Company Name: Compustar: Marketplace-Business-Simulation-How-Win-Edited-5-31-09-A.Html

http://www.fohguild.
org/forums/other-games/33070-
marketplace-business-simulation-how-win-edited-5-31-09-
a.html
Marketplace Marketing Plan
Marketing 5332: Executive Decisions in Marketing
Company Name: CompuStar

Game 3, Team 1
Spring 2008
Executive Personnel:
Jason Juren VP Finance
Tameisha Smith VP Advertising
Reagan Simpson VP Sales Management
Monica Greak VP Brand Design
Marketplace Marketing Plan
Marketing 5332: Executive Decisions in Marketing
I. Executive Summary -
CompuStar started the first year very optimistic that it could design a strong brand
and create a powerful advertising campaign that would lead us to dominance in the market. Our
optimism regarding our brand design was well placed, and as of Q5 we have maintained the
strongest workhorse brand with a score of 72. We expect this score to improve even further in
Q6 given the new R&D items we have purchased (New Word Program & High Speed modem).
While the CostCutter brand has been a bit more volatile (We no longer had the best brand as of
Q5 68 versus MicroChip's 72) we believe that our coming changes to the brand will give us the
strength we need to recapture the market and re-establish ourselves as the premier
CostCutters. In year two we plan to continually redesign our brands as we learn from our
competitors and as we gather more market data. We have also planned the launch of an
Innovator brand and a Traveler brand. These brands are simply copies of the best brands on
the market. We feel that by doing this we can capture the under-served markets in which we
have no real competitors and at the same time deny valuable resources to our competitors.
These new brands will of course be updated as our competitors launch improved versions and if
they prove successful we will purchase R&D components for them and attempt to surpass the
competition with them.
Our optimism regarding our advertising ability was somewhat off-set by a cold reality.
Our initial advertisements were rated poorly for the CostCutters (63) while our Workhorse add
began at a mere 55. We launched the Workhorse Euro ad with much suspense and were
greeting with a mere 53. We have learned from our mistakes which were essentially leaving far
too much clutter in our ads. We have launched two ads per product now. The first for each is a
completely redesigned add that will be running more frequently in regional advertising
(approximately19 times for CC and WH respectively) and the other two adds are straight copies
of the other successful ads of our competitors. We have now planned to redo at least 3
advertisements a quarter in order to better fit our advertising schedule and content around the
market information that we can collect.
We opened sales offices in New York, Chicago, Berlin,& London in year one and in
year two at the end of Q5 we will be in every city with the exception of the Canadian region and
LA. By the end of Q6 we will be in every city. This will allow us to use the more cost effective
regional advertising across the board and reach every potential customer out there. We plan to
have approximately 10 people per sales office and will reduce or increase this number as the
economics of each sales office in terms of sales per employee become better understood.
Overall, CompuStar is currently in "second place" if you go by sales volume and a
balanced score card, but we believe that in the second year we will violently overtake our
competition. We feel that we will maintain a firm monopoly on the WorkHorse brand and that we
will entrench our CostCutter brand as well. That coupled with the fact that we are about to
launch a war against AgilitY by challenging them on their Innovator and Traveler brands means
that we have everything to gain and stand to profit handsomely from the spoils of war. Year two
will prove to be exciting, suspenseful, and most of all profitable for CompuStar.
PART II:
II. History of the Firm
Page
A. CompuStar is committed to being the world’s leader in advanced, practical, and
cost-effective business solutions, by providing our customers with high-quality
microcomputers and complete customer service programs.
B. Target Markets Selected to Date
1. Primary Target Market (as of EOQ4) – Workhorse
a. CompuStar WH
b. Components selected in order to meet customer needs:
Component Consumer Need/Want/Application (Index Score)

Base Components
Standard Desktop Design Multi-purpose Workstation (128), Minimum
Complexity for operators (125)
Compact Disk (CD) Read/Write Drive Fast computer to computer links (117)
Very High Capacity Hard Drive The more storage space the better (119)
Office Software-word, Spreadsheets Word Processing (129)
Accounting/bookkeeping Software Bookkeeping/budgeting (113)
Business Graphics Software Business Graphics (104)
Presentation Software Presentation (113)
Database Software Data management-accounts, inventory (117)
Web Design Software Web design and management (114)
19” High Resolution Monitor for Desktop Easy on eyes (118)
Mid-range Processor Computer are lowest priced (115)
Expanded Keyboard with Hot Keys Need to program special functions (111)
Antivirus Software Peace of mind-safe, secure, no hassle (126)
Standard Network/Internet Connection Easy to tie into local area network (120), Able to
send & receive emails (115), Communication with
other computers (117)
Windows for Professionals with High Peace of mind-safe, secure, no hassle (126)
Security Protection
c. Brand Judgment
(1) Customer satisfaction with brand design
There were no changes made to the CompuStar WH design.

Therefore, the brand rating remained the same from Q3 to Q4.
Region Q3 Rating Q4 Rating

United States 72 72
Europe 72
(2) Comparison of Brand Designs for Q3 and for Q4
In Q3, our closest competitor in the Workhorse market, Orange

OR-Infinity1900, had a lower rating as compared to our brand by 3
points. One of our competitor’s disadvantages noticed was that
their brand carried a ‘high capacity hard drive’, whereas our brand
Page
offered a ‘very high capacity hard drive’. Our brand also offered
an expanded keyboard with hot keys as opposed to their standard
keyboard, but it is difficult to assess who has the true advantage
with the given components. Orange may have the advantage with
the standard keyboard since the potential customers are looking
for minimum complexity and little training needed for this
computer, yet we may carry also carry somewhat of an advantage
since there is a need to program special functions. One of the
advantages that their brand carried over ours is that their
computer provided a DVD drive as opposed to our CD drive. Our
brand and Orange OR-Infinity1900 remained as the top two
brands from Q3 to Q4, yet there were no brand changes for both
companies. The brand design and brand judgment remained the
same for both quarters.
Q3 CompuStar/ Orange/
CompuStar OR-
WH/ Infinity1900/
72 69
Base Components X X
Standard desktop design X X
Compact disk (CD) X
read/write drive
Digital video disk (DVD) X
read/write drive
High Capacity hard drive X
Very high capacity hard X
drive
Office software-word, X X
spreadsheets
Accounting/bookkeeping X X
software
Business graphics software X X
Presentation software X X
Database software X X
Web design software X X
19” high resolution monitor X X
for desktop
Mid-range processor X X
Standard keyboard X
Expanded keyboard with X
hot keys
Antivirus software X X
Standard network/Internet X X
connection
Windows for professionals X X
with high security protection
Page
CompuStar OR-
WH/ Infinity1900/
72 69
Base Components X X
Compact disk (CD) X
read/write drive
Digital video disk (DVD) X
read/write drive
High Capacity hard drive X
Very high capacity hard X
drive
spreadsheets
software
Business graphics software X X
Web design software X X
19” high resolution monitor X X
for desktop
Mid-range processor X X
Standard keyboard X
Expanded keyboard with X
hot keys
connection
with high security protection
d. Ad Judgment
(1) Customer satisfaction with ad design
For the CompuStar WH ad in quarter 4, several changes

were made to the advertising copy in an effort to increase
the ad rating. The following product features were
removed from the previously listed advertisement:
“bookkeeping/budgeting applications”, “easy to use, simple
design”, and “easy on eyes with larger screen”. In their
place, the following features were promoted: “ready to use,
bundled software”, “highest rated brand – Work Horse”,
and a “picture office setting” feature was added. The order
of the importance of the features submitted in the ads were
also changed.
Page
For Q4, an additional ad was also created for this brand to
be distributed in Europe. Instead of promoting the “highest
rated brand – Work Horse”, the “lowest price in town” was
advertised and the rankings of the features were adjusted.
With these modifications, the CompuStar WH ad rating

increased from 55 to 58 (by 3 points) from Q3 to Q4 and
the CompuStar WH Euro ad earned a rating of 53 in Q4.

United States 55 58
Europe 53
Ad Features CompuStar WH CompuStar WH CompuStar WH Euro

Q3 Q4 Q4
Mention brand name 8 9 9
Lowest price in town 4
Do variety of tasks 2 1 1
Local sales/service 7 7 7
Bookkeeping/budgeting 9
applications
Word processing 1 2 2
application
Data management 6 8 8
application
Ready to use, bundled 5 5
software
Highest rated brand – 4
Work Horse
Easy to use, simple 3
design
Easy on eyes with 5
larger screen
Link PC to local 4 6 6
network/Internet
Picture office setting 3 3
(2) Comparison of Ad Designs for Q3 and for Q4
In comparison to the ad ran by Orange for their OR-Infinity1900 in Q3, we received a lower ad
rating for CompuStar WH (63 versus 55). Our ad included the top 5 of the same promoted
features as Orange’s ad, but their ranking system elevated the importance of those features
more than we did. In order to improve our ad, we removed some of our features that had lower
classified wants/needs/applications, such as “bookkeeping” and “easy to use, simple design”,
and added new features. The features added, “ready to use, bundled software”, “highest rated
brand – work horse”, and “picture office setting”, increased our ad rating from 55 points to 58
points.
We also created a new ad to be placed in Europe to promote that our brand is the “lowest price
in town” as opposed to the “highest rated brand – work horse”. The ad scored a 53 in Europe.
Page
The ad insert quantities for the CompuStar WH were also doubled from Q3 to Q4. Our ad
judgment scores still needs improvement and the ad features and placement will be revisited
after reviewing market research.
CompuStar OR-
WH/ Infinity1900/
55 63
Mention brand name 8 5
(115)
Do variety of tasks 2 1
(128)
Local sales/service 7
(121)
applications (113)
Word processing 1 2
application (129)
Data management 6 3
application (117)
Easy to use, simple 3 4
design (110)
Easy on eyes with 5
larger screen (118)
Link PC to local 4
network/Internet (120)
Q4 CompuStar/ Microchip/
CompuStar Business
WH/ Chip/
58 71
(115)
Manufacturer’s rebate 2
(115 for lower price)
(128)
Local sales/service 7 5
(121)
Word processing 2
application (129)
Data management 8
application (117)
design (125/110)
Ready to use, bundled 5 4
software (116)
Highest rated brand – 4
Work Horse (115)
Link PC to local 6
Page
network/Internet (120)
Picture office setting 3
(125)
Q4 CompuStar/ AgilitY
CompuStar Computers/
WH Euro/ Valutron/
53 68
(115)
(115)
Manufacturer’s rebate 2
(115 for lower price)
(128)
(121)
Word processing 2
application (129)
Data management 8
application (117)
design (125/110)
Ready to use, 5 4
bundled software
(116)
Link PC to local 6
network/Internet
(120)
(125)
e. Price Judgment
What are the implications for pricing based on your analysis?
(1) Customer satisfaction with pricing and

