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AdSim Advertising Simulation by Smartsims Industry Benchmark Report

AdSim Advertising Simulation Report Guide: Industry Benchmark Report

What is the Industry Benchmark Report?

The Industry Benchmark Report is a summary of all firms’ Net Marketing Contribution reports so that you can benchmark yourself against your competitors as shown in the figure below.

In real life, this information would be difficult to obtain, but this report has been made available to you so that you can learn from your competitor(s).

There are several key parts of this report that you need to understand.

Sales & Gross Margin

Sales and Gross Margin in AdSim Advertising simulation

The Sales Revenue listed for each is the total wholesale sales revenue of all the firm’s products. The Cost of Goods Sold is the total cost of goods sold of all of the firm’s products that were sold, which 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.

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.

Product Marketing

Product Marketing in AdSim Advertising simulation

This section shows the combined Market Research, Agency Fees, Media Advertising, Customer Relationship and Marketing Communications expenditure for each firm.

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.

Customer Relationship and Marketing Communications expenditure lets you know how much your competitors spent on implementing their selected options.

Net Marketing Contribution

Net Marketing Contribution in AdSim Advertising simulation

Net Marketing Contribution is the amount of profit remaining after manufacturing (cost of goods sold) and marketing expenditures have been deducted. The only costs still to be deducted are other functional overhead costs for your firm, e.g. finance, administration, etc.

Net Marketing Contribution is a measure of how profitable your firm is as a result of its strategic marketing plan. There is only one way that you can improve it, increase your Sales Revenue per dollar of Marketing Expenditure.

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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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Music2Go Marketing Factory

Question of the Week: Why did I receive a different number of units from what I ordered? | Music2Go Marketing Business Simulation

In Music2Go you make decisions for an entire year, but your factory has a limited ability to adjust the number of units produced to try to meet actual demand during the year. This is called Demand Responsiveness.

Demand Responsiveness allows the actual number of units ordered to increase or decrease by up to 20% to meet the actual demand for your product.

For instance, if you ordered 1 million units of a product, then the actual number of units delivered could vary between 800,000 units and 1.2 million units depending on actual demand.

Product Contribution Report in Music2Go Marketing

In our example above, we ordered 1.9 million units of our Sonic product, but the Actual Units ordered was less than this at 1.5 million because the demand for our products was less than what we anticipated to sell.

Note: Most worlds have 20% Demand Responsiveness enabled, although your instructor may request this to be modified or disabled for your Multi-Player. 

Related Articles
Music2Go Sales Promotion Screen

Question of the Week: What is Sales Promotion? | Music2Go Marketing Simulation

Sales Promotion

Sales Promotion in Music2Go works by boosting your distribution coverage and distribution index. You should buy the Distribution Coverage and Sales Promotion Market Research report for detailed information on the Sales Promotion Rating and stage of Product Life Cycle for all firms in the Industry.

There are 6 types of sales promotion activities available to you to promote your
products and support your distributors:

  • Trade Shows
  • Salesforce Training
  • Premiums (Gifts)
  • Website / Social Media
  • Point of Purchase displays
  • Rebates

Each promotional activity has particular relevance to certain stages of the Product Life Cycle as outlined below. Note that the Distribution Coverage and Sales Promotion Market Research report will show the age and stage of product life cycle for every product on the market, as well as the Sales Promotion Rating and the Promotion Mix effectiveness.

Choosing a Sales Promotion Mix

Sales Promotion Mix in Music2Go Marketing

Remember that each of your products will progress through the Product Life Cycle starting in the Growth phase for new products, then gradually progressing through to the Decline stage over the next six rollovers.

