Download achieving the course objectives

MKT 430
Sections 71 & 81
As of February 9, 2005
MARKETING MANAGEMENT
Professor: Pierre Chandon
E-mail: [email protected]
Office: Jacobs Center 479
Phone: (847) 491 2716
COURSE OBJECTIVES
Successful firms are those that integrate the objectives and resources of the organization with
the needs and opportunities of the marketplace better than competitors—that is, those that identify
untapped sources of customer value, and deliver and capture more customer value than their
competitors. The role of marketing management in organizations is to identify customers'
unfulfilled desires, determine which customers the business should serve, decide on the
appropriate products and services, and determine the optimal methods of pricing, promoting, and
distributing the products or services.
This course is primarily designed for participants with little or no marketing experience.
However, the range of concepts and materials we will be using should provide a challenging
experience even for those of you who have marketing backgrounds. The objectives of the course
are (1) to enhance your marketing decision-making skills and (2) to enhance your understanding
of key marketing concepts and best practices in a variety of settings and organizational
environments.
ACHIEVING THE COURSE OBJECTIVES
Marketing is one of the most difficult areas of analysis and decision-making for firms. Why?
Because marketing requires to master an array of ‘hard’ and ‘soft’ skills. Although many
marketing problems lend themselves well to quantitative analysis, the human element plays a
much larger role than in other business functions. This is why this course will rely heavily on
group and class-wide discussion of (1) real-world case studies and (2) lectures on
conceptual/technical issues.
I choose cases for their ability to improve your marketing decision-making skills on a specific
set of issues (e.g., pricing), not to provide general “world knowledge” about marketing practices
in a certain industry. As a result, some of the cases may appear somewhat removed from the
specific problems pertinent to your particular industry experience and interests. However, the
lessons to be learned from the cases selected in this course are universally relevant and transcend
the particular companies, countries, or industries in which they are set.
One strength of the course is that I wrote myself five of the 10 cases that we will study
(Cacharel de L’Oréal: Decoding and Revitalizing a Classic Brand; Diesel for Successful Living:
Strategies for Upward Brand Extension in the Fashion Industry; Unilever in Brazil: Marketing
Strategies for Low-Income consumers; Russian Standard Vodka: Strategies for Global Branding
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and Expansion into the US Market; and Brand Audit: How to Measure Brand Awareness, Brand
Image, Brand Equity and Brand Value). All my cases are decision oriented and two are
multimedia (Cacharel and Unilever in Brazil—which won the 2004 EFMD Case Writing
Competition). Another strength is that many cases are international, enabling you to learn about
innovative marketing strategies that are not well-known in the US.
Case preparation and class discussion
Some of you may not be familiar with the case teaching method. To benefit from the case
method, you must be intimately familiar with the facts of each case. I also recommend that you
follow these simple steps:
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When reading a case, you should try to identify the underlying marketing problems (not
just the symptoms described in the case). While doing this, you should think about how
these problems apply to your industry and company. Do not attempt to find out what
happened to the company, as this would greatly reduces what you will learn from the case.
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You should then generate alternative marketing actions (incl. their pros and cons) and
make a decision about what should be done before you come to class. 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.
The arguments behind your recommendation are more important than your decision itself.
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Finally, you should be prepared to discuss your analysis and decisions with other course
participants in a constructive manner. Repeating case facts or personal experience is not
enough. Building on other people’s comments is as important as coming up with answers.
A typical question at the end of a case discussion is: “So what is the answer?” In case studies,
as in the real world, there is no unique answer (although some answers are better than others)!
What is important is that you know what you would have done in that specific marketing
situation, and why, and that you begin to construct your own framework for approaching more
general marketing problems.
Course material
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Packet of cases and readings.
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Kotler, Philip (2003), A Framework for Marketing Management, Upper Saddle River, NJ:
Prentice Hall, Second edition (optional).
The Kotler book is a concise version of Kotler’s Marketing Management. If you have at least a
relatively recent edition of Marketing Management, you don’t need to buy the required book. This
book will be particularly useful for participants with little marketing knowledge. Others should
use this book as a basic reference text to flesh out material from the class discussion in greater
detail, depending on your needs and interests (i.e., you do not need to read each chapter before
each class).