Comparison of prices for Q3 and Q4
In order to determine if demand due to price is elastic, we calculated the price of elasticity for
our work horse brand amongst Q3 and Q4. Using the price ratings as demand quantity
substitutes and using the Q3 and Q4 prices in comparison, the price of elasticity was
determined to be 1.029. Therefore, it was determined that the sensitivity to price was elastic,
indicating that it was a good move to reduce prices from Q3 to Q4 and also may indicate that
lowering prices may help to improve the price rating and therefore, improve customer’s
potential for purchasing.
CompuStar WH/Work Horse
Region Q3 Price Q3 Rebate Q3 Net Price Q3 Rating
Page
United States $3,087 $0 $3,087 87
Standard Chip/Work Horse

United States $1,999 $95 $1,904 100
CompuStar WH/Work Horse

United States $2,750 0 $2,750 98
Europe $2,750 0 $2,750 98
CompuStar CC/Cost Cutters

United States $1,850 $0 $1,850 100
Europe $1,850 $0 $1,850 100
AgilitY Computers/Work Horse

United States $2,050 $25 $2,025 100
Europe $1,850 $25 $1,825 100
China $1,800 $25 $1,775 100
2. Secondary Target Market (as of EOQ4) – Cost Cutter
a. CompuStar CC
b. Components selected in order to meet customer needs.
Component Consumer Need/Want/Application (Index Score)
Base components
Standard desktop design Multi-purpose workstation (96)
Compact disk (CD) read/write Fast computer to computer links (85)
drive
Standard hard drive Computers are lowest priced (119)
Office software-word, Word processing(127)
spreadsheets
Accounting/bookkeeping Bookkeeping, budgeting (119)
software
Presentation software Presentations (104)
Database software Data management-accounts, inventory (109)
15" monitor for desktop Computers are lowest priced (119)
Page
Budget processor Computers are lowest priced (119)
Standard keyboard Minimum complexity for operators(123)
Antivirus software Peace of mind-safe,secure,no hassle (128)
Standard network/Internet Easy to tie into local area network(92)
connection
Windows for professionals with Peace of mind-safe,secure,no hassle (128)
high security protection
c. Brand Judgment
(1) Customer satisfaction with brand design
There were no changes made to the CompuStar CC design.

Therefore, the brand rating remained the same from Q3 to Q4.

United States 68 68
Europe 68
(2) Comparison of Brand Designs for Q3 and for Q4
In Q3, our closest competitor in the Cost Cutter market, Microchip

– Business Chip had a lower rating as compared to our brand by 4
points. One of our competitor’s disadvantages noticed was that
their brand carried the following: ‘high capacity hard drive’, ‘web-
design software’, and a ’17” monitor”. All of these additional
components have the potential of driving the Cost Cutter brand’s
price up which would make the brand less appealing, lowering the
brand rating. However, Microchip may have an advantage with
the “midrange processor” in giving the brand more value for the
better deal.
In Q4, Microchip increased their rating, and topped our brand

rating by 4 points ahead. They changed to a 15” monitor, went to
a standard capacity hard-drive and removed their web-design
software to help boost their rating. We did not change our brand
and therefore, did not obtain any benefits or increase in brand
rating.
Q3 Compustar CC Microchip/Busines
68 s Chip
64
Base components X X
Compact disk (CD) X X
read/write drive
Page
Standard hard drive X
spreadsheets
software
15" monitor for desktop X
Budget processor X
Mid-range processor X
Standard keyboard X X
Antivirus software X
Standard X X
network/Internet
connection
Windows for X X
professionals with high
security protection
High capacity hard drive X
17" monitor for desktop X
Web design software X
Base components
Compact disk (CD) X X

read/write drive
Standard hard drive X X
spreadsheets
software
Page
15" monitor for desktop X X
Budget processor X
Standard keyboard X X
connection
with high security
protection
Business graphics X
software
d. Ad Judgment
(1) Customer satisfaction with ad design
For the CompuStar CC ad in quarter 4, several changes

were made to the original advertising copy and a new ad
was also designed in an effort to increase the ad ratings.
To reduce ad clutter, the following product features were
removed from the previously listed advertisement:
“local/sales service”, “data management application”, and
“ready to use, bundled software”. The ratings of the
features were also readjusted.
For Q4, an additional ad was also created for this brand.

Instead of promoting the “bookkeeping/budgeting
application” and the “picture office setting”, “new and
improved brand” and “local sales/service” was advertised
and the rankings of the features were adjusted.
With these modifications, the CompuStar CC ad rating

increased from 62 to 63 (by 1 points) and the additional ad
was not promoted.

United States 62 63
Europe 63
Page
Ad Features CompuStar CC CompuStar CC CompuStar CC
Q3 Q4 Copy
Q4
Lowest price in town 2 2 3
New & improved brand, 5
claim 1 time
Bookkeeping/budgeting 5 5
applications
Word processing 1 1 1
application
Data management 7
application
Ready to use, bundled 6
software
Easy to use, simple 3 3 2
design
(2) Comparison of Ad Designs for Q3 and for Q4
In comparison to the ad ran by Microchip for their Business Chip in Q3, we received a higher ad
rating for CompuStar CC (62 versus 61). In comparing the ads, our ad seemed to be more
detailed with the program applications that our computer offered and microchip seemed to focus
on just advertising the top features, such as “word processing applications” and “do variety of
tasks.” It seems as though our ads were somehow ranking alike although the vast differences.
Although our ad increased by a point in Q4, AgilitY Valutron surpassed us (63 versus 74).
From reviewing the ads, it can be concluded that our ad may have had too much clutter and not
enough focus on the main features of promotion.
Our ad judgment scores still need improvement and the ad features and placement will be
revisited after reviewing market research.
Q3 – Cost Cutter Consumer CompuStar MicroChip

Need/Want/Application CC [Business
(Index Score) Chip]
Bookeeping/budgeting 119
4
applications
Word processing application 127 1 3
Data management application 109 7
Presentation Application 104 8
Easy to use, simple design 125 2
Easy on eyes with larger 103
screen
5 2
software
Page
Link PC to local 92
network/Internet
Picture Business Professionals 122 4
Q4 – Cost Cutter Consumer CompuStar AgilitY

Need/Want/Application CC [Valutron]
(Index Score)
Lowest price in town 119 2
Local sales/service 107 8 5
Bookeeping/budgeting 119
5
applications
Word processing application 127 1
Data management application 109 7
Easy to use, simple design 125 3 3
6 4
software
Highest rated brand- 101
Workhorse
Link PC to local 92
network/Internet
Manufacturer’s Rebate 119 2
e. Price Judgment
(2) Customer satisfaction with pricing and Comparison of prices

for Q3 and Q4
Due to this segment not being introduced until Q4, the price elasticity of demand for each
segment was not calculated. However, our judgment score for Q4 was extremely high (97),
indicating we are on track for the ideal price for the segment.
CompuStar CC / Cost Cutter

United States 1,850 0 1,850 74
Europe 1,850 0 1,850
CompuStar WH / Workhorse

Europe 2,750 0 2,750
MicroChip – Standard Chip / Work Horse

United States 1,999 95 1,904 100
Page
CompuStar CC / Cost Cutter

Europe 1,850 0 1,850 97
CompuStar WH / Workhorse

Europe 2,750 0 2,750 98
AgilitY – Valutron / Work Horse

United States 2,050 25 2,025 100
AgilitY – Valutron / Cost Cutter

Europe 1,850 25 1,825 99
AgilitY – Valutron / Work Horse

Europe 1,850 25 1,825 99
C. Geographic and Sales Decisions
Quarter 3 – (First Segment – Cost Cutter)
Sales Office Unit Sales For Sales Staff Unit Sales per
First Segment (Sales Only) Salesperson
New York 44 1 44
Chicago 33 1 33
Quarter 4 (Second Segment – Cost Cutter)
Sales Office Unit Sales for Sales Staff Unit Sales per
First Segment (Sales Only) Salesperson
Berlin 208 2 104
London 215 2 107.5
New York 142 2 142
Chicago 142 1 71
Page
Quarter 3 – (First Segment – Work Horse)
Second (Sales Only) Salesperson
Segment
New York 121 4 30.25
Chicago 92 3 30.67
Quarter 4 (Second Segment – Work Horse)
Second (Sales Only) Salesperson
Segment
Berlin 283 4 70.75
London 399 4 99.75
New York 240 4 60
Chicago 186 4 46.5
D. Company Performance
1. Detailed cumulative balanced scorecard for all competitors in the game.

