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The Wharton School

University of Pennsylvania

Marketing 777

MARKETING STRATEGY

Professor: George S. Day,

Suite 700 JMHH,

Telephone: 215 898 8245

Email: [email protected]

Administrative Mary DoneganAssistant: Suite 700 JMHH

Telephone: 215 898 2104Email: [email protected]

Office Hours: By appointment

Web Caf Address: http://webcafe.wharton.upenn.edu/eRoom/mktg/777c

Class Schedule: Monday and Wednesday

9:00am 10:20am

10:30am 12:00 noon

Introduction

This course views marketing as both a general management responsibility and an

orientation of an organization. Relatively less attention will be given to the specificactivities of the marketing department, sales group, or advertising function in

implementing strategic decisions.

We will take the viewpoint of the general manager and the senior marketing executive

to address the issues of:

Formulating segmentation and focus strategies

Understanding, attracting and keeping valuable customers

Positioning the business to achieve an advantage over competitors

Identifying and exploiting growth opportunities

Allocating resources across businesses and segments

Managing the channels for gaining access to the served markets, and

Aligning the organization to changing market requirements.
mailto:[email protected]:[email protected]://webcafe.wharton.upenn.edu/eRoom/mktg/777cmailto:[email protected]:[email protected]://webcafe.wharton.upenn.edu/eRoom/mktg/777c

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The course will use a mix of cases, lecture/discussion, outside speakers, and groupprojects. This material will be integrated throughout the course with four over-riding

themes. First, that successful market strategies deliver superior customer value; second,

that successful implementation of these strategies requires a high level of marketorientation a market-driven firm has superior skills in understanding, attracting, and

keeping customers; third, that the internet will transform most markets by introducing

new business models and enabling personalization of offerings; and fourth, that themarket arena in which the strategies are implemented is increasingly global.

Objectives

Your basic objective is to develop your own understanding and management skills. My

primary objective is to stimulate this process. Specifically, the course will attempt to

help you develop your knowledge and skills in the application of advanced frameworks,

concepts, and methods for making strategic choices at the business unit level. At theend of the course, you should have a working knowledge of the approaches that

organizations use to resolve market strategy issues.

Teaching Method and Performance Evaluation

This course will be taught as a seminar so participation during the lectures andmeaningful contributions to the case discussions are essential. There are four

components to the course grade:

1. Class Participation (25%). This part of the grade depends on the quality of your

contributions. Highly valued contributions include asking insightful questions about the

assigned readings, redirecting a case discussion when the current point has beenadequately covered, providing an appropriate qualitative analysis, summarizing and/or

reconciling previous comments, and drawing generic learning points from a particular

case.

2. Individual Written Case Analysis (20%). This should be handed in at the

beginning of the session for which the case has been assigned. The choice of the

specific case is made by each person. The write-ups should be in essay form and ascomprehensive as possible. Also, they should be double-spaced and typed and not

exceed eight (8) pages, including exhibits and tables. Do not use questions for

discussion in the syllabus as the structure for your report. These questions are meant tosignal the main issues to be addressed during the class discussion.

Note that the California Vision Tools case cannot be used to satisfy this requirement.

This is a short, descriptive case that will be used to stimulate a class discussion.

3. The Wireless Wars (25%). Twelve self-selected teams will be assigned to

formulate a strategy for one of four existing network operators in the U.K. market, the

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new operator TIW/Hutchinson or an MVNO. Teams should be prepared to make a 10

minute presentation on October 16 that covers a market assessment and a medium term

competitive marketing strategy for their assigned operator. These presentations shouldbe supported with a team report of up to six (typed, double-spaced pages) including

tables and exhibits. Although two teams will be assigned to each network operator,

only one team will be randomly chosen to present. The other team will be given threeminutes to explain what they did differently.

In line with the theme of the course, your strategy should position the networkdistinctively. Ensure you detail of how you have arrived at this positioning, how you

will communicate it in a way that exploits its particular strengths, why you think it will

be successful and what you consider success to be. Your market analysis should

include a review of network performance to-date, an assessment of your competitionscurrent and likely future positioning. Note that the case contains a great deal of market

data some of it disguised. You are encouraged to supplement case data with any other

data you feel is helpful (for example, you may wish to research the network providers

websites). You should present your case in such a way as to sell it to the networksboard of directors. To do this you will need to estimate the investment required to

achieve the positioning and the expected results (in terms of market share over the nextfive years).

4. Marketing Strategy Project (30%). This report is to be prepared and presented by

self-selected groups of three or four people. The topic should relate to the content ofthe course and provide a significant learning experience for all members of the group.

