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May 23, 2017

NORTHWESTERN UNIVERSITY

J.L. Kellogg Graduate School of Management

Summer 1Y MBA 2017

Mkt 466

Please note any changes to the syllabus (note date on upper

right hand corner) on Canvas.

Note that first class attendance is MANDATORY.

Read the material assigned for the first class meeting.

Instructions for registration and purchase of the

Markstrat Simulation software is posted on Canvas.

OVERVIEW

This course presents an integrative, dynamic view of

competitive product strategy. It focuses on understanding,

developing, and evaluating product strategies over the life of a

product market. An important distinction we will make in the

course is the difference between Customer Advantage and

competitive advantage. A framework for developing marketing

strategies that yields a distinctive customer advantage will be

presented and applied in various situations throughout the course.

A significant portion of the course will focus on growth

strategies. Topics include growth strategies in the early stages of

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the market, in the later stages of the market when the market is

growing, in the later stages of the market when the market is

mature, and in declining markets. In addition, we will discuss

differentiation strategies. Material is presented using a mix of

cases, lectures, and a computer simulation game called

MARKSTRAT.

COURSE REQUIREMENTS

Evaluation

Class participation 20%

MARKSTRAT (includes two reports (15%) and performance in the

game (20%)) 35%

One mid-term case analysis 20%

Final exam 25%

Total 100%

Teams

Forming teams is required. Except for the final exam which will

be an individual take home case, all other written material, including

the case analysis and the MARKSTRAT simulation and the two

reports, will be completed in these teams. Team size will depend on

class enrollment. A deadline for forming teams is noted in the class

schedule. As part of the evaluation process, group members will

grade each other's participation on a number of dimensions. These

grades will play an important role in the determination of final

grades.

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Class Participation

A significant portion of the course material is presented using

both cases and lectures. Your consistent contribution to these

sessions is essential to achieving the objectives of the course. The

quality of the discussion is, in large part, your responsibility.

Therefore, plan to attend all sessions of the course, to

arrive on time, fully prepared for either a case or class

discussion, and plan to stay for the entire session. Like

group evaluations, class participation will be an important factor in

determining your final grade. Strong or poor class participation can

move the final grade up or down by one letter grade.

You must attend the first class. I will pass out a class

roster in the first class to make it convenient to form groups.

Everyone must be in groups by the end of the second class.

Please inform me ahead of time if you will be missing a class.

MARKSTRAT

Each team will be assigned a MARKSTRAT company to

manage. Your task will be to (1) set marketing and financial

objectives, (2) develop strategies to achieve those objectives, and (3)

implement your strategies with appropriate tactical decisions.

Each team is required to make seven MARKSTRAT decisions.

The due dates for the decisions are noted in this syllabus.

Each team is also required to submit two reports (details are in

this syllabus).

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Lecture Notes

Lecture notes will be made available either in class when the

particular material is discussed or posted ahead for download. In any

event, pdf copies will be posted on Canvas.

Case Analysis

We will discuss seven cases in this course. Each has been

selected with care with a particular learning objective in mind. The

time frame of the case or the particular product or service that is the

focus of the case is not important. Depending on your background,

you may or may not associate with the product or service described in

the case. What is important are the learnings, the generalizations,

which you take away from the case. How can you apply them to the

particular situation that you are facing?

It is important in evaluating a case to put yourself in the state of

mind of the protagonists at the time of the case. You may know what

happened afterwards or may have some unique information about

the case, either through personal experience or otherwise, that is not

available in the case itself as given to you. Ignore that. Hindsight is

always 20/20. Based on the facts available, what is your best

course of action? That is what I want you to focus on, not on

information that is unavailable in the case. You should not seek

information that is not provided in the case. Do not look up the web

for updated information! In every situation, I want you to consider

how the firm can achieve customer advantage. That is the key to

success!

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A good case is one which transcends time and teaches

principles that are applicable broadly. This means the core problem

of the case should not change if all the dates are brought forward

except for the data. We will discuss and debate lots of current

examples in class. Cases always use data that are somewhat old

because companies which participate in case writing will not provide

the most recent information as that might help the competition! I

will update you as to what happened to the problem or decision faced

in the cases.

