Summary Marketing Management (14th ed.) by Remy Gankema, 2014
MARKETING MANAGEMENT
SUMMARY BY REMY GANKEMA
C HAPTER 1 D EFINING M ARKETING FOR THE 21 ST
C ENTURY
T HE S COPE
OF
M ARKETING
W H AT I S M AR K ET I N G ?
Marketing is about identifying and meeting human and social needs or ‘meeting
needs profitably’. Thus, marketing management is the science of choosing markets
and getting, keeping and growing customers through creating, delivering, and communicating superior customer value.
W HO M AR K ET S ?
A marketer is someone who seeks a response from another party, the prospect.
Marketers seek to influence the level, timing, and composition of demand to meet
the organisation’s objectives. Eight demand states are possible:
1.
2.
3.
4.
5.
6.
7.
8.
Negative: Consumers dislike the product and may even pay to avoid it.
Non-existent: Consumers may be unaware of or uninterested in the product.
Latent: Consumers may share a strong need that cannot be satisfied by an existing product.
Declining: Consumers begin to buy the product less frequently or not at all.
Irregular: Consumer purchases vary on a seasonal or even hourly basis.
Full: Consumers are adequately buying all products put into the marketplace.
Overfull: More consumers would like to buy the product than can be satisfied.
Unwholesome: Consumers may be attracted to products that have undesirable social consequences.
A market is a collection of buyers and sellers who transact over a particular product
(class). Consider the following key customer markets:

Consumer markets: Companies selling mass consumer goods and services.

Business markets: Companies selling business goods and services.

Global markets: Companies in the global marketplace must decide which countries to enter; how to
enter these countries; how to adapt products to each country, etc.

Non-profit and Governmental markets: Companies selling to non-profit organisations.
The marketplace is physical, e.g. a store; marketspace is digital, e.g. a web shop.
Metamarket describes a cluster of complementary products/services closely related
in the minds of consumers, but spread across a diverse set of industries.
1
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
T HE N EW M ARKETING R EALITIES
M AJO R S O CI E T A L F O R C ES
12 key new marketing behaviours, opportunities, and challenges are:

Network information technology

Retail transformation

Globalisation

Disintermediation

Deregulation

Consumer buying power

Privatisation

Consumer information

Heightened competition

Consumer participation

Industry convergence

Consumer resistance
N E W C O MP AN Y C AP ABI LI T I E S
The new societal forces that created the 12 key challenges also generated a new set
of capabilities to help companies cope and respond. For example, the use of internet
as a powerful information and sales channel. Or, the new reach on consumers with
mobile marketing and social media. Mainly impacts on internet base.
C OMPANY O RIENTATION T OWARD
THE
M ARKETPLACE
There are five concepts of marketing:
1.
2.
3.
4.
5.
Production concept: The oldest concept of all. It holds that consumers prefer products that are widely
available and inexpensive. Managers concentrate on achieving high efficiency, low cost, and mass distribution.
Product concept: Proposes that consumers favour products offering most quality, performance or innovative features.
Selling concept: Holds that consumers and businesses, if left alone, will not buy enough of the organisation’s products. Practised most aggressively with unsought goods (goods buyers normally do not
think of buying).
Marketing concept: Holds that the key to achieving organisational goals is being more effective than
competitors in creating, delivering, and communicating superior customer value to your target markets.
Holistic marketing concept: Is based on the development, design, and implementation of marketing
programs, processes, and activities that recognise their breadth and interdependencies. It acknowledges that everything matters in marketing – and that a broad, integrated perspective is often necessary. Four broad components characterise holistic marketing. These components are internal marketing, integrated marketing, performance marketing, and relationship marketing.
R E L AT I O N S HI P M A RK E T I N G
Relationship marketing aims to build mutually satisfying long-term relationships
with key constituents in order to earn and retain their business. Its ultimate outcome
is a unique company asset called a marketing network, consisting of the company
and its supporting stakeholders with whom it has built mutually profitable business
relationships.
I N T E GR AT E D M A RK ET I N G
Occurs when the marketer devises marketing activities and assembles marketing
programs to create, communicate, and deliver value for consumer such that ‘the
whole is greater than the sum of its parts’. Two key themes are that (1) many different marketing activities can create, communicate, and deliver value and (2) market2
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
ers should design and implement any one marketing activity with all other activities
in mind.
I N T E R N AL M ARK ET I N G
The task of hiring, training and motivating able employees who want to serve customers well. Ensures that everyone in the organisation embraces appropriate marketing principles.
P E R FO R MA N CE M ARK E T I N G
Requires understanding the financial and nonfinancial returns to business and society from marketing activities and programs. Top marketers are also considering the
legal, ethical, social, and environmental effects of marketing activities and programs.
U PDATING T HE F OUR P S
The original four Ps of marketing (product, price, place, and promotion) can be updated to reflect the holistic marketing concepts as follows:

People: Internal marketing and the fact that employees are critical to marketing success. Also reflects
the fact that marketers must view consumers as people.

Processes: Reflects all the creativity, discipline, and structure brought to marketing management.

Programs: All the firm’s consumer-directed activities. These activities must be integrated such that
their whole is greater than the sum of their parts.

Performance: To capture the range of possible outcome measures that have financial and nonfinancial
implications, and implications beyond the company itself.
3
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
C HAPTER 2 D EVELOPING M ARKETING S TRATEGIES
AND P LANS
M ARKETING
AND
C U STOMER V ALUE
T H E V A L U E C HAI N
An organisation generally has nine strategically relevant activities: the five primary
and the four support activities. A firm’s success depends not only on how well each
department performs its work, but also on how well the company coordinates departmental activities to conduct core business processes. The processes include:

Market-sensing process: All activities in gathering and acting upon market information.

New-offering realisation process: All activities in researching, developing, and launching new highquality offerings quickly and within budget.

Customer acquisition process: All activities in defining target markets and prospecting.

Customer relationship management process: All activities in building deeper understanding, relationships, and offering to individual customers.