A list of candidate topics is provided in Exhibit 1 (attached). However, every effort will

be made to accommodate other topics. Feasible topics include an evaluation of thestrategy of a firm or business, or the applicability of a concept or method useful in

strategic marketing. The report will ordinarily be based on secondary sources and

information in the public domain, but can also be based on field research or interviewsand data collection within a company.

The reports will be evaluated according to the following criteria:

1. The quality of the analysis were the right questions asked?

2. The feasibility of the conclusions or recommendations did they follow from the

analysis?3. Evidence of mastery of the frameworks, concepts, and methods developed during the

course; and

4. The effectiveness of the written and verbal presentation of the report.

Unless I am informed otherwise, I will assume the workload was shared equally by the

members of the group.

Please prepare a brief (one-paragraph to one-page) typed proposal to be submitted with

the names of the team members by September 25. A one-page progress report is due

on November 6. The final paper should be between 12 and 15 pages, excluding any

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charts, graphs, and figures. This paper is due on December 2. A class presentation of

the project will be scheduled forDecember 2, 4 or 9.

Materials

A bulkpack of printed case studies and readings will provided. The required text forthe course is George S. Day, The Market-Driven Organization: Understanding,

Attracting and Keeping Valuable Customers, New York: Free Press, 1999

Along with the assigned readings, you are encouraged to regularly read strategy-related

items in the Wall Street Journaland articles inBusiness Week, Fortune, Forbes, and

other publications.

This syllabus and any updates available on the World Wide Web at:http://webcafe.wharton.upenn.edu/eRoom/mktg/777c

Course Philosophy

The starting point is the belief that you cannot develop a sound competitive marketstrategy unless you first understand the problem or situation. This requires not only an

understanding of what the important features are in the situation you face, but also of

how these features will impact your strategy. In other words, you need to have a good

theory. Cook-book solutions rarely work in practice because every situation issomewhat unique, and there are no universal marketing solutions. Alfred Whitehead

expressed this very well in a famous essay from 1929:

Whatever be the detail with which you cram your student, the chance of this

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. Thereally 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 toimmediate circumstances.

- Alfred Whitehead, The Aims of Education and Other Essays

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Exhibit One

Illustrative List of Topics for Marketing Strategy Project

1. Analyze how changes in the strategies and relative power of buyers and/or customerscould cause a distribution system to compress and eliminate intermediaries.

2. Determine the feasibility of a strategy of close customer relationships, in terms of themutual benefits, organizational requirements, and prospects for competitive advantage.

3. Assess the present orientation of a firm to its market, by comparing the judgements of

senior managers with the perceptions of major customers, and identify barriers tobecoming more market-driven.

4. Evaluate the effectiveness of an application of CRM processes and technologies in

retaining a companys most valuable customers.

5. Assess the present and prospective extent of globalization of the market for a business,and identify the appropriate strategies for participation.

6. Value the equity in a brand name, and propose strategies for maximizing the value

through line extensions, or other strategies.

7. Use scenario analysis to understand the impact of an environmental discontinuity on

the viability of a market strategy.

8. Assess the impact of a sense-and-respond or mass customization strategy in a market

where competition is on a make-and-sell basis.

9. Forecast the pattern of value migration in a market as the requirements or technology

change and identify feasible strategies for the incumbent to use in response.

10. Undertake an analysis of the capabilities, strategies, and intentions of a major

competitor, and propose a defensive strategy to blunt these initiatives.

11. Assess the ability of the organization to learn about its markets and act on the

information.

12. Identify and evaluate strategic opportunities for a follower when the leader has

preempted most of the positions of advantage.

13. Evaluate the benefits and costs of a marketing alliance and forecast the durability of the

relationship of the partners.

14. Identify feasible strategies for surviving an industry consolidation or shakeout.

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Overview of Course

A. INTRODUCTION

1. September 9 Introduction to the Course

2. September 11 The Fundamentals of Market StrategiesCase: Snapple

3. September 16 Becoming Market Driven

Case: California Vision Tools (not suitable for case write-up)

B. POSITIONING FOR ADVANTAGE

4. September 18 Strategies for Achieving Advantage


Case: First Direct Branchless Banking6. September 25 Alternative Value Strategies

7. September 30 Alternative Value Strategies (continued)Case: easyJet 2000

8. October 2 Innovative Growth StrategiesCase: TiVo

9. October 7 Value Migration and Channels10. October 9 Creating Value through Innovation

Case: Weve Got Rhythm: Medtronic Corporation

Cardiac Pacemakers Division

Guest Speaker: Steve Mahle, President, Brady Pacing

Business, Medtronic Corp.

