an exploration of the link between marketing and financial performance
MARKET STRATEGY involves participants in analysing the financial aspects of a five-year market diversification plan. This involves finding strategies that are feasible in terms of cash flow and profitability.
Before deciding the best strategy, they must decide objectives (in terms of profitability, wealth creation, growth and survival).
To prepare the plan, participants must decide which market or markets are the most attractive and what mix of price, promotion, product performance, inventory availability and debtor (receivables) policy is best.
The markets are export (involving either direct selling using own staff, non-exclusive agents or dealers) and launching a new product to a new domestic market.
Here, participants investigate the relationship between marketing actions and business success, Discounted Cash Flow (DCF) and financial measures.
KEY LEARNING: As detailed below this covers:
- THE PLANNING PROCESS
- THE FINANCIAL IMPACT OF MARKETING DECISIONS
- FINANCIAL & MARKETING MEASURES
- FINANCIAL CONCEPTS (DCF, ROI etc.)
- SETTING OBJECTIVES
DURATION: About four hours. This duration allows the simulation to fit into most course time-tables and, it can be also used as a stand-alone event or at a business conference.
TARGET AUDIENCE: The simulation is designed to be used by all management levels and functional specialists.
METHOD: After a short briefing the training group is divided into several teams of three to five participants. These teams consider the problem facing them and then make a series of plans that are fed, by the team, into their own microcomputer that simulates their effect. The results are printed for the team to analyse and discuss before modifying their plan. This cycle should be repeated for six to ten times. At the end of the simulation phase the teams reunite to discuss and compare results.
The planning models are designed and calibrated so there is no right answer. This ensures the maximum of discussion and argument, both during planning and during the review. Further, these simulations serve to complement traditional lectures. By using the computer to do the calculations, this ensures that participants make effective use of practice time.
The simulations may be used with any number of teams.
AVAILABILITY: This simulations is available off-the-shelf and a comprehensive Trainer's Pack is provided allowing trainers with little or no experience with simulations to run the simulations.
THE PLANNING PROCESS
Participants are involved in preparing the financial aspects of a five-year market diversification plan. This involves finding strategies that are feasible in terms of cash flow and profitability. Then, before deciding the best strategy, they must decide objectives. To prepare their plan, participants must decide which market or markets are the most attractive and what mix of price, promotion, product performance, inventory availability and debtor (receivables) policy is best. The markets are export (involving either direct selling using own staff, non-exclusive agents or dealers) and launching a new product to a new domestic market.
THE FINANCIAL IMPACT OF MARKETING DECISIONS
The markets and decisions are chosen to show how marketing decisions link to financial results. Price, promotion and product performance impact the Profit and Loss Account (Income Statement) and, through their effect on sales volume, the assets in the Balance Sheet. In contrast, the prime impact of inventory availability and debtor policy is on Current Assets and through their effect on sales volume the Profit and Loss Account.
FINANCIAL & MARKETING MEASURES
The simulation model takes a comprehensive range of marketing mix decisions and uses them to calculate for each year several key measures (sales revenue, unit market share, cash market share, profit contribution, profit to sales %, capital employed, cumulative cash flow, return on investment and residual income (value added)).
The simulation model summarises the five year plan in terms of total sales revenue, average unit share, average cash share, average profit to sales %, total profit contribution, average capital employed, worst cash position, internal rate of return and net present value.
When deciding feasible strategies, participants are concerned with cash flow and funding availability. When investigating these strategies, participants must consider profitability (profit to sales %, return on investment and internal rate of return); growth (sales revenue, profit contribution and market share) and value added (residual income and net present value).
The internal rate of return and net present value introduce the concept of discounted cash flow and show how this relates to marketing planning.
Participants are free to decide which of the measures should be used and use these when finding the best strategy. This freedom ensures that participants discuss the relative merits of each measure. Then, as they attempt to reach these objectives, they discover how their marketing decisions influence these.
Documentation is provided separately using UK and US financial terms in MS Word format and comprises:
A Participants' Manual that provides, for the participants. a description of the simulation, a description of their task and how to use the software.
The Background Notes describe the simulation for the trainer and may be used as a handout to the participants at the end of the simulation. (Please contact us to receive a copy of these).
Using the Simulator provides, for the trainer (and computer support staff), information about installing the simulation and the use of the software.
Running the Simulation provides, for the trainer, information about running the simulation.
Briefing is a MS Power Point briefing explaining the simulation to the participants. (You may find it useful if you review this before reading the briefs.)
Specimen Results are provided in Adobe PDF format and illustrate output. (Our design approach means that it is very easy to change these reports (detail, terminology etc.) to reflect your needs).
|UK Terms||US Terms|
|Using the Simulator|
|Running the Simulation|
This is provided to allow you to download an evaluation version of the simulation.
The table below shows the files to download, their description and size. You should copy them to a folder, a USB Flash Drive or even to floppy discs! Run setup.exe. The program will then install.
Note: When downloading the setup.lst file you must right click and then select Save As. (If you left click the file will open - this is a feature of Windows XP, Vista and Windows 7.)
If, instead of installing from the Web, you are installing from the CD-ROM version of this resource you can install directly by clicking setup.exe and opening the file.
|setup.exe||Installation Program||137 Kbytes|
|Setup.lst||Installation Data||5 Kbytes|
|Imps1.cab||Simulator Files (1)||1,282 Kbytes|
|Imps2.cab||Simulator Files (2)||783 Kbytes|
Most recent update: 01/05/12
Hall Marketing, Studio 11, Colman's Wharf, 45 Morris Road, London E14 6PA, ENGLAND
Phone +44 (0)20 7537 2982 E-mail firstname.lastname@example.org