Addison Wesley Longman Case

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MARKETING ENGINEERING FOR EXCEL • CASE • VERSION 2.0.0



Case
Addison Wesley Longman
By Gary L. Lilien & Arvind Rangaswamy


Product Planning Using the GE/McKinsey
Approach at Addison Wesley Longman
It was July 1997 and Mark Roth, manager of business books at Addison
Wesley Longman, was facing a bit of a dilemma. He was about to present his
1998 fiscal year new book budget and had three new marketing books in his
portfolio. One of them, Marketing Engineering, was a bit different from the
other two. It did not currently have a large natural market but might
ultimately be a big winner, he thought, if it were promoted properly. He was
about to make his plans for annual promotion, kicking his program off at the
August American Marketing Association Educator’s Conference in Chicago. His
main question was – how should he prioritize the promotional resources for
the three new books?
Background
Addison Wesley Longman is one of the largest global educational publishers, selling books, multimedia and learning programs in all major academic disciplines to the primary, secondary, higher education, professional, and
English language teaching markets throughout the world.
AWL is part of the Pearson Group. Pearson PLC, headquartered in London, is
an international provider of media content and is composed of information, education and entertainment companies. Pearson reported the following fiscal
year-end figures:
1996 Sales ($ mil.): $3,746.8 1-Yr. Sales Growth: 19.5%
1996 Net Inc. ($ mil.): $413.1 1-Yr. Net Inc. Growth: (7.7%)
1996 Employees: 17,383
1-Yr. Employee Growth: (10.5%)
In addition to AWL, some of Pearson’s companies include: the Financial Times
Newspaper, Penguin/Putnam, The Economist Group, Pearson Professional and
Pearson Television. In 1988, Addison-Wesley was acquired by Pearson PLC.
The Company merged with Longman, a sister Pearson publisher, in 1995 and
became Addison Wesley Longman. In 1996, AWL acquired HarperCollins
Educational Publishers, consisting of HarperCollins College and Scott
Foresman, and merged those operations with AWL’s.

Each company that makes up AWL has historic publishing strengths and
accomplishments. Many people in the United States remember learning to
read with Elson Basic Readers featuring Dick, Jane, and Spot. Scott Foresman,
their publisher, celebrated their centennial in 1996. Longman, which published
Dr. Samuel Johnson and Wordsworth, among other British literary lights, has a
distinguished 273-year tradition. The former HarperCollins College, now part of
the Higher Education Publishing Group, traces its roots back to 1817 when the
brothers Harper established a publishing house in New York City. When
Melbourne Wesley Cummings published MIT physics professor Francis Sears’
Mechanics in 1942, Addison-Wesley was launched as an outstanding publisher
of science, mathematics and computer texts.
The college division of AWL markets books to colleges and universities
throughout the world. Its main promotional resources are sampling,
brochures, direct mail, exhibitions (primarily at academic meetings) and direct
selling to professors. The U.S. college division sales force includes over 200
individuals, each of whom specializes in an academic specialty (business,
science, humanities) and works in a regional territory, servicing several dozen
schools. AWL managers believe that their sales force is particularly important
in encouraging instructors to consider and adopt new textbooks, and they use
their sales force as a key tool in their product introduction mix.
The New Marketing Texts
The three new marketing texts that AWL was introducing in the summer of
1997 were:
Advertising and Sales Promotion Strategy by Gerard J. Tellis, University of Southern California, aimed primarily at MBA advertising
and sales promotion courses;
Analysis for Strategic Marketing by Vithala R. Rao, Cornell University
and Joel H. Steckel, New York University, aimed at capstone MBA strategic marketing courses, particularly those with analytic content;
and
Marketing Engineering by Gary L. Lilien and Arvind Rangaswamy, Penn
State, a book and extensive package of software to deliver marketing tools to support marketing decision making.
The Marketing Engineering book was a bit different from others in that it
included two volumes plus a CD with 26 software packages that could be
applied immediately to both classroom and prototype professional business
problems. However, as the book was sufficiently different from anything else
on the market, both Mark and the authors felt that the AWL selling effort could
make a critical difference in the acceptance of the book, especially in the short
run.
The New Marketing Book Promotional
Challenge
As Mark was finalizing his proposal, he began glancing through the Marketing
Engineering book. He noticed that the book identified several methods that
could be used to approach a problem just like his.
“What a novel idea,” he thought. “Why not use the ideas and tools from
Marketing Engineering to determine what to do here?”
He determined that one Marketing Engineering tool might be appropriate for
his problem: the GE/McKinsey approach.
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Applying the GE Approach
Mark found the GE approach implemented in Marketing Engineering in a tool
called Portfolio Planning (GE). In consultation with his planning staff, Mark
came up with the following factors for the components of the composite
dimensions:
Industry Attractiveness:
• Market size (total volume of books to be sold in the next three years).
• Growth rate (annual growth rate of market size).
• Technological requirements (high would be “traditional book,” low
would be when the book needed capa bilities of producing multimedia,
software, etc.).
2
• Leading edge (low would include more traditional topics; high would
include new and emerging topics).
2
Business Strength:
• Market share (book’s likely share of market after two to three years).
• Share growth (annual growth rate of market share).
• Investment/cost (high means low need for investment; low means
high need for investment).
2
• Synergy (ability of book to induce sales of other AWL books or to lead to signings of new authors).
Mark then attempted to assign weights (from 1 to 5) to the factors above. He
decided that the weights depended on the strategic position of the firm – whether it wanted to view itself as a traditional publisher or as a leading-edge publisher. Hence he constructed two sets of weights: “Traditional” and “Leading Edge” (Exhibit 1). He also rated each of the businesses, Tellis,
Rao/Steckel, and Lilien and Rangaswamy on each of the factors (Exhibit 2).

