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Winter 2012

Instructor Pedro Gardete W-348 650-725-1735 gardete@stanford.edu

Faculty Assistant Delilah Gallardo W-308 650-723-0547 gallardo_delilah@gsb.stanford.edu

Course Description The goal of this course is to introduce you to the essentials of marketing management. In this class, you will discover how firms and customers behave and learn the strategies and methods that marketers can use to operate successfully in today's dynamic environment. The three key objectives of this course are:

• To introduce you to the key elements of marketing management • To provide you with a sound framework for identifying, analyzing, and solving

marketing problems • To enhance your leadership, analytical, and communications skills

Keep in mind that effective marketing management results not from simply internalizing marketing facts and institutional detail, but from systematic critical thinking and the reasoned application of several general, underlying principles. "Whatever be the detail with which you cram your student, the chance of his meeting in after-life exactly that detail is almost infinitesimal; and if he does meet it, he will probably have forgotten what you taught him about it. The really useful training yields a comprehension of a few general principles with a thorough grounding in the way they apply to a variety of concrete details. In subsequent practice the (students) will have forgotten your particular details; but they will remember by an unconscious common sense how to apply principles to immediate circumstances."

-- Alfred Whitehead, The Aims of Education and Other Essays.

Spring 2014 Marketing Management (M240)

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4/4

1. Introduction and Overview 4/7

2. Segmentation & Targeting

4/11 3. Segmentation & Targeting II

Calyx Flowers: Managing Profitable Growth

4/14 4. Positioning

Product Team Cialis: Getting Ready to Market

4/18 5. Developing a Value Proposition

Datril

4/21 6. Leveraging Value

Steinway & Sons: Buying a Legend

4/25 7. Capturing Value I

The New York Times Paywall

4/28 8. Capturing Value II

Optical Distortion

5/2 9. Special Session: Guest Speaker (12pm, G101)

Brian McAndrews CEO, President and Chairman at Pandora

5/5 10. Integrative Case

Aqualisa Quartz GROUP CASE WRITE-UP DUE

5/9

11. Special Session: Guest Speaker Tony Small

VP, Sales Strategy and Operations at Zillow

5/12 12. Acquiring and Retaining Customers I

Dryclean Express

5/16 13. Special Session: Guest Speaker (12pm, G101)

Steve Kessel SVP, Worldwide Digital Media, Amazon

5/19 14. Communicating Value I

5/23 15. Special Session: Guest Speakers from

General Mills Jenny Zechmeister

Jay Picconatto

5/28 16. Special Session: (Wedn.) Guest Speaker

Abhishek Pani Head, Data Science for Adobe Online Advertising

5/30

17. Integrative Case Soren Chemical

MARKETING PLAN DUE

6/2

18. Summary and Wrap-up

Spring 2014 Marketing Management (M240)

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Course Requirements During the term, the students (working individually and in groups) will be evaluated based on their performance in each of the following activities:

Class Participation Group Case Write-Up Group Marketing Plan Final Examination

25% 20% 20% 35%

Note that the overall grade is based on both individual-level performance and group performance. Class Participation Almost every session of the course will involve interaction in the form of class discussion. I expect each student to be prepared at all times to comment in any class session. To reinforce this expectation, I will randomly select (i.e., cold call) students at the beginning of the session (to open the class) and throughout the ensuing discussion (whether or not the student's hand is raised). Many of the sessions in this course follow a case discussion format. The case method is not always an efficient learning vehicle, but it is one of the most effective means of sharpening your decision-making abilities, requiring you to be an active participant in resolving a marketing problem. The assigned cases are intended to give you practice in assembling data to support a decision. Further, the case method provides a vehicle by which to apply the theories, concepts, and analytical devices discussed in a class or in the reading materials. Finally, the discussion forum provides an opportunity to argue your position and to learn from others by listening to their comments and criticisms. As part of your preparation for class, you should work together in groups to prepare the assigned case studies. The purpose of these groups is to assist each participant in developing his or her understanding of the issues and topics raised in the cases. The discussion group is a useful and informal forum in which to test your ideas. Further, your discussion group should also be the same group you work with on the written assignments, thus allowing you to build your problem solving skills as a group as the term progresses. We expect students to be responsible for managing the division of labor within the group. I am asking you to form your own study groups. Your group should consist of no more than five persons (a smaller group size may be OK; be sure to check with me). Choose a name for your group and submit a list of group members to my assistant (preferably

