Monthly Archives: May 2019

Perceptual Map in Music2Go

Question of the Week: What is the Perceptual Map in Music2Go Marketing Simulation?

Perceptual Map

The Perceptual Map is a convenient way of visualizing the differences between the different market segments in terms of the different level of Style / Design and Technical Specifications that each of the market segments desire. The center of these circles represents an “ideal” product for each market segment. So demand for your products will be higher if they are closer to the center of these circles.

Segment Movement Over Time

The style/tech preferences of the market segments will change over time. The Standard Segment moves relatively slowly, the Youth Segment moves at a moderate rate and the Sports Segment moves quickly on the perceptual map.

Perceptual Map Comparison in Music2Go

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New and Existing Customers in AdSim

Two Market Segments in AdSim Advertising Simulation

Your market analyst in AdSim have suggested dividing the market into two segments: Existing Digital Camera owners and New Digital Camera owners.

Existing Customers

This is the base segment of market demand and as stated above the simulation starts off with approximately 1.7 million Existing Customers with approximately half of them expected to purchase a new Digital Camera each year.

Each year the number of Existing Customers will increase by the number of New
Customers purchasing Digital Cameras.

Existing Customers are characterized by being far more technologically savvy and more likely to be ready for a more complex Digital Camera with more features. They already know how to operate a Digital Camera so they are less impressed by firms’ support claims and more interested in Consumer Sales Promotions, Loyalty Programs and Warranty Lengths.

The initial Existing Customer base will largely be made up of technophile early
adopters, but this will change over time as the early majority swells the market from 1 million to 3 million annual sales per year. These adopters are less avid TV and Radio listeners than the general populations, and they read more.

In general, Existing Customers are a little more “price sensitive” than New Customers and they are looking for a deal.

Your firm anticipates approximately 15% growth per year in this market segment.

New Customers

The New Customers will initially be the early majority entering the market and by
the end of the simulation it will be the start of the late majority.

These customers will largely be “Middle America”, Families and Professionals wanting to digitally capture special moments in their life.

In general, New Customers are a little less “price sensitive” than Existing Customers; they are looking for an easy to use Digital Camera with good after sales support, and are prepared to pay a little more to guarantee that.

Your firm expects the number of new customers entering the market to grow by
approximately 15% per year.

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Staff Salary, Training and Motivation level

MikesBikes Advanced Question of the Week: What happens if you invest in people and they leave?

Invest in developing your people in MikesBikes
By Peter Baeklund

Good people will stay longer, are more motivated and will work harder if you provide them with an opportunity to learn, and grow.

Some people will choose comfort and security, even if they’re not fully engaged with their jobs. This is both bad for them and for you.

According to current research, opportunity for growth and development are still two of the most powerful motivators.

Your business is nothing more than the collective energy and efforts of the people working with and for you. 

If you want to make your business better, invest in your people. They’ll get the job done.

Jim Bouchard

So what does this mean for you in MikesBikes?

Not sufficiently investing in training your staff, poorly paid workers and/or firing workers due to inaccurate capacity calculation will often result in a low skill and motivation index. In addition, another negative outcome of this is an increase in staff turnover rate, which means your products’ quality will also suffer.

So what should you do to ensure that your staff are highly motivated?

1. Pay your staff well

Workers are more motivated when they are paid well.

The average salary level you set will affect not only your bottom line, but also worker motivation and effectiveness. Factory workers are paid (on average) the rate you select. Administration staff are paid (on average) twice the rate. For comparison purposes, the average industry salary is $25,000 per year.

The graph below shows the motivation index achieved by changing the firm’s average salary from $25,000. The effect would be increased by sustaining the salary changes across succeeding years.

2. Train your staff 

You need to think carefully about the relationship between your overall strategy and how employee motivation and employee skill levels relate to that, especially if your strategy is to be a low cost, high volume manufacturer.

In general, well trained and motivated workers are more productive than poorly trained workers, so you need to employ fewer workers to achieve a given level of worker capacity. If your workers are well trained and motivated you need fewer Administration staff.

