Module 2: The functions of Marketing in Business Management
NQF LEVEL 5 – 15 CREDITS*
Published by Business Management Training College (Pty) Ltd
147 Second Road, Chartwell, Fourways, 2191
Private Bag X100, Bryanston, 2021
Tel: 011-708-0159, Fax: 086-639-4687 | E-mail: info@bmtcollege.ac.za
www.bmtcollege.ac.za
© Copyright 2021 - All rights reserved
No part of this publication may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means, electronic, mechanical, photocopying,
recording, or otherwise, without the prior written permission of the copyright owner,
Business Management Training College (Pty) Ltd.
2021 First Edition
First Print June 2021
*SAQA equates one credit with ten notional hours of study. Credits include all studies
related to this module, including prescribed and recommended research, assignments
and work-related projects if required. Credits will only be granted upon successful
completion of the full programme.
Author: Fahima Haffejee
Editors: Bernie van der Linde, Zoe Auths, Jako Poolman
TABLE OF CONTENTS
PRESCRIBED TEXTBOOK REFERENCES ............................................................. V
CHAPTER 1: THE CONCEPT OF MARKETING ...................................................... 2
1.1
INTRODUCTION ............................................................................................. 2
1.2
DEFINING MARKETING ................................................................................. 3
1.2.1 The Exchange.................................................................................................. 5
1.2.2 The Marketing Gap .......................................................................................... 6
1.2.3 What is Marketed? ........................................................................................... 7
1.2.4 Where is the Market?....................................................................................... 9
1.2.5 Closing the Marketing Gap ............................................................................ 11
1.3
THE MARKETING ORIENTATION ................................................................ 12
1.3.1 Production Orientation ................................................................................... 12
1.3.2 Sales Orientation ........................................................................................... 13
1.3.3 Marketing Orientation .................................................................................... 14
1.3.4 Relationship Marketing .................................................................................. 17
1.4
THE MARKETING FUNCTION ...................................................................... 18
1.5
SUMMARY .................................................................................................... 20
CHAPTER 2: THE MARKETING ENVIRONMENT.................................................. 22
2.1
INTRODUCTION ........................................................................................... 22
2.2
COMPONENTS OF THE MARKETING ENVIRONMENT ............................. 22
2.2.1 Internal (micro) Environment ......................................................................... 23
2.2.2 External (market and macro) Environment .................................................... 23
2.3
THE MICRO-ENVIRONMENT ....................................................................... 25
2.4
THE MARKET-ENVIRONMENT .................................................................... 27
2.4.1 Supply............................................................................................................ 28
2.4.2 Demand ......................................................................................................... 29
Copyright © Business Management Training College (Pty) Ltd
i
2.4.3 Needs and Trends ......................................................................................... 30
2.5
THE MACRO-ENVIRONMENT...................................................................... 31
2.5.1 Political and Legal Environment..................................................................... 33
2.5.2 Economic Environment .................................................................................. 34
2.5.3 Socio-Cultural Environment ........................................................................... 35
2.5.4 Technological Environment ........................................................................... 35
2.5.5 Physical Environment (The Environment) ...................................................... 36
2.6
ANALYSING THE ENVIRONMENT............................................................... 37
2.6.1 The SWOT analysis ....................................................................................... 38
2.7
SUMMARY .................................................................................................... 40
CHAPTER 3: UNDERSTANDING THE TARGET MARKET ................................... 42
3.1
INTRODUCTION ........................................................................................... 42
3.2
CONSUMER BEHAVIOUR ............................................................................ 43
3.2.1 Determinants of Consumer Behaviour ........................................................... 43
3.2.2 Individual Factors that influence consumer behaviour ................................... 46
3.2.3 Group Factors ................................................................................................ 50
3.3
MARKET SEGMENTATION .......................................................................... 51
3.3.1 Bases for Segmentation ................................................................................ 52
3.3.2 Levels of Market Segmentation ..................................................................... 53
3.4
MARKET RESEARCH AND INFORMATION ................................................ 54
3.4.1 Types of Research......................................................................................... 55
3.4.2 The Power of Information .............................................................................. 56
3.5
SUMMARY .................................................................................................... 57
CHAPTER 4: THE MARKETING INSTRUMENTS .................................................. 60
4.1
