THE KODIMA BUSINESS GAME LEADS TO FASTER AND BETTER UNDERSTANDING OF MARKETING MANAGEMENT THEORY

                        Vesselin Blagoev, Marina Uzunova, Michael Minkov



Abstract


We introduce a business game played at International University College and analyze its didactic effect. Our data show that students who played the game achieved better academic results than those who did not.

          Introduction

          Games have been actively used in management education since the beginning of the 1950s (Keys & Wolfe, 1990; Faria, 2006), although some authors trace that method to the war game simulations of Wei-Hai in 3000 B.C (Wilson, 1968), or to the King’s Game (1664), the War Chest (1780), and more (Thomas, 1957; Young, 1959; Keys and Wolfe, 1990). The development of new and considerably more sophisticated games has accelerated enormously during the last 40 years as a result of the possibilities open by new technologies (IT and communication) and new knowledge. In the field of marketing management, we have to acknowledge the role of new knowledge derived from the huge amount of available statistical data. This new marketing knowledge, combined with new technologies and the available data, has led to the development and use of business/marketing games for market simulation and even to the development by Gary Lilien and Arvind Rangaswamy of a new field of marketing – marketing engineering (Lilien & Rangaswamy, 1998; 2004).

          This paper concentrates on the use of the KODIMA business game in the education of Business Administration and International Finance and Trade students in modules such as Marketing Theory and Practice, Marketing Management, Marketing Analysis and Planning and the effects of that on the understanding and application of the theories that the students have to learn and use in seminars and later in their professional careers.             

    Background

          The use of games, including marketing games, in  business education has been studied by many scholars including Keys and Wolfe (1990), Burns and Gentry (1992), Gentry, Burns and Fritzsche (1993), Drea, Trip and Stuenkel (2005), Dulany, Faria, Gregg and Wellington (2010), Faria (2001 and 2006), Faria, Hutchinson, Wellington and Gold (2009), and Garber, Hyatt, Boya and Ausherman (2012). As it is usual in an extensively researched field, this has led to different classifications of games and theories that explain the role of games in education.

          Faria (2006) argues that there are four most studied areas of research in the field of marketing games: their learning aspects, their merits, and their external and internal validity. Garber et al. (2012) define four a priori learning goals based on the findings of Faria et al. (2009) from their study of 304 articles on the use of marketing games in business education:

  • the learning experience and the learning outcomes from applying marketing principles in context (They call this “verisimilitude”);

  • the strategy aspect of the business game (analysis and problem solving);

  • the decision making experience gained through gaming (competition);

  • the teamwork experience.

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          In this paper we concentrate on the learning aspects and merits of a particular game called KODIMA. We focus on the students’ achievements on the same four dimensions as they correspond to our goals when we introduced gaming in the education process. We measured the effectiveness of the game by comparing the final exam scores of these who played the game with those who did not, studying marketing only through theory.

    The KODIMA Business Game

          We developed KODIMA with the four-stage experiential learning model (Kolb, Lublin, Spoth & Baker, 1986) in mind. There are scholars who disagree with it (i.e. Freedman & Stumpf, 1980) but we think that it serves well our purpose: to create new knowledge and skills based on the gaming experience, followed by observation and reflection, leading further to the formation of abstract concepts and serving as a bridge to theory.  We did not have doubts that the use of business games would facilitate the learning process as KODIMA simulates the business and marketing environment very realistically and there is an extensive research supporting the view that marketing games provide analytical, interpersonal, problem-solving, communication, team-work and negotiation skills. At the same time, they instill leadership skills in the participants (Gosenpud, 1990, as cited by Faria, 2006).      

          KODIMA is a complex marketing game, simulating a virtual market in which the management teams (students or executives who play the top management of their companies) produce, marketing and sell predefined products competing with each other. Originally KODIMA was designed in 1981 (Blagoev, 1981) and was used in the marketing management education of chief executive officers and other top managers of the Bulgarian companies in their executive MBA education. In 2010, the game and the software were revised significantly so as to be used in the new market environment. The playing teams have to make 67 decision inputs per round covering the whole spectrum of the marketing mix: product, price, distribution and communication. Fig. 1 shows the decision table that has to be filled in and submitted by each team (company) in every round. The teams have to make decisions in the following areas:

          Product Policy

  • The teams may produce and sell three types of products: basic (no frills), normal and luxury (with frills).

  • They may also decide whether to re-pack the products and independent from that - whether to change the information on their labels and/or in the form of supplements

          Pricing Policy

  • The teams may change the price (increments of 1%) of any of the products and in either direction – up or down.

 
          Communication Policy
The teams may use any of the following communication/advertising channels:

  • Brochures/leaflets

  • Newspaper advertising

  • Magazines

  • Company website

  • Banners in other websites

  • Outdoor advertising

  • Radio

  • TV commercials

          Distribution Channels
The teams may sell through the following eight distribution channels:

  • Own brand shops in malls/trade centers

  • Own brand shops on the high streets

  • Own brand shops on lesser known shops

  • Shops which carry different brands

  • METRO and other Cash-and-Carry outlets

  • Company e-sales system

  • Catalogue sales

  • TV Shops and Teleshopping

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          Market and Marketing Research
The teams have the option to order/buy reports from research, including

  • Market research
  • Marketing research

    Bank Loans

Fig.1:  The Decision table of KODIMA which the players have to fill-in and submit at each round of the game

          Finally, the teams have the option to apply for, and get, a market loan to finance their marketing mix if they do not have enough financial resources of their own. The condition for getting a bank loan is to have enough own assets to provide collateral to the bank.   

