MANAGEMENT SCIENCE MARKETING040 955

o. Univ.-Prof. Dipl.-Ing. Dr. Dr. h.c. Udo Wagner

University of Vienna

Summerterm 2015

Monday 09.45 11.15, HS 11, Oskar-Morgenstern-Platz 1

Targeted audience: Students studying Quantitative Economics,Management, and Finance. UK: Management Science Marketing 2 ECTS

Course Content:

Todays markets have become increasingly difficult environments for most companies. Challenges arise from changes in technology such as the convergence of information and communication technology, and from intensifying globalization. In particular, developments on the technological front and the rise of the internet have changed the customer and competitor landscape. Customers today are much better able to search for and obtain information that helps them to make intelligent buying decisions. Industry boundaries have become increasingly indeterminate as companies from different industries merge or partner, or as firms combine the knowhow of multiple industries. In this ever changing environment companies have to be smart and able to address customer needs in a way that leads them to purchase their products and more importantly that satisfies customers genuine needs so that satisfaction and loyalty are the result. This is where marketing plays a crucial and vital role.

This course aims at providing an overview of the marketing discipline and its fundamental concepts.

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Course Objectives

The primary objective of this course is to develop an

understanding of marketing as an all-embracing management

conception that focuses on a variety of stakeholders, in

particular on external and internal customers. On the one

hand, students are provided with knowledge regarding

marketing, on the other hand, students should learn to analyze

case studies and to learn to solve real life marketing problems.

Required textbook

Christian Homburg, Sabine Kuester, Harley Krohmer:

Marketing Management, A Contemporary Perspective,

McGraw-Hill Higher Education, 2nd edition 2013. Link to Amazon: http://amzn.to/1i2gA9WCopies of the Power Point presentation will be available on the MOODLE platform.

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4Course grades

There will be one unannounced quiz during the semester, and a final

examination. Opportunities for make-ups will not be offered. Additionally,

students have to work on a case study designed on an individual basis.

Since not all of the material can be discussed in class, students are

expected to prepare for class sessions by reading the relevant chapters of

the text book. Regular class attendance is expected.

Course grades will be based on the various requirements discussed

above, with the following weights:

Quiz 10 %

Case study 20 %

Final examination 70 %

Credits earned constitute one quarter of the overall grade for UK:

Management Science.

In order to receive your computerized credit report, be sure to have

registered in the UNIVIS-system; signing off is tolerated up to March 13th,

2015.

5Course Outline

Session Topic Assigned

reading

03/02 + 03/09 Shaping Marketing Strategies Chapters 1 4

03/16 Product Decisions Chapter 5

03/23 Pricing: Making Profitable Decisions Chapter 6

04/13 Sales and Communication Decisions Chapters 7 8

04/20 Marketing of Services Chapter 11

04/27 Final examination *)

Chapters 1 8, 11delivery of case studies Appendix

*)http://marketing.univie.ac.at/uploads/media/ManagementScience_EndtestSS14A.pdf

http://marketing.univie.ac.at/uploads/media/ManagementScience_KurztestSS14.pdf

6An Overview of Marketing Cases *)

Introduction

Every day, marketing managers make real decisions which ultimately effect

the message delivered to the customer. The actual job of a marketer involves

the formulation of strategy and oversight of the implementation of his or her

decisions.

Case studies attempt to simulate these real world marketing decisions by

putting the student in the position of the marketing decision maker. Based on

the information presented in a specific case, the student is asked to make

decisions and formulate a practical strategic solution to the challenge

presented.

Case study analysis should ultimately assist students in making better

decisions both in simulated and actual business situations.

*) notes on case studies have been mainly prepared by S. Kuester

7Definition of Marketing Cases

What are case studies? Basically, a case study is a written description of

a specific business situation, either real or fictional, although most are at

least based on a factual situation.

Case studies come in several different sizes. The textbook, Marketing

Management, contains both standard case studies and mini cases which

focus on a single aspect and are under a page in length.

There is no specific length of a case study, some will be much longer and

contain very detailed information.

The focus of a case may be as wide as an industry or a large

multinational company or as specific as a single start up or non-profit

business.

Exposing students to a wide variety of cases leads to greater

preparedness for making marketing decisions in his or her career.

8Four types of Marketing Cases

Incident Case This case focuses on a specific issue a company has faced such as a crisis that has been caused by political activists publicly protesting

the companys manufacturing conditions. In this example, the student is asked questions pertaining to the crisis (i.e. what were the main causes?

How did the management handle the crisis? What can be done differently in

the future to avoid similar crises?)

