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Market Segments in Music2Go Marketing Simulation: Standard Segment

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This article will be a three-part series introducing the market segments in Music2Go Marketing Business Simulation. In this article, we’ll be talking about the Standard Segment.

Market Segments in Music2Go Marketing

There are three market segments in Music2Go – Standard, Youth, and Sports (Multi-Player only).

These segments have different sizes, projected growth, sensitivity to price, advertising, distribution, and product specs.

You start with a single MP3 Player product in the Standard market segment. Starting in Year 3 (after 2nd rollover) you may improve your existing product and/or launch additional products into new market segments (up to a maximum of 4 products by Year 6). Part of the challenge of Music2Go is in being able to balance the needs of your products within your limited marketing budget.

Standard Segment

Consumers in this segment tend to be less active than those in the Sports segment and thus do not require the high level of technological specifications inherent in sports designs. While young adults in this segment share the purchasing ability of their sports counterparts, they are more price conscious, which is reflected in the relative pricing between these two segments.

  • Medium priced ($85 – $100) with high price sensitivity
  • Price range is $40 to $120, but the recommended range is $85 to $100.
  • Medium sensitivity to advertising
  • High sensitivity to distribution coverage
  • Low sensitivity to product specifications
  • Consumer style / tech spec preferences change slowly, so segment moves
    slowly on perceptual map.

Since consumers in this segment are highly price sensitive, you can expect some price competition. Plan for this with cost reduction projects to maintain acceptable unit margins. However, be careful of engaging in a price war. No one wins a war. This is the slowest moving segment and has low sensitivity to product specs. So you may only require a single product spec improvement project midway through the simulation to remain competitive. It is the largest of the three segments but has minimal underlying growth.

You will be selling a single Standard Segment music player in the first two years of the simulation. After the 2nd rollover you may launch additional products into the Youth and Sports segments (Multi-Player only).

Related Articles: 
group of people with thumbs up - business simulations are where mistakes are encouraged

Business Simulations: where making mistakes are encouraged

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Making mistakes simply means you are learning faster.

Weston Agor

Who likes making mistakes? Majority of us probably don’t like making one or try our best to avoid it.

In school, we always thrive to do the best we can to avoid making mistakes in our exams or essays to avoid failing.

At work, would you hire someone who says they often make mistakes or promote someone who constantly does? Majority of employers probably wouldn’t.

Here at Smartsims Business Simulations, we believe that we often learn best and the most when we fail, and make mistakes. This allows us to look back, analyze what and where we have gone wrong and restart. If there’s an opportunity, we can also get feedback from our mistakes. This gives us a brand new start to take action and hopefully never make the same mistake again.

However, realistically, we seldom get a second shot to do all these, right? Professors in universities will rarely allow you to redo an exam you already failed. You won’t get another shot of winning that soccer match you already lost. You would lost an opportunity to get promoted if you missed your quota.

Good news is with Smartsims Business Simulations, failure and mistakes are encouraged!

The foundation of simulation-based learning is that we learn by doing. Our objective is to give students an opportunity to have their own business experience, and mirror what it’s like in the real world. This allows them to take responsibility over their own learning and become personally engaged with the content. They get to manage their own company in a fun and safe environment, while allowing them to learn through trial and error, testing different decisions and strategies.

Every business simulation includes a practice and competitive application. Once students are familiar with the simulation format, their teams develop strategy and make key decisions for their organization. Students use real-time market and business reports to effectively analyze market conditions; develop strategy; and, evaluate the impact of their choices.

All our business simulations provide students with a platform to develop an understanding of business concepts, make strategic and critical decisions, and allow them to see the immediate impact of their decisions.

Here, failure is encouraged and allowed, so that they can try better approaches and methods.

Provide your students with a unique learning opportunity and take your course to the next level with Smartsims. Contact us to learn more.

Correcting a failed product development project

Question of the Week: How do I correct a failed Product Development Project? | MikesBikes Advanced Business Simulation

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You want to get product development projects right the first time as this can be a costly mistake. It can mean either your Unit Prime Cost is higher than you want and/or your specifications are not as you wanted resulting in a lower demand for your product if they are wrong.

There could be two reasons why your project failed:

1. The project/budget expenditure was too low and/or
2. The requested unit prime cost was unrealistically low

As in real life, you do not want to commit to a product development project without checking that it was appropriately funded and that it would be able to provide an acceptable return on investment.

In addition, you have to be careful that the specifications you enter for your new product actually fall close to the ideal point of the segment you are targeting. Look under Key Reports for Perceptual Map of Market Segments to check this. Products outside the radius of influence (i.e. outside the circles) will not sell at all.

How do we conduct successful development projects?

We will walk you through an example where we develop the design for a racers bike. While the specifics and calculations may change, the steps you follow will be the same:

1. View the Indicative Values for Market Segments within the Product Development Scenario Information report to view the ideal product attribute levels desired by each segment.

(Note: These desired product attributes by each market segment change slightly from year to year so be sure to keep monitoring for the changes.)

Indicative Values for Market Segments

2. Take the current Style/Tech Specs of your closest existing Design Project and calculate the required change in Style/Design and Technical Specs.

In our example, the closest existing Design Project is our Adventurer Bike. You can view the Product Development Project Results Report to view your closest existing design paying attention to the Style/Design and Technical Specs:

Product Development Project Results Report

3. Calculate the difference in Style and Technical Specifications between the desired design and the closest existing design.

As you can see, in this example, our only and closest existing design project is our Adventurer product. This features specifications of 50 Style and 60 Technical. Our desired design project has targeted specifications of 20 Style and 86 Technical.

So the difference is 30 Style and 26 Technical.

Estimated Costs and Time Frames

We can see on the Product Development Scenario Information report that each unit of Style development costs $1000 and each unit of Technical development costs $20,000.

Our example calculation will be:

30 x $1,000 added to 26 x $20,000 = $550,000

Therefore, our design cost would be $550,000 on the new design to achieve 20 Style and 86 echnical.

4. Calculate your prime cost.

From the table above we can see that the prime cost will be calculated at roughly $0.1 to $0.15 per design and $4.50 to $5.00 per technical specification. We want a racers bike with 20 style/design and 86 technical specifications.

A conservative calculation would therefore be:

0.15 x 20 added to 5.00 x 86 = $433

If we enter any additional expenditure on to our design cost this will be used to further reduce the Prime Cost.

Note: This does NOT mean you should always aim super low with target Prime Cost.  If you aim too low, then your project won’t have enough money to achieve its objectives and you will miss your style / tech spec targets as well as your prime cost target.

How do I correct a failed product design?

A failed product design is a design that shows anything less than 100% success rate within the Product Development Results Report. Unfortunately this means you will need to design the design again. However! The failed design is likely to be a lot closer to your desired specifications than the previous closest design, thus it means it is likely to be cheaper to invest in. Simply follow the process above again working off the new closest existing design (even if the closest existing design is a failure).

Check out our Common Mistakes in MikesBikes Advanced article.