MARKETING FUNDAMENTALS AREA: MARKETING MANAGEMENT INTERNATIONAL M.B.A. PROFESSOR: SESSIONS: 24 JIKYEONG KANG Professor of Marketing E-mail: jikyeong.kang@ie.edu Professor Kang is currently a visiting research professor at Instituto de Empresa. Before coming to Madrid, she spent the past six years at Manchester Business School directing Full-time and Executive MBA Programmes and also provided strategic leadership for a suite of distance learning MBS Programmes. During those six years, the th nd MBS Full-time MBA ranking went up from 48 (2002) to 22 (2007) in the world, according to the Financial Times ranking reports. A native of Korea, she also spent 18 years in the USA, nine years of which were spent in the faculty of the University of Wisconsin – Madison, USA. During the early years of her career at UW - Madison she was elected as a member of the prestigious Teaching Academy. Professor Kang has been the recipient of many research grants, and has done consultancy work for many international organisations, including sanofi-aventis, Adelphi International, Royal Bank of Scotland, Hilti, and Sears. She has also received several national/international awards for her research and actively publishes her work in various academic research journals. In addition, Professor Kang has presented numerous papers at industry and academic conferences throughout the US and Europe. In 2005, she was highly commended in the Public Sector for the Asian Women of Achievement Award in the U.K. She is thrilled about the prospect of learning the Spanish language and experiencing the culture, but more importantly from a professional point of view, she is keen to discover how consumers and companies within the Latin culture are similar to and different from those in other parts of the world. This new interest is very much in line with one of her on-going research programmes, as she is very interested in expanding our knowledge on the effects of culture in the marketplace, as well as the influences of ethnicity and acculturation on consumer behaviour. Academic Background BSc, Hanyang University in Seoul, Korea MSc, Colorado State University PhD, University of Minnesota Academic Experience Professor of Marketing, Manchester Business School, UK, 2004 – (on sabbatical leave) Senior Lecturer, Manchester Business School, UK, 2000 – 2003 Assistant Professor, University of Wisconsin-Madison, USA, 1991 – 2000 Also taught at CEIBS (Shanghai, China); ESSEC (Paris, France); Rotterdam School of Management Erasmus University (Rotterdam, The Netherlands); and HEC (Montreal, Canada) Published by IE Publishing Department Original version, November 2009 1 OVERVIEW AND OBJECTIVES People often define marketing as advertising or sales – highly visible activities by which organizations try to persuade consumers to buy products and services. However, marketing is more than advertising and sales – even the most skillful marketing cannot make consumers buy things that they don’t want. Rather, marketing involves identifying consumer needs, and then satisfying these needs with the right product (or service), available through the best distribution channels, promoted in ways that motivate purchase as much as possible, and priced at the right level. These decisions – product, place (distribution), promotion, and price – comprise the “Marketing Mix”. Together with rigorous and complete analysis of the environment, customers, and competitors, they are the key activities of marketing management, and they are crucial ones: failure to find the right combination of the “Marketing Mix” may result in product (or service) failure. The objective of this course is to introduce you to the concepts, analyses, and activities that comprise marketing management and to provide practice in assessing and solving marketing problems. The course is designed to further develop your critical thinking skills. Ultimately, you should develop improved decision-making skills, including the ability to analyze problems, evaluate alternatives, and make better decisions. Upon a successful completion of the course, you will feel more prepared to approach new situations, make decisions, and develop strategies based on careful analysis. These skills should extend beyond marketing and apply to all areas of business. In addition, the course incorporates aspects of social responsibility and the relevance for marketing decision making, because social marketing is gaining increasing importance due to the shift from transaction-based to relationship-based marketing. INSTRUCTIONAL PLAN This course will involve a combination