MGMT E-6000 – Marketing Management Spring 2012

Instructor: Dr. John L. Teopaco

E-mail: jteopaco@fas.harvard.edu

Telephone: 617-353-3146

Required Materials: Custom Coursepack [Harvard Coop]

“You cannot teach a man anything. You can only help him discover it within himself.”

- Galileo Galilei

COURSE DESCRIPTION

Marketing is the interface between the company and the marketplace. Managers in all functional areas of business need an understanding of marketing fundamentals. While marketing managers create and implement marketing strategy, managers in accounting, finance and operations also need to understand marketing plans that require their cooperation orapproval.

This course covers the processes involved in the creation, communication, sale and distribution of products. It takes a managerial perspective – exposing students to the tasks and decisions faced by marketing managers, including target market selection, competitive positioning, and the formulation of product, pricing, communications and distribution strategies.

COURSE OBJECTIVES

The principal objectives of the course are to enable you to:

1. Understand and apply the basic concepts and frameworks ofmarketing management2. Perform rigorous qualitative and quantitative analyses required for the formulation of effective marketing programs 3. Communicate effectively in writing and orally4. Develop teamwork skills

GRADING

The course grade will be determined accordingly:

Class participation - 50%Group written case analysis - 25%Solo written case analysis - 25%

100%

Your participation grade is based on attendance, punctuality, regularity and quality of contributions to class discussions. [Refer to Appendix-B for a more detaileddescription of grading expectations.] Please note: Attendance is a necessary but not sufficient condition for asatisfactory grade. You need to make significant contributions!

COURSE LEARNING PHILOSOPHY

“Knowing is not enough; we must apply.Willing is not enough; we must do.”

—Johann Wolfgang von Goethe

Marketing management encompasses decision-making skills, analytical abilities, concepts, knowledge, and

2

communications skills. This course is designed to help you develop these skills and capabilities, and specifically, theskill to develop effective solutions based on analysis and reasoning.

Marketing Management is an interactive, discussion course. I do not lecture. For every class, you are required to have fully prepared the assignment and to discuss your preparation in class.

RULES OF THE GAME

“Education is not preparation for life; education is life itself.”- John Dewey

We shall treat our class sessions as business meetings. As such, attendance, punctuality, preparedness, and meaningful contributions are required. We’ll practice professional demeanor in class. Specifically, we shall adhere to the following protocols:

(1) Arrive on time. Quit on time.

(2) This is a discussion class, and not a note-taking class,therefore, computers are not allowed.

(3) Stay during the entire duration of the class. Take yourbreak prior to class. Do not leave prematurely. If you must leave early, please alert me in advance.

(4) You may bring beverages to class. Please do not eat in class.

(5) Turn off cell phones.

(6) Only one conversation at a time.

3

(7) Bring your name card to every class.

(8) Stay in the same seat (at least for the first three weeks).

Violating these protocols is disruptive to class learning and disrespectful to the rest of the class. Since I evaluate your performance for every session, a violation automatically degrades your evaluation for that class. (If you forget your name card or you don’t stay in the same seat, you risk not getting credit for your class contribution that day!)

Be fully prepared for each class session. Be ready to “open” the case discussion at the beginning of class and to answer questions that I may pose during discussion.

Active contribution to class learning is the key to success in this course. There is no make-up for missed classes. If you are unable to attend class, please e-mail me in advance. Emergencies will be dealt with on a case-by-case basis.

You are responsible for announcements made in class—assignment changes, extra case data, etc.

If an emergency arises and class is cancelled, in the next class, we shall pick up where we left off (i.e., we’ll coverthe assignment that was missed).

CASE ANALYSIS

“He that has sense knows that learning is not knowledge,but rather the art of using it.”

— Richard Steele

Cases are vehicles for learning diagnostic skills and for applying concepts and frameworks introduced in readings and conceptual discussions. The learning from a case comes in

4

two ways. The first involves pre-class preparation: the ability to diagnose case problems and issues, to select and apply appropriate forms of analysis (e.g., quantitative, logic, experience, conceptual) and to make decisions about case solutions. Each student should make a decision about what should be done before coming to class and be able to document and present that solution on the basis of analysis.

The second part of learning from cases comes from realizing that other people do not always diagnose, analyze, and solveproblems the way you do. Understanding others’ positions, learning from them, and countering them with your own is a critical part of the learning experience. To do so, you must listen to each other as well as talk in class. Only when you have tried to defend your position can you fully understand its strengths and weaknesses. There is no single rightanswer for a case, just as there is rarely a single right marketing decision in actual practice.

