Step 5 – Firm Profit and Loss statement
Based on your decisions and your estimates for segment sizes and brand shares, the marketing plan tool can make financial projections for the decision period. This form, depicted in Figure 67, shows a pro forma firm profit and loss statement, similar to the one in your annual report.
The lines from Revenues to Contribution after marketing are obtained by summing the columns in the previous form Brand contribution. The other lines are explained below:
(j) Market research studies: Equal to the total cost of the market studies ordered in your decisions; the cost of each study is given in the Market studies decision form.
(k) Research and development: Equal to the sum of all budgets allocated to R&D projects in your decisions; the allocated budget is one of the many decisions which you have to make when initiating or continuing a research project.
(l) Exceptional costs & profits: Usually equal to 0. You may incur an exceptional cost if you decide to withdraw a brand; in this case, any remaining inventory will have to be disposed of, the cost of which will be calculated as explained previously in the Inventory disposal loss.
(m) Earnings before taxes: Equal to Contribution after marketing – (j) – (k) – (l)
Figure 67 – Marketing Plan – Company P&L statement
About Circular Markstrat
Markstrat simulation was created more than thirty years ago by Jean-Claude Larréché, Alfred H. Heineken Professor of Marketing at INSEAD, and Hubert Gatignon, The Claude Janssen Chaired Professor of Business Administration and Professor of Marketing at INSEAD, and has been constantly improved since its creation.
Used in combination with traditional training methods such as conceptual sessions or case studies, Markstrat is a highly effective tool for learning strategic marketing concepts, such as brand portfolio, segmentation, and/or positioning strategies, as well as for learning operational marketing. Similar to a flight simulator, this marketing simulation allows students and managers to practice new skills in an intensive time frame and in a risk-free environment before trying them out in a real business environment.
Circular Markstrat was developed over 2021-2022 in collaboration with Professor Caroline Ducarroz (UCLouvain, Louvain School of Management) and launched in 2023. Circular Markstrat gives an environmental perspective to Markstrat simulation and includes environmental concerns in a plausible economic perspective, using principles of Circular Economy.
Also, besides bringing an environmental setting based on circular economy considerations, Circular Markstrat is well anchored in another setting that companies have to deal with nowadays: digitalization of markets, by introducing digital & traditional media as well as digital initiatives.The mathematical model of Markstrat and of Circular Markstrat is based on solid theoretical foundations, whose underlying formulas have been extensively tested. These simulations have been used to successfully train large number of participants and executives from many universities and organizations.
You and your team will be given a company and product portfolio to manage in a dynamic and interactive environment, facing environmental challenges. No previous computer experience is required but it is important to read this handbook prior to your course. If you do not read it carefully, you will run the risk of putting your team at a competitive disadvantage!
About StratX Simulations
StratX Simulations is a subsidiary of StratX, a unique training and development group founded by INSEAD Marketing Professor, Jean-Claude Larréché. StratX brings together disciplines from leading business schools, management consultants and learning design specialists.
StratX Simulations’ mission is to develop and market business games to the Academic Community. We develop high-tech, sophisticated simulations and tools, in partnership with academic stars such as Jean-Claude Larréché, Huber Gatignon, Chan Kim and Renée Mauborgne, all professors at INSEAD.
StratX Simulations is active in three disciplines: Marketing, Strategy, and Management. Our methodology is based on our belief that new skills must be learned through action and experience in addition to books and lectures.
Over the past thirty years, StratX Simulations has designed and developed a portfolio of world-class business simulations, including Circular Markstrat, BrandPRO, MixPRO, Digital MediaPRO and Blue Ocean Strategy Simulation, used in over 500 business schools in 60+ countries.