Fulfilment management process: All activities in receiving and approving orders, shipping goods on
time, and collecting payment.
C O R E C O M P ET EN CI ES
A core competency has three characteristics: (1) It is a source of competitive advantage and makes a significant contribution to customer benefits. (2) It has applications in a wide variety of markets. (3) It is difficult for competitors to imitate.
A H O LI ST I C M A RK ET I N G O RI EN T AT I O N
AN D
C US T O M E R V A LU E
Holistic marketers succeed by managing a superior value chain that delivers a high
level of product quality, service, and speed. They address three key management
questions:
1.
2.
3.
Value exploration: How a company identifies new value opportunities.
Value creation: How a company efficiently creates more promising new value offerings.
Value delivery: How a company uses its capabilities to deliver the new value offerings more efficiently.
THE CENTRAL ROLE
OF
S T R AT E GI C P LAN N I N G
Most large companies consist of four organisational levels: (1) corporate, (2) division, (3), business unit (BU), and (4) product. Corporate is responsible for designing a
corporate strategic plan for all divisions. They establish a plan covering the allocation
of funds to each BU within the division. Each BU develops a strategic plan to carry
that BU into a profitable future. Finally, each product level (line, brand) develops a
marketing plan for achieving its objectives.
The marketing plan is the central instrument for directing and coordinating the marketing effort. Its strategic marketing plan lays out the target markets and the firm’s
value proposition. The tactical marketing plan specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, and
service.
4
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
C ORPORATE
AND
D IVISION S TRATEGIC P LANNING
There are many differences between corporations, but all corporate headquarters
undertake four planning activities:
1.
2.
3.
4.
Defining the corporate mission: Organisations develop mission statements to share with managers,
employees and often customers. It provides a shared sense of purpose, direction, and opportunity.
Good mission statements have five major characteristics:
a. They focus on a limited number of goals.
b. They stress the company’s major policies and values.
c. They define the major competitive spheres within which the company operates.
d. They take a long-term view.
e. They are as short, memorable, and meaningful as possible.
Establishing strategic business units: There are two different kinds of business definition. Take NS for
example. Its product definition is ‘they run a railroad’. Its market definition is ‘they are a people-andgoods mover.’ Large companies normally manage quite different businesses, each requiring its own
strategy. These business can be classified into strategic business units (SBUs). An SBU has three characteristics:
a. It is a single business, or a collection of related businesses, that can be planned separately
from the rest of the company.
b. It has its own set of competitors.
c. It has a manager responsible for strategic planning and profit performance, who controls
most of the factors affecting profit.
Assigning resources to each strategic business unit: Once management has defined SBUs, it must decide how to allocate corporate resources to each. Portfolio-planning models provide ways to make investment decisions.
Assessing growth opportunities: If there is a gap between future desired sales and projected sales,
corporate management needs to develop or acquire new businesses to fill it. There are three options
to identify opportunities for growth. Additionally, they can downsize businesses for resources.
a. Intensive growth: A company’s first course of action should be a review of opportunities for
improving existing businesses. The consideration whether it could gain more market share
with its current products in their current markets is done using a market-penetration strategy. Next, it considers whether it can find or develop new markets for its current products, in a
market-development strategy. New products to current markets are considered with a product-development strategy.
b. Integrative growth: Identifying opportunities to build or acquire related to current businesses.
c. Diversification growth: To identify opportunities to add attractive unrelated businesses.
d. Downsizing and divesting older businesses: Companies must prune, harvest, or divest old
businesses to release resources for other uses and cost reduction.
5
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
B USINESS U NIT S TRATEGIC P LANNING
The BU strategic-planning process consists of the following steps:
1.
2.
3.
4.
5.
6.
The business mission: Each BU needs to define its specific mission.
SWOT analysis: Overall evaluation of a company’s strengths, weaknesses, opportunities, and threats.
Exists of external and internal environments:
a. External environment: Opportunity and threat analysis. A marketing opportunity is an area of
buyer need and interest that a company has a high probability of profitably satisfying. To
evaluate opportunities, companies can use market opportunity analyses (MOA). An environmental threat is a challenge posed by an unfavourable trend that would lead to lower sales or
profit.
b. Internal environment: Strengths and weaknesses analysis. Each business should evaluate its
better and worse parts.
Goal formulation: After having performed a SWOT analysis, a company can proceed to goal formulation, developing specific goals for the planning period. The BU sets objectives such as profitability,
sales growth, etc., and then manages by objectives (MBO). For MBO to work, the BUs objectives must
meet four criteria:
a. They must be arranged hierarchically, from most to least important.
b. Objectives should be quantitative whenever possible.
c. Goals should be realistic.
d. Objectives must be consistent.
Strategic formulation: Goals indicate what a BU wants to achieve, strategy is the plan for getting
there. There are three generic strategies that are a good starting point for strategic thinking, called
Porter’s generic strategies: overall cost leadership, differentiation, and focus. Firms directing the same
strategy to the same target market constitute a strategic group. Additionally, many companies form
strategic alliances. Often, these alliances take the form of marketing alliances. Four major categories
are:
a. Product or service alliances: A company licensing another to produce its product, or two
companies jointly market their products or a new product.
b. Promotional alliances: A company agrees to carry promotion for another’s.
c. Logistics alliances: A company offers logistical services for another’s.
d. Pricing collaborations: One or more companies join in a pricing collaboration.
Program formulation and implementation: It is important that a marketing strategy is implemented
properly.
Feedback and control: Examine the changing environment and act.
6
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
C HAPTER 3 C OLLECTING
F ORECASTING D EMAND
C OMPONENTS
S YSTEM
I NFORMATION
AND
M ODERN M ARKETING I N FORMATION
OF A
Every firm must organise and distribute a continuous flow of information to its marketing managers. A marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, evaluate and distribute information to decision makers. It relies on internal company records, marketing intelligence activities,
and marketing research.
I NTERNAL R ECORDS
Marketing managers rely on internal reports of orders, sales, prices, costs, inventory
levels, receivables, and payables:

Order-to-payment cycle: Heart of the internal records system. Includes all orders, invoices, backorder, shipping documents, et cetera.

