the game. There is no ability to withdraw products from the market once are entered and are established products in the marketplace. Alternatively, you should look to reposition poorly performing products instead.

On the right-hand side of the individual product sales you will find a listing of the top 10 best-performing products in the marketplace. This is helpful, particularly in a cluttered marketplace later in the game with it could be up to 200 products, to identify how many of the main selling products your team has in the market. Think of it like the top 10 TV shows for instance. You may choose to challenge some of the major firms with products in the top 10, and you should think about protecting your more successful products.

Finally, underneath the individual product sales results, there are three graphs presented which cover the main key metrics of “sales per round”, “profit per round”, and most importantly “accumulated profit”. It is this the graph – as discussed above – which is THE key metric for performance in the simulation game.

Another useful diagram that will be provided by your instructor/teacher is the number of products that are in each positioning cell – as shown here. The red colored cells indicate that there are a higher number of products competing in that particular cell, whereas the green cell indicates a lower level of competition.

This is a very helpful tool to enable you to select the most appropriate cells to target and reposition and develop new products for. Obviously, all of these tables and charts need to be used in conjunction with each other, to help you determine the best strategic choices for your team in the simulation game.

How the sales points work

This is a relatively straightforward calculation, with a slight twist. The points listed above representing market demand in the initial chart/perceptual map out the key number.

For example, if you have positioned a product in a cell that has 1,000 points listed, and your firm is the only one in that particular cell, then you will win 1,000 points in sales.However, if you are targeting a cell with 1,000 points, and there is another product in the same cell, then the points are equally distributed – 500 points each. Likewise, if there are five different products in a cell with a maximum of 1,000 points, then each team would generate 200 points.

If your team chooses to enter two products into the same cell, say worth 1,000 points again, then each of your products would earn 500 points each provided there was no other competitors targeting that cell. While this may seem a strange approach at first, by entering two products into the same positioning cell, you can substantially reduce the threat of new competition – as there is less incentive for competitors to choose to target that positioning cell.

A loyalty and price premium bonus

In addition to the above sales calculation, there is a simple “bonus” provided to the existing (not new) products in the market – whether they are predisposition or remain in the same positioning cell.

Existing products automatically earn an additional 20% of their previous sales. This represents the natural advantage existing products have the new product in the marketplace. This represents a “bonus” for likely customer loyalty, increased purchase frequency, and price premium ability.

For example, if you have a product in a cell that is worth 500 points and you are the only product in that cell, then you will win 500 points in the first round. In the next round, you will win 500 points plus a 20% bonus of the previous points – an extra 100 points – giving you 600 points in total. Likewise, in the very next round, you will win 500 points plus 20% of the previous 600 points, which is equal to 120, which is equal to 620 points in total.

However, say in that round, where you had 600 points previously, a new competitor enters that particular positioning cell. Therefore your points would be, half of 500 = 250 points plus 20% of the 600 (120 points) giving you 370 in total, whereas your competitor (being a new product) would win half of 500 points = 250 points.That is probably the most complex calculation you need to do in the simulation game. This provides an incentive to protect your high-performing products as a will generate a greater bonus for you. Whenever they are challenged by competitors, their bonus potential also decreases – so it is often in your interests to protect your major products.

A video of the simulation game rules and instructions

Here is a video – which repeats most of the above information – but may be helpful in clarifying some of the rules and approaches of the simulation game – good luck to all teams!

Jan 222017
 


Due to numerous requests, I have decided to develop and provide a free marketing simulation game for lecturers and instructors. One of the challenges of any simulation game is explaining, sometimes a complex set of rules, to students. Therefore, I have designed this simulation game to be simple and easy to understand, yet being complex enough to enable discussion of numerous marketing concepts.

Please note that the free marketing simulation game can be downloaded at the bottom of this page.

Please also refer to the teaching notes page and the instructor’s guide to running the game.

Flexible teams and simulation game lengths

Sometimes marketing simulation games are quite restrictive, requiring certain numbers of teams and using set starting positions. However, with this free marketing and positioning simulation game, up to 10 teams can participate at the one time – but the game will operate effectively with a small number of teams.