Illustrative Case This type of case describes what companies have done in the past with a specific focus on the strategic decisions made. The

student learns what has been successful and where a company could

improve the strategic process to derive a better outcome.

Exercise Case The exercise case presents situations for students to apply the theory and skills they have learned.

Puzzle and Answer Case This type of case presents a puzzle and asks the student to derive a solution. Most marketing issues have several

possible solutions, though.

9Objectives of Marketing Cases

The main objective of case studies is to increase the students knowledge and build fundamental principles through the examination and analysis of

idiosyncratic situations. Case studies embody the concept of learning by doing. Through simulation, these exercises bridge the gap between the classroom and the boardroom. Through case studies, students should build

appropriate real world skills. Case studies should aide a student to,

develop diagnostic and analytical skills in areas such as situation analysis, evaluation of alternatives, making choices and justifying decisions;

apply the theories and concepts, to solve real business problems; actively participate in his or her learning and diagnose and solve problems; develop critical thinking skills - as there are no correct answers to case

studies, students are encouraged to formulate creative solutions and justify

arguments;

improve business writing competence.

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Case Analysis 1

Due to the diverse nature of cases, it is virtually impossible to establish a

standard framework that will work under all circumstances. Keeping that in

mind, there are several fundamental steps that should be adhered to when

solving a case.

(1) Read: The first reading is aimed at familiarizing oneself with the main

issues of the case, including but not limited to, the firms structure and potential challenges and difficulties of the situation.

(2) Re-read: Re-read the case with a more thorough eye, this time you should

take notes. Individually or in a team, use this second reading to identify

and isolate key information and issues. While reading the case it is

important to decide which assumptions are reasonable in relation to the

case situation. Sometimes, it is necessary to estimate, guess and

speculate in case analysis as it is in real life.

Pay special attention to tables and figures (if provided), interpret numbers

on performance.

Ask for W (i.e., who, when, what, why, where, with whom, how, )

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Case Analysis 2

(3) Analyze: Begin by conducting a meticulous analysis of the external

situation facing the firm. This analysis may include macro and micro

environments (i.e., consumer behavior, competition) and the resulting

analysis should visibly express the challenges facing the firm.

After completing the environmental analysis, it is necessary to analyze

the firm to which the case pertains. Focus on strengths and weaknesses

of the firm. Compare these internal strengths and weaknesses

determined to the opportunities and threats which exist in the

marketplace.

The main focus of this phase is to clearly state the problems and/or

opportunities facing the firm you are studying.

Analyze the case first without consulting the text book (and check your

marketing knowledge), then elaborate in more detail by also relying on

the text book.

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Case Analysis 3

(4) Brainstorm: Generate a number of alternative plans of action. During

the brainstorming phase, solicit and record ideas from others (if

possible). It is imperative to review several possible solutions before

determining the best avenue to reach a solution.

(5) Solve: Recommend and justify a solution to the previously identified

issue which takes into account all prior steps. It is of critical importance

that decisions are made to present a strong solution. In this phase the

support of your recommendations must be solid. Case studies do not

have one right answer, it is most important that final decisions are supported with logical arguments.

(6) Report: Prepare a written report / presentation

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Further references:

Baldauf A. (1998): Richtlinien fr die Fallstudienvorbereitung, in: Wagner U.,

Reisinger H., Baldauf A. (Herausgeber): Fallstudien aus der sterreichischen

Marketingpraxis 2, WUV Universittsverlag, 2. Auflage, S. 9-17

Baldauf A. (1996): Die Fallstudienmethode dargestellt am Beispiel von Frosch, in:

Wagner U., Reisinger H. (Herausgeber): Fallstudien aus der sterreichischen

Marketingpraxis 1, WUV Universittsverlag, S. 9-20http://marketing.univie.ac.at/fileadmin/user_upload/lehrstuhl_marketing/Sonstige_Dateien/Fallstudien/Band1/Frosch.pdf

Online Learning Centre: www.mcgraw-hill.co.uk/textbooks/homburghttp://highered.mheducation.com/sites/0077146042/information_center_view0/index.html

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Air France to Run High-Speed Trains in 2010

In a joint venture with France's Veolia, the airline aims to rival short-haul and discount airlines with its own

cross-border train service.

"If you can't beat 'em, join 'em," goes the old phrase. And when it comes to the battle in Europe between

short-haul flights and high-speed trains, it seems like airline giant Air France-KLM is taking this advice to

heart.

