COURSE OUTLINE - MARKETING PROBLEMS (IBM 421)
Cal Poly - Pomona
Dr. Kirkpatrick
College of Business Administration
Spring 2010
Office Hours:
7:30 - 8:00 and 11:45 - 1:00 Tuesday/Thursday; 11:30 - 1:00 Wednesday
Building 94, Room 223; Phone: (909) 869-2438; fax (909) 869-3647
email:
jkirkpatrick@csupomona.edu
web site: www.csupomona.edu/~jkirkpatrick
Required Text:
Custom Book - Strategic Marketing Problems: Cases and Comments by Kerin and Peterson
Recommended:
See below.
Prerequisite:
IBM 408 and 411
----------------------------------------------------------------------------------------------------------------------------------------------K&P
Date
I.
Strategic Marketing and Entrepreneurship
II.
Case Analysis: Prewriting for the Marketing Plan
Case: Sorzal Distributors
pp. 1-15, 35-45, 109-15
p. 123
4/1
4/1
III.
Financial Analysis for Marketing Managers
pp. 17-33, Ex. 1, 3, 4, 6 + handout
4/6
IV. Situational Analysis
A. Market Identification and Marketing Research
Case: South Delaware Coors, Inc.
B. Opportunities and Threats
Case: Show Circuit Frozen Dog Dinner
Case: Soft and Silky Shaving Gel
V.
Product Strategy
Case: Elitch Gardens
VI. Pricing Strategy
3/30
pp. 47-57
p. 127
pp. 47-57
p. 137
p. 149
4/8
4/8
4/13
4/13
4/15
pp. 59-71
handout
4/20-22
4/20-22
pp. 17-33, 97-105, Ex. 2, 5 (pp. 31-33)
4/27
Case to be handed in: Tex-Fluids, Inc. (handout) -- written analysis due Thursday, April 29
In-Class Written Case Analysis: Tuesday, May 4, 1:00 - 2:50 PM
Case: Afton Industries
Case: Frito-Lay, Inc.: Sun Chips™ Multigrain Snacks
VII. Promotion and Distribution Strategies
Case: Steel Door Technologies, Inc.
handout
p. 157
pp. 85-105
p. 185
5/6
5/11-13
5/18
5/18
In-Class Written Case Analysis: Thursday, May 20, 1:00 - 2:50 PM
VIII. Marketing Control
Review in-class, preview F-L Grandma’s
Case: Carrington Furniture, Inc. (A)
pp. 107-21
p. 191
5/25
5/25
5/27
Case to be handed in: Frito-Lay, Inc.: Grandma’s Brand Cookies (handout), p. 203 -- written analysis due Tuesday,
June 1
2
Date
IX. Marketing Ethics
Cases: A Japanese Bribe, General Electric Prices, & Humboldt County Private Enterprise
(to be handed out)
6/3
6/3
In-Class, Final Written Case Analysis: Thursday, June 10, 11:30 AM - 1:30 PM
Recommended Supplementary Reading: The Marketing Imagination, by Theodore Levitt. This book is widely available in paperback. As a minimum, I recommend chapters 2, “The Globalization of Markets,” and 8, “Marketing
Myopia.” These chapters are reprints from the Harvard Business Review. “The Globalization of Markets” can be
found in the May/June 1983 issue of HBR and “Marketing Myopia” can be found in both the July/August 1960 and
the September/October 1975 issues. On a lighter note, I recommend Marketing Warfare and Bottom-Up Marketing by
Al Ries and Jack Trout.
Marketing Problems is the capstone course in the marketing major. Consequently, its objective is to take
your knowledge of the principles of marketing and your skills in quantitative and financial analysis as givens and then
to apply that knowledge and skill to real-life marketing situations. Hence, the heavy emphasis on case analysis.