of lectures, discussions, and case analyses. Each class session will be conducted in a highly interactive mode, where students feel encouraged not only to ask questions, but also to bring their own ideas and experiences to class discussions. An optimal and continuous learning process can be achieved by actively sharing your knowledge, experiences, and thoughts through effective communication. That means it is the quality of your participation that would be of significance, not the quantity. EXPECTATIONS OF PROFESSIONALISM Classes should be treated like any other professional business environment. Arrive at least 3 minutes before each class session begins! Unless you have a just cause and sought prior permission, late arrivals will not be allowed to enter the classroom until the class reaches an appropriate transition point because they distract other students and are disconcerting to the professor. You are expected to fully prepare for each class, and whilst you are in class, you need to fully engage. You need to turn off your mobile phone and will not be allowed to place it on your table. Laptop computers may not be used in class unless required for a particular class session. You should never check email or surf the Internet during class. You should not dominate a class discussion or use class participation as an opportunity to show off your knowledge or experiences. You are invited, and in fact encouraged, to disagree – this is essential to our learning process – however, do so in a professional and respectful manner. Provide rational arguments for positions you take and do not personally attack your colleagues. 2 Everyone should contribute approximately equally to the preparation of a group assignment. This does not mean that everyone's ideas must be included. It does, however, mean that everyone should contribute about equally to the overall process. In sum, if you treat your colleagues and professor with respect, your learning will occur in both a stimulating and a very pleasant environment. COURSE MATERIALS Readings Each session’s reading list includes required textbook chapters as well as recommended readings such as technical notes, journal articles, or newspaper clippings. You must complete the required readings before coming to each class. You are expected to use these materials in class discussions as well as in your assignments. A textbook is required at entry level courses, such as this one, to provide students with a thorough and comprehensive view of the topic. The textbook reading will provide you with a detailed understanding of the nature of marketing practices. Textbook P. Kotler, K. Keller, M. Brady, M. Goodman (2009). Marketing Management (European Edition). Prentice Hall. ISBN-13:978-0273718567 ISBN-10: 0273718568 Cases The emphasis in this course will be for you to acquire “hands-on” skills and the competencies in applying those skills. Therefore, the main technique to be used in this course will be the case method. Therefore, it is absolutely necessary that you read and analyze each case before coming to the class. You will receive penalty points in your class participation score, if it is deemed that you have not adequately prepared for a case discussion when you are called to open a case discussion or asked to answer a particular question. Lecture Notes The PowerPoint slides used in each class will be made available after each class session on the Internet platform CampusOnline. Additional References Aaker, D. (2002). Building Strong Brands. Simon and Schuster. Blackwell, R. D., Miniard, P. D. and Engel, J. F. (2006). Consumer Behaviour, 10th edition. Thomson, South Western. Bruhn, M. (2003). Relationship Marketing. Prentice Hall. Christoper, M., Payne, A., and Ballantyne, D. (2002). Relationship Marketing: Creating Stakeholder Value. Elsevier/ Butterworth Heinemann. De Chernatony, L., and McDonald, M. (2005). Heinemann. Creating Powerful Brands. Elsevier, Butterworth Kasper, H., Helsdingen, P., and Gabbott, M. (2006). Services Marketing Management: A Strategic Perspective, 2nd edition. John Wiley & Sons. 3 Malhotra, N. K. and Birks, D. F. (2005). Marketing Research: An Applied Approach, 2nd European edition. FT Prentice Hall. Szwarc, P. (2005). Researching Customer Satisfaction and Loyalty: How to Find out What People Really Think. Kogan-Page. Sheth, J., Parvatiyar, A. (2000). Handbook of Relationship Marketing. Sage. Webster (2002). The Role of Marketing and the Firm. Handbook of Marketing. Sage. 4 COURSE ASSESSMENT Individual: Class Participation Exam I Exam II 20% 20% 20% Group: Group Case