Sales information systems: Timely and accurate reports on current sales.

Databases, data warehousing, and data mining: Organising information into customer, product, and
salesperson databases, and then combine the data to identify relations.
M ARKETING I NTELLIGENCE
T H E M A R K ET I N G I N T E L LI G EN C E S Y ST E M
A marketing intelligence system is a set of procedures and sources that managers
use to obtain everyday information about developments in the marketing environment. Companies can take eight possible actions to improve the quantity and quality
of its marketing intelligence:

Train and motivate the sales force to spot and report new developments.

Motivate distributors, retailers, and other intermediaries to pass along important intelligence.

Hire external experts to collect intelligence.

Network internally and externally.

Set up a customer advisory panel.

Take advantage of government-related data resources.

Purchase information from outside research firms and vendors.

Collect marketing intelligence on the internet.
A NALYSING
N E E DS
AN D
THE
M ACRO - ENVIRONMENT
T R EN DS
Entrepreneurs and companies manage to create new solutions to unmet needs. We
distinguish among fads, trends, and megatrends:

Fad: Unpredictable, short-lived and without significance. Requires luck and good timing.

Trend: A sequence of events with momentum and durability. Reveals the shape of the future and can
provide strategic direction.

Megatrend: A large social, economic, political, and technological change that is slow to form, and once
in place, influences us for seven years or longer.
7
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
I D E N T I FY I N G
THE
M A J O R F O R C ES
Firms must monitor six major forces in the broad environment:

Demographic environment: Population in all its forms:
o Worldwide population growth
o Population age mix
o Ethnic and other markets
o Educational groups
o Household patterns

Economic environment: Trends affecting purchasing power:
o Consumer psychology
o Income distribution
o Income, savings, debt, and credit

Sociocultural environment: Sociocultural trends:
o Our relationship to ourselves, others, organisations, society, nature, and the universe
o High persistence of core cultural values
o Existence of subcultures

Natural environment: Changes in the natural environment. Important trends to be aware of:
o Shortage of raw materials
o Increased cost of energy
o Increased pollution levels
o Changing role of governments with respect to nature

Technological environment: The dynamic technological changes:
o Accelerating pace of change
o Unlimited opportunities for innovation
o Varying R&D budgets
o Increased regulation of technological change

Political-legal environment: Changes in laws, government agencies and pressure groups:
o Increase in business legislation
o Growth of special-interest groups
F ORECASTING
AND
T H E M EA S UR E S
OF
D EMAND M EASUREMENT
M A RK ET D E M AN D
When breaking down a market, there are many productive ways:

Potential market: The set of consumers with a sufficient level of interest in a market offer.

Available market: The set of consumers who have interest, income, and access to a particular offer.

Target market: The part of the qualified available market the company decides to pursue.

Penetrated market: The set of consumers who are buying the company’s product.
8
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
A V O C AB U L AR Y
FO R
D E M AN D M E AS UR E M EN T
The major concepts in demand measurement are market demand and company demand. Within each, a demand function, a sales forecast, and a potential are distinguished:

Market demand
o Market demand: The total volume that would be bought by a defined customer group in a
defined area and a defined time period in a defined environment under a defined marketing
program.
 Minimum, potential, sensitivity: The base demand is the market minimum, the demand at its upper limit the market potential. The distance between market minimum and potential is called marketing sensitivity of demand.
 Market-penetration index: Comparison of the current and potential levels of market
demand.
o Market forecast: The market demand corresponding to the level of industry marketing expenditure.
o Market potential: Upper limit of the market demand.
 Product-penetration percentage: The percentage of ownership or use of a product
or service in a population.

Company demand
o Company demand: The company’s estimated share of market demand at alternative levels of
company marketing effort in a given period of time.
o Company sales forecast: The expected level of company sales based on a chosen marketing
effort.
 Sales quota: Sales goal set for a product line, company division, et cetera.
 Sales budget: A conservative estimate of the expected volume of sales.
o Company sales potential: The sales limit approached by company demand as company marketing effort increases relative to that of competitors.
E ST I MA T I N G C U RR E N T D E M AN D
Current demand can now be calculated. Total market potential, area market potential, and total industry sales and market shares ought to be estimated:

Total market potential: Multiply the potential number of buyers by the average quantity each purchase, times the price.

Area market potential: The estimation of market potential of different areas. Two major methods are:
o Market-build-up method: A simple explanation is given at p. 110 of Kotler & Keller (2012).
o Multiple-factor index method: Assessing a market on different factors, with each factor having its own weight. Brand development index (BDI) divides brand by category.

Industry sales and market shares: Besides estimating potential, a company needs to know the actual
industry sales. Industry trade associations often collect and publish total industry sales, but usually not
individual company sales. Another way is to buy reports from a marketing research firm.
E ST I MA T I N G F UT UR E D E MA N D
Finally, future demand can be estimated:

Survey of buyers’ intentions: Asking people on their buying intentions and putting the answers on a
purchase probability scale. An example could have ‘0.00’ for ‘No chance’ and ‘1.00’ for ‘Certain’.

Composite of sales force opinions: Asking sales representatives to estimate their future sales.
9
Summary Marketing Management (14th ed.) by Remy Gankema, 2014

Expert opinion: Obtaining forecasts from experts, including dealers, distributors, suppliers, etc.

Past-sales analysis: Developing forecasts on the basis of past sales:
o Time-series analysis: Breaks past time series into trend, cycle, seasonal, and erratic, and projects them into the future.
o Exponential smoothing: Projects the next period’s sales by combining an average of past
sales and the most recent sales, giving more weight to the latter.
o Statistical demand analysis: Measures the impact of a set of causal factor on the sales level.
o Econometric analysis: Builds sets of equations that describe a system and statistically derives
the different parameters that make up the equations.