The first case is Google Car. Google has been working on

self-driving car (autonomous vehicle) technology. Critical issues

include Google’s motivation to invest in this technology and how they

could make money. Preparation questions are noted in Canvas.

The second case is Groupon. The business has grown

extremely rapidly. You are asked to evaluate the business model

both from the perspective of Groupon and the merchants.

Preparation questions are noted in Canvas.

The third case is HubSpot: Inbound Marketing and Web

2.0. HubSpot provides software and a platform for companies to

engage in inbound marketing activities such as blogging, search

engine optimization, and social media. The company has 1,000

customers after three years in business, and is at a critical juncture.

How do they grow? So far, customers have come to the company

which resulted in a lot of diversity. Should they target a specific type

of customer? Preparation questions are noted in Canvas.

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The fourth case is the Reinventing Adobe case. Adobe is

the dominant player in the digital content creation space. But sales

have stagnated. The company is looking to grow. It changed the

business model from a license model to a subscription model. You

are asked to evaluate the merits of the decision. In addition, the

company identified a new business opportunity in “Digital

Marketing.” Is this a good move for Adobe? This is a written

group assignment. Questions to be answered are noted Canvas.

The fifth case is the Comcast Corporation case. Digital

technology is disrupting many industries, and the pay-tv industry is

facing a similar situation with OTT (Over-The-Top) services which

bypass cable providers, like Comcast. In, particular, HBO announced

such a service called HBO Now, priced at $14.99 a month. How

should Comcast respond? Preparation questions are noted Canvas.

The sixth case is the A1 Steak Sauce case. A1 is a Kraft brand

and the dominant player in this category. Lawry’s, a Unilever brand,

has announced a new steak sauce at a significant price reduction to

A1. You are asked to decide how Kraft should respond and to

evaluate the profit implications of their response. Preparation

questions are noted in Canvas.

The seventh case is the New York Times Paywall case.

The NYT is facing declining print subscription revenue and

advertising revenue. After an earlier attempt to charge for online

content which was subsequently abandoned, the NYT has now

instituted a paywall, whereby readers of NYT on the web would have

to pay a subscription after accessing a certain number of free articles.

As arguably America’s preeminent general newspaper, the rest of the

industry is waiting to see whether this time around the program

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would be successful. You are asked to evaluate whether the NYT

Paywall is working and how this plan is likely to evolve in the future.

Preparation questions are noted in Canvas.

The formal written case analysis is the Adobe

Reinvented case.

Final Exam

The final exam will be an individual take-home case. The case

will be released on Thursday, August 10, and will be due by 8PM on

Tuesday, August 15. This is an individual final exam. It should

not be discussed with your group members or other members of the

class. You are also prohibited from accessing any information about

the products or the company described in the case. The exam

should be submitted in pdf format to Canvas.

WRITING CASE SOLUTIONS

Please answer only the questions asked in the same order as the

questions!

Do not write the answers like an essay in long paragraphs!

Write the answers to each question using bullet points

Each bullet point can contain more than one sentence. But

each bullet point should describe a clear point that pertains to

the question asked

For answers that involve calculations, it should be clear to the

reader how the numbers reported were obtained.

Honor Code

1. MARKSTRAT team members should not discuss any game

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details with anyone outside their group, either in this class or

other classes, and should not access any outside sources for

information about the game. The only information that should

be used is what is available through the MARKSTRAT text, in-

class discussion, self-learning, and interactions with the

professor and teaching assistant.

2. When preparing the cases you should only have access to

information that is presented in the cases. You should not

access the web or any written material from any source to find

information about the cases used in this course. This applies to

any trade books or articles written about the specific matters in

these cases. You should also not discuss these cases with

students from prior classes.

3. There is one case to be submitted as a group project during

the module. The above restrictions apply.

4. There is an individual final exam case to be submitted. In

addition to the restrictions mentioned in item 2 above, you

should not discuss the final exam case with your group

members as well.

5. Class preparation of lecture material, assigned readings, and

cases that are not graded assignments can be done individually,

or as part of your group, or with other class members outside

your group.

6. The electronic TCE forms should be filled out in class during

the last class session. So, please remember to bring your laptop

or tablet to the last class.

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7. This is the honor code requirement. This requirement must

be strictly followed to maintain the integrity of the

course. Please contact me if anything is unclear about the

honor code as I have expressed it.

