Summary Strategic Marketing Management 2010
4.1: Organizational Learning & Knowledge Management
Some Basic Terminology:
 Individual vs. organizational learning
Organizational learning assumes individual learning. But individual learning is an insufficient
condition for organizational learning. Individual is een deel van organizational learning ( samen met
technological, administration etc ). More than the sum of the parts.
 Single-loop learning vs. double-loop learning
Single-loop (adaptive learning) = aannemen vanuit de omgeving en het bedrijf zelf
Double-loop (generative learning)= het zelf opwekken / onderzoeken van ‘leermomenten’
 Explicit vs. tacit learning
Explicit = tangible knowledge, representations like manuals, operating procedures, administrative
forms, work routines
Tacit = example: how to ride a bike; this can only be learned through personal experimentation
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Low codifiability= moeilijk om kennis te structureren in regels die makkelijk gecommuniceerd
kunnen worden.  transfer of tacit knowledge behoeft training, interactie en educatie
Know-how = how things get done, (requires frequent social interaction, education, training)
High complexity: wetenschappelijk, moeilijker meetbaar ( i.t.t. explicit knowledge )
The learning process:
Information:
1. Acquisition: kennis binnen halen, formal market research, competitive intelligence, informal
collection of information, satisfaction surveys etc.
2. Dissemination: formal  cross-functional teams, trainings, presentations etc,
or informal  social interaction
3. Shared interpretation: conflict resolution & information exchange by organizing formal
meetings, discussing alternative options.
4. Utilization: behavioural change, gebruik van kennis / toepassen
o Conceptual: recognizing the importance of information, giving meaning to
information.
o Instrumental: direct use in marketing-strategic activities: making, implementing or
evaluating marketing decisions.
Tools for the learning organisation
Marketing Management Support Systems (MMSS) = software that helps in translating hard
data into meaningful information through summary statistics, equations, graphs, trends etc, that
may facilitate decision making. MMSS can help because of: problem recognition, selecting a
problem-solving approach, evaluating options and choices.
 MMSS: analytical optimization: if much structured data is available for the problem and stable
market
ORAC model: distinguish 4 different marketing problem-solving modes:
- Optimizing ( looking for optimal solution )
- Reasoning ( using mental models )
- Analogizing ( start from prior experience and solutions )
- Creating ( think out of box )
 ORAC: relies on reasoning and analogizing, sales force planning, media planning, sales
promotion planning.
4.2: Entrepreneurial decision making
Decision-making theory
= Analytic and systematic approach to the study of decision making
Good decision: based on logic, uses all available information, considers all possible alternatives,
applies appropriate quantitative techniques
6 steps:
1.
2.
3.
4.
5.
6.
Define the problem
List the alternatives
Identify possible outcomes taking into account the ‘state of nature’
List the payoffs
Select a quantitative decision model
Apply the model to select a strategy
Decision making under uncertainty
Game theory
Game theory = considers the impact of the strategies of competing firms on our own strategy
outcome
!!! Game theory = beslissing nemen op game theoretische afwegingen. Hoe dat je het kan
gebruiken & toepassen als manager
5.3: Irrational or “myopic” managerial behaviour
Cognitive biases in decision making
Consumers, investors and entrepreneurs are assumed to be rational in their decision making. But our
decisions are often biased, irrational choices.
Confirmation bias = tendency to search for confirming information to lower dissonance
Dissonance theory = avoid dissonant information, search for confirming information
Escalation bias = tendency to continue investing in a strategy, despite negative feedback
Often in high commitment, examples: bad marriages, waiting for a bus.
Escalation is reinforced by: internal & external justification, sunk cost,
reason for negative feedback,
Escalation is reduced by: more information, use analytic or systematic approach to evaluate,
establish a rule a priori that determines when to stop, sequential decision declouping.
Myopia and selective perception =
1. The tendency to overlook distant times: decisions that favour short-term returns at the
expense of long-term firm performance
2. The tendency to overlook distant places: overemphasize effects that occur near the decision
maker.
3. Tendency to overlook failures: firms oversample successes and undersample failures.
Program a: 200 people will be saved of 600. Program b: 1/3 probability that 600 will
be saved and 2/3 probability nobody will be saved.
Framing bias = contextual and presentation biases emerge when people make different decisions as
a function of how information is presented to them, even though the substance of the information is
unchanged.
Hoe vertel je het. 10% vet or 90% fat-free, 60% probability being profitable or 40%
probability being unprofitable.
3 robust context effects:
1. Compromise effect = predicts that a product obtains a relatively larger utility and choice
probability when it become an intermediate or compromise in the assortment. (lowest
costs )
2. Similarity or substitution effect = adding a new product decreases the utility of the
products similar to it; choice probabilities will decrease disproportionally more for
products similar to the new product.
3. Attraction effect = adding a new product enhances the utility and choice probabilities of
the relatively superior option it is most similar to.
Causal attribution = social psychology theory about how people explain the cause of actions and
results. Attribute good performance to internal factors, attribute bad performance to external
factors.