Say we launch a new Sports product this period. This new product will start in the Growth phase of the Product Life Cycle. Then from looking at the Sales Promotion table (this can be found in the Player’s Manual and Market Information Report), we can see that our ideal Sales Promotion Mix for a new Sports product is:

  • Trade Shows: 20%
  • Sales Force Training: 30%
  • Premiums (Gifts): 20%
  • Website and Social Media: 15%
  • Point of Purchase Displays: 15%
  • Rebates: 0%

Total =100%

That was a simple example, but what happens in the second year that we sell this Sports product? The product will have moved from the “Growth” phase to “Growth – Starting to Mature.” So the optimal Sales Promotion mix will be 1/3 of the way between the ideal Growth and Mature in the Sales Promotion table. That would give us an optimal Sales Promotion mix something like:

  • Trade Shows: 15%

(Ideal Growth = 20%, Ideal Mature = 5%)

  • Sales Force Training: 27%

(Ideal Growth = 30%, Ideal Mature = 20%)

  • Premiums (Gifts): 26%

(Ideal Growth = 20%, Ideal Mature = 40%)

  • Website and Social Media: 13%

(Ideal Growth = 15%, Ideal Mature = 10%)

  • Point of Purchase Displays: 17%

(Ideal Growth =15%, Ideal Mature =20%)

  • Rebates: 2%

(Ideal Growth = 0%, Ideal Mature = 5%)

Total =100%

Tip: You should buy the Distribution Coverage and Sales Promotion Market Research
report for detailed information on the Sales Promotion Rating and stage of Product
Life Cycle for all firms in the Industry.

Related Articles
Chossing an agency in AdSim

Question of the Week: Which Agency should I choose in AdSim Advertising Simulation?

Agency Selection

The first key decision you need to make for each of your products is whether you will employ the services of an advertising agency to assist you with your media selection.

Four Agencies

Agency selection screen in AdSim

Internal Plan

The Internal Plan means trusting your own media selection ability and going at it alone, which often obtains far greater returns.

The default plan for each product is average at best. Approximately 30% of you promotion budget is being wasted on poor media selection. By carefully reading and analyzing the marketing plan and market overview/research for your product’s target segment, you should be able to greatly improve the effectiveness of your promotion budget.

TV Magic

TV Magic is a media-buying agency that specializes in producing TV advertisements and bulk purchasing TV advertising time.

TV Magic will suggest a TV advertising media plan that will be significantly better than following the default plan. They are less skilled at other media production/selection, but their suggested plans will be noticeably better than the default plan.

Print Works

Print Works is a media buying agency that specializes in producing print advertisements and bulk purchasing print advertising space.

Print Works will suggest a Newspaper/Magazine advertising media plan that will be significantly better than following the default plan. They are less skilled at other media production/selection, but their suggested plans will still be noticeably better than the default plan.

Radio Can

Radio Can is a media-buying agency that specializes in producing radio advertisements and bulk purchasing radio-advertising airtime.

Radio Can will suggest a radio advertising media plan that will be at least significantly better than following the fault plan. They are less skilled at other media production/selection, but their suggested plans will still be noticeably better than the default plan.

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  • Alternatively, you can contact our Support Team here.
Testing Decisions in MikesBikes

How do I Test My Decisions in MikesBikes Introduction to Business Simulation?

There are three ways on how you can test your decisions in MikesBikes Introduction to Business Simulation.

1. Live Forecast

Smartsims Simulations Live Forecast

These figures on the Live Forecast update in real-time as you click “Apply” on any decision screen. This enables you to easily see the impact of individual decision changes on overall performance.

The figures can then be clicked to bring up the relevant forecast report in full. Previous figures remain in small font below.

The new Live Forecast feature will help you make more informed decisions and provide an immediate warning if you have made poor decisions.

2. Forecast Results Reports

MikesBikes Forecast Results Reports

This menu features reports which give you an indication of your performance – assuming you meet your forecasts.

There are a range of Pro Forma reports available for you to view:

  • Forecast Results Report Overview
  • Pro Forma Income Statement
  • Pro Forma Product Gross Margin Report
  • Pro Forma Cost of Goods Manufactured Report
  • Pro Forma Cashflow Report

3. Offline Mode

This feature in the Multi-Player allows you to try out different decision options and strategies before you commit yourself.

In Offline Mode, your competitors use only their default decisions. So don’t read too
much into the results.

To start Offline Mode, click the “Offline” button next to the Multi-Player launch button.

In Offline Mode, your competitors use only their default decisions. So don’t read too much into the results. For instance, in Offline Mode you might launch new products into empty markets and do very well due to lack of competition. But if you use those same decisions in the Multi-Player, you could do poorly if the other firms choose to launch new products at the same time. So always think about what might happen if your competitors were to do something differently.

