Practice Marketing Stimulation: TEC Backpacks

Tabitha Atwood, Carol Greer, and Erika Johns

IUPUI Kelley School of Business Dr. Saxton M450

2013

This document contains the report of TEC Backpacks practice marketing simulation process, strategy, and learning outcomes.

IUPUI Kelley School of Business 2 Practice Marketing Stimulation: TEC Backpacks

Contents
Introduction ................................................................................................................................................ 3 Customer Segmentation ............................................................................................................................ 3 Initial and Final Target Segment .......................................................................................................... 4 Means-End Chain................................................................................................................................... 8 Segment Persona .................................................................................................................................... 8 University Students Backpack Needs ................................................................................................ 9 Product Design ........................................................................................................................................... 9 Initial Product Plan vs. Final Product Plan ........................................................................................ 9 Product Design changes with Segment change ................................................................................. 9 Pricing the Product .................................................................................................................................. 11 Distribution ............................................................................................................................................... 12 Distributor Choices .............................................................................................................................. 12 Distributor Reach ............................................................................................................................... 12 University Students ......................................................................................................................... 13 Promotional Strategy ............................................................................................................................... 14 Positioning and Messages ................................................................................................................... 14 Branding Strategy ................................................................................................................................ 15 Brand Essence ................................................................................................................................... 16 Media Vehicles ..................................................................................................................................... 16 Reach/Frequency Analysis............................................................................................................. 16 Media Plan ........................................................................................................................................ 18 Budget .................................................................................................................................................... 19 Integrated Marketing Communications Plan (IMC) ....................................................................... 20 Ad ........................................................................................................................................................... 21 Reflection ................................................................................................................................................... 23 Sales Recap ............................................................................................................................................ 24 Competitors .......................................................................................................................................... 24 Five Lessons Learned: ......................................................................................................................... 28 The Four Ps ........................................................................................................................................... 28

IUPUI Kelley School of Business 3 Practice Marketing Stimulation: TEC Backpacks For University Students, ecoTEC is the backpack that delivers the highest quality pack for the best price while reducing your carbon footprint

Introduction
TEC Backpacks goals were profit driven. We mean being profitable every round during the simulation. When we talk about the simulation or game, we are referring to the month long project in the class that mocks a real world business model. We had to make decisions as a team and work together to make a product and sell the product, just like we will be doing once we graduate. The goals we set up were realistic, and we had a process to reach our BHAG. We achieved our goal by setting up smaller goals throughout the game. These smaller goals were: use Wrights Rule to calculate marketing spend, to do better than the other teams, and to appeal to our target market. When it came down to Wrights Rule, we used the calculation and realized we had to increase spending in order to get into the market. We calculated Wrights Rule every round, but never ended up implementing the exact amount. Some of these smaller goals did not occur, but the vision of having these goals led us to be second in profit overall. Our teams positioning, as listed above, For University Students, ecoTEC is the backpack that delivers the highest quality pack for the best price while reducing your carbon footprint fits with our messages of great value and eco-friendly. Our Vision: To help University Students embody their core values by providing a backpack that reduces their carbon footprint without reducing their wallet Our Mission: TEC Backpacks is a down-to-Earth backpack manufacturing company offering high-quality and moderately priced backpacks made of materials that are very eco-friendly. We view ourselves as friends with our customers, our employees, our community, and our environment. We aim to become a regionally recognized brand name, capitalizing on eco-friendly backpacks. Our goals are moderate growth, annual profitability, and maintaining our values as well as our customers values"

Customer Segmentation
TECs target segment changed in the third quarter/round of the Game. The following explains our initial and final segment choices.

IUPUI Kelley School of Business 4 Practice Marketing Stimulation: TEC Backpacks

Initial and Final Target Segment

TECs analyses reflected of the five segments for the backpack market within the Practice Marketing Game are: School Children Outdoor Enthusiasts University Students Luxury Trendfollowers Urban Commuters The game offers a significant amount of data for each of the target segments. The data has been interpreted in the chart on the next page in terms of profit. Market size is calculated in dollars and has a large spread scaled 1 to 10. For factors that have a high significance we gave them a larger spread. Factors with a lesser significance have a smaller deviation. For example, the growth rate of 10 or more percent is favored, and will not be achieved in a mature backpack market. Since Market Growth is in single digits for all of the segments, the scores are only separated 2 to 7 percent from lowest to highest. An interesting comparison is that price sensitivity and production costs are almost the inverse of each other within each segment. Basically, they cancel each other out with the exception of Luxury Trendfollowers. It is a slight surprise that Luxury Trendfollowers had the highest end score. However, we also feel that since there is only a 1 point stretch between the lowest and highest, that any of the segments stand a fair chance in the Practice Marketing Game. To make the decision using this data, we first disregarded the Luxury Trendfollowers score. It was a consensus that the segment is just not big enough in market size. Since the Luxury Trendfollowers are not price sensitive, let us suppose that we could increase the price to double the average making the market size: $84,000; it is still a significantly small market size compared to the other segments. The Outdoor Enthusiasts appeared the next most attractive as far as profit potential. This was the best way for us to evaluate the segments, since profit is how the game is won. Congruently, we set our goals to be the most profitable. After the first quarter, there were two other teams targeting the Outdoor Enthusiasts. Although, we had high message, appeal, and interest levels; for the first two quarters we had these smallest piece of market share within our own segment. Once we saw the extreme competition in the Outdoor Enthusiasts segment, we decided to leave the segment and pursue another segment instead. There were two available segments, University Students and Luxury Trendfollowers. Between the two segments, we chose University Students for our new target segment. The irony is that University Students had the lowest final score and Luxury Trendfollowers achieved the highest score, but we chose this segment because we saw an opening in the market and believed that we could win the simulation by focusing on University Students since no other teams were. The only other segment that was not claimed was Luxury Trendfollowers, and we felt after two wasted rounds that we could not afford to market to this segment. Another reason we chose to target University Students was pricing; enough backpacks were in the $65 and up and we didnt want to be just another expensive backpack.