Myopic marketing behaviour = kortzichtig
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Put more weight on long-term market outcomes in managers compensation package ()
customer satisfaction )
Increase the amount of information disclosure about performance-relevant assets
Better understanding of various marketing metrics and the incremental information they
provide over traditional accounting measures (what marketing metrics provide information
about future performance that is not already contained in current-term accounting
measures?)
Developing better models and understanding what managerial incentives lead to myopic
marketing decisions
5.1 Innovations & pioneer advantages
5.2 Innovation development
5.3 Innovation commercialization
Diffusion = process by which an innovation is communicated through certain channels over time
among the members of a social system.
Purpose of diffusion models = forecast the life-cycle curve of a new product vategory; depict the
successive increase in number of adopters.
The Bass Diffusion Model :
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Innovators: consumers influenced by mass-media communication only (=external influence)
Imitators: consumers influenced by word-of-mouth communication only (=internal
influence); late adopters learn from early adopters.
Lecture 6: Environmental Turbulence
6.1 Marketing Strategies in a Turbulent Environment: A Unifying Framework
Turbulence can be good:
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On the output side  can lead to more impactful marketing strategies
On the input side  improvisation and flexibility can lead to competitive advantage,
managing uncertainty is possible.
Managing project uncertainty: Managers can’t predict the future, but accurately gauging the degree
of uncertainty inherent in their projects can help them to quickly adapt to it.
Managing uncertainty types: balance between planning & learning
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Variation: insert (time & financial ) buffers
Foreseen turbulence: alternative paths to project goals
Unforeseen turbulence: ability to build in new decision tree
Chaos: ability to continuously redefine the project’s goals
3 dimensions of environmental uncertainty or turbulence: Outcome, Input, Impact.
6.2 Economic contractions & consumer behaviour
Business cycle fluctuations are more pronounced in durables’ expenditures:
1.
2.
3.
4.
Because of big investment decision
Consumers can more easily postpone or delay their acquisition
Durables are often quite expensive
Companies’ reactions during recessions may reinforce cyclical sensitivity.
Why are some industries more cyclical than others?
1. Pricing practice in durable industries enhances cyclical sensitivity
2. Time saving convenience goods are less sensitive to business cycle fluctuations than leisure
durables
3. Replacement purchases are less sensitive to business cycle fluctuations.
Consumers switch rapidly National Brand  Private Label but gradually PL  NB (=steepness)
Consumers switch more extensively National Brand  Private Label than PL  NB (=deepness)
Conclusions:
1.
2.
3.
4.
Private Label behaves countercyclical
Private Label increases faster than it drops
Private Label share increases more extensively than it drops
The growth effect of a contraction (krimping van ecomonie) is partly permanent
6.3 Economic contractions & firm behaviour
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Innovation in recession: less innovation
Advertising in recession: as budget of sales percentage, less advertising clutter (for higher
marginal revenue), less advertising  less sales, marketing = flexible cost, less advertising 
brand less distinctiveness and more substitutable
Price: (cost, competition, consumer): if price premium NB would decrease in recession,
consumers can save on their grocery expenses without trading down to Private Label
alternatives. Reducing Price Gap of NB regarding PL  PLS ↓
Promotion in recession: can generate revenue (faster), budget shifts from advertising to
promotion. Cutting promotions in recession  Private Label Share ↑
General: innovations, advertising and promotions are reduced. Only prices are maintained the same.
Managerial recommendations during contractions:
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Innovation: invest more in innovative NPI’s instead of less-innovative NPI’s
Advertising: do not cut advertising budgets
Price: temporary reduce the price gap
Promotions: temporary increasing promotions  prevents consumers from trying the
Private Labels
Why more Private Labels:
1.
2.
3.
4.
Quality increase of PL
Concentrating in retailing sector
More product categories with PLs
Increasing use of price promotions
7.1 From goods-selling to services-oriented marketing
The Goods-Centered paradigm: goods-centered model of exchange, commodity exchange, mass
communication, tangible resources. Marketing is concerned mostly with the production &
distribution of physical goods at a profit.
The Relationship-Centered paradigm: relationship-centered model of exchange. Customer loyalty,
satisfaction, retention, trust & commitment. It refers to all marketing activities directed towards
establishing, developing, and maintaining successful relational exchange.
The Service-Centered paradigm: service-centered model of exchange. View products as kind of
“service delivery” to the customer, integrates goods with services. Competitive advantage & superior
performance enhanced through services and relationship efforts. Intangibles, dynamics.
7.2 Service Marketing
Service Characteristics:
1. Intangibility: services are performances, cannot be seen, felt, tasted or touched.
2. Inseparability of production and consumption: services are first sold, and then produced
and consumed simultaneously.
3. Heterogeneity / non-standardization: variability of performance due to producer-,
customer-, time-related factors.
4. Perishability: unoccupied capacity = lost to the firm  synchronize supply & demand
Expanded marketing mix:
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Process: The actual procedures, mechanisms and flow of activities by which the service is
delivered. The service delivery and operating systems.