Total
Company Perfor Financial Market Marketing Investment
Team ID Wealth
Name manc Performance Performance Effectiveness in Future
e
game
60055 MicroChip 0.000 -4.414 0.195 0.710 2.309 0.334
team 2
game
60055 Orange 0.472 3.708 0.185 0.672 2.215 0.462
team 3
game
60055 CompuStar 1.263 6.187 0.520 0.653 1.683 0.357
team 1
Page
game
AgilitY
60055 6.584 14.096 0.555 0.680 1.331 0.930
Computers
team 4
2.
II. Marketing Effectiveness
Formula: marketing effectiveness = [average brand judgment/100 +
average ad judgment/100]/2
(1) Brand Judgment – Q4
(a) Segment 1: CompuStar WH – Work Horse
(b) Segment 2: CompuStar CC – Cost Cutter
Highest brand judgment in first segment: 72

Highest brand judgment in second segment: 68
Average of best brand judgments in target segments = (72 +

68)/2 = 70
Marketing Effectiveness is a measure of how well the managers have been

able to satisfy the needs of the customers as measured by the quality of their brands
and ads. The score ranges from 0 to 1.0. A good score would be greater than 0.8.
CompuStar obtained an average score of 70 which is a bit below what is considered
‘good.’ Previously, we averaged a score of 70 in quarter 3. For the first segment
(Work Horse), we changed the rank of priority from ‘variety of tasks’ (need score of
106) to ‘word processing’ (need score of 129) with hopes to increase sales in that
segment. We also chose to have a primary focus on ‘easy to use’ (need score of
110). Although we re-prioritized our rankings, our average score for this segment
stayed the same. We feel this may be due to the revisions of each priority which
caused somewhat of a break-even. Our recommendation would be to only focus on
revising the top 2-3 priorities versus 4+ as to not drop below this score in this
segment. We chose not to modify our top 3 priorities for the second segment, Cost
Cutter as we shifted our focus toward the first segment, the Work Horse, with the
intention of bringing in higher cash flows. Since the score in the second segment
was a 68, we should have either chose to pick up another segment or continue to
focus on improving this segment.
(2) Ad Judgment – Q4
Highest ad judgment in first segment: 58

Highest ad judgment in second segment: 63
Average of best ad judgments in target segments = (58 +
63)/2 = 61
Ad design and judgment are critical. There are three different factors that
directly effect ad judgment and unfortunately, we have not had as much improvement in
ad design as desired. CompuStar is currently investing time toward finding what these
Page
ads should solely consist of. Specific ad claims were an easy start. The company
believes that we are achieving a solid idea of what claims should be in the ad, which
has helped increase our ad judgment in previously targeted segments. Improvements
have been shown although we still may not have precise claims. The judgments for
Cost Cutter ads from Quarter 3 to 4 increased by 1, while the judgments of Work Horse
ads increased by 3.
Our company has, however, a good basis for the number of claims that should
be in the ad as well as the order of the claims. As a result, the ads were rated within
our desired segments. CompuStar believes that these higher ratings from Q3 to Q4 are
mostly due to the revised ad claims in the advertisements.
b. Market Performance -- Q4
market share in first segment: 58

market share in second segment: 46
Average market share in target segments = (58 + 46)/2 = 52
Market Performance is a measure of how well the managers are able to create
demand in their primary and secondary segments. Since this performance will depend
upon the number of competitors- If there are 3 firms, a good score would be greater
than 0.5. If there are 8 teams, a good score would be greater than 0.35. Currently, there
are 3 other firms in competition with CompuStar for a total of 4 competitors. Our
average market performance equaled 52 which signified above average. This was an
improvement from the average score of 47 from Q3. Although CompuStar offered no
price rebates, the opening and expansion of our sales force improved the overall market
performance score.
A summary is as follows:
--United States: net change of 7 salesmen in region (With total of 10 in New York and 9
in Chicago)
--Europe: net change of 5 salesmen in region (With total of 10 in Berlin and 10 in
London)
We have chosen to expand into China with 8 salesmen in Shanghai and Tianjin
as well as 10 salesmen in both Guangzhou and Beijing for a total of 36 salesmen in Q5.
These were low cost regions to open offices in and were also not occupied by
competition in the prior quarter (3). However, our biggest competitor, AgilitY Computers,
had opened offices in two cities in China for Q4 leaving Shanghai and Tianjin open
allowing CompuStar to reap the profits of these untouched cities.
 Financial Performance
Q3 = (-499,252 / 1,079,948) * 100

= -46.23
Q4 =(316,990 / 5,123,700) * 100
=6.19
Page
Cumulative: -20.02
At the end of Q4, CompuStar had a cumulative financial performance score of

-20.02. Financial performance measures how well the executive team has been able to
create profits for its shareholders. It essentially is a measure of spending efficiency or
the “bang for the buck” measurement. A positive number is always desired and the
larger the better. The operating profit for the division is used to compute the executive
team’s financial performance.
An improvement in financial performance was achieved in Quarter 4 compared
to Quarter 3 when CompuStar was able to increase sales revenue from $ 1,079,948.00
to $5,123,700.00. In both Quarter 3 and Quarter 4 operating expenses for CompuStar
were relatively high with a lower gross margin than Q4, which contributed to the
negative operating profit in the first year.
The increase in operating expenses from Quarter 3 to Quarter 4 was related to a
few factors. First, CompuStar opened a total of 12 new sales offices in Q4 (within the
U.S. and Europe) and additional resources had to be utilized to staff these new offices.
Despite the increased cost, CompuStar feels the costs of opening up in these markets
will provide benefit in the future. Another area of operating expenses that increased
from Quarter 3 to Quarter 4 were the sales office leasing costs for the newly opened
offices in Europe. CompuStar’s approach has been to gain increased market share
early by expanding to opportunistic cities as early as possible (i.e. China for Q5). The
$1,495,636.00 increase in sales revenue from Quarter 3 to Quarter 4 was partially
attributed to opening these new sales offices. Additional factors affecting operating
expenses in Q3 and Q4 include brand modification and engineering costs, ad
creation/modification, and advertising expenses. While it would be prudent to create
brands initially that satisfy consumer needs, the cost spent on modifications to,
specifically, the CompuStar WH brand is most certainly worth the increase in operating
expenses
Overall CompuStar has seen some areas where the increase in operating
expenses was worth the cost. Sales force expenditures, some brand modifications/ad
modifications, and new sales offices increased sales revenue which helped created a
better financial performance in Quarter 4 than Quarter 3. In other areas the inability to
match consumer’s wants and needs with brand design and ad creation did not lead to
the desired “bang for the buck.” Working these issues out early was important to
CompuStar as we move forward into year 2 where the costs from year 1 will greatly
benefit financial performance in year 2.
d. Creation of Wealth
Formula: Creation of Wealth = Net investment/Cumulative investment from

Corporate Headquarters
Where; Net investment = Cumulative profit + Cumulative investment from

Corporate Headquarters
Quarter 3:
Page
Creation of wealth = net investment / cumulative investment from Corporate
Headquarters
= 247,948 / 1,500,000
= 0.17
net investment: 247,948

cumulative investment from Corporate Headquarters: 1,500,000
In quarter 3 our product segments were the following- First segment: Work
Horse, Second segment: Cost Cutter. Our performance for Q3 in wealth creation
was the poorest performance in this area in the game at 0.17 as compared to the
average of 0.33. At 0.43 Orange has the highest score for wealth creation. This
indicates that our current revenues are less than Corporate Headquarters has
invested. Our expenses to open new sales offices with low revenue depressed
the creation of wealth of our firm. There is a quarter delay after the set up cost of
sales offices are incurred before these offices become active and generate
revenues. We expect to see revenue generated from these investments in the
upcoming quarters. Market research costs equaled $40,000 for this quarter.
Quarter 4:
Creation of wealth = net investment / cumulative investment from Corporate
Headquarters
=714,938 / 2,000,000
= 0.36
net investment: 714,938

net investment = -1,285,062 + 2,000,000 = 714,938

cumulative profit: -1,285,062
At 0.36, CompuStar’s performance for Quarter 4 in wealth creation was poor