IUPUI Kelley School of Business 5 Practice Marketing Stimulation: TEC Backpacks Evaluation of the Profit Potential of Market Segments for Backpacks

Rate each segment on 110 scale per text

School Children
8 $168,000 4

University Students
$122,880 10

Urban Commuters
$207,000 8

Outdoor Enthusiast
$163,800 1

Luxury Trendfollowers
$42,000

Market Size

(#)(%buying)(avg$)=

Market Growth

2%

6%

4%

5%

7%

Competition

Univ Stud

4 School Children

3 Lux Trend />Univ

10 None(if, lux/urb)

8 Urban Commuters

Price Sensitivity

2 very high

high

medium

low

10 very low

Production Costs

10

low

low to med

5 medium

very high

5 medium

Marketing Costs

8 easy w/low $

avg

expensive

hard to reach

avg

Market Value 32/6= 5.33 (Sum above/6)

29/6=4.83

30/6=5

34/6=5.67

35/6=5.83

IUPUI Kelley School of Business 6 Practice Marketing Stimulation: TEC Backpacks Still, another analysis, the Segment Overview, is shown in a table on the following page. Admittedly, our opinions may have been slightly swayed in favor of Outdoor Enthusiasts because we conducted the Profit Potential Analysis first. Yet, the benefits desired area had a very high percentage of the Outdoor Enthusiasts that preferred specific benefits. With 86 percent of the segment desiring both capacity and waterproof benefits, we understood that there was a high likelihood of the segment being easy to please when we offer these benefits in product design. No other segment had as high agreement across the segment. It begs the question for each of the other segments, what does the rest of the segment want and how can we capture all of its attention? Also appearing in the Segment Overview on the next page, TEC came up with some different factors that are important to TEC to evaluate segments by way of strategy. These two extra criteria are THREAT OF NEW ENTRANTS and MARGIN AFTER DISTRIBUTION. The threat of new entrants is picked as a criterion because it is impossible to know where any of our competition will target prior to the first quarter. The idea that two teams will inevitably have to target a single segment in the game in sighted a great deal of concern, and if there is a low threat of new entrants maybe this situation could be avoided. Also, knowing that consistency is a priority, we did not want to have to skip around segments and constantly rebrand TEC. Therefore, a low threat of new entrants becomes a more favorable segment. Margin after distribution is another important evaluation because it follows our profit goals. It may be considered redundant by some to add this criterion since it is so similar to the Profit Potential Analysis, but we felt that the Segment Overview should act as a summary of the deciding factors. The margin after distribution consideration caused the least price sensitive segments to become the most attractive, and again showed Outdoor Enthusiasts to be a favorable target segment. Another factor that made TEC decide to add original criteria to the Segment Overview on the next page is that if all the teams used the exact same criteria, then it would be more likely that multiple teams would target the same segment. The table on the next page shows how we used the criteria to pick our segment, the Outdoor Enthusiasts.

IUPUI Kelley School of Business 7 Practice Marketing Stimulation: TEC Backpacks Customer Segments Overview
Segment Name & Size

School Children

University Students

Urban Commuters

Outdoor Enthusiasts

Luxury Trendfollowers

Key Differentiating Demographics

Ages 5-17yrs Middle income

Ages 17-23yrs Low to Middle income Environmentally Conscious Great Value

Eco-Friendly (68%)

Ages 25-44 Medium to high income Needs an assistant to carry essentials Classic image Comfort (56%) Capacity Waterproof Professional Significant

Ages 18-44 High income Male Achievement Perform man with nature Capacity (86%) Waterproof (86%) Durability Peak Performance Could be sig because not price sensitive Low High

Ages 25-44 High income Female Deserve Luxury Indulgence

Key Differentiating Attitudes & Beliefs

Moms want Great Value Kids care about fun Capacity (47%) Comfort, Durability Low Cost Quality Cute Small if charge avg price High Low

Benefits Desired

Capacity Eco Friendly Almost nothing if produce preferred features Medium Medium

Comfort (62%) Capacity Durability Fashionable Could be sig. because not price sensitive Low Low

Attribute Preferences Margin after Distribution (see page ___) Threat of new entrants Targeting Priority

Very High Medium

The bulk of this paper and the reflections are based on the final target segment, University Students. Targeting the Outdoor Enthusiasts in the beginning caused a few things to happen in the game. First, we lost money by heavily investing in marketing to a segment that we inevitably left, and we simply lost two quarters. Second, we developed a taste for a high margin with a high price point. Finally, it influenced our choice to go the eco -friendly path. Although Outdoor Enthusiasts did not list eco -friendly as being of high significance to them, the idea of the outdoors gave us hope that it may give us a smoother transition. No data supports this and there is little to no crossover of Outdoor Enthusiasts with the other segments, but somehow it felt right. In any case, the rest of the segment analysis represented in the following is based on the University Students segment.