In each case that we will discuss, you are the marketing manager who must make a decision. You should
identify yourself with the protagonist or main character in each case and decide, on the basis of what you know about
marketing, what you would do if you were in that person's shoes--and, more importantly, why you would do it. Your
audience is top management--and it is top management (not me) whom you must convince that your decision is the
right one. In class, of course, as in real life, you must also be prepared to convince your peers that your decision is
correct. The course, therefore, is a course in problem-solving thinking and persuasive reasoning.
Course grades will be based on two out-of-class written case analyses (the first one weighted 15%, the second
one 20%), three in-class written case analyses (the first two weighted 15% each, the third one 20%), and ten hand-in
answers to selected case discussion questions (weighted 15% for all ten). Because the out-of-class cases are discussed
on the day that they are due, late cases will be penalized one letter grade per class day (i.e., an A- case becomes a
B-)--and both cases must be handed in to get a passing grade for the course.
To determine your final course grade I convert all of your scores and letter grades to the 4-point system (A =
4.000, A- = 3.667, etc. See the Cal Poly catalog for details.) and weight each as indicated above. For example, suppose
you get the following scores and grades:
1st out-of-class case C+
1st in-class case
C
2nd in-class case
B-
2nd out-of class case
B+
3rd in-class case
B+
discussion questions 7, 8, 8, 9, 0 (failed to hand in), 10, 9, 8, 10, 10
Your case grades are assigned the following points and weights, in order: 2.333 (15%), 2.000 (15%), 2.667 (15%),
3.333 (20%), and 3.333 (20%). Your discussion question points equal 79 out of 100, or 79.00%, which is a C+ (78’s
and 79’s are C+’s, 80’s and 81’s are B-’s); thus, your discussion question grade is assigned a 2.333 and weighted 15%.
Your final course average equals: (2.333 x .15) + (2.000 x .15) + (2.667 x .15) + (3.333 x .20) + (3.333 x .20) + (2.333
x .15) = 2.733 or a B- for the course. I assign final grades, using the following ranges on the 4-point system:
A
AB+
B
BC+
=
=
=
=
=
=
3.833 to 4.000
3.500 to 3.832
3.167 to 3.499
2.833 to 3.166
2.500 to 2.832
2.167 to 2.499
C
CD+
D
DF
=
=
=
=
=
=
1.833 to 2.166
1.500 to 1.832
1.167 to 1.499
0.833 to 1.166
0.500 to 0.832
0.000 to 0.499
To keep track of your grade progress, download the following: www.csupomona.edu/~jkirkpatrick/IBM421
/421GradeCalc.xls. This an Excel spreadsheet that will open in Excel. If it doesn’t, open Excel, then open the file
“421GradeCalc.xls.”
3
Note: when turning in papers and discussions questions, the safest place to do so is in my hands. Never tape or in
any other way try to attach papers to the door of my office (they’ll disappear) or to slip them under the door (the
weather strip won’t allow it!). If you can’t put the papers in my hands, then put them in the drop box outside room 105
in building 6; be sure my name is clearly mark on the paper. It will be put into my mailbox.
Extra Credit. Up to 5 percentage points or half a letter grade can be earned by those students who to do the extra
credit assignment, details to be handed out later in the course. Extra credit will be due on the day of the final: March
18. (Note in the above example that well-done extra credit earning the full five extra points would change the student’s
course grade from a B- to a B+, from a 2.733 average to a 3.233!)
Out-of-class written cases (Tex-Fluids, Inc., due Thursday, April 29, and Frito-Lay, Inc.: Grandma’s Brand
Cookies, due Tuesday, June 1). Written case analyses should follow the "problem-analysis-solution" format as discussed in the Instructions for Out-of-Class Written Case Analyses attached to this syllabus. They should be typed,
double-spaced, and no more than 4-5 pages plus exhibits. Your written analyses are individual--not group--projects,
but brainstorming will be encouraged to help you do the prewriting and idea generation that are necessary to coming
up with well thought-out solutions to cases. (In-class case analyses will be open book, open notes!)
