Experiential Education Archives

Part 2: Common Mistakes in Music2Go Marketing Simulation

Mistakes are the stepping stones to success.

– John C. Maxwell

What are the other common mistakes in Music2Go Marketing?

In Part Two, we’ll talk about the importance of reaching the right customers and how to better allocate your Sales Promotion Mix.

Here’s Part One of the article in case you missed it.

Mistake #4: Misunderstanding the Importance of Reaching the Right Customers

Not understanding this can be a costly mistake as it often leads to incorrectly assigning your Advertising Mix. This can have a negative impact on the demand for your products and can also lead to overspending. Meaning your firm’s profitability is at risk!

How do you know if you are spending your advertising budget inefficiently? Follow through this section, it will show you how to efficiently allocate your advertising budget.

Each market segment is sensitive to different dimensions. View the Market Information report.

Product Dimension Sensitivities in Music2Go

How do I interpret this Product Dimension Sensitivities graph?

The best way to explain it is through an example. If you take the Standard segment, you’ll see it has a high sensitivity to Price. This means that an increase to your price (example setting the price to the maximum) is going to have a negative effect on your sales volume.

What these sensitivities mean is a change in any of these factors, will result in a proportionate change in the consumers’ demand for your product(s).

There are four media choices to develop your advertising mix on: Television, Newspapers, Magazines and Digital Media.

There are two substantial sources of information you can use to determine your optimal advertising mix for a given advertising spend: Advertising and PR Reach by Media Curve and Media Viewing Habits. Both information can be found in the Market Information report.

Each media type can reach a given proportion of its audience for a given investment. This is shown within the Advertising and PR Reach by Media Curve.

The best way to explain this would be to provide an example.

Example: Budget of $4 million on Standard Segment.

Option 1: 42% of the Standard Segment read magazines.

So our $4 million spend would reach approximately 90% (taken from the graph at a spend of $4 million) x 42% (Media Viewing Habits) =  37.8% of the Standard segment can be reached

Option 2: 85% of the Standard Segment can be reached via Digital Media.

So our $4 million spend would reach approximately 50% (taken from the graph at a spend of $4 million) * 85% (Media Viewing Habits) = 42.5% of the Standard segment

Option 3: But maybe we can do better than that still. What happens if we spend $2 million on Newspapers, and $2 million on Magazines?

If we spend $2 million on Newspapers, we could reach approximately 40% of Newspaper viewers and 58% of the Standard segment reads Newspapers. So we could reach approximately 40% (Media Viewing Habits) x 58% (taken from the graph at a spend of $2 million) = 23.2% of the Standard Segment.

If we spend $2 million on Magazines we could reach approximately 50% of Magazine viewers and 42% of the Standard segment reads Magazines. So we could reach approximately 50% (Media Viewing Habits) x 42% (taken from the graph at a spend of $2 million) = 21% of the Standard segment.

So, together our $4 million spent half on Newspapers and half on Magazines would reach approximately 44.2% of the Standard segment, which is obviously a better use of our Advertising budget than the first two options.

As you can see, with the same budget, but a different allocation towards each media channel can make a huge difference in the amount of consumers you can reach.

This is only an example of good and bad marketing mixes. This is far from the best mix you can make. We suggest playing around on different Marketing Mix and see what works best for your strategy and budget.

Mistake# 5: Inaccurately Allocating Your Sales Promotion Mix

Your Sales Promotion strategy will need to vary with the Life Cycle of your product. For instance, Trade Shows and Sales Force training will be important a new product launch, bur progressively less so as the product ages. Your existing product will be in the Mature phase of its life cycle for your first Sales Promotion decision (Sales Promotion decisions are available after the 1st rollover).

It is important that you get your Sales Promotion Mix right, because it helps boost your distribution coverage and distribution index. In addition, some segments are particularly sensitive to Distribution, such as the Standard Segment.

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
So, how do I choose a Sales Promotion Mix for my products? 