Means-End Chain

Features: Water bottle holder, durable, eco-friendly material

Benefits: Reduces carbon footprint

Values: Earthfriendly & Socially Concious

From the means-end chain above, we can conclude that the values of a University Student are Earth-friendly and socially conscious. We came to this conclusion by starting with the features our backpack, which are a water bottle holder, durable, and made of eco-friendly material. From these features, the benefit is that the backpack reduces a persons carbon footprint.

Segment Persona
The archetype consumer of ecoTeC backpacks in the University Students segment is Sasha. Sasha is a student at Indiana University majoring in economics. Sasha is 20 years old and is excited about next semesters study abroad program in Brazil. He is saving the money that he earns from valet parking on the weekends. It bothers him the way the sophisticated clientele treat everything and everyone as disposable items when it so obvious to him that this attitude is what

9 is wrong with society. Sasha understands that overpopulation is inevitable and is deeply concerned about the effects of it. When it was time for Sasha to purchase a backpack to carry belongings to class and other day trips, the only choice for Sasha was an ecoTec. The ecoTeC backpack is made with eco-friendly materials and has high durability compared to other backpacks on the market. Sasha was so surprised that it didnt cost a lot to make a purchase that helped reduce his carbon footprint. It is so trendy to care about the earth and be organic, which is a good thing, but its usually expensive. What a relief that something that is good for us has been made so easy to get. ecoTeC speaks to Sashas sensibilities and he feels confident that he made the right purchase every time he packs and un-packs his ecoTeC.

University Students Backpack Needs

From the means end chain discussed previously, we can conclude that the University Student needs a pack that will support the weight of their workload, be socially acceptable, and be eco-friendly.

Product Design
TEC Backpacks first designed a backpack to fit the needs of Outdoor Enthusiasts. Below shows the stages of our backpack design for each round. From Round 1 to Round 3 we started to transition our backpack to fit more to the needs of University Students. We struggled with deciding what feature to add, and ended up landing on a water bottle holder and sticking with it. We also experimented with the color because this was not something that we could extract from our market data. We also changed the Final product: straps, but realized through the changes from -Rounded top -Eco-friendly material quarter to quarter we found that basic straps -Basic straps -Water bottle holder were just fine. We also found that a blue -Blue pack pack was preferred.

Initial Product Plan vs. Final Product Plan

Our initial product was created to appeal to the Outdoor Enthusiasts. Once we decided to change segments, we slowly changed our backpack to fit the needs of University Students. The following section includes a table that tracks our changes as well as our final product.

Product Design changes with Segment change

Round 1 is the product that we made for Outdoor Enthusiasts. We tried a tan color, which they did not like. Green turned out to be preferential. When we changed to

10 University Students as a target segment we tried blue. Although our segment liked blue, we tried red to see if the segment would be indifferent to the color. School Children liked red and if University Students didnt mind the color then we could pick up some of the School Children without sacrificing the University Students. This was not the case. The University Students did not like red. Therefore, we kept the pack at blue for the remaining rounds.

The below chart reflects the characteristics that are important for each segment. From this chart, we created a backpack that would appeal to University Students.

11

Pricing the Product

When determining a price for our backpack, we took into account several factors. First, we considered the average purchase price University Students paid. According to the game, University Students paid on average, $32 for a backpack. Unfortunately, we were not given more information about what features and characteristics the average backpack contained, so we had to make inferences according to their preferences. Next, we took into consideration the cost of the backpack. When we offered a solar device and water bottle holder with the backpack, it cost $23 and we decided to sell our backpack at $56, leaving us a nice margin. Unfortunately, University Students were not buying at this price and we did not sell very many units. We decided to remove the solar device and just offer a water bottle holder, reducing our costs to $13 per bag. When we did this, we lowered our price to $36. Sales increased, but we did not want to be priced below JHB (named: our primary competitor), so we increased our price to $40 for the last three rounds. We also added better straps when increasing the price to increase our customers perceived value. Another important factor in determining our price was the distributors cut and accepted price range. Please see section on distribution for further information on price cuts. When we were priced at $56, we were not able to be sold in the Discount Retail Chain, but were able to sell in the University Store, online discount retailer, High End Outdoor, department store, and direct. When we lowered our price to $40, we were no longer able to sell in the High End Outdoor, but could now sell in the Discount Retail Chain. We considered increasing our price above $40, but ultimately decided not to so we could remain in the Discount Retail Chain. We ultimately decided to sell in and channel that we could that would leave us a nice margin. Although we did not determine Van Westendorps 4 price points, we did charge a range of prices and tracked sales at each price. As you can see from the graph below, $40 seemed to be the optimal price point. At $56, University Students perceived the bag to be too expensive and $36 was too cheap. As the price moved closer to $40, sales increased. We initially felt that $36 would yield better sales since it was closer to University Students average price paid, however students must have associated a lower price with a lower quality bag, so sales actually increased when we increased our price. This also has to do with our marketing spend and they go hand in hand.

