The Effect of Starting Price and Advertising on Business Strategy

Kenneth Goosen

Abstract


Many simulation users and game designers believe that those student participants who develop a  good business strategy will have a significantly better profit performance. The emphasis on business strategy is almost universal among users and game designers. The underlying hypothesis of this paper is that whether a given strategy works depends on the placement of the starting decisions such as price and advertising by simulation designers.  In this paper, only price and advertising will be subject to analysis in terms of starting decisions made by the game designer. Three experiments were conducted in which the same strategies were used in each experiment.  The only difference was that the starting decisions for price and advertising were different in relation to optimum decisions.  The results clearly showed that the placement of starting decisions can have a dramatic effect on whether a strategy is successful or not.

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