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by e-mail) in advance of the second class session. Case preparation. In preparing for class, I recommend that you read the case more than once. The first reading should give you a feeling for what the case is about and the types of data contained in the case. Many people like to underline or otherwise mark up their cases to pick out important points relating to the business and the situation; e.g., customer behavior and trends, competitor's behavior and trends, and the firm's strengths and weaknesses. Be sure to pay attention to the exhibits in the case; these often contain information that will be useful in analyzing the situation. Once you have a good idea of the fundamentals, you should read the case again with the goal of understanding the specific situation. You will want to get at the root causes of problems and gather data from the case that will allow you to make specific action recommendations. During this reading, carefully prepare your answers to the assigned discussion questions. As is often the situation in actual practice, cases may not have all the data you would like. Nevertheless, it is critical that you develop a reasoned plan of attack on the basis of the data available. Moreover, you should not attempt to find out what happened to the company or business as a basis for making your decision. At no time should papers or notes from previous or concurrent marketing courses be used. Such use constitutes a violation of the Stanford Honor Code. These criteria apply to both in-class and written case analyses. In the class discussion, we will try to build a complete analysis of the situation and address the problems and issues in the case. Each person is expected to be prepared to share his or her individual views with the class. The principal objective of the discussions is to examine completely all aspects of the situation: facts, suppositions, alternatives, final action. In these sessions, it is my job as instructor to facilitate discussion: first to obtain all views and finally to help pull together the prevailing views of the discussion. Note that the direction and quality of the discussion is the collective responsibility of the group. A typical request at the end of a case discussion is: What is the answer? Let me emphasize here that the case method of learning does not provide the answer. In most case discussions, several viable "answers" will be developed and supported by various participants. In real life, there is a multitude of factors (only a tiny fraction of which are detailed in the case) that contributes to a decision’s success or failure. What is important is that you know what you would have done in that specific marketing situation, that you clearly communicate your marketing analysis and recommendation, and that you can defend that analysis and recommendation. You will be evaluated on your ability to defend your recommendations. There are often very excellent defenses available on both sides of any given issue. A sensible recommendation, when based on superficial reasoning, is not compelling. In selecting case materials, I chose cases that are relevant (i.e., fit the pedagogical

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objectives of the course), interesting (i.e., topical), or both. Some of the cases may appear to be far removed from problems pertinent to your particular industry experience, but in general, the lessons to be learned from the cases are universally relevant and transcend particular situations and time. Evaluating class participation. Grading class participation is necessarily subjective. Some of the criteria for evaluating effective class participation include:

1. Is the participant prepared, and do his or her comments show evidence of analysis of the case, thereby adding to the group’s understanding of the situation? Does the participant go beyond simple repetition of case facts without analysis and conclusions? Do comments show an understanding of theories, concepts, analytical devices presented in class lectures or reading materials?

2. Is the participant a good listener? Are the points made relevant to the discussion? Are they linked to, but not redundant with, the comments of others? Is the participant willing to interact with other class members?

