Marketing Management

Session 1
Overview of Marketing (I)

Prof. Wenbo Wang

I cannot compete against

Please turn off your compute and mute your phone.

Guys’ picks
Girls’ picks
The Top Brands of Class, year 2017/2018

Rank % mention

1 83%

2 56%

3 25-35%

4 16~20%
The Top Brands of Class, year 2019

Rank % mention

1 70%

2 50~60%

3 20~30%

4 10~15%
Stock Market Performance:
Sock Price Increased More than 800% in past 10 years

As of Jan 31, 2018

Apple: $ 860 billion. Google: $ 817 billion. Microsoft: $ 733 billion
 Philip W. Schiller
Apple, Inc. Senior VP, Worldwide Product Marketing

Compensation for year 2017

•Total Compensation
$ 11,677,200

•Salary
$494,931
•Bonus
$375,000
•Restricted stock awards
$10,801,500
•Others
$5,769
This Session
• Overview of marketing
• What is marketing?
• Marketing framework

----- class break -----

• Overview of course
Some Modern Views
Marketing is a social and managerial process by which individuals and
groups obtain what they need and want through creating, offering
and exchanging products of value with others.

(Kotler 1994)

Marketing is the process of planning and executing the conception,

pricing, promotion, and distribution of ideas, goods, and services to
create exchanges that satisfy individual and organizational goals.

(American Marketing Association)

My Perspective: Marketing is a way of logical thinking

Economics Psychology

Marketing
-Rational -Emotional
-Pricing -Decision Making
-Competition -Well Being
-Supply/Demand -Satisfaction
 The Framework: Concepts & Tools for Problem Analyses

What is my 3C
Business?
CUSTOMER COMPANY COMPETITION
BUSINESS
STRATEGY

Where do I want to
go? SEGMENTATION TARGETING POSITIONING STP
MARKETING
STRATEGY

How do I get
there? PRODUCT PRICE PROMOTION PLACE
MARKETING
MIX/PLAN
4P
Look at
What is my
Business?
CUSTOMER COMPANY COMPETITION
BUSINESS
STRATEGY

•Business: web social network

•Who are facebook’s customers?

•Who are facebook’s competitors?

 The Framework
What is my
Business?
CUSTOMER COMPANY COMPETITION
BUSINESS
STRATEGY

Business: web social network

Who are the customers?
A simple rule: whoever directly and/or indirectly pay
What about advertisers?
-2009 Rev: 302 millions USD
-55% Self-service ads
-25% Engagement ads
-10% Microsoft ads deal
-10% Gift shop and others
The Framework

What is my
Business?
CUSTOMER COMPANY COMPETITION
BUSINESS
STRATEGY

Competitors: how to identify current / potential

competitors?
A simple rule:
• Serving the same customers.
• Satisfying same/similar needs / wants.
 Marketing Framework

What is my
Business? CUSTOMER COMPANY COMPETITION
BUSINESS
STRATEGY

Where do I want to
go? SEGMENTATION TARGETING POSITIONING
MARKETING
STRATEGY

Decide which groups to Create an image or identity in the

Divide a market into smaller
market to target market for the product
subsets of customers

STP Strategy
Targeting: Decide which groups to market to

Ritz Ad
 Marketing Framework

What is my
3C
Business?
CUSTOMER COMPANY COMPETITION
BUSINESS
STRATEGY

Where do I want to
go? SEGMENTATION TARGETING POSITIONING STP
MARKETING
STRATEGY

How do I get
there? PRODUCT PRICE PROMOTION PLACE
MARKETING
MIX/PLAN
4P
 Product
Product: goods, services, and ideas. Anything that can
satisfy needs and wants, and can be sold.
Installation Augmented product

Packaging
Actual product
Brand Features
name Core
Delivery benefit Core product
and or
credit service After-
sale
Quality service
Design
level

Warranty Levels of a Product

 Real Life Product Decisions
• How to design each level of the product that fits STP
strategy (e.g., Cathay Pacific)?

• How to allocate company’s recourses to each level of

product given 3C (e.g., Samsung, Apple )?

• What if we have multiple products (e.g., P&G, and

HKUST)? How to manage them?