Analysis is more than noting and summarizing case facts. The facts must be noted, but then reasoning must be applied to determine how these facts relate to each other, and most importantly, how these facts point to the underlying causes ofthe case situation.

[Refer to Appendix-A for a description of the case method oflearning and your responsibilities.]

INSTRUCTOR BACKGROUND

I have had a varied career in marketing, consulting and teaching. After receiving my MBA degree from the Universityof Minnesota, I worked in product management for The Pillsbury Company, Citibank and Norwest Bank, and in advertising account management for Ogilvy & Mather Advertising.

After this corporate experience, I decided to pursue my interest in teaching by studying for my doctorate in

5

marketing at Harvard Business School. I have taught at Babson College, Miami University, Northeastern University, and Boston University where I am a full-time faculty member.

APPENDIX-A

The Interactive/Discussion Method of Learning

The primary learning materials that we will be using are cases and conceptual readings. The most important rule to keep in mind is that you are expected to have fully preparedfor class by having thoughtfully read the assignment and answered the assigned discussion questions.

Cases deal with real life business situations. Analysis anddiscussion of cases provide an effective means of developingthe attitudes and skills necessary to become an effective manager. There are no right or wrong answers. However, there are good and bad analyses! What is important is the process of arriving at your own conclusions and

6

recommendations, by marshalling evidence in the case, and applying careful and logical thinking.

Take a proactive stance when you read the conceptual articles. How does the reading relate to prior articles? How does it relate to the assigned case and prior cases thatwe have discussed? How does the content relate to your own personal experience as a consumer? What examples and illustrations vividly bring to life the concepts that you are reading about?

Most importantly, you should be eager and willing to share your insights with the rest of the class! I shall guide andprovoke discussion primarily by asking fundamental—even seemingly naïve—questions. You should be prepared to “go with the flow” of the discussion.

Class Participation

In this course, you will be expected to be present for all class sessions and to arrive on time. You will be evaluatedon your performance for each class session. Absentees will get failing grades for missed classes. If you absolutely cannot attend class, please e-mail me in advance.

Your in-class contributions are all-important because we will be learning from one another. My role is not to “impart wisdom,” but to facilitate your learning from each other. Arriving at a consensus is not the objective of class discussion! To the contrary, comments that identify the pros and cons of alternative decisions or points of view, and generate a healthy debate are strongly encouraged (and rewarded).

Lively, vigorous discussions are the goal, but arguments should always be at a professional level. In this spirit, please do not speak unless called upon, and whoever has the floor should receive the full attention of the class.

7

Listen to what he or she has to say! Build on previous speakers’ comments. Do not raise your hand while someone is speaking. Finally, address your comments to the entire class, not just to me.Grading will be based on quality (depth, insightfulness, contribution to class learning) and quantity (consistency, regularity). Quality counts more. However, one cannot makequality comments without some quantity. Those who do not participate are likely to do poorly in the course.

As mentioned, you are expected to come fully prepared and ready to participate for every class. (Otherwise, please do not bother attending so we can avoid any potential embarrassment and waste of class time.) Be prepared to be called upon to “open” a case by presenting your full analysis and recommendations at the start of class, or to beasked for a comment in the midst of the discussion.

The grading of class participation is necessarily a subjective exercise. However, high-quality comments have one or all of the following characteristics: (1) insightfulness, (2) appropriate application of marketingconcepts, and (3) advancement of the discussion. Some specific criteria for evaluating discussion contributions are:

Does the student demonstrate an eagerness to participate?

Is the student a good listener? Does he/she build on others’ comments?

Is the student willing to interact with other class members?

Are the points made relevant to the discussion? Are they linked to others’ comments?

8

Do comments demonstrate evidence of in-depth analysis of the case?

Do comments add to our understanding of the situation?

Do comments make a substantive contribution to the advancement of our analysis?

Is there a willingness to test new ideas, or are the comments “safe?”

Do comments show an understanding of concepts or analytical techniques properly applied to the current situation?

Is the student presenting insightful quantitative analysis?

Is the student presenting ethical considerations and insights?

I will give you a midterm class participation grade. However, if you feel that you are having difficulty getting into the discussions, please talk to me right away. Take advantage of office hours. Don’t wait until mid-term or worse, until the end of the term!

APPENDIX - BProfile of the “A” Student--An Outstanding Performer

Being a successful student, particularly in a case/interactive course, is multi-dimensional. Aside from academic prowess, positive attitudes and behaviors are equally important and indicative of the excellent student.