3. Is the participant an effective communicator? Are concepts presented in a concise

and convincing fashion? Keep in mind that your grade for class participation is not simply a function of the amount of “air time” you take up. In general, I will evaluate you on how well you respond to the questions and on how effectively you take into account the comments and analyses of your classmates. Group Assignments Group Case Write Up Each group will submit a written analysis for the Aqualisa Quartz case (Session 10, May 7). The case write-up is due in soft copy and should be sent to gallardo_delilah@gsb.stanford.edu before the beginning of class on the day the case is to be discussed. No cases will be accepted late. Please include a separate cover page with your identifying information (group name and individual names). After that cover page, please have no identifying information so the cases can be graded blindly. There is a strict upper limit of four pages of text, single spaced (with an additional three pages of exhibits). Please use standard margins (at least 1") and conventional font size (12-point, Times New Roman). In your exhibits, strive for simplicity. Conveying your data in concise form with fewer assumptions will increase its persuasiveness. The use of quantitative analysis to support ideas is welcomed and encouraged, as long as it is

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presented in a clear and intuitive fashion. In preparing your write-up, I suggest you use the following format:

1. Statement of the Problem. 2. Recommendations. 3. Analysis. 4. Exhibits (if any).

Some general guidelines for preparing an effective write-up are:

1. Provide a coherent, well-organized analysis. 2. Be concise. Do not spend time rehashing or paraphrasing the details of the case

without explicitly using them to make a broader point for your analysis. 3. Focus your specific recommendations on the important issues in the case. Be sure

to address all of the discussion questions somewhere in the write-up, in addition to any other issues you believe are critical.

4. Do not write a consulting report that simply provides your recommendations. Provide a balanced analysis and demonstrate an awareness of potential arguments against your recommended course of action.

5. Tie your exhibits to the text of the report. 6. Make explicit all of the assumptions you use in generating your exhibits. Where

nonobvious, also make explicit your calculations. 7. Whenever possible, specify how the implementation of recommendations is to

take place (be specific). Presentation. For the case write up, your group may also be asked to make a brief opening presentation in front of the class (in addition to handing in a written case analysis). During the term, I will provide you with details and guidelines for the presentation. All group members will receive the same grade for the group project and the group case write up. You will, however, have the opportunity to indicate the level of contribution of your teammates, and this may be used to adjust grades in the final equation. Marketing Plan A marketing plan is a document that contains an analysis of the situation surrounding a marketing problem and a proposed course of action. Many books have detailed the components of a marketing plan (see Chernev, 2009, Strategic Marketing Management, for a review of different books’ recommendations for marketing plans). Though they

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differ in some ways, each of the recommendations has more commonalities than differences. The assignment in this class will be based most closely on the outline by Kerin and Peterson (2000, Strategic Marketing Problems: Cases and Comments). It has been tailored somewhat to be practicable given the information available in the case that has been assigned to you this year. Although this will be your first (and last) marketing plan in this course, you have already, in the course of your case analysis preparation, engaged in each of the component parts of the marketing plan. Your marketing plan for this assignment should contain the following information and adhere to this organization:

1. Executive summary 2. Company description (be brief) 3. Company goals and strategic focus 4. Situation analysis

a. Competition analysis b. Company analysis c. Customer analysis

5. Product-market focus a. Segmentation analysis b. Target market(s) c. Positioning

6. Marketing program a. Product strategy b. Price strategy c. Promotion strategy d. Distribution strategy

7. Financial analysis and supporting exhibits and appendices

Your marketing plan will be limited to 5 single-spaced pages of text in 12-point Times New Roman font, 1” margins. You will have up to an additional 4 pages of exhibits. As with the case write-up above, your group may be called upon to make a brief presentation of your recommendations. If so, the instructor will notify you in advance of the class session.