Well trained workers are a significant factor in improving your internal quality. Workers are more motivated when they are paid more and when they are well trained. They are less motivated when you fire other workers as their feeling of job security decreases.

The graph below shows the effect of job cuts on morale and staff turnover rate.

Poorly motivated and poorly trained workers can contribute to significant staff
turnover (sometimes as high as 40% to 50% per year). That gets expensive because each worker than is replaced costs $4,000 to replace. Also each new  worker arrives with a minimum level of training, so your average employee skill level is reduced which lowers your internal quality. So remember to maintain an appropriate balance in managing your workforce rather than using a ‘slave labor’ model even if your overall strategy is to be a low cost manufacturer.

3. Pay close attention to your workforce

Keep track of your staff’s Skill Index, Motivation Index and the Staff Turnover Rate by referring to the Manufacturing Quality Report every rollover. You can find this report in the Manufacturing menu > Reports tab and navigate down to the report.

Manufacturing Quality Report MikesBikes

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Common Mistakes in AdSim Article

Common Mistakes in AdSim

When you repeat a mistake, it’s not a mistake anymore. It’s a decision.

-Paulo Coehlo

Over the years, we have noticed a few common mistakes that students make in the simulation that will be reflected in real-life if not learned from. We want you to learn from these mistakes and know how to resolve them.

Here are three of the common mistakes we see AdSim users make:

Mistake #1: Not getting the Message Strategy right

message strategy in AdSim

Getting the Message Strategy is message strategy is vital. This will be used to position your brand using your advertisements and therefore has a large bearing on your Advertising.

The purpose of a Message Strategy in AdSm is to establish your brand position to ensure that you are effectively targeting your customers through media advertising with a message that they will respond to. You will be able to measure the effectiveness of your Message Strategy decision through two market research reports:

  • The Advertising Evaluation Report – this shows your adverts to a focus group from your market segment and asking them to rate your campaign’s appeal.
  • The Tracking Study Report – shows a comparison of your product’s top of mind brand awareness versus its unaided brand awareness. The better your brand position, the higher your top of mind brand awareness will be.

Mistake #2: Not making Customer Relationship Management  (CRM) decisions based on market researchCRM decisions in AdSim

Retention of Existing Customers is a key part of how to win AdSim and this is your main decision for keeping them satisfied with your Customer Service Level.

The purpose of a Customer Relationship Management strategy in AdSim is to decide which policies you will implement to try and keep Existing Customers loyal to your Digital Camera brand. Each option has an associated cost. Generally, the greater the cost of the option, the more appeal it will have to your market.

You will be able to measure the effectiveness of your Customer Relationship Management strategy through two market research reports:

Mistake #3: Not spending all your Marketing Plan Budget and not purchasing Market Research Reports

Marketing Plan Budget report in AdSim

You need to ensure that you spend all your marketing budget as funds do not carryover on to the next year if left unspent.

You can look at investing it in activities where you think the return will more than cover the cost.  In addition, you can also allocate it towards purchasing additional market research reports.

Market Research Reports in AdSim

Information has value and by investing on these reports, you are making more informed decisions.

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Adrian Cenon University of Auckland student

Student Success Stories: Adrian Cenon from The University of Auckland

Adrian Cenon is a Master’s student and MikesBikes Mentor from The University of Auckland. He was also recently invited by Audrea Warner, professor at the Graduate School of Management to share his experience using MikesBikes Advanced in the Managing People and Organizations course. We thought it would be a great idea for Adrian to share his experience with all of you.

Get to know Adrian more in our interview below as he shares his MikesBikes experience, the challenges and lessons he learned from the simulation.


Tell us about yourself

Adrian Cenon MikesBikes Student

AdrianI’m currently a Master of Management, major in International Business student at The University of Auckland. I have finished a degree in Economics and Education, major in History at De La Salle University.

I have worked in Singapore as an Organizational Development Analyst and as a Global Learning Support Executive. In addition, I was also a Training and Research Officer.

What was your first impression about using a business simulation in the course? 

