How Consistent Are Winning Strategies? The Role of Competitor Analysis and Budgets on Performance in a Simulation

Abstract

This article looks at the role of competitor analysis in the development of marketing strategies in a business simulation. It is, in part, a replication of an earlier study by Green and Faria that indicated that good strategic decisions are, on the whole, successful even when actions of competitors are ignored completely. The current study, based on the MARKSTRAT2 simulation, confirmed the results of Green and Faria in that the strategies continued to be successful in an environment with different competitors. However, in the rerun situation, the winning strategies did not deliver the profits necessary to earn the budget levels achieved in the original run of the simulation, and the original strategies could only be pursued by providing additional funding. In this sense, it is clear that in the reruns, the original strategies were less successful, thus supporting the notion that competitor analysis is an important step in strategy development.