Case Discussion Questions
Of the cases that will be discussed in class, selected discussion questions will be handed in by you for grading. All
questions, however, will be covered in the class discussion, so you should prepare answers to every question before
coming to class. The following questions should be handed in on the dates that the cases will be discussed:
Case
Question to Answer
South Delaware Coors, Inc.
Show Circuit Frozen Dog Dinner
Soft and Silky Shaving Gel
Elitch Gardens
Afton Industries
Frito-Lay, Inc.: Sun Chips™ Multigrain Snacks
Drypers Corporation
Steel Door Technologies
Carrington Furniture, Inc. (A)
The Three Ethics Cases
#1
#2 (entire question)
#2
#5 (entire question)
#3
#5a
#4b
#3b
#1
#1
Date Due
4/8
4/13
4/15
4/22
5/6
5/13
5/18
5/20
5/27
6/3
Your answers to these questions should not exceed one page. Most of the answers should be between one-third and
two-thirds of a page long. They should be typed or word-processed. Your answers will be graded on the basis of ten
points each and your final score for all ten will be weighted 15% of your final course average. Penalty for late papers: three points per class day.
More on the Out-of-Class Cases
Spelling, Grammar, and the University Writing Center. Spelling and grammar, of course, matter, especially
in your out-of-class cases! A paperback dictionary and a style book, such as The Elements of Style by Strunk and
White or The Golden Book on Writing by Lambuth, are handy references to have on your desk. By all means, please
visit the University Writing Center (building 15, room 2919, 869-5343) if you feel like you need help with your writing, or visit the Center’s website http://www.csupomona.edu/~uwc.
Plagiarism: The Cal Poly catalog states the following in connection with plagiarism. “Students are hereby informed that the university considers plagiarism a serious academic offense which subjects those engaging in the practice to severe disciplinary measures.” These measures include not just failure of the course in which the plagiarism
occurs but expulsion from the university. The Merriam-Webster dictionary defines plagiarism as stealing and passing
4
off as one's own the ideas or words of another, or the use of another’s production without crediting the source. See
http://www.csupomona.edu/~uwc/pdf/plagiarism3-hnd.pdf and http://nutsandbolts.washcoll.edu/plagiarism.html for
further discussions of what plagiarism is and how to avoid it. (By the way, http://nutsandbolts.washcoll.edu/ is an
excellent, albeit lengthy, guide to college writing of all types.)
----------------------------------------------------------------------------------------------------------------------------- ----------------
Professor Kirkpatrick received his BA degree in philosophy from the University of Denver and his MBA
and PhD degrees in marketing from Baruch College of the City University of New York. He has worked as account
executive for Public Relations Aids, Inc. in New York City and Smith-Hemmings-Gosden Direct Response Advertising in El Monte, CA; he has also worked as senior account executive for the Young and Rubicam Direct Marketing Group in Los Angeles. His publications have appeared in the Journal of Advertising, Marketing Theory: Philosophy of Science Perspectives, Developments in Marketing Science, Vol. IX, Managerial and Decision Economics,
and The American Journal of Economics and Sociology. His book In Defense of Advertising: Arguments from Reason, Ethical Egoism, and Laissez-Faire Capitalism was published in 1994 by Quorum Books; in 1997, the work was
translated into Portuguese and published in Brazil. His second book, Montessori, Dewey, and Capitalism: Educational Theory for a Free Market in Education, was published in February of 2008. Professor Kirkpatrick also publishes a blog at jkirkpatrick.net/blog.
5
Questions of Comprehension: Prelude to Case Analysis
Basically, case analysis requires three cognitive skills: (1) application--i.e., using concepts and general principles to solve a specific problem that is new to you, (2) analysis and synthesis--i.e., breaking down the case problem
into its component parts, identifying relationships among the parts, and putting the parts together in a new way that
sheds light on the solution, and (3) evaluation--i.e., judging the worth of an alternative course of action by comparing
it to a standard. Knowledge and understanding, however, both of general marketing principles and of the facts of
each specific case are prerequisite to sound case analysis. Before examining any given case, ask yourself the following questions of comprehension:
1. What concepts and principles from my basic marketing or marketing management textbooks will I have to call
upon to analyze and solve this case?