Physical evidence: The environment in which the service is delivered and where the firm and
customer interact, and any tangible components that facilitate performance or
communication of the service.
People: All human actors who play a part in the service delivery and thus influence the
buyers perceptions?: namely, the firms personnel, the customer and other costumers in the
service environment.
Differences service firms:
1.
2.
3.
4.
Targeted customer group ( individual vs. Institutions )
Geographic spread (local vs. (inter) national )
Benefit duration to the customer (short vs. long-term)
Need for customer presence during service production (high vs. low)
7.3 Service quality assessment
Key Factors leading to gap 5:
Word-of-mouth communication & Personal needs & Past experience  expected service
Model helps to predict, generate & identify key factors that cause the gap to be (un)favourable to
the service firm in meeting customer expectations.
SERVQUAL measures perceived quality (attitude, judgment of consumers)
Servqual 5 Super Dimensions:
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TANGIBLES => Appearance of physical facilities, equipment, personnel, and written materials
EMPATHY => Caring, individualized attention given to customers
RELIABILITY => Ability to perform the promised service dependably and accurately
RESPONSIVENESS => Willingness to help customers and provide prompt service
8ASSURANCE =>
Employee’s knowledge and courtesy and their ability to inspire trust
and confidence
- Servqual bestaat uit objectieve vragen. Ze zijn beschrijvend en meetbaar.
(Hoeveel wc rollen liggen er bij het toilet. Zit er een schoonmaakrooster bij het toilet)
- Servqual meet alleen percepties!
8.1 Consumer & social networks
Online network advantage over tv viewers or magazine readers:
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Users tend to be more highly involved in electronic networks
Electronic networking sites collect information that is of high commercial value
Value of the network structure pattern of person-to-person ties
Dyad = a pair of actors
Triad = subset of 3 actors
A: balanced
B: not balanced
C: balanced
D: not balanced
Network position: centrality
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Degree centrality: direct ties an
actor has
Betweenness centrality: times that
a focal actor occurs on the shortest
path or geodesic between all pairs
of actors in a network.
Closeness centrality: average
shortest distance between a focal
actor and all other actors in the
network.
Strength of weak ties: weak ties may prohibit transfer of complex and tacit knowledge, which
requires intensive interaction (ability to transfer) and positive valence (a good understanding 
willingness to transfer)
Linking disconnected parts in the network provides acces to non-redundant information and it
provides brokerage avantages. The broker can exploit its position and only selectively share
information or play other actors against one another. Example: Microsoft as only link between user
& software supplier.
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Horizontal connectivity = networks pertaining to customers and potential customers only,
such as Facebook, MSN, Hyves.
Vertical connectivity = networks pertaining to actors occupying a different location in the
industry value chain, such as patient-physician network, buying groups in European grocery
retailing.
8.2 Leveraging horizontal connectivity
Where do new media make a difference:
1.
2.
3.
4.
5.
6.
The connected customer: myspace, facebook.
Influence on NPD: crowd sourcing
Influence on search behaviour: social bookmarking
Influence on evaluation: review sites
Influence on adoption: viral marketing (electronic buzz)
Influence on loyalty: brand communities
Social Contagion = (virus) phenomenon that actors are influenced in their behaviour through
exposure to other actors’ knowledge, attitude, or behaviour (imitation)..
Examples social contagion: 10.000 copies of the Da Vinci Code were delivered to influential
readers. Hotmail’s get your free e-mail account appended to the bottom of every outgoing email.
3 basic requirements for social network campaigns to work:
1. Er is social contagion tussen consumenten
2. Er zijn consumenten die veel invloed uit kunnen oefenen op anderen. (mbt het kopen van
producten)
3. Bedrijven kunnen deze mensen identificeren en bereiken
Role of opinion leaders, ideally combine 4 characteristics:
1.
2.
3.
4.
Interested in and up to date about new products
Being early adopters
Having a central location in the network
Talk about new products
Network-based marketing practices:
1. Buzz-marketing = marketing campaign that exploits the power of customer word-ot-mouth
and social networks.
2. Viral marketing = (electronic buzz, online word-of-mouth) = any strategy that encourages to
pass on a marketing message to others through the internet, creating the potential to
exponential growth in the message’s exposure and influence. (Hotmail, Facebook).
3. Brand (online) Communities = a specialized, non-geographically bound community, based on
social relations among admirers of a brand (or neighbourhood, occupation, leisure pursuit).
Brand Community exhibits:
1.
2.
3.
4.
Centre around a brand.
Connection that members feel
Social practices
Moral responsibility
2 types of brand communities:
1. Small group brand communities: much social interaction with small group of friends, beyond
online social interaction, strong identification with the group as well as the brand, groupreferent values (social enhancement). Example: “Harley Owners Groups”.
2. Network-based virtual communities: interaction less important, participation driven by
functional goals, limited to online interaction, self-referent values (purposive, self-discovery).
Building brand communities, how to keep communities vital and growing:
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Use market research as a barometer
Give members reason to meet
Protect your community
Create conversations
Think like a customer