UNIVERSITY OF ALBERTA School Of Business
Department of Marketing, Business Economics, and Law MARKETING 664,A1 - PRODUCT MANAGEMENT AND PRICING
FALL SESSION 2004 COURSE SYLLABUS
Instructor: Webb Dussome Time: T 9 - 11:50
Location: HC 2 25 , Humanities Building Office: BUS 4-30G, Business Bldg.
Phone: (780) 492-0675 Fax: (780) 492-3325
E-Mail: [email protected]
Website: http://courses.bus.ualberta.ca/mark664-dussome Office Hours: T 12-13, F 11-13, or by appointment
COURSE CONTENT AND OBJECTIVES
Marketing 664 is a course that deals with two of the 4 ‘P’s’ in the marketing mix – pricing and product. The importance of these two topics to business is obvious. They are arguably the most important of the four Ps because, put simply, price is what an organization gets from customers in return for product.
To be more specific, course content deals with the management, and pricing of goods and services. Specific topics include product and pricing strategy, brand management, and the use of quantitative pricing techniques.
Course objectives include the development of skills required to apply specific concepts of product management and pricing to business scenarios, and also the skills necessary to incorporate the use of quantitative marketing tools into product decision making.
REQUIRED TEXTS
There are two required texts as follows:
1) Product Management (Third Edition), by Donald R. Lehmann and Russell S. Winer.
Toronto: Irwin/McGraw-Hill, 2002
2) The Strategy and Tactics of Pricing (Third Edition), by Thomas T. Nagle and Reed K.
Holden. Englewood Cliffs, N.J.: Prentice Hall, 2002
Other related information will be added during the term, most notably brand management material from: Strategic Brand Management (first and second editions) by Kevin Lane Keller, Upper Saddle River, New Jersey: Prentice Hall, 1998, 2003. Students are not expected to purchase these books.
EVALUATION
Assignments – 30% (one assignment for each topic, 15% each) Exams - 70% (one 2 hour exam for each topic, 35% each)
In determining the student’s final grade, the instructor will consider the student’s overall individual course performance in an absolute sense (50% is considered the minimum passing percentage), and also each student’s performance relative to his/her peer’s performance.
EXAMS
There will be one exam for each topic in the course. The exams are not designed to be cumulative in their coverage, but there is likely to be some advantage to recalling and understanding material covered in any previous exam.
Students should familiarize themselves with the University’s guidelines regarding exam deferrals.
ASSIGNMENTS
There is one assignment for each topic in the course. These assignments are attached to this course outline.
Please hand in the assignments on the date they are due. If students have not made previous arrangements with the instructor, assignments will be penalized at 50% for each day they are late.
ACADEMIC INTEGRITY
The University of Alberta is committed to the highest standards of academic integrity and honesty. Students are expected to be familiar with these standards regarding academic honesty and to uphold the policies of the University in this respect. Students are particularly urged to familiarize themselves with the provisions of the Code of Student Behaviour (online at
www.ualberta.ca/secretariat/appeals.htm) and avoid any behaviour which could potentially result in suspicions of cheating, plagiarism, misrepresentation of facts and/or participation in an
offence. Academic dishonesty is a serious offence and can result in suspension or expulsion from the University.
UNIVERSITY POLICY ON COURSE OUTLINES
Policy about course outlines can be found in Section 23.4(2) of the University Calendar.
COURSE STRUCTURE
Class time will be divided between lecture, class discussion, and in-class exercises. To be most effective, students should be prepared to review notes from classes and to keep pace with readings from the texts.
COURSE SCHEDULE
The following schedule is provided as a general guideline. Depending on the flow of the course it could change slightly, so students should keep current on in class activities.
Date Topic
PRODUCT MANAGEMENT:
Sept. 14 Introduction, Chapter 1 Sept. 21 Chapters 3 and 4
Sept. 28 Chapters 5 and 6 (start)
Oct. 5 Chapters 6 (finish) and 7 (skim)
Oct. 12 Chapter 8, and case discussion
Product Management Assignment Due Oct. 19 Chapter 9, and review for exam
Oct. 26 Product Management Exam (2 hours)
PRICING:
Nov. 2 Product Management exam review, Chapters 1 and 2 (start) Nov. 9 Chapter 2 (finish) and Chapters 3,4 (skim only)
Nov. 16 Chapters 5, 6 (start)
Nov. 23 Chapter 6 (finish), Chapter 7 Pricing Assignment Due Nov. 30 Chapter 8 and case discussion Dec. 7 Chapter 9 and exam review
The two hour final (pricing) exam will be held on the date and time specified by the University of Alberta.