Grading an entire term’s performance with a single letter grade is a complex and difficult process. Class contribution grades reflect in-class performance. Therefore,

9

they reflect pre-class preparation and effort only implicitly. Massive preparation and personal effort without any corresponding in-classcontribution will not warrant a satisfactory grade.

To clarify my grade expectations and values, the following profile (albeit stylized) is an attempt to illustrate why and how an outstanding performer earns an “A” .

Attendance: “A” students have virtually perfect, punctualattendance. Their commitment to the class resembles that of the instructor.

Preparation: They are thoroughly prepared for class. Theyare ready to share ideas and

insights concerning multiple facets of the case and readings. They have

identified the central issues and concepts. They have examined qualitative and quantitative data thoroughly to support their arguments.

Enthusiasm: They exhibit interest in the class and in thesubject. They go beyond the

obvious—looking “behind the facts” of the case. They share pertinent

personal experiences and insights.

Retention: “A” students have retentive minds. They connect past learning—from

previous cases, chapter readings, and previous courses—to the present.

Attitude: They have a winning attitude. They have both the determination and the

self-discipline for success. They show initiativeand drive.

Talent: “A” students have something special—exceptional intelligence, extraordinary creativity, organizational skills, diligence, or a

10

combinationthereof. These traits are evident to the

instructor and classmates.

Management: They have clearly defined personal goals for the course and are committed to strategies for achieving them. They monitor their performance and are

proactive in making necessary adjustments (i.e., allocating more time to

preparation, meeting with the instructor, forming study groups).

Results: “A” students make consistently high grades on various performance measures--oral and written, qualitative and quantitative.

CASE PREPARATION QUESTIONS

Aqualisa Quartz

1. Why is the Quartz shower not selling?

2. What is the Quartz value proposition to plumbers? To consumers?

3. Is the Quartz a good product? Is it a niche product or a mainstream product?

4. What is the rationale behind Aqualisa’s multiple brand strategy (Aqualisa, Gainsborough, and ShowerMax)? Be prepared to map out how each brand “goes to market,” i.e., what channels of distribution each brand uses and the consumer segments they reach.

5. What should Rawlinson do to generate sales momentum for the Quartz product? Should he change his marketing strategyto target consumers directly, target the DIY market, or target developers? Should he lower the price of the Quartz?

11

Or should he do something different altogether?

Note on Marketing Strategy

1. “The central role of marketing in the enterprise stems from the fact that marketing is the process via which a firmcreates value for its chosen customers.” What does this mean to you?

2. What is a marketing strategy?

3. What are the 5Cs? What are the 4Ps? What is the relationship between the two?

Note on Low-Tech Marketing Math

Please do the following exercises. The answers are in brackets.

1. A manufacturer wishes to establish a retail list price of $6.00 on an item. The item will be sold via a wholesalerand retailers (stores). Retailers have a policy of obtaining a 40% margin based on selling price. What price must the wholesaler sell the item for? [W.S.P. = $3.60]

2. In order for the wholesaler to receive a 20% margin, whatprice must the manufacturer sell the item for? [M.S.P. = $2.88]

3. The manufacturer’s cost of goods sold is $2.00. What is the manufacturer’s margin in unit contribution dollars and contribution margin percentage? [U.C. = $0.88; CM = 30.6%]

4. A manufacturer plans to sell a product for $5. The unit variable costs are $2 and total fixed costs assigned to the

12

product are $30,000. How many units must be sold to breakeven? [BESV = 10,000 units] What must the manufacturer’s dollar sales volume be to breakeven? [BESR =$50,000]

5. What would breakeven volume become if fixed costs were increased to $40,000 while the selling price and variable costs remained unchanged? [BE = 13,333 units]

6. What would breakeven volume become if selling price were dropped from $5 to $4 while fixed and variable costs remained unchanged? [BE = 15,000 units]

7. What would breakeven volume become if unit variable costsper unit were reduced to $1.50, selling price remained at $5and fixed costs were $30,000? [BE = 8,571 units]

Product Team Cialis: Getting Ready to Market

1. What are the most relevant dimensions along which to segment the patient market for ED treatment? (This is a separate and independent step from the selection of the actual target—see below.)

2. Of the segments identified, which would you target initially with Cialis?

3. What is Viagra’s positioning in the marketplace in 2002? How would you characterize the Viagra brand?

3. What would be the most effective way to position Cialisin the marketplace?

4. What marketing mix activities should accompany the launch of Cialis?

a) What would be the most important messages to communicate to the target patients?

13

To physicians? To partners?

b) What medium would you use to reach each of these parties and what would your relative resource allocation be to each?

c) How would you price Cialis (assuming no health coverage)? What type of promotions would you offer?

