WEEK 10

Two Key Decisions

I believe our group has made two very important decisions that have greatly impacted our success. Early on in the simulation, at the end of period 3, we have realized that our product price for Allround was too high. We purchased the Trade-offs Report which we found to be very useful, and found that Allround had a perceived cost of “Very High”. Based on this report, we noticed that customers did not value Allround as much as the cost. Although our product was very effective, customers did not see value in the high cost. After much discussion with Andrew, and performing an analysis of market prices, we decided to decrease the price by 15 cents. Currently, Allround is well positioned in terms of matching the customer’s value with the price.

The second critical decision occurred in period 6 where we decided to introduce Allright (the allergy product). After Andrew and I performed our own individual market attractiveness, we both agreed that the allergy market was an attractive market based on usage, # of competitors, and segment growth. We wanted to introduce the product, but there were several tough decisions that needed to be made. This included allocating the marketing budget and the price. Based on the fact that the product is unique to the market, we attempted to use a skim strategy having a high initial cost. However, we realized after that our competitors increased the prices so our product was no longer above our competitors. Going forward to periods 8,9, and 10, we plan on increasing prices slightly as our product is very unique to the allergy market.

Special Incidents

Looking at some of the special decisions, I found the bad social media comments dilemma to be interesting as it put us in the company’s shoes. When making this decision, we definitely thought of what most companies do. Seeing Facebook pages of Coca Cola, Honda, Nissan, or even WNE, it hard to see these organizations letting users give negative comments so others would see. I would think that they would delete the comments so that other users do not see them. That is the decision we made for this special incident.

A more difficult special incident occurred during period 6 where we had to decide on an unhappy large drug store. We were on the fence but decided to not offer a discount and ultimately lost the customer. We based our decision on the fact that Allstar’s analysis of cost did not indicate that a discount should be given. In my eyes, I felt that this customer was bullying Allstar so we had to stay firm and not offer the discount because of potential effects on other customers. Ultimately, not offering the discount did hurt sales which was offset by other retailers.

Most Important Thing

I think one of the most important things that I have learned in recent periods has been the importance of competitor analysis. It is good to know how your company is doing, but it is also important to compare that to the industry and competitors. If you as a CEO stay in a “bubble” and only look internally, you will not see how you really fair when compared to the industry. I have learned this when looking at the growth of the industry and comparing it to the company growth. This made me realize that although Allstar is doing very well recently, so are competitors, and more importantly so is the entire industry. In my eyes, there has to be a good standard to use as a metric, and looking at industry standards is helpful.