Cesim SimBrand Marketing Management Simulation Game Guide Book

CESIM GLOBAL CHALLENGE
Introduction
Simulation for international business
and strategy
CESIM SIMBRAND
Introduction
Marketing management
simulation game

2
What is Cesim SimBrand?
Cesim SimBrand develops students understanding and command of
the whole marketing decision-making process. The simulation covers
marketing topics including segmentation, positioning, distribution channel
investments, advertising budget allocation, after sales services, pricing,
sales forecasting, marketing research, competitor analysis, research and
development, and profitability.
The simulation covers marketing topics including: segmentation,
positioning, delivery channel investments, marketing budget allocation,
customer care services and pricing. In addition, teams will make
strategic decisions regarding their company’s core competencies.
Students work in teams and in direct competition
against other student teams.

3
Learning Goals
Familiarize students with the whole marketing decision-making
process, including brand portfolio strategy, segmentation strategy,
positioning strategy, and their relationship with each other.
Develop capabilities in formulating, implementing, and adapting
marketing strategies in a dynamic competitive environment over the
course of several decision-making periods.
Enhance fact-based analytical decision-making and crystallize the
financial implications of marketing decisions by linking the decisions to
cash flows and bottom line performance.
Give practical experiences in team-work and problem solving and
excite competitive spirits in a dynamically evolving marketplace.

4
Learning Process
Applying new ideas
Analysis & planning
Observations & reflections
Results & team-work
Generalizing from the
experience
Lectures & discussion
Concrete experience
Decision making

5
Web-Based Solution
The simulation is completely web-based. The simulation can be
accessed from any computer that has an internet connection and
there is no need to install any additional applications.
The simulation platform allows team-members to work virtually if
they wish. Each team-member has her/ his own account that
enables them to make decisions and scenarios on their own and
later combine the outcomes with the other team-members on the
[decision checklist] -page.
The platform also includes a communications forum that can be
used to communicate within teams and between all teams in one
market.

6
Simulation Platform Structure
The student interface of the platform includes the following pages:
[Home] - General info page with deadlines
[Decisions] - All decisions are made under ’Decisions’
[Results] - Results become available in this area after each deadline
[Schedule] - Simulation schedule is available on this page
[Teams] - Teams and team-members in your market can be viewed here
[Communications] - Access to discussion forums for team and market
[Readings] - Access to Decision-making instructions and case description

7
Simulation Organization
Each simulation market consists of 3-12 teams, with 1-8
members in per team. The number of parallel simulation
markets is not limited, making it possible to utilize the
simulation for any number of students in the class.
All teams are starting from exactly the same position, with
similar market shares and profits. Equally, teams will be faced
with the same market conditions during the simulation.
Note that teams compete against other teams in their own
market, not against a computer. Each team’s decisions
influence the other teams’ results and the market development
overall.

8
1. Go to http://www.cesim.com and choose “Register” on the top right.
2. Fill in your email and other details and select the language and the
time zone.
click <next>
3. Enter the course code that is given by your instructor.
click <next>
4. Enter license code if required. (Note that if the license code is
required you must enter a valid code. Otherwise the registration will
not continue.) click <next>
5. Choose your Group and Team. Group equals one world where a
maximum of 12 teams operate.
click <next>
6. Click “Finish” and your registration is almost done.
7. Check your email and click the activation link.
8. Login with your email and password at www.cesim.com.
Student Registration Process

9
Flow of Operations
Decision making with
the web interface
System calculates
the results automatically
at the given deadline
Results from the
previous round and
market info for the new
round available
Analysis
and
planning
Note that it is not possible to modify decisions after the round deadline. If a team has not saved decisions
for a round, the system will automatically use its previous round’s inputs.
Introduction
Practice
Round
Strategy and
Objectives
Decision -
making (x 5 – 12)
Conclusion
and Analysis
After the introduction, the teams
familiarize themselves with decision-
making via a practice round. The
practice round results will not have any
influence on the actual game results.
The instructor decides the number of
actual decision-making rounds (5-12)
and decision-making follows the cycle
on the right.

10
Main Objective and Winning Criteria
The main objective for the teams is to maximize shareholder value.
This is measured by the share price. Share price is the same for
each team in the beginning of the simulation and it will change during
the simulation in accordance with the teams’ success in the markets.
The share price calculation is based on the discounted cash flow
method and for the most part the share price is affected by the level
of earnings. In addition, the level of R&D and marketing
communications, the riskiness of the team’s market portfolio, and the
team’s decision-making track record over time have influence in the
share price.
In summary, teams should aim for:
sustainable, profitable growth

11
Decision Making Fundamentals I
Decision making is round-based. One decision-making period is typically
regarded as one fiscal year.
In the default configuration, teams start their SimBrand without any operations
history. If the instructor wants, one period history can be activated for the
students. In the beginning of the game, market research and example results
are available to support the start. Practice round precedes the actual decision
making rounds and after the practice round, the situation is reset back to the
initial, and decisions will be made for the first round.
The manual, case description, and market research should all be read before
the practice round. Market outlooks should be read before making decisions for
each round. A new market outlook containing information about the market
development becomes available as soon as the previous round has passed.
Remember to save decisions before deadline.