Market-test method: Described in chapter 20.
10
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
C HAPTER 4 C ONDUCTING M ARKETING R ESEARCH
T HE M ARKETING R ESEARCH S YSTEM
Marketing insights provide diagnostic information about how and why we observe
certain effects in the marketplace, and what that means to marketers. Marketing research is often done by outside firms. These marketing research firms fall into three
categories:
1.
2.
3.
Syndicated-service research firms: Firms that gather consumer and trade information, sold for a fee.
Custom marketing research firms: Firms that are hired to carry out specific projects.
Specialty-line marketing research firms: Firms providing specialised research services.
T HE M ARKETING R ESEARCH P ROCESS
Effective marketing research follows the following six steps:
1.
2.
Define the problem, the decision alternatives, and the research objectives: It is important to define
the problem not too narrowly or broadly.
Develop the research plan: To develop a research plan, decisions have to be made about data
sources, research approaches, research instruments, sampling plan, and contact methods:

Data sources: Secondary data are data collected for another purpose and already exist. Primary data are freshly gathered data for a specific purpose.

Research approaches: Marketers collect primary data in five main ways:
o Observational research: Gathering data by observing relevant actors settings unobtrusively. Ethnographic research is observational research that provides deep cultural
understanding of how people live and work.
o Focus group research: A focus group is a gathering of 6-10 carefully selected persons
brought together to discuss various topics of interest at length. A research moderator provides questions and probes.
o Survey research: Surveys are used to assess people’s knowledge, beliefs, preferences, and satisfaction and to measure these magnitudes in the general population.
Surveys should be short and not conducted too often.
o Behavioural research: The analysis of data such as catalogue purchases, store scanning data, and customer databases. Actual purchases are more reliable than statements.
o Experimental research: Designed to capture cause-and-effect relationships by eliminating competing explanations of the observed findings. Experiments call for selecting matched groups of subjects, giving them different treatments, controlling extraneous variables, and checking whether differences are statistically significant.

Research instruments: There are three main research instruments in collecting primary data:
o Questionnaires: Consists of a set of questions presented to respondents. Most
common used instrument. Need to be carefully developed, tested, and debugged before use on greater scale.
o Qualitative measures: Relatively unstructured measurement approaches that permit
a range of possible responses.
o Technological devices: Devices such as brain wave scanners and skin sensors.

Sampling plan: Now, a sampling plan must be designed. This calls for three decisions:
o Sampling unit: Whom should we survey?
o Sample size: How many people should we survey?
11
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
o
Sampling procedure: How should we choose the respondents?

3.
4.
5.
6.
Contact methods: Finally, one must decide how to contact the subjects:
o Mail: Reaches people who would not give personal interviews. Low response rate.
o Telephone: Gives the ability to clarify if respondents do not understand.
o Personal: Most versatile but also most expensive, biased, and time consuming.
o Online: Approach of increasing importance, many ways to do research. Pros: inexpensive, fast, honest and versatile. Cons: can be small and skewed, can suffer from
technological problems and inconsistencies.
Collect the information: Generally the most expensive phase and the most prone to error.
Analyse the information: Extracting findings by tabulating data and developing summary measures.
Computing of averages and measures of dispersion, and applying advanced statistical techniques.
Present the findings: The presenting of findings relevant to the major marketing decisions facing management, in an understandable and compelling way.
Make the decision: Can be made with marketing decision support systems (MDSS), a coordinated collection of data, systems, tools, and techniques, with supporting software and hardware.
M EASURING M ARKETING P RODUCTIVITY
There is an increased need for accountability. Two complementary approaches to
measuring marketing productivity are marketing metrics and marketing-mix modelling. Marketing dashboard are a structured way to disseminate the insights gleaned
from these two approaches within the organisation.
M AR K ET I N G M ET RI C S
Marketing metrics is the set of measures that helps them quantify, compare, and interpret their marketing performance. There are many different measures; marketers
choose them based on the issue they face.
M AR K ET I N G -M I X M O D E L LI N G
Marketing-mix models analyse data from a variety of sources to understand more
precisely the effects of specific marketing activities. The finding from marketing-mix
modelling help allocate or reallocate expenditures.
M AR K ET I N G D A S HBO A RD S
A marketing dashboard assembles a summary set of relevant internal and external
measures for synthesis and interpretation, a visual display with real-time indicators.
As input to the dashboard, two key market-based scorecards that reflect performance and provide possible early warning signals, should be included:

Customer-performance scorecard: Records how well the company is doing year after year on customer-based measures. Management should set target goals for each measure and take action when results get out of bonds.

Stakeholder-performance scorecard: Tracks the satisfaction of various constituencies who have critical interest in and impact on the company’s performance: employees, suppliers, banks, distributors,
retailers, and stockholders.
12
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
C HAPTER 6 A NALYSING C ONSUMER M ARKETS
W HAT I NFLUENCES C ONSUMER B EHAVIOUR ?
The study of how individuals, groups, and organisations select, buy, use, and dispose
of goods, services, ideas, or experiences to satisfy their needs and wants is called
consumer behaviour. Buying behaviour is influenced by cultural, social, and personal
factors.
C U LT UR A L F A CT O R S
Culture determines the values a person grows up with. It is the broadest and deepest influence on consumer behaviour. Each culture consists of smaller subcultures
that provide more specific identification and socialisation. Also, everyone belongs to
a social class, relatively homogeneous and enduring divisions in a society.
S O CI AL F A CT O R S
Next to cultural factors, social factors affect buying behaviour:

Reference groups: All the groups that have a direct or indirect influence on one’s attitude or behaviour. Groups with direct influence are called membership groups. They consist of primary groups, with
whom the person interacts fairly continuously and informally, and secondary groups, such as religious
and professional groups. Aspirational groups are those a person hopes to join; dissociative groups are
those whom one rejects. An opinion leader is the person who offers informal advice or information
about a specific product or category.

Family: The most important consumer buying organisation in society. The family of orientation consists of parents and siblings. They give a person an orientation toward religion, politics, et cetera. The
family of procreation is the person’s spouse and children. They influence a person more directly on
buying behaviour.