5. What competitive response do you anticipate from Pfizer? From Bayer-GlaxoSmithKline?

Market Segmentation, Target Market Selection and Positioning

1. Explain the differences between segmentation, targetingand positioning.

2. What are the major bases for segmenting consumer markets? (Refer to Note on Marketing Strategy.) Cite examples.

3. How does one determine which market segment to target?

4. What is the significance of positioning to marketing strategy?

5. How do you develop a positioning for a product? What is a positioning statement?

6. How do companies differentiate their products for effective positioning? Cite examples.

Principles of Product Policy

1. What is product policy? What are key product policy

14

decisions?

2. What is a product line? What is product line breadth? What is product line length?

3. Why does one need a product line? What is a product line strategy? What are important considerations in formulating a product line strategy?

4. What is a new product development process? What are the characteristics of an effective one?

5. What are marketing strategy considerations for each stage of the product life cycle?

British Airways: “Go for It, America!” Promotion

1. What’s the problem facing BA? Is it reality or perception?

2. What is your appraisal of the strategic alternatives thatBA considered in addressing the business downturn problem? Can you think of any other worthwhile options?

3. Assess both the concept and proposed implementation of the “Go for It, America!” program. Can you think of ways toenhance its launch?

4. What reactions do you have to the questions raised about the program near the end of the case?

Integrated Marketing Communications

1. What is integrated marketing communications?

2. Explain the various communications mix tools/vehicles. For what objective is each tool best suited? What are

15

disadvantages of each vehicle?

3. What is fundamentally different between sales promotions and media advertising? What’s the difference between consumer promotions and trade promotions?

4. Explain the 6Ms model for communications planning. Howuseful is it?

Charles Schwab & Co.

1. What circumstances motivated development of the TTC campaign?

2. Evaluate the creative (message) strategy behind the TTC campaign.

3. How effective was the TTC test market? Evaluate the results.

Financial Analysis Tips: In analyzing results of the test over control, assume that the lift of 205 in Exhibit 11 is for one year. “The budget weight of advertising tested was equivalent to a $100 million national campaign” (p. 9) Therefore, the test markets represented a $6 million media expenditure (6% of $100 million). Disregard the fourth quarter in your analysis of the effect of the test. Assume that net new assets for the test markets in 2004 were $3.018billion (6% x $50.3 billion [Exhibit 1]).

4. Would you support Saeger’s TTC budget request for 2006?

Principles of Pricing

1. What is cost-based pricing? What’s wrong with it?

2. What is true economic value? What is its role in pricing

16

strategy? How does it aid in setting an actual price point?

3. What factors determine price sensitivity? How do we use economic value and these sensitivity factors to set price?

Atlantic Computer: A Bundle of Pricing Options

1. What price should Jowers charge DayTraderJournal.com for the Atlantic Bundle (i.e., two Tronn servers + PESA software)? Note from the Planning the Strategy section in the case that Jowers makes a conservative estimate that two Tronn servers plus PESA equals the performance of four Ontario Zink servers.

2. Think broadly about the top-line revenue implications from each of the four alternative pricing strategies. Approximately how much money over the next three years will be “left on the table” if the firm were to give away the software tool for free (i.e., status quo pricing) versus utilizing one of the other pricing approaches?

3. How is Matzer likely to react to your recommendation?

4. (a) How is Cadena’s sales force likely to react to your recommendation?

(b) What can Jowers recommend to get Cadena’s hardware-oriented sales force to understand and sell the value of thePESA software effectively?

5. How are customers in your target market likely to react to your recommended pricing strategy? What response can be provided to overcome any objections?

6. How is Ontario Zink’s senior management team likely to react to the Atlantic Bundle?

17

San Fabian Supply Company

1. As an exclusive distributor, what does San Fabian do for MacDowell?

2. Why does MacDowell want to change the relationship?

3. What would be the impact of the change on San Fabian?

4. What options does San Fabian have?

5. What would you recommend San Fabian do?

Financial Analysis Tip: Use Exhibit 5 to estimate selling and general & administrative expenses associated with MacDowell sales.

Distribution Policy

1. What functions do marketing channels perform?

2. What decisions do companies face in designing their channels?

3. What are the various levels of distribution intensity? How does one decide which level is appropriate for one’s business?

4. What are potential channel conflicts? How can a manufacturer mitigate or minimize channel conflicts?

18

GROUP WRITTEN CASE ANALYSIS

19

GENERAL MILLS, INC.: YOPLAIT CUSTARD-STYLEYOGURT (A)

General Guidelines

Your report should be no longer than five pages – double-spaced, 1-inch margins, 12-size font, with page numbers, andstapled (no plastic/hard covers, please). If you wish to include exhibits that you have created, you can have up to two. Reports will be collected in class. Late reports willnot be accepted.