2. How can these concepts and principles help me define the problem, generate alternative courses of action, or recommend a solution?
3. What in this case is the most important fact that I must consider? Next most important? Third most?
4. What uncertainties exist in the competitive environment? What assumptions about these uncertainties will I have
to make before I can solve the case?
5. What quantitative analysis is required?
6. What additional information--if I could get it--would I want to have in order to help me solve this case?
6
THE PRINCIPLES OF MARKETING
Marketing is the entrepreneurial function of business that creates and delivers need- and want-satisfying
products to consumers. The overall goal of marketing is to create customer satisfaction.
Company objective: Strive for high market share through intensive growth and market penetration.
The five components of marketing strategy:
1. Market strategy -- A market consists of people who have a need for your product, and the purchasing
power and authority to buy the product.
Market definition -- The most basic principle of marketing is: know your market, or: to know how to market your product, first you must know to whom you are marketing. This means conducting research to define and
describe your typical prospect or customer; it means identifying their needs and wants, identifying the competition,
and identifying any other variables that might affect your marketing decisions.
Corollary principles: (a) Use the market research information to improve your decisions, (b) Divide your
market into segments--because not everyone is a prospect for your product, i.e., not everyone has the same needs
and wants. An implication of this is that multiple segments call for multiple products.
Market position (or competitive strategy)-- select positions within market segments that differentiate your
products from the competition
2. Product strategy -- This refers to the development of new products and the management of existing
ones.
The primary principle: primacy of the product, or: without a good product, you have nothing. "Good," in
this context, means meeting the objective, universal needs and optional wants of consumers (i.e., hula-hoops and pet
rocks meet the universal need of entertainment, but pink Cadillacs meet the optional tastes and preferences of only
some consumers)
Develop and market multiple products for multiple segments--develop deep (primarily) and wide (secondarily) product lines.
Use branding for identification and packaging for (customer) convenience.
3. Pricing strategy -- This means setting prices, determining their flexibility (i.e. fixed pricing vs. a willingness to negotiate), determining discounts and allowances.
Vary your prices according to product and segment.
Develop price leadership by keeping costs low and quality high, by setting prices high enough to provide a
strong return on investment but low enough to prevent the competition from expanding production.
4. Promotion strategy -- Promotion means communication--the purpose of which is to make a sale. There
are four methods of promotion: advertising, personal selling, publicity, and sales promotion (coupons, contests, free
samples, etc.).
First, know your product cold.
Then, communicate its unique selling proposition (USP) to your target market. Your USP answers such
questions--from the consumer's perspective--as "what's in it for me?," "why should I buy your product?," and "what
distinguishes your product from the competition?"
Focus on benefits, but sell the steak (the product's tangible features) as well as the sizzle (the product's intangible benefits).
Match features and benefits to the needs and wants of your segments.
5. Distribution strategy -- Distribution means physically moving and delivering the product, either
through middlemen or directly, to the consumer. It means moving the product to a place or location that is convenient to the consumer.
Treat your middlemen (and suppliers) as intermediate customers (i.e., be nice to them by striving also to
meet their needs and wants).