Roles and status: A role consists of the activities a person is expected to perform. It comes along with
its status.
P E R SO N A L F A CT O R S
The following personal characteristics influence a buyer’s decision:

Age and stage in the life cycle: Taste in products is often related to our age and family life cycle.

Occupation and economic circumstances: What one does and what his purchasing power is.

Personality and self-concept: Logically, one’s personality and self-concept influences his decisions.
Brand personality is the specific mix of human traits that can be attributed to a particular brand.

Lifestyle and values: One’s pattern of living and his beliefs.
K EY P SYCHOLOGICAL P ROCESSES
Four key psychological processes fundamentally influence consumer responses.
These are motivation, perception, learning, and memory.
M O T I V AT I O N : F RE U D , M AS LO W , H ER Z B ER G
Everyone has needs at any time. A need becomes a motive when it is aroused by a
sufficient level of intensity to drive one to act. There are three well-known theories
of human motivation:
13
Summary Marketing Management (14th ed.) by Remy Gankema, 2014

Freud’s theory: Freud assumes psychological forces are largely unconscious, and that a person cannot
fully understand his own motivations. A technique called laddering lets one trace a person’s motivation from the stated instrumental ones to the more terminal ones.

Maslow’s theory: Maslow’s pyramid. Human needs are arranged from most to least pressing: physiological needs, safety needs, social needs, esteem needs, and self-actualisation needs.

Herzberg’s theory: A two-factor theory of satisfiers and dissatisfiers. For a purchase, not only should
dissatisfiers be absent, also satisfiers should be present.
PERCEPTION
Perception is the process by which we select, organise, and interpret information inputs to create a meaningful picture. There are three perceptual processes:

Selective attention: One cannot attend to all stimuli, most are screened out – called selective attention. Some findings on selective attention:
o People are more likely to notice stimuli that relate to a current need.
o People are more likely to notice stimuli they anticipate.
o People are more likely to notice stimuli whose size is large compared to usual.

Selective distortion: The tendency to interpret information in a way that fits our preconceptions.

Selective retention: The remembrance of only the things we want to remember.

Subliminal perception: Perceptions of the subconscious.
L E AR N I N G
A drive is a strong internal stimulus impelling action. Cues are minor stimuli that determine when, where, and how a person responds. Discrimination means we have
learned to recognise differences in sets of similar stimuli and can adjust responses
accordingly.
E MO T I O N S
A brand may make a consumer feel proud, excited, and ads may create feelings.
M E MO R Y
Notice the difference between long-term and short-term memory (LMT/SMT). Most
views of LTM structure assume one forms some kind of associative model.
Memory encoding describes how and where information gets into memory.
Memory retrieval is the way information gets out of memory. Three facts are important about memory retrieval:

Presence of other product info in memory can produce interference effects and cause to either overlook or confuse new data.

Time between exposure to information and encoding has been shown to produce only gradual decay.

Information may be available but not accessible for recall without proper retrieval cues or reminders.
14
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
T HE B UYING D ECISION P ROCESS : T HE F IVE -S TAGE M ODEL
Consumers typically pass through five stages of buying decision:
1.
2.
Problem recognition: The process starts when the buyer recognises a problem or need.
Information search: Then, the search for information. The milder search state is called heightened attention, while active information search is reached when he is looking for reading material et cetera.

Information sources: Major information sources to which consumers will turn are:
 Personal
 Commercial
 Public
 Experimental

3.
Search dynamics: It is important to identify the hierarchy of attributes that guide consumer
decision making in order to understand different competitive forces. This process is called
market partitioning.
Evaluation of alternatives: There are endlessly many processes used. Every person is different.

4.
Expectancy-value model: Posits that consumers evaluate products and services by combining
their brands beliefs according to importance. Calculation of best product by weighted-score
model.
Purchase decision: The real purchase of the product.

Non-compensatory models of consumer choice: With non-compensatory models of consumer choice, positive and negative attribute considerations do not necessarily net out, like in the
expectancy-value model. Consumers often take heuristics, mental shortcuts or rules of
thumb. Three choice heuristics:
 Conjunctive heuristic: Consumers sets a minimum acceptable cut-off level for each
attribute and chooses the first alternative that meets minimum standard for each.
 Lexicographic heuristic: Consumer chooses on basis of its most important attribute.
 Elimination-by-aspects heuristic: Consumer compares brand on an attribute selected probabilistically - where the probability on choosing an attribute is positively related to its importance - and eliminates brands that do not meet minimum acceptable cut-offs.

Intervening factors: Two intervening factors of purchase intention and the purchase decision
are attitudes of others and unanticipated situational factors that may erupt. A consumer’s
purchase decision is heavily influenced by perceived risk:
 Functional risk: Product does not perform to expectations.
 Physical risk
 Financial risk
 Social risk: Product results in embarrassment in front of others.
 Psychological risk: Product affects mental well-being.
5.
 Time risk: Failure of product results in opportunity cost.
Post-purchase behaviour: Marketers must monitor post-purchase satisfaction, actions, and product
uses and disposal.
M O D ER AT I N G E F F E CT S
ON
C O N SU M ER D ECI SI O N M AK I N G
The manner by which a consumer follows the decision-making stages depends on i.a.
the level of involvement and extent of variety seeking:
15
Summary Marketing Management (14th ed.) by Remy Gankema, 2014

Low-involvement consumer decision making: There are two means of persuasion. The central route,
in which much thought is stimulated and decision are based on real information, and the peripheral
route, in which much less thought is provoked. The central route is only followed if consumer possess
enough motivation.

Variety-seeking buying behaviour: Take cookies for example. People do not want just one type of
cookies, they like to switch between cookies all the time.
B EHAVIOURAL D ECISION T HEORY
E CONOMICS
AN D
B EHAVIOURAL
Behavioural decision theory (BDT) has been an active academic research area in
marketing. The work of those academics lead to the emergence of the field of behavioural economics. Issues in three broad areas are reviewed:

Decision heuristics
o Availability heuristic: Consumers base their predictions on the quickness and ease with which
a particular example of an outcome comes to mind.
o Representativeness heuristic: Consumers base their predictions on how representative or
similar the outcome is to other examples.
o Anchoring and adjustment heuristic: Consumers arrive at an initial judgment and then adjust
it based on additional information.