The company announced Monday that it would enter into a joint venture with French transportation service-

provider Veolia to start providing international high-speed rail service. Planned routes include connections

between Paris and Amsterdam, KLM's main hub, and Paris and London beginning in October 2010.

Air France-KLM's decision to enter the rail business is partially driven by rising fuel costs, which have cut

away from the already slim profit margins for short-haul flights. Even more significant, however, has been the

sharpened competition airlines have been forced to face as railway companies put faster trains and routes

into operation, leading large numbers of passengers to choose the train over the plane in their cost-time

calculus.

Veolia and Air France-KLM have been in discussions with Alstom, the maker of the TGV high-speed trains

currently used by the SNCF, about either leasing or purchasing a number of trains to operate this service.

In particular, the companies are interested in the new generation of Alstom trains known as the AGV, which

can carry up to 900 passengers at a speed of 360 km/h (224 mph). At such speeds, passengers would be

able to commute between Paris's Charles de Gaulle airport and Schiphol airport outside Amsterdam in

approximately 1.5 hours.

Source: excerpt from Air France to Run High-Speed Trains in 2010, Businessweek.com 09/09/2008Link: http://www.businessweek.com/globalbiz/content/sep2008/gb2008099_061975.htm

Final examination - 2014

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1) Explain the fundamental and distinctive characteristics of services. Which characteristic is especially

relevant regarding the services offered by Air France-KLM? Please be specific! 10 points

2) Describe the two-dimensional typology of services adapted from Schmenner and find examples for

each category for Air France-KLM. 8 points

3) What are the three additional marketing mix components of services? Which of them is most important

for Air France-KLM and why? Substantiate your response. 4 points

4) Customer satisfaction depends on various kinds of performance factors. Describe these factors and

provide examples of these factors for the Air France-KLM case. 6 points

5) Describe the content of the C/D paradigm and provide respective examples for the Air France-KLM

case. 4 points

6) Describe the principle underlying the Product-Market Growth Matrix by Ansoff. In terms of this matrix,

how would you classify the move of Air France-KLM to run high-speed trains? Please be specific and

substantiate your response!5 points

7) Explain the principles of a SWOT analysis and apply a (simple) SWOT analysis to the Air France-KLM

case.5 points

8) Explain the Five Forces Model developed by Porter and provide examples for these forces for the Air

France-KLM case! 10 points

9) Explain the principles of segmentation for B2B markets. Then concentrate on companies as customers

of Air France-KLM and provide appropriate examples for segmentation approaches. 5 points

10) Explain the principles of transaction cost theory and apply this theory for companies as customers of

Air France-KLM. 5 points

Final examination - 2014

Setting the Scene for Marketing

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Chapter 1

Content

1.1 Markets as Focal Points of Marketing

1.2 Development and Scope of the Marketing Concept

1.3 Structure

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Learning Objectives

In this chapter you will become familiar with:

The characteristics of markets, different types of markets, and how

markets can be differentiated from one another

The historic development and various facets of marketing

The various perspectives of marketing

The general structure and orientation of this book

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What is Marketing?

Concentrate business activities on your customers!

A customer is the most important person in any business.

A customer is not dependent on us. We are dependent on her/him.

A customer is not an interruption of our work. She/he is the purpose of it.

A customer does us a favor when she/he comes in. We arent doing her/him a favor by waiting on her/him.

A customer is part of the business not an outsider.

A customer is a person who comes to us with her/his need and her/his wants. It is our job to fill them.

A customer deserves the most courteous attention we can give her/him. She/he is the lifeblood of this and every business. She/he pays your

salary. Without her/him we would have to close our doors. Dont forget it.

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1.1 Markets as Focal Points of Marketing

Marketing is derived from market and to market: great

significance that markets have for marketing.

Markets define the framework for marketing practiced by companies the

customers, competitors and other stakeholders present in a market shape the

scope of marketing activities to a major extent.

The significance of markets is demonstrated by the fact that within the course

of their marketing activities, companies strive to actively exert a controlled

influence on the behavior of both customers or potential customers and

competitors to the benefit of the company and its stakeholders.

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1.1 Markets as Focal Points of Marketing

We define a market as any place where supply meets demand, thus leading to

the formation of prices. Supply and demand can meet at a physical location

e.g. in a store or at a trade fair) or at a virtual location (e.g. on the internet or by

telephone).

The following stakeholders have an important influence on market activities:

Buyers, customers (end / organizational customers, public institutions;B2C, B2B)

Companies (competitors)

Sales partners (intermediaries, brokers, wholesaler, retailer)

Public institutions (legal regulations, general / industry-specific)

Lobbyists

Share holders / owner

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Need / Want / Demand

Customer needs:

Needs arise when there is a discrepancy between actual and

desired states of being. Needs are human requirements that

result from subjectively perceived psychological, personal or sociological deficiencies. Individuals desire to meet these needs is the driving force of many activities.