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

Say we launch a new Youth product this period. This new product will start in the Growth phase of the Product Life Cycle (See Market Information Report > Sales Promotion). Then from looking at the tables above, we can see that our Ideal Sales Promotion Mix for a new Sports product is:

  • Trade Shows – 15%
  • Sales Force Training – 25%
  • Premium (Gifts) – 5%
  • Website and Social Media – 25%
  • Point of Purchase Displays – 25%
  • Rebates – 5%

Total = 100%

That was a simple example, but what happens in the second year that we sell this Youth product? The product will be 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 figures in the Sales Promotion Table. That would give us an optimal Sales Promotion mix something like:

  • Trade Shows – 10% (Ideal Growth = 15%, Ideal Mature= 5%)
  • Sales Force Training – 17% (Ideal Growth = 25%, Ideal Mature= 10%)
  • Premiums (Gifts) – 15% (Ideal Growth = 5%, Ideal Mature= 25%)
  • Website and Social Media – 23% (Ideal Growth = 25%, Ideal Mature= 20%)
  • Point of Purchase Displays – 25% (Ideal Growth = 25%, Ideal Mature= 25%)
  • Rebates – 10% (Ideal Growth = 5%, Ideal Mature= 15%)

Total = 100%

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. 

 

Common Mistakes in Music2Go Part 1

Part 1: Common Mistakes in Music2Go Marketing Simulation

“During a research experiment a marine biologist placed a shark into a large holding tank and then released several small bait fish into the tank.

Shark Story

As you would expect, the shark quickly swam around the tank, attacked and ate the smaller fish. The marine biologist then inserted a strong piece of clear fiberglass into the tank, creating two separate partitions. She then put the shark on one side of the fiberglass and a new set of bait fish on the other.

Again, the shark quickly attacked.  This time, however, the shark slammed into the fiberglass divider and bounced off.  Undeterred, the shark kept repeating this behavior every few minutes to no avail.  Meanwhile, the bait fish swam around unharmed in the second partition.  Eventually, about an hour into the experiment, the shark gave up.

This experiment was repeated several dozen times over the next few weeks.  Each time, the shark got less aggressive and made fewer attempts to attack the bait fish, until eventually the shark got tired of hitting the fiberglass divider and simply stopped attacking altogether.

The marine biologist then removed the fiberglass divider, but the shark didn’t attack.  The shark was trained to believe a barrier existed between it and the bait fish, so the bait fish swam wherever they wished, free from harm.”

The short story above is by Marc Chernoff.

What do you think is the moral lesson of this story? 

The lesson here is many of us give up after experiencing failures. Like the shark story, we believe that if we were unsuccessful in the past, then we will always be unsuccessful. We continue to see barrier in our heads, even when there are no “real” barriers.

So you are probably reading this article because you want to get out of a situation where you have made mistakes in the simulation and want to fix it, right? Good on you for crossing that barrier!


Mistake #1: Not purchasing Market Research Reports

Purchasing Market Research reports in Music2Go

We cannot reiterate enough how important this is. Many students want to “save” their budget and invest it in other areas in the simulation. However, knowledge is power and by investing in these paid reports, you are making more informed decisions.

Mistake #2: Having leftover Marketing Budget

Marketing Budget Report in Music2Go

Your budget does not carryover to the next year, so it is important that you spend the entire Marketing Budget that you have been given for the current year.

Mistake #3: Misunderstanding the Importance of Pricing Products Correctly

Price is usually a key determinant of demand and is the most critical component to maximizing your revenue. Therefore, carefully thinking about your Pricing strategy is important as this would have an impact on the demand for your products.

Check out this article on How to Set Retailer Price and Retailer Margin for your products.


Part 2 talks about Misunderstanding the importance of reaching the right customers and inaccurately allocating your Sales Promotion Mix.

DeltaSigmaPi x Smartsims

Professional Fraternity Exploring Entrepreneurship through MikesBikes Advanced

The article below is written by one of our previous students, Michael Stewart from Boston University. Michael took the Managing a Growing Enterprise course with Professor Greg Stoller and used MikesBikes Advanced as part of this.

Upon completion, he had the idea to incorporate MikesBikes Advanced into their program for this semester’s pledge class in their business fraternity, Delta Sigma Pi. The purpose of their fraternity is to foster the study of business in universities and to promote the association of students studying business for their mutual advancement through research and practice.

Michael is in charge of instructing the pledge (underclassmen students at Boston University) as they seek brotherhood within the fraternity. He felt that the simulation would be academically enriching and will create some level of competitiveness and enjoyment.


MikesBikes Advanced Experience in the Managing a Growing Enterprise course

This past fall, I was introduced to MikesBikes Advanced in my Managing a Growing Enterprise course at Boston University. This class was for students interested in pursuing Entrepreneurship and much of the lesson plan was focused on how to strategically position a new company in a competitive market.

