Boom and bust is a pervasive
dynamic for new products. Sales of new products often grow explosively as word
of mouth, advertising, and falling prices attract new buyers. New producers
tend to enter the market. But eventually the market saturates and sales fall,
often just as capacity is growing the most rapidly. The all-too-frequent result
is excess capacity, a price war, huge losses, and the failure of leading firms.
The boom and bust dynamic appears in diverse industries, including personal
computers, consumer electronics, toys and games, recreational equipment, and
semiconductors, to name a few.
How does boom and bust arise? And why is it so persistent? What prevents companies
from learning from the mistakes of others and smoothing out the roller-coaster
of new product life cycles? The B & B Enterprises Management Flight Simulator
creates a learning laboratory to explore these issues.
Players take the role of top management of B & B Enterprises, a fictitious
firm based on a variety of real cases. The game begins as a new product is launched.
Players are responsible for marketing, pricing, and capacity expansion decisions
to maximize their cumulative profit over the next 40 quarters. The potential
market is large, but as in real life key attributes of the market, including
its size and price elasticity, consumer responsiveness to word of mouth, repurchase
behavior, and other customer attributes, are unknown. The player also faces
a simulated competitor whose pricing, marketing, and capacity expansion strategies
are likewise unknown. The game illustrates fundamental principles of corporate
strategy including the learning curve, time delays in capacity expansion, competitive
dynamics, and market saturation.
The game can be used alone or in conjunction with a wide range of cases. The
strategic environment captured in the game is particularly applicable to consumer
durables, toys and games, fashions, fads, and other products that experience
rapid growth and saturation. Consumer electronics such as video games, personal
computers, internet devices, mobile phones, and VCR's; durables such as 10 speed
bicycles, high-end golf-clubs and chain saws; toys and games such as LazerTag
and Trivial Pursuit; and even fad products such as wine coolers or fashion watches
all exemplify the dynamics captured in the game. B & B focuses on the effective
management of the life cycle of a new product, and allows the player to experience
issues such as competitive strategy, coordination of pricing, marketing, and
capacity acquisition. The game is currently in use at MIT's Sloan School and
in a number of other universities and companies around the world. As product
life cycles continue to shorten the dynamics exemplified in the game become
more and more relevant.
B & B is now available in a new web-based version with an improved and redesigned
interface. For a free demo and ordering information, visit forio.com