Analyses (Two 5-7 page case write-ups / 10-min presentations) Group Marketing Project 3-5 page interim written report 5% 20-minute oral presentation + 10-min Q&A 5% 15-20 page final written report 10% 20% 20% Class Participation (20%) Class participation will be assessed during each class session (i.e., lecture sessions, case discussion sessions, and project presentation sessions). When class sessions follow a case discussion format, the assigned cases are intended to give you practice in assembling information to support a decision and provide a vehicle by which to apply the theories, concepts, and analytical devices discussed in class or in the reading material. The discussion forum provides an opportunity to argue your position and to learn from others by listening to their comments and criticisms. The criteria for evaluating effective class participation include: Is the student present and on time? You cannot learn marketing by simply reading a textbook or doing your assignments. Much of the learning will occur in the course of the discussions in class. Hence, regular attendance is required in order to receive credit for class participation. Please advise in advance if you cannot attend a session. Does the student participate in class? For others to learn from your experience, you must participate – which means offering your insights during both case discussions and the lectures. Does the student make quality points? It is entirely possible to offer many comments and still receive a low grade for participation. Insightful comments backed up by data or case information that advance the class discussion and that are well presented are what is being sought. Also, asking questions that help to improve the learning environment of the class is important. In general, how well you respond to questions, how effectively you use the information in the case to support your views, and how effectively you take into account the comments and analyses of your classmates are factors in assessing class participation. When determining the class participation grade, the following questions will be asked: Are the points made relevant to the class discussion? Did the comments add to our understanding of the situation? Were the concepts presented in a concise and convincing manner? Can the participant back up a point with financial or other data? Does the participant go beyond simple repetition of case facts with analysis and recommendations? Do comments show an understanding of theories, concepts, and analytical devices presented in class lectures or reading materials? 5 Exams (40%) Two exams will involve case analyses. They may cover materials from readings, lectures, cases, and/or class discussions. Exam I will cover materials from the first 11 sessions, and Exam II will cover materials from the second10 sessions. Group Case Analysis (20%) Each group must complete two case write-ups and submit their report and a copy of presentation slides at the beginning of the corresponding class session. The group should also upload their presentation to Campus Online after their presentation. For each write-up, there is a lower limit of 5 pages and an upper limit of 8 pages (assuming 11-point font size, Times New Roman, single spacing), including exhibits. Each group will also make a short 10-min presentation at the beginning of the corresponding class session. Case write-ups can sometimes feel difficult, especially if you have not done one before. It might be helpful if you follow a template or format for writing up cases. Below is an example of a format you can follow in presenting your ideas to ease this process. It is not compulsory you follow this particular format. However, whichever format or template you decide to follow, you should always provide headings for each section. Suggestions for Analyzing Cases The main goals of analyzing cases are threefold: To provide a real-world frame of reference in which to apply theory and concepts. To learn to reason well with available data. To learn to identify the most important issues and express ideas concisely. It is recommended that you read the case at least twice. The first reading should be a quick reading of the text in the case. It should provide a broad view of the subject matter and the type of data the case contains. In your initial analysis, you should try to gain a feel for the broad issues: What sort of organization is the case about? What core product(s) and service(s) are provided? What is the nature of the industry? What problems do management face? Subsequent readings will give you a