Course administration and Texts

The best way of reaching me is by e-mail at

LAKSH@kellogg.northwestern.edu. Office hours will be

arranged at a mutually convenient time.

Required: Larreche and Gatignon, MARKSTRAT Participant

Handbook: Strategic Marketing – Durable Goods (StratX

International)

Upon registration on the Markstrat website, each student

will receive a unique PAK (Participant Activity KEY), so

everyone must register. Registration allows you to download

a pdf copy of the Markstrat Handbook

We cannot run the simulation unless every team

member registers on the Markstrat website.

Also, the Markstrat handbook is NOT available at the

bookstore and has to be purchased online (pdf file).

Instructions are provided in: “Markstrat Online Software

Registration Instructions” (posted on Canvas).

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I will communicate with you several times during the course of

the quarter by e-mail. I will use your kellogg.northwestern.edu

account for this purpose. Therefore, you must make sure that your

Northwestern account is functioning and you can retrieve messages

from that account.

Class Preparation

First, there are two important components of the course,

namely the Markstrat simulation and the cases. You must take the

simulation seriously and play to win. And, I expect you to prepare

the cases thoroughly. Second, I have highlighted which items you

should read and which can be skimmed or postponed among the

Notes and articles provided. We will talk about some of the articles,

but not all. The reason is lack of in-class time. Then, why include

them at all? You may want to take a look at them when you have

more time. Mainly, I want you to bring your experience and

imagination to class. I want you to share your ideas about marketing

strategy.

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Markstrat schedule

1. Monday, July 10: Introduction to Markstrat

2. Thursday, July 13: MARKSTRAT teams lists due

3. MARKSTRAT decision I due by 8 PM Tuesday, July 18

4. MARKSTRAT decision II due by 8 PM Friday, July 21

5. MARKSTRAT Update I due by 8PM Saturday, July 22

6. MARKSTRAT Team Meetings (30 minutes/team)

Meetings will be held on Monday, July 24. Time slots

to be determined.

7. MARKSTRAT decision III due by 8PM Tuesday, July 25

8. MARKSTRAT decision IV due by 8PM Friday, July 28

9. MARKSTRAT decision V due by 8PM Tuesday, August 1

10. MARKSTRAT decision VI due by 8PM Friday, August 4

11. Final MARKSTRAT decision VII due by 8PM Tuesday,

August 8

12. MARKSTRAT Update II due by 8PM Wednesday, August 9

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Markstrat Reports

You will be required to provide two reports on your assessment of

your firm, its competitors and your marketing plans.

Each should be brief and to the point; not exceeding four -

five double-spaced (12 point type) pages. Tables and

appendices are limited to a MAX of 2 pages, and only if

necessary. Do not reproduce tables from the simulation

output. The max number of pages should NOT exceed 6

pages

Precision, clarity and brevity are important. Deadlines for

submitting these reports are noted on the outline. Late reports will

not be accepted. Here is a summary of the assignments:

1. Initial Marketing Strategy (due 8PM Saturday, July 22)

Provide a clear statement of your objectives (what you expect to

achieve), your strategy for achieving those objectives, and the

tactics you plan to use to implement your strategy. Present strong

evidence that your objectives are reasonable, your strategy the best

available, given consumer behavior, your position and the positions

of the competitors. Use the available market research information

to help with your analysis.

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You can think of the write-up in the following way:

Assume that senior management of your company has selected the

members of the group to manage a spin-off of the firm. You were

given an initial budget (say $7M or so) and after two periods (say 2

years), management is interested in knowing how you are doing

and what your strategy is going forward.

Clearly there are several unknowns, but that is true in real life as

well.

Objectives: Your goals for the 7 periods (not necessarily period by

period); what do you expect to achieve. Include a cumulative

profit goal at the end of period 7.

Strategies: Key actions to deliver your objectives (how you are

going to achieve your objectives). Discuss what you are going to do

over the next five periods.

Plans or Tactics: How you plan to execute against your strategies

(the specifics). The tactics could be written along with the strategy,

but the strategies should be clear.

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2. Updated Report (due 8PM Wednesday, August 9)

Here is what I am looking for:

A. A half page (or less) summary from Update 1 of what you said

you would achieve and how you would achieve it:

Can be written as bullet points: Should be clear and precise

Think of this as what you promised to deliver to top management!