• How to manage product at different stage? Product growth

• ……
 Marketing Framework

What is my
3C
Business?
CUSTOMER COMPANY COMPETITION
BUSINESS
STRATEGY

Where do I want to
go? SEGMENTATION TARGETING POSITIONING STP
MARKETING
STRATEGY

How do I get
there? PRODUCT PRICE PROMOTION PLACE
MARKETING
MIX/PLAN
4P
Real Life Price Decisions
Optimal price (restaurants, mobile phone service)?
Seasonal pricing (airlines)?
Price reaction to competitors? (price match)
Price of buyback, price of second hand book (Amazon
bookstore)?
Consumer psychology (9.99 vs. 10.02)?
……
Optimal price for gym clubs

Bally Total Fitness

 Price: Bally Total Fitness
Optimal price plan for gym clubs (Bally Total Fitness).
(￥800 annual plan vs. ￥220 quarterly plan )
Lazybones: Time spent in fitness club per week
Why matters to pricing?
hours

6
5
4 quarterly fee plan
3
2
annual fee plan
1

Q1 Q2 Q3 Q4
Price: Bally Total Fitness

Takeaway of this example

• price is highly connected to customer behavior
(getting lazy or re-motivated in this case),
product feature (limited physical space and
capacity), promotion (extra discount, loyalty
points in this case).
Price: Bally Total Fitness

Takeaway of this example

• Price is highly connected to customer behavior,
product feature, promotion.
• Some time the connection is not obvious.
Consulting business opportunity if you can
figure out the connection that else cannot.
 Pricing Puzzle for Night Club

Two types of pricing plan:

1) An entrance fee + pay for drinks
2) No entrance +pay for drinks

Puzzle: Why do some night clubs

charge an entrance (bouncer fee)
while some don’t ?

Nightclubs offer two products:

entertainment and drinks.

28
Pricing Puzzle for Night Club
If free entrance (no entrance fee), then the club will have to cover
the cost of entertainment through the price of drinks.

Then heavy drinkers would pay disproportionately more for

entertainment and light drinkers pay less.

Consequence:
1) The heavy drinkers go elsewhere. Incur a loss in drink revenue.
2) Entertainment revenue that could be earned from light drinkers
would be little as they drink little.
An entrance fee can fix this problem: cover the entertainment cost
by the entry fee .
Pricing Puzzle for Night Club

When do night clubs not charge an entrance fee?

- When the customers are all heavy drinkers and

are not much different in drinking quantity,
then free entry is fine (no free rider problem).

- When there is no entertainment, then free entry

is fine.
Pricing Puzzle for Night Club

Takeaway
• Again, price is connected something else of the
4P (the cost structure of product in this case)…
and
• connected to customer behavior across market
segments (heavy vs. light drinkers)
 Marketing Framework

What is my
3C
Business?
CUSTOMER COMPANY COMPETITION
BUSINESS
STRATEGY

Where do I want to
go? SEGMENTATION TARGETING POSITIONING STP
MARKETING
STRATEGY

How do I get
there? PRODUCT PRICE PROMOTION PLACE
MARKETING
MIX/PLAN
4P
Place
Place (also called distribution) is about getting the
products to the customer.

Place decisions include:

• Market coverage.
• Location.
• Distribution channels (retailer, wholesale, direct
marketing, vending machine, ATM)
• International presence
• ……
 Place: The diamond store puzzle
Why diamond stores choose to locate together with competitors?
Google map “Diamond Stores, New York, NY”.

34 stores in one street!

Explanation

Explanation 1: stores may want to collude on

price. Effective monitoring is a must for
sustainable price collusion.
Explanation 2: consumers have quality concerns.
Stores being close to each other is a signal of high
quality and not being afraid of quality comparison.
– evidence: high quality brands do not locate on
the diamond street
 Graff

Tiffany

Harry Winston
Buccellati

Cartier
Questions To Keep In Mind

When you make 4p decisions, think about

how/why does ____ affect customers?

how / why does ____ affect competitors?
How/why does ______ affect other 3p’s?
Course & Syllabus
What do you want?
• About 92 % of you want to get A

• See syllabus for grade rebuttals

• Zero tolerance on cheating

•Your final grade will be curved to a relative

grading system
What do you want?
• Learn concepts that can be applied to real business
- Guaranteed! You will see key concepts and tons of real
life cases.

• You want to get A (according to the pre-class survey, 96%

wants A)
- Sure thing! Will max up my quota of A subject to the
curve system
Is any MARK2120 professor more “easy” or more
“killer”?
Grade Distributions for Spring 2013
WENBO JUN OLIVER ANIRBAN AMY
Grade L1, L11 L2, L3 L4, L5 L6, L7, L8 L9, L10, L12
A+ 4 4 10 14 6
A 8 11 9 14 28
A- 14 11 9 15 4
B+ 20 19 15 28 22
B 10 21 17 21 50
B- 22 11 18 17 3
C+ 33 33 42 65 49
C 18 16 3 6 11
C- 1 1 2 5 5
D 0 1 3 6 10
F 0 1 3 3 1
Avg Grade 2.85 2.85 2.83 2.83 2.84
A range % 20.0 20.2 21.5 22.2 20.0
B range % 40.0 39.5 38.2 34.0 39.7

NO!
All grade distributions are coordinated among all professors
Course objectives

1: Not about memorizing stuff

2: Being smart.
- “text book smart”
- “street smart”

3: To develop a way of logic thinking, to identify and

address the key decisions facing marketing managers.