Evaluation
Your overall evaluation will be based on the following five components, according to this
weighting scheme:
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Class participation:
20%
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Individual case write-up:
20%
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Group case write-up 1:
20%
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Group case write-up 2:
20%
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Individual Final exam:
20%
Class participation
Almost every session of the course will involve interaction in the form of class discussion. In
particular, the case method requires you to be an active participant in resolving a marketing
problem. I expect you to be prepared at all times to comment in any class session. Class
participation is not simply a function of the amount of "air time" you take up, but will be
evaluated on (1) preparation (comments add to our understanding of the situation beyond simple
repetition of case facts and show an understanding of the concepts and tools presented in class or
in the reading materials) and (2) listening and communication skills (the points are linked to the
comments of others and presented in a concise and convincing fashion). Note that you will not be
evaluated on questions that you ask to clarify lecture or course material. If you have a question,
chances are that the same question is on the minds of some of your classmates as well. Thus, you
are doing the class a favor by asking it.
Individual and Group case write-up
You will have to prepare a written analysis of the “Kodak Funtime” case (individually) and of
the “Unilever in Brazil” and “Calyx and Corolla” cases in self-selected group of 4 to 6 students.
You will have to form your own group, based on affinity and geographical location. I will assign
people without group to existing groups. Please send your individual and group write ups by
email to: [email protected] by the due date mentioned in the course
overview. There will be a grade penalty for late write-ups.
Individual and group case analyses must be typewritten, single-spaced, and must not exceed
1,500 words. You may include exhibits in the group write-up (they are not necessary for the
individual write-up). Exhibits do not count toward the word limit but must not exceed 3 pages.
The format for the written case analyses is as follows:
1. A concise executive summary. This should define the single most important problem
facing the company and outline the recommendations in a very short paragraph.
2. Recommendations.
a. This should start with a statement of the quantitative and qualitative marketing
objectives (including timetable).
b. The marketing strategy recommended to achieve this goal comes next (i.e., the
positioning statement).
c. The action plan comes next (i.e., specific changes in the marketing mix). It should
include detailed and actionable solutions.
d. The expected benefits of the recommended solution come next.
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e. The expected drawbacks of the recommended solution and the key major
impediments come last.
3. Appendices. These should provide supporting analyses as needed, including a brief
analysis of the market (customers, competitors, company, community), the customer
segmentation scheme (if applicable), support for the targeting decision (target
attractiveness vs. company resources), and information supporting chosen positioning.
Reasons why obvious alternative strategies and actions were not chosen should be given.
Finally, the appendices should include relevant financial forecasting and break even
analyses.
Case write-ups will be graded according to:
1. Quality of problem diagnosis. The source of identifiable symptoms or key impediment to
attaining valued goals is defined (i.e., the correct problem is identified).
2. Quality of recommendations. Specific, comprehensive and practical plans recognizing
issues of implementation are provided.
3. Writing style and organization. The write-up is logically structured and is clear and
concise. Use exhibits to amplify and support your paper, but ensure the argument in the
paper can stand on its own. Never append an exhibit that is not referred to in the text.
There is no need to repeat facts from the case except to explicitly support a conclusion.
Final exam
The final examination will consist of a case analysis similar to the ones we have analyzed
throughout the course. It is designed to test how well you can apply the knowledge and skills
learned in the course. 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, read the assigned readings, and attend the classes.
The exam will be an open-book take-home case analysis. It will be distributed on Monday
5/23 for Section 71 and on Tuesday 5/24 for section 71 and is due on Wednesday June 1 for
both sections. Send it by email to: [email protected].
Grades
Course participation, individual and group write-ups, and the final exam will be graded on a
20-point scale. The grades are interpreted as follows.
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17 to 20: Inspired work.
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13 to 16: Excellent work, only minor lapses.
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9 to 12: Satisfactory. Some good insights, but need more.
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5 to 8: Serious problems. Probably structural.
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Below 5: Terrible! We need to talk!
Final grades usually range from A to C. The grading is “on the curve” and the total number of
As in any given section will not exceed 45%. Keep in mind that your grade is not always a perfect
indicator of your potential marketing skills, it simply reflects your relative performance on the set
of specific tasks outlined above.
