Markstrat: Sonites and Vodites

If I have to single out one thing at ISB from which I learnt the most, Markstrat would be it. Markstrat enabled us to use concepts that we learnt in class in a simulated marketplace, for the first time I must say. But the thing that was key to Markstrat in my opinion was the spirit of the competition. It was one against another - all for the exclusive bragging rights to "I won Markstrat" for the rest of the term. For some reason, the enthusiasm and the level of involvement of students into Markstrat was easily visible - on dinner tables, in casual chats, in parties, in joy and in grief.

For me, this was my first exposure to B2C marketing, and yes the experience was rewarding. We gave our heart, soul, sweat and blood into Markstrat. Okay, by we I mean Pratap and I; rest of the study group members never showed enough interest. One good thing about I and Pratap working together was that both of us thought among similar lines; we wanted to win Markstrat - coming second, third or fourth was never an option. However, at times chasing this dream was difficult - after all this was Term 2, the second most taxing term at ISB (close second to Term 3). And Markstrat did consume a lot of time - the analysis before a decision, the post result discussion, strategizing for the next decision. We went "All In" for our last decision, desperately trying to bridge the $70 million gap with the table toppers. That was our Masterstroke, and we made $289 million in the last period, the highest by any team in any period. And yes, we did win the bragging rights, which by the way were very effectively utilized. The picture below very clearly depicts how we performed (hoping that this would add some credibility to what I am going to write next).

Our Period 8 performance

Next, I will try and pen down certain dos and donts that may be helpful for anyone who is going to play Markstrat. Hope this helps someone. However, let me add that I will not provide any specific tips - that would kill the learning and the fun of it.

• Read the Markstrat manual - this is probably the most important tip for success in Markstrat. I know many teams that did not understand head or tails of the Markstrat world till the very end. That can be disastrous.
• Although your performance is evaluated among the similar firms across all the industries, remember one thing - your ultimate competition is from firms within your industry and not from outside. You have to be on top of your game in your industry, or else you will be killed.
• Your win or loss in Markstrat is dependent very much on your performance in the later periods, and not so much on the earlier periods. Out of a total Net Contribution of $770 million in all periods, we made $450 million in the last two periods. Hence, treat the initial periods as investments required to ace the later periods.
• Buy all the reports - the Industry Newsletter, Company Report and Market Research Studies. Don't be frugal here, because you will not save much anyway.
• Enter the Vodite market early, even with a crappy product if required. There is plenty of money to be made in the Vodite market if your are the first mover. Price as high as possible initially, and discard the crappy product later. Entering early also means high brand awareness, which can be milked again in the later periods.
• One product for one customer segment - do not have one product cater to more than customer segment. You will lose out heavily on both the segments. Focus on selling one product to one segment only.
• Spend heavily on advertisements and spend your entire budget. Do not always trust the Advertisement Experiment reports, they are not always accurate. Do not leave money on the table, spend everything you have. Spend a certain percentage of the total spent on Advertising Research as well.
• R&D and Online Queries - you need to invest reasonably well in R&D to win. However, never do a Feasibility Study, they are useless and take up one period unnecessarily. Rather, trust the Online Queries - they are reasonably accurate and save you one period. Also, although Markstrat says there is a limit to the no. of Online Queries you can do, if you do not save your session you can do unlimited no. of Online Queries. Utilize this to the fullest and do as many queries as you can. You will realize that for every product there is a threshold, beyond which if you want to improve the features it will cost you a lot. The idea should be to find the threshold and optimize your spending.
• Price Rationalization - do not freak out seeing price cuts in your industry. The industry in itself will not grow if the prices are kept artificially high, and eventually you will lose out on the long term. It is okay to start with a high price, but remember to rationalize the price to enable the market segments grow.
• Under-Production - the most common problem that we faced. We ended up under-producing in almost all the periods, including the last period (which is a crime btw). In my opinion, it is always better to over produce than to have lost sales. I recommend you read up lecture notes for Session 5 on Production Planning, which will help you to objectively evaluate how much you should produce.
• Make proper use of the Semantic Scales, Multi-Dimensional Scaling and Conjoint Analysis Reports. These three reports need to used in tandem, and neither of them should be used in isolation.
• Do not collude - not only because it will kill all the learning and the fun, but also because colluding actually will not help you to win. As already mentioned, artificial high prices, if sustained, would mean that the customer segments will not grow to their full potential - and everyone in the industry will actually lose out.
• Consult the Profs - What would you do in a real life situation when your products do not sell in the market? You would consult experts. Do the same here as well. Discuss with the Profs if you fail to figure out the logic of why certain things happen the way they do in the Markstrat world. Believe me, sometimes these discussions would lead to starking revelations.
• Be organized - you will have to deal with a lot of data in Markstrat, and sometimes the amount of data can be overwhelming. It is important to be well organized with the data, otherwise things can get real messy.

Hope you all have as much fun playing Markstrat as I had. For information, there is a world-wide competition on Markstrat as well, known as E-Strat. If some of you are enthusiastic enough, you may wish to participate in it. If any of you have any specific queries, leave a comment and I would be happy to help. Best of luck with Markstrat!