Framing: The manner in which choices are presented to and seen by a decision maker.
16
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
C HAPTER 8 I DENTIFYING M ARKET S EGMENTS AND
T ARGETS
B ASES
FOR
S EGMENTING C ONSUMER
MARKETS
A market segment consists of a group of customers who share a similar set of needs
and wants. Regardless of which type of segmentation scheme we use, the key of
segmenting is adjusting the marketing program to recognise customer differences.
G EO G R A P HI C S EG M EN T AT I O N
Divides the market into geographical units such as nations, states, et cetera.
D E MO G R AP HI C S EG M EN T AT I O N
Divides the market on variables such as age, life stage, gender, income, and so on.
Unimportant and boring text, feel free to read it anyway.
P SY C HO GR AP HI C S E G M EN T AT I O N
Psychographics is the science of using psychology and demographics to better understand consumers. A popular classification system based on psychographic measurement is the VALS framework. It divides people into people with high resources
and innovation, and low resources and innovation:

High resources
o Innovators: Successful, sophisticated, active, take-charge people.
o Thinkers: Mature, satisfied, people motivated by ideals and who value order.
o Achievers: Successful, goal-oriented people who focus on career and family.
o Experiencers: Young, enthusiastic, impulsive people who seek variety and excitement.

Low resources
o Survivors: Elderly, passive people concerned about change.
o Believers: Conservative, conventional, and traditional people.
o Strivers: Trendy and fun-loving people who are resource-constrained.
o Makers: Practical, down-to-earth, self-sufficient people.
B E H AV I O UR AL S E G M EN T AT I O N
Divides buyers on the basis of their knowledge of, attitude toward, use of, or response to a product:

Needs and benefits

Decision roles: The role people play in decisions (initiator, influencer, decider, buyer, user).

User and usage - real user and usage-related variables: Segmenting on variables such as occasions,
user status, usage rates, et cetera. Brand loyalty status is divided in four groups:
o Hard-core loyals: One brand.
o Split loyals: Two/three brands.
o Shifting loyals: Consumers who shift loyalty from one to another.
o Switchers: No loyalty.
B ASES
FOR
S EGMENTING B USINESS M ARKETS
Different variables are used when segmenting business markets, but some stay the
same. Table 8.5 in Kotler et al. (2012) gives a nice overview of possible variables. The
17
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
idea is still the same: splitting up population in smaller groups with a same set of
needs and wants.
M ARKET T ARGETING
Table 8.6 (Kotler et al., 2012) shows a seven-step needs-based market segmentation
approach.
E FF E C T I V E S E G M EN T A T I O N C RI T ERI A
To be useful, market segments must rate favourably on five key criteria:

Measurable: Size, purchasing power, and characteristics of segments can be measured.

Substantial: Segments are large and profitable enough to serve.

Accessible: Segments can be effectively reached and served.

Differentiable: Segments are conceptually distinguishable and respond differently to different things.

Actionable: Programs can be formulated for attracting and serving segments.
There are five threats to the intrinsic long-run attractiveness of a market (segment):

Threat of intense segment rivalry

Threat of new entrants

Threat of substitute products

Threat of buyer’s growing bargaining power

Threat of suppliers’ growing bargaining power
E V AL U AT I N G
AND
S E L E CT I N G
THE
M AR K ET S E G ME N T S
When evaluating market segments, the firm must look at the segment’s overall attractiveness and the company’s objectives and resources. There is a range of possible levels of segmentation that can guide market decisions:

Full market coverage: Serving all customer with all the products they might need.

Multiple segments: Serving a subset of all the possible segments. A supersegment is a set of segments
sharing some exploitable similarity.

Single-segment concentration: Marketing to only one segment.

Individual marketing: One-to-one marketing, or customised marketing. Serving one individual.
18
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
C HAPTER 9 C REATING B RAND E QUITY
W HAT I S B RAND E QUITY ?
A brand is a name, term, sign, symbol, or design, or a combination of those, belonging to particular goods or services.
THE ROLE
OF
B RAN D S
Brand identify the maker of a product and helps simplifying decision making. Brands
also perform valuable functions for firms. They simplify product handling, tracing,
and organising inventory and accounting records. Intellectual property can be protected through patents and trademarks et cetera. Besides, it provides predictability
and security of demand for the firm, and creates barriers to entry that make it difficult for other firms to enter the market.
T H E S CO P E
OF
B R AN DI N G
Branding is endowing products and services with the power of a brand.
D E FI N I N G B R AN D E Q UI T Y
Brand equity is the added value endowed on products and services. Customerbased brand equity is thus the differential effect brand knowledge has on consumer
response to the marketing of that brand. Three key ingredients of customer-based
brand equity:

Brand equity arises from differences in consumer response.

Differences in response are a result of consumers’ brand knowledge.

Brand equity is reflected in perceptions, preferences, and behaviour related to all aspects of the marketing of a brand.
B R AN D E Q UI T Y
MO D E L S
Three more-established brand equity models are:

BrandAsset Valuator (BAV): It compares brand equity of thousands of brands across hundreds of categories. Four key components of brand equity in line with BAV:
1. Energised differentiation: The brand’s point of difference.
2. Relevance: How appropriate the brand is to you.
 Differentiation and relevance form the brand’s strength.
3. Esteem: How you regard the brand.
4. Knowledge: An intimate understanding of the brand.
 Esteem and knowledge form the brand’s stature. Strength and stature can be put in
quadrants to position companies.

Brandz: According to this model, brand building follows a series of steps. It assigns persons to a step
depending on their responses to a set of questions. The steps, from weak to strong relationship, are:
1. Presence: Do I know about it?
2. Relevance: Does it offer me something?
3. Performance: Can it deliver?
4. Advantage: Does it offer something better than the others?
5. Bonding: Nothing else beats it.

