ERP Simulation Game
What is the impact of advertising, price and BOM in the game?
The market model implemented in ERPsim is somewhat complex, and it is difficult to isolate the impact of any one of price, recipe content (BOM) and advertising because they all interweave quite closely. To explain the whole underlying model would not only be quite long, but it would also diminish a key aspect of the game - consumer behavior is to be discovered, not explained! But here are some clues.
The simulator sets a favored recipe (for several types of muesli) at the beginning of each game. The closer you get to that recipe, the more units you will sell. The recipe preference does not change between quarters.
There is no flavor/brand loyalty. Given the right incentives anyone will switch to any product. There is size loyalty however. No one ever switches from a 1/2 kg to a 1 kg product or vice versa. If you remove the advertising for that product, the customer will go back to his old ways (there's no loyalty to a particular product)
Advertising does not create demand. Think of it as though each customer walks into a store with a 20 Euro budget. Advertising influences which product(s) they will spend their 20 Euros on, not how many boxes. The influence is at the brand level - only YOUR 1kg blueberry muesli, not ALL your products, and not ALL blueberry muesli on the market in general, and not YOUR 1/2 kg blueberry muesli either.
Price has a direct impact on demand. If a box costs half as much as it did before, the same 20 Euro budget will buy twice as many boxes.
Each customer has their own idea of a "perfect" box of muesli, expressed as a certain % of the various ingredients.
Each Distribution channel has its own preferences in terms of size (DC10 = 1kg, DC14 = 500g, DC12 = mix of 500g and 1Kg). Also, the customers have multiple recipe preferences in terms of flavors.
Stores have shelf space for a limited range of products.
Market demand is...