Final report

This is the final strategy report, unfortunately I did terribly on my last run. I changed my strategy around a bit and now it looks like it wasn't a very good decision.

Here I'm going to answer the questions for the section, I will also incorporate some of major areas in the first few runs, and will review the old posts to see where I did well, where not so much, and why I think that may have been the case.



Report

Overall Strategy


* What pricing strategy did you use as you worked through the simulation?

As I went through the simulation I changed strategies a few times, however I pretty much always looked at only a few indicators, in my first run I paid a lot of attention to things which I thought mattered, in the end the results showed that they did not matter.

All that really mattered was supply/demand and prices being adjusted. I also noticed that you could move cars around and make some cities more profitable than others and so I did that.

In most of the runs I also paid attention to the per car profits and income so I would move cars accordingly, sometimes bankrupting a city to raise capital in another city that was making more money per vehicle.

However, in my last run I noticed that although one city was consistently making less money than the other, it was making more money on weekends and so I was able to move cars there and charge more on the weekends. From what I saw in the results it wasn't the best idea as I am not able to control the amount of cars that can be rented out on weekends and weekdays and so because of lower profits in that city, I was therefore making less money. I could charge more but the profit was still lower, and therefore it added up at the end of the simulation to a low score.

* Did you change strategies or maintain the same strategy throughout? If you changed, what caused you to do so?

Yes I did change strategies, at first I was paying attention to unnecessary things which did not matter in the long run, I guess I was just over analyzing and thought the sim was more powerful and inclusive than it really was. After a while I started to pay attention to the utilization more, than I paid more attention to each individual move in the price of the competitor. I also paid attention to the predictions as they were being made, however I would often go against them and profit.  All in all, I don't think I understood the sim too well.

What caused me to change was just the curiosity of what would happen if I changed my strategy. Often times it paid off and I almost think that if I did one more run, I could beat all of my previous scores. In order for me to hit a personal best I would need to pay attention to each item that worked in my previous strategies and basically make those changes, this would be the ideal move but I really don't want to do it again. I already invested more time than necessary into this sim and doing it one more time to raise a score would not accomplish anything than get my name higher in the ranks and provide some personal gratification.

* In selecting the objective of your strategy, what were you trying to maximize (i.e. maximize profit, maximize market share, meet competition, status quo, etc.)?

My main goal was to maximize profits, I cannot control market share as I can't add more cars, at first you can because you have a few additional cars which are not at play but once you cap out at 36,145, that is the limit and all that the market share numbers tell you are the fluctuations in the cars as they move from one place to another, since you can only do this quarterly, it's not an effective indicator. For a while I was trying to emulate the competition and this worked well in being quite stable but what I found later is that I could often push the envelope and they would have to fold under me as long as I did it incrementally. This worked out very well as can be seen by my high score.

* What differences did you notice between weekday vs. weekend demand?

What I noticed is that weekdays in Orlando were always in demand, usually the same in Miami, but weekends in Miami were always priced lower and not so much in demand, when it came to Orlando weekends, it was a bit easier to play with the numbers but it also resembled Orlando very closely.

* How would you characterize the behavior of each type of customer’s (business/leisure) responses to changes in price?

It's interesting because at first, I thought it made a difference but I don't think it actually did, I did notice at first that as can be seen here and here that business and leisure travel did make a difference but then I thought about how can I actually use that information and found none.

I did notice that one of the cities was inherently business and the other strictly leisure but even that would change based on weekdays or weekends and even as prices would fluctuate. Again, I'm not sure if I could have used this data at all but I did notice some shifts and at the beginning because I was over-analyzing the information, I actually thought it mattered.

* How did you use the observations you made regarding differences in these segments’ responses to price change in your pricing strategy?

Well, at first I figured that no matter what business was business and people needed to travel and I noticed that when I raised the prices on weekdays rather than weekends utilization in Orlando was always way higher than in Miami, and so I tried to work my prices to a place where I could take business away from the competition and maybe that worked and maybe it didn't but I can see major differences in the different run that I did which basically all used a different strategy, this can of course be seen in the different posts that I made for each run, some more detailed than other and I did provide screen shots so from what is available you may be able to see a trend.

If you go here and scroll to the very bottom, this will show all of the posts from the very first (bottom) to this one (top) and this should allow for a more sequential look at what I did and what the results of each move were.

* Did you try to target a particular group? How were you able to target a specific group of customers through pricing?

 At first I did and again, seeing at how many questions you're asking here about the traveler types (business/leisure) it's beginning to make me think that A. I should have read these questions before beginning the simulation and B. the traveler types made a difference. But again, at first I did try to use this information but raising prices on weekdays when business travel was up and lower on weekends when it was down and leisure was up.

* What differences did you identify between the two markets (Orlando and Miami)?

What I found in Orlando was that although typically you made less money per rented out vehicle, utilization was always high, almost without care to the price, also in Orlando weekend prices were almost always if not always the highest. Although I do think I remember seeing an inverse of this at one time.

