Minnesota Micromotors - Marketing Simulation: Managing Customers and Segments Reflection Paper

Marketing Simulation: Managing Customers and Segments

Reflection Paper

In this simulation, we learnt how to efficiently and effectively allocate marketing resources to increase market share and firm profitability. In each quarter for 13 quarters (from Q4, 2012 – Q4, 2015), I had to adjust resource allocation in an effort to satisfy customers, improve product performance, drive sales, and ultimately increase firm profitability. It exposed me to a variety of moving pieces that enable a successful business performance across different objectives and parameters

Our cumulative score was based on our performance on four success metrics

1. Market Share
2. Cumulative Revenue
3. Cumulative Profit
4. Customer Satisfaction

Playing the CEO of Minnesota Micromotors, a manufacturer for motors used in medical devices, we were to analyze and capture the most profitable market segments. Customers were divided into market segments based on their requirements for price and key performance features. Customer segments were divided into large volume customer and small volume customers. Large volume customers were further divided into Customer A, Customer B, Customer C and Customer D. Each had their own criteria for product selection either price or product quality. We had to allocate sales and marketing resources for each targeted segment, deciding which new customers we want to acquire and which loyal customers we need to retain. Additionally, we had to work to find levels of spending on market research and marketing communications that maximize cumulative profit for the company.

My final highest score of the two simulation run was 43 points which was divided into the below metrics:

Market Share: 3.8%

Cumulative Revenue: $ 46 M

Cumulative Profit: $ 1.3 M

Customer Satisfaction: three highly satisfied customer segments (Segment A, C and Small customers)

My strategy was to target large customers to increase the overall profit for the company. Segment A and C were not price conscious customers and were value centric towards the performance of the motors. I tried to maintain a high price and a low discount for these segments also invested on the Thermal Resistance feature as this feature played a key role in the performance of the motors and customers saw this feature as extremely important in their decision making process. These customers were not willing to compromise on the quality of the motors irrespective of the price quoted to them.  

My strategy was to maintain a high price and maintain a high power to size ratio helped me focus on the 2 customer segments (A and C) that were the least price sensitive and chose superior product quality. MM generated maximum revenue (33%) from segment A and 7% from Segment C. Also the small customers who were highly price sensitive bought through distributors  generated about 29% of the revenue.

Segment B and D were highly price sensitive customers so I did not wanted the salesforce to spend their time on  these customers justifying our higher prices for high quality products. I had a salesforce of 8-9 salesrep depending on the overall marketing budget which devoted most of their time in acquiring and retaining large customers.