The game has been built to accommodate up to eight rounds. However, a smaller number of rounds can be played, as it is no requirement to finish all eight rounds.

This gives the instructor flexibility in terms of working with different size classes/groups and with different time constraints. Each decision would generally take student groups 15 to 60 minutes per round to complete (depending upon the level of the class and the level of analysis and the number of scenarios considered). Typically, a more advanced class will take longer to make decisions as they consider more competitors, analyze return on investment, look at different scenarios, and are more engaged in group discussion.

Fun to play, easy to understand

The game rules are fairly straightforward and quick to learn. There is a 15 minute video provided below that explains to student groups how to play the game. Therefore, a game could be up and running in that short space of time. In addition to the video, there is also a PowerPoint presentation – of the slides used in the video – if you would prefer to explain the game directly to your students yourself (this is also below).

I have used this game numerous times with university-level students and usually have a great success with class engagement and interest. Because there are not too many rules to remember, most students will proactively be involved, with the more advanced students becoming quite analytical and even considering aspects of game theory.

Excel-based

The simulation game has been built in Excel. It requires no special software to run and does not include any macros. All the calculations and graphs and team positions are calculated automatically.

All the instructor/teacher needs to do is enter the decisions of each team. This would only take several minutes per around and the results are automatically calculated and displayed in Excel, which can then be either provided in soft copy to students or shown via a projector to the entire class.

Easy to use

Because of the automated process – as discussed in the above section “Excel-based” – other than entering the team decisions, there is very little involvement required by the lecturer/teacher in terms of running the game. This means that the instructor can focus upon the marketing concepts and helping students/teams understand the competitive environment and how to look for positioning opportunities.

Covers many marketing concepts

There are multiple marketing and strategic concepts that would become apparent during the game, which provides a great learning tool for students.

In particular, the following marketing topics are addressed:

  • market segmentation
  • positioning and repositioning
  • competitive strategy
  • return on marketing investment and payback
  • customer lifetime value
  • the role of new products
  • game theory
  • marketing metrics and financial metrics
  • marketing dashboards

So depending upon your particular teaching needs, you can tailor your discussions and/or assignments and assessment tasks relative to the particular topic you want to discuss. Alternatively you can have a general discussion with the class after running the game, as to which particular marketing aspects they took away from the game – that is, being a self-teaching tool.

Obviously, because it is a relatively fun exercise, it is also a great team building activity – particularly to use early in the term/semester.

Video for Lecturers: How to Run the Marketing Simulation Game

Here are the PowerPoint slides used in the video if you would prefer to present/discuss the simulation game, instead of using the above video… How to Play PowerPoint – Marketing and Positioning Simulation Game

Video for Students: How to Play the Marketing Simulation Game

Please note that there is also an article on this website designed to help students compete in the simulation game.

Download for the free marketing and positioning simulation game here

Here is the Excel file for the sim game… Free-Marketing-and-Positioning-Simulation-Game

Once you have downloaded the simulation game, you can save the file for different terms/classes – such as “term one game”, and so on.

Let me know how it goes

If you do use the game for your class, please email me and let me know how it went.

geoff@greatideasforteachingmarketing.com

Jun 172016
 

Please note there is now a 2nd edition of the PMW

The first edition of the workbook, as discussed below, has been discontinued – click here to find out about the new 2nd edition (international version).

The Practical Marketing Workbook (first edition)

This workbook has over 200 student activities designed in a worksheet form. This means that you can photocopy pages for students and use them in class as individual or group activities.

Each activity contains its own instructions and spaces for students to write their responses. The workbook takes many of the exercises on Great Ideas for Teaching Marketing and turns them into worksheet-based activities.

 

Key Features of the Practical Marketing Workbook

  • Contains over 200 activities – all with simple instructions
  • Quick and easy to use
  • The ideal resource for teaching ‘Marketing Principles’
  • Also a great resource for ‘Consumer Behaviour’, ‘Promotions Management’ and ‘Marketing Strategy’
  • Provides variety and interest for students
  • Appeals to student’s different learning styles
  • Uses a mix of simple and more complex activities
  • Adaptable for both undergraduate and masters programs
  • Flexible for 1-2 hour tutorial sessions, or full 3 hour lectures
  • Reinforces theory and enables understanding and application
May 112016
 

Given the continued level of interest in the “new” Coke 1985 product replacement, I decided to put together a video for a student activity based upon the lead up to the decision. As you and your students will see, there were limited options for Coca-Cola to pursue given the sophisticated and ongoing marketing campaign from Pepsi.