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Attendance Policy
Students taking this course for credit must attend the first class. It is strongly recommended
that students attend every class session. Missing more than three class sessions is strongly
discouraged and may lead to a grade adjustment. Students are required to send me an email 24
hours before the class each time they miss class. In case of emergencies, the absence form can be
submitted after the student has missed a class but no later than two days after that.
Honor code
In addition to Kellogg’s honor code, the following rules apply to this class:
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Discussion cases may be prepared either with your group members or individually.
Group written cases are to be prepared by group members only. The cases are not to be
discussed with anyone who is not a member of the group, regardless of whether they are in
the class.
Individual written cases are to be prepared without consulting group members, other class
members, or outside sources of information.
Students should demonstrate respect for the professor and fellow students during the class
period. Students, therefore, should refrain from distracting behavior such as disruptive
eating, using laptops to surf the Web or check e-mail and holding side conversations.
Course instructor
Pierre Chandon is Visiting Professor of Marketing at the Kellogg School of Management,
Northwestern University and Assistant Professor of Marketing at INSEAD, which he joined in
1999. Prior to that, he was a professor at the London Business School and at the University of
North Carolina at Chapel Hill and a Visiting Scholar and Lecturer at Wharton, University of
Pennsylvania. At INSEAD, he teaches Marketing Management and Advanced Brand
Management in the MBA, EMBA, and in various executive educations programs. Pierre Chandon
holds a PhD in Marketing from HEC and a degree in business administration from ESSEC, both
in France. His expertise is in brand management and consumer behavior for low-involvement
products, with applications in the areas of sales promotions and point of purchase marketing. He
has published articles and books in leading academic journals, including Journal of Marketing,
Journal of Marketing Research, and Journal of Consumer Research. In 1998, he won the HEC
Interdisciplinary Dissertation Award and, in 2003, he won the Stellner Distinguished Scholar
Award for his achievements and contributions to the field of Marketing. In 2004, he won the
EFMD case writing competition for his case, “Unilever in Brazil: Marketing Strategies for LowIncome Consumers.” His work has been the subject of media coverage in Europe and the US, by
France Inter, L’Expansion, Les Echos, and the Marketing Science Institute.
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COURSE OVERVIEW
Part 1: Marketing Strategy Formulation
N°
Topic
Case and Assignments
Section 71
(Chicago)
Section 81
(Evanston)
1. Customer-driven
strategy
The Black & Decker Corporation (HBS case)
Fri 4/1
Tue 3/29
2. Brand-driven strategy
Parfums Cacharel de L’Oréal (INSEAD case)
Mon 4/4
Tue 4/5
Group composition due.
3. Market-driven strategy
Ericsson Mobile Phones (IMD case)
Mon 4/11
Tue 4/12
4. Marketing strategy
formulation wrap-up
Unilever in Brazil (INSEAD case)
Mon 4/18
Tue 4/19
Case and Assignments
Section 71
(Chicago)
Section 81
(Evanston)
5. Promotion decisions 1
The California Milk Processor Board: (Tuck
case)
Mon 4/25
Tue 4/26
6. Promotion decisions 2
Russian Standard Vodka (INSEAD case)
Mon 5/2
Tue 5/3
7. Pricing decisions
Kodak Funtime Introduction (HBS case)
Mon 5/9
Tue 5/10
Individual write-up due (Kodak case)
* Case due
* Case due
8. Product decisions
Biopure Corporation (HBS case)
Fri 5/13
Tue 5/17
9. Distribution decisions
Invisalign (Kellogg case)
Mon 5/16
Tue 5/24
Group write-up due (Unilever case)
Part 2: Marketing Strategy Implementation
N°
Topic
Group write-up due (Calyx & Corolla, s. 81)
10. Marketing strategy
Implementation wrap up
* Case due
Diesel For Successful Living (INSEAD case)
Mon 5/23
Group write-up due (Calyx & Corolla, s. 71)
* Case due
Tue 5/31
* The second group write-up (Calyx and Corolla case) is due on Monday 5/23 for section 71 and
on Tuesday 5/24 for section 81.
The take home individual final exam will be distributed on Monday 5/23 for section 71 and on
Tuesday 5/24 for section 81. It is due on 6/1.
