course description s335 spring 2014 product launch · course description — s335 — spring 2014...

Graduate School of Business

STANFORD UNIVERSITY

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Course Description — S335 — Spring 2014

Product Launch

Jonathan Levav

Faculty East 223

(650) 725-0351 (office)

[email protected]

Faculty assistant: Sandra Davis,

[email protected]

Russ Siegelman

650-245-4142 (cell)

[email protected]

Please read this document carefully as it is designed to provide you a sense of the

course’s content, our expectations, and daily assignments.

COURSE DESCRIPTION

This course is an advanced applications marketing course. Unlike the base core course

that is designed to cover every basic topic in marketing, here we focus on a number of

basic questions and attempt to explore them in depth. Although we will have some

lectures for background, the bulk of this endeavor will be accomplished through case

discussions. In other words, we can’t and won’t cover everything, as this course is not

designed to be comprehensive. We are going to rely on your academic background in

marketing to cover the basics; here and there, it is possible that some material will be a

review of what you’ve done before. Unfortunately, due to the tight schedule we will

not be able to cover any of the basics that are not already included in the course

material.

Our focus will be on the question, “When launching a product, what are the framing

issues that will help determine its success?” In particular, we will provide you with

tools to analyze market situations and determine whether it makes sense to launch a

product or engage in a marketing-related investment. Sometimes this will regard a


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completely new product, and other times whether or not to enter a new market with an

existing product. The course is not designed to cover issues such as execution of a

strategy (although we will touch on this a bit), but on whether to enter a market to

begin with. Thus, the course is decision oriented; we want you to think about market

entry decisions and how you would make them. The tools that you will be provided

won’t consist of equations; instead, we’ll arm you with a set of questions to ask, whose

answers will help you make better decisions.

This course is intended as a complement to other courses in the GSB that cover tactical

issues (e.g., pricing, branding) or the mechanics of creating and running startups (e.g.,

Aligning Startups with their Markets). Unlike courses focusing on the latter, we will

cover both “big company” as well as “baby company” issues. Don’t worry if you’re a

startup junkie, we will discuss startups. And if your dream is to run the mac n’ cheese

division at Kraft, we’ll have you covered as well. It’s worth noting that although the

contexts of big and small companies can differ, there is still a lot of overlap, and the

basic questions that you have to ask are similar. After all, at the end of the day in all

cases you will be dealing with customers regardless of your company’s size. Indeed,

that’s why this course will be largely focused on customers and what they value. Plus,

if you’re lucky, some day your little company becomes big like Nike or Charles Schwab.

The point is, some days the topic will be spot-on for you and your interests at the

moment, but other days not as much. That’s the nature of the beast, however, since this

is a course that needs to retain a certain breadth to be part of the foundations menu.

Two faculty members will lead the course discussions. Jonathan is the academic that

studies how people make decisions; Russ is the practitioner that founded and ran MSN

while serving in the position of Vice President at Microsoft, was a partner at the venture

capital firm Kleiner, Perkins, Caufield and Byers, and is now an angel investor. We

teamed up because we thought that by giving you a breadth of views about the same

problem, we would make you better decision makers after you graduate. We are not

here to preach a specific gospel and there won’t be one framework (in fact there will be

several, some which may disagree at times!) that you walk out of the course with.

Instead, through lectures, cases, and guest speakers, we will provide a menu that you

can later adapt to your decision context. This isn’t a course with many rights or

wrongs, so be prepared to debate with your classmates (and us). Our goal is that at the

end of the course you’ll be better decision makers about launching products. Not the

best—we haven’t enough time for that—but better. In our experience many of the

lessons that you’ll learn in the course will come in handy in the future, rather than the

present.


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Broadly speaking, this course is organized into four modules. In addition, there a few

sessions that straddle these modules or tackle issues that don’t fit neatly into a category.