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Units Sold
3000 2500 2000 Units 1500 1000 500 0 36 36 39 40 40 40 47 56 56 56 Price in dollars

Distribution
Prior to the beginning of the Practice Marketing Game we analyzed distribution channels based on the average price that each segment is willing to pay, how many consumers from each segment make purchases through the distribution channels, and compared the percentage cuts of the channels.

Distributor Choices
Distributor Reach Distributors are separated in the table below by reach. The highlighted areas are meant to easily distinguish optimal reach. Outdoor Enth 281 1,069 168 1,069 267 2,476 267

Marketing Channels University Store Online Discount Retailer Discount Retail Chain Department Store Direct High End Outdoor Fashion Boutique

Kids 993 2,096 3,531 2,869 540 757 216

Univ Stud 2,808 850 2,042 1,191 401 401 722

Urb Comm 442 1,948 708 2,922 425 766 1,532

Luxury 57 399 28 741 133 213 1,172

13 Outdoor Enth 4,614 14,000

Marketing Channels Total top 3 reach Market size

Kids 8,496 35,000

Univ Stud 6,041 24,000

Urb Comm 6,402 20,000

Luxury 2,312 5,000

The highlighted areas are the ideal distributers by each segment. It should also be noted that School Children and University Students can be reached by similar distributers. Also, the Urban Commuters and the Luxury Trendfollowers also can be reached in similar Distribution channels. We then correlate the price preferences with the Distributors cut in order to identify the margins left for production and profit. The next table shows that the University Store offers the highest margins, but a lower reach than the top three reaching distributors. We have based the quantitative analysis below based on the average purchase price of $32.00 for this segment. Please note that the margin column on the left is the margin before production and marketing costs.

University Students Marketing Channels University Store Online Discount Retailer Discount Retail Chain Department Store Direct High End Outdoor Fashion Boutique Total top 3 reach Univ Stud 2808 850 2042 1191 401 401 722 6041 Of 24,000 8% 2% 6% 3% 1% 1% 2% 17% Price min $ 30 $ $ $ 15 $ $ 50 $ 60 max $ 80 $ 200 $ 40 $ 130 $ 200 $180 $200 Dist% Cut$ 30 $ 9.60 40 $12.80 50 $16.00 45 $ 4.40 0 $ 28 $ 8.96 55 $ 7.60 Margin $ 22.40 $ 19.20 $ 16.00 $ 17.60 $ $ 23.04 $ 14.40

As shown above, the University Students segment offers the most benefit at the University Store and Discount Retail Chain. We used this factor to decide to offer a promotional budget to these channels during the Game. However, our main competitor, JHB beat us to offering these incentives to the channel members. We went ahead and offered the incentive to the University Store because it is our segments main distributor by name. But the other distributor that we offered the incentive to is the Online Discount Retailer. It was the only distributor that did not already have a favorable relationship with one of our competitors. We are also able to look at the margins and realize that there is not much that we can offer to the University Students in features that will fit in the average price in these channels. Since we

14 began our Practice Marketing Game with the Outdoor Enthusiasts and already established high scores with our features, benefits, and message; we had a difficult time deciding if we should give them the things that they want and charge them more, or give them less and get closer to a favorable price. We chose to give them a feature that appealed to both segments: the solar panel, and charge a higher price. This gave us a higher margin than we were enjoying in the Outdoor Enthusiasts segment. Yet, when meeting with a consultant we were advised to lower the price. The lower price allowed us to utilize the above analysis in order to successfully distribute to the University Students. Additionally, this change influenced the Disappearing Mousetrap strategy where we heavily marketed a product to convince the segment that TECs pack had everything that they desired. This was in conflict of our beginning ideals, but proved to be effective in the Game. Fortunately, the most important benefit to the University Students could be actualized (eco friendly material) and used in the brands positioning which was broadcasted through the same message of eco-friendly consistently through the remainder of the Game. This table shows how our margin after production through distributors and before marketing considering final factors: Price of bag Production Cost Margin per Unit $40.00 $13.00 $27.00 CHANNEL Discount Retail Chain Department Store University Store Online Discount Retailer PROFIT MARGINS $11.00 $9.00 $15.00 $11.00

Promotional Strategy
Positioning and Messages
Positioning Statement: For University Students, ecoTec is the backpack that delivers the highest quality pack for the best price while reducing your carbon footprint. When we were targeting Outdoor Enthusiasts, our messages were rugged and peak performance; however when we switched to University Students we changed our messages to eco-friendly and great value. Although fewer messages are clearer, we felt that adding the second message was worth it. We wanted to keep our message as consistent as possible; however the change in segments and backpacks required a change in message. We kept our

15 message consistent at eco-friendly and great value for several rounds and our message score averaged around 20., as shown in the graph below.