Miami seem to have more leisure travelers and less business travelers.

* Did you concentrate your analysis in any particular region?

Being that my focus was on maximizing profits, I focused on the one region that had the highest possibility of making a profit, but when you had too many cars utilization would go down and you'd have to adjust prices to make things work. Sometimes this was a good thing, sometimes not so much. Once what I did was move nearly all of the available vehicles to the most profitable city which at the time I believe was Miami and tried to make money that way but I don't think it worked out as well as I thought it would have being that utilization would go down and with that the prices would have to follow. It was a good way to capture market share though.

* In what ways did those differences make the pricing decision more complicated?

What was difficult is to understand how to move cars and prices around in such a way that when one city had inherently higher prices on weekdays and lower on weekends and the other had higher prices on weekends and not weekdays, because I could not say allocate a maximum of X number of cars for weekends and this many for weekdays it made the decision to move cars more difficult as in some cities you could charge more on some days and less on others and same for the other city but the opposite was true so I had a bit of a hard time there, especially when what I thought was a good idea, ended up hurting me for an entire quarter, until I could move cars back to where they could make me more money.


* How did price sensitivity vary across the regions?

It changed a lot with market share and depending on the month and I guess season if you look at it that way.
Prices were also strongly tied-in with the competition as sometimes I would make the mistake of trying to match them, forgetting their higher marker share and power. Sometimes going against the grain really helped make some serious cash, in fact on some occasions I would raise the price incrementally and would still see utilization just as high as before and this really felt bad because I could have easily raised prices even higher and would have been okay.
Other times I simply raised prices high to get a feel for the market ceiling and if utilization went down a few percentage points, I knew that I needed to go down a bit but losing 5% wasn't a big deal because I could lower the price a bit w/o having to go up by a dollar or two and lose a whole month in the process.

* How did you use the observations you made regarding the differences between these markets in your pricing decisions?

What I did was simply look at the business/leisure traveler type, forecasts and competition pricing and this helped me price things right so that I would not be losing out, however often this was not enough.

Cost Structure

* In what ways did you use the break-even calculator?

I didn't use it too often. When I did use it I simply wanted to see how the numbers would change, this helped me sort of see where I was going but I chose to rely on only a few indicators so as to not confuse myself and make pricing decisions difficult.

* How did an understanding of the general economics of the business affect your pricing decision?

Basics helped, supply/demand, and pricing were critical but I'm sure that if I was better at understanding the data that was being made available to me, I could make better decisions. I know that from what was available to me, if I took more time on each move, rather then focus on writing these blog posts, I could probably do better. I could have spent a lot more time analyzing each area and looking back at past data, charting it, and basically making scientific decisions by using everything that was available to me, however usually I did not.

Capacity Management

* What did you do with capacity utilization?

What this told me, was out of X amount of cars what percentage was being rented out. Getting it closet o 100% was my goal, if I went a but lower, no problem, that just meant that I was as close to the maximum price as I could get that month but prices fluctuated on a monthly basis and I needed to keep that in mind. In Orlando for example, it seemed like the market was just eating everything up, and I was not being aggressive enough in my pricing strategy, however Miami was a different story altogether.

* Which was more important to manage – surplus or shortfall?

Surplus I think, because when I moved cars from one place to the other, I made that decision based on per car profits and it didn't matter if shortfalls were in one market because that was expected. Surplus was a different story because having too many vehicles meant lower prices and less potential profits.

Competitive Price Moves

* What did you think the competition was doing?

The competition was constantly trying to lower prices when I went up but they were also looking at seasonality as well I think because sometimes I would go against the forecast because it seems natural to me that a work climate would have more travelers in the winter time and I could raise prices as demand was almost certain to go up. But again it was these areas that I needed to pay more attention to.

* What kind of competitor were you up against?

A bigger and stronger, more dominating competitor, they had more cars and were able to often dictate prices.

Impact of General Market Conditions

* Did you observe any patterns in overall demand across the number of periods of the game you played?

Yes there seemed to be certain times of the year when prices were on the rise and other when they were going down, as mentioned earlier, I think being that both Orlando and Miami are a warm market and there are many snow-birds who travel there during this season, I could expect prices to go up in the later months of the year, and they did.

* How would you characterize the elasticity of demand in this market overall?

I feel from what I saw the markets were fairly fixed in price, yes the prices would change but that is expected in such an industry, especially these two cities. I also think that if I was more aggressive from the very beginning of the simulation, I would have been  able to make more money but sometimes you don't do what is necessary, as I noticed that sometimes I thought I was making an aggressive move but rather was shown that it made no difference and I could have pushed harder as the market would have supported it.

* Was it a good year or bad year to be managing this business? Why?

It was a good year to be managing this business if only because if it was left to the current management, they would have bankrupted the company completely and blamed the competition. I think that I could have done much better and looking at some of the high scores, I gotta say WOW, it is possible but at the same time, when I see negative revenue, it makes me wonder.

Anyway, overall, very nice.