compared to the average of 0.52. In Quarter 4, our product segments were the
following: First segment: Work Horse; Second segment: Cost Cutters (as in the previous
quarter). We decided to enter markets of the cities Berlin and London in Europe. We
opened 2 new sales offices and hired 15 sales reps to ensure we had market presence.
This strategy caused us a large expense of $ 10,694,742 between the office leases and
sales force expenses. We expect that the revenues from these expenses will be seen in
the upcoming quarters. $60,000 in R&D expenses was incurred in this quarter. In the
upcoming quarters we expect to see a positive return on investment.
e. Investments in the Future
Page
Formula: Investments in the firm’s future = (Current expenses that benefit
firms future/Net Revenues)*10+1
Where; Current expense that benefit firm’s future = Cost to open new sales
office + R&D investment in new brand features and new brands
Where; Net Revenues = Sales Revenue – Rebates
Quarter 3:
Current expenses that benefit firm's future = 260,000 + 0 + 0 = 260,000
net revenue = 1,079,948 - 0 = 1,079,948
Investments in the firm's future = (260,000 / 1,079,948) * 10 + 1 = 3.41
Quarter 4:
Current expenses that benefit firm's future = 350,000 + 0 + 0 = 350,000
Net revenue = 5,123,700 - 0 = 5,123,700
Investments in the firm's future = (350,000 / 5,123,700) * 10 + 1 = 1.68
Cumulative:
Investments in the firm's future = 5.09
There are two factors that affected CompuStar’s Investment in the Future scores:
Opening new sale offices: In the test market in Quarter 3, we decided to open new
offices in New York and Chicago, and this opening cost us $ 260,000. In return, net
revenue totaled $1,079,948. In quarter 4 office leases totaled 350,000 which in turn
increased our net revenues to $5,123,700
Brand modification: In Q4, we spent $ 90,000 on brand modification. However, brand
judgment neither increased nor decreased. We need to increase customer satisfaction
in Q5.
Cost Work
Cutter Horse
Average brand judgment in
Q3 68 72
Average brand judgment in
Q4 68 72
Difference 0 0
Although revenue increased in Quarter 4, the Investment in the Future Score

dropped from 3.41 in Quarter 3 to 1.68 in Quarter 4. In Quarter 5 we need to increase
our IF score by spending more to open new offices to increase market share or buy
point of purchase displays to increase sales.
(3) Sales Offices Opened in Q4
Page
Sales offices opened in Q4 Lease Cost
Shanghai $40,000.00
Tianjin $30,000.00
Guangzhou $31,000.00
Beijing $40,000.00
TOTAL $141,000.00
PART III:
III. Marketing Strategy for Second Year
A. We will be targeting Workhorse, CostCutter, Traveler, and Innovator. Our goal is

to improve our current brands and penetrate markets with the new brands as
well.
B. Brand Strategy
1. The Research and Design that we are planning to buy is Office software-
word, spreadsheets - new release and the High speed network/Internet
connection. The costs are roughly around 1.5 million for each item.
R&D Item Quarter Qtr Cost Per Unit Replacement If yes, Net
Item Will Avail. Quarter to Production Item Original Change
be Purchase Cost (y/n) Item and in Unit
Ordered Cost Cost?
Office software- 5 6 $1,705,542 64 Y 48 16
word, /qtr. for
spreadsheets – which
new release quarters?
High speed 5 6 $1,421,285 105 Y 52 53
network/Internet /qtr. for
connection which
quarters?
Q5 Q6 Q7 Q8
Total Costs to $3,126,827
Purchase R&D
by Quarter
2. The new components will be mainly promoted on the two main segments
that we have been targeting: cost cutter and workhorse. These
components may also be used on our new brands in later quarters,
depending on the surveys and research obtained.
R&D CompuStarCC/CostCutter CompuStar/WorkHorse

Component
Page
Office software- Q6 (+$16) Q6 (+$16)
word,
spreadsheets –
new release
High speed Q6 (+$53)
network/Internet
connection
3. We have increased our number of brands in targeting the

segments, as well as increased the number of segments to target. In Q5
we have increased our brands from 2 to 4, and have modified an original
brand to enhance its selling features. Multiple rebates were also added to
help entice consumer buying. Our projected sales volume shows a
relatively linear increase in Q5 and Q6. We expect this to grow in the
same fashion albeit at a stronger rate in Q7 & Q8. Our intent is to
penetrate more markets with more brands and sell at a lower price to win
consumer choice. While we intend to continually modify our brands we
cannot project the change in cost of goods sold given modifications and
new R&D given that we must evaluate the brands in the quarters before
we modify them.
Quarter 5
CompuStarCC2/ CompuStarWH CompuStarInno/ CompuStarTrav/

CostCutter* /Work Horse Innovator* Traveler*
Unit Sales $1,808 $2,633 $3,350 $3,200
Price
(Average)
Unit Rebate $42.5 $41.6 $50 $66
(average)
Base Unit $1,491 $1,959 $3,008 $2,139
COGS
Unit Gross $317 $674 $342 $1061
Margin ($)
Unit Gross 17.53% 25.6% 10.2% 33.15%
Margin (%)
Total 63,652 69,116 40,504 41,119
Annual
Market
Demand in
Units
Projected
by
Marketplace
for this
Segment for
all Cities
being
Targeted
Page
% Market 2.35% 4.9% 0.36% 0.6%
Share in
Segment
that
Projected
Sales
Represents
Projected 1500 2000 250 250
Sales in
Units
Projected $2,712,000 $5,266,000 $837,500 $800,000
Sales
Revenue
Projected $2,236,500 $3,918,000 $752,000 $534,750
Total COGS
Projected $31,875 $41,600 $6,250 $8,250
Total
Rebates
Projected $445,125 $1,298,400 $79,250 $257,000
Total Gross
Margin ($)
Total Projected Sales Revenue for Quarter 5: $9,615,500
Total Projected Rebates for Quarter 5: $ 75,817
Total Projected COGS for Quarter 5: $6,036,552
Total Projected Gross Margin ($) for Quarter 5: $3,503,131
Quarter 6

CostCutter* /Work Horse* Innovator Traveler
Unit Sales $1,765 $2,591 $3,300 $3,130
Price
(Average)
Unit Rebate $0 $0 $0 $0
(average)
Base Unit 1,507 1,648 2,998 2,133
COGS
Unit Gross 258 943 302 997
Margin ($)
Unit Gross 14.6% 36.39% 9.15% 31.8%
Margin (%)
Total 78,496 84,523 47,860 49,662
Annual
Market
Demand in
Units
Projected
by
Page
Marketplace
for this
Segment for
all Cities
being
Targeted
% Market 2.5% 5.9% 2.1% 2%
Share in
Segment
that
Projected
Sales
Represents
Projected 2,000 5,000 999 999
Sales in
Units
Projected $3,530,000 $12,955,000 $3,296,700 $3,126,870
Sales
Revenue
Projected $3,014,000 $8,240,000 $2,995,002 $2,130,867
Total COGS
Projected
Total
Rebates
Projected $516,000 $4,715,000 $301,698 $996,003
Total Gross
Margin ($)
Total Projected Rebates for Quarter 6: $0
Quarter 7

CostCutter* /Work Horse Innovator* Traveler*
Unit Sales $1,765 $2,591 $3,300 $3,130
Price
(Average)
Unit Rebate
(average)
Base Unit $1,507 $1,748 $2,671 $1,813
COGS
Unit Gross $258 $843 $629 $1317
Margin ($)
Page
Unit Gross 15% 36.3% 19% 42%
Margin (%)
Total 78,496 84,523 47,860 49,662
Annual
Market
Demand in
Units
Projected
by
Marketplace
for this
Segment for
all Cities
being
Targeted
% Market 5.09% 9.46% 4.1% 4%
Share in
Segment
that
Projected
Sales
Represents
Projected 4,000 8,000 2,000 2,000
Sales in
Units
Projected $7,060,000 $20,728,000 $6,600,000 $6,260,000
Sales
Revenue
Projected $6,028,000 $13,264,000 $5,342,000 $3,626,000
Total COGS
Projected 0 0 0 0
Total
Rebates
Projected $1,032,000 $7,464,000 $1,168,000 $2,634,000
Total Gross
Margin ($)
Total Projected Sales Revenue for Quarter 7: $ 40,648,000
Total Projected COGS for Quarter 7: $ 28,260,000
Quarter 8

CostCutter /Work Horse Innovator* Traveler*
Unit Sales $1,765 $2,591 $3,300 $3,130
Price
Page
(Average)
Unit Rebate 0 0 0 0
(average)
Base Unit $1,137 $1,748 $2,671 $1,813
COGS
Unit Gross $628 $843 $629 $1317
Margin ($)
Unit Gross 35.5% 32.5% 19.06% 42%
Margin (%)
Total 78,496 84,523 47,860 49,662
Annual
Market
Demand in
Units
Projected
by
Marketplace
for this
Segment for
all Cities
being
Targeted
% Market 7.6% 11.8% 6.26% 6%
Share in
Segment
that
Projected
Sales
Represents
Projected 6,000 12,500 3,000 3,000
Sales in
Units
Projected $10,590,000 $32,387,500 $9,900,000 $9,390,000
Sales
Revenue
Projected $6,822,000 $21,850,000 $8,013,000 $5,439,000
Total COGS
Projected 0 0 0 0
Total
Rebates
Projected $3,768,000 $10,537,500 $1,887,000 $3,951,000
Total Gross
Margin ($)
Page
4. We are expecting to have to modify each brand

every quarter to take advantage of new components. For the brand that
we are not planning on modifying, we still want the cost of modification to
be figured into our plans to take advantage of any better designs that
could come along.
Quarter 5 Quarter 6 Quarter 7 Quarter 8