Message Score by Turn

30 Message Score 25 20 15 10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 Turn

Since JHB was also using great value as their message, we tried to switch it to funky and eco-friendly. When we did this, our message score dropped. It created a great opportunity for JHB, since they were now the only team with great value as their message. Their message score increased while ours decreased. For the last two rounds, we decided to change our message back to great value and eco-friendly. Our message score went up turn 11 and back down during turn 12. We feel we would have been better off keeping our message consistent throughout the game, but we learned from our mistake.

Branding Strategy
ecoTeCs brand personality is young, optimistic, socially conscious, and intelligent. These traits are shown through our positioning statement as well as the companys vision and mission as a whole. Our brand is for the young, socially conscious University Students, but also appeals to children because of its basic features and young look. If our brand is a person this would be his favorite things: Car: Ford Focus Flower: Wild flowers Actor: Owen Wilson Animal: Frog Drink: Bacardi Clothing: Toms Furniture: Futon

16 Brand Functional Performance ecoTeC is the most durable and eco-friendly backpack in the market. It makes the purchaser feel good because they are buying a product that is useful to them as well as good for the environment. The eco-friendly material is of great value so the purchaser will not feel robbed when it comes to purchasing the pack. Brand Essence Eco-friendly Intelligent Optimistic

Media Vehicles
In the Practice Marketing Game, each of the five segments for backpacks has ideal media vehicles in which to reach them. Below are recommendations based on the data gathered from the game. The data is attached and the boxes, accompanied by circled data, represent the ideal media vehicles for each segment. The data was singled out in yellow based on the highest numbers for reach (most effective) in each media by segment. Then, the cost per that number is below. The lowest costs are highlighted in green. Weighing both of these factors, the most cost efficient and effective vehicles are found for each segment. University Students and School Children share two clear choices for media vehicles: Video Games and Social Media.We would have liked to acquire three media vehicles for the multiplier effect; however it never made sense in the budget to cover three vehicles. Additionally, the frequency of each media buy should be 5+/-2 (3-7 times). Reach/Frequency Analysis Schl Media Vehicle Chld Print Fin Journal FashMag OutdMag $ Comic $ Newsp Internet Gossip

Univ St 1 2 $ 20 40 35 13 5 $ $ 4

Urb Com 50 13 12 23

Outdoor Luxury 8 4 $ $ 8 35 29 20 20 40 2 30 33 15 10 55 14 15 1 20 50 45

Circ 16657 14827 21982 21374 20677

Cost $ 650 $ 750 $ 800 $ 450

$ 18 42 10 80 15 30 8 $ 12 32

$ 1,000

26871

$ 1,100

17 Schl Chld 40 18 10 2 $ TV Wild Cable Cartoon Ch $ Nat Ntw Radio Sports News Top 40 $ Poster Gym Billboard $ Subway 1 10 60 5 $ KEY: Highest reach respectively for segment Lowest Cost per reach respectively for segment As the table illustrates, Social Media reaches a large number of Luxury Trenfollowers and Urban Commuters, while Video Game ads will reach a large number of School Children. This is in addition to the University Students media vehicle choices 6 12 $ 11 45 $ 4 19 32 20 25 7 11 55 7 4 16 38 15 33 5062 16097 13213 $ 500 $ 600 $ 500 5 4 23 70 15 25 $ $ 40 40 30 $ 50 23 32 $ 30 33 20 30 53 15 25 45 36 21420 28364 39779 $ 1,000 $ 1,150 $ 1,600 35 65 28 44 $ 22 35 60 87 20 $ 10 80 65 55 55 8 45 116 15 8 60 87 37785 42162 70947 $ 3,000 $ 1,800 $ 5,200 Urb Com

Media Vehicle Vid Games

Univ St 35 20 25

Outdoor Luxury $ 24 5 3 4 45 31 50 20 30 47 20 50 35 55 18

Circ 29806 32089 41739

Cost $ 700 $ 1,400 $ 1,000

$ News Soc Med

$ 60 17 $

$ $

$ $

18 Media Plan We intended from the beginning to follow a pulsing schedule. That would have looked like this for the University Student segment: Q3 4Xs Soc Media 4Xs Vid Games Q4 4Xs Soc Media Q5 4Xs Soc Media 4Xs Vid Games Q6 4Xs Soc Media Q7 4Xs Soc Media 4Xs Vid Games Q8 4Xs Soc Media Q9 4Xs Soc Media 4Xs Vid Games