Our Professor, Gregory Stoller, used the simulation to further our understanding of class material, as well as a tool to keep students engaged outside of the classroom.

MikesBikes Advanced is an online business simulation that offers students the opportunity to run their own company, while managing all the key functional areas of a business. It is an interactive tool that applies the basic concepts of business in a real-life context. Through the simulation, we received hands on experience making marketing, operations, product development and financial decisions.

After introducing the simulation to us and dividing us into teams, Professor Stoller assigned us our first deliverable; the Strategic Plan.

Boston University MikesBikes team strategic plan

Our Strategic Plan set the guidelines of our businesses and assisted teams as they set variables for the first few weeks of the simulation.

The plan outlined our company’s mission, corporate and functional strategy and the key metrics that would be utilized to measure our company’s performance. The plan allowed for teams to show how they were going to position their companies relative to others in the virtual industry and how they were going to structure their spending in each functional area to achieve this position.

My classmates and I understand how much work would be involved in this assignment and found ourselves working on plans late into the night and often overnight into the morning they were due. This shows the complexity of the simulation and all the variables that you must stay apprised of over the course of the weekly rollovers. Once the first rollover hit, we still found that we failed to account for many of the variables that play into the shareholder value, which happened to be the most important metric in MikesBikes.

As the weeks passed, we saw the virtual market begins to take shape as teams began to adapt their strategies. Some teams chose to launch products into all possible market segments, whereas others held tight within only a few segments. By the end of the simulation, the teams that diversified their product found the most success. With only a few weeks left, teams who were behind did not have the time needed to launch new products and replicated the success of others. The lagging teams resorted to paying dividends and manipulating other financial variables in order to inflate their shareholder values in the final hour.

At the very end of the semester, each of the teams presented their performance and the lessons they learned from their experience in the simulation. Each team spent time discussing some of the mistakes they made early in the simulation and how they could have operated differently. The improper use of cash was a factor that impacted all the teams. Almost all the teams sat on heavy cash balances and did not use resources to reinvest back in their operations. It was not until the end of the simulation that we all began to pay dividends, buy back equity and pay off debt.

The simulation gave the class a more competitive feel than other business classes. Every Wednesday night my classmates and I would stay up to see who was on top after the weekly rollover. We spent hours trying to find the best ways to position our respective companies, may it be targeting a different segment or possibly improving product quality. We knew that if we found ourselves at the bottom of the rankings on Thursday morning, we would be subjected to some friendly banter among others in the class. As a rather small class, a shared bond developed within the group. It also helped that most of us had pre-existing relationships from our shared brotherhood in the business fraternity, Delta Sigma Pi.

Delta Sigma Pi (DSP)

Delta Sigma Pi Brothers at Boston University
From left to right: Max Reich, Gabor Imre, Hiro Nango, Eric Zhu and Michael Stewart (Brothers of DSP)

Our fraternity, Delta Sigma Pi, or more fondly known as “DSP”, was organized in 1907 to bring students of commerce together, develop their skills and prepare them for the world of business.

Since its origin, DSP has attracted thousands of students to join its organization by emphasizing its four pillars: Brotherhood, Service, Professionalism and Scholarship. Along with a sense of identity, these pillars help guide DSP chapters across the country as they help mold young men and women into business leaders of tomorrow.

The shared brotherhood is also why we all found ourselves together in Professor Stoller’s class. The five of us all have interest in entrepreneurship, a few having some prior experience running their own companies. We were all driven by our shared desire to practice our business skills in an academic environment. Once a few of us signed up for Managing a Growing Enterprise, we quickly influenced others in the fraternity to join as well. I believe that this factor was what led to the simulation feeling so competitive – the fact that we wanted to have higher shareholder value than our brothers on the opposing teams.

Taking the class also opened our eyes to something that could be done to better our fraternity. Our chapter does not offer many outlets for our brothers to practice their business skills, work together in teams and compete against one another. We have been actively searching for different ways to accomplish this in the Spring 2019 semester. It is for this reason that we have decided to partner with Smartsims in order to share the MikesBikes simulation with our pledge class this spring.

After being introduced to MikesBikes this past semester, it became obvious to us that this could be a great tool to be added to our semester-long pledge program. Each semester, our new pledge class could take part in the simulation and practice their skills as they compete against one another. The simulation will provide the pledge class with an opportunity to better understand the functional elements that go into running a company.