sharper picture of the business issues and should help you integrate information in the exhibits. As in real life, some of the exhibits will be superfluous. However, others will contain critical information. You will often have to process this data further in order to extract the most useful conclusions. In subsequent readings, underline key points and make notes as you go: What decisions need to be made, and by whom? What are the objectives of the organization and its members? What are the relevant resources and constraints? In developing recommendations, identify some alternative strategies and courses of action: What are the pros and cons of each? Try to apply concepts from the course. Consider the implications of each strategy for the organization, including responses by competitors if applicable. 6 An Example Format for Case Write-ups Please select your point of view and clearly state the problem: one important goal of this assignment is to see if indeed you are competently identifying what the major issue(s) of the case is/are. Obviously, the rest of your presentation will then go from there in terms of identifying the solutions for the problem you identified. For those of you who are still not clear on what is expected, below is an example (with an emphasis on “example”) of a case analysis outline. 1. Point of View You choose the person whose view you want to use. It may be a third-party point of view (e.g., a marketing consultant) or any person who is involved in the case. 2. Marketing Objectives and Relevant Case Facts (“Where are we now?” “Where do we want to go?” “What will the future environment be like?”) Facts relevant to the identification of the problem and its subsequent particulars are sifted from the case and grouped under certain headings. 3. Problem/Opportunity Statement The problem is clearly stated in this section. It should be stated in a way that it is not answerable by a yes or a no. 4. Alternative Courses of Action (“What should we do with 4Ps?”) SWOT analysis is just one of the tools used to formulate alternatives. It is also encouraged that you brainstorm and be creative in terms of developing alternatives. 5. Evaluation of Alternatives (“Compare return on investment”) The options are evaluated based on criteria formulated (e.g., ease of implementation, cost of implementation, compatibility with corporate marketing strategy, etc) and associated risks. 6. Decision The best alternative is chosen, and the choice is justified in this section. 7. Implementation Plan (“How do we do it?”) Detailed plan (i.e., who, what, where, when, how, cost) for gaining acceptance and implementing the decision is outlined in this section. 8. Contingency Plan / Risk Analysis In case the chosen alternative would not work, an alternative plan could be considered here. 9. Program Monitoring (“Are doing what we’re supposed to be doing?” “How do we meaure the success, i.e., KPIs?”) You should discuss how implementation and results will be monitored (e.g., scheduled review periods). Dos & Don’ts of Case Analysis There are a number of common problems and issues which come up in case analysis. Although many of these apply specifically to written case write-ups, most apply equally to preparing for case discussions in class. Don’t rehash the facts of the case. It is critical to understand (and include in a write-up or discussion) the “key” facts of the case – those which drive subsequent recommendations. Don’t ignore alternatives you did not consider. You should briefly recognize alternative courses of action, which you chose not to recommend. In preparing for in-class discussion, you should be able to clearly articulate why other alternatives were not chosen. Do critically evaluate data and issues. One of the objectives of a case analysis is to learn how to prioritize important information. The “facts” provided in the case may be more or less relevant, more or less important, and more or less valid. As you interpret the data from the case, be sure to critically evaluate each. Consider the problem you have identified and whether and how the facts are relevant to that problem. Also, be sure to consider the data being presented – ask whether the data was collected in a reasonable manner and consider the actor and the context before taking what an actor says as “truth.” Be sure to qualify conclusions when the data you rely upon is more suspect. Do make your Appendices and Exhibits comprehensible. Be sure any additional information that you provide is self-explanatory. 