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Final Examination The final examination will consist of a case analysis, similar to the ones we have analyzed throughout the term. It is an exclusively individual task and it will be delivered as a take home, through coursework. The same criteria used to assess the written case assignment will be used to judge your test performance. Thus, the best way to prepare for the exam is to conscientiously study each of the cases throughout the term, answer the discussion questions, read the assigned readings, and attend the classes. The exam will be open book, open notes. No additional guidance should be necessary. A copy of last year's final exam, along with sample answers to the case analysis, will be placed on reserve at the Library. Honor Code Most of the material you will encounter in marketing management is not highly mathematical or heavily analytical. The secret to success in the subject matter is working hard to integrate a wide variety of disparate tools and frameworks into a coherent approach to solving marketing problems. This kind of individual learning requires individual effort. The following guidelines are provided for reference:

• Discussion within your study group is acceptable and encouraged for purposes of general case preparation. Each group should establish an expectation that every member participates in the group process (i.e., no free riding!), which means at a minimum having read and thought about the assigned material. Each individual should have sufficient grasp of the material to be able to hold his or her own during class participation (i.e., one should not expect to "pass the baton" to a study group teammate when called upon).

• Your class preparation should not benefit from notes of case discussions from students who have taken this course in the past or at other schools. This means that you should not use analyses of cases posted to the Internet or sent via e-mail from individuals outside your study group.

• Because not all marketing students cover the same cases at the same time (or even in the same quarter), please refrain from discussing the details of the class outside of your section until all students have had the opportunity to grapple with the issues from the case.

• For your group case write up and group projects, it is important that you demonstrate how well your group members understand the course concepts. For this reason, please do not consult with individuals outside of your study group.

Failure to abide by these guidelines will constitute an Honor Code violation.

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Readings All required readings are included in the course syllabus packet (occasionally, additional readings will be distributed in class). For those interested in more background, we have made two texts available at the Reserve Desk in Jackson Library:

Kotler, Philip and Kevin Keller (20011) Marketing Management (14/e). Upper Saddle River, NJ: Prentice-Hall, Inc. Winer, Russell S. and Ravi Dhar (2010) Marketing Management (4th Edition). Upper Saddle River, NJ: Prentice-Hall, Inc.

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OUTLINE OF CLASS ASSIGNMENTS

SESSION 1 INTRODUCTION AND OVERVIEW Friday, April 4

In this introductory session, you will get an introduction to evaluating a business opportunity using marketing concepts. We conclude the session by going over the various requirements and administrative details associated with the course.

ASSIGNED READING:

Please read through the “Course Description” and this “Outline of Class Assignments” and come prepared with any questions.

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SESSION 2 SEGMENTATION AND TARGETING I Monday, April 7

We devote the session to presenting a framework that is useful for understanding customer behavior. We will discuss how to successfully segment markets and identify desirable targets.

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SESSION 3 SEGMENTATION AND TARGETING II Friday, April 11 CASE: Calyx Flowers: Managing Profitable Growth (Kellogg 0845) DISCUSSION QUESTIONS:

1. Which attributes are important to people when they buy flowers? 2. Identify and describe the wants and needs of different customer segments in

the flowers market 3. Identify the key problem for Calyx Flowers and propose a course of action

ASSIGNED READING:

Aaker, "Positioning Your Product," Business Horizons, 25 (May-June), pp. 56-62.

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SESSION 4 POSITIONING Monday, April 14 CASE: Product Team Cialis: Getting Ready to Market (HBS 9-505-038)

Lilly and ICOS are preparing for the launch of a new drug, Cialis, to compete against Viagra. To position against the incumbent firm Pfizer, which developed and markets Viagra, and other newcomers into the erectile dysfunction market, they must determine how best to segment the market and which target market to focus on. Additionally, they must set a communications strategy that leverages their understanding of the ED market, their own strengths, and the competition.

DISCUSSION QUESTIONS:

1. What is the process by which customers acquire and use prescription drugs like Cialis? Which aspects of that process are most important for Cialis, and how can Cialis best affect them?

2. What are the different segments of consumers? Which parts of the decision making process are most relevant to each of these? How attractive is Cialis to each of these segments?

3. What are the primary impediments to adoption? What does this imply about marketing efforts?

4. How did the first entrant, Viagra, affect the potential market? What are some of the advantages and disadvantages of being a first-mover?

5. What are the competitive strengths and weaknesses of Viagra? Assess Levitra as a competitor. How should Cialis account for each of these competitors in its launch?

