In pricing, most of my pricing strategies were just following my competitors, because I have the faith that their prices are the results from the competition in that market. It is true that we should put an eye upon our main competitors, because they have the important information we need. For example, in Brazil, when I found the main competitor of me spent 35 million dollars on the promotion on Family & Healthy products, I realized that I could not I Ignore the promotion on this kind of product any more. So I invested about 5 million dollars on it immediately.Furthermore, I found that a big number of the competitors produced the medium toothbrushes and few of them put their heart into producing small and large products. And more people in all of the markets choose medium toothbrushes than other products. Therefore, I focused upon the medium products from the 1st period to the 6th period. What’s more, once I entered a new market, I chose only several medium products to produce because the data told me that the medium toothbrushes are the most popular products and the most profitable products.
After I ran the actions I prepared, I got positive net contribution finally. In promotion, I always consulted the strategy from my competitors, because I believed they could survive in the market, meaning that their promotions were not bad. I usually was the second or third in promotion among all the companies. In addition, I arranged the promotion by the sales force after I arranged the sale force by the shopping habits of the customers in the native market. In pricing, I chose almost all the medium products because I thought the medium is the most practical. And I chose some small and large products, in order to collocate with the medium ones. In advertising, I also consulted from my competitors. However, I put all of my advertising into a continued advertisement. Especially in large market, such as Brazil and Mexico, I focus on the Family/Economy products, because I think the family is the group, who has the biggest buying power.
2. Changes and Rationale
My first steps were 1st Brazil in period 1, 2nd Argentina in period 2, 3rd Mexico in period 4, 4th Chile in period 5, 5th Peru in period 7, 6th Venezuela in period 9. And the 10th period is the remaining period for me to do some adjustments to make a better result of the simulation. In order to get a better performance, I rearranged the steps into 1st Brazil in period 1, 2nd Argentina in period 3, 3rd Mexico in period 4, 4th Venezuela in period 6. The reasons why I changed the order is that when I entered Brazil, I got the top market share immediately. After that I set a plant in Brazil, but I need time to improve the capability of the plant to support that markets I am going to enter later (we can only add 100 units of production in Brazil every year). As a result, I stayed at Brazil for another year. At the third year, I entered Argentina instead of the second year. As for the fourth market I entered. I used to enter Chile at the 5th period.
However, at this time, when I entered Mexico at the 4th period, it needs some time for me to enlarge the market in Mexico. Consequently, I chose to enter into the 4th market at the 6th period, which is actually the requirement from the MBA 558 professor, corresponding to the class syllabus. What’s more, when I chose Chile, who was my first choice for the 4th market, I found that the work-force in that country was really high and the advertising cost was also too expensive. I abandoned it because I believe I didn’t have enough money to support this strange market at that time. And then I chose Venezuela to replace it because it was a little country and it was easy for me to handle. Moreover, its work force cost is low and market is normal, unlike Chile.
3. Performance Objectives VS Actual Performance
After I ran the period 1 and period 2, I got a negative net contribution. That is inevitable and reasonable, because when I entered Brazil, I started the plant immediately and invested huge money on the promotion and advertisements. Moreover, I arranged nearly 100 people working on the sales and the price was also not too high. As a result, the cost of products sold was really high, which is why the net contribution was negative. However, as I invested huge money on the promotion and sales, and the price was not too high. I got lots of unit sales totally. It means that, I already have a relatively big mark share with the competitors. Because the market share is truly important especially for the new comers, I still felt optimistic about my wonderful future in Brazil. That is to say we must bear the negative net contribution at first and try to get positive net contribution later, which needs us have the enough support of finance.
Every time I entered a new market, I got a negative contribution in the first period. However when I enlarged my productivity and raised my price, I got a positive contribution in the following periods. I didn’t have a specific objective in every market, but the actual performance was that I have the biggest market share in Brazil, which is my most important market. And in other markets, I was always top 3 company in market share. I have the overall biggest market share. It seems like my strategy was not bad but need to be improved if I want to have the biggest market in every country.
4. Key Strategy
Important markets first, Largest markets first.
Sale force, Promotion, Pricing, Allowance and Advertising
According to the shopping habits of the customers, rich status of the countries and competition situation. SKU When I entered a new market, I focus on several medium products, because medium ones are the most practical and popular. After I occupied some market share, I developed some other products. In rich countries, I focus on healthy ones. By contrast, in poor counties, I drew attention into the economy ones. Among the children, I only sold medium products, because the children don’t have so many different requirements
5. Company Position for the future
After the 10 periods, I have the biggest market share in Brazil, which is my most important market. And in other markets, I was always one of the top 3 companies in market share. In total, I have the overall biggest market share. It seems like my strategy was not bad but need to be improved if I want to have the biggest market in every country. In the future, I will try to enlarge my market share in the other countries, except for Brazil, in order to get the biggest market in every country. After that, my company should find a good way to get more net contribution, as my company was not the one who has the largest net contribution.
6. Lessons from the simulation experience
The entry steps when my company want to expand I should find a most important and large country to enter first and then expand step by step. In every new market, what I need to do step by step. At first, I should focus on the specific product or some specific products, instead of kinds of ones. After I occupy some market share, I will try to produce other kinds of popular products How to arrange sales force and promotion upon it
I would search the information about the shopping habits of the customers at first and then analyze it. After that, I arrange the sales force and the promotion. How to price the products and make the allowance
Before I price my products, I should consult my competitors, because their prices represent the market supply and demand. As for the allowance, I will make it based on my price. When my price is raised, I would also raise my allowance.
How to advertise
Before I invest my money into the advertisements, I should find my target market and then try to consult my competitors in that specific market. And then I will make a advertisement corresponding to my competitors and my steps to enlarge my market share. What’s more, I would still stick on a advertisement if I have it for many years, because I believe I have a competitive advantage in it.
How to arrange the plants
I chose Brazil as the location of the plant because I thought Brazil has the sufficient work force, a big market and also the central location. Nevertheless, I made a mistake upon the production in the plant that I added its capability by 100 million units every year, making the depreciation so high. If I restart the simulation, I would control the power of the plant according to the sales.
From the simulation, I learned how to do the streamlined global expansion with working as the country-manager and how to use different strategies in different periods, which are the vital things that I learned from this course.
Courtney from Study Moose
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