11. October 14 The Future of Distribution: Strategies and Technologiesfor Reaching Markets

Guest Speaker: Adam Fein, President, Pembroke

Consulting12. October 16 Wireless Wars

Group presentations

C. RELATING TO CUSTOMERS

13. October 21 Competing for Customer Relationships

14. October 23 Competing for Customer Relationships (continued)Case: Hilton HHonors Worldwide: Loyalty Wars

15. October 28 Managing Customers for ProfitCase: Hunter Business Group: Team TBA

16. October 30 Collaborative Partnering

Case: Procter & Gamble: The WalMart Partnership (A)

17. November 4 Customer Relationship Management at Fidelity

Investments

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Guest Speaker: Sanjiv Mirchandani, Executive Vice

President, Fidelity Investments

D. BRAND STRATEGIES

18. November 6 Managing Brand Equity19. November 11 Growing the Brand

Case: Howard Schultz and Starbucks Coffee Company

20. November 13 Managing Brand EquityGuest Speaker: Elizabeth Browning, President, Lluminari

21. November 18 Managing Brand Equity (continued)Case: Black & Decker Corporation (A)

E. ALIGNING THE ORGANIZATION TO THE MARKET

22. November 20 Reshaping the Organization

23. November 25 Building a Market-Driven OrganizationCase: Sony Europa (A)

24. November 27 Putting It All Together: How Merck Protected TheirShare of the Cholesterol Statin Market

Guest Speaker: Jerry Wisler, Vice President,

Artheoscleorosis, Merck

25. December 2 Group Presentations26. December 4 Group Presentations (continued)

27. December 9 Summary: Challenges for Marketing

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DETAILED CLASS SCHEDULE

(A) INTRODUCTION

1. September 9 Introduction to the Course

Reading: Chapter One of the text for the course

2. September 11 The Fundamentals of Market Strategies

Case: Snapple

Questions for Discussion:

1. Why do you think Snapple flourished in the period 1972 to 1993when so many other startup premium fruit drinks failed?

2. Did Quaker make an error in buying Snapple or did they manageit badly?

3 .What can Triarcs managers learn from the Quaker experience?

4. What should Mike Weinsteins highest priority initiatives be in

his effort to reinvigorate Snapple?

3. September 16 Becoming Market Driven

Reading: Chapters 2 and 3 of text

Case: California Vision Tools (this vignette is not suitable forcase write-up)

Questions:

1. Why is it so difficult to change an engineering oriented company?

2. Why do firms focus on their currently served market and miss the

emergence of new segments with different requirements?

(B) POSITIONING FOR ADVANTAGE


Readings: (1) Chapter 4 of text

(2) Treacey and Wiersema, Customer Intimacy and

Other Value Disciplines

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(3) Constantinos Markides Six Principles ofBreakthrough Strategy


Case: First Direct Branchless Banking

Questions:

1. How has First Direct been able to sustain its advantages in the home

banking market in the U.K.? Why do they have the highest customersatisfaction ratings in the industry?

2. What challenges do they face in the future? How big a threat or

opportunity is online banking?

3. What should they do to maintain their growth in the face ofintensifying competition?

6. September 25 Alternative Value Strategies

Readings: (1) Chapter 5 of text

(2) Robert Dolan Sustaining Value

(3) W. Chan Kim and Rene Mauborgne Creating NewMarket Space

7. September 30 Alternative Value Strategies (continued)

Case: easyJet 2000

Questions:

1. What customer value does easyJet offer? How do they

make money? Where is their business model vulnerable?2. How far can the concept behind easyJet be extended? What

would you recommend? Why?

8. October 2 Innovative Growth Strategies

Case: TiVo

Questions:

1. What factors are inhibiting or facilitating the adoption of TiVo?

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What is the most attractive market segment?

2. What are Microsofts potential strengths and weaknesses in this

market?3. What is your assessment of the proposed action plan? What

alternatives should be considered?

