Markstrat is the marketing simulation game played in teams. In 2013 I posted a tips and tricks on how to win at Markstrat, I’ve now been lucky to be involved in some further Markstrat simulations, and thought it was worthwhile sharing the learnings.
The previous posts are still relevant, and go into a lot more detail, this post will simply add on and reiterate key points.
Markstrat starter information
I realised that the tip and tricks I previously posted were for those that were well conversed with the Markstrat world, there were some key points that I assumed were already known, being involved with some teams from the beginning made me realise that was not the case, below are some starting pointers.
- completely (value of zero) use up all of your budget.
- stick to one product per market segment, there are no exceptions to this rule, the reason being
- it is impossible to build a product with ideal values for two segments.
- it increases the products competition, i.e. you may have x competitors in one segment and y competitors in another segment, targeting two segments means x plus y competitors.
- it dilutes advertising spend, making it harder to conquer a segment.
- and similarly, the aim is to dominate a market segment, it is very difficult to do two at same time.
- early on, when you start with two products, chose the product that is the highest total contribution margin segment (CM x total estimated volume) (cull the other product)
- when decided on which product to cull early on, look at which product is closest in characteristics to the competitors. You want to differentiate your product early on compared to the competitors.
- observe the budget of competitors, you start with around $7.1m the minimum budget cap, there is a maximum budget cap of about $x so to prevent teams dominating the game, each period the minimum and maximum increase roughly 2.85% per inflation.
And the main takeaways for Markstrat beginners are;
Do not get emotionally attached to products – it is very easy to want to keep both your products at the start, don’t. You will be competing against others who may have one good product and one bad product, they will be spending money on their single good product.
Do not get emotionally attached to segments – it is very easy to want to throw some advertising to those segments that are buying small amounts, don’t. Concentrate on one segment only.
As I previously posted, I mentioned to get in Vodites straight away with a budget product, this will still allow you to sell at a ridiculous price since being the only product in the marketplace.
What I have also found is that if you are competing for the highest shareprice, you need to diversify into the Vodite market as it appeases investors. Even if you are doing well in the Sonite market alone, it maybe worth creating a Vodite product to get an additional SPI bump.
Suggested Markstrat gameplay
I have seen a new starting scenario in which every single team gets the same two products, this is obviously a lot fairer, but means a number of new strategies. The main issues is because everyone starts with the same product, it is key to differentiate the products by R&D, rather than advertising spent. The problem if R&D is that the research isn’t available.
My suggested gamplay for the early rounds is significantly change your products prices (more than 30%) possibly go midway between your two products. Price is the only characteristic that doesn’t need to be R&D, use this to your advantage and then spend advertising on price. What this would do is move the market towards your product away from others.
With no research available it seems counter productive to R&D a product this early on, but if you don’t you will be wasting a round. Simple R&D a product mid point in characteristics between your two products, this will mean you are completely differentiated to your competitor products.
The general rule is still always that; your portion of advertising spend compared to competitors will be your market share. For new products always use no-objectives to increase brand awareness. Never cull your existing two products as they have really high brand awareness, always reuse them, even if you are targeting a new segment.
Previously, I posted that commercial team doesn’t really matter and to only meet the commercial team of competitors, I was quite wrong. The commercial team moves your products, a low commercial team will automatically default to your competitor’s commercial teams picking up the slack.
Once suggestion I have, increase your commercial team by a minimum of the increase the market’s segment. For the large segments it is not unusual to have more than 200 people in the later rounds.