Therefore, the following New Coke video outlines most of the key information – which can be used with the New Coke role play activity – and the question for your marketing students becomes… “what would you do???”

 

May 062016
 

KFC flavored nail polish – a brand too far?

KFC has introduced chicken flavored nail polish into their Hong Kong market. This new product (in 2016) is a significant extension to their brand. According to their publicity:

  • “This campaign is designed to be intriguing and fun to increase excitement around the KFC brand in Hong Kong.“

Student Activity

  1. Review KFC’s TV commercial for their flavored nail polish for the Hong Kong market. How well do you think it works as a persuasive message? Would this style of communication encourage younger consumers to become more engaged with the brand?
  2. What is the role of a brand extension (for most brands, not just KFC)?
  3. Do you agree with KFC’s decision to extend their brand to flavored nail polish? Why/why not?
  4. Do you think that they will be successful with their goal of increasing excitement around the brand in Hong Kong?
  5. Could this be a new product that KFC could also launch successfully in other countries?
  6. What other brand extension ideas do you have for KFC?
May 042016
 


The student activity is based around a video for a brand of healthy drinks called “neuro”. The video shows the brand being promoted using a variety of promotional tools.

The goal of this activity is to simply get students to:

  • identify and list the range of communication tools shown in the video
  • discuss which of the tools would be the most important in the overall campaign, and
  • discuss how they think the campaign elements and tools works together.

Here is some information on the brand from their website:

neuro. The Drinks.

Every neuro drink starts as an idea to help solve a problem faced by real people every day. Life throws a lot at us, neuro drinks are designed to make things better.

It’s our mission to create great tasting drinks that do great things for people. neuro drinks help, providing enhanced energy and focus, a protective dose of key vitamins and nutrients, a serene, calming mood, even a full night of restful sleep. To make a truly innovative line of drinks we had to think differently. We looked at what was wrong or missing from much of what is offered in grocery stores, healthy markets and online. What we left out speaks as strongly about neuro drinks as what we put in.

Apr 242016
 

Introduction

Real Burger World (or RBW as it later became known) was a small hamburger chain established in the UK in the early 2000’s. Despite a significant financial investment, professional management, the use of branding consultants, and extensive media coverage, the business did not prove to be viable and closed within a few years.

This case study is based upon the real life experience of RBW. As RBW was a private company, their actual financial and sales data is unavailable – any numerical information contained in this case study is for study and academic purposes only and is not intended to reflect the actual position of the firm.

The origins of RBW

The inspiration for RBW came to Naz Choudhury one night in London when he was heading home from work late one night. Naz was hungry and the only quick/convenient food options available to him at that time were the traditional fast food chains, such as McDonald’s and Domino’s. So the light globe went on over Naz’s head – “why isn’t there a healthy, higher quality ‘fast food’ chain in the market?” Hence, the concept of RBW was born in a visionary moment.

Naz was so excited that he raced home and jumped onto his computer and started to type out a vision and plan for his fast, but real, food chain – much like the scene in the Jerry McGuire movie, when Tom Cruise’s character has a vision of sports agents building real relationships with their clients. And much like Tom Cruise in the movie, Naz sets out to make his vision a reality.

In the movie, Tom’s partner was played by Renee Zellweger (“you had me at hello”), but in the real life sage of RBW, Naz’s initial business partner was Mark Viegas, a long-time friend. Mark was employed as an industrial chemist, but was so persuaded by Naz’s vision of a real burger empire that, not only did he quit his job, but like Naz he sold his apartment and they both invested around 100,000 UK Pounds plus into the new venture.

Naz and Mark were able to secure a further investment from a business angel (a silent partner – at least initially) and collectively the three of them had start-up capital of more than 300,000 UK Pounds (approximately $500,000 USD) to create a franchised real burger empire that they planned would conquer the UK first and then the rest of Europe.

