Recently, I did a Marketing Management class, and I used PharmaSim. On the final day of class, I wrapped up the long exercise with a debrief discussion. With students, I walked through this list of the take-aways I wanted them to get from their PharmaSim experience:
- Tactics — develop a deeper understanding of the various tactics in the marketing mix.
- Appreciate that pricing is difficult.
- Inflation -> (your costs, your prices?)
- Competitor-based pricing?
- You presume demand curve is sloping, but there is still much uncertainty.
- Distribution
- Essential, but diminishing returns in terms of coverage.
- Promotions
- Tradeoffs b/t costs & benefits.
- Diagnosing brand situation, types of promotions.
- Diminishing returns.
- Not essential, at least in the short term.
- Product
- Reinforcing the importance of satisfying customer needs (e.g., alcohol).
- Appreciate that pricing is difficult.
- Strategies
- It can be difficult to actually follow the strategy you set, particularly if you start having difficulties. (“Is this a temporary problem? Or maybe our strategy is wrong?”)
- Goals
- A visceral understanding of the incentives that managers have for hurting the long-term profitability of the brand (by harvesting the brand, “cashing out”)
- For you, the reason was “Period 10 is the last period.”
- For managers, the reason is sometimes “I’m only going to be here for three years, and then I’m moving on.”
- The lesser importance of market share when I asked you to maximize earnings.
- An intuitive feel for the proper process:
- Goals should inform strategies…
- which in turn should inform tactics…
- which in turn will lead to outcomes…
- which in turn should be used to inform a revision of strategies if necessary.
- A visceral understanding of the incentives that managers have for hurting the long-term profitability of the brand (by harvesting the brand, “cashing out”)
- A visceral understanding of “the managerial condition.”
- Marketing management is …
- managing multiple inputs simultaneously (many of which are quantitative).
- dynamic (i.e., changing over time).
- submitted to a function (the marketplace) that determines the results.
- Managers suffer …
- Information overload (even with summaries!)
- Uncertainty
- Seem odd to have both info overload and uncertainty simultaneously?
- When dealing with information …
- It’s easy to forget to question the accuracy of information
- It’s easy to forget that correlation != causality
- Marketing management is …
– Eric DeRosia
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