AdrianI was impressed that my first course in University of Auckland recognized that learning is enhanced by connecting the management theories discussed in class with the dynamic interactions within a team. As well as how they respond to real-life challenges and scenarios incorporated in MikesBikes. Through my previous work experience, I have been an advocate of the 70-20-10 model (by Eichenger and Lombardo) that has been widely used by management consultants and talent development professionals.

Furthermore, I heard a lot of feedback from the previous Cohort that the MikesBikes experience will be a challenging, fun and effective way to enhance my business acumen and leadership skills.

Did your impression of the simulation change as the course progressed? 

Adrian:  Yes, the whole learning journey was more immersive and challenging than what I expected. The level of competition among teams was intense and it required a lot of effort and focus to adapt our strategies based on market trends so we could gain an edge.  I also didn’t expect that it would elicit extreme levels of happiness, excitement and sometimes disappointment as you view the results after each rollover.

How was your experience working on the simulation on your own and eventually with a team?

Adrian Cenon MikesBikes Team

AdrianI would say that MikesBikes engaged my team on a level where we felt that we were running our own company and were accountable for our roles. When I reflect on the experience, I am extremely proud of how our team performed because of four reasons:

  1. We were genuinely passionate about our brand – WindChaser, and how it stood for “Chasing the Right Things” – identifying what is important and chasing it with the best of our abilities. Everyone participated in formulating our Team Goals and Key Performance Indicators (KPIs) and strategies.
  2. We had a great team culture and believed in the capabilities of one another. The rigor of analysing various reports (eg. Marketing, Finance, Manufacturing, Research and Development and Human Resources), making decisions, and competing with other teams strengthened our realization that we could only achieve our goals if we functioned as a high performing team. We learned to foster interdependence by aligning our actions with our core values of Passion, Accountability, Respect and Trust.
  3. Third, we dealt with conflicting priorities the right way and demonstrated integrity in how we competed with the other teams. Our team was aware of numerous “strategies” that we could pursue to get ahead and maximise our Shareholder Value (SHV) at all costs. But just like in the real world, you are sometimes faced with a choice to focus on the bottom line or preserve your reputation and relationship with others.

For example, heading to the final rollover, we had the option of extracting as much capital from our partner firm/ subsidiary. The problem was that applying this tactic would hurt their final SHV. Instead of taking full advantage, our team agreed to a reasonable rate with our subsidiary to ensure a sustainable SHV growth for both teams. In the end, this decision came at the expense of our team losing the European market by a narrow margin. However, we didn’t treat this as a setback because we stayed true to our values and enhanced our reputation and credibility among our peers.

4. Even though we didn’t win our market, we believed that the MikesBikes experience brought out the best in each one of us. As the CEO, I learned the importance of empowering your team members to perform their roles but at the same time providing guidance and support when they experience challenging situations. I am grateful to my team for believing in my capabilities and trusting me that we would become better individuals as a result of this learning journey.

Please share your experience in the course as a whole and how the simulation added value and impacted your learning.

AdrianI consider MikesBikes as an effective platform that maximised the learning from the “Managing People and Organisations” course. The different scenarios and complexities provided various opportunities. I was able to utilise my previous work experience and theories I learned in class, and apply them in a simulated business environment.

The experience took me out of my comfort zone as it brought a lot of high and low points which required me to reflect and adapt to changes to effectively lead my team. I consider the lessons learned from the simulation and the course as vital “Deep Smarts” which I would be able to leverage when I continue my career in Organizational Development and Talent Management.

What advice would you give your past self (go back to the time when you were still doing the course and the simulation)? What do you wish you knew back then when you were doing the simulation?

Adrian at UoA Business School

AdrianI would prefer not to give my past self any advice about the course and the simulation. I believe that the process of dealing with uncertainty provided the best opportunity to learn and more importantly, build character. There were several instances where our team spent a lot of time in figuring out how to drive our strategies because we recognized that a wrong move can have significant consequences.  Ultimately, the ability to handle pressure, evaluate the effectiveness of decisions, and manage our mindset proved to be excellent learning points which are applicable in the real world.

Connect with Adrian through LinkedIn.