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SESSION 5 DEVELOPING A VALUE PROPOSITION Friday, April 18 CASE: Datril: Pioneering the Acetaminophen Market (Kellogg 0804)

Bristol-Myers, a leading manufacturer of pharmaceutical and consumer products, must determine how to market its newest product: Datril, a non-prescription acetaminophen drug.

DISCUSSION QUESTIONS:

1. What should Bristol-Myers do? 2. Who are the target customers? 3. What is Datril’s value proposition? 4. How should Datril be priced? 5. What incentives (either consumer or retailer) should be offered, if any? 6. How should Bristol-Myers communicate the benefits of Datril?

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SESSION 6 LEVERAGING VALUE Monday, April 21 CASE: Steinway & Sons: Buying a Legend (A) (HBS 9-500-028)

For 140 years, Steinway has held the reputation for making the finest quality grand pianos in the world. In 1992, Steinway was considering introducing a mid-priced line of grand pianos under the brand name "Boston." Designed by Steinway, but manufactured by a Japanese piano maker, the Boston line would represent a major shift in strategy for the company.

DISCUSSION QUESTIONS:

1. What is the essence of the Steinway brand? What accounts for the value of the brand?

2. Who are Steinway’s customers? How should the market for pianos be segmented? 3. What do you think of Steinway and Sons’ 1992 decision to launch the Boston line

of pianos? Discuss the pros and cons of this decision. ASSIGNED READING:

Aaker, “Should you take your brand to where the action is?” (HBS 97501). Keller, Sternthal and Tybout, “Three Questions You Need to Ask About Your Brand,” Harvard Business Review (Reprint R0209F).

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SESSION 7 CAPTURING VALUE I Friday, April 25 CASE: The New York Times Paywall

This case examines The Times’ decision to start charging for content. It examines the trade-offs underlying this dramatic shift in the company’s business model, which is complex due to its multi-sided, multi-channel nature and the competitive landscape.

DISCUSSION QUESTIONS:

1. Is the Paywall working? 2. How would you evaluate the current Paywall with the two prior ones? Do you

think it is appropriately designed compared with the Financial Times or the Wall Street Journal?

3. Why are newspapers in trouble? What is the goal of The Times in creating the Paywall?

4. Should The Times actively manage its transition from print to digital? 5. Does the Paywall seem like a good strategy for newspapers in general?

OPTIONAL READING: Dolan, “Note on Low-Tech Marketing Math” (HBS 9-599-011). This note provides some background information for those unfamiliar (or uncomfortable) with certain marketing terms (e.g., margin, contribution, break-even) and the basic calculations associated with them. Some marketing math will prove useful in your analysis of cases from this point onward.

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SESSION 8 CAPTURING VALUE II Monday, April 28 CASE: Optical Distortion, Inc. (A)

A new product, contact lenses for chickens, is to be introduced by a small firm formed to market the product. An entry strategy must be planned including price, sales force, size, and location.

DISCUSSION QUESTIONS:

1. What characteristics of the ODI contact lens are likely to make it appealing or unappealing to different types of chicken farmers?

2. In what geographic areas should ODI focus its efforts? 3. On what market segments (in addition to geographic) should ODI focus its

efforts? 4. What pricing policy should ODI adopt?

ASSIGNED READING:

Dolan, “Pricing: A Value-Based Approach,” (HBS 9-500-071)

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SESSION 9 SPECIAL SESSION: Brian McAndrews, CEO, President and Chairman of Pandora Friday, May 2

The session will be held from 12pm to 1pm in the G-101 classroom. Please arrive promptly so that we may start on time. As a sign of respect for our guest, please plan on staying for the entire session.

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SESSION 10 INTEGRATIVE CASE Monday, May 5 CASE: Aqualisa Quartz: Simply a Better Shower (HBS 9-502-030)

In May 2001 Aqualisa had launched the Quartz shower, a significant product innovation in the U.K. shower market. By September 2001, the euphoria surrounding the product's initial launch had long since faded. Harry Rawlinson, managing director of Aqualisa, knew that the Quartz was technologically leaps and bounds above other U.K. showers in terms of water pressure, ease of installation, use, and design. But for some reason, it simply wasn't selling.

