A grad student team is responsible for managing Firm "M" in hypothetical MARKSTRAT industry "Russia." They began the MARKSTRAT simulation with a similar (but not identical) scenario to the one used in our class: a five-firm industry in which all five firms start with the same two Sonite products (the same as every other team), the same 20% market share and stock price index of 1,000. Firm M's initial long-term strategy had a number of components:

(1) to be the pioneer in the Vodite market (which they thought would grow rapidly and generate huge profits)

(2) to develop five Sonite brands uniquely customized to each of the 5 Sonite segments

(3) to be a cost-leader (the lowest cost producer).

After 4 decision periods, things are not going as planned. Firm M's Sonite market share has shrunk to 8%, its net contribution has decreased, and its stock price index has dropped below 800. Firm M has not yet modified its initial two brands, MODE and MOUSE, and the new brand it hoped would capture the Shoppers segment, MOSH, was a big failure and has an inventory of 280,000 units. Luckily, Firm M still has the minimum budget of $8 million to maintain its planned advertising campaign and continue boosting brand awareness. Based on your experience with MARKSTRAT and knowledge of marketing strategy, please answer the following:

Given this situation, Firm M decides to go ahead and develop a Vodite product in period 5 in order to pursue its initial strategic goal of becoming the pioneer in this promising market. Given its struggles in the saturated Sonite market, firm M's management team feels that a fast start in the Vodite market will provide the opportunity to turn around the company's fortunes. Do you agree or disagree with this decision? Why or why not? If not, what other strategic direction should Firm M pursue?

Firm M not only wants to be first into the Vodite market, but also to develop a high-quality product to appeal to the Innovators segment. In response to their initial on-line query, the R&D department informs them it will cost $9 million to develop this product. Should Firm M go ahead and try to implement this strategy? Why or why not? What changes should Firm M make in order to increase the chance that this R&D plan and overall strategy will succeed?

Given your knowledge of marketing strategy in general, discuss the soundness of Firm M's initial strategy: Is it a good strategy that can succeed, or is it a poor strategy that is likely to fail? What is good or bad about it? If you were managing Firm M beginning in Period 1, how would you change this strategy to increase the firm's chances for success? What would be your alternative strategy in case one or more parts of this strategy do not work after the first few decision periods? Please explain.