MARKETING 664:
PRODUCT MANAGEMENT ASSIGNMENT– FALL 2004
This assignment is due at the start of class on October 12, and is worth 15% of your overall course mark.
Find an advertisement for each of three brands competing in the same product (or service) form.
You will need to differentiate one of the brands from the others, so it would be best to choose brands that have some differentiating characteristics. Do not use internet ads. Using the applicable chapters of the Lehmann/Winer textbook and your product management class notes, answer the following questions:
(1)/ List the important benefits (or attributes, if you prefer) on which these brands differ. You may include price as an attribute. (6 points total, 2 points per brand)
(2)/ Describe the positioning the brands have on these benefits, and how they compete with each other. Ensure your discussion includes a complete assessment of the remaining three marketing mix elements (price, promotion, place) of at least one competitor’s current strategy. For a guide to this assessment, refer to pages 121 and 122 of the text. (3 points total, 1 point per element)
(3)/ Speculate about which of these brands has the best or worst positioning, using the information you have provided above to support your speculation. (1 point)
(4)/ Could this category be considered attractive? Use the information you have provided above and the information provided in chapter 4 of the text in your analysis. (5 points)
Attach the ads, or photocopies of the ads, to your write-up. Refer to the ads to support your answers to the questions above.
Notes:
(a)/ You are to work independently of others on this assignment. Find your own ads; turn in your own work. Secondary data that supports your analysis is expected.
(b)/ You are limited to three pages, double-spaced (12 point font) for your write-up, ignoring exhibits (exhibits can include ads, and a completed figure 4-11 from the text). Please note that the instructor will not read information beyond the three page maximum, and will penalize papers where the font is less than 12 point and/or the spacing is less than double.
MARK 664 - PRICING ASSIGNMENT – FALL 2004
This assignment is due at the start of class on November 23, and is worth 15% of your overall course mark.
1./ Please read the August 21, 2004 Globe and Mail (page B4) newspaper article written by Keith McArthur called “Squaring off over sponsorships; Rivals are gaining. The price tag is soaring. Is the battle for the Olympic rings worth all the cash?”
You will need to access this article using your University of Alberta ID from the data base factiva, which is available from the following link:
http://www.library.ualberta.ca/databases/databaseinfo/index.cfm?ID=169
Once you have read the article, answer the following questions.
Based on your knowledge of pricing from this course, provide an analysis of:
i./ What VANOC should consider when determining the amount they should charge for sponsorship rights. (3 points)
ii./ What the potential sponsors should consider when determining the amount they would be willing to pay for sponsorship rights. (3 points)
2./ Swing Manufacturing and Steady Manufacturing both operate in the widget industry, but with radically different cost structures. Swing is a capital-intensive, automated manufacturer, while Steady is a labor intensive “job shop”. Monthly operating data are as follows:
Swing Manufacturing Steady Manufacturing
Sales 5,000 units 5,000 units
Price $10.00 $10.00
Variable $2.50 $5.50
Fixed Cost $35,000/month $20,000/month
Current Profit $2,500/month $2,500/month
Swing and Steady both currently have an equal (50%) share of the market. Each is evaluating opportunities to enhance profits. One opportunity involves selling a low value, but potentially high volume, market not currently served by either company. The potential increase in sales for either company entering that market alone would be at least 40% (2,000 units). If they both entered, the potential sales increase would be at least 20% for each of them. Unfortunately, reaching that market would require pricing at $8.50, 15% below current levels.
a) If either company could costlessly segment the market for pricing (that is, charge the 15% lower price only to this new segment without undermining the prices charged to current customers), how much additional profitability could each company earn by achieving a 20% and a 40% increase in sales. Would you recommend that either or both companies pursue this opportunity? (4 points)
b) In fact, neither Swing nor Steady can effectively segment this market (each must charge one price to everyone). Calculate the break even changes for this opportunity for each of them. Calculate the change in profit for a 40% increase in sales. Briefly explain why this answer differs from your answer in part (a). (3 points)
c) Was Steady’s decision to cut their price financially justified? (2 points) Notes:
(a)/ You are to work independently of others on this assignment.
(b)/ You are limited to three pages, double-spaced (12 point font) for your write-up. Please note that the instructor will not read information beyond the three page maximum, and will penalize papers where the font is less than 12 point and/or the spacing is less than double.