B. The rest of the document:

When you wrote the first report, you had the results of your first

two decisions. So, you had somewhat limited data on market and

competitive evolution. Now, things are quite different. You have

made all 7 decisions

Were you able to meet the objectives you set in the first report?

Provide a clear analysis of how your strategy has evolved and

why. The “why” is very important.

Can be written as bullet points with expansion around the bullet

points.

Another very important part of the paper is to discuss key

learnings/applications from the simulation. Work on coming up

with between five to ten key strategic learnings from the

Markstrat simulation which can be applied to real business

situations. What are the key take-aways regarding marketing

strategy?

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CLASS SCHEDULE1

1. Monday, July 10

Topics:

Course Introduction Introduction to the Markstrat simulation Demonstration of the simulation software

Course Introduction

1. To highlight the product life cycle approach to strategy

which is the foundation of this course; from new-to-the-

world markets to growth markets, to mature markets and

declining markets. This is accomplished using a mix of

lectures, case discussions and readings, and through the

Markstrat simulation.

Learning Objectives

1. To understand the principles of the simulation

a. Achieved through the Introduction to Markstrat

presentation, by reading the Handbook and my Notes

on Markstrat

2. To understand the mechanics of the simulation

a. Achieved through the demonstration of the software

Krishnamurthi, “Markstrat Online Software

Registration Instructions” (posted on Canvas)

Larreche and Gatignon, MARKSTRAT Participant

Handbook, Strategic Marketing – Durable Goods (you can

1 The syllabus notes which items are in the course packet, which are posted in Canvas, and which you find on your own

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download a pdf copy after you register for Markstrat using the

instructions posted on Canvas)

Krishnamurthi, “Introduction to MARKSTRAT” (OHs

posted on Canvas)

Krishnamurthi, “Notes on Markstrat” (posted on Canvas)

Markstrat Online Dashboard and Period 0 Market

Research (posted on Canvas). I will refer to this information

when I present the simulation in class. So, please bring your

computer with you to class, or a copy of this document,

whichever is convenient.

Note: This looks like a lot of reading from the text, but it is not

tough going! Nevertheless, it may be confusing the first time

around! So, here is some advice. Go over my "Introduction to

Markstrat" OHs. This is a brief summary of the facts. Next, go over

the Participant Handbook. My "Notes on Markstrat" will provide

many of the answers to items that may not be clear in the

Handbook on first reading. If you are confused about

anything in the simulation, check my “Notes on

Markstrat” first. These notes will also help you with your

decisions over the course of the quarter.

Once you have registered for the simulation, you can go back to

www.stratxsimulations.com, sign in as a participant using your PAK

number, click on the green button in the middle-bottom that says

“Access Markstrat” and click on “Preview Markstrat,” to familiarize

yourself with the reports and the decisions forms. While you cannot

enter any inputs here, you can see what analyses and charts are

available to you, and what decisions you need to make for your own

simulation.

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2. Thursday, July 13

Topics:

Lecture: Frameworks for Marketing Strategy

Lecture: A Framework for Growth

Learning Objectives

To understand the key frameworks underpinning Marketing

Strategy

1. Frameworks 1, 2, 3, 4 and 5 are the basics

2. Frameworks 6 & 7 are summary frameworks

3. Framework 8 presents a framework for growth

4. Simple but powerful and practical frameworks that can

be used for products and services, and in B2C and B2B

contexts

Lecture/Discussion:

Frameworks for Marketing Strategy

Read:

Krishnamurthi, “The Essentials of Marketing Strategy”

(Read, important; posted on Canvas)

Krishnamurthi, “How Marketing is Changing” (Read;

posted on Canvas)

Read the “Google Glass” example described on pages 10-20 in

Krishnamurthi “Essentials of Marketing Strategy”

Question: Which is a better target market, B2C or B2B?

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Skim if you have time

“How Google Breaks Through,” February 2015, McKinsey

Quarterly

“Marketing the Mercedes Way,” February 2015, McKinsey

Quarterly

Note: The McKinsey Quarterly articles are NOT in the course

packet or posted on Canvas. Log on to www.mckinsey.com

and register. Click on “About Us” in the top bar, click on

“McKinsey Quarterly” and type the name of the article in the

“search” bar, and read the articles for free at your leisure.

