Monthly Archives: November 2018

Sunil Abinandan's Smartsims Journey from student to employee

Student Success Stories: Journey from a MikesBikes Business Simulation Student to a Smartsims Employee

Get to know the latest addition to the Smartsims Team, Sunil Abinandan. He shares his experiences doing the MikesBikes Advanced simulation as a student, mentor and how these successfully helped him land the job here at Smartsims!  Continue reading Student Success Stories: Journey from a MikesBikes Business Simulation Student to a Smartsims Employee

Music2Go Inventory Costs

Question of the Week: What are the Inventory Costs in Music2Go Marketing Simulation?

There are two types of inventory costs in Music2Go.

Inventory Holding Cost

Each year all firms are charged 3.5% of the value of their average closing inventory for inventory holding costs to cover the cost of warehousing etc.

For instance, if you have 1 million units of unsold stock at the end of the year at a cost of $40 per unit, then you have $40 million of inventory which will cost:

3.5% *$40 million = $1.4m in holding cost

Inventory Disposal Loss

If a firm updates a product with a new design or abandons it altogether then all existing inventory is dumped at 93.5% of what the firm paid for it.

Example:

$1 million of inventory would be dumped for $935K giving a loss of $65K.

You can gather some valuable market research from looking at the figures for your competitors. Firms that have no inventory holding costs have stocked out, because they are under forecasting demand for their products. Firms with large inventories are over forecasting demand. If you see any inventory disposal costs, then you know that your competitor has either updated an existing product’s design or abandoned one.

Related Articles:

How to Set Retailer Price and Retailer Margin in Music2Go

Improving Total Marketing Contribution

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Reference: 

This Photo by Unknown Author is licensed under CC BY

AdSim Marketing Plan Budget Report

ADSIM ADVERTISING SIMULATION REPORT GUIDE: Budget Report

What is the Budget Report?

The budget report shows you your annual budget, how this is currently being spent and how much budget is remaining. You can access this report by clicking on the Live Forecast widget (top right of all decision screens), on your Home page and under the Reports menu.

Related: Industry Benchmark Report

Need extra help?

  • You can receive an immediate answer to a number of commonly asked questions through our Support Center.
  • Contact us here.
AdSim Advertising Simulation by Smartsims Industry Benchmark Report

AdSim Advertising Simulation Report Guide: Industry Benchmark Report

The Industry Benchmark Report is a summary of all firms’ key results so you can benchmark yourself against your competitors. Click on the image below for an example report:

The Sales Revenue listed for each is the total wholesale sales revenue for each company’s products.

The Cost of Goods Sold is the number of units of a particular product sold multiplied by its manufacturing cost.

Gross Margin is the amount of profit that each firm made after the manufacturing costs were deducted.

Note: You have no control over either the wholesale price or the manufacturing cost of your product, so your aim to maximize sales revenue by running the most cost effective advertising campaign that you can.

The Evaluation Research expenditure lets you know how much market research your competitors are purchasing.

The Agency Fees let you know whether your competitors are using an Agency or not and how much it is costing them.

The Media Advertising expenditure allows you to see how much money your competitors are spending on Advertising, but now how they are allocating it to each media type.

Marketing Contribution is the amount of profit remaining after manufacturing (cost of goods sold) and marketing expenditures have been deducted. This is a measure of how profitable your firm is as a result of your decisions.

Need more help?

  • You can receive an immediate answer to a number of commonly asked questions through our Support Center.
  • Contact us here.

MikesBikes Introduction Report Guide: Market Summary

What is the Market Summary Report?

The Market Summary Report is a market research report giving a side-by-side comparison of all the products currently being sold in the market.

MikesBikes Introduction Market Summary Report

8 Key Pieces of Information

Sales

Sales is simply how many units the particular product sold last year.

Retail Price

Retail Price is the recommended retail price that each firm set for their product(s). You need to remember that the wholesale price is retail price minus the retailer margin, so it’s possible that a cheaper product than yours might have a higher wholesale price if that firm has lower retail margins.

Awareness

Awareness is a measure of how many consumers in that segment are aware of your product due to your corporate brand advertising and product advertising.

