Firm M initially targeted high income earners and savers with two brands, MOST and MOVE. Over 10 periods, the company engaged in R&D to develop new brands targeting different segments, eventually focusing on professionals and followers with the MORE and MEGA brands. While revenue increased from $33,313 to $51,035 over this time, earnings fluctuated due to issues with brand performance, pricing, and competition in the market. Lessons learned included the importance of segmentation, targeting, positioning, and accounting for costs in pricing strategies.

1. FIRM
By: Katherine Showalter, Evelyne Ringia, Chad Frutig, Stephanie Nord, and Dana Wu
Markstrax presentation: December 9, 2013

2. Why Firm M?
– Two products that
could be targeted to
high income earners
and savers
– High income earners
had potentially higher
profit margins but the
savers represented a
larger portion of the
market

3. Executive summary- Strategy over all
Initially we started by targeting multiple segments using two brands
followed by R&D projects and a discontinuation of one of our brands
in order to better position ourselves.
In period five we decided to target multiple segments but this time
using one brand for each segment; however, the sales did not
generate enough revenue in a then highly competitive market.
Some of the new brands were discontinued after only 2 periods and
some after 3 periods. Finally, we decided to focus on only two
segments using two brands that were doing better than the rest and
the last period ended with those brands.
Another strategic turn was the increase in prices in all of the new
brands and the slight reduction of the price on the old one done in
period 7. The results of this strategy are explained later in this
presentation.

4. Executive summary- outcomes
The ROI result of 44% is a better measure of
marketing performance because it only takes
into account figures which are related to
marketing, unlike the 12% which accounts for
the acquisition expenses as well.
Own calculation: gain/cost
of investment: 12%
Calculated by Markstrat:
44%
ROI results

5. Other measures of success:
• Contribution before marketing
• Steady increase in EPS (chart shown in outcomes)
• Stable stock price in second half
Executive summary- outcomes (continued)

6. Executive summary- Ending portfolio: Period 10
Evaluation of firm’s ending position
• By period 10 Firm M had improvements
• Revenue of $51,035 compared to $33,313 of period 0
• Slight improvement of contribution before marketing, $13,679
compared to $13,508
Recommendation for future management
• We recommend having fewer brands in the market
• We recommend defining the target market early on and
creating brands that focus on their specific markets

7. Starting portfolio… (period 0)
• Information about M
– MOST had a lower base cost with a higher potential to make profits
– Earnings before taxes: $13.3 M

8. • Firms with higher
revenue could out-
perform M
• Our potential target
markets: High income
earners had potentially
higher profit margins but
the savers’ large numbers
offered a large potential
for higher sales
• The brand MOVE did not
have sufficient design
capabilitiess to support
its positioning with our
target markets
• Firm M had the second
highest net
contribution
• Brand MOST had the
highest market share,
18%
Strengths Weaknesses
Threats
Opportunities
SWOT for the starting portfolio

9. SWOT (starting portfolio) continued
Net contribution comparison: Period 0

10. Period 0 Competitive Analysis
Competitor relative market shares
Competitor selling prices
Competitors analysis, their relative market shares and pricing, distribution,. None of
competitors had started R&D in period 0

11. Matrix
strategy
Product
Price
Promotion
Place

12. Initial Strategies
Product
We decided on a production of 175,000 units for MOST because the 152,000 units
produced in period 0 were sold out. The Brand awareness for MOST was 54.6% and
had the highest purchase intentions so a 16% increase in production was reasonable.
For MOVE we decided to produce only 50,000 units because we had more inventory
from the prior period, and its brand awareness and intention to purchase were not as
strong as MOST’s.
Price
There were no price changes made
during the initial period because the
semantic scales showed our price
positioned us well with our targets. 0
1
2
3
4
5
6
7
Explorers Highs
Earners
Professionals Savers Shoppers
Price and positioning
Ideal Price MOST MOVE
Target: MOVE for high earners and professionals; MOST for savers and shoppers

13. Promotion
Target market allocation: MOST ($3.0 M), MOVE ($1.9 M)
Explorers High earners Professionals Shoppers Savers
MOST 10% 5% 10% 30% 45%
MOVE 30% 30% 30% 10% 0%
Place
We allocated more people in mass merchandizing than specialty
stores and the fewest in online stores. This decision was guided by
the consumer survey study which showed that generally more
population shopped in mass merchandizing.

14. Outcomes of the Initial Strategy
Metrics
Period 0 Period 1
Net results
Revenues 33,313 36,997
3,684
Cost of goods sold (13,945) (14,256)
(311)
Inventory costs (636) (605)
(31)
Contribution before marketing 18,732 22,136
3,404
Advertising expenditures (4,000) (5,241)
(1,241)
Commercial team costs (1,224) (1,425)
(201)
Contribution after marketing 13,508 15,470
1,962
Market research studies (245) (458)
(213)
Earnings before taxes 13,263 15,012
1,749

16. Product Strategy
Matrix R&D strategy over the 10 period
We positioned our original brands (MOST & MOVE) for high income
earners and savers
R&D trend for 10 periods
Brand Target Period
MOST Savers Original
MOVE High income earners
MORE Professionals P 3
MEGA Followers
MERMAID Adopters P 6
MELON Innovators
MESSY Followers
MOXIE Explorers
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Period
2
Period
3
Period
4
Period
5
Period
6
Period
7
Period
8
Period
9
Period
10

