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Marketing Management

INTRODUCTION:

The SLP for this course involves participating in a simulation exercise. Unlike cases, which are static, simulations are interactive and you can see the results of your decisions. What's more, you can repeat the simulation to improve the quality of your decisions.While many simulations focus on just one general area of management (e.g. supply chain management or leadership), I have selected one that integrates several areas. In particular, you will be looking at income statements and sales reports. You will be making decisions about production, pricing, and investment.
REQUIREMENTS:

Your first step is to come up with a strategy for how you will make these decisions.

1. Access the simulation site http://www.forio.com/pdasim.htm) We will be using the PDA Sim
2. Read the introduction, and study the Financials and the Market Information. Review the Decisions you will be asked to make, BUT DO NOT ENTER ANY DECISIONS! (If you have difficulty with impulse control, try one of the other simulations!)
3. Describe the strategy that you will use over the four years of the simulation, and defend why you think that strategy will work. In doing this you will want to consider what ratios will give you the information you need to make the best decisions. There are numerous ratios you can calculate with the data you have. First, you need to determine what types of ratios are going to be relevant to you. Obviously debt or liquidity ratios are not gong to be germane to this simulation. You are going to want to look at ratios that measure manufacturing efficiency and profitability. Some you will want to use to compare the entire firm's performance over time, others can best be used when applied to comparing the three products' performance or profitability. Begin by looking at

 unit price
 unit cost
 average revenue per unit
 break even

Explain what these ratios tell you and how you can use them to plan and evaluate the effectiveness of your strategy. You will definately need to use additional ratios that will give you more or better information - but at a minimum, you must address these in your paper.

You may append supporting materials, such as data tables and references. Be sure to EXPLICITLY draw on concepts and theories from the courses you have taken throughout the MBA program.

Solution Preview

See attached files.

The response addresses the queries posted in 1011 words with references.

//First of all, we will run the simulation to make the appropriate pricing strategies for the product X5, X6 and X7. We will follow the same strategy for all the next three years. You are free to choose different strategy to maximize the profits.

The main objective of the simulation is to maximize the profits for all the three models over a period of five years. In order to maximize the profits, the price of product X6 will be increased, price of X7 will be reduced and the price of X5 will be kept constant. It is because; the product X5 is in the market from the last three years and customers are quite satisfied from the performance of this product. If the price of the product is increased or decreased, then, it will affect the sales revenue of the company. So, the price of X5 doesn't require an increase; but at the same time, the complete advantage of maximizing profits would be taken (Stahl & Grigsby, 1997).

The product X6 is in the market for 2 years and customers are more concerned about the performance in comparison of its price. It has a flat metal case. The current price of the product is $400 and an increase in the price will not affect its sales. The last product in product line of the company is X7, which is new in the market with a colored case. The customers include both the performance and the price of the product in making the buying decision for X7. Thus, the best strategy for this product is to lower the price of the product for some time. The current price is $400 and it will be reduced for the period of four years. The graph sows an increase in the profitability of all the three products in the year 2005 in comparison of the year 2004. Product X6 has the highest growth in its profits (PDA Sim, 2009). The total revenue and the performance of the products have also increased.

//Now, we will run the simulation for the four years and will interpret the results obtained by the pricing strategies, which we have decided.

Keeping the price of X5 constant, increasing the price of X6 by $25 and reducing the price of X7 by $10, we obtained an increase in the profit. The total change in the profits is about to 70% in comparison of the year 2004. The R&D allocation is also ...

Solution Summary

The response addresses the queries posted in 1011 words with references.

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