          A very important characteristic of KODIMA is that it is a business game with memory. The decisions of the team in each round - i.e. higher expenses for advertising using a specific communication channel - influence the outcome in the next two consecutive rounds as well.

          Using Keys and Wolfe's (1990) criteria, we can define KODIMA as a complex game. It involves more than 30 decision inputs per round which is a good imitation of the competitive market environment. Each decision by each team influences the outcomes of the other teams. As KODIMA provides a very good simulation of the real market, it is an excellent educational instrument that should lead to better understanding and implementation of marketing theory in solving marketing management problems.

          The use of KODIMA in education, regardless the level of the participants (university students from BA or MBA programs, or company executives) requires comprehensive instruction (Gentry, Burns & Fritzsche, 1993) including a presentation of the purpose of gaming, and of KODIMA in particular

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, and familiarization with the decision table and the possible options, concerning each of the marketing mix elements. It is very important to explain and underline the competitive environment and the interdependence between the decisions of each team and those of the competing teams. Last but not least, we must stress the fact that the game has a memory and each decision influences the next two consecutive rounds.     
         
    Hypotheses

          Different hypotheses have been tested in the literature (i.e. Drea, Tripp, & Stuenkel, 2005, p.27; Wawer, Milosz, Muryjas & Rzemieniak, 2010, p.52). We decided to test the following hypotheses about the use of KODIMA in the business and marketing education:

          H1: Undergraduate students will actively participate in the game and show appreciation for such methods of learning through experience

          H2: Undergraduate students who participate in the game will show higher academic achievements at their final unit assessments compared to those who did not participate. 

          The first hypothesis can be tested by looking at the percentage of students who voluntarily participated in the game although opting out would not have any academic consequences for them. We decided that we would consider H1 confirmed if more than 2/3 of the students participated. H1 would be rejected if less than 67% participated.

          For H2 we decided that the assessment would be based on a comparison of the end-of-module assessment results of the participating and non-participating students. We decided that a difference of over 5% in the average marks of the two groups would be an acceptably high difference for the hypothesis to be confirmed. Note that we did not use the traditional method of testing statistical significance as we were interested in the difference between our two specific groups, not in the difference between the hypothetically general populations of all participating and all non-participating students.

          We also asked the students' lecturers to assess the quality of their in-class discussions of marketing theory and the quality of their in-class case analyses. Naturally, these assessments would be made subjective.  

    The Experiment  

          In October 2012 we played KODIMA with the BA (Hons) students of Levels 1, 2 and 3 at IUC, Sofia. Level 1 played the game as an element of the Marketing Principles and Practice module. For Level 2 it was an element of International Business in the Global Context, whereas for Level 3 it was part of NDP and Brand Management. KODIMA was introduced to the students during the first class of their modules. They saw a presentation of the decision table and the simulators, and received detailed instructions on the game's rules.

          The students were given an opportunity to form teams and play the game or opt out, no-questions asked.        The teams of those who decided to participate consisted   of 4-5 students. They had to work independently from the other teams in their free time after classes. The decision tables had to be submitted in electronic format according to the game schedule and the feedback forms (results of the round) were individually emailed to the team CEO/contact person, again according to the schedule. No comments on the development of the game (team results) were provided during the two weeks that the game was played, although some administrative questions were answered. After the end of the game, we presented the results of the game and explained what had

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produced these results. This was followed by a discussion on the main points of academic interest, including how specific combinations of marketing mix elements might influence outcomes. This analysis was made for every marketing mix element, keeping other things equal.

    Results

          Only 30-35% of all students in each class decided to participate in the game. This relatively low interest in the game is partly due to the fact that the game is a non-assessed element and the students were not motivated to spend additional time to what the module already requires.

          The average end-of-semester exam mark of those who played the game exceeded that of those who did not play by 12% (56 v 50 in the British marking system).

          The lecturers’ impressions of those who played the game and those who did not were that the later participated more actively in the in-class discussions. In addition, they manifest a higher level of involvement in out-of-class reading of suggested learning resources and were better prepared for in-class case analyses and discussions.      

    Discussion

          Our study yielded two very important findings.

          H1 is not confirmed. The students were not excited by the opportunity to participate in the game and a relatively small number signed up for it. We conclude that for most students the lack of academic incentive was a more powerful factor than the opportunity to play an educational game. Our bachelor students appear to be strongly focused on their final goal - receiving a bachelor's degree - and invest little time for extracurricular activities. Additionally, some students indicated that they could not find reliable partners to form a team.

          On the other hand, H2 was confirmed. Those who played the game showed better academic results than those who did not. However, we have no proof of cause-and-effect relationship. It is possible that those who chose to play were students with a higher intellectual potential; hence their superior academic achievement. In other words, their academic performance would have been better even if they had not played the game. 

          To prove that KODIMA really boosts academic performance, we need to control for intellectual potential. This can be done by assessing the students’ cognitive abilities, for instance through IQ tests, and controlling for that variable when estimating the impact of KODIMA. We hope to be able to do a study of this kind very soon.

If playing KODIMA is associated with higher academic performance, with IQ controlled for, we would have evidence that gaming is a valuable academic tool that should be made part of business education whenever appropriate.  

References

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Dulany, D., Faria, A., Gregg, J., & Wellington, W. (2010). Using simulations successfully for integrative learning. Proceedings of The Marketing Management Association, 128-130.

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