12
Decision Making Fundamentals II
Decisions are entered in the grey cells. These will be used in the actual
calculation of the results.
Estimations are entered in the blue cells. These will not be used for the
calculation of the results, but they are important because together with the
decisions they form the basis for the budgets.
Different buttons and checkboxes are used in certain decisions where
there are some specific options to choose from.
As a starting point in the simulation, teams have cash that has been
invested as share capital. Some expenditure has already been made into
R&D, market research, and service quality, but there is no product portfolio
or market segment related decision history.

13
Assignment
The team will take over as the new management team of a global mobile
device marketing company. The team is responsible for developing and
implementing the company’s marketing strategy, including product portfolio,
market segmentation, product positioning, channel decisions, and R&D.
The essence of the simulation is to mirror a fast developing, technology-
based product market that is driven by short product life cycles and
innovation; where constant attention to product development, good timing
and successful positioning are the keys to success.
Teams manage smartphone products and related after sales services.
Product dimensions include battery life and product compactness, features,
and design. The services includes warranties and repairs.

15
Market Areas and Segments
The company can operate in two markets. The markets are of different size and
have different growth rates.
There are four different customer segments in both markets (more detailed
information in the Marketing research report):
- Households
- High-end households
- Companies
- High-end companies
Segments react in different ways to the marketing mix that consists of price, product,
advertising, channel investments, and after sales (Customer care) decisions.
Note that the demand for services is calculated separately from the demand for
products, but the services demand influences the demand for products and vice
versa.

16
Products and Services
For every product, the team is able to decide whether it will be sold in one or
two markets. Products that have very similar characteristics cannibalize each
other’s demand
The team does not make any production decisions. All products are acquired
through contract manufacturing.
Teams can also sell after sales services. These services are titled ‘Customer
care’ and decisions are made regarding warranty, investments in repair
quality, and the pricing of repairs.
Detailed information is available in the Decision-making instructions.
The product is a smart phone and the company is
able to offer up to six differentiated products in both
markets simultaneously.

17
Crux Challenge
To unify developer dimensions
with customer segmentation
Three product developer
dimensions
1. Capabilities dimensions
Battery life, compactness
2. Functional dimensions
Photo/Video, extra memory, premium
display, navigation, security
3. Style dimensions
Classic, avant-garde, sport
Four segments in two market
areas
1. Market 1
Consumers, high-end consumers,
Companies, high-end companies
2. Market 2
Consumers, high-end consumers,
Companies, high-end companies
Note that customer segment
preferences are detailed in the
marketing research report.

18
Demand Structure
Total market size is affected by:
a. Total market growth rates (i.e., economic conditions, demographics)
b. Average price level in the market
c. Aggregate investments in advertising
d. Total number of differentiated products available in the market
Market shares for each team are affected by:
a. Number of products in the company’s portfolio
b. Product characteristics (battery life, compactness, features, design)
c. Price
d. Advertising investments
e. Channel investments
f. After sales services (Customer care)
g. Past market share
Remember:
- All factors are measured relative to the competitors, meaning that customers will compare each
of the team’s marketing mix to the other teams.
- There is cross-elasticity between the demand for services and demand for products
- Products that are very similar cannibalize each other
- Advertising and channel investments have long-term impact
- The demand function is continuous, i.e. demand exists without discrete thresholds

19
Positioning Maps
The Products page includes a product positioning tool that allows you to
compare your own product positioning with that of the competing teams.
Separate maps are available for both market areas.
By clicking the dots on the maps you can see more detailed information of the
selected product in the middle of the screen.

20
Product Portfolio Management
Product portfolio decisions are crucial. At any point during the simulation the team
can have a maximum of 6 products in its portfolio. Products can be sold in one or two
markets. Product decisions:
•Product name
•Market selection
•Upgrade (if you want to keep existing
product do not click upgrade)
•Design (one design only)
•Features (one or more features)
•Compactness level (higher is better)
•Battery life level (higher is better)
The Capability usage indicator shows the level of capability
usage with the current set of features . If the indicator is close
to 100 and you want to add new features you need to
decrease compactness or battery life levels.
Note that compactness and battery life capabilities can be
improved through R&D decisions.