Important: After using Offline Mode, your team’s agreed decisions need to be re-entered in the Multi-Player.

Watch our tutorial video here:

 

Note that this feature might be disabled in your course.

Need extra help?
  • You can receive an immediate answer to a number of commonly asked questions through our Support Center.
  • Contact us here.
MikesBikes Advanced Business Simulation

MikesBikes Advanced Strategic Management Simulation

 

MikesBikes Advanced is a highly instructive and engaging means to teach business strategy, management, and decision-making. This Strategic Management Capstone Simulation bridges the gap between theory and practice, as students manage their own bicycle manufacturing company.

Competing individually or in teams, students analyze the market to formulate their own cross-functional strategic plan. The implementation of their strategy requires engaging with all key functional decision areas of their company. Students will master each business discipline, as well as understanding the relationship between each function.

The dynamic marketplace and competitive nature of the simulation ensures that students must continue to adapt their strategy to the changing market and their competitor’s decisions. The competitive element of MikesBikes encourages students to understand these principles and have fun doing it!

For an additional challenge; MikesBikes Advanced enables instructors to simulate market recessions and booms, as well as enable our unique corporate takeover module.

Recommended For:

  • Business Capstone
  • Strategic Management
  • Business Administration
  • Business Management
  • Entrepreneurship
  • Business Strategy
  • Business Policy
  • Management and Leadership Development
  • Organizational Behavior
  • Product Management

Teaching with MikesBikes Advanced

 

MikesBikes Introduction to Business Simulation

 

MikesBikes Introduction is a next generation interactive business simulation application, specifically designed for foundation-level courses.

As an introduction to business simulation, MikesBikes Intro features a unique structure which allows students to gradually build confidence. This is achieved by progressively giving students control over their own company. They will initially determine the price and marketing mix for their only product. Each subsequent decision period they are given additional decision areas to manage to provide an insight into distribution, operations and finance; as well as the task of launching new products into emerging markets.

Recommended For:

  • Foundations of Business
  • Introduction to Business
  • Business Administration
  • Business and Society
  • Business Fundamentals
  • Business Organization and Management
  • Leadership for Business
  • Small Business Management
  • Business Concepts
  • Management Principles

Teaching Foundations of Business with MikesBikes/strong>


salary-in-mikesbikes-advanced

Question of the Week: How much should we pay our staff?

This question relates to our MikesBikes Advanced Strategic Management Simulation.

Human Resources: Average Salary

This is the average annual earnings of an employee working on the factory floor. The average salary level you set will affect not only your bottom line but also attract better skills and will improve motivation.

Factory workers are paid (on average) the rate you select. Administration staff are paid (on average) twice this rate. For comparison purposes, the average industry salary is $25,000 per year.

How does Salary impact your staff’s motivation level?

Salary level is compared to an industry average of $25,000 and smoothed over several years.

Job security is reduced during downsizing, but is also smoothed over several years.

Including the training/skill level reflects the fact that employees are looking for more than salary and job security. They are looking for a job where they are learning and working with other highly-skilled people.

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 change across succeeding years.

Staff Motivation and Turnover Rate in MikesBikes Advanced

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

Staff Motivation and Turnover Rate when Downsizing in MikesBikes Advanced

Check out the latest Question of the Week articles here:
Smartsims Support Center header

Press Release: Smartsims Support Center Goes Live!

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This live resource enables our simulation users to receive instant answers to their questions, as well as browse a wide range of help topics to guide them through their learning journey.

Video Overview

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Browse decision areas such as Marketing, Operations, Finance; or specific decision periods:

Business Simulation Marketing Simulation Advertising Simulation  Business Simulation Marketing Simulation Advertising Simulation

 

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Was this support article helpful?

 

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You can find the Smartsims Support Center here: https://www.smartsims.com/support

Alternatively, click on new Support button at the top of any of our webpages:  Smartsims Support Center

 

Spread The Word!

We recommend placing a link to the Smartsims Support Center in your Course Syllabus and/or on your Course’s Webpage.

 

This proactive approach takes our current service offering to the next level in user experience.

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