Guide
You're launching a brand against two competitors. Each period you set a price and decide how much to spend on quality and on advertising — and customers choose between the three of you on price, quality, and awareness, in proportions this market keeps to itself. Finish with the most company value — cash plus the worth of the customers you've won — after 20 periods to win. There are three levels, and level 1 is free. The last section spells out how the game maps onto the marketing mix.
Levels
Every level runs 20 periods with the same three levers, and the company worth the most at the end wins. Each level adds one lesson to the last. Level 1 is free; levels 2 and 3 are part of full access.
- 1 · The marketing mix
- One market, two rivals who never change their prices. Find out what your customers value and put your money there.
- 2 · Choose your segment
- Two kinds of customer with different tastes, and a rival positioned for each. You can't win every customer: choose a segment, then set your price and spending for it.
- 3 · Real life
- Level 2, plus rivals that answer back, a downturn that comes without warning, and overhead that can make you insolvent. Position carefully and keep a reserve.
Starting a game
Every company starts level: $5,000 in cash, a price near $20, and quality and awareness scores of 25 each. Each game's market is drawn from its seed — leave it blank for a new one, or replay a seed to face exactly the same market again. Click the level in the header to see the game's seed, for example to check it's the one your professor assigned.
Reading the board
The table shows every company's current price, quality and awareness scores, cash, and share of last period's market — at levels 2 and 3, its share of each segment instead. Your row is highlighted; each rival is labeled with its strategy. Below it is your decision form for the coming period. At level 3, news of the period (a rival's response, the downturn) appears above the table.
Your three levers
- Price
- What you charge per unit, between $10 and $60. It carries over from period to period until you change it.
- Quality spend
- Raises your quality score. Each dollar adds less than the last: the gain is 1.5 × the square root of what you spend that period.
- Ad spend
- Raises your awareness score, by exactly the same rule.
Spending shows up in the same period's results — there's no lag. But a brand needs upkeep: each period, quality and awareness lose 10% of whatever you've built above the starting 25 (15% at level 3). Stop spending and your scores — and your customers — slowly drift away.
Your budget
Quality spend plus ad spend can't exceed the cash you have. That limit is the point: every dollar has to go where this market rewards it most, and it has to earn back more than it costs.
How customers choose
Each period 300 customers split between the three companies. Each company's attractiveness is a weighted sum of its price score, quality score, and awareness score, and its share of customers is its attractiveness over everyone's. The weights are what make every market different — some care mostly about price, some about quality, some about awareness, some about all three — and they're hidden. Watch how the rivals' different strategies fare to work out which one this market rewards.
Pricing
Price is judged against what the market is actually charging: at the average of the three prices your price score is 100, below it climbs, above it falls away steeply. Pricing well above the market also costs you sales outright, however little this market otherwise weighs price — customers have budgets. Pricing low wins share but thins your margin on every unit.
Sales, revenue, and profit
Units sold follow your share of the 300 customers. Every unit costs $10 to make, so a period's profit is (price − $10) × units sold, minus your quality and ad spend. Profit goes straight into your cash.
Company value: how you win
The winner is the company worth the most at the end, not simply the one holding the most cash. A real buyer would pay for two things: the money in the bank, and the customers the business will keep selling to after the game ends.
company value = cash + customer base customer base = average share × 300 customers × average margin × 20 periods
- Average share
- Your market share averaged over the last 10 periods (over every period played, until there have been 10).
- Average margin
- What you earn per unit — price minus the $10 unit cost — averaged over the same periods, counted between $0 and $10. At levels 2 and 3 the average is weighted by your share each period — the margin you actually earned on your customers — and counted up to $13, so customers who pay a premium are worth more.
- 20 periods
- Your customers are valued as if they keep buying at that share and margin for 20 more periods.