Brand resonance model: Also views brand building as a pyramid of steps, which needs the right ‘building blocks’. From bottom to top, with step as main and ‘building blocks’ necessary as sub:
19
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
1.
2.
3.
4.
Identify: Ensuring customers identify your brand and associate it with a specific product.
 Brand salience: How often and how easily customers think of the brand.
Meaning: Establishing the brand meaning in customer’s minds.
 Brand performance: How well the product meets customers’ needs.
 Brand imagery: Describes the extrinsic properties of the product or service.
Response: Eliciting the proper customer responses in terms of brand-related judgment
 Brand judgments: Focus on customers’ own personal opinions and evaluations.
 Brand feelings: Customers’ emotional responses with respect to the brand.
Relationships: Converting consumers’ brand response to an intense, active loyalty.
 Brand resonance: Describes the relationship customers have with the brand.
B UILDING B RAND E QUITY
There are three main sets of brand equity drivers:
1.
2.
3.
The initial choices for the brand elements or identities making up the brand.
The product, service, and all accompanying marketing activities and support.
Other associations indirectly transferred to the brand by linking it to some other entity.
C HO O SI N G B R A N D E L E M EN T S
Brand elements are anything that identifies and differentiates a brand, like the
‘swoosh’ logo and ‘Just Do It’ slogan of Nike. There are six criteria for choosing brand
elements, the first three are brand building, latter three are defensive:
1.
2.
3.
4.
5.
6.
Memorable: How easily do consumers recall and recognise the brand element?
Meaningful: Is it credible?
Likable: How aesthetically appealing is it?
Transferable: Can it introduce new products?
Adaptable: How adaptable and updatable is it?
Protectable: How legally protectable is it?
D E SI GN I N G H O LI ST I C M ARK ET I N G A CT I V I T I E S
Integrated marketing is about mixing and matching marketing activities to maximise
their individual and collective effects. Those marketing activities should work singularly and in combination.
L EV ER A GI N G S E CO N D A RY A S SO CI AT I O N S
The third way is to ‘borrow’ brand equity from another company. In other words,
they create and link it to your product.
I N T E R N AL B R AN DI N G
Consists of activities and processes that help inform and inspire employees about
brands. Some important principles for internal branding are:

Choose the right moment.

Link internal and external marketing.

Bring the brand alive for employees.
B R AN D C O M MU N I T I ES
A specialised community of consumers and employees whose identification and activities focus around the brand. They share rituals, and moral responsibilities.
20
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
M EASURING B RAND E QUITY
An indirect approach of assessing potential sources of brand equity identifies and
tracks consumer brand knowledge structures, while a direct approach assesses the
actual impact of brand knowledge on consumer response. A brand audit is a consumer-focused series of procedures to assess the health of a brand, uncover its
sources, and suggest ways to improve and leverage its equity. Brand-tracking studies collect quantitative data from consumers over time to provide consistent, baseline info about how brands and marketing programs are doing.
M ANAGIN G B RAND E QUITY
Once brand equity has been created it must be managed properly to not lose value.
B R AN D R EI N FO R C E M EN T
Marketers should consistently reflect on the firm’s products, core benefits, unique
brand associations, et cetera.
B R AN D R EV I T A LI S AT I O N
If brand equity lost value, a firm must find a way to get itself back to its old value.
One can either go ‘back to basics’ or ‘reinvent’ his product.
D EVISING
A
B RANDING S TRATEGY
A branding strategy or brand architecture reflects the number and nature of both
common and distinctive brand elements. There are three options on branding new
products:
1.
2.
3.
It can develop new brand elements for the new product.
It can apply some of its existing brand elements.
A combination of the both.
When an existing brand introduces a new product, the product is called a brand extension. A new brand combined with an existing, is called a sub-brand. The existing
brand in both cases is called the parent brand, if it is a bigger group it is called a
master/family brand. Brand extension exists of line extension, where the parent
brand covers a new product within the category, and category extension, where the
brand is used for a new category of product.
A brand line consists of all products sold under a particular brand, a brand mix all
lines that a particular seller makes. Finally, branded variants are specific brand lines
supplied to specific retailers, a result from the pressure to provide distinction.
B R AN DI N G D E CI SI O N S
If a firm decides to brand its products, it must choose which brand names to use.
Three general strategies are:

Individual or separate family brand names: Also called a ‘house of brands’ strategy. Useful if a company produces quite different products.

Corporate umbrella or corporate brand name: Also called ‘branded house’ strategy. Lower development costs, can lead to greater intangible value for the firm.

Sub-brand name: Using a part of the brand as your brand name. For example, ‘Kellogg’s Corn Flakes’
(Kellogg’s is the brand name).
21
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
B R AN D P O R T FO LI O S
A brand portfolio is the set of all brands and brand lines a particular firm offers. Multiple brands are often necessary to serve multiple segments. Other reasons for multiple brands are:

Increasing shelf presence and retailer dependence in the store.

Attracting customers seeking variety.

Increasing internal competition within the firm.

Yielding economies of scale on all aspects.
Brand portfolios are too big if the firm makes profit when one is dropped, and too
small if it can add profit when one is added. Brands can also play specific roles:

Flankers: Positioned so that more important flagship brands can retain their desired positioning.

Cash cows: Brand that are kept around because they bring in money without much effort.

Low-end entry level: Brands that are made to attract customers to the brand franchise.

High-end prestige: To add prestige and credibility to the entire portfolio.
B R AN D E XT EN SI O N S
Most new products these days are brand extensions. Some advantages and disadvantages of brand extensions are:

Advantages
o Improved odds of new-product success: Customers are already known with the brand and
have expectations of it. That causes improved odds of succeeding.
o Positive feedback effects: A well-working new product might add to the total brand’s value.

Disadvantages
o Brand dilution: The effect that occurs when consumers no longer associate a brand with a
specific or highly similar set of products and start thinking less of the brand.
o Value diminution: When the brand extension harms the value of the whole brand.
To determine the success of brand extensions, scorecards such as in table 9.5 (Kotler
et al., 2012) can be used.
C USTOMER E QUITY
Customer equity is ‘the sum of lifetime values of all customers’. It is affected by:

Acquisition: Number of prospects, the acquisition probability of a prospect, and acquisition spending.

