PharmaSim Take-aways

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).
• 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 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

 
– Eric DeRosia