Engineering 3 @ $60,000 per 3 brands @ 3 brands @ 3 brands @
Costs by brand = $60,000 per $60,000 per $60,000 per
Quarter $180,000 brand = brand = brand = $180,000
$180,000 $180,000
C. Geographic Expansion
1. Sales offices opened in all cities in China during quarter 4. During quarter
5, these offices will become active. During quarter 5 sales offices will
open in LA, Atlanta, Paris, Rome, and all cities in Brazil. These offices
will become active in quarter 6. Sales offices in the Canadian cities will
open in quarter 6, and be active in quarter 7.
City to Open Cost to Open Quarterly Lease Quarter Office Quarter Office
Costs will be will be Active
Purchased
Atlanta $90,000 $60,000 Q5 Q6
Paris $110,000 $70,000 Q5 Q6
Rome $110,000 $65,000 Q5 Q6
Curitiba $50,000 $35,000 Q5 Q6
Rio de Janeiro $60,000 $38,000 Q5 Q6
Sao Paolo $60,000 $36,000 Q5 Q6
Belo Horizonte $40,000 $30,000 Q5 Q6
Montreal $70,000 $50,000 Q6 Q7
Toronto $70,000 $51,000 Q6 Q7
Calgary $60,000 $41,000 Q6 Q7
Vancouver $60,000 $44,000 Q6 Q7
2. Quarterly leasing costs will increase steadily in quarters 5 through 7. The

initial strategy of limited sales office openings will be eliminated in favor of
a truly global focus.
Q5 Q6 Q7 Q8
Total Costs by $520,000 $260,000 $0 $0
Quarter to Open
New Offices
Quarterly Lease $141,000 $334,000 $186,000 $0
Costs New
Page
Offices
Quarterly Lease $308,000 $449,000 $783,000 $969,000
Costs Existing
Offices
Quarterly Lease $449,000 $783,000 $969,000 $969,000
Costs All
Offices
D. Sales Force Staffing By Quarter for All Open Offices
Net Change In Salespeople Total Cost to Hire New Cost to Hire Per
Per Region Salespeople Per Region Salesperson Per Region
1 $6,000 $6,000.00
2 $12,861 $6,430.50
3 $20,090 $6,696.67
4 $27,569 $6,892.25
5 $35,239 $7,047.80
6 $43,064 $7,177.33
7 $51,022 $7,288.86
8 $59,095 $7,386.88
9 $67,269 $7,474.33
10 $75,536 $7,553.60
11 $83,885 $7,625.91
12 $92,310 $7,692.50
13 $100,807 $7,754.38
14 $109,368 $7,812.00
15 $117,992 $7,866.13
16 $126,673 $7,917.06
17 $135,408 $7965.18
18 $144,195 $8,010.83
19 $153,031 $8,054.26
20 $161,914 $8,095.70
21 $170,841 $8,135.29
22 $179,811 $8,173.23
23 $188,822 $8,209.65
24 $197,872 $8,244.67
25 $206,959 $8,278.36
1.
Quarter 5
United States
Quarterly Training Costs
Page
$300 $2000 $3000 $4000 $200 $300
0 0 0
Sales Annual Quarterl Total Sup- Cost Inno- Mer- Work Tra- Total Qtrly
Office Salary y Salary Staff port Cutte vator cedes Hors veler Salaries
r e Per City
New York $100,0 $25,000 10 2 2 1 0 4 1 $250,000
00
Chicago $90,00 $22,500 9 2 1 1 0 4 1 $202,500
0
Total Quarterly Salaries For the Region $452,500
# Staff Per Segment 4 3 2 0 8 2
Total Quarterly Training Costs $46,000
$12,000 $6,000 $6,000 $0 $16000 $6000
# New Salespeople Hired 7

Cost of Hiring per Salesperson $7,177.33
Total Cost of Hiring Salespeople $50,241.31
Total Salary Costs for Region 1, Q5: _____$452,500________
Total Training Costs for Region 1, Q5: ______$46,000________
Total Costs of Hiring New Salespeople,

Region 1, Q5: ______$50,241.31_____
Total Salary, Training, and Hiring

Costs, Region 1, Q5: _____$548,741.31__
Quarter 5
Europe

$3000 $2000 $3000 $4000 $2000 $3000
Sales Annual Quarterly Total Sup- Cost Inno- Mer- Work Tra- Total
Office Salary Salary Staff port Cutter vator cedes Horse veler Qtrly
Salaries
Per City
Berlin $75,000 $18,750 10 2 2 1 0 4 1 $187,500
London $85,000 $21,250 10 2 2 1 0 4 1 $212,500
$12,000 $8,000 $6,000 $0 $8,000 $6,000

Total Cost of Hiring Salespeople $35,239
Page
Total Salary Costs for Region 2, Q5: _________$400,000_______
Total Training Costs for Region 2, Q5: ______$40,000___________

Region 2, Q5: _______$35,239__________

Costs, Region 2, Q5: ______$475,239______
Quarter 5
China

$3000 $2000 $3000 $4000 $2000 $3000
Sales Annual Quarterly Total Sup- Cost Inno- Mer- Work Tra- Total Qtrly
Office Salary Salary Staff port Cutter vator cedes Horse veler Salaries Per
City
Shanghai $ 20,000 $5,000 8 1 1 1 0 4 1 $40,000
Tianjin $ 18,000 $4,500 8 1 1 1 0 4 1 $36,000
Guangzho $22,000 $5,500 10 2 2 1 0 4 1 $55,000
u
Beijing $20,000 $5,000 10 2 2 1 0 4 1 $50,000
$18,000 $12,000 $12,000 $0 $32,000 $12,000
Total Cost of Hiring Salespeople $ 309,089
Total Salary Costs for Region 3, Q5: _______$181,000_______

Region 3, Q5: _______$309,089__________

Costs, Region 2, Q5: ______$576,089______
Total Sales Personnel Costs (Salary, Training and Hiring) Across All Regions for Quarter
5: $1,600,069.31
Page
Quarter 6
United States

$3000 $2000 $3000 $4000 $2000 $3000
Office Salary Salary Staff port Cutter vator cedes Horse veler Salaries
Per City
New York $100,000 $25,000 10 2 2 1 0 4 1 $250,000
Chicago $90,000 $22,500 9 2 1 1 0 4 1 $202,500
Atlanta $80,000 $20000 10 2 2 1 0 4 1 $200,000
$18,000 $10,000 $9,000 $0 $24000 $9000

Region 1, Q6: ______$75,536_____

Costs, Region 1, Q6: _____$798,036__
Quarter 6
Europe

$3000 $2000 $3000 $4000 $2000 $3000
Salaries
Per City
Berlin $75,000 $18,750 10 2 2 1 0 4 1 $187,500
London $85,000 $21,250 10 2 2 1 0 4 1 $212,500
Paris $80,000 $20,000 10 2 2 1 0 4 1 $200,000
Rome $70,000 $17,500 10 2 2 1 0 4 1 $175,000
Page
$24,00 $16,00 $12,000 $0 $16,00 $12,00
0 0 0 0
0

Region 2, Q6: _______$161,914__________

Costs, Region 2, Q6: ______$1,016,914______
Quarter 6
China

$3000 $2000 $3000 $4000 $2000 $3000
City
Shanghai $ 20,000 $5,000 10 2 2 1 0 4 1 $50,000
Tianjin $ 18,000 $4,500 10 2 2 1 0 4 1 $45,000
Guangzho $22,000 $5,500 10 2 2 1 0 4 1 $55,000
u
Beijing $20,000 $5,000 10 2 2 1 0 4 1 $50,000
$24,000 $16,000 $12,000 $0 $32,000 $12,000

Region 3, Q6: _______$12,861__________
Page
Costs, Region 3, Q6: ______$308,861______
Quarter 6
Brazil

$3000 $2000 $3000 $4000 $2000 $3000
City
Curitiba $ 60,000 $15,000 10 2 2 1 0 4 1 $150,000
Rio de $ 65,000 $16,250 10 2 2 1 0 4 1 $162,500
Janeiro
Sao Paolo $ $16,250 10 2 2 1 0 4 1 $162,500
65,000
Beijing $ $12,000 10 2 2 1 0 4 1 $120,000
48,000
$24,000 $16,000 $12,000 $0 $32,000 $12,000
Cost of Hiring per Salesperson $8691.50

Region 4, Q6: _______$347,660__________

Costs, Region 4, Q6: ______$1,038,660______
6: $3,162,471
Quarter 7
United States

$3000 $2000 $3000 $4000 $2000 $3000
Page
Per City
New York $100,000 $25,000 10 2 2 1 0 4 1 $250,000
Chicago $90,000 $22,500 10 2 2 1 0 4 1 $225,000
Atlanta $80,000 $20000 10 2 2 1 0 4 1 $200,000
$18,000 $12,000 $9,000 $0 $24000 $9000
Total Cost of Hiring Salespeople $7,553.60

Region 1, Q7: ______$7,553.60_____

Costs, Region 1, Q7: _____$754,553.60
Quarter 7
Europe

$3000 $2000 $3000 $4000 $2000 $3000
Salaries
Per City
Berlin $75,000 $18,750 10 2 2 1 0 4 1 $187,500
London $85,000 $21,250 10 2 2 1 0 4 1 $212,500
Paris $80,000 $20,000 10 2 2 1 0 4 1 $200,000
Rome $70,000 $17,500 10 2 2 1 0 4 1 $175,000
$24,00 $16,00 $12,000 $0 $16,00 $12,00
0 0 0 0
Cost of Hiring per Salesperson $0
Total Cost of Hiring Salespeople $0
Page
Region 2, Q7: _______$0__________

Costs, Region 2, Q7: ______$855,000______
Quarter 7
China

$3000 $2000 $3000 $4000 $2000 $3000
City
Shanghai $ 20,000 $5,000 10 2 2 1 0 4 1 $50,000
Tianjin $ 18,000 $4,500 10 2 2 1 0 4 1 $45,000
Guangzho $22,000 $5,500 10 2 2 1 0 4 1 $55,000
u
Beijing $20,000 $5,000 10 2 2 1 0 4 1 $50,000
$24,000 $16,000 $12,000 $0 $32,000 $12,000