7 Do provide a strong analysis. The analysis or rationale should: be focused on the key problem you identify in the case; consider evidence that favors and opposes a particular alternative; be correct in analysis and not making inappropriate assumptions; and draw upon relevant theories and concepts and analytical tools from class and readings. Do offer strong recommendations and implementation plans. Make sure your recommendations and implementation plans: are specific; are practical; consider costs involved; and can be implemented by the firm. Clearly indicate target markets, consider the timing of the implementation plan, and address the key problem you identified in the case. Don’t have unstated or unreasonable assumptions. In analyzing the case and making your recommendations (as in the real world) you will never have all the data you would like. Your analysis and recommendations will therefore have to draw on assumptions; but be sure to state these where appropriate and be sure they are reasonable. Do proofread. Write-ups should be free of spelling or grammatical errors and should be carefully edited and of the quality you would submit to a manager. Don’t bring in information from outside the case. Our case discussions and your write-ups should be based upon the information presented in the written case. When you add outside information – that is, only known to a few people or revealed by further outside research – you add confusion to our discussion. Although you may know or find out what the company actually did in a particular situation, this does not necessarily make that decision right. Do remember that there is no correct answer. One thing about business is that there is rarely a single right answer – there are many paths to success. What will be heavily scrutinized when evaluating your discussion points and write-ups is the logic and rationale that you use to come to your conclusions. Still there are many wrong answers – those that are not well supported by analysis and logic. 8 Case Write-up Evaluation Form Your case write-ups will be rated on each of the following items using a 0 to 10 scale: “0” = extremely poor, “5” = average, and “10”= superb. Professional Style Rating The report was well-structured and well-organized. The report was interesting and included creative ideas/solutions. The report was well adapted to the marketing field. The report/presentation slides were free of grammatical and spelling errors. The report was professionally prepared (The cover page should include section number, group identification, full names of all group members, and case title). The presentation was professionally prepared and delivered. Comments: Analytical Soundness and Application of Principles Rating The group clearly identified and analyzed the problem/objectives. The group properly researched the topic. The group made effective use of marketing principles, models, and/or theories. The group made reasonable assumptions. The group built credible arguments using sound evidences to back up their arguments. The group articulated well-developed strategies and appropriate tactics. The group examined the implications of their analyses and recommendations. The group effectively handled the defense of their ideas (vs alternative ideas). The group clearly linked the problem analysis, strategy, and tactics (congruency tests). Comments: Case Allocation Cases Blue Mountain Resorts Limited: The Night Skiing Decision TiVo in 2002: Consumer Behavior Product Team Cialis: Getting Ready to Market IKEA Invades America Mountain Man Brewing Co.: Bringing the Brand to Light Atlantic Computer: A Bundle of Pricing Options UPS and HP: Value Creation through Supply Chain Partnership Capital One: Launching a Mass Media Starbucks: Delivering Customer Service Making Loyalty Pay Groups A J B F C G D I E H F C G D H E I B J A Group Marketing Project (20%) A separate briefing document will provide information on further details of the group marketing project. With regard to the deliverables, you will be asked to submit a 3-5 page interim written report at the beginning of Session 11. At the beginning of Session 24, you will need to submit a 15-20 page (excluding appendices) final written report. During Session 24, your group will also do a 20-minute oral presentation (plus 10-min Q&A). The project will give you an opportunity to reflect on what you have learnt in the course and to apply them to practical marketing issues and/or problems in the real world. 