DISCOVERING THE MAJORITY FALLACY Insights into Experiential Pedagogy, Volume 6, 1979 178 DISCOVERING THE MAJORITY FALLACY Raymond J. Smead, Texas Tech University David W. Finn, Texas Tech University ABSTRACT The fallacy game, designed to allow students to discover the majority fallacy, a key principle of product positioning strategy, is described. Results suggesting that the teaching objective was reached are presented. INTRODUCTION The fallacy game is a simple competitive business simulation designed to dramatically demonstrate an important element of product positioning--the majority fallacy. The game is intended to illustrate the principle so clearly that students can “discover” the concept without having it suggested to them in any other way than through the experience of the game. This clarity is achieved through narrowness of focus; while many simulation games ask students to make choices in several decision categories, thus stressing the interrelatedness of decisions, the fallacy game asks for a decision in one category--product position--thus underlining the principles of this single decision. Students also told the exact model by which the criterion variable of the game--market share--is determined. that their attention is concentrated on competition analysis. The discovery of the majority fallacy ‘sets the stage for, and complements, traditional lecture and discussion of product strategy. At the games termination, students read and discuss Kuehn and Jay’s [1] seminal article on product positioning (which suggested this game) in terms of the play of the game. THE MAJORITY FALLACY The majority fallacy concerns where a new brand entry into a market should be positioned with respect to physical or perceptual product attributes. For example, a soft drink producer launching a new beverage must Select levels of carbonization, sweetness, and other attributes. After conducting some initial product testing, perhaps paired comparisons of, say, three product variants differing in level of sweetness, it might be determined that most consumers find level A to be too tart, level C too sweet, and level B about right. The temptation in such a case might be to select the modal preference level of the attribute, in this case level B. This could be a major strategic blunder--the majority fallacy. When several established brands already occupy the modal preference level for the attribute, the most the newcomer can expect is to share the market. If four existing brands occupied the preferred position, the new entry might hope for a 20% share of the market, if the difficulties of being the lagged entry can be overcome. The point to be made in teaching product strategy is that a much better product position may be above or below the modal preference level. This allows one to sits between existing competition and satisfy many consumers not having the modal preference. To make this point as obvious as possible through a classroom game, only one decision variable is introduced-- where to position a new brand along three attribute dimensions. THE GAME The game is begun by showing competitors a consumer preference map. For each of the three attributes of the product category the map shows how many consumers occupy each of six possible levels. There are thus 63 = 216 possible product positions. This map is shown in Figure 1. The distribution of consumers is clearly not random or uniform; there are three preference peaks (one major and two minor) and the distribution of customers slopes away smoothly from these peaks. For the first round of the game, each of the teams (up to six) may select any position they wish. In subsequent rounds each team may move as many as four locations (city block distance) from their previous position. This restriction is to make any major position change multistage, preventing erratic behavior on the part of any team. After each round students receive a market share map which shows which teams capture what locations on the consumer preference map. Figure 1 illustrates such a map. The simplicity of the game makes it easy to administer. Each team’s decision is reported as three numbers, and the administrator’s decision card requires only number of teams, number of copies, and each team’s product position. Since there are no cumulative or lagged variables, each round of play stands by itself. The computer code for the game is quite short and is shown in the Appendix. When there are no teams, only the consumer preference map is output. STUDENT REACTION So far, the game has been used with only one class: graduate students with no prior business education taking a leveling course in marketing principles. Six teams with three of four members each played six rounds. The students were given output on one day, then the next week each turned in a written thought, including a description of the market as he saw it and a decision for the next step. These individual decisions are not necessarily used in the next round--that is a decision made in class (after all individual thoughts have been written.) To promote the discovery of the majority fallacy, the game was introduced with no accompanying lecture on strategy. To determine the progress of the class toward this teaching objective, the weekly papers were analyzed for evidence of this occurrence. The results have been most gratifying. Table 1 illustrates some comments by students prior to the first two moves. By the third move, almost all students were talking about the foolishness of competing for large segments in the face of much competition. Insights into Experiential Pedagogy, Volume 6, 1979 179 Insights into Experiential Pedagogy, Volume 6, 1979 180 On the third move, one team positioned itself in the least dense area and captured a large market share, demonstrating exactly what we had intended. This led to lively and meaningful classroom discussion. Prior to the fifth move, students were instructed to read Kuehn and Day’s article [1] and to write a report relating the game to the article and to the general topic of segmentation. The results were more than satisfactory. All students recognized that the article could have been written about their recent experiences. Grades were assigned on the basis of the written input. Students were informed that the quality and depth of their individual written decisions were the sole basis for their grade in this game. This worked very well. Not only did it insure that all students had studied the situation before