DISCUSSION QUESTIONS: 1. Describe the customers that the Aqualisa Quartz (AQ) is best designed to serve.

Which other products in the market, if any, should the AQ be positioned against? 2. Why isn’t Aqualisa Quartz selling? What combination of distribution and

promotion is best suited to get the AQ in the showers of the intended customers? 3. How should Aqualisa Quartz be priced? Why? How is the pricing decision related

to your answer to question 2?

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SESSION 11 SPECIAL SESSION: Tony Small, VP, Sales Strategy and Operations at Zillow Friday, May 9

This session will be held in the usual class time. Attendance is required. Please arrive promptly so that we may start on time. As a sign of respect for our guest, please plan on staying for the entire session.

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SESSION 12 ACQUIRING AND RETAINING CUSTOMERS I Monday, May 12 CASE: DryClean Express: Managing Dissatisfied Customers (Kellogg 0836)

DryClean Express has lost a customer’s item and must determine how to treat the customer following the mishap.

DISCUSSION QUESTIONS: 1. What should the dry cleaner do, if anything, to compensate the customer? 2. What is the value of the customer to the firm? 3. What other factors, other than customer value, affect your decision?

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SESSION 13 SPECIAL SESSION: Steve Kessel, SVP of Worldwide Digital Media at Amazon Friday, May 16

The session will be held from 12pm to 1pm in the G-101 classroom. Please arrive promptly so that we may start on time. As a sign of respect for our guest, please plan on staying for the entire session.

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SESSION 14 COMMUNICATING VALUE I Monday, May 19

In this session, we discuss both classic and contemporary approaches to communicating value to consumers. We will reflect on what makes these approaches work and relate the approaches to underlying psychological variables that underlie their success (or failure).

ASSIGNED READING:

Dolan, "Integrated Marketing Communications," (HBS 9-599-087).

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SESSION 15 SPECIAL SESSION: GENERAL MILLS Friday, May 23

This session will be held in the usual class time. Attendance is required. Please arrive promptly so that we may start on time. As a sign of respect for our guests, please plan on staying for the entire session.

GUEST LECTURE: General Mills

Visitors from General Mills will discuss the process of brand management, using a specific case study (involving the development, testing, and introduction of a new product) to illustrate the various responsibilities of brand managers.

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SESSION 16 SPECIAL SESSION: Abhishek Pani, Head of Algorithms and Data Science for Adobe Online Advertising Wednesday, May 28

This session will be held in the usual class time. Attendance is required. Please arrive promptly so that we may start on time. As a sign of respect for our guest, please plan on staying for the entire session.

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SESSION 17 INTEGRATIVE CASE Friday, May 30 CASE: Soren Chemical: Why is the New Swimming Pool Product Sinking? (HBS 4188)

Jen Moritz, marketing manager for Soren Chemicals, is struggling with the poor sales performance of Coracle, a new clarifier for smaller, residential-size swimming pools. Moritz suspects that the go-to-market strategy for Coracle may be flawed, but she is unsure where the problem lies.

DISCUSSION QUESTIONS: 1. What is the addressable market size for Coracle? Is the first-year goal of $1.5

million sales reasonable? 2. Why is Soren Chemical struggling to sell Coracle? What are the implications of

the channel structure for pool chemicals? How would you describe the selling process for Kailan MW versus Coracle?

3. What is the highest price Soren Chemical can set for Coracle? What is the impact of a higher retail price on distributors and retailers?

4. What action plan do you recommend for Coracle? Should Soren Chemical adopt a push or pull strategy?

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SESSION 18 SUMMARY AND WRAP-UP Monday, June 2 In this final session, we summarize the course and take care of any remaining administrative details.