MikesBikes Advanced at Delta Sigma Pi

Our plan is to run the simulation very similar to how it was conducted in Professor Stoller’s class. Of course, there will need to be many resources available to the pledge class as they will be less familiar with the functional areas of running a business as they are only underclassmen who have not taken some of the pre-requisite classes yet. We will address this concern by assigning advisers to each team and providing a two-week “ramp up” period before the first rollover.

Each team will work with the advisers to create Strategic Plans that will outline both their corporate and functional strategies. These plans will guide their decision making once the first rollover takes place. Advisers will continue working with teams throughout the semester and help guide them as they set variables that fit related to the simulation. The advisers will also help to further their understanding of topics such as trade-offs, competitive positioning, and other business-related activities. Since these topics are relative to almost every sector of the business world, these students will gain much value from taking part in this experience even if they have no aspiration towards running their own company.

The final deliverable will be a team presentation during which the pledges will talk about the lessons they learned and critical decisions that had the most impact on their performance. We hope this will be a reflective exercise that will also allow the pledges to practice speaking in business settings.

The winning team will be decided by both this presentation and simulation performance. The presentation will also be a tool for Administrators to review how to better implement the simulation in the future with pledges who have no prior entrepreneurial experiences.

As a fraternity, we are looking forward to seeing how we can further experiment with the MikesBikes Advanced simulation. We are certain that it will provide academic value to the pledge class. However, we are realistic in that we expect there to be some kinks given that this is our fist attempt implementing the simulation. We feel fortunate to have the opportunity to share this experience with the pledge class and hope it ignites an interest in Entrepreneurship.


Michael is currently running the MikesBikes Advanced simulation until April, so stay tuned for the next article featuring their pledges experience with the simulation!

Related Articles:

Student Success Stories: Peter Johnson from Des Moines Area Community College

University of Auckland Business Masters’ MikesBikes Presentations

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

Student Success Stories: Peter Johnson from Des Moines Area Community College

Meet Peter Johnson, an Intro to Business student from Des Moines Area Community College. He managed to land the Top 7 spot in the MikesBikes Introduction Hall of Fame last Fall.

We interviewed Peter to learn about his decision-making, strategy and what resources he used to help him succeed in the simulation.

What is your decision-making process within the simulation?

My decision-making process always began with reading the business reports to base my decisions off of.  When looking over the reports, I would also take notice of what my competition was doing.  Analyzing this information was very helpful in every new decision I made especially when expanding my product line.  I would then adjust my numbers for production and available units for sale.  Next, I would tend to my advertising in each market.  I spent quite a bit of money on advertising, but it worked well for me.  In addition, I invested in many company and product improvements such as efficiency and quality.  When able, I would pay dividends and repurchase equity as well.  For the most part, this decision-making process remained routine for me through each simulation rollover.

What was your strategy going into the simulation?

My strategy for the simulation was to increase shareholder value by boosting sales and maximizing profits.  To do so, I wanted to grow my company by expanding the product line and by investing more money in advertising to grow my brand and gain a competitive edge.  I knew I wanted to separate myself from the competition and an increase in advertising was my first step in accomplishing that.

How did you begin implementing that strategy?

I implemented that strategy by immediately increasing the money I spent on advertising.  I paid attention to the market reports to allocate my advertising expenses effectively for each market.  I also looked for ways to improve the products and company along the way.  For example, I invested in efficiency and quality when given the opportunity to do so.  Also, market reports helped me make tailor made product improvements according to the expectations of each corresponding market.

How did you familiarize yourself with the simulation?

I watched the instructional videos and looked through the various reports available.  I took advantage of my practice time with the simulation.  During this time, I was able to make decisions according to information I read in the reports and see how the results of my decisions would play out in the simulation.  Seeing how these decisions would positively or negatively affect my business was very helpful.

How would you describe the competition?

I would describe the competition as a high priority.  In my opinion, it is equally important to pay attention to what your competition is doing as much as it is to pay attention to what your own company is doing.  You can definitely create competitive advantages for your business depending on what your competition is doing or not doing.

What resources did you pull on to develop your winning strategy which led you to the top of your course and then top in the Hall of Fame?

Utilizing the reports made available to me in this simulation was crucial in developing a winning strategy.  The information they provide allowed me to refine my decisions along the way and improve the accuracy of those decisions.  Also, keeping an eye on my competition proved to be more valuable than I had originally anticipated.