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SESSIONS OVERVIEW
Part 1: Marketing Strategy Formulation
Session 1: Customer-driven strategy
Topics covered
In this session, we will discuss the marketing concept (“find what customers want and give it
to them—at a profit”). We will then discuss the strategic marketing framework, which we will use
throughout this course. This framework covers the three steps of marketing planning: Market
analysis (analysis of customers, company, competitors, and collaborators), marketing strategy
formulation (segmentation, targeting, and positioning), and the 4 Ps of the marketing mix
(product, pricing, promotion, and place/distribution decisions).
Case
The Black & Decker Corporation (A): Power Tools Division (HBS case).This classic case
illustrates the value of understanding customers and of creating customer value. It is also useful to
discuss the process and key decisions involved in strategic marketing planning.
Preparation questions
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Black & Decker is one of America’s best known and best loved brands, its power tools are
objectively as good as those of Makita, its main Japanese competitor, but professionals
hate them. Why?
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What should Black & Decker change in its products (inc. the brand), prices, promotion,
and distribution to regain market share against Makita?
Assigned readings
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Kotler: chapters 1, 3 and 6.
Session 2: Brand-driven strategy
Topics covered
In this session, we will explore one of the key arguments against the traditional market
orientation studied in session 1: That really innovative companies do not listen to their customers
and shape customer preferences instead of merely trying to follow them.
Assignment due
For each group, the name and emails of all group members.
Case
Parfums Cacharel de L’Oréal (A): Decoding and Revitalizing a Classic Brand (INSEAD case).
The case puts ourselves in the shoes of Dimitri Katsachnias, a Greek chemical engineer with an
INSEAD MBA but no prior brand management experience. Katsachnias was promoted to CEO of
Cacharel as the company is facing a financial crisis. Most worrying, its one-time best-selling
perfumes, AnaïsAnaïs and Loulou, seem now completely outdated and its latest launch, Eden, has
flopped.
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Preparation questions
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What is the Cacharel brand about? Come up with a definition of the brand by carefully
watching the completely history of Cacharel ads on the course web site .
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Is Cacharel’s historical brand identity a good platform for the re-launch of the brand?
Shouldn’t Katsachnias look at what competitors are doing and what consumers want in
2000, rather than at how the brand was positioned in 1978?
Assigned readings
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Price R, "Ignore your customers", Focus Magazine, Winter 1997.
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Holt, Douglas B. (2003), "What Becomes an Icon Most?," Harvard Business Review, 81
(3), 43.
Optional readings
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Chandon, Pierre (2004), "Note on Brand Audit: How to Measure Brand Awareness, Brand
Image, Brand Equity and Brand Value." INSEAD Case Study #02/2004-5191: European
Case Clearing House (www.ecch.cranfield.ac.uk).
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Businessweek (2004), “The Top 100 Brands”, August.
Session 3: Market-driven strategy
Topics covered
This session reviews the key concepts and methods available to analyze a market (customers,
competitors, company, and collaborators) and to formulate a marketing strategy, (choose how to
position a brand for the targeted segment so that it delivers, and captures, customer value).
Case
Make Yourself Heard: Ericsson Global Brand Campaign (IMD case). This case illustrates the
importance of good positioning in an industry with high churn rate of customers and products. It
also serves to examine the value of the many so-called “ingredient branding” strategies that have
recently tried to emulate the Intel Inside campaign.
Preparation questions
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Do you think that branding is the best way for Ericsson to stop the price competition and
commoditization affecting the mobile phones industry? Why not invest the branding
budget in R&D or in manufacturing improvements?
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Evaluate Ericsson’s global branding campaign. Is Ericsson right to try to emulate Nike
with its “Make yourself heard” campaign? Would a more utilitarian positioning based on
technology, make more sense?
Assigned readings
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Tybout A M & Sternthal B, "Connecting with Consumers: the Four Ds of Effective
Positioning", Financial Times Mastering Marketing, 1999.
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Kotler, chapters 7, 8, and 9.
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Session 4: Wrap-up of Marketing Strategy Formulation
Topics covered
In this session, we will see how all the points mentioned in the first part of the course about the
formulation of the marketing strategy fit together, and how they need to be implemented via the 4
P’s. We will also examine what marketing strategies can create value for low-income consumers.