17. Some of our brands were discontinued after being in the market for a
number of periods because their performance did not meet our
targets
We decided to focus on only two targets markets, professionals and
followers, with two brands (MORE & MEGA) towards the final periods
Product Strategy continued
Period
3
.
Move
Moxie
.
Period
8
Period
8
Messy
Mermaid
Period
9
Period
9
.
Melon
This had a positive impact to our overall performance in the
respective periods
Production amount was always decided considering the
inventory value and future selling prospects from consumer
survey data
Discontinued Brands
Brand Management:

18. Price Strategy
• Most price changes done were a reflection of how much inventory was
left, competition, and future selling prospects from consumer survey
studies in aspects like brand awareness, purchase intentions, market
shares. For new brands we relied on market studies.
• A strategy turn occurred in Period 7 in which prices of all new brands were
raised to in order to achieve improved profit margins.
0
100
200
300
400
500
600
700
P1 P2 P3 P4 P5 P6 P7 P8 P9 P10
Most More Mega Melon Mermaid Move Moxie Messy
Price trend: All Matrix brands

19. Promotion strategy
Commercial teams and advertising were our major tools used for targeting and
positioning. Research studies showed each brand’s status with regard to brand
awareness, where our customers liked to shop, customer intentions to buy, and
experiments which showed the impacts of advertising and commercial team
allocation. Perceptual Maps were used to give direction on positioning.
Advertising and commercial team expenses trend
0
1,000
2,000
3,000
4,000
5,000
6,000
Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8 Period 9 Period 10
Advertising expenditures Commercial team costs
A drop in advertising expenses
in period 5 was caused by more
money being allocated to R&D
projects for 4 of our products

20. Place strategy
• Places of sales in the Alpha market included
specialty, mass, and online stores
• Consumer surveys showed where every
segment of customer preferred to shop
• Experiments showed us the impact of
commercial team allocation to our brands
Bubble blots showing over all team distribution

21. Contribution after marketing
The price changes from period 7 showed tremendous
improvements to both contribution before marketing and
earnings before taxes.
-10000
-5000
0
5000
10000
15000
20000
25000
P2 P3 P4 P5 P6 P7 P8 P9 P10
Contibution before marketing Earnings before tax
Outcomes

22. • Stock Price Index
1 2 3 4 5 6 7 8 9 10
1019 998 670 708 579 456 471 464 463 453
0
200
400
600
800
1000
1200
Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8 Period 9 Period 10
Stock price Index
Outcomes (Continued)

23. Outcomes (Continued)
Segment Shares- Sonites /Explorers
0
10,000
20,000
30,000
40,000
50,000
60,000
Period 0 Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8 Period 9 Period 10
Revenues
Our segment share for explorers
improved towards the second half
which we suspect might be a result
of our Moxie brand which was
targeted the explorers from period 6

24. Period 0 Period 10 Difference
Initial and
Final
Cumulative
10 periods
Revenues 33,313 51,035 17,722 404,431
Cost of goods sold -13,945 -28,045 -14,100 -224,719
Inventory costs -636 -1,390 -754 -14,431
Contribution before marketing 18,732 21,599 2,867 165,281
Advertising expenditures -4,000 -2,892 1,108 -37,673
Commercial team costs -1,224 -5,028 -3,804 -36,781
Contribution after marketing 13,508 13,679 171 90,826
Market research studies -245 -1,081 -836 -8,652
Research and development 0 0 0 -24,150
Exceptional cost or profit 0 0 0 -7,681
Earnings before taxes 13,263 12,598 -665 50,344
Comparison of the Initial and final portfolios

25. STRENGTHS
• The introduction of MORE was a great
success in all of our history because it was
well positioned with professionals for a
number of periods
Positioning of
brand MORE
• We made a fast turn around when it was
clear that advertising our products further
was not profitable and therefore allocated
more of the budget towards the
commercial teams.
Advertising
expenses
• From period 6 to period 10 Firm M made
constant improvements that can be
demonstrated by the earnings before tax
and contribution before marketing in slide
10.
Improvements
in second half

26. CHALLENGES
• Some of our brands did not
withstand the competition from
other firms and eventually we had
to withdraw them from the market.
Competition
• We did R&D for 4 brands at a time
and as a result there were scarce
resources to support their existence
in the market.
Brand
introduction
• The brand MOVE had a poor design
and high base cost which affected
its survival in the market.
Poor design
of MOVE

27. Opportunities & Threats
In period 5 our three products were MORE,
MOST, and MEGA. We saw the opportunity to
increase our sales through having one product for
each target market. So in period 6 we introduced
4 new products, making it 7 total products
The increased
competition in the
market proved to
be our threat.

28. What we learned
Competition analysis: study what
other brands are doing and try to
position more efficiently than them
by adjusting the marketing mix and
commercial team
Having many products doesn’t
necessarily guarantee increase in
sales; it’s better to focus on fewer
products that are well positioned to
attract their target market to build
brand identity
Segmentation,
Targeting and
Positioning are
key
Pricing strategy: we
used the exact price
from the conjoint
analysis but it didn’t
take into account
production costs so
we lost money