21
Research and Development
By investing in R&D, teams can increase their compactness and battery life
capabilities. When the capabilities are increased, the team is able to sell
better products or provide existing products at a lower cost. R&D decisions
are very strategic and long-term so they must be done carefully.
Note that R&D investments come into effect with one period delay, i.e. the
investments will increase in the next round's competence indices.
Product X
A B
Unit cost
Offered battery life / compactness level
Maximum battery
life/compactness level (= index)
R&D
Unit cost with index A
Unit cost with index B
R&D investment example
Vertical axis presents the unit cost and
horizontal axis presents the battery
life/compactness level.
Scenario 1: before R&D investment
• Bar A presents the maximum battery
life/compactness level before new R&D
investments.
• Unit cost for manufacturing Product X can
be read on the vertical axis (line i)
Scenario 2: after R&D investment
• Investment into battery life/compactness
R&D moves the maximum index from Bar A
to Bar B
• Unit cost for Product X (with unchanged
battery life/compactness level) decreases
from i to ii
i
ii

22
Channel Investments
Channel investments are allocated between the three available distribution
channels for every product.
An investment in the target customer’s preferred distribution channel(s) has a
positive effect on sales. This includes the number of outlets stocking the product,
the way in which the product is presented in the outlets and the promotional efforts
aimed at motivating the salespeople at the outlets.
Default sales channels are:
a. Specialty stores
b. Household appliance stores
c. Department stores
Channel investments have a long term impact.
Different distribution channel investments yield
different effect in different customer segments.
Page 9 in Marketing research report gives more
detailed information about the effects.

23
After sales Services
After sales services are called customer care in this simulation and are formulated
through decisions about extended warranty, investments in repair quality, and pricing of
repairs. Term repairs in this case refers to repairs that fall outside the normal or
extended warranty period.
The extended warranty has a positive impact on demand but results in higher costs. Also note that
companies have product liability based on laws and conventions and as a result, even with no
extended warranty period there are some warranty costs. The present value of all future warranty
costs for every active product is automatically calculated and presented in the decision-making tool.
Investment in repair quality affects positively the demand for repairs. It also has some impact on
the demand for products.
All repairs are outsourced and the pricing of repairs is decided as a margin, i.e., how
much is charged on top of the price that is paid to the third parties that conduct the
repairs. Besides pricing, demand for repairs is influenced by the repair quality and the
company’s product sales. Furthermore, the decision about extended warranty
influences the demand for repairs. The longer the warranty period, the more the
warranty replaces billable repair services.

24
Cost Classifications
1. Variable production costs
- Completely variable costs that depend on the sales volume
- More advanced products (capabilities, features) create higher costs
- Product designs (classic, avant-garde, sport) have equal costs
- Subject to economies of scale, i.e., higher volume gives lower cost per
unit sold
- Forecasting accuracy influences variable production costs, that is, the
better the team is forecasting its sales, the lower the variable production
cost per unit. Note that the impact of forecasting accuracy is limited
2. Administration
- Market presence creates administration cost
- Number of products in the portfolio creates administration cost
3. Production line costs
- Launching a new product results in production line costs
- Altering an existing product results in production line costs

25
Financial Data
Budgets consist of profit and loss statements and balance sheets for the
whole group and each market area separately. The balance sheet page
also includes key financial indicators.
Current round figures update continuously as decisions are made.
Actualized figures for the last rounds are shown on the right.
Note that all R&D and marketing (promotion) costs are expensed on the
profit and loss statement during the period the investments are made. As a
consequence, profit for the year may heavily fluctuate depending on the
intensiveness of R&D and marketing investments.

26
Selected Financial Ratios
Gross profit % = Gross profit / Sales x 100
This indicator shows how much margin the company makes after deducting
variable production costs from sales. It can be used to make quick comparisons
between teams in the same industry, e.g., higher contribution margin may
indicate more effective product portfolio and/or more effective contract
manufacturing.
Operating profit (EBIT) % = Operating profit / Sales x 100
Gives indication about the profitability that the company is earning from its
operations. Calculated as sales revenue minus all operating expenses. Note that
SimBrand companies do not own any fixed assets, thus there is no depreciation
of assets.
Return on sales % = Profit for the year / Sales x 100
Shows how much the company earns from its sales. Also referred to as profit
margin.

27
Decision Checklist
On the decision checklist page all team-members’ decisions can be seen side by side. By
pressing ’save’ a team-member’s decisions are moved to the team-decision column. At
the deadline, the system reads the decisions from the team-decision column and
calculates results for the round.
Team-decisions can be edited directly by pressing ’go’ in the team-column. In addition,
any team-member can access the other team-members’ decision area by pressing ’go’ in
the respective column.
Team members can also import other team member’s decisions by pressing Import
Note: Previous round decisions will be used if there are no saved decisions for the round.

28
Results
After each round the system generates reports that depict the results of
each team.
Results provide information about a team’s own sales, operations, and
finances. In addition, results can be used to benchmark performance
between the competing teams in the same market.
Results consist of:
a. Summary report with key financial ratios and capability indicators
b. Market research reports for both markets separately; including
selectors that allow you to pick selected products for comparisons
c. Income statements for both markets, and for the whole company
d. Balance sheet for the whole company
Results can be downloaded to a spreadsheet by clicking ’download’.
Results charts are available too.

29
Cesim Ltd
www.cesim.com
contact@cesim.com
Technical Support
support@cesim.com
More Information

Cesim SimBrand Marketing Management Simulation Game Guide Book

More Related Content

What's hot (20)

Viewers also liked (20)

Similar to Cesim SimBrand Marketing Management Simulation Game Guide Book (20)

Recently uploaded (20)

Cesim SimBrand Marketing Management Simulation Game Guide Book