These needs become wants when they are directed to specific

objects that might satisfy the need.

Demands are wants for specific products backed by an ability to

pay (products or services that can best satisfy needs, offer

greatest benefits).

Food Hamburger McDonalds

Marketers do not create needs! 22

Latent needs

not yet perceived

1.1 Markets as Focal Points of Marketing

Types of markets: can be classified according to the following criteria.

1. Classification by types of goods sold we distinguish markets for consumer

goods, business-to-business goods as well as services:

Consumer goods satisfy the needs of private end customers.

Industrial and business-to-business goods are sold to organizations

Services refer to economic exchange activities that create essentially non-physical output

2. Classification by degree of internationality we distinguish local markets,

regional markets, international markets and global markets.

3. Classification by distribution of power between buyers and companies here

we distinguish buyers markets and sellers markets:

Buyers markets are characterized by a dominance of the demand side over the supply side.

This constellation can result from an oversupply or lack of demand and will force the

companies to become more customer-oriented.

Industrialized economies tend to exhibit features of buyers markets.23

supply > or < demand?

sellers markets

1.1 Markets as Focal Points of Marketing

Types of markets: can be classified according to the following criteria (cont.)

4. Classification by distribution of power between buyers and companies here

we distinguish buyers markets and sellers markets

but also: power within the distribution channel (manufacturer vs. intermediaries)

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1.1 Markets as Focal Points of Marketing

Market definition: describes the structuring of a market, and defines the

relevant market area. Various criteria can be taken on board when defining the

relevant market.

Companies definition of the market based on groups of companies, for example,

firms in a certain industry or economic sector (e.g. the chemicals market as a market

served by chemicals companies)

Products definition of the market based on certain products or product lines (e.g.

market for long-distance travel)

Buyers definition of the market based on certain buyers or groups of buyers (e.g.

market for price-sensitive students)

Needs definition of the market based on certain needs or need categories on the

part of the buyers (e.g. market for leisure time recreation and entertainment).

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1.1 Markets as Focal Points of Marketing

1.2 Development and Scope of the Marketing Concept

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Marketing implementation also

addresses company-internal

organizational issues,

performance/success

benchmarking, monitoring

other business disciplines

Market-oriented management

is a general, corporate

management concept and

orientates organizational

culture, organizational structure

and organizational processes

towards the firms customers and competitors

Relationship marketing

emphasizes on long-term

business relationships

Marketing Mix The four Ps (McCarthy, 1964)

Product decisions (Product)

Pricing decisions (Price)

Communication decisions (Promotion)

Distribution decisions (Place).

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1.2 Development and Scope of the Marketing Concept

Various approaches to defining marketing:

Activity-oriented definitions characterize marketing as a bundle of market-driven activities

practiced by companies focusing on the creation and delivery of value to customers, and the

management of customer relationships.

Relationship-oriented definitions are rooted in the logic of relationship marketing. Here the

objective of marketing is to establish, maintain and strengthen relationships with customers.

Management-oriented definitions of marketing, particularly concern the degree to which the

companys decisions are guided by market-oriented considerations

Integrative definition of marketing: Marketing has a company-external and company-internal

facet

External marketing comprises the conception and implementation of the market-related activities

that are practiced by a company and geared towards buyers or potential buyers of its products

Internal marketing refers to creating the necessary prerequisites and conditions within the

company in order to facilitate the effective and efficient implementation of activities

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1.2 Development and Scope of the Marketing Concept

Effective refers to whether the desired result is achievedEfficient refers to the extent to which time/effort is well used for the intended purpose

1.3 Structure

The book is structured in four parts (see Figure 1-3):

Part 1 discusses the strategic perspective of the company (Chapters 2, 3 and 4)

Part 2 pertains to the marketing mix instruments (Chapters 5, 6, 7, 8 and 9)

Part 3 focuses on marketing in specific contexts (Chapters 10, 11 and 12)

Part 4 investigates aspects of marketing implementation (Chapters 13, 14, 15 and 16)

and concludes with a discussion of issues of market-oriented management (Chapter

17).

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1.3 Structure

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Summary

Markets as Focal Points of Marketing

Relevant stakeholders are:

Buyers, companies, sales partners, public institutions

Development and Scope of the Marketing Concept

the four Ps:

1. Product

2. Price

3. Promotion

4. Place

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