Region 3, Q7: _______$0__________

Costs, Region 3, Q7: ______$296,000______
Quarter 7
Page
Brazil
$300 $2000 $300 $4000 $200 $300
Sales Annua Quarterl Total 0Sup- Cost 0
Inno- Mer- 0
Work 0Tra- Total Qtrly
Office l y Salary Staff port Cutte vato cedes Hors veler Salaries Per
Salary r r e City
Curitiba $ 60,000$15,000 10 2 2 1 0 4 1 $150,000
Rio de $ 65,000$16,250 10 2 2 1 0 4 1 $162,500
Janeiro
Sao $ 65,000 $16,250 10 2 2 1 0 4 1 $162,500
Paolo
Beijing $ 48,000 $12,000 10 2 2 1 0 4 1 $120,000
$24,00 $16,00 $12,000 $0 $32,00 $12,00
# New Salespeople Hired 0 0 0 0 0

Region 4, Q7: _______$0__________

Costs, Region 4, Q7: ______$691,000______
Quarter 7
Canada

$3000 $2000 $3000 $4000 $2000 $3000
City
Montreal $ 70,000 $17,500 10 2 2 1 0 4 1 $175,000
Toronto $ 70,000 $17,500 10 2 2 1 0 4 1 $175,000
Calgary $ $16,250 10 2 2 1 0 4 1 $162,500
65,000
Vancouver $ $16,250 10 2 2 1 0 4 1 $162,500
65,000
$24,000 $16,000 $12,000 $0 $32,000 $12,000
Page
Cost of Hiring per Salesperson $8691.50

Region 5, Q7: _______$347,660__________

Costs, Region 5, Q7: ______$1,118,660______
7: $3,715,213.60
Quarter 8
United States

$3000 $2000 $3000 $4000 $2000 $3000
Per City
New York $100,000 $25,000 10 2 2 1 0 4 1 $250,000
Chicago $90,000 $22,500 10 2 2 1 0 4 1 $225,000
Atlanta $80,000 $20000 10 2 2 1 0 4 1 $200,000
$18,000 $12,000 $9,000 $0 $24000 $9000

Region 1, Q8: ______$0_____

Costs, Region 1, Q8: _____$747,000
Page
Quarter 8
Europe

$3000 $2000 $3000 $4000 $2000 $3000
Salaries
Per City
Berlin $75,000 $18,750 10 2 2 1 0 4 1 $187,500
London $85,000 $21,250 10 2 2 1 0 4 1 $212,500
Paris $80,000 $20,000 10 2 2 1 0 4 1 $200,000
Rome $70,000 $17,500 10 2 2 1 0 4 1 $175,000
$24,00 $16,00 $12,000 $0 $16,00 $12,00
0 0 0 0

Region 2, Q8: _______$0__________

Costs, Region 2, Q8: ______$855,000______
Quarter 8
China

$3000 $2000 $3000 $4000 $2000 $3000
City
Shanghai $ 20,000 $5,000 10 2 2 1 0 4 1 $50,000
Tianjin $ 18,000 $4,500 10 2 2 1 0 4 1 $45,000
Guangzho $22,000 $5,500 10 2 2 1 0 4 1 $55,000
u
Beijing $20,000 $5,000 10 2 2 1 0 4 1 $50,000
Page
$24,000 $16,000 $12,000 $0 $32,000 $12,000

Region 3, Q8: _______$0__________

Costs, Region 3, Q8: ______$296,000______
Quarter 8
Brazil

$3000 $2000 $3000 $4000 $2000 $3000
City
Curitiba $ 60,000 $15,000 10 2 2 1 0 4 1 $150,000
Rio de $ 65,000 $16,250 10 2 2 1 0 4 1 $162,500
Janeiro
Sao Paolo $ $16,250 10 2 2 1 0 4 1 $162,500
65,000
Beijing $ $12,000 10 2 2 1 0 4 1 $120,000
48,000
$24,000 $16,000 $12,000 $0 $32,000 $12,000
Page
Region 4, Q8: _______$0__________

Costs, Region 4, Q8: ______$691,000______
Quarter 8
Canada

$3000 $2000 $3000 $4000 $2000 $3000
City
Montreal $ 70,000 $17,500 10 2 2 1 0 4 1 $175,000
Toronto $ 70,000 $17,500 10 2 2 1 0 4 1 $175,000
Calgary $ $16,250 10 2 2 1 0 4 1 $162,500
65,000
Vancouver $ $16,250 10 2 2 1 0 4 1 $162,500
65,000
$24,000 $16,000 $12,000 $0 $32,000 $12,000

Region 5, Q8: _______$0__________

Costs, Region 5, Q8: ______$771,000______
8: $2,589,000
2. Compustar has taken on a staffing plan which aims to create a stable

global presence. The initial plan is to maintain a staffing level of 10 in
each city. This number will allow us the flexibility to adjust with market
demand/need.
E. 1. Ad Designs
Page
Ad Designs for Quarter 5
In Quarter 5, Compustar took two strategic routes for ad design. The primary change was in a
paring down of the ad features that would be included in each ad. It was felt that the
advertisements used in Quarter 4 included too many features, and resulted in a cluttered
presentation. The second strategic move was to add new ads which were designed to mimic
the top rated ads in each respective segment. The WH Euro was eliminated from rotation.
Ad Name/Segment Cc* WH * CC Copy* WH Copy*

Cost Cutter Workhorse Cost Cutter Workhorse
Priority 3 1 4 2
Ad Features
Mention brand name 6 4 5 7
Lowest price in town 2 3
Do a wide variety of tasks 2 2
applications
Word processing applications 1 1 1 1
Easy to use, simple design 3 3 2 5
software
Link PC to local 4
network/Internet
Picture business professionals 5

In Quarter 6, Compustar anticipates further streamlining of the advertising offerings. Our
primary strategic focus remains on the bread and butter of our organization: the workhorse
brand. This advertisement will be fine tuned depending on consumer needs. In addition,
modifications and improvements to the brand will be highlighted this quarter. The traveler brand
will now receive advertising focus as well in order to broaden our market scope. Furthermore,
our “copy” advertisements expect to be fazed out of rotation during the next two quarters.
Ad Name/Segment Cc WH * TR*
Cost Cutter Workhorse Traveler
Priority 3 1 2
Ad Features
Do a wide variety of tasks 2
Local sales/service
applications
Word processing applications 1 1
Easy to use, simple design 3 3
Link PC to local 3
network/Internet
Page
New & improved brand, claim 1 5
time
Picture people in travel setting 4
Small footprint/size 2
Rugged design for portability 1

During quarter 7, the cost cutter brand will be moved to a position of lower priority in favor of
higher revenue producing brands. Advertisements for the Innovator brand will enter the
rotation.
Ad Name/Segment Cc WH * TR* IN*

Cost Cutter Workhorse Traveler Innovator
Priority 4 1 2 3
Ad Features
Local sales/service
applications
Word processing applications 1 1 1
Link PC to local 3
network/Internet
Picture business professionals 5 3
New & improved brand, claim 1
time

Quarter 8 will again see a refocusing of advertising. The innovator brand will take a position of
increased priority in anticipation of a larger market share in this segment. The workhorse and
traveler brands will be modified to reflex consumer demand. Modifications to the traveler ads
will reflect improvements to the computers design.
Ad Name/Segment Cc WH * TR* IN*

Cost Cutter Workhorse Traveler Innovator
Priority 4 1 3 2
Ad Features
Page
applications
Word processing applications 1 1 2
software
Link PC to local 3
network/Internet
New & improved brand, claim 1 6
time

Number of new or redesigned ads 4 4 3 3
Design/revision cost per ad $30,000 $30,000 $30,000 $30,000
Total ad design/revision costs $120,000 $120,000 $90,000 $90,000
2. Frequency by city for local advertising by quarter. Duplicate table for

quarter 6, 7 and 8. If you are not running local ads in a particular quarter,
you may simply say so. You do not need to show a blank table. Make
sure your frequency is sufficient to support your brand.
Frequencies should not be less than 9 (1 every 10 days) and 9 is
actually quite low. Frequencies should not be identical for each of the
remaining quarters.
Local Advertising:
Quarter 5
United States
AD 1 AD 2 AD 3 AD 4 (a) Total (b) Total (c) Cost Per Total Media

CC/ WH CC Copy WH Copy Frequency Frequency Ad Cost per City
Costcutter Workhorse Costcutter Workhorse per City per City ^.9 (b * c)
Chicago 13 13 13 13 52 41.30507 $7000 $289,135.49

New York 13 13 13 13 52 41.30507 $12000 $495,660.84
Total $784,796.33
Page
Europe
AD 1 AD 2 AD 3 AD 4 (a) Total (b) Total (c) Cost Total Media
CC/ WH CC Copy WH Copy Frequenc Frequenc Per Ad Cost per
Costcutter Workhorse Costcutter Workhorse
y per City y per City City
^.9 (b * c)
Berlin 13 13 13 13 52 41.30507 $6000 $247,830.42

London 13 13 13 13 52 41.30507 $7000 $289,135.49
Total $536,965.91
China will be advertised regionally
Total Local Advertising Costs for Quarter 5: $1,321,762.24
Quarter 6
United States
AD 1 AD 2 AD 3 (a) Total (b) Total (c) Cost Total Media

CC WH TR Frequenc Frequenc Per Ad Cost per City
Costcutter Workhorse Traveler
y per City y per City (b * c)
^.9
Chicago 11 24 13 48 38.12775 $7000 $266,894.25