7
Formula Sheet
1. BE units =
FC
=
P - VC
FC
UC
2. BE $
FC
=
UC ÷ P
FC
CM
=
or: BE $ = BE units x P
When calculating breakeven, the following applies:
3. Market Share =
Note: CM = P - VC =
P
$ = units
$
&:
$
= $
% or CM
company sales (in units or $)
relevant market sales (in units or $)
4. BE Market Share =
BE units (or $)
relevant market sales in units (or $)
5. BE with a profit goal ($) =
FC + $ profit
P - VC
6. BE with a profit goal (%) =
or:
FC
P - VC - (∏% x P)
FC + ROI
P - VC
=
FC
or:
FC
UC - U∏
CM - ∏%
7. segment market potential in $ (or units) = total market sales in $ (or units) x % share of segment
8. % share of segment = segment market potential in $ (or units)
total market sales in $ (or units)
9. local area market potential ($ or units) = national sales x % population in local area
10. national sales = local area market potential (e.g., test market sales)
% population in local area
11. annual rate of growth (or decline) =

Abbreviations:
BE = breakeven

FC = total fixed costs
P = unit selling price
VC = unit variable cost
UC = unit contribution
CM = contribution margin
∏ = profit
U∏ = unit profit
n = number of years or periods
n
later year  1
earlier year 
or :
 later year
or :
earlier year
n
later year  earlier year 

earlier year

n


1

UC
P
8
Decimal Refresher
If you are even remotely shaky on decimals and percentages, you must do the following exercises. But first, go to the
library reserve room and read pp. 1-18 in Everyday Math Made Easy by Peter Davidson, especially pp. 11-18 on "Using Percents." Davidson reviews all of the basic rules you need to solve these problems.
1. Convert the following decimals to percentages:
(a) .258 (b) .097 (c) .003 (d) .0003 (e) 25.7
2. Convert the following percentages to decimals:
(a) 37.28% (b) .11% (c) 125% (d) 2.1% (e) .03%
3. Convert the following dollar amounts to decimals in the appropriate units as indicated. For example: $2,500 converts to $2.5 thousand or $ .0025 million.
(a) $7,847,000 - convert to thousands, then to millions
(b) $125,700,000,000 - convert to millions, then to billions
(c) $860,000 - convert to millions, then to billions
(d) $5,280 - convert to millions, then to billions
(e) $6,520,361,200 - convert to millions, then to billions
4. Convert the following decimal dollars to plain numbers. For example: $4.57K (or thousand) converts to $4,570;
$4.57M (or million) converts to $4,570,000.
(a) $12.6753 billion (b) $7.2 million (c) $45.68 billion (d) $45.68 million
(e) $12.6753 million (f) $7.28739871045 billion
5. Multiply:
(a) $6.2 million x 2.5% (b) $252 million x .08% (c) $ .086 billion x 11%
(d) $27,500,000,000 x .1% (e) $37,511.23 x 125%
(f) $6.2 million x 215%
6. Divide:
(a) $2.3 million ÷ $62.5 billion (b) $72.82K ÷ 1.5% (c) $237 million ÷ $20K
(d) $9.8 million ÷ 32.7% (e) $825,000 ÷ .02% (f) $36,235 ÷ $10.2 million
9
Instructions for Out-of-Class Written Case Analyses
As capstone course in the marketing major, Marketing Problems gives you practice in applying the principles of marketing to real-life situations. This requires the skills of problem solving thinking and persuasive reasoning;
case analysis is the means of practicing these skills. Each case presents you with a marketing problem that you--as
marketing manager--must solve. Your success within the company depends on your ability correctly to identify the
problem confronting you, your ability to identify viable alternative courses of action in response to the problem, and
your ability to persuade your peers and, especially, your superiors that your choice of solution is the best one. You do
all of this by knowing which concepts and principles of marketing to apply in each of the many different situations. In
other words, you are the protagonist in each case and you must be the hero who recommends a course of action to top
management that will solve their problem.
Task
•
To write a 4-5 page (plus exhibits), typed, double-spaced case analysis following the "problem-analysis-solution"
format. The paper should be divided into three major sections, labeled "Problem," "Analysis," and "Solution." All
questions in the case format must be answered.
Audience
•
•
Primary: your boss and, especially, top management.
Secondary: your peers (who might be attending the meeting in which you present your analysis).
The Writing Process
Prewriting
1. First reading. Quickly read the case once, writing down any ideas that come to mind, especially as they relate to
the discussion questions or case format. Do not spend a lot of time and especially do not get bogged down trying
to crunch a lot of numbers--i.e., do some preliminary calculations but not a lot.