“Digital Marketing”

This interactive reading can only be accessed from the

Harvard web site. Instructions on how to access the

readings are posted on Canvas. The main focus of the

reading is advertising and communication in the digital

marketing setting rather than pricing or product design. This

is an interesting, interactive reading with a lot of illustrations!

Read over the course of the quarter.

Dawar, “When Marketing is Strategy,” Harvard Business

Review, December 2013 (Read; in course packet)

The key point of this article is that organizations should shift

strategy from upstream to downstream (from products to

customers).

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Lecture/Discussion:

A Framework for Growth (using Framework 8, “The

Product Development – Market Development”

matrix)

MARKSTRAT teams list due in class

Supplementary reading (this is background reading on the

basics of segmentation; these notes written by me are a

refresher; could be helpful to connect with the basics of

marketing; skim or postpone as needed):

Krishnamurthi, “Note on Consumer (B2C)

Segmentation” (posted on Canvas)

Krishnamurthi, “Note on B2B Segmentation” (posted on

Canvas)

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3. Monday, July 17

Topics:

Case: Google Car

Lecture: Growth Strategies: New-to-the-World

Products

Learning Objectives

1. Using the Google Car case (new-to-the-world, so Cell 5) to

demonstrate that even with very new products or services,

the first 3 questions of Framework 1 (who is the target,

what needs are critical, what are the impediments in

meeting the needs) have to be addressed for successful

value creation and value capture

Case: Google Car (in course packet)

This is a case for class discussion.

Preparation questions are posted in Canvas

Lecture/Discussion:

Growth Strategies: New-to-the-World Products

We will discuss a number of new-to-the-world (Cell 5) products and

services. In these situations, the new entrant has the opportunity to

create customer preferences, shape customer thinking, create a

frame of reference, become prototypical of the category, and ideally

become a psychological standard. But these actions alone are not

enough. The entrant also has to take preemptive actions that raise

the cost of entry for competition. The combination of preference

formation and preemptive positioning creates stickiness and raises

customer switching costs which favor the first entrant.

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4. Thursday, July 20

Topics:

Lecture Growth Strategies: New Markets (contd.)

Case: Groupon

Growth Strategies: New Markets (continued)

Learning Objectives

1. To apply the steps of Framework 1 to the Groupon service

model

2. To show that value capture can be problematic with Cell 5

products

3. Time permitting, we will start to discuss optimal growth

strategies for small players using the Product Development-

Market Development matrix of Framework 8

Case: Groupon (in course packet)

This is a case for class discussion.

Preparation questions are posted in Canvas

Lecture/Discussion:

Growth Strategies: Established Markets: Small

Scale Strategies

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5. Monday, July 24

Markstrat team meetings (tentative)

8:30AM – 11:30AM

1PM – 2PM

4:15PM – 5:15PM

Additional meetings will be scheduled for

Tuesday, July 25 as needed

Class: From 2-4PM

Topics:

Case: HubSpot

Learning Objectives

1. To apply Frameworks 1-4 to another new service, the Inbound

Marketing program offered by HubSpot

2. Discussion of optimal growth strategies for small players

using the Product Development-Market Development matrix

of Framework 8

Case: HubSpot: Inbound Marketing and Web 2.0 (in

course packet)

This is a case for class discussion.

Preparation questions are posted in Canvas

Lecture/Discussion:

Growth Strategies: Established Markets: Small Scale

Strategies (contd.)

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Readings:

Skim: Chris Zook & James Allen, “Growth outside the

Core,” Harvard Business Review, December 2003, (in

course packet)

This article discusses how to grow in adjacent spaces. The

examples are outdated, but the concepts are interesting.

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6. Thursday, July 27

Topics:

Case: Adobe Reinvented

Lecture: Growth Strategies:

Established Markets: Large Scale Strategies

Learning Objectives

1. The “Adobe Reinvented” case will be used to discuss strategic

options for a dominant software company as it struggles to

grow.

2. To use the Product Development-Market Development matrix

of Framework 8 to discuss optimal growth strategies for large

players

Case: Reinventing Adobe (in course packet)

Assignment: This is a written group assignment.