9. October 7 Value Migration and Channels

Readings: (1) Anderson, Day and Rangan, Strategic ChannelDesigns

(2) Adam J. Fein and Sandy Jap, Manage

Consolidation in the Distribution Channel

10. October 9 Creating Value through Innovation

Reading: Robert G. Cooper, The Invisible Success Factors in NewProduct Development

Case: Weve Got Rhythm: Medtronic Corporation Cardiac

Pacemakers Division

Speaker: Steve Mahle, President, Brady Pacing Business,Medtronic Corporation


1. Why did Medtronics market share erode between 1970 and 1986?

2. What are the crucial elements of the NPD system that turned thecompany around? What are the key interdependencies?

3. What challenges does Medtronic face in the future?

11. October 14 The Future of Distribution: Strategies and Technologies for

Reaching Markets

Speaker: Adam Fein, President, Pembroke Consulting

12. October 16 Wireless Wars

Selected groups will make 10-minute presentations on the recommended

strategy for one of the four existing network operators, or a new

operator, or an MVNO.

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(C) RELATING TO CUSTOMERS

13. October 21 Competing for Customer Relationships

Readings: (1) Chapters 7 and 8 of text

(2) Frederick F. Reichheld, Lead for Loyalty

(3) Russell S. Winer, A Framework for Customer

Relationship Management

Questions:

1. What are the differences between loyal buyers, defectors, switchersand prospects?

2. What benefits do customers get from a close relationship with asupplier?

14. October 23 Competing for Customer Relationships (continued)

Case: Hilton HHonors Worldwide: Loyalty Wars

Questions:

1. What are the strengths and weaknesses of the Hilton HHonors

Program from the perspectives of the Hilton brand, the memberproperties and the guests?

2. What should Hilton do in response to Starwood?

15. October 28 Managing Customers for Profit

Case: Hunter Business Group: Team TBA


1. What do you think of HBGs approach? How valid is the customercontact matrix?

2. What is your analysis of the three options Kowalski has at the end of

1993 (given the assumptions that revenues declined 20 percent andthere are 1500 active accounts)?

3. How important is the Gold Account program as an incentive to

dealers?

4. What is the trade-off, if any between eliminating salesforce, and a

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drop-off in contacts? Who would you eliminate?

5. What will happen to Team TBA in the next 3 to 5 years?

16. October 30 Collaborative Partnering

Reading: Chapter 9 of course text

Case: Procter & Gamble: The WalMart Partnership (A)

Questions:

1. Why has Wal-Mart been so successful? Has power in the channel

shifted to Wal-Mart?2. How would you evaluate the Wal-Mart/P&G partnership?

3. What problems are P&G facing? How has P&G typically fought the

threat of private labels?

4. Why did Kimberly-Clark agree to supply private label diapers to Wal-Mart? How should P&G respond?

17. November 4 Customer Relationship Management at Fidelity Investments

Speaker: Sanjiv Mirchandani, Executive Vice President, Fidelity

Investments

(D) BRAND STRATEGIES

18. November 6 Managing Brand Equity

Readings: (1) Peter Farquhar, Brand Waves: Building Momentum

Throughout the Ownership Cycle

(2) David A. Aaker, Measuring Brand Equity Across

Products and Markets

(3) Kevin Lane Keller and Sanjay Sood, The Ten

Commandments of Global Branding

19. November 11 Growing the Brand

Case: Howard Schultz and Starbucks Coffee Company


1. What is the Starbucks brand promise?

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2. Are there limits to the growth of the Starbucks franchise?

Which growth alternatives would you recommend?

20. November 13 Managing Brand Equity

Speaker: Elizabeth Browning, President, Lluminari

21. November 18 Managing Brand Equity (continued)

Case: Black & Decker Corporation (A)

Questions:

1. What is the cause of Black & Deckers 9% share versus Makitas

50% share?

2. How does the buying behavior of the tradesman influence the

situation?3 .What is Makitas competitive strategy, and what role does Milwaukee

play?4. What action alternatives should B&D pursue?

(E) ALIGNING THE ORGANIZATION TO THE MARKET

22. November 20 Reshaping the Organization

Reading: Chapters 10 and 11 of course text

23. November 25 Building a Market-Driven Organization

Reading: Chapter 12 of the course text

Case: Sony Europa (A)

Questions:

1. How appropriate are the changes initiated by Sony seniormanagement in Europe in response to the evolving market and

distribution realities?

2. Assess the reorganization seven months into the implementation:What has been gained or lost?

3. What step should Ron Summer take? Should he appoint Shin Takagi

as vice president of consumer marketing Europe?

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24. November 27 Putting It All Together: How Merck Protected Their Share of the

Cholesterol Statin Market

Speaker: Jerry Wisler, Vice President, Artheoscleorosis, Merck

25. December 2 Group Presentations

Each group will make a presentation of the highlights of their project and

the main insights that were gained. Presentations must be no more than10 minutes.

26. December 4 Group Presentations (continued)

27. December 9 Summary: Challenges for Marketing

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