2. Brainstorming. With two or three other students, recite your ideas about the case. Do this one person at a time
without evaluation or criticism. True brainstorming withholds evaluation--because its objective is to generate as
many ideas as possible, "the wilder, the better." After everyone has presented his or her ideas, discuss with your
peers why you think certain ideas are better than others. You also might want to discuss what additional numbers
need to be crunched to aid your analysis.
3. Digestion. After the brainstorming session, write down a preliminary--and brief--case analysis in the "problemanalysis-solution" format.
Drafting
4. Second reading. Read the case again and do any additional quantitative analysis you think is necessary. Answer
the discussion questions.
5. Write the rough draft. Write fast--don't worry about grammar or spelling or finding the perfect word; your objective at the draft stage is to get it all down on paper.
6. Put the draft aside for at least a day.
7. Read your draft aloud to a friend, preferably not a member of this class or even a marketing major--your friend
does not have to know the case to give you important feedback. Have your friend think about the following questions: (a) What to me (your friend) is the most interesting point in this case analysis? Why?, (b) In your own
words, what have I described as the problem and the solution to this case?, and (c) What additional information
would enhance the analysis or make it clearer? Or, at what point in my paper did you become confused or lost?
8. Discuss your friend's reactions to your case analysis.
10
Revising
9. Concerning case format, ask yourself the following questions: Is the problem stated in symptom/cause format,
demonstrating the connections between symptom and cause? Is the analysis divided into sections that clearly detail the decision objectives, the alternative courses of action, the theoretical principles that must be applied to
solve the problem, and the math? Is the solution stated clearly and forcefully with suggestions for implementation? Have all of the discussion questions been answered somewhere in my paper?
10. Concerning coherence and detail, ask yourself these questions: Is the order of the paper correct? I.e., are there
paragraphs, sentences, or ideas that should be eliminated, rewritten, or repositioned in the paper? Are there any
hidden assumptions or hasty generalizations? Make all assumptions clear enough that a child of two could not
miss them! Is there enough evidence for the claims and recommendations I am making? In other words, have I
proved my argument?
11. Concerning form and style, ask: Does the paper as a whole flow smoothly from section to section, paragraph to
paragraph, sentence to sentence? (Any sentence or paragraph that has to be read twice to be understood probably
should be reworked.) Are the exhibits clearly labeled, following format of the exhibits in the text, and have I referred to the exhibits in the body of my paper? Are there any spelling, grammatical, or punctuation errors? (Run
spelling check and look up anything you have doubts about.)
12. After your paper is printed, proofread one more time for typos and correct.
Evaluative Criteria
Your case analyses will be graded holistically--i.e., based on my overall impression of your work--using the
following guidelines:
A-
An excellent case analysis answers all of the discussion questions and follows the case format precisely.
Spelling and grammatical errors are absent. The quantitative analysis is essentially correct, allowing for differences in assumptions--and the assumptions are clearly spelled out. The paper flows smoothly, is articulately reasoned with plenty of specific detail, and even contains a strong persuasive punch. The excellent case
analysis, in other words, has many strengths and very few flaws.
B-
A good case analysis has more strengths than weaknesses, but essentially it is a strong paper, especially in the
area of quantitative analysis. The flaws may show up as a question that is not answered at all or not answered
in specific detail, or as spelling and grammatical errors, or assumptions that are not made clear, or poor organization. The general thrust of the case, however, is essentially correct, or at least on the right track.
C-
A fair case analysis has major flaws--counterbalanced by an equal number of strengths. Flaws include--in
addition to those listed above--repetition of case facts without using them to make a point, failure clearly to
identify the problem or to recommend a concrete solution, failure to understand and to work out the quantitative analysis.
D-
A poor case analysis has more flaws than strengths. It shows some effort put into the assignment, but on the
whole it is on the wrong track in analyzing the case, or it shows minimal understanding of how to apply marketing concepts and principles to a specific situation.
F-
A unacceptable case analysis has many major flaws and likely shows minimal understanding of the case or of
the assignment. It usually is too brief in length and therefore exhibits little or no thought or effort put into the
assignment.