Note that although we would ideally order the lectures in the order of appearance of

the modules below, our emphasis on having case protagonists in class means that we

have to subject our schedule to theirs. This is unfortunate, but the payoff is having

these guests join us. In this regard, note that occasionally guests have to cancel or

change their schedule. We hope that this does not happen, and will keep you informed

if there are any changes. The four modules we will discuss are:

Customer Segmentation

Customer segmentation is a critical part of any marketing analysis, and that is where we

start. The goal is for you to learn why customer segmentation is critical in considering

marketing problems, and to understand how to think about segmentation as more than

just demographics. Jonathan kicks off the class with an oldie but “goodie”—the FedEx

case, in which segmentation plays an important role. He also teaches a classic

segmentation case, Starbucks, and does a lecture on segmentation. Russell teaches the

Lilliputian case that links segmentation to strategy – specifically the “disruptive versus

sustaining innovation” theory developed by Clayton Christensen. Jonathan will teach a

case that we wrote specifically for this course – Azul Airlines – about how a new airline

in Brazil used segmentation to enable a hugely successful launch. David Neeleman,

Founder of Azul, will be a guest in class.

Sources of Value

In this module we focus on how companies create and capture value from customers,

and why some customers are more valuable than others. Jonathan does a lecture to

frame these issues, and another that explains why customer psychology plays a role in

how customers value products. Jonathan will teach the Polyphonic case which is

illustrative of economic value to the customer issues and he finishes this module by

doing a lecture on brand value.

Discovering Value

This is the module where, among other things, we teach Customer Development

principles and hypothesis driven business decision-making. Russell teaches an Intuit

case on Intuit’s Small Business Health Insurance Solutions which explores different

aspects of hypothesis driven business decision-making and how experiments help

discover customer value. We will have Olivier Helleboid and Ginny Lee of Intuit as our

guests to discuss this case. Jonathan teaches a case about Bugaboo, the company that


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invented the market for super-high end strollers. We hope that the founder of Bugaboo

will be able to join us via Skype.

Go-to-Market

Once you have segmented your market and discovered the sources of value, how do

you launch your product? Although one could have a whole course about this topic,

the breadth of material that we cover precludes this, so we cover just a few of the things

that we feel are highlights (we are not at all comprehensive). David Moran, the former

head of the pricing practice at McKinsey and VP of Pricing at ABInbev will guest speak

about pricing in product launches. Russell will teach the Sephora case where we will

learn about social media marketing. Our guest will be the case protagonist, Julie

Bornstein, CMO of Sephora.

Finally we will have a class on pivoting, where we will discuss the Billguard case (with

the CEO in attendance!) and the launch of the aluminum bottle at ABInbev (with

company executives in attendance). We will also have a session on “Why Product

Launches Fail,” which will consist of lessons learned from Jonathan and Russell’s

experience about why product launches fail, illustrated with some real-life examples.

READINGS

There isn’t a textbook for this course. Your course reader includes articles and cases

that will be discussed in class, and even an occasional textbook chapter. All readings

are required, as they will serve as the basis for class discussion.

We’ve yet to encounter a marketing textbook that doesn’t make us gag, but those who

feel compelled to read fat tomes may wish to consult the following:

Kotler, Philip and Kevin Keller, Marketing Management (2008, 13th Edition),

Prentice Hall. ISBN-10: 0136009980, ISBN-13: 978-0136009986 (any earlier edition

is perfectly fine too).

Lehmann, Donald R. and Russell S. Winer, Product Management (2005, 4th Edition),

McGraw-Hill/Irwin.

The third emphasizes quantitative and financial aspects of marketing:

Best, Roger J., Market-Based Management - Strategies for Growing Customer Value

and Profitability (2009, 5th Edition, any earlier edition is fine too), Prentice Hall


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CLASS DISCUSSION

The course will consist largely of case discussions, in addition to a few lectures by us

and by guests. We have included questions to guide your reading. Typically the

discussion in class will start with those questions, and then branch out. In other words,

the questions are merely a starting point for your analysis, with the goal of getting you

oriented, and are certainly not intended to be comprehensive. The cases have both a

qualitative and quantitative component, so please prepare to discuss both, as you will

be called on to contribute to both aspects. Your preparation will be infinitely easier if

you do two things in succession:

1) Try the case on your own;

2) Work on it with your study group.

We will regularly cold-call. We do this in order to ensure full participation and to keep

the discussion flowing and evenly distributed among the different class members. We

will also call on volunteers to speak, so please don’t hesitate to raise your hand if you

feel that you have a comment that would advance the discussion.

Your active participation in class will be a substantial portion of your course grade.