Retention: Retention rate and retention spending level.

Add-on spending: A function of the efficiency of add-on selling, number of add-on selling offers, and
the response rate to new offers.
22
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
C HAPTER 10 C RAFTING THE B RAND P OSITIONING
D EVELOPING
AND
E S TABLISHING
A
B RAN D P OSITIONING
Positioning is the act of designing a company’s offering and image to occupy a distinctive place in the minds of the target market. Deciding on a positioning requires
determination of a frame of reference by identifying the target market, identifying
the optimal points of parity and points of difference, and creating a brand mantra.
D E T ER MI N I N G
A
C O MP ET I T I V E F RA M E
OF
R E F ER EN C E
The competitive frame of reference defines which other brands a brand competes
with and thus should be the focus of competitive analysis:

Identifying competitors: A good start is to determine category membership, the products with which
a brand competes. Sometimes these competitors come from totally different industries, a group of
firms offering a product that are close substitutes for one another.

Analysing competitors: Identify what the strengths and weaknesses of competitors are, and fight
them on their weaknesses.
I D E N T I FY I N G O P T I M A L P O I N T S - O F -D I F F ER EN C E
P AR I T Y
AN D
POINTS-OF-
Now, points-of-difference and points-of-parity can be defined.

Points-of-difference (PODs): The differences between a firm and its competitors. Three criteria determine whether a brand association can truly function as a point-of-difference:
o Desirable to consumer: Consumers must see the brand as personally relevant to them.
o Deliverable by the company: Company must have the internal resources to feasibly and profitably create and maintain the brand in the minds of consumers.
o Differentiating from competitors: Consumers must see the brand as distinctive and superior.

Points-of-parity (POPs): The attributes that are shared with other brands. There are two basic forms:
o Category POPs: Attributes that consumers view as essential to a legitimate and credible offering within a certain product category. They are necessary, but not sufficient.
o Competitive POPs: Designed to overcome perceived weaknesses of the brand. May be required to either negate competitors’ PODs or negate a vulnerability of the brand as a result of
its own POD.
POPs and PODs should be seen from multiple frames of reference. For example,
Subway has convenience as POP with McDonalds and healthy food as POD, but
healthy food as POP with restaurants and convenience as POD.
C HO O SI N G POP S
AN D
POD S
Perceptual maps may be useful for choosing POPs and PODs. These are visual representations of consumer perceptions and preferences. Figure 10.1 (Kotler et al., 2012)
gives a clear view of a perceptual map.
B R AN D M AN T R AS
Short, three- to five-word phrases that capture the irrefutable essence of the brand
positioning. They are designed with internal purposes in mind. Three key criteria for
a brand mantra are:
23
Summary Marketing Management (14th ed.) by Remy Gankema, 2014

Communicate: Define the category of business for the brand and set the brand boundaries, clarify
what is unique.

Simplify: Be memorable, so be short, crisp, and vivid in meaning.

Inspire: Take out ground that is personally meaningful and relevant to as many employees as possible.
E ST A B LI SHI N G B R AN D P O SI T I O N I N G
Once brand positioning strategy is determined, it has to be known to the organisation and consumers. The category membership must be communicated. Three main
ways to convey a brand’s category membership:
1.
2.
3.
Announcing category benefits: Communicating the benefits of the category, such as durability in the
industrial tools category.
Comparing to exemplars: Compare your product with well-known, noteworthy other brands.
Relying on the product descriptor: The product descriptor is what follows the brand name, such as
‘sports car’.
D IFFERENTIATION S TRATEGIES
Competitive advantage is a company’s ability to perform in ways that competitors
will not match. A leverageable advantage is one that a company can use as a springboard to new advantages.
In competitive markets, firms need to differentiate beyond product differentiation.
Some dimensions are:

Employee differentiation: Have better-trained employees who provide superior customer service.

Channel differentiation: More effectively and efficiently design distribution channels’ coverage.

Image differentiation: Craft powerful, compelling images that appeal to consumers’ needs.

Services differentiation: Design a better and faster delivery system providing more effective solutions.
Brands should also have emotional components. Brands that are lovemarks command both respect and love and result from a brands’ ability to achieve:

Mystery: Draws stories, metaphors, dreams, and symbols. Adds to the complexity of relationships.

Sensuality: Keeps the five senses on alert for new textures, scents, et cetera.

Intimacy: Empathy, commitment, and passion.
In general, a firm should monitor the following when analysing potential threats:

Share of market: The competitors’ share of the market.

Share of mind: Percentage of customers who named the competitor when asked to name the first
brand that comes to mind.

Share of heart: Percentage of customers who named the competitor when asked to name the brand
they would prefer to buy.
A L T ER N AT I V E A P P RO A C HE S
TO
P O SI T I O N I N G
Three alternative, less-structured approaches to positioning are:

Brand narratives and storytelling: Rather than outlining specific attributes, some marketers see positioning a brand as telling a story. The following framework applies to a brand story:
o Setting: The time, place, and context.
o Cast: The brand as a character, including its role in the life of the audience.
24
Summary Marketing Management (14th ed.) by Remy Gankema, 2014
o
o
Narrative arc: The way the narrative logic unfolds over time.
Language: The authenticating voice, metaphors, symbols, and themes.

Brand journalism: The concept that marketers should communicate different messages to different
markets segments, as long as they at least broadly fit within the basic broad image of the brand.

Cultural branding: Assembling cultural knowledge, strategize according to cultural branding principles,
and hire and train cultural experts.
P OSITIONING
AND
B RANDING
A
S MALL B USINESS
With limited resources behind the brand, both focus and consistency in marketing
programs are critically important. Some specific branding guidelines are as follows:

Creatively conduct low-cost marketing research.

Focus on building one or two strong brands based on one or two key associations.

Employ a wall-integrated set of brand elements.

Create buzz and a loyal brand community.

Leverage as many secondary associations as possible.
25