4: I will try to use YOUR brands as examples

Course website

Course website on Canvas

You will find:

 Syllabus
 Guidelines for major assignment
 Copies of lecture slides AFTER lecture
 Sample quiz
 Optional reading (keep updating)
Communication is vital!
 Keep your name card with you.

 Is your Canvas account operational?

 Have you received my emails last week?

 Keep the most updated class schedule with you!

 Email: Wenbo Wang wenbowang@ust.hk

 Office hours: By appointment

Communication is vital!
• Submit you photo card (hard copy)
• Can be downloaded at Canvas. under “files/assingement”
Policies
• I cannot compete with
No laptop or cell phone.

• Submit hardcopies of assignment.

• Late assignments will not be graded.

• Arrive to class on time. Punishment for chronic

late coming or early leaving.
Grade

No final exam
Quiz (50% in total, 25% each)
• 25% each, best 2 out of 3 quizzes count

• Quiz dates. The quiz dates cannot be changed.

• 7-8 pm on Sep 27
• 7-8pm on Oct 25
• 7-8pm Nov 20
• No separate make-up quiz will be scheduled.

• Summary session before quiz

• No class on quiz day

Quiz (50% in total, 25% each)
• Quiz is designed NOT to embarrass or surprise you

• Consist of objective questions such as multiple-choice

and true or false

• Quizzes will be exclusively based on class lectures and

PPTs (not the textbook)
A Sample Question from Quiz

Which of the following is NOT one of the four p’s of

marketing?

a) Promotion
b) Positioning
c) Product
d) Price
e) Place
Group Final Project + Presentation

• Form a group of 6 members

• Group members are required to sit together in the assigned seats

• Group members have to be from the same class section

• Submit your group member list thru Canvas-assignment

Form a Group by Sep 18
Group Form. docx
 Group Final Project + Presentation
• Final project: develop a marketing plan for a product or service
that you would like to bring to market

• See sample project from last year on Canvas

• A 10 minutes presentation of the report on Late Nov

• Attendance is mandatory at all presentations, and every group

may be required to comment/mark on every presentation.

• Each group will be scheduled 10-15 minutes to meet the

professor in private and discuss its idea for the project
Course materials
Core materials
 Class lectures and discussions
 Lecture PPTs

Complementary materials
 Business cases
 Optional but recommended book Principles of Marketing
(15th or 16th edition) by Kotler and Armstrong, Prentice
Hall.
 Reserve 8 copies of the book from the library under my
name and course # MARK2120
Group Exercise (10%)
Two types of exercise
(a) discussing cases
• cases and assignment will be handed out in advance
• one group to provide the solution to the
assignment. The other groups add their comments and
join in a discussion answer in-class questions

(b) answer in-class questions

• each group of students will get 3-15 minutes to
discuss in-class questions among themselves
Group Exercise will be Graded on…
1) How constructive are the comments made by your
group?
2) How much positive influence your group brings to
the class discussion?
3) How active is your group in terms of participating
in class discussions?

Free ride? There will be within group peer evaluation.

Individual Class Participation (+/-10%)

Confucius’ “Ren (仁) ratio” principle

• If you add to the classroom experience through comments,
questions, answers, humor, or any other good things, you stand
to score up to 10 extra points.

• If you serve as a negative influence, through late-coming,

talking to your neighbors, missing deadlines, or any other such
distracting actions, you may lose up to 10 points of your grade.

• If you never contribute in class and submit all your

assignments in time, your score will simply be zero.
Research Credit (3%)
Earn 3 research credits (worth 3% of the grade).
This can be done through participation in 3
marketing experiments (of 1 hour each) OR by
completing 3 research assignments.

Details are on the instruction manual on Canvas

(under “files” -“research credit”)
How to get a good grade for this course?

• Attend class and participate in discussion

• Work with your team members on group work
• Browsing but not memorizing the textbook
• Spend about 1 hour preparing for quiz (more
hours does not help)
Next class
Lecture
• Introduce STP and 4P
• More examples on marketing puzzles

Assignment
• Read Chapter 1, Appendix 1, before next class
• Photo card (hard copy) due Sep 11 at the beginning of
the class
• Group formation due Sep 18