As we concluded from the Reach/Frequency Analysis, Social Media and Video Game ads are the most efficient regarding reach and cost that can be purchased. As mentioned earlier, a frequency of 5 +/- (2) is preferred. The ad buys can only be purchased with frequencies of 1, 2, 4, or 8 times. This means that we would have to buy a minimum of 4 times frequency in any media vehicle in order to achieve the 5 +/- (2) rule. As mentioned in the following budget, it is way off (expensive) the Wrights Rule number and we would be way over the budget that is comfortable. We ended up modifying our media buys to conform to the market in which we were playing. We began targeting the University Students with only 2 times frequency in Social Media and one in Video Game ads. Occasionally we flipped the frequencies and increased them over the progress of the game. The ending result was a hybrid of pulsing and increasing over time. The deviation from our planned Pulsing schedule was that when we changed segments in round 3, we basically lost all the media money that we spent to our previous segment. This left us with minimal funds to begin marketing to University Students. Here is the actual schedule that was used in Quarters 3 through 12 Q3 2X Soc Media 1X Vid Games Q4 2X Soc Media 1X Vid Games Q5 2X Soc Media 1X Top 40 fm Q6 2X Soc Media 1X Vid Games Q7 1X Soc Media 4X Vid Games Q8 1X Soc Media 4X Vid Games Q9 1X Soc Media 4X Vid Games Q10 2X Soc Media 4X Vid Games Q11 4Xs Soc Media _____ Q12 8X Soc Media ______

The costs are shown in the next section on the Budget. From the 7th to the 10th quarters we were attempting to entice the School Children to purchase our pack as well which is why we were Video Game heavy as opposed to Social Media heavy. We did not follow a pulsing schedule, though our media costs slightly pulsed. If we had to do it again we would stick to our plan. In hind sight, it was silly of us to try to take anything from JHB backpacks because their message dominated the market. However, we did benefit from competing with JHB, because we increased our sales by trying to beat the brand leader. In the last two quarters, we gave in to who we are and made sure that we fully targeted University Students where we would get the most exposure, and that was in Social Media. We ended the Game with an awareness score between 4 and 5 out of 10 with maybe a 2 out of 10 for the rest of the markets.

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Budget
Several factors played a role in deciding our advertising budget. First, we calculated Wrights Rule, however it suggested spending very little in the beginning and we did not feel that was sufficient. We also considered units sold during the previous turn. The more we sold, the more money we had to spend on advertising. Our actual balance was also a consideration since we never wanted to go negative and tried to have at least a two thousand dollar balance.

Forecasted Units Average Turn Units Sold Sold Margin

1 2 3 4 5 6 7 8 9 10 11 12 50 100 250 400 500 700 1,000 1,200 1,500 1,750 2,000 2,500 75 73 325 331 426 333 960 1,062 1,354 1,532 1,925 2,829 $28.70 $32.70 $15.98 $15.98 $11.73 $15.65 $11.84 $13.91 $11.84 $9.60 $14.60 $14.60

Wright's Rule Ad SpendForecast

$158 $360 $439 $703 $645 $1,205 $1,302 $1,836 $1,954 $1,848 $3,212 $4,015

Wright's Rule Ad Spend-After

$237 $263 $571 $582 $550 $573 $1,250 $1,625 $1,763 $1,618 $3,092 $4,543

Actual Spent
$6,000 $2,000 $2,700 $2,700 $3,600 $2,700 $3,800 $3,800 $3,800 $4,800 $4,000 $8,000

Interest Score
20 19 17 18 19 21 24 25 27 30 33 36

We wanted at least one media form to have a frequency of 5 +/- 2, since that is considered an appropriate frequency. We used a few different media vehicles depending on our budget. We always tried to have at least one frequency on social media, although we usually had more. We chose our other media vehicles based on their trade-off of cost verses reach as mentioned in the previous section Our interest score was also an important factor. Generally, the more we spent, the higher the interest score. However, some of that was due to increased awareness after more time has passed. We wanted our interest score to be as high as possible, but we still had to stay realistic with our ad spend. Finally, we considered the competition when deciding how much to spend. Our competition with JHB was intense, so we had to spend more than we would have liked just to keep customers aware of our brand so we could compete. JHB had really high revenue, so they could spend a lot and we tried to keep up with them as much as possible.

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Integrated Marketing Communications Plan (IMC)

Developing an effective integrated marketing communications plan is essential for adapting to changing environments and maintaining a consistent brand image. Many companies in the past have changed their message when they change their media vehicle. For example, a company introduces an email marketing campaign to target a new segment or narrow in on a niche in the current target, and then the company comes up with a new message. This clouds the brand image. Do not be something else that you are not. This was a mistake that we made when we changed from great value to funky and also when we considered the color red. Though we had good reason to do so, it was ineffective. Below is a summary of ecoTeCs final IMC Plan. Objective: Appeal to Esteem by goodness and doing what is right for the environment. Target Market: University Students Frame of Reference: Backpacks Positioning Statement: for University Students, ecoTec is the backpack that delivers the highest quality pack for the best price while reducing your carbon footprint. Features and Benefits that are Important to them: Eco friendly, Capacity Key Messages: Eco Friendly , Great Value

Branding Strategy Brand Functional Performance: Reduce carbon footprint Brand Personality: a young Owen Wilson Brand Essence: young, socially conscious, optimistic, intelligent

This table should be referenced by all TEC employees, and be shared with channel members and any outsourcing companies in order to keep the brand image consistent through all representations, communications, and brand ambassadors.