The market – at that time

McDonald’s was born in the 1950’s when the McDonald’s brothers opened their first store. After Ray Kroc took over and started franchising successfully in the early 1960’s, the McDonald’s juggernaut was able to deliver increased profits consistently every year for around 50 years – up until the turn of the century . In around the year 2000, McDonald’s had its first profit setback and revenues stated to fall. The underlying trend – of healthier and more diverse choices – had caught up with them.

You probably have noticed the extent to which McDonald’s has diversified its food offerings over the last decade or so, including higher quality and healthier food choices. This is the trend that RBW wanted to tap into in order to execute their growth plan. Also keep in mind that 98% fat free products started to emerge in the early 1990’s and organic food products were also starting to grow in popularity.

Therefore, as you can see, Naz and his RBW “vision” appeared to be “on trend” – and he had the money, the motivation and the opportunity – so what went wrong?

RBW’s initial focus

The long-term plan was to turn Real Burger World into a successful franchise business. Typically franchises schemes start with that end goal in mind and strive to structure and refine two to three successful outlets first before they start their franchising efforts. This was the intended plan of Real Burger World – set up two successful stores and look to a franchised operation throughout the balance of the UK and then onward throughout Europe.

A key part of this initial strategy and overall direction was the importance of brand equity building. Naz saw the success of the venture being built around “brand”. Although he was running a fast food operation, he saw that the longevity and financial success of the organization depended upon the creation of a strong brand. A strong brand would generate ongoing franchisee sales, as well as strong customer loyalty and communicate key points of difference.

As a result, during the development the Real Burger World operation they engaged the services of a specialist branding company to help in the design of their second store in particular, as well as help them with logo design and generating media attention. Obviously, this was a reasonably expensive exercise that depleted some of their start-up capital.

Media attention

Fortunately – or unfortunately – depending upon your viewpoint, RBW was able to secure the publicity and media attention of a reality TV show in the UK on Channel 4 known as “Risking It All”. This TV series profiled start-up operations and entrepreneurs and highlighted their challenges and successes. The TV show ran for two series and during that time RBW was highlighted in two episodes, bringing their brand to millions of viewers in the UK at the time.

The first episode focused upon the set-up of the first store and the various challenges and setbacks that they faced, while the second episode reviewed their performance after the store had been established and highlighted their plans to create a second store. In particular, it highlighted the changes in store-design, product process, and overall menu that they had implemented as a result of their learning and experience from the first store.

At the end of the first episode, the financial realities of supporting an individual store that had franchise aspirations were acknowledged. When the end goal is to create a franchise system, then there are additional costs associated with the operations of the store. It becomes more than just a local hamburger joint – and becomes the starting point of “something special”.

The additional costs were to prove overly significant and there was a decision made to let Mark leave the organization – in order to reduce the cost structure – and the silent investor became an active partner in the business. Through this transaction, this silent partner was then willing to invest further funds in order to set up a second store.

The second store

The first store had numerous difficulties as highlighted on the TV series (as will be outlined below). However, based upon the learnings of the first shop, it was anticipated that the second store would be better located, better structured, better staffed, have a better menu – and would become their template for the franchise system throughout the UK and the balance of Europe.

The design of the second store was significantly different to the “fast food” look and feel of the first store. It was friendlier, more modern, and was more spacious. It created clear expectations for the amount of time (around 7 to 10 minutes) that customers needed to wait for “real food”. The seating areas were more comfortable and the overall atmosphere was more exciting and interesting.

Despite changing the store design significantly, and altering the overall atmosphere, the basic problems of the first store were not adequately addressed and unfortunately carried over. As a result, the second store did not achieve the level of sales required to generate a viable business and to attract potential franchisees. This meant that the vision of Naz had ended after only two stores – despite a significant level of effort, a willingness to learn, a willingness to succeed, and a significant overall investment.

The problems with the first store

The first episode of “Risking It All”, which highlighted Real Burger World, concentrated upon the implementation of its first store. Unfortunately, while Naz had the entrepreneurial vision and spirit, the overall execution of his plan was not ideal.