Questions to be answered are posted in Canvas

Lecture/Discussion:

Growth Strategies:

Established Markets: Large Scale Strategies

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7. Monday, July 31

Topics:

Case: Comcast Corporation

Lecture: Differentiation

Case: Comcast Corporation

This is a case for class discussion.

Preparation questions are posted in Canvas

Learning Objectives

1. We have now discussed the very early stage and the growth

stage of the product life cycle.

2. A lecture on Differentiation will present a wide variety of ways

that products and services can attempt to differentiate

themselves. Even though the discussion of Differentiation

could have happened at any point in this course, it has

particular resonance as markets mature because one needs

fresh thinking regarding Differentiation.

Lecture/Discussion:

Differentiation to Achieve Customer Advantage!

Readings:

Edelman & Singer, “Competing on Customer Journeys,”

Harvard Business Review, November 2015 (in course

packet)

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What is the key point of this article? I described the customer

journey in the pre-purchase, purchase and post-purchase stages

and that power is shifting to the customer in my note on “How

Marketing is Changing.” Instead of simply reacting to the

customer, the authors discuss how companies can be proactive

in their interactions with the customer to shape and shorten the

customer journey and recapture some of the lost power.

Can you think of how to incorporate the ideas in this

article in your business?

Chan Kim & Renee Mauborgne, “Blue Ocean Strategy,”

Harvard Business Review, October 2004 (in course

packet)

This article, considered a classic, (there is also a book) discusses

the difference between competing in existing market spaces and

slugging it out with competition (red ocean) versus creating

new market spaces where competition is irrelevant (blue

ocean). The examples are mostly outdated, but the logic is quite

good, and is worth a read.

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8. Thursday, August 3

Topics:

Lecture: Differentiation (contd.)

Case: A1 Steak Sauce

Differentiation to Achieve Customer Advantage!

(contd.)

Learning Objectives

1. Now, we are moving to the mature stage of the product life

cycle. The A.1. Steak Sauce case will be used to highlight the

strategic options for the dominant brand in a mature product

category when attacked by a competitor.

Case: A.1. Steak Sauce: Lawry’s Defense (in course packet)

This is a case for class discussion.

Preparation questions are posted in Canvas

Readings:

Pankaj Ghemawat and Thomas Hout, “Tomorrow’s Global

Giants: Not the Usual Suspects,” Harvard Business Review

(November 2008) (Skim; in course packet)

A very interesting article that talks about competitors from countries

like China and India.

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“I Think of my Failures as a Gift,” an interview with former P&G

CEO Lafley by Karen Dillon, Harvard Business Review (April

2011) (Skim; in course packet)

Mr. Lafley, who retired and came back as CEO of P&G and retired

again, talks about how a company can learn from failures and use the

learning to improve the odds of success in future undertakings.

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9. Monday, August 7

Topics:

Case: NYT Paywall

Lecture: Marketing Strategies for Mature & Declining

Markets

Learning Objectives

1. We are now in the declining stage of the product life cycle. The

New York Times (NYT) is arguably America’s greatest general

purpose newspaper. But the newspaper industry is

undergoing serious disruption, and the NYT along with its

competitors is suffering from declining print subscriptions

and decreased advertising revenue. In searching for a new

source of revenue, the NYT instituted a paywall for readers

who access the NYT only through the internet. The case will

be used to evaluate what led to the Paywall decision, and

whether the Paywall will save the NYT.

2. After the case discussion, we will have a lecture on strategic

options in Mature and Declining markets.

Case: The New York Times Paywall (in course packet)

This is a case for class discussion.

Preparation questions are posted in Canvas

Lecture/Discussion:

Marketing Strategies for Mature & Declining

Markets

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Readings:

Anderson, Narus and van Rossum, “Customer Value

Propositions in Business Markets,” Harvard Business

Review, March 2006 (Read; in course packet)

What is the key point of this article? Need to understand

customer value to deliver a compelling value proposition.

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10. Thursday, August 10

Topics:

Lecture: Marketing Strategies for Mature & Declining

Markets (contd.)

Markstrat Debrief

Learning Objectives

1. Complete the traversal of marketing strategies over the

product life cycle

2. A debrief and discussion of Markstrat results and the strategic

learnings from the simulation

Marketing Strategies for Mature & Declining

Markets (contd.)

Course Summary

MARKSTRAT Debrief