Assignment due
Group write-up of the Unilever in Brazil Case.
Case
Unilever in Brazil: Marketing Strategies for Low-Income Consumers (INSEAD case).This
classic case illustrates the value of customers-driven strategies in the difficult and poorlyunderstood context of low-income consumers in emerging countries. The case also illustrates the
strategic marketing planning process and the use of qualitative and quantitative marketing tools.
Preparation questions
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Segmentation and targeting. Should Unilever invest in a lower-margin segment of the
market instead of continuing to invest in its premium brands? Does Unilever has the right
skills and structure to make money in a market in which even small local entrepreneurs
struggle to break even? In the long run, what exactly would Unilever gain and what would
it risk losing?
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Positioning. Unilever already has three detergent brands with distinct positioning. Does it
need to develop a new brand with a distinct value proposition, or can it adapt the promise
of its existing brands, perhaps with a brand extension?
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Marketing mix implementation. What price, product, promotion, and distribution strategy
would allow Unilever deliver value to low-income consumers at a profit without
cannibalizing its own premium brands too much? It is just a question of price?
Assigned readings
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Prahalad, C. K. and Stuart Hart (2002), "The Fortune at the Bottom of the Pyramid,"
Strategy+Business, 26.
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Dawar, Niraj and Amitava Chattopadhyay (2002), "Rethinking Marketing Programs for
Emerging Markets," Long Range Planning, 35 (5), 457.
Part 2: Marketing Strategy Implementation
Session 5: Promotion decisions (1)
Topics covered
In this session, we will examine how different promotional tools (advertising, sales
promotions, events, etc.) can be integrated in a coherent marketing communication. In addition,
we will discuss how to find the right balance between customer acquisition and retention, and we
will see which marketing communication tools are more appropriate for each goal.
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Case
“The California Milk Processor Board (CMPB): Branding a Commodity”
Preparation questions
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What associations do consumers have for milk? Who are the typical consumers of milk?
When, why and how do they consume milk?
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How can the CMPB change consumer perception of milk and increase its consumption?
Do you think that the Got Milk program will be successful with regards to these two
objectives? What about the Milk Mustache ads (see examples of the milk mustache ads:
www.whymilk.com)?
Assigned readings
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Kotler chapter 16.
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Blattberg R C & Deighton J, "Manage Marketing by the Customer Equity Test", Harvard
Business Review, Summer 1996.
Session 6: Promotion decisions (2)
Topics covered
In this session, we will continue to examine promotion decisions by looking at sales
promotions and global promotion strategies.
Case
Russian Standard Vodka: Strategies for Global Branding and Expansion into the US Market
(INSEAD).
Preparation questions
1. What are the sources of the brand equity of the Russian Standard brand? Why was the
brand able to enjoy such rapid success in Russia?
2. Should Russian Standard be launched in the US? If yes, Should Russian Standard adapt
the positioning of the brand and its marketing mix (name, price, packaging, distribution,
communication) or should it try to keep the positioning and marketing that have been
successful in Russia, in order to create a consistent global brand?
Assigned readings
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Aaker, David A and Erich Joachimsthaler (1999), "The lure of global branding," Harvard
Business Review, 77 (6), 137-44.
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Dolan R J – "Integrated Marketing Communications", HBS note, June 2000.
Session 7: Pricing decisions
Topics covered
In this session, we will address two pricing issues: how to measure the ROI of various pricing
decisions, and how national brands can fight against cheaper private labels and generics. We will
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also examine the role of sales promotions, price discrimination, and other short-term pricing
tactics.
Assignment due
Group write-up of the Kodak Funtime Case.
Case
Eastman Kodak Company: Funtime Film (HBS Case). This short case illustrates a situation
facing many consumer goods. Despite Kodak’s considerable brand equity, private labels (store
brands) and cheaper brands like Fuji are gaining market share. What can Kodak do?
Preparation questions
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Use qualitative and quantitative analyses to compare four possible strategies: (1) change
nothing, (2) decrease the price of Kodak Gold at Fuji’s level, (3) increase the amount of
advertising for Gold to the same level (as a percentage of sales) as Fuji, and (4) launch
Kodak Funtime.
