Assessment of Final Market Position
Regalto: We started with a strong position in the Alpha and Beta segment, and with an overall market share of 17.2%. From then on our market share declined, reaching a low of 6.9% in period 4. We launched new products in period 5, namely Fly, targeting the Delta segment and Spark, refocusing on the Alpha segment. This helped us increase our overall market share to 9.7% in period 5. The key takeaway from this decline is that we were not quick enough to launch R&D of new products that would exactly target specific customer segments. This allowed our competition (particularly Purple) to steal market share in segments (Alpha, Beta) where we originally had maximum penetration. Innovo: Our decisions for Regalto had a significant impact on our strategy and final market position in the Innovo market. As planned, we launched Sinatra targeting Sigma in period 4. We targeted Sigma because market forecasts suggested it was the fastest growing segment (35% growth estimated for period 3) and price wasn’t the most important attribute unlike for other segments. We also felt that our competitors would introduce products in period 3 targeted at the higher volume segments Kappa and Lambda. We priced Sinatra at the high-end hoping to improve margins by taking advantage of the relative price-insensitivity of our target consumers. Given that Innovo was a relatively new market, we assumed that direct and special would be the channels of choice. Unfortunately, our financial position constrained us from advertising enough to build brand awareness and staffing it with an adequate sales force. We tried to compensate for the sales force shortage by spending on training; this back-fired in that it took them away from their job of selling when the product was introduced. Sigma did not take-off as forecasted with among the highest forecast errors in the entire simulation (see Appendix). At launch, while Sinatra’s preference was the highest in Sigma,...
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