An awareness rating of 0.50 means that 50% of the consumers in that segment are aware of your product. When trying to raise the awareness level of your product(s), you need to pay attention to making sure that you are targeting your budgets to the media types that the particular segment watches the most.

Public Relations (PR)

PR is a measure of how many consumers in that segment have a “good” public relations image of your product due to your PR expenditure. When consumers read bike magazines you want them to see your product being reviewed and talked about and that is what your PR budgets are for. A PR rating of 0.40 means that 40% of the consumers in that segment have heard some good PR about your product.

Distribution

The distribution rating is a measure of how much distribution coverage your product has. A distribution rating of 0.65 means that 65% of consumers in that segment will find your product in a store they regularly shop at.

The only way to improve your distribution rating is to convince more stores to stock
your bikes

Quality

The quality rating is a measure of how many units of your product are returned under warranty. If approximately 2% of your sales are returned under warranty then your rating will be approximately 0.50, but if you can reduce it to approximately 0.3% of your sales being returned under warranty then your quality rating will rise to 0.90. In MikesBikes the only control you have over quality is how much money you allocate to your quality improvement budget each year.

Delivery

Delivery is a measure of how often your retailers run out of stock of your bikes. A delivery performance rating of 1.0 means that your factory never stocks out of bikes, however if your factory stocks out of bikes this year, then next year your delivery performance rating will fall. The lower your delivery performance rating, the less likely that retailers will want to stock your bikes. However be careful, as some segments are more sensitive than others to stocking out.

Product Specs

The “product specs” rating is a measure of how close your product is to the segment’s ideal dimensions for “tech” and “style”. A rating of 1.0 means that your product is 100% what the segments wants, a rating of less than 1.0 means that it is not. As MikesBikes progresses you will be offered numerous product development projects that will improve the product spec ratings of your products, if your product spec ratings are lower than your competitors it means that they are spending more money on product development than you are.

Check out the last MikesBikes Intro Report Guide here:

Industry Benchmark Report

MikesBikes Intro Report Guide - Industry Benchmark Report

MikesBikes Introduction Report Guide: Industry Benchmark Report

What is the Industry Benchmark Report?

This report is a summary of all firms’ Key Financial results, which you can use to benchmark yourself against your competitors.

In MikesBikes Introduction, this report is divided into four sections: Financial Results, Customer Satisfaction, Internal Results and Innovation Learning.

Financial Results

MikesBikes Intro Financial Results

There are two key variables that you need to understand in this section, Share Price and Shareholder Value.

Your Share Price is the current market price of one share in your firm; the main drivers of share price are your average earnings per share (EPS) and your D/E ratio. If you want to improve your Share Price then you need to keep improving your EPS and to keep your D/E ratio below 1.0.

Shareholder Value is a measure of how much value a shareholder has received from owning one share of your company from the moment you took over running your firm. So Shareholder value is the current Share Price, plus the accumulated dividends that you have paid with 10% compound interest.

Customer Satisfaction

Customer Satisfaction in MikesBikes Intro Most of the fields here should be self-explanatory. However, you need to be aware that the Distribution Channel support figures include both your Extra Support (sales promotion support) spending and the annual support cost of supporting all the retailers that currently stock your products. Distribution Information (Distribution and Branding > Reports tab) report details what those annual costs are.

So every firm that has at least one store stocking its products will be spending at least a couple of hundred dollars. To see what their sales promotion budgets are, view the Multi-Firm Retailer Margins and Extra Support report under “Firm Marketing”.

Internal Results

Internal Results in Mikesbikes intro

The main purpose of this section of the report is so that you can compare your production efficiency strategy with your competitors. Make sure to compare your wastage results and number of products. The lower the production efficiency budget and the higher the number of products (more setup time), then the worse a firm’s wastage value will be.

Innovation and Learning

Innovation and Learning in Mikesbikes intro

Monitor how much your competitor(s) are spending on product development, it means that they are either making their products cheaper to produce, more attractive to the market or both. If you let a competitor get a significant production cost advantage over you then they will easily win any price wars involving that product.

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Check out the Smartsims Support Center or contact us here.