Most important in this regard is the quality of your class participation. Sheer quantity is

neither sufficient nor necessarily desirable. You’ll note that sometimes we will ask some

questions that are simply case regurgitation. We do this in order to get people “warmed

up,” and we want you to answer them, but these will not carry as much weight as the

questions that require analysis on your part. Although those of you who are not shy

about raising your hand will find these regurgitation questions tedious, some of your

classmates who are more hesitant to participate find these types of questions to be

helpful warm-ups. Our goal as discussion managers is to be as inclusive as possible.

For those who are concerned with how participation will be graded, these are the rough

criteria that we will use to assess students’ participation performance:

Comments that show evidence of analysis of the case and other assigned readings;

Comments that add to our understanding of the situation;

Comments that build on previous comments by other students;

Comments that are supported by data from the case, both qualitative and quantitative;

Comments that are questions—some of the best comments that we’ve heard in our


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classroom careers are questions that ignited a debate;

Comments in which you take a different position that your classmate (s) or the flow of

class room conversation, AND support it with data and cogent analysis.

Finally, you can’t contribute to class through ESP (or through email after the fact), so your

consistent presence is crucial. More on this below.

REQUIREMENTS

This course requires work in and out of class. Specifically, you will be expected to:

(1) Participate in class discussion (see above);

(2) Complete graded assignments (see below);

(3) Prepare a final project (see even more below).

There are four graded assignments in this course. Two relate to cases we will be

discussing (Lilliputian and Bugaboo), one is a take-home final exam, and one is a final

project that is due on the last day of class. We detail these assignments below.

A. Lilliputian Turn-in Case Write Up (15% of grade)

This assignment is to be completed in a team of two, NOT MORE than two, and

NOT LESS than two. It is due by electronic upload to Coursework by noon April

14, the day we will do the case in class. Late submissions will not be graded.

Only have 1 team member (not both) of your team upload your assignment to

Coursework and make sure BOTH your team member’s names are included in

the document name and on the first page of the assignment.

We would like you to write paper of no more than 5 pages (assignments

submitted of more than 5 pages will get a demerit; assignments of less than 5

pages will NOT get a demerit if they answer the questions completely and in

full) single spaced, one inch margins, (including tables) that analyzes the

Lilliputian case and answers the following questions:


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1. Please indicate how you segment the MPS market by filling out the

“How You View the Market” table provided below.

2. Describe the optimal target market segment for the MPS launch and

justify your choice.

3. Write a concise launch plan for the MPS and explain the rationale for

your choices. It must include positioning, pricing, distribution

channels, and promotion.

4. Based on your analysis and your plan for the MPS launch, is the MPS a

disruptive or sustaining innovation? What are the strategic and

operational implications for the company, depending on your answer

to the previous question?

For your analysis you can consider markets described in the case, or

variants of those markets (as you may see them differently than described

in the case), or markets not mentioned in the case (but the latter is not

required to get a good grade on this assignment).


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Table: How You View the Market

Product View Demographic

View

Job-To-Be-Done

/ Customer Use

View

Market

Competitors

Features

Source: Adapted from C.M. Christensen and M.E. Raynor. The Innovator’s Solution.

Boston: Harvard Business School Press (2003). p. 83 Table 3.1.

A good assignment will have:

A crisp, clear segmentation and the logic of why you chose the segment.

Your explanation should have some connection between the user needs,

market opportunity, and competitive dynamics in that segment.

An understanding the “job to be done” versus other forms of

segmentation.

An understanding of the sustaining versus disruptive concepts.

An understanding that sustaining versus disruptive innovation is

connected to the market you launch in, the competitive situation in that

market, cost structure, and other business model factors.

There are many ways to acceptably answer these questions. As always we

are looking for clearly articulated positions, backed up with logical thinking,

and evidence from the case to support your position.

B. Bugaboo New Product Assignment (5% of grade)

This assignment is to be completed in the same five person groups that you will be

completing your final project with (details on those groups appear below) and should be


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turned in, in person on the day that we discuss the case, May 16. We would like you

take on the role of “growth consultants.” Your task is to suggest a new product that will

successfully grow the company given what you learn in the case about how the

company operates and how it develops its products. We would like you to write a one-

page memo that answers the following questions:

1. Suggest one possible new products for Bugaboo that fit its desired positioning. An

effective (hint, hint) memo will start with a one sentence positioning statement

based on the information in the case. This should help guide your new product

ideas.

2. Identify the 2-4 pieces of information you would most need to evaluate the

advisability of pursuing the new product launch you suggest, and what action

steps would you take to get that information? (Feel free to be brief.)