9 COURSE SCHEDULE SESSION 1 Topic: Introduction to the Course The Marketing Concept Required Reading: KKBG, Chapters 1 & 2 SESSION 2 Topic: The Marketing Concept (cont’d) Introduction to the Group Marketing Project Required Reading: KKBG, Chapters 3 & 4 Additional Recommended Reading: What is Marketing? (HBS 9-590-007) The Marketing Mix (HBS 9-584-125) Marketing Myopia (HBS R0407L) What is the Meaning of `Marketing? (Marketing News. Sep. 15th 2004, p. 17) Marketing Redefined: Nine Top Marketers Offer Their Personal Definitions. (Marketing News Sept.15th 2004. pp.16 &18.) SESSION 3 Topic: Analyzing Market Opportunities through Marketing Research Required Reading: KKBG, Chapters 5 & 6 Additional Recommended Reading: Market Research: Listen and Learn (HBSP 2750BC) Backward Market Research (HBR 85301) SESSION 4 P.C.: Blue Mountain Resorts Limited: The Night Skiing Decision (IVEY 83A025) SESSION 5 Topic: Understanding Customers Required Reading: KKBG, Chapters 7 & 8 Additional Recommended Reading: Understanding Customer Experience (HBR Article R0702G) The Top Ten Reasons You Don’t Understand Your Customers (Harvard Management Update Article U0605C) Beating the Market with Customer Satisfaction (HBR Article F0703H) SESSION 6 P.C.: TiVo in 2002: Consumer Behavior (HBS 9-502-062) SESSION 7 Topic: The Market Planning Process: Segmentation, Targeting, and Positioning Required Reading: KKBG, Chapters 10 & 14 Additional Recommended Reading: Market Segmentation, Target Market Selection, and Positioning (HBS 9-506-019) From Market Segments to Strategic Segments (HBS Press Chapter 2661BC) Market Customization: Market Segmentation, Targeting, and Positioning (HBS 2580BC) 10 SESSION 8 P.C.: Product Team Cialis: Getting Ready to Market (HBS 9-505-038) SESSION 9 P.C.: IKEA Invades America (HBS 9-504-094) SESSION 10 Topic: Marketing Mix: Products and Branding Required Reading: KKBG, Chapters 12, 13 & 15 Additional Recommended Reading: Brands and Branding (HBS 9-503-045) Customer-Centered Brand Management (HBR R0409H) Core Brand Values: How to Build a Unique Brand (HBS Press Chapter 8279BC) Linking Advertising and Brand Value (Business Horizontal Article BH047) What are Brands Good for? Sloan Management Review, Vol.48 (1), 31-37. (SMR 46106) SESSION 11 P.C.: Mountain Man Brewing Co.: Bringing the Brand to Light (HBSP 2069) SESSION 12 Exam I SESSION 13 Topic: Marketing Mix: Pricing Required Reading: KKBG, Chapter 16 Additional Recommended Reading: Principles of Pricing (HBS 9-506-021) Setting the Right Price at the Right Time (Harvard Management Update Article U0312B) Pricing It Right: Strategies, Applications, and Pitfalls (HBS Press Chapter 2629BC) Toward an Understanding of Price Wars: Their Nature and How They Erupt. International Journal of Research in Marketing, Vol.18, pp.83-98. SESSION 14 P.C.: Atlantic Computer: A Bundle of Pricing Options (HBSP 2078) SESSION 15 Topic: Marketing Mix: Distribution Channels Required Reading: KKBG, Chapters 17 Additional Recommended Reading: Channel Management (HBS 9-590-045) What is the Right Supply Chain for your Products? (HBR 97205) From Declining to Growing Distribution Channels (HBS Press Chapter 2688BC) SESSION 16 P.C.: UPS and HP: Value Creation through Supply Chain Partnerships (IVEY 907D02) 11 SESSION 17 Topic: Marketing Mix: Marketing Communications Required Reading: KKBG, Chapters 19 & 20 Additional Recommended Reading The Mismanagement of Advertising (HBR F00106) Who Benefits from Price Promotions (HBR F0209C) Marketing Promotions (HBS 9-506-028) Getting the Most out of Advertising and Promotion (HBR 90301) Integrated Marketing Communications (HBS 9-599-087) SESSION 18 P.C.: Capital One: Launching a Mass Media (Ivey 906A05) SESSION 19 Topic: Services Marketing Required Reading: KKBG, Chapter 18 Additional Recommended Reading A Crash Course in Customer Relationship Management (Harvard Management Update Article U0003B) Service Recovery (HBS 9-801-342) The Profitable Art of Service Recovery (HBR 90407) Putting the Service Profit Chain to Work (HBR 4460) SESSION 20 P.C.: Starbucks: Delivering Customer Service (HBS 9-504-016) SESSION 21 Topic: Customer Satisfaction, Loyalty, and Relationship Marketing Required Reading: KKBG, Chapter 11 CRM – the Right Way (HBR OnPoint Collection 2173) Additional Recommended Reading Preventing the Premature Death of Relationship Marketing (HBR OnPoint Article 7974) Avoid the Four Perils of CRM (HBR OnPoint Article 8946) Customer Profitability and Lifetime Value (HBR 9-503-019) CRM: Profiting from Understanding Customer Needs (Business Horizons Article BH 158) SESSION 22 P.C.: Making Loyalty Pay (HBS 9-505-031) M.D.: Customer Lifetime Value (MK4-109-I-M) SESSION 23 Exam II SESSION 24 Group Marketing Project Presentation 12