New York 11 24 13 48 38.12775 $12000 $457,533
Atlanta 11 24 13 48 38.12775 $7000 $266,894.25
Total $991,321.50
Europe
AD 1 AD 2 AD 3 (a) Total (b) Total (c) Cost Total Media
CC WH TR Frequenc Frequenc Per Ad Cost per City
^.9
Berlin 11 24 13 48 38.12775 $6000 $228,766.50

London 11 24 13 48 38.12775 $7000 $266,894.25
Paris 11 26 13 48 38.12775 $6500 $247,830.38
Rome 11 26 13 48 38.12775 $5500 $209,702.63
Total $953,193.76
China and Brazil will be advertised regionally.
Quarter 7
Page
United States
AD 1 AD 2 AD 3 AD4 (a) (b) (c) Cost Total
CC WH TR IN Total Total Per Ad Media
Costcutte Workhors Traveler Innovator
r e Freque Freque Cost per
ncy per ncy per City
City City ^.9 (b * c)
Chicago 10 12 11 13 46 36.5390 $7000 $255,773.6
9 3
New York 10 12 11 13 46 36.5390 $12000 $438,469.0
9 8
Atlanta 10 12 11 13 46 36.5390 $7000 $255,773.6
9 3
Total $950,016.3
4
Europe
AD 1 AD 2 AD 3 AD4 (a) Total (b) Total (c) Cost Total Media
CC WH TR IN Frequenc Frequenc Per Ad Cost per City
Costcutter Workhorse Traveler Innovator
^.9
Berlin 10 12 11 13 46 36.53909 $6000 $219,234.59

London 10 12 11 13 46 36.53909 $7000 $255,773.63
Paris 10 12 11 13 46 36.53909 $6500 $237,504.09
Rome 10 12 11 13 46 36.53909 $5500 $200,965.00
Total $913,477.31
China, Brazil, and Canada are advertised regionally
Total Local Advertising Costs for Quarter 7: $1,863493.65
Quarter 8
United States
Page
AD 1 AD 2 AD 3 AD4 (a) (b) (c) Cost Total
CC WH TR IN Total Total Per Ad Media
Costcutte Workhors Traveler Innovator
r e Freque Freque Cost per
ncy per ncy per City
City City ^.9 (b * c)
Chicago 9 12 11 11 43 34.1561 $7000 $239,092.7
1 7
New York 9 12 11 11 43 34.1561 $12000 $409,873.3
1 2
Atlanta 9 12 11 11 43 34.1561 $7000 $239,092.7
1 7
Total $888,058.8
6
Europe
AD 1 AD 2 AD 3 AD4 (a) Total (b) Total (c) Cost Total Media
CC WH TR IN Frequenc Frequenc Per Ad Cost per City
^.9
Berlin 9 12 11 11 43 34.15611 $6000 $204,936.66

London 9 12 11 11 43 34.15611 $7000 $239,092.77
Paris 9 12 11 11 43 34.15611 $6500 $222,014.72
Rome 9 12 11 11 43 34.15611 $5500 $187,858.61
Total $853,902.76
Page
Brazil, China, and Canada will be advertised regionally.
3. Media selection and frequency by region for regional advertising by

quarter. Show frequency and preference index within each cell wherever
ads are being run. (Duplicate table for quarter 6, 7 and 8.) Make sure
your frequency is sufficient to support your brand. Frequencies
within any cell should not be less than 9 (once a month in each of
three weekly publications) and 9 is actually quite low. Frequencies
should not be identical for each of the remaining quarters.
Regional Advertising
Quarter 5
China
Page
MEDIA AD 1 AD 2 AD 3 AD 4 (a) Total (b) Total (c) Total
CC WH CC Copy WH Copy Frequenc Frequen Cost Media
Costcutter Workhors Costcutt Workhors
e er e y Per cy Per Per Cost
Media Media^. Ad (b*c)
9
Business $ $
Newspapers
General 13 13 26 20.6525 $6800 $140437
Business
Magazines
Computer $ $
Magazines
General $ $
News
Magazines
Leading 7 7 6 6 26 20.6525 $3200 $66088
Trade
Journals
New Venture $ $
Magazines
Sports 13 13 26 20.6525 $1050 $216851.2
Magazines 0 5
Executive $ $
Business
Magazines
Science and $ $
Technology
Daily $ $
Newspapers
Leisure & $ $
Entertainme
nt
Total $423376.2
5
Total Regional Advertising Costs for Quarter 5: $_423376.25
Quarter 6
China
MEDIA AD 1 AD 2 AD 3 (a) Total (b) Total (c) Total

CC WH TR Frequency Frequency Cost Media Cost
Per Media Per Per (b*c)
Media^.9 Ad
Business $ $
Newspapers
General 11 13 24 19.0638 $6,800 $129633.84
Page
Business
Magazines
Computer $ $
Magazines
General News $ $
Magazines
Leading Trade 12 12 24 19.0638 $3,200 $61004.16
Journals
New Venture 13 13 26 20.6525 $10,50 $216851.25
Magazines 0
Sports $ $
Magazines
Executive $ $
Business
Magazines
Science and $ $
Technology
Daily $ $
Newspapers
Leisure & $ $
Entertainment
Total $407489.25
Brazil
MEDIA AD 1 AD 2 AD 3 (a) Total (b) Total (c) Total

CC WH TR Frequency Frequency Cost Media Cost
CostCutter Workhorse Traveler
Per Media Per Per Ad (b*c)
Media^.9
Business 13 13 26 20.6525 $7000 $144567.50
Newspapers
General $ $
Business
Magazines
Computer $ $
Magazines
General News $ $
Magazines
Leading Trade 13 13 26 20.6525 $2900 $59892.25
Journals
New Venture $ $
Magazines
Sports 13 13 13 39 30.9788 $9000 $278809.20
Magazines
Executive $ $
Business
Magazines
Science and $ $
Technology
Daily $ $
Page
Newspapers
Leisure & $ $
Entertainment
Total $483268.95
Total Regional Advertising Costs for Quarter 6: $890758.20
Quarter 7
China
MEDIA AD 1 AD 2 AD 3 AD 4 (a) Total (b) Total (c) Total Media C

CC WH TR IN Frequency Frequency Cost
Per Media Per Media^.9 Per
Ad
Business $ $
Newspapers
General 11 13 24 19.0638 $6,800 $129633.84
Business
Magazines
Computer 13 13 26 20.6525 $2300 $47500.75
Magazines
General News $ $
Magazines
Leading Trade 12 12 24 19.0638 $3,200 $61004.16
Journals
New Venture 13 13 26 20.6525 $10,50 $216851.25
Magazines 0
Sports $ $
Magazines
Executive $ $
Business
Magazines
Science and 13 13 10.3263 $6000 $61957.80
Technology
Brazil
Page
MEDIA AD 1 AD 2 AD 3 Ad 4 (a) Total (b) Total (c) Total
CC WH TR IN Frequen Frequen Cost Media
Costcutt Workhors Traveler Innovator
er e cy Per cy Per Per Cost
9
Business 10 10 20 15.8656 $7000 $111059.2
Newspapers 0
General $ $
Business
Magazines
Computer $ $
Magazines
General News $ $
Magazines
Leading Trade 12 12 13 27 21.4468 $2900 $62195.72
Journals
New Venture $ $
Magazines
Sports 10 10 10 13 43 34.1561 $9000 $307404.9
Magazines 0
Executive $ $
Business
Magazines
Science and 13 13 10.3263 $6000 $61957.60
Technology
Daily $ $
Newspapers
Leisure & $ $
Entertainment
Total $542617.4
2
9
Business $ $
Newspapers
General $ $
Business
Magazines
Computer 13 10.3263 $4000 $41305.20
Magazines
General News $ $
Magazines
Leading Trade 13 13 26 20.6525 $6000 $123915.0
Journals 0
New Venture 13 13 10.3263 $ $
Magazines
Sports 13 13 13 39 30.9788 $1500 $464682.0
Magazines 0 0
Executive $ $
Business
Magazines
Science and 13 13 10.3263 $1200 $123915.6
Technology 0 0
Daily $ $
Newspapers
Leisure & $ Page $
Entertainment
Total $753817.8
0
Canada
Total Regional Advertising Costs for Quarter 7: $1,813,383.02
Quarter 8
China
MEDIA AD 1 AD 2 AD 3 AD 4 (a) Total (b) Total (c) Total Media C

CC WH TR IN Frequency Frequency Cost
Per Media Per Media^.9 Per
Ad
Business $ $
Newspapers
General 11 13 24 19.0638 $6,800 $129633.84
Business
Magazines
Computer 13 13 26 20.6525 $2300 $47500.75
Magazines
General News $ $
Magazines
Leading Trade 12 12 24 19.0638 $3,200 $61004.16
Journals
New Venture 13 13 26 20.6525 $10,50 $216851.25
Magazines 0
Sports $ $
Magazines
Executive $ $
Business
Magazines
Science and 13 13 10.3263 $6000 $61957.80
Technology
Daily $ $
Newspapers
Page
MEDIA AD 1 AD 2 AD 3 Ad 4 (a) Total (b) Total (c) Total
Leisure & 9 $ $
Business
Entertainment 10 10 20 15.8656 $7000 $111059.2
NewspapersTotal 0
$516947.80
General $ $
Business
Magazines
Computer $ $
Magazines
General News $ $
Magazines
Leading Trade 12 12 13 27 21.4468 $2900 $62195.72
Journals
New Venture $ $
Magazines
Sports 10 10 10 13 43 34.1561 $9000 $307404.9
Magazines 0
Executive $ $
Business
Magazines
Science and 13 13 10.3263 $6000 $61957.60
Technology Brazil
Daily $ $
Newspapers
Leisure & $ $
Entertainment
Total $542617.4
2
Page
Canada