In addition to the one-page memo, we would like you to diagram or sketch of what

your preferred new product would look like. Design is a particularly important

element of Bugaboo’s brand DNA, so have fun with this.

As you will note, we only want one page here, so please be brief and to the point, and

keep your margins at 1 inch. The criteria used for grading will be how well your new

product reflects what Bugaboo should be or wants to be as a company (please specify

which in your write-up), and whether or not you suggest the most important pieces of

information to evaluate the advisability of your new product idea. Bonus points for

creativity (as long as it’s realistic creativity—a stroller that doubles as a flying saucer

won’t count as creative; however, a stroller with a hands-free automatic diaper

changing feature and baby straightjacket will be sent straight to the Bugaboo factory for

immediate production).

C. Final Take Home Exam (10% of grade)

On the last day of class (or very soon thereafter) you will receive the final exam,

which you must complete and submit by the final exam date scheduled for this

course. The final will be structured like a problem set, and is completely open book

and open notes. It’s designed to take a few hours (2-3), although some of you will

finish faster, and other slower types might take longer. Don’t leave it until the last

second, but also don’t stress. We hate giving exams, but we have to do it, so we try

to make them as straightforward as possible.

D. Final Project


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As this syllabus goes to press, we are still finalizing some of the details of this final

project. The full scope of the project in all its details will be distributed to you after

classes begin. That said, here’s what we do know…

The final version of your project is due at the beginning of class 18 on June 2, 2014.

However, an interim—or nearly final—version needs to be ready for class on May 28,

2014, where you will be presenting to your classmates.

This year we will be crowdsourcing the final projects from you. We would like you to

come up with a product about which you would like to write your final assignment. We

will collect a list, vet the list, and then hold a vote. The top three vote getters will be the

project that the class will have to choose from. So suggest (and choose) carefully! The

parameters for the products are as follows:

1) Product scheduled to be launched by the end of 2014 or early 2015.

2) The product can come from a mature company (e.g., Nike) or from a startup

(e.g., Door Dash) that has been funded through at least a series A round.

3) We will be expecting you to collect market data (from public sources or

otherwise), so pick something where you think data will be available.

4) You’ll need to either know or figure out a fair bit about the product, so don’t pick

something that’s so secret that you don’t know what it is.

Please send your product candidates to Sandra Davis by noon on Monday, April 14. We

will be putting it up for a vote on the 18th, and releasing the results on the 21st.

For the final assignment, your task is to answer the question, “Is launching this product a

good idea or bad idea and why?” The key aspect that you will be evaluated on is the latter.

The final project will be completed in groups of five (5) students each. Students will choose

their own groups. I.e., you get to pick whom you’ll be working with. Once you’ve chosen

your group of five, please send a note to our Faculty Assistant, Sandra Davis, so that she

can keep record of the groups. Students who don’t have a group by the end of the second

week will be randomly assigned to work together. Please send an email to Sandra

confirming your group on or by April 25. In your email to Sandra, please include your

first, second, and third choice of project topics, based on the list that we will generate

through the student vote. We will do our best to accommodate everyone’s first choice.

Your task is to produce a document no longer than 5 pages (double spaced and in 12 point

font, with one inch margins) that outlines your answer to the good idea/bad idea question


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above. Your report can include up to 3 pages of exhibits. Your document needs to show

that you’ve incorporated the major questions that represent the backbone of a product

launch analysis. This includes, but is not limited to:

1) An identification of customers and customer segments;

2) An analysis of company capabilities as it relates to the launch;

3) An analysis of how the competition influences your launch plans.

Some of this material will be covered in class in detail, but other aspects will require you to

rely on your knowledge and background in marketing (this is an advanced applications

course, so we trust you to fill in the blanks where necessary). Furthermore, you are

expected to use publicly available data and resources to flesh out your plan; any source of

data is available to you, just like it would in real life (and like in real life, some data sources

are crappy, so you’ll need to be smart data shoppers).

Your projects will be evaluated by three parties. The first party is your classmates. On

May 28 you’ll be presenting a brief, five-minute précis of your analysis to your classmates.

Think of this as speed-dating for your ideas. They’ll rate your presentation and provide

you with constructive criticism. You will receive more details about the plan for May 28 as

we approach the date. For now the important thing is to know that you are to prepare a

short presentation based on your project that will give the audience an idea of your

analysis.