What challenges did you face? How did you overcome these?

Lost sales became a challenge for me on more than one occasion.  Every time I expanded my product line, I incurred lost sales in each of the new markets.  To correct this, I increased the number of units available for sale in each of those markets.  Occasionally, I would have to buy more SCU to produce more units.  Paying attention to my market share and future market demand helped me eliminate lost sales.

Was there anything in particular you did that you think helped to prepare yourself?

I think taking advantage of the practice time to learn about the simulation really helped me.  Getting to know the reports available and the information they contain are advantageous in making solid decisions and taking informed calculated risks.

How has participating within a course which uses a business simulation to supplement their teaching materials helped you? What do you think of the business simulation?

I think it helped me in learning about and understanding how to read various business reports.  It is important to know what information to look for when making any decision for your company.  The interactive platform is a great way to experience making decisions for a business and seeing the outcome of those decisions.

Comments on your experience with the simulation itself

I really enjoyed my experience with the Mike’s Bikes simulation.  Engaging in the simulation is an interesting and fun way to learn.   It provided me with valuable tools and experience when addressing a company’s business decision making process.  Being that every Mike’s Bikes experience is unique to that user, it is a simulation I would participate in again.

MikesBikes Intro Hall of Fame

University of Auckland-Business Masters-MikesBikes Advanced- Presenations

University of Auckland Business Masters’ MikesBikes Presentations

The Business Masters students taught by Professor Darl Kolb from the University of Auckland were suited and booted for their final presentations on the MikesBikes Advanced Strategic Management Simulation

“The MikesBikes simulation combines elements of strategy, marketing, operations, product design and human resource management within a complex competitive environment. Besides the business and management aspects, the simulation provides a place for leadership to emerge as it did in these successful teams. I am always proud of all our simulation teams, but seeing so many of our students do so well on the world stage makes me immensely proud.”

– Professor Darl Kolb

Check out some of the photos from the final presentation:

Photos are taken from The University of Auckland Business School

First Place in NJIT SOM

2018 Strategic Management Showcase at New Jersey Institute of Technology

You can’t look at the competition and say you’re going to do it better. You have to look at the competition and say you’re going to do it differently.

-Steve Jobs

Students from New Jersey Institute of Technology definitely did things differently which led them to succeed in the The Fourth Annual Strategic Management Showcase with MikesBikes Advanced! The Showcase concluded last 30th of November with great success!

The Top 6 teams across the Strategic Management course competed head-to-head to achieve the highest Shareholder Value in MikesBikes Advanced.

The winning team, ALY BikeZ consisted of Aditya Patel, Luke Gregory and Yandy Gonzalez-Acevedo.

In second place we have CycloTherapy with Dikasse Zalla, Rosa Lee Moss and William Penn.

In third place we have CTS Bikes with Christopher Kukla, Spencer Kapp and Thomas Brady.

Congratulations to ALY BIkeZ and to all the participants! Well done and we wish you all the best!

Check out some of the photos from the Showcase:

Photos are provided by Shanthi Gopalakrishnan. 

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

AdSim Marketing Plan Budget Report

ADSIM ADVERTISING SIMULATION REPORT GUIDE: Marketing Plan Budget Report

What is the Marketing Plan Budget Report?

The forecast marketing expenditure budget shows you how much money you have available to spend this year as shown in the figure below.

Note: This report can be found in the Marketing Plan menu.

Forecast Project Budget Expenditure AdSim

There are three key parts of this report that you must understand.

Budget Limit

Your budget limit is set as part of your product’s marketing plan. It is up to you to decide whether you spend your entire budget or not.

How much you spend of this year’s budget has no effect on your budget for next year.

Budget Expenditure

The first column shows much money you currently have allocated to evaluation research, Agency fees and product advertising. Changing any of your decisions in these areas will automatically update this report.

Available to Spend

This is how much unallocated budget you have left, i.e. how much money you still have available to spend if you want to. Any money you spend will be deducted from your net marketing contribution, so you should only spend on activities where you think the return will more than cover the cost.

If this number is negative that means that you have exceeded your budget and you need to choose which advertising activities to cut back. If you do not do so yourself, then AdSim will automatically reduce your media advertising expenditure during the rollover to bring you back within budget.

Check out the latest AdSim Report Guide here:

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

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.

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

Need extra help?

Check out the Smartsims Support Center or contact us here.