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Ad
We decided that University Students would respond to humor and something simple. This age group is still swimming with the messages received while growing up that people should save water, promote recycling, etc., and they want things to be easy. The words in the ad are playing upon these ideas. The chalkboard and words learned this semester tells University Students that this ad is for them. Also, the visual aid is striking. The red hair is eye catching and dramatic, while the female in the ad is friends with the bird. This illustrates the relationship with nature and being eco- friendly. The image is visually striking and dramatic, like a highend fashion ad. Since backpacks are worn, this seemed appropriate. Also, an article from the Journal of Consumer Research titled Narrative and Persuasion in Fashion Advertising highlighted the benefit of these techniques and their effectiveness in fashion ads. The ad communicates eco -friendly well with the visual features and logo with the footprints (carbon footprint implied) and great value. Although the visual of the dramatic high end fashion feel is slightly contradictory to the great value message, we still wanted to communicate quality, and there is nothing wrong with offering quality at an affordable price point which in fact means great value. Moreover, great value is relative. Since college students want it all and want to pay nothing for it, similarly all customers that want great value, so we felt this is appropriate. Consequently, this follows the disappearing mousetrap strategy in which we ended the game. Additionally, the message if you do nothing else highlights the simplicity. Finally, the end message is a call to action Get ecoTeC. Calls to action and a positive demand to for the segment to purchase have been proven to be effective. Another article by from the Journal of Consumer Research titled Enjoy! Hedonic Consumption and Compliance with Assertive Messages features this idea (this article also cited or Prof. Sasha Fedorikhin in the references!). And finally, our logo is used to communicate that it is the brand hero of this ad since it is very large and repeated on the backpack in the photo. Therefore, it is made clear that the brand is for backpacks by repeating the logo on the pack. Overall the ad speaks of a young, socially conscious, intelligent, and optimistic backpack and consumer.

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Reflection
We found that the Game influenced our strategy in that we made decisions that we had not intended from the beginning. The following summarizes our strategy and results while targeting University students. It cannot be emphasized enough that consistency is the key to success in the Game.

Disappearing-mouse Mousetrap: TEC Backpacks product is believed to be superior due to effective marketing. Our effective marketing includes our message of great value and eco friendly. We chose to use an ad within a video game and social media as our vehicles. We then changed to just social media and intensified the number of times exposed. Volume/Share: In regards to our volume and share, the below chart shows what share we had of School Children and University Students, respectively. While University Students were our focus, we were also able to grab a small percentage of the School Children segment. School Children Total Purchases TEC Purchases Share of Segment 8233 1583 19% University Students 2312 1117 47%

Strategies: Disappearing-mouse Mousetrap Budget (not from the beginning) Beat the other teams-

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Sales Recap
Our sales data, below, shows our sales numbers and costs turn-by-turn for all three years. As you can see, out net profit was negative for the first two rounds, but it slowly started to increase starting the third turn. We varied our marketing and distribution costs with the most being spent in the beginning and the end. Overall, we made a profit of $50,049.
First Year: 1st Q 2nd Q 3rd Q 4th Q Total 1st Year Second Year: 1st Q 2nd Q 3rd Q 4th Q Total 2nd Year Third Year: 1st Q 2nd Q 3rd Q 4th Q Total 3rd Year Total 3 Years 1,354 1,532 1,925 2,829 $36.00 $40.00 $40.00 $40.00 Units 75 73 325 331 Price $120.00 $120.00 $56.00 $56.00 Sales $6,580 $6,408 $11,440 $11,775 $36,203 Sales 426 333 960 1,062 $47.00 $56.00 $36.00 $39.00 $12,819 $11,939 $21,931 $25,997 $72,687 Sales $30,526 $38,470 $48,248 $71,298 $188,542 $17,602 $27,576 $25,025 $36,777 $3,800 $4,800 $4,000 $8,000 $2,000 $2,000 $2,000 $2,000 $7,124 $4,094 $17,223 $24,521 $52,962 $8,733 $7,659 $12,480 $13,806 $3,600 $2,700 $3,800 $3,800 $110 $110 $1,000 $2,000 $376 $1,470 $4,651 $6,391 $1,846 Cost of Goods Sold $5,400 $4,964 $7,475 $7,613 Marketing Costs $6,000 $2,000 $2,700 $2,700 Distribution Costs $1,015 $1,015 $30 $50 Net Profit -$5,835 -$1,571 $1,235 $1,412 -$4,759

$297,432

$50,049

Competitors
ecoTeC names a few competitor as companies to watch, and the table below sums up the results from our market for 3 key competitors. JHB beat all of us in the end in every category. We had named them as our main competitor because our price points were the closest and had similar distributors. We were also concerned about JEP soaking up some of the University Students sales. Their price is exactly the same as that which we tried to sell our first ecoTeC pack to University Students. JEP was offering a laptop sleeve which we believed appealed to our segment, but most of our segment did not want to pay the price that is necessary to offer one. Summit and ecoTeC went back and forth on profit leaders in different rounds besides JHB. Since profit was our focus from the beginning, we saw Summit as a threat to our goals.