In the next step we will compile the ratings that your classmates gave you. The top rated

groups (total number TBD) will be asked to make a longer presentation of their work on

the final day of class, June 2. Here’s the kicker: at that session we will have a panel of

experts to evaluate your presentation. In addition, your classmates will get to ask you

questions and challenge your ideas. Groups that are not asked to present will still be asked

to provide a PowerPoint presentation based on their report—this way no one is exempt

from doing work, but only some groups will benefit from the special feedback session!

The third party will be us. Your formal grade for the project will be made independent of

the ratings from the speed-dating event. You can make improvements to your project

between the speed-dating event and the final day of class. That is, we expect you to take

advantage of your classmates’ comments to improve your work. Only your final entry,

submitted on June 2, will be graded.

Your grade will depend on several criteria:

(1) The completeness and logical flow of the analysis.


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(2) The ability to relate the concepts discussed in class and in the readings.

(3) The clarity and organization of the presentation and the cogency of the

arguments.

Note that all group members will receive the same final grade. We reserve the right

to alter this policy if necessary.

Please submit your final project on the last day of class in paper form. You are welcome

to supplement your submission with electronic files that are emailed to Sandra Davis by

the beginning of the last class on June 2 should it be necessary. No late assignments

will be accepted.

GRADING

Your course grade will be based on class participation, graded assignments and a final

project that will be weighted as follows:

Class participation: 30%

Graded exercises (includes final exam): 30%

Final Project: 40%

COURSE POLICIES

So that we are all on the same page, we wanted to elucidate our expectations for in-class

behavior. The reason that we have these policies is to ensure the best possible

classroom environment.

(1) The use of laptops or tablets is prohibited. Keep them in your bag during class. If

you did an analysis on Excel, simply bring a printout. We will be providing

handouts at every class so that you can take notes.

(2) The use of iPhones, Blackberries, HTCs, Androids, and whatever else has a screen

is prohibited. They are disruptive and their use undermines the culture of

collaborative learning that we try to foster in our classroom.


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(3) Attendance is mandatory. We understand that other demands may require you to

miss a class. You are entitled to be absent from class once for any reason, provided

you let us know in advance by sending an email to Sandra Davis. If you had an

extenuating circumstance that forced you to be absent and prevented you from

informing Sandra, you can come see us after the fact. However, we expect this to

happen only very rarely. Assuming no extenuating circumstance took place,

please note that being absent more than once will affect your grade and each

subsequent absence will have an increasing negative effect. More than three

absences will be grounds for an unsatisfactory grade.

(4) Class will begin and end on time. As a courtesy to your classmates and to the

visitors we will have during the quarter, please arrive on time. We plan to operate

the class without a break, since it’s only 90 minutes. Regarding the latter, we

would be grateful if you could remain seated for the entire duration of the session.

Entering and exiting the classroom during class time is a distraction both to us and

to your classmates, and shows disrespect to our guests.

(5) In order to foster an informal learning atmosphere, we would like to learn your

names. To help us do this as quickly as possible, we will require that you use a

name card in class. Please choose your seat for the first class carefully, as that will

be your permanent seat for the remainder of the term. The idea here isn’t to over-

police you, but simply to make it easier for us to get to know you better and to

track participation.

(6) As explained above, we will be cold calling people in class. Please let us know

before class if an emergency has made it impossible for you to be prepared

adequately for that class. We want people to participate, not feel embarrassed.

(7) Group work is encouraged. However, at no time should you use notes or papers

prepared by others (not in the group) for courses where these materials might

have been taught, either inside or out of Stanford. Such use is considered a

violation of the Stanford Honor Code.

(8) Have fun. We want you to look forward to Monday and Friday afternoons, not

dread them!

STUDENTS WITH DISABILITIES


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Students who may need an academic accommodation based on the impact of a

disability must initiate the request with the Student Disability Resource Center (SDRC)

located within the Office of Accessible Education (OAE). SDRC staff will evaluate the

request with required documentation, recommend reasonable accommodations, and

prepare an Accommodation Letter for faculty dated in the current quarter in which the

request is being made. Students should contact the SDRC as soon as possible since

timely notice is needed to coordinate accommodations. The OAE is located at 563

Salvatierra Walk (phone: 723-1066, 723-1067 TTY).