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EXERCISES
Mark was planning to allocate his new product budget equally across the
books. Using the GE approach:
1. Describe the business portfolio and the options available to AWL.
2. What does the GE approach sugges t about the relationship between
AWL’s strategic objectives and its promotional plans?
3. What should Mark do?
4. What other factors should Mark consider in setting and allocating the
budget?
5. Comment on the uses and limitations of the GE model.
ADDISON WESLEY LONGMAN CASE 4/8

Exhibits

Traditional
Weights
Leading-Edge
Weights
Industry Attractiveness
Market size 5 2
Growth rate 2 5
Technological requirements 5 1
Leading edge 1 5

Business Strength
Market share 3 2
Share growth 1 5
Investment/cost 5 1
Synergy 1 5
EXHIBIT 1: AWL’s weights for new marketing texts (1-5 scale).


Tellis Rao/Steckel Lilien/
Rangaswamy

Sales Potential 20 15 12

Industry Attractiveness
Market size 5 3 2
Growth rate 2 4 4
Technological
requirements
4 5 1
Leading edge 2 3 5

Business Strength
Market share 3 2 2
Share growth 3 4 4
Investment/cost 4 5 1
Synergy 1 3 5
EXHIBIT 2: Ratings for new AWL marketing texts.

ADDISON WESLEY LONGMAN CASE 5/8

APPENDIX: Details of the Three Books from
AWL Promotional Material

1. Advertising and Sales Promotion Strategy
First Edition, 475 pages, 1998, Cloth, 0-321-01411-1
Gerard J. Tellis, University of Southern California
Unique; theoretically rigorous, rich with examples and useful for
designing successful strategies.
Promotion is a rich topic that integrates perspectives from a number of
disciplines including marketing, economics, psychology, anthropology, and
operations research. It is also a dynamic area that is constantly changing as
firms develop new media, appeals, and methods to better compete with their
rivals in a rapidly changing environment. Advertising and Promotional
Strategy is designed to communicate all of these aspects of promotion. After
reading this book, prospective managers will understand the topic of promotion well enough to be able to design successful strategies.
Hallmark Features
• Tellis’s writing is simple, direct, and lively. He uses short sentences
and simple language even when explaining complex ideas.
• The text has a managerial orientation – more so than any other text in the field – helping prospective managers understand the topic well enough to design successful strategies.
• The book’s presentation is practical, analyzing a large number of relevant examples and describing creative promotional strategies.
• Tellis draws from the most recent research in the social sciences to
ensure that students are exposed to the most current knowledge in
the field.
• This book explains why phenomena occur and tries to show why certain strategies succeed, while others fail.
• Using contemporary examples, the author clearly communicates points.
• Tellis explains theories, concepts and terms from first principles – his
book requires no particular prerequisites in business, marketing,
economics, or psychology.
• Special topics include coverage of regulation (Chapter 2), direct
marketing (Chapter 16), ethics, international strategy, and brand
equity.
• Your students will enjoy the text’s 16-page color advertisement insert, lavish examples and numerous illustrations.
Supplements include: Instructor’s Manual with Test Bank/Transparency Masters/ CD-ROM Guide, a Computerized Test Bank for Windows, a Videotape with advertisement clips for classroom use, an Instructor’s CD-ROM with ad
stills and clips, and an Interactive CD-ROM case on Intel that allows the
student to act as a marketing manager designing a promotional strategy.
This title has the following supplements:
ADDISON WESLEY LONGMAN CASE 6/8

Instructor’s Resource Manual by Siva K. Balasubramanian, Southern
Illinois University includes the Instructor’s Manual, Test Bank,
Transparency Masters, and CD-ROM Guide. 0-321-40771-7
Instructor’s CD-ROM includes a gallery of print advertisements and
quick-time clips of TV commercials. 0-321-01643-2
Videotape contains advertisement clips for classroom use. 0-321-
40772-5
Intel Case CD-ROM for Windows by John Quelch, Harvard University
Business School, is based on a Harvard Case Study on the Advertising
Campaign for Intel on introducing its product into the UK market. The
student acts as a marketing manager with an advertising budget, who
needs to decide who to target: the novice home computer buyer, the
average business person who uses a computer, or the corporate
purchasing manager. With this, they then develop an advertising and
promotion campaign using a series of provided advertisements, etc.
0-321-02175-4

2. Analysis for Strategic Marketing
First Edition, 400 pages, 1998, Paper, 0-321-00198-2
Vit