Alycon Motor Corporation - Stratsim Marketing

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Sales Revenue

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Chart 3: Revenue

18,497

Year 4rth of automotive industry was extremely compensative for Alycon as the company made a revenue of 48,436 million dollars. At the beginning of the simulation, Alycon distribution capabilities were lowest in the South, West and North regions. Initially, Alycon added dealerships to increase coverage in areas upto 60% in West and North & 48% increase in South or on par with the East region. This was especially important for the South region, where we quickly realized the largest unit sales overall. The management team was also aware that too few dealerships would cause Alycon to lose sales, while the company didn’t worried about sales cannibalization because of the future planned growth in vehicle line. Therefore, the management team goal was to increase dealerships slowly to a level just above 60% in the beginning and to manage upto 80% in the future.

Judging by Alycon’s Unit sales, 2249 thousand automobiles were sold in the fifth period, which was a much higher quantity sold than the competition, this strategy of increasing distribution centers worked well in crossing revenue verges.

Net Income

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Chart 4: Net Income

Alycon’s current net income is 1221 million dollars. However, in the 2nd period Alycon’s income was below (-) 5k million dollars. The main reason of the company’s decline was top-heavy investing in consumer marketing tactics and the in the construction of two new project plants.

Alycon communication decisions were rather conservative to start. For example, in the first round, the management increased Regional Corporate Advertising by one million dollar in Alycon region. The total expenditure incurred on marketing communications in the second year was about 1,167$ million dollars in total. Throughout the course of the simulation, the management incrementally increased all areas of marketing equally among regions. The exception was one round where we lowered dealer discount for the Alec. Alycon also set advertising for the Minivan higher upon its launch, since it was a new product. Additionally, the management modified areas of promotional focus to be in-line with our target markets’ hot button issues. During the later stages of the simulation, Alycon’s financial position allowed for an increase in marketing expenses more drastically.

Dealer Rating

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Chart 5: Dealer Rating

Alycon started with a dealer rating of 65 and currently it stands at 74. Discounting the risk-aggregated maneuvers used by the organization, Alycon has maintained equilibrium in preserving its company’s ratings. Chart 5 expands on the companies functioning.

Overall, Alycon market value, net income and sales (over periods 2 to 4) increased by the same order between these three variables. Having borrowed some long-term debt, Alycon stopped its technological advancement in period 3 to help offset the development costs of the AEV, Minivan, Sports and the major upgrades. However, after Alycon’s first bond issue, the credit rating decreased from AA to D.

Market Share

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Chart 6: Unit Share

Alycon’s Market share went from 20 perent (Period 0) to 15 percent (Period 1) to 26 percent (Period 3). With the development on high tech auto gear and the launching of newer auto models, Alycon has established to gain a new brand image in the market. Chart 6 styles the time line market invasion of Alycon Corporation.

By the end of the 5th Year simulation, Alycon’s performance was outstandingly better than before. Alycon was great in almost all key performance metrics and was able to return maximum shareholder value as evident by its highest stock price ($74.76.68, period 4). Thus, it seemed that the company’s consumer-based marketing approach was effective and should therefore continually be implemented in the future. Alycon’s future goal is to expand current automobile offerings (as ALYCON started R&D on a new economy car during the last period of the simulation) and satisfy a wider consumer base. This strategy should serve well for the ALYCON in the future as this strategy leads to a win-win situation for both the company and the firm’s customers.

SWOT Analysis

Strengths

Ability to Buy Back Stock

The management approved repurchasing of 100 shares of Alycon stocks in Year 2, as this was a more efficient way of returning value to shareholders than raising dividends. Currently, Alycon has only 321 million shares outstanding which a positive indication of success.

Price Elasticity

A tough decision was made early on to increase the MSRP (maximum suggested retail price) of vehicles regularly based on their sales and in relationship to any upgrades. Increasing MSRP also reduced the impact of in-game inflation and increases in labor and materials costs on Alycon profit margins. This resulted in improved profit margin in successive game periods. The management also noticed early on that we were selling almost all vehicles, so increasing MSRP would also lead to increase in profit margin without additional inventory. Moreover, over the phases its been evident that the company brand has a strong price elasticity.

Weakenesses

Declining sales in key geographic segments

Alycon has witnessed a decline in its sales in key district divisions. In Period 5, the company witnessed few declining sales across North, South, and other East regions. Declining sales region can impact brand reputation. Thus, a continuous decline in the company's key geographic segments could put pressure on the profit making segments and the overall revenues of Alycon.

Opportunities

Market Growth

Due to managerial absence of control Alycon was unable to introduce/manufacture its AudiX7 in the market. However, now the managers are conglomerating to encounter core goals and objectives and would be launching three different vehicles in the market.