COURSE SCHEDULE AND READINGS

Some of our classes will have outside visitors. As we mention above, since these are

busy people whose schedules can change at the last minute, please regard the following

as extremely likely but not set in stone. “Leader” refers to which of the co-teachers will

be leading the discussion. Note also that some our cases are still being produced as this

syllabus is going to press. As the cases become available we will distribute them and

include the questions to guide your reading.

1. April 4, 2014

The Basic Question

Case: Federal Express B

Leader: Jonathan

Readings:

1. Basic Quantitative Analysis for Marketing

2. Analyzing Marketing Problems and Cases

Yes, Federal Express is a golden oldie (almost 40 years old!). Then again, so is the

Bible, but we still read it. The beauty of Fed Ex is that the protagonist in the case

faced exactly the kind of question that we will tackle in this course: Is this a good

idea or bad idea? In this way the case gives an overview for the type of issues that

we will tackle in this course.

Class Preparation Questions:

1. Who uses the Courier Pak? How large is the potential market for Courier Pak?


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What are the appropriate target markets for Courier Pak?

2. Who is the competition for Courier Pak?

3. Is Courier Pak consistent with Federal Express Corp’s objectives and abilities?

4. Is Courier Pak an economically viable product?

5. How should Federal Express Corporation support and market the Courier Pak?

2. April 7, 2014

Not All Customers Were Created Equal

Leader: Jonathan

Readings:

Skim for background: Lehmann, Donald R. and Russell S. Winer, “Segmentation”. A

fairly detailed guide to segmentation methods

We discuss and review the basic concepts of segmentation, targeting, and positioning.

We’ll overview criteria for segmenting the market and for target market selection.

There aren’t a lot of things in marketing that are right or wrong, but not segmenting is

one of the wrong things.

3. April 11, 2014

Really, They’re Not All Created Equal

Case: Starbucks: Delivering Customer Service

Leader: Jonathan

Readings:

None.

In this case we consider the pros and cons of a launch decision given the customer

segments served by the firm.


1. What is the situation that Starbucks is facing?


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2. Would you recommend making the $40 million expenditure? If so, why? If not,

why not? Please make sure to support your analysis quantitatively and

qualitatively.

3. Is spending to hire more employees the most effective way to improve

performance? Is there a different area in which Starbucks should invest? If you

recommend not making a monetary investment, what course of action would

you recommend Starbucks undertake?

4. April 14, 2014

The Strategic Consequences of Segmentation

Case: Lilliputian Systems

Leader: Russ

Readings:

1. Chapters 2 and 3 of “Innovator’s Solution” by Clayton M.

Christensen and Michael E. Raynor (Sep 2003)

In this case we review and evaluate different ways to consider customer

segmentation and the implications for launch and company strategy due to

segmentation decisions.

Class Preparation Questions (also see Assignment Section):

1. Please indicate how you segment the MPS market by filling out the “How

You View the Market” table provided below.

2. Describe the optimal target market segment for the MPS launch and

justify your choice.

3. Write a concise launch plan for the MPS and explain the rationale for your

choices. It must include positioning, pricing, distribution channels, and

promotion.

4. Based on your analysis and your plan for the MPS launch, is the MPS a

disruptive or sustaining innovation? What are the strategic and

http://www.amazon.com/Clayton-M.-Christensen/e/B000APPD3Y/ref=sr_ntt_srch_lnk_1?qid=1329971689&sr=1-1

http://www.amazon.com/Clayton-M.-Christensen/e/B000APPD3Y/ref=sr_ntt_srch_lnk_1?qid=1329971689&sr=1-1

http://www.amazon.com/Michael-E.-Raynor/e/B001JS2UZK/ref=sr_ntt_srch_lnk_1?qid=1329971689&sr=1-1


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operational implications for the company, depending on your answer to

the previous question?

For your analysis you can consider markets described in the case, or variants of

those markets (as you may see them differently than described in the case), or

markets not mentioned in the case (but the latter is not required to get a good

grade on this assignment).

Table: How You View the Market

Product View Demographic

View

Job-To-Be-Done

/ Customer Use

View

Market

Competitors

Features

Source: Adapted from C.M. Christensen and M.E. Raynor. The Innovator’s Solution. Boston:

Harvard Business School Press (2003). p. 83 Table 3.1.

Reminder: Case write-up assignment due via Coursework by 1:30 pm. Only

upload one assignment per team and make sure both team member names are

written in the name of the file. See Requirements Section above for details of

assignment.