making a group decision, but it also supplied us with good ongoing insight into the learning process. It took three product position analyses beyond the initial decision before every member of the class had demonstrated an understanding of the concept. The stopping point for the game was not announced since many students gave evidence of a doomsday phenomenon.” That is, their papers contained comments like, “If this were going to be the last move, I’d move to..,” This suggested that they were willing to take great risks if the world were ending tomorrow. The play of the game resulted in many beneficial side effects. For example, questions were raised about the stability of market segments, definitions of preferences, the relation between perceptions and choice, and the ability of advertisers to influence beliefs and perception. Although originally designed for use in that portion of a course preceding ‘product Strategy,” the game is equally useful for introducing the concepts of “segmentation, "search,” or consumer behavior.” REFERENCES 1 Kuehn, Alfred A. and Ralph L. Day, Strategy of Product Quality, Harvard Business Review, Vol. 40, No. 6, 1962, pp. 100-110. Insights into Experiential Pedagogy, Volume 6, 1979 181 Table of Contents Volume 6, 1979 The Use of Cases with Role Plays in a Research Methods Course Debugging and Implementing the Live-Case Approach to Marketing Research in the Australian Environment Using a Case as the Basis for a Modified Debate Using Cases in Business Communication Classes A Structured Approach to Case Analysis and Reporting Intercollegiate Case Analysis Competition as an Experiential Learning Experience Attributes Germane to Student/Live Case Situations Understanding Dispute Resolution Through Experiential learning Personality Development and Conflict Dynamics: An Experimental Design to Study the Effects of Teaching Methodologies on Conflict Resolution Interpersonal Competence and the Digital PDP-11:40 The process of Writing a Collective Bargaining Simulation: A Case Study in Practical Pedagogy Simulating Negotiations in an Educational Context Simulations as a Technique for Teaching Collective Bargaining Experiential Processing of Differing Managerial Perspectives: The Use of a Game Show Format Individual Self Report vs. Group consensus in Small Decision-Making Groups Effects of Sex-Role Stereotypes on Promotion Decisions: An Exercise Computer Aids to Planning: The Budget and Forecasting Module Use of a Microcomputer in a Decision Analysis for Investment Portfolio Selection A Game of Investment Strategy: Description, Use, Criticism and Modification Coping with Future Uncertainties Through Probabilistic Budgeting Administration and Design of Simulation Materials for a Specialized Management Training Program Managing Stress in Organizational Life Banksim: The Bank Management Simulation Issues in the Organizational Application of Simulation and Experiential material Games Within Games: The Role of the Glitch Experiential Learning from Classroom to Business An Evaluation of the Small Business Institute Program as an Experiential learning Exercise Conversations with Top Management (Simulated) Experience in the Use and Assessment of Simulation in Management Education A Statistical Analysis of Simulation Users: Relationships between Stress and Human Subject guidelines Group Decision Making in a Computer Game Analysis of Demographic and Psychosocial Variables Comparing Performance During Three Managerial Accounting Simulation Schedules Business Policy Simulation and the Intense Course Structure The Use of Intensive Simulation in Executive Development and Academic Settings The Use of Experiential Exercises in the Undergraduate Consumer Behavior Course A Personal Marketing Strategy Approach: Framework and Application Teaching PERT Experientially in Marketing Research Discovering the Majority Fallacy An Experiential Approach to Studying International Business A Demonstration of the Business Simulation Game as a Curriculum Assessment Device Relating Teaching Methods with Educational Objectives in the Business Curriculum The Junior Achievement Applied Management Program as a Compromise Situation Between the Simulation and the Internship Who is Using Computerized Business Games?: A View from Publishers' Adoption Lists Trials and Tribulations in Testing Educational Innovations An Examination of the Perceived Effectiveness of Computer Simulation in a Classroom Setting as Affected by Game, Environmental and Respondent Characteristics Game Administration: A Life Cycle Analysis Research on the Effectiveness of Using a Computerized Simulation in the Basic Management Course Gaming and Attitudinal Change The Teacher-Student Relationship in Experiential Classes and the Student's Perception of Course Effectiveness An Exploratory Study of Student Characteristics and Educational Processes in Programmatic Experiential learning General Incongruity Adaption Level (GIAL) as a Predictor of Risk Preferences in a Simulated Management Game The Cap-Stone Opportunity: Combining Business Simulation and Experiential Learning Incorporating MIS/DSS into Policy Courses Via Simulation Who Benefits Most from Participation in Business Policy Simulations: An Empirical Study of Skill Development by Functional Areas The Use of Program NAMEX in Teaching the Accounting for Nonmonetary Assets The Use of Program CVP in Teaching Cost-Volume-Profit Analysis Experiential vs. Traditional Classroom Approach in the Basic Management Course: A Puerto Rican Experience A Guide to the Successful Use of Business Simulation Games The Dynamic Aspects of Interactive Gaming Puts the Realism into Gaming System Representation of SIMORG The Design of a Database System to Support Business Simulation and Experiential Learning A Data Entry and Retrieval System for a Computer Simulation (DERS) Simulation - An Advantage for Accounting Research Computer-Aided Project Performance Control Simulation: An Interactive Experiential Gaming Technique for Managerial Decision Making Utilization of Manual Simulation Games to Develop Scenarios of Future Events - An Exploratory Study Foundry: A Foundry Simulation Customized Debriefing: The Achilles Heel of Experiential learning? Computerized Business Simulations and Experiential Learning Exercises: An Instructional Interface The Baseball Game: A Group Role Observation, Problem Solving Experience A Practical Design for Experiential Learning Exercises: Roles, Technical Equipment and Alternative Debriefing Formats