Business simulation games allow students to test their classroom knowledge in a simulated business environment. Innovative Learning Solutions Inc., or ILS, has developed the Marketplace business simulation game for use in undergraduate business classes, graduate business programs and executive level training courses. The game places players in charge of a fictional computer company and grades them based on profitability, customer satisfaction and market share in their targeted market segments.
The Marketplace game has five market segments, ranging from the "cost cutter" for low-price, low-performance computers, to the "Mercedes" for customers who demand high performance and are willing to pay the price. An effective strategy requires the students to research these market segments and how well their product fits in each segment. Successful Marketplace players pay top dollar for the best market research available, as this expenditure delivers the most value over the course of the game.
Once the Marketplace players have selected their market segments, they design a product to meet the needs of that market. Products that are geared toward the "cost-cutter" or "workhorse" markets will not always have the latest features but will offer inexpensive options to the lower end of the market. If a company chooses to target the more lucrative "innovator" or "Mercedes" markets, its products must offer all the features that these consumers expect.
The best Marketplace players are typically those that employ aggressive pricing strategies, especially in the low-end markets. These strategies can include price cuts, rebates and discounts that allow one player's product to earn more sales than his competitors. Although the marginal profit on each product sold will be minimal, the sales volume will often allow the player to earn more total profits than a competitor targeting the more lucrative "innovator" or "Mercedes" markets right at the start.
Since the aggressive pricing strategy is intended to increase demand for the Marketplace player's product, an aggressive factory management strategy enables the player to have adequate manufacturing capacity to meet that demand. Although players will suffer a penalty for excess inventory, that penalty is less than what the player would incur if he runs out of stock on an item, especially as the company grows and ventures into the more lucrative market segments later in the game.