Expert answer:Simulation Assignment
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Q-1 Who are MM’s target customers? Are all segments equally attractive to MM? If yes,
why? If not, why not? How do the different segments’ need and expectations evolve over
time?
Simulation is a market strategy tool that helps in making strategy decision. GTM is a strategy
help companies to determine how to approach customer and achieve competitive advantage. The
objective is to achieve the maximum overall market share and profits of MM’s Motors in the
present market environment and make customer happy and satisfied.
In Segment A, MM have a competitive position with competitors and customer advantage. When
I Increase in power-to-size ratio and good customer service, it improves overall market and
satisfied the customer.
Segment B, is a very unstable. Since we cannot compete in thermal resistance, I was unable to
satisfy them. So the market share in this segment is not very high.
For Segment C, the customer has the most perceptive towards price as compared to all the other
segments. By increasing the sales force, I was able to satisfy this customer.
Segment D is a potential customer as they are more satisfied with the motor performance. In
order to satisfy this segment, I had to increase the discount rate and decreased the sales force
which resulted in an increase in our sales and revenue.
Also, distributors play a significant role by taking care of small buyers as this segment is more
price sensitive.
Q-2 How does customer satisfaction change over time? How do you balance hard
performance metrics such as revenues and profits with soft metrics such as customer
satisfaction?
In the motor industry, MM has an extreme competitive advantage. In order to keep the customers
satisfied, I increased the customer service and provided better quality.
Since most of MM sales were coming from the large customer, it was important to keep them
satisfied as well. For our small customers, the goal was for our distributors to try and satisfy
them by implementing their own marketing. In this scenario, I focused mainly on customer A
and D; to keep segment B and C satisfied, I prevented negative marketing as this segments
continued to buy from MM.
In order to sustain and compete with MM competitors in the market, my target customer were (A
and D) to gain higher revenue and profits.
In conclusion, the customer service is very important in keeping customer satisfaction. Also, I
realized that if MM spends on R&D and improve their quality, then it helped in achieving extra
value to MM business.
Q-3 How does customer satisfaction relate to customer loyalty?
Customer loyalty can be measured by the relationships between MM and their customers which
is critically important.
During my run, I realized that the large customers were not satisfied with MM sales force.
Therefore, I increased spending on large customers. In order to make them satisfied, it was very
important to work closely to meet their needs. Also, it was very important for MM to pay equal
attention to all its customers and also spend on R&D to keep up with new market trends and
achieve competitive advantage.
Q-4 How should you manage MM pricing? What does it take to justify price increase? How
does price discounting affect the outcome?
To gain a competitive advantage in the market, it was very important to keep MM customers
satisfied with the pricing which was to offer to them good discounts. To gain a market share
price acts as the main source. By investing in power-to-size ratio MM provides more value for
our product. Segment A, B & C were not price sensitive as this customer were more focused on
operational effectiveness. However, Segment D and distributors were price sensitive, so I gave
them some extra discount since they focused on price. MM competitors have a large percentage
of the market share their pricing is lower making price the game changer in the market.
Q-5 How do you balance short-term and long-term investments?
Short-term investment gives good results immediately however; it could result in a loss in the
long run. Long-term investment is for a longer period of time which does not provide immediate
results but will give results in future.
To achieve competitive advantage, I have concentrated on improving our product’s power-tosize ratio to build a good brand image. Also, the market research helped me analyze and know
my overall market share. As I focused on power-to-size ratio, I saw a shift in our competitors
from power-to-size to high thermal resistance products. As I reduced the thermal resistance
product, there was a shift in the market behavior. Doing this, I increased the efficiency of
manufacturing to keep the cost under control.
Q-6 How does channel conflict figure into your pricing decisions? How do you minimize
channel conflict?
There are three different types of channel conflict:
1. Multi-channel conflicts: This conflict occurs when the industrialist wants to establish
more than two channels which deliver its sales to the same market. As part of the MM
strategy, I did not put a lot of focus on small customers as they are well taken care of by
our distributors.
2. Vertical channel conflicts: This conflict occurs when manufacturers begin to use direct
sales in advertising their products directly to consumers. To minimize this conflict,
manufacturers also had to team up with the distributors.
3. Horizontal channel conflicts: This disagreement occurs when two firms use the same
channel. In this situation, firms compete by lowering down the price and attracting more
customers.
Thank you for reading,
…
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