MktSIM© Market Simulation Model

Overview

MktSIM© is a marketing simulation model for organizing information about a brand/product and its competition, and then estimating the probable effects of various marketing strategies on share and volume.

THE QUESTIONS

What marketing decision maker or student of marketing has not been curious at one time or another about what might happen to a brand's share and volume if the advertising expenditure were doubled; or cut in half; or if the price were increased or decreased by twenty percent; or if product quality were improved by ten percent; or if distribution fell by fifteen percent?

And what about the launch of a new product? Which strategic marketing mix would give it the best chance of survival in a competitive environment? And how might its fortunes be affected if competition simultaneously launches strategic countermoves?

THE CHALLENGE

Definitive answers to these kinds of "what-if" questions are not available, and the best "real world" estimates are only possible through carefully controlled experimentation in test markets. Such experimentation can be both costly and time consuming, and there are still severe limits on how many factors in the marketing mix can be examined simultaneously.

SIMULATION

However, a rough indication of what might happen as a result of various "what-if" scenarios can be provided through computer based simulation. Marketing simulations on mainframes or time sharing systems have been used by marketers, advertising agencies, and consultants for years. Availability of such models for PC's is still rare.

FORECASTING DEMAND

While financial planning models and spreadsheet macros for personal computers are plentiful, these models do not provide estimates (forecasts) of demand... they merely estimate the financial consequences of different demand levels.

MktSIM© fills this productivity gap for IBM-PC's by providing a model based on competitive market dynamics which relates marketing mix decisions to demand as expressed by share and volume. A combination of data from syndicated services (IRI, NFI, LNA), internal data sources, and expert judgment is used as initial input for fitting the model to a particular market. Once the existing market has been replicated to satisfactory tolerances, MktSIM© can then be used to run "what-if" simulation experiments.

GENERAL APPLICABILITY

The general structure of MktSIM© is consistent across all kinds of markets, but the parameters and competitive dynamics for each market will be different. Each user has the opportunity to capture the unique qualities of the market he's interested in, and to customize MktSIM© to meet his special needs. Although the model provides the flexibility for customization (it's not just a set of fixed parameter equations), it's easy to work with and does not require the degree of sophistication that's necessary to build an econometric model from scratch.

KNOWLEDGE BASE

Over ten years of "hands-on" experience with new and existing products in all kinds of categories is incorporated in the model, so in a sense it's a marketing strategy "expert system". As a result, you don't have to worry about what kinds of variables to include or how to put these variables together to capture the dynamics of your market. While these matters are taken care of by MktSIM©, you still need to expend some effort in planning your project, gathering your data, fitting the model to this data, and interpreting the results. However, you don't have to be an econometrician in order to do this.

USER BENEFITS

The net benefit to both laymen and professionals is that they need to spend relatively little time to build a custom model, and can thus concentrate most of their time on running simulations and getting feedback on alternate strategic policies. The advantages of being able to "bench test" strategies prior to major commitments of time and money are obvious. Fitting the model and running simulations can also provide some interesting insights about the user's implicit assumptions regarding "what makes the market tick", and how these assumptions hold up when the available information is examined objectively.

Features

Among MktSIM-WIN©'s many features are the following:

* Data for each brand in the market is entered for the variables listed below:

- Advertising expenditure
- Advertising effectiveness index
- Product quality index
- Price per equivalent unit
- Distribution/point-of-purchase index
- Unit share in previous time period
- Unit share in current time period (used only to obtain initial fit)

* The model makes estimates of the following items for each brand in the simulation:

- Unit share
- Unit volume
- Dollar share
- Dollar volume

* Goodness-of-fit calculations for actual vs. estimated are
performed along with the generation of suggested parameter weights.

* Parameters and data can be "fine-tuned" interactively.

* It's menu driven -- no commands to remember.

* Data is entered and edited using a spreadsheet-like data grid.

* Graphs involving one, two, and three variables can be produced.

* Logical design, range checking, and error trapping minimize
user mistakes and allow easy recovery from errors.

* A comprehensive manual and hypertext help system takes you in easy
to digest steps through all of MktSIM©'s features.

If you'd like to examine a very small sampling of the GRAPHICS available in each of our software products, JUMP to our GRAPHICS SAMPLER.

If you want to 'Try via DOWNLOAD', by all means link to our: FREE DEMO SOFTWARE.