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TEC Target Segment Market Share in Target Segment Other Segments Buying Product Extra Features Price Price Perception Where Distributed University Students 47% Lux, Urb Comm, Ecofrndly, round, basic Water Bottle 40.00 High Univ Store, Direct, Online Disc, Disc Ret, Dept Store $47,900 Eco Friendly/Great Value 22 Social Med 36%

JHB School Children 80% Univ St, Synthetic, round, basic Water Bottle, Cartoon 40.00 High Univ Store, Direct, Online Disc, Disc Ret, Dept Store 58,400 Great Value/Fun 30 Top 40/Cart/gaming /Comic/Soc Media 89%

JEP Urban Commuters 25% Univ St Advanced, Round, adv Laptop Sleeve 65.00 High Univ Store, Dept Store, Online, Direct $36,875 Classic/Professional 22 Fin Jorn/NewsP/Soc Med/ Online News 23%

Summit Outdoor Enthusiasts 74% Luxury Large Rect, advanced all Water Bottle, Waterproofing 125.00 High Outdoor, Fashion, Direct, Online $41,200 Pk Perf/ tough/Lt Wt 18 Outdoor Mag/ Wilderness Cable 21%

Total Ad Spend Message(s) Message Score Ad Campaigns Bought Interest Level

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JHB started out with a plan and stuck to it. Their consistency and aggressive marketing spend is commendable. Even when they were losing money in the beginning rounds, they consistently spent the money on marketing and continued to grow sales, ultimately defining the needs of our market place. In the end, we were just excited to be in second place in interest level and profit. Looking at the total dollar amount spent on the previous page, it is clear that the amount made a difference. JHB spent the most, then ecoTeC, Summit, and JEP respectively. This is representative of where we placed in profit. However, JEP had a higher interest level and this is probably due to their higher message score. We are curious how long it would have taken us to push them out of the Outdoor Enthusiast segment, since we began with an aggressive media spend and high scores for interest and message. Yet, we didnt want to waste time fighting over a segment that was not big enough for more than one brand leader. In any case, Summit did great with the Outdoor Enthusiasts and they were a constant concern for us.

JHB is tracked round by round on the next page. JHBs product is the most similar to ours. In the end, they began featuring a water bottle, surely in an attempt to take more of our sales. It is significant to take a look at their message scores in the table and see that in the 7th quarter/round the score peaked when we withdrew from the great value message and let them run with it. When we re-implemented this message, the score tapered. We consulted our expert and she confirmed that changing back could be in our best interest. Changing messages was one thing that we knew we did not want to do and we did it three times. It is unfortunate, but it is what happened. It is clear from the chart below and how JHB finished in the game that the biggest key to success is consistency and one cannot back away because of taking a loss at the beginning. In quarter/round 3 JHB did reduce the budget a little, but it did not hurt them because everything else stayed consistent. We think that the fact that we shared the great value message helped us ride their brand equity a little. In the end, we are glad that we switched to the University Students segment and had the opportunity to compete with JHB.

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JHB by Turns
Target Segment Other Segments Buying (units) Product

Turn 1

Turn 2

Turn 3

Turn 4

Turn 5

Turn 6

Turn 7

Turn 8

Turn 9

Turn 10

Turn 11

School Children Univ Students

And Urb Cm

Lux?

Sythet material

Rnd Top

Basic

Straps

Extra Features

Cartoon

Cartoon /wtr Bottle 40

Price Price Perception Where Distributed

28 HIgh Univ Store, Direct, , Dept Store 4300 Great value/Fun 16 Comic and Game 21 22 22 16 Online Disc,

35

38

Disc Ret,

Dept Store

Total Ad Spend Message(s) Message Score Ad Campaigns Bought Interest Level

4300

3600 18

3600

3600

3600

3600

4600

6400

5500

15300

19.6 23

22.4

27

32

32

32

32 add

30 Top 40 89

25

27

34

44

53

69

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Five Lessons Learned:

It is necessary to spend a significant amount of money on promotions in order to achieve brand image and claim a position in the market Message consistency is key Stick to your plan from the beginning Giving the consumer exactly what they say they want does not necessarily result in desired purchasing behavior A brand leader can define the entire markets perceptions of what is important

The Four Ps
Product: Eco Friendly material, water bottle

Eco Friendly great value, Social Media

University Students & ecoTeC

Where they shop Price 40.00,

Product: Eco Friendly material, water bottle Durable material with minimum features that can be sold at the price that is acceptable to University Students Price 40.00, the highest price that will convey quality and still compete in Position: University Store, Department Store, Discount Retailer, and Online Discount Retailer Promotion: Eco Friendly great value, Social Media the messages that University Students respond to delivered in the segments preferred vehicle

29 Articles in order of appearance: Narrative and Persuasion in Fashion Advertising Author(s): Barbara J. Phillips and Edward F. McQuarrie Source: Journal of Consumer Research, Vol. 37, No. 3 (October 2010), pp. 368-392 Published by: The University of Chicago Press Enjoy! Hedonic Consumption and Compliance with Assertive Messages Author(s): Ann Kronrod, Amir Grinstein, and Luc Wathieu Source: Journal of Consumer Research, Vol. 39, No. 1 (June 2012), pp. 51-61 Photos: Red head with bird: http://grungygentleman.com/post/view/herschel-supply-co-x-themotley-sweepstakes-loaded-backpack