9
Business $ $
Newspapers
General $ $
Business
Magazines
Computer 13 10.3263 $4000 $41305.20
Magazines
General News $ $
Magazines
Leading Trade 13 13 26 20.6525 $6000 $123915.0
Journals 0
New Venture 13 13 10.3263 $ $
Magazines
Sports 13 13 13 39 30.9788 $1500 $464682.0
Magazines 0 0
Executive $ $
Business
Magazines
Science and 13 13 10.3263 $1200 $123915.6
Technology 0 0
Daily $ $
Newspapers
Leisure & $ $
Entertainment
Total $753817.8
0
Total Regional Advertising Costs for Quarter 8: $1,813,383.02
Page
F. Sales Promotion Strategy By Quarter - use of POP. (Duplicate tables for quarter
6, 7 and 8).
Quarter 5
POP CC WH Total Cost per POP Total Cost for POPS

Number
of POPs
USA 2 2 4 $200 $800
Europe 2 2 4 $200 $800
Region 4 4 8 $200 $1600
3
Total $3,200
Quarter 6
POP CC WH Total Cost Total Cost for POPS

Number per
of POPs POP
USA 4 4 12 $200 $1600
Europe 4 4 16 $200 $1600
China 4 4 16 $200 $1600
Brazil 4 4 16 $200 $1600
Total $6400
Quarter 7

Number per
of POPs POP
USA 4 4 8 $200 $1600
Europe 4 4 8 $200 $1600
China 4 4 8 $200 $1600
Brazil 4 4 8 $200 $1600
Canada 4 4 8 $200 $1600
Total $8000
Quarter 8

Number per
of POPs POP
USA 4 4 8 $200 $1600
Europe 4 4 8 $200 $1600
China 4 4 8 $200 $1600
Brazil 4 4 8 $200 $1600
Canada 4 4 8 $200 $1600
Page
Total $8000
G. Financial Strategy
1. Profitability
a. Projections of profits by quarter. Complete table below. Note that

all figures in this table must correspond directly to the totals
arrived at in your marketing plan above.
Pro-Forma Profitability of Marketing Division
Quarter1 Quarter2 Quarter3 Quarter4 Quarter5 Quarter6 Quarter7 Quarter8

Revenues $0 $0 $1,079,948 $5,123,700 $9,615,500 $22,908,570 $ 40,648,000 $62,267,500
Rebates $0 $0 $75,817
Cost of Goods sold $0 $0 $800,584 $3,348,700 $6,036,552 16,379,869 28,260,000 $42,124,000
Gross margin $0 $0 $279,364 $1,775,000 $3,503,131 $6,528,701 12,298,000 $20,143,500
$0
Sales office leases $0 $0 $175,000 $308,000 $449,000 $783,000 $969,000 $969,000
Sales force expense $0 $0 $405,310 $761,742 $1,600,069 $3,162,471 $3,715,213 $2,589,000
Sales force $0 $0 $0 $0 $0 $0 $0 $0
promotions
Sales force $0 $0 $0 $0 $0 $0 $0 $0
programs
Ad creation/revision $0 $0 $60,000 $90,000 $120,000 $120,000 $90,000 $90,000
POP expenses $0 $0 $800 $1,600 $3,200 $6,400 $6,400 $6,400
Local Advertising $0 $0 $97,506 $236,668 $1,287,532 $0 $0 $0
expenses
Regional $0 $0 $0 $0 $417,014 $890758.20 $1,813,383 $1,813,383
Advertising
Expenses
Engineering cost for $0 $120,000 $0 $0 $180,000 $180,000 $180,000 $180,000
new brands
Market research $72,800 $0 $40,000 $60,000 $100,000 $100,000 $100,000 $100,000
Miscellaneous $0 $0
Operating $72,800 $120,000 $778,616 $1,458,010 $4,165,600 $5,242,629 $6,873,996 $5,747,783
expenses
Operating profit -$72,800 -$120,000 -$499,252 $316,990 -$662,469 $1,286,072 $5,424,004 $14,395,717
Research and $0 $3,126,827 $0 $0 $0
development costs
Set up costs for new $0 $300,000 $260,000 $350,000 $670,000 $260,000 $0 $0
sales offices
Net profit -$72,800 -$420,000 -$759,252 -$33,010 -$4,459,296 1,026,072 $5,424,004 $14,395,717
Cumulative net -$72,800 -$492,800 -$1,252,052 -$1,285,062 -$5,744,358 -$4,718,286 $705,718 $15,101,435
profit
b. Return on investment (Creation of Wealth) by end of second year
Page
Cashflow Statement

Cumulative Net -$5,744,358 -$4,718,286 $705,718 $15,101,435
Profit (add profit from
all previous quarters to
profit from current
quarter)
Cumulative $7,000,000 $7,000,000 $7,000,000 $7,000,000
Investment from HQ
funding from HQ in
Q1-Q5)
Net Investment (Add $1,255,642 $2,281,714 $7,705,718 $22,101,435
rows 1 and 2)
Return on .179 .326 1.101 3.16
Investment = Net
Investment /
Cumulative
Investment (row 3
divided by row 2)
Page

Company Name: Compustar: Marketplace-Business-Simulation-How-Win-Edited-5-31-09-A.Html

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Company Name: Compustar: Marketplace-Business-Simulation-How-Win-Edited-5-31-09-A.Html

Uploaded by

Copyright:

Available Formats

http://www.fohguild.

Marketplace Marketing Plan

Marketing 5332: Executive Decisions in Marketing

Company Name: CompuStar

II. History of the Firm

B. Target Markets Selected to Date

1. Primary Target Market (as of EOQ4) – Workhorse

b. Components selected in order to meet customer needs:

Component Consumer Need/Want/Application (Index Score)

(1) Customer satisfaction with brand design

There were no changes made to the CompuStar WH design.

Region Q3 Rating Q4 Rating

(2) Comparison of Brand Designs for Q3 and for Q4

In Q3, our closest competitor in the Workhorse market, Orange

(1) Customer satisfaction with ad design

For the CompuStar WH ad in quarter 4, several changes

With these modifications, the CompuStar WH ad rating

Region Q3 Rating Q4 Rating

Ad Features CompuStar WH CompuStar WH CompuStar WH Euro

(2) Comparison of Ad Designs for Q3 and for Q4

What are the implications for pricing based on your analysis?

(1) Customer satisfaction with pricing and

CompuStar WH/Work Horse

Region Q3 Price Q3 Rebate Q3 Net Price Q3 Rating

Standard Chip/Work Horse

Region Q3 Price Q3 Rebate Q3 Net Price Q3 Rating

CompuStar WH/Work Horse

Region Q4 Price Q4 Rebate Q4 Net Price Q4 Rating

CompuStar CC/Cost Cutters

Region Q4 Price Q4 Rebate Q4 Net Price Q4 Rating

AgilitY Computers/Work Horse

Region Q4 Price Q4 Rebate Q4 Net Price Q4 Rating

2. Secondary Target Market (as of EOQ4) – Cost Cutter

b. Components selected in order to meet customer needs.

Component Consumer Need/Want/Application (Index Score)

(1) Customer satisfaction with brand design

There were no changes made to the CompuStar CC design.

Region Q3 Rating Q4 Rating

(2) Comparison of Brand Designs for Q3 and for Q4

In Q3, our closest competitor in the Cost Cutter market, Microchip

In Q4, Microchip increased their rating, and topped our brand

Compact disk (CD) X X

(1) Customer satisfaction with ad design

For the CompuStar CC ad in quarter 4, several changes

For Q4, an additional ad was also created for this brand.

With these modifications, the CompuStar CC ad rating

Region Q3 Rating Q4 Rating

(2) Comparison of Ad Designs for Q3 and for Q4

Q3 – Cost Cutter Consumer CompuStar MicroChip

Q4 – Cost Cutter Consumer CompuStar AgilitY

(2) Customer satisfaction with pricing and Comparison of prices

CompuStar CC / Cost Cutter

Region Q3 Price Q3 Rebate Q3 Net Price Q3 Rating

Region Q3 Price Q3 Rebate Q3 Net Price Q3 Rating

MicroChip – Standard Chip / Work Horse

Region Q3 Price Q3 Rebate Q4 Net Price Q4 Rating

Region Q4 Price Q4 Rebate Q4 Net Price Q4 Rating

Region Q4 Price Q4 Rebate Q4 Net Price Q4 Rating

AgilitY – Valutron / Work Horse

Region Q4 Price Q4 Rebate Q4 Net Price Q4 Rating

AgilitY – Valutron / Cost Cutter

Region Q4 Price Q4 Rebate Q4 Net Price Q4 Rating

Total Salary Costs for Region 1, Q5: _$452,500____

Total Training Costs for Region 1, Q5: $46,000__

Total Training Costs for Region 2, Q5: $40,000_____

Total Salary Costs for Region 3, Q5: _$181,000_

Total Training Costs for Region 3, Q5: $86,000_____

Total Salary Costs for Region 1, Q6: _$652,500____

Total Training Costs for Region 1, Q6: $70,000__