There were several fundamental errors made which limited the potential of his concept. The first was that they started “fitting out” the store prior to signing the official lease. Upstairs from the store, the owner of the building was developing apartments to sell and decided that a fast food outlet would distract from his sale prices. At this time, Naz and Mark had invested significant time and money into the structure of the first store. They were forced to negotiate from a weakened position. One of the key concessions of the negotiations was to rename the business from Real Burger World to just RBW.

But it just didn’t end there in terms of things that unfortunately went wrong. In all good intentions, they hired a friend of theirs to be the manager of the store. Not only did this add to the overall cost structure of the operation, but surprisingly their friend had not worked in a fast food outlet before.

Compounding the problem with the store management was the store design was based upon a concept of how it should look/feel to the consumer without consideration of the serving time and the preparation of food. In other words, the store design, particularly the kitchen area, was not overly supportive of a streamlined food preparation operation.

Upon realizing the extent of their limited service time and delays, Naz and Mark hired a professional consultant in the area of fast food operational aspects. This consultant was immediately concerned with the preparation and service time which was generally in the order of 7 to 10 minutes. This consultant recommended several changes which were not consistent with the original “vision” of Naz and included the precooking and/or use of frozen products.

While the vision was aligned to the significant growing trend of health and even organic food, RBW did not position themselves in that particular space. Instead, they focused on the word “real” – which communicated that their food was fresh, chemical free, preservative free, not frozen, not precooked. So as you can see, we have a dilemma – we have a fast food consultant recommending that the way to increase service and delivery times is to violate the basic underlying vision and values of the business.

This is where the second store was to come into play. Not only was the second store improved in terms of the customer experience, but the kitchen and food preparation area were more structured around a timely and efficient manner. The brand continued to promote the fact that it was providing “real” food, and try to build the expectation in the customer’s mind that real/quality food was worth waiting for. To help build this expectation they had signage around the store indicating that the food was “worth the wait”.

Another recommendation of the consultant that the two partners did adopt was to replace their friend as store manager and hire a professional/experienced manager of a fast food operation. This helped make a difference to the speed of their operation, as well as the motivation and training of the day-to-day staff.

Menu design

One of the key elements of the operation’s marketing mix that did not substantially change between the two stores was their menu and burger designs. Perhaps surprisingly, without any professional cooking/chef experience, both Naz and Mark took it upon themselves to design the burgers and menu items. To achieve this end, they went to local stores/markets initially and then prepared burgers in their own kitchen. Without consideration to the cooking environment/store structure, they determined a menu range that would be offered within both stores.

There were mixed reactions to their burger products, as highlighted on the two episodes of the TV reality show. Some products were highly successful, such as their natural shakes/fruit drinks and their chips/wedges that still had part of the potato skin on. However, their burger range was somewhat lacking in appeal. For instance, in the second episode, there were a group of male teens who purchased burgers at a store across the road and then came to RBW for their shakes only. Clearly, the fast food chain had a “share of customer” (known as “share of stomach” in the fast food industry) problem that they were not readily addressing.

Promotional activities

Up until Mark left the business as a full-time partner, he essentially assumed the role of a promotions manager (although it was referred to as marketing manager on the TV series). In this regard, Mark was very active and conducted a whole series of marketing experiments – to reasonably varying degrees of success.

For instance, he had a “protest” against the local McDonald’s store nearby their first store. Mark himself as dressed as an angry Ronald McDonald, and was protesting against processed and encouraging the local commuters/passers-by to visit RBW where they could sample “real” fast food. On another occasion, he had a discount burger day, and also he had a free burger day – provided you bought another product.

While these activities may sound a little extreme, it is important to note that in the early days of the business – given the long-term franchising goal – it was necessary to build brand awareness, establish positioning, and generate an initial trial of their food products. To this end, it needs to be acknowledged that Mark was very successful in achieving these goals. However, for some reason, the Real Burger World concept failed to generate sufficient repeat business to be viable, relative to their underlying cost structure.

Cost structure

As indicated in the first episode of the TV show, the breakeven point of the operation (when they only had one store) was approximately 1000 UK Pounds per day (which is equivalent to $2,000 US) and equates to $400,000(AUD) per year in order to just break even.