5. April 18, 2014

Value To and Value Of Customers

Leader: Jonathan


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Readings:

1. Gupta, Sunil and Donald R. Lehmann, “Customers as Assets,” Journal of Interactive

Marketing, Winter 2002, 9-24. The authors introduce the concepts of customer

acquisition and retention and explain how to measure and use lifetime value for

managerial decision-making.

2. Reichheld, Frederick F. and W. Earl Sasser, Jr., “Zero Defection: Quality Comes to

Service,” Harvard Business Review, September-October 1990, pages 2-8. This article

emphasizes the importance of retaining customers and its impact on customers’

lifetime value and firm profits.

3. Best, Roger J., “Life Cycle Cost and Customer Value.”

Successful product launches depend on delivering value to consumers. Here we

discuss one such source of value, economic value to consumers (EVC). But if we want

to survive as a firm, we need to grow their value to us. We learn a way to measure this

value and discuss its implications.

6. April 21, 2014

Pricing Strategy in Product Launches

Guest: David Moran, co-founder, Promolytics

David Moran is the former head of McKinsey’s pricing practice in New York and the

former VP of Pricing at AbInbev’s corporate headquarters. He recently co-founded

Promolytics, a startup company in Palo Alto that enables firms to conduct pricing

experiments on its customers. He will be discussing the important things to

consider when pricing a new product.

7. April 25, 2014

EVC in Action. Also Entrepreneurial Optimism.

Case: Polyphonic HMI

Leaders: Jonathan and Russ


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Readings:

Lovallo, Dan and Daniel Kahneman, “Delusions of Success,” Harvard Business

Review, July 2003, pages 56-63.

In this case we discuss motivating product purchase using EVC. In addition, since

Polyphonic is a startup company, we will spend a little time discussing both the

adaptive and the pernicious qualities of entrepreneurial optimism.


1. What is the value of the tool to the potential customers?

2. If you were Mike McCready, the CEO of Polyphonic, which target market—

unsigned artists, producers, or record companies—would you pursue?

3. How would you position and price the product? What are potential benefits and

drawbacks of Hit Song Science for each player in the music industry? Who

stands to gain or lose most from this technology? How does that impact your

plan?

8. April 28, 2014

The Critical Role of Segmentation in Product Launch Decisions

Case: Azul Airlines

Guest: David Neeleman, CEO, Azul Airlines, and founder JetBlue

Leader: Jonathan

Readings:

None.

In this case we discuss a quarter of a billion dollar decision that Connecticut-native

David Neeleman had to make in 2008: Should he launch a new passenger airline in

Brazil? We discuss the critical role of segmentation in his analysis, and will benefit

from his presence as we discuss our ideas.


1. Should Neeleman and his team launch Azul? Why or why not?

2. What is the state of the Brazilian transportation market at the time of the case?

3. How might the competition respond to Azul’s entry, and how should this affect

Azul’s possible launch?


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9. May 2, 2014

How Brands Drive Customer Value

Leader: Jonathan

Readings:

1. Keller, Kevin L. and Donald R. Lehmann, “How do Brands Create Value.” This

article provides a framework for understanding the development and impact of

brand equity.

2. Skim for background: Lehmann, Donald R. and Russell S. Winer, “Managing

Brand Equity.”

The long run success of your product launch depends on being able to create a

set of associations—positive associations—in consumer’s minds about your

product. In this session we will discuss the importance of brands, how they can

drive consumer behavior, and how to build brand equity.

10. May 5, 2014

Pivoting

Case: Billguard (case to be distributed later in the term)

Guest: Yaron Samid, CEO, Billguard

Leader: Jonathan

Readings:

1. View video: http://www.youtube.com/watch?v=7RoOvOO3NpA

Yaron Samid, founder of Billguard, a startup in the fintech space, is facing a difficult

decision. Does he abandon the b-to-b distribution and monetization strategy for his

company’s product and instead shift to a b-to-c model, or does he persist? He has

spent down half of the company’s venture funds, and is at a critical juncture. Yaron

will be in class to discuss his decision.

Class Preparation Questions

http://www.youtube.com/watch?v=7RoOvOO3NpA


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TBD

11. May 9, 2014

Launching in a Very, Very Big Conglomerate

Case: The AbInbev Aluminum Bottle (case to be distributed later in the term)

Guest: Nathaniel Davis, VP of Innovation, AbInbev worldwide

Readings:

None.