Form and presentation count. Your writing should be presentable to top management —lucid, persuasive, proper grammar and sentence structures, no typos. Stylistically, be direct. Use terse, simple sentences, headings and subheadings. Edit and proofread your work. Sloppy and unprofessional writing will lower your grade.

Please do not conduct outside research—use only the data provided in the case.

Analysis Guidelines

Assume the role of a consultant to Bruce Becker, Director ofNew Business Development, and address your report to him. He is quite familiar with the yogurt industry and Yoplait, therefore, do not repeat or restate case facts per se. Present analysis, insights, conclusions and recommendations, and use case facts only to support them. In short, write about the facts’ significance—the answer to “so what?” about these facts.

Becker said (p.11): “I wondered if we were researching ourselves to death. We were rolling out regular Yoplait quite successfully without a whole lot of industry data and primary research. Aside from that, the research we had doneon Custard-Style had consistently indicated that it was a winner.”

20

Your task, therefore, is to advise Becker on the following:

(1) Why do a test market? What does Becker already know about Custard-Style based on the research to date? What uncertainties remain, if any? What are the key questions facing Becker at this time?

(2) Which or which combination of research methods would yourecommend? What sequence? What are the pros and cons of each of the test market alternatives being considered by Becker?

I am particularly interested in the analysis that leads to your recommendations.

SOLO WRITTEN CASE ANALYSIS

GREAT AMERICAN KNITTING MILLS: GOLD TOE SOCKS

General Guidelines

Your report should be no longer than five typewritten pages—double-spaced, 1-inch margins, 12-size font, with page numbers, and stapled.

Analysis Guidelines

In writing this report, you are a marketing consultant brought in to advise Frank Bendheim, president of Great American.

Your task is to address the following: Should Gold Toe change its distribution strategy? Why? And if so, how?

As president, Bendheim is very familiar with the sock industry and his own company. Therefore, do not repeat or

21

restate case facts per se—he’s already aware of these! Cite case facts only as evidence or support of your analysis, insights and conclusions. In other words, write about theirsignificance (the “so what” part).

I am particularly interested in the analysis that leads to your recommendations. An outstanding report is balanced—citing pros and cons of strategic alternatives, and it covers all the key issues and areas of analysis in an insightful and logical manner.

You may want to consider the following points and integrate useful insights into your analysis and recommendation (simply answering these questions should not constitute yourreport):

How successful has Gold Toe been? What are the reasons for its performance?

What are the benefits of Gold Toe’s exclusive distribution policy?

What is the significance of recent developments in the marketplace: competition, consumers, and retailers?

What are the pros and cons of expanded distribution?

What are implementation considerations of your recommendation?

Form and presentation count. An excellent report would be presentable to top management—lucid, persuasive, concise, proper grammar, no typos. Stylistically, be direct. Use terse, simple sentences. Cut out the fat. Avoid puffery and jargon. Be decisive and persuasive.

MGMT E-6000 – Marketing ManagementSpring 2012 Course Schedule

22

MODULE DATE ASSIGNMENT

Course Orientation 1/26 Syllabus

Marketing Overview 2/2 Aqualisa Quartz: Simply a Better Shower

2/9 (1) Note on Marketing Strategy(2) Note on Low-Tech Marketing

Math

Segmentation, Targeting, 2/16 Product Team CialisPositioning

2/23 Market Segmentation, Target Market

Selection and Positioning

Product Policy 3/1 Principles of Product Policy

3/8 Due: Group Written Case Analysis General Mills, Inc.: Yoplait

Custard-StyleYogurt (A)

3/22 General Mills, Inc.: Yoplait Custard-Style

Yogurt (B)[distributed by instructor]

23

Marketing Communications 3/29 British Airways: “Go for It, America!”

4/5 Integrated Marketing Communications

4/12 Charles Schwab & Co., Inc.: The “Talk

to Chuck” Advertising CampaignMGMT E-6000 – Marketing Management

Spring 2012 Course Schedule

MODULE DATE ASSIGNMENT

Pricing Policy 4/19 (1) Principles of Pricing(2) Genvet Pharmaceuticals

4/26 Atlantic Computer: A Bundle ofPricing Options

Distribution Policy 5/3 (1) San Fabian Supply Company

(2) Distribution Policy

5/10 Due: Solo Written Case Analysis Great American Knitting

Mills: Gold Toe Socks

24

25