So the question is how can a local hamburger store have such a high underlying cost structure? As you can imagine, this is not a common cost structure for the local take away food place. However, we need to consider the long-term goals of Real Burger World, which was to create a successful franchise chain. Therefore, the costs were much higher than a local take away due to: two full-time managers that were not involved in the day-to-day operations of the business, the use of branding and other consultants, the willingness to reinvent the store design, the investment in promotional activities, and the use of discounting (penetration pricing) in the early stages in order to generate a higher number of first-time customers.

Why the second store?

It is clear that the second store was opened and redesigned despite the first store not being viable at the time. So how could this happen? The obvious answer relates back to the underlying goal of the business and its long-term intent. This business was primarily structured to become a franchise system. The owners and investors in the business simply needed to demonstrate that one or two stores could become quite viable and then they could be demonstrated to potential franchisees, who would then invest their own capital to expand business/brand.

Therefore, Naz, Mark and the silent investor viewed the initial store as a “marketing experiment”. While they had hoped that the initial store design, process, and menu offering were to be successful, they also took the view that this was a “market test” that would provide valuable feedback for the long-term goals of competing against the major players in the fast food arena. While they did learn valuable lessons from the first store, particularly in terms of store design and managing customer expectations, perhaps they should have had a closer look at their product range?

Key lessons?

Certainly Naz and Mark had the commitment to make this business a success and were willing to invest a significant amount of their own money to achieve the vision. Like most entrepreneurs, they believed that they were on a winning pathway and thought it presented a significant market opportunity as they were tapping in to a key trend and a gap in the marketplace. In Australia, around the same time, it should be noted that Crust Gourmet Pizza stores were tapping into the same trend and would ultimately become very successful and implement a franchise structure/system and eventually sell their operation to a major corporation.

And like a successful and adaptive marketer, they were willing to learn from their mistakes and to view their decisions as ways to generate “market feedback” about what worked and what was less responsive. It is difficult to accuse these two partners of being overly committed to their original decisions – they were willing to hire a new store manager, willing to redesign the stores, willing to implement different promotional tactics, willing to “expose” their business and decision-making on two episodes of a reality TV show, and so on.

The two partners, as betrayed on the TV show, were certainly likable and hard-working and it is disappointing that two risk-taking entrepreneurs were not able to make a difference in this market. As previously mentioned, since the RBW concept was implemented, McDonald’s has adapted to the changing marketplace. For instance, in recent years McDonald’s has broadened their food offering (to include: upmarket burgers, salads, create your own tastes, fruit shakes, gourmet coffees, and so on), they have relaxed the look/feel of the stores and reinforced the quality/natural ingredients.

Therefore, one would have to assume that it was either a question of timing, limited branding, overrun of cost expenditure, product design, or overall strategic execution – and probably a combination of all these – that did not deliver the results of the initial Real Burger World vision.

Questions to address

  1. Given that the brand had the long-term goal of building a franchise system, which was reliant upon a strong and successful brand being developed, do you think that they were too focused on brand and not focused enough on their process and operations?
  2. Highlight the intent of the various promotional activities, the redesign of the store, and other marketing aspects as listed in the case. What was the firm attempting to achieve with these activities? (Hint: Think beyond just acquiring new customers.)
  3. Based upon the information within the case study, what recommendations for the two business owners in order to achieve their business goals?
Feb 242016
 

Teaching Notes

This activity is designed to introduce students to the for/against of adapting a global firm’s product mix to meet local needs in host countries. Students first review a short video and then address specific questions on international marketing.

Student task

Student Discussion Questions

  1. McDonald’s is a strong global brand, does their variety of food throughout the world help to strengthen or weaken their positioning and brand image?
  2. From a cost and logistics perspective, would McDonald’s prefer a standardized or localized menu across the world?
  3. What are the risks inherent in McDonald’s trying to compete in local markets against local “experts”? (For example, a Mexican menu item in Mexico?)
  4. Is this approach (of localized menu items) likely to deliver more or less innovation across all of McDonald’s operations (worldwide)?
  5. Taking these above questions in account, plus your other thoughts, list the advantages and disadvantages of this menu adaption strategy to McDonald’s.
  6. And an easy question to finish with, what other product/menu ideas do you think that McDonald’s could introduce?