An example
Over the last 10 periods you averaged a 32.0% share. You charged $20 most of the time but $19.00 and $19.50 in three periods, so your margin averaged $9.80. With $6,000 in cash:
customer base = 32.0% × 300 × $9.80 × 20 = $18,816 company value = $6,000 + $18,816 = $24,816
Why averages, and why your own margin
- Averages mean one period can't make or break you. A slow start keeps your customer base low for a while, even once you've taken the lead, until those periods fall out of the last 10. Likewise, a last-minute change can only shift a fraction of the number.
- Customers bought at cost are worth nothing. Pricing at $10 can win a big share, but a customer you earn nothing on adds nothing to what the business is worth.
- A high price doesn't inflate it either. The margin counts only up to $10 a unit ($13 at levels 2 and 3) — pricing high earns you cash now, but it costs you share, and that shows up in your customer base.
Reading the board
Under the table, each company's value is broken down into cash plus customer base, and the customer base into its average share and average margin. That's why a company leading on "Last Share" can still have a smaller customer base: the average also covers earlier periods, and any price cuts along the way.
What it means for your strategy
There are two ways to fall short: hoard cash by abandoning your brand and customers near the end (your brand fades without upkeep, and your share goes with it), or buy customers so cheaply that they earn you nothing. Build a business that keeps customers at a healthy margin, and keep it running to the last period. A company is worth its future, not just its bank balance.
Your competitors
Each rival follows one fixed strategy for the whole game, shown next to its name: a discounter prices a touch below the market and leans on advertising; a quality-focused company prices a touch above and leans on quality; a balanced one splits the difference. They budget from their recent revenue. Whichever strategy is pulling ahead is your best clue to what this market values. From level 2 the rivals are always one discounter, priced at $19 for the bargain hunters, and one quality-focused company at $23 for the enthusiasts.
Segments (levels 2 and 3)
From level 2 the 300 customers come in two kinds, each with its own hidden weights and its own feeling about price. The board shows each segment's size and character, and your share of each, every period; the weights are revealed in the debrief.
- Bargain hunters — 180 customers
- A dollar off wins them; a dollar on loses them.
- Enthusiasts — 120 customers
- Pay for a better product and a name they know.
You set one price for both. A price that suits one segment rarely suits the other, and spending that wins one may be wasted on the other: trying to please everyone usually loses to rivals who each please someone. Choose the segment you can win, and price and spend for it.
Rivals answer back (level 3)
At level 3 the rivals watch you. If your price is more than 3% below the cheapest of theirs, the discounter matches it the next period and the other rival cuts halfway towards it (never below $11). Once you stop undercutting, they ease back towards their usual prices. A rival that loses 3 points of share in a period spends 50% more the next to win it back. A price war can win you customers, but everyone's margin pays for it — yours too.
The downturn (level 3)
Every level-3 game has a downturn. It will come, somewhere between periods 8 and 12, and last 3 to 5 periods — but there's no warning: you find out when it hits. While it lasts the market shrinks to 65% of its usual size, in both segments, and every customer is more put off by a high price. Your sales fall, but your overhead doesn't.
Overhead and insolvency (level 3)
At level 3 every company pays $300 of overhead each period, whatever it sells. If your cash ends a period below $0 you're insolvent: the game ends there and you lose, however well you were doing.
The lesson: keep at least one period's costs — the overhead plus what you plan to spend — in cash, and cut your spending when the downturn hits. Spend every dollar and the downturn can put you under.
The rivals keep 3 periods of overhead in hand.
The debrief
After period 20 the company with the most company value wins. The debrief names the winner, breaks its value into cash and customer base, reveals the weights this market ran on, and says which lever gave the winner its edge. From level 2 it shows how each company split the segments, and at level 3 how the price war (if you started one) and the downturn went. Replay the seed to put what you learned to work. Win, and it tells you what the next level brings.
The marketing mix, in this game
- Price
- → Your price, scored against the market's own average price.
- Product
- → Quality spend and the quality score it builds.
- Promotion
- → Ad spend and the awareness score it builds.
- Place
- → Not modeled here — every company reaches the same customers.
The lesson is the one real marketers face: the mix only works when it matches what your customers actually value, and you usually have to infer that from how the market responds.