During my exchange semester at Northwestern University’s Kellogg School of Management; I attended legendary Professor Tim Calkin’s highly coveted class: Marketing Strategy. In this interesting yet demanding class, 40% of our grade was our performance in a simulation game called Markstrat. Markstrat has a long heritage in the business school world. It was developed by Professor Jean-Cluade Larréché and Professor Hubert Gatignon of INSEAD from 1974 to 1977. The widely known game is played in over 500 including 8 of the top 10 international business schools and 25 of the top 30 in the US.
At Kellogg, the game was played over 7 weeks by teams consisting of 4-5 players. During the simulation, we assumed the role of senior management of a company and made a number of decisions in marketing, finance, research and development areas. Our primary goal was to outperform competing teams who also took control of a company. At the end of 7 weeks, our performance was evaluated by measuring the cumulative profits we generated for our company. We were the top performing team that generated a cumulative profit of $525 million, 53% higher than average. Globally, Markstrat is considered a good measure for performance under pressure as the simulation demands highly analytical thinking in time sensitive business scenarios.
This thrilling learning journey has taught me several valuable lessons in marketing, strategy and business management which I have articulated below.
1. Focus on the Consumer
All the teams started the simulation in the same situation with the same products, which were artificial products called Sonites. As the game progressed, the teams could either develop better products or enter a new market for an artificial product called Vodites. The Sonite and Vodite markets were completely different, and so were the decisions for these markets.
The best way to cut through product complexity is to focus on a target customer. Once you identify what your customer most wants you can concentrate on giving them exactly that. If you know their sweet spot in terms of product specifications, price, channels and advertising preferences, you can consistently gain their business. However, the key is to constantly evolve your offering with changing consumer preferences. Every week in the simulation, consumer’s ideal price points, product specifications and channels evolved, and we ensured that we modified our product offering accordingly week on week.
A classic case study of successful implementation of consumer focus are the Disney Parks. Using technology, Disney focuses on the individual and personalizes each and every consumer’s experience at its theme parks. Consumers are given the opportunity to customize their rides and experiences at the park, and then even receive personalized Disney content after their visit to the park. This consumer focused approach has resulted in a whopping 70% return rate in first time Disney Parks visitors.
2. Have your Pulse on the Market
To give your customer what he wants, you need to know what he wants. It is critical to have your pulse on the market. To achieve this, we ensured that we ordered every single market research study available on Markstrat. Additionally, we pored over every study, wove together the pieces of information and understood the big picture about our industry, consumer and competitors. In the real-world, it is important that information that comes in from varied sources such as market research, competition tracking, media and vendors is discussed and captured on a common platform so that it is easier to understand the holistic direction of the business.
3. Think Ahead, Move Fast
One of the reasons of our team’s superior performance was our success in the Vodite market. As it was a new market, there was no information available about its consumers, their preferred price points or their preferred channels. However, we knew what the consumers wanted in terms of their product specifications. We were the first movers in our industry to launch a Vodite. We ensured that we had a stable source of income through a successful Sonite product that we used to finance innovations in the form of R&D projects for both Vodites and Sonites. We achieved this by planning from Week 2 onwards our R&D projects and moving fast when the time was right for us to launch a Vodite. In today’s rapidly evolving business world, the need to think ahead and move fast becomes imperative to survive and succeed. A real-world example of a company that failed to think ahead is Kodak. Originally, Kodak defined itself as being in the photo processing business. However, this definition severely hindered the company to think ahead, innovate and move fast in the rapidly evolving digital world. Eventually, Kodak faced a lot of financial turbulence and business decline.
4. Build Trust Within Your Team
The 7 week Markstrat simulation is also a test of team dynamics and individual performances. From day one, we ensured that we built expertise within the team. Members specialized in Product, Revenue Forecasting, Production Planning and Price Modelling individually. We complemented this individual empowerment with collective ownership. Every week, individuals shared their findings and recommendations. However, the team made decisions together. This combination allowed us to build trust within the team and perform like a well-oiled machine. I plan to apply this learning in a real-world business scenario in the future.
In conclusion, the Markstrat simulation experience was not only one of the most enriching academic experiences of my life but also one that taught me the nuances of winning in business. These learnings can be adopted by business school students, professionals and managers in any industry anywhere in the world.