Log into the Capstone Spreadsheet and click the Decisions menu. Select Marketing. Use this area to determine each product’s Price, Promotion Budget, Sales Budget and Sales Forecast. What’s the difference between the Computer Prediction and Your Sales Forecast? The Computer Prediction cannot consider what your competitors are actually doing. It does not know. Instead, it assumes each of your competitors will offer one mediocre product (with a customer survey score of 20) in each segment. It benchmarks how your product would do against this mediocre playing field.

The Computer Prediction, expressed as units demanded, changes as you make decisions about your product.

You use the Computer Prediction to evaluate the impact your decisions will have upon your product’s appeal. For example, you can estimate the impact a price change will have upon demand. The Your Sales Forecast column overrides the Computer Prediction with your own prediction (see “8 Forecasting”). Until you provide a sales forecast, the computer uses its mediocre Computer Prediction to predict your proforma financial statements. Always override the Computer Prediction with your own forecast.

The remaining cells display the financial impacts of your decisions:

• Gross Revenue Forecast (Price multiplied by either the Computer Prediction or, if entered, Your Sales Forecast.)
• Variable Costs (Labor, Material and Inventory Carrying costs subtracted from the Gross Revenue Forecast.)
• Contribution Margin Forecast (Gross Revenue minus variable costs.)
• Less Promotion and Sales (Contribution Margin Forecast minus the product’s Promotion Budget and Sales Budget.)

The Rehearsal Tutorial’s Marketing Tactics show you how to run the department. Log in at the Capsim website and go to Getting Started for information about the Rehearsal.