Class Preparation Questions

TBD

12. May 12, 2014

The Twists and Turns of Customer Development

Case: Intuit Small Business Health Insurance Solutions

Guest: Olivier Helleboid, VP Financial Data Services, Intuit, and Ginny Lee, SVP

and GM, Intuit

Leader: Russ

Marketing classes say, “Know your customers” and nowadays a best-practice is to

run a customer development process to do this. But when do you trust the data that

you garner from your customer development process? When might be it wrong?

This case allows us to go behind the “success story” of the Intuit’s development of

health insurance solutions to small businesses to find out how customer data can

sometimes lead marketers astray, and what to do about it.

Readings:

1. “Customer Discovery and Validation for Entrepreneurs” (available only on

Courseware, not in case packet)

2. Optional reading: “Hypothesis-Driven Entrepreneurship: The Lean Startup”


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1. Why have the pilot results not met expectations?

2. Do you think Intuit should consider offering Employer Sponsored Insurance

(ESI)? Why or why not?

3. Should Helleboid’s team terminate the pilot and give up the idea of selling ESI to

small businesses? If they should move forward, in what direction and what

should they do next?

13. May 16, 2014

A Framework for New Product Development

Case: Bugaboo, International

Leader: Jonathan

Readings:

1. TBD

Bugaboo, maker of upscale baby strollers, is looking to for ways to grow its business.

It hopes to become a mobility company, but so far its product line only includes

strollers. In this session we discuss the different ways in which the company can

choose to grow, and what products it might launch.


1. Does it make sense for Bugaboo to become a “mobility” company in the near or

distant future?

2. Suggest a possible new product for Bugaboo that fit its desired positioning. An

effective (hint, hint) way to start is with a one sentence positioning statement based

on the information in the case. This should help guide your new product ideas.

3. Identify the 2-4 pieces of information you would most need to evaluate the

advisability of pursuing the new product launch you suggest, and what action

steps would you take to get that information?

REMINDER: Group assignment due today in class. Note that questions 2-4 above

are the same as the assignment. Question 1, however, is not. You are still

responsible for it.


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14. May 19, 2014

Choice Architecture

Leader: Jonathan lecture

When you launch a product, you have to be mindful of the context in which your

customers will be making their purchase decision. In this lecture, we introduce the

idea of “choice architecture” and explain how the way in which you design the

decision context in which your product is offered can affect the success of your

product launch. To do this, we rely on insights from research on customer

psychology and behavioral economics.

15. May 23, 2014

Social Media Marketing

Case: Sephora Direct: Investing in Social Media, Video, and Mobile

Guest: Julie Bornstein, CMO Sephora

Leader: Russ

Readings

“Social Media”, HBS Note

In this session we will explore the (relatively) new world of social media marketing.

We will discuss online marketing best practice, and explore the trade-offs between

online and off-line marketing and branding efforts. Sephora is a leading cosmetics

retailer and has been a leader in reaching customers online and through social

media. This case will give us a chance to see how the best-in-the-business do it, and

decide whether we agree or not with their approach.


1. Who is Sephora's customer? What is the decision making process for a Sephora

purchase?

2. What is Sephora's value proposition and how does it differ from its competitors?

3. What should be the objectives of Sephora's digital marketing and communication

efforts?


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4. How should Bornstein allocate her digital marketing budget? Assuming that the

incremental $1M for digital marketing will come from traditional marketing

activities. , from which traditional marketing programs would you cut and why?

5. How would you measure the success of Sephora's digital marketing programs?

16. May 28, 2014

Speed dating event—Final project presentation to fellow students

17. May 30, 2014

Why Do New Product Launches Fail?

Leaders: Jonathan and Russ

Readings

1. Chapter 21 from Thinking, Fast and Slow, by Daniel Kahneman

In this session we will discuss different reasons why new product launches fail. As

you might imagine, this question could fill up a whole course. Here we will be

focusing on two aspects of failure. The first, presented by Jonathan, will have to do

with how managers’ intuitions are fallible, and how those fallibilities lead to

erroneous decisions. The second, presented by Russ, will comprise his view of keys

to failure that he observed in his career as a venture capitalist.

18. June 2, 2014

Final presentations and summary

course description s335 spring 2014 product launch · course description — s335 — spring 2014...

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