Marketing Simulation Recap

M1: Assignment: Years 1-3 Checkpoint

From Year 0 to Year 1, I decreased prices by 10% and the OPI increased. One example to support this action is that there was increase in unit sales from 151 to 193 for MOJO and 147 to 203 for MOON. Another reason to support this is the gain from last year, which was $7.5 million for MOJO and $12.7 million for MOON. Also to support this, retail sales increased from $48.2 million to $55.7 million for MOJO and from $52.3 million to $65.0 million for MOON. There were, however, examples that suggested this price decrease may be counterproductive. One, our competitor ROCX had the 2nd largest gain from last year at $9.6 million with MOON being 1st and MOJO being 3rd. Two, although the price went down for both products, the unit cost remained the same at $115 for MOJO and $127 for MOON. Three, production costs for both products increased from $36 to $48 million. As a result, the company’s gross profit went from $22.7 million to $22.5 million.

From Year 1 to Year 2, I made no changes to pricing. I found some examples to support this action. One example was the OPI increased yet again and there was increase in unit sales from 193 to 209 for MOJO and 203 to 213 for MOON. Another reason to support this was retail sales increased from $55.7 million to $60.2 million for MOJO and from $65.0 million to $68.2 million for MOON. Also to support this, the gain from year to year was $4.6 million for MOJO and $3.2 million for MOON, which led to a gross company profit increase from $22.5 million to $24.1 million. There were, however, examples that suggested this price decrease may be counterproductive. One, the market share for MOJO went from 21.2% to 20.2% and the market share for MOON went from 22.3% to 20.5%. Two, our competitor ROCX saw the most improvement with a gain of 47,000 in units sold and a gain of $16 million by decreasing