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What else can Kodak do to reverse the negative trend, in the short term, and in the long
run?
Assigned readings
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Dolan R. J., "Note on Low-Tech Marketing Math", HBS note, Dec 1998.
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Rao, R., Bergen M E & Davis S, "How to Fight a Price War", Harvard Business Review,
March-April 2000.
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Hoch Stephen J. and Raju J., "Are Private Labels a Threat to National Brands?", Financial
Times Mastering Marketing, 1999.
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Optional: Kotler, chapter 13.
Session 8: Product decisions
Topics covered
In this session, we will examine issues related to the launch of new products. In particular, we
will discuss various tools for assessing consumer demand. We will also discuss the problems
raised by managing a line of products, including cannibalization and pricing expectations.
Case
Biopure Corporation (HBS Case). Biopure is a start-up biotech company that is developing a
substitute for blood transfusions, a product that could revolutionizing human medicine. While
they are waiting for FDA approval for marketing Hemopure in the human market, they have
already received a license to launch Oxyglobin, the equivalent product but designed for pets.
Preparation questions
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How do you assess Biopure's potential in the human market? In the animal market?
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How might Oxyglobin be a threat to Hemopure? How might it be an asset to Hemopure?
What will be the impact of Oxyglobin's pricing on Hemopure?
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Should Biopure launch Oxyglobin immediately or should they wait until after Hemopure
has established itself in the human market? If they launch Oxyglobin, how should it be
priced and distributed?
Assigned readings
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Krishnamurthi L. "Pricing: Part Art, Part Science", Financial Times Mastering Marketing,
1999.
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Dolan R "Analyzing Consumer Preferences", HBS note, 1999.
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Optional: Kotler, chapters 10 and 11.
Session 9: Distribution decisions
Topics covered
In this session, we will explore marketing channel decisions for services in a business-tobusiness context and moderately technological product. The Invisalign case (Kellogg) will also
enable us to discuss the value of electronic distribution channels and of auctions and other pricing
mechanisms.
Assignment due
Group write-up of the Calyx and Corolla Case.
Case
The focus of this case is on designing an optimal distribution strategy for a company's
products/services. Invisalign case offers a manufacturer's view on issues associated with
developing a distribution channel for a new product/service.
Preparation questions
Diagram Invisalign’s channel structure. What channel functions and flows are performed
by each of the channel members for the traditional braces market? How is this different
for Invisalign?
Are there any gaps in the channel? Are channel members performing functions that
Invisalign intends them to do? If not, why not?
How are channel power sources being used to either achieve or inhibit Invisalign’s
success? What would you do to ramp up conversion from generation of interest to profit
capture?
Assigned readings
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Coughlan and Stern, Marketing channel design and management.
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Narayanan, V.G. and Ananth Raman (2004), "Aligning Incentives in Supply
Chains," Harvard Business Review (November), 94-102.
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Narayanan, V.G. and Ananth Raman (2004), "Technical Note on the Economics
of Incentive Alignment," (optional).
Optional: Kotler, chapters 14 and 15 (optional).
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Session 10: Wrap-up of Marketing Implementation
Topics covered
In this session, we will examine how all the points mentioned in the second part of the course
about marketing strategy implementation fit together. We will also examine two advanced issues
in managing brands: brand repositioning and brand extensions.
Case
Diesel For Successful Living (INSEAD case). Diesel started as a small jeans manufacturer in
Northeastern Italy and quickly became a cult brand around the world. The Diesel case shows how
a company can grow without losing its identity. It is also useful to discuss the pros and cons of
different brand extension strategies.
Preparation questions
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Has Diesel remained true to its original identity despite its enormous growth?
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What should be the goal of the upscale StyleLab line? Image or revenues?
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What branding strategy should Diesel use for StyleLab? Independence (StyleLab),
endorsement (StyleLab by Diesel), or sub-branding (DieselStyleLab)?
Assigned readings
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Aaker David A., "Should You Take Your Brand to Where the Action Is?", Harvard
Business Review, Fall 1997.
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Aaker, David A. and Eric Joachimsthaler (2000), "The Brand Relationship Spectrum,"
California Management Review, 42 (4), 8-23.
Optional reading
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Selective Marketing Bibliography.
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