Capsim Strategy Paper

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BA 411
C52670

Part 1
All segments are critical for the implementation of our company’s strategy because we chose to be broad cost leaders. Cost leaders maintain a presence in all market segments by focusing on low production costs and competitive pricing. With that in mind, one segment is considered to be slightly more important than the others: the low end segment. We will compete in every market segment, but this is one of the most important due to the fact that price is the main consideration of the buying criteria at 53% importance. Our costs will be much lower than our competitors which translates into a lower market price for this product, which is ideal for our customers. We based our sales predictions off of Steve’s data, who is currently using the same strategy in Capsim, so we are assuming that our data will be somewhat similar. The actual industry total unit sales were 12,488,000, his segment growth rate was 11.7%, and his market share percentage was 19%. From those numbers, his forecasted sales for the low end segment were 12,488,000 * 1.117 * .19 = $2,650,328.24. We would expect our forecasted sales to be similar. Two factors that must be considered when forecasting sales demand are actual industry unit sales and market share. We will consistently have a relatively high market share in comparison to our competitors because of our competitive pricing, so we will capitalize on that. Because we have low production costs, we can invest more in marketing so that we will have high awareness and accessibility when compared to our competitors. We would expect our units sold to the segment to be consistently on the higher end of the spectrum based on our combination of lower prices and higher product awareness in the market. The other factor to consider, actual industry unit sales, will be the same for every competitor in the segment because it is the sum of every individual company’s units sold. It is clear that no one has an advantage or a...
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