INTRODUCTION ........................................................................................... 60
4.2
PRODUCT DECISIONS ................................................................................ 61
ii
Module 2: The Functions of Marketing in Business Management
4.3
DISTRIBUTION DECISIONS ......................................................................... 64
4.4
COMMUNICATION DECISIONS ................................................................... 65
4.5
PRICING DECISIONS ................................................................................... 65
4.6
SUMMARY .................................................................................................... 66
CHAPTER 5: CUSTOMER SERVICE...................................................................... 69
5.1
INTRODUCTION ........................................................................................... 69
5.2
DEFINING CUSTOMER SERVICE ............................................................... 69
5.3
PERCEIVED VALUE ..................................................................................... 70
5.3.1 Types of Perceived Value .............................................................................. 71
5.4
IS THE CUSTOMER ALWAYS RIGHT? ........................................................ 73
5.5
CUSTOMER RETENTION ............................................................................ 74
5.6
SUMMARY .................................................................................................... 76
CHAPTER 6: THE BASIC MARKETING PLAN ...................................................... 78
6.1
INTRODUCTION ........................................................................................... 78
6.2
INTENTION AND OUTCOMES ..................................................................... 79
6.3
MARKETING PLAN FRAMEWORK .............................................................. 79
6.3.1 The Research phase ..................................................................................... 80
6.3.2 The Formulation Phase ................................................................................. 84
6.3.3 The Implementation Phase ............................................................................ 86
6.3.4 The Review phase ......................................................................................... 87
6.4
SUMMARY .................................................................................................... 88
Copyright © Business Management Training College (Pty) Ltd
iii
LIST OF FIGURES
Figure 1.1: Core marketing aspects ........................................................................... 3
Figure 1.2: Flows between modern exchange markets .............................................. 9
Figure 1.3: Simplified marketing flow........................................................................ 10
Figure 1.4: Principles of the marketing orientation ................................................... 14
Figure 2.1: The Marketing Environment ................................................................... 23
Figure 2.2: Components of the marketing environment............................................ 24
Figure 2.3: Demand and supply sides of the Market Environment ........................... 27
Figure 3.1: Customer types, activities and roles ....................................................... 44
Figure 3.2: Consumer behaviour model ................................................................... 46
Figure 4.1: Product levels ......................................................................................... 63
Figure 4.2 Basic food distribution channels and intermediaries ............................... 64
Figure 5.1: Example of personalised customer engagement on social media .......... 75
Figure 6.1: Structure of the marketing plan .............................................................. 80
FIGURE 6.2: THE BCG (MARKET GROWTH-MARKET SHARE) MATRIX ............ 81
Figure 6.3: The GE Mckinsey Matrix (Market Attractiveness-Enterprise Strength
Model) ...................................................................................................................... 83
LIST OF TABLES
Table 2.1: Micro-environment elements controlled by the marketing function .......... 26
Table 3.1: Maslow's hierarchy of needs and marketing motivation .......................... 48
iv
Module 2: The Functions of Marketing in Business Management
PRESCRIBED TEXTBOOK REFERENCES
Erasmus, B.J., Strydom, J.W. & Rudansky-Kloppers, S. (2019). Introduction to
Business Management. (11th ed.). Oxford University Press. ISBN 978 0190 745769.
•
Study Chapter 13, Marketing Management.
RECOMMENDED TEXTBOOK/S
Cant, M.C., & Van Heerden, CH. (2017). Marketing Management – A South African
Perspective. (3rd ed.). Juta. ISBN 978 1485 125204.
Copyright © Business Management Training College (Pty) Ltd
v
PROGRAMME OVERVIEW
THE PROGRAMME AIMS TO ADDRESS THE FOLLOWING MANAGERIAL
COMPETENCIES:
•
Proficient communication skills: effective managers need to be skilful
communicators and have good listening skills to be able to manage a diverse
workforce. Good managers must be able to adapt their communication skills
based on people’s personality and culture;
•
Understand multigenerational workforce trends: effective managers need to
understand the different generations and be able to adapt their management
style accordingly;
•
Leadership skills: effective managers need the ability to direct, motivate and
lead by example. This includes being aware of their own strengths to interact
with subordinates in a way that capitalizes on their own strengths and minimises
their weaknesses;
•
Planning skills: effective managers need to be organised. They need to know
what needs to be done and when it needs to be done. Effective managers need
to understand the organisation’s goals and objectives to inspire subordinate to
achieve the vision;
•
Problem-solving skills: Effective managers must be able to identify and solve
problems; take responsibility for challenges that arise and take ethical
approaches to decision-making and problem-solving;
•
Information sharing and collective intelligence: Effective managers encourage
social connectors and the sharing of ideas for joint decision-making (Blum,
2014; Sineriz, 2018)
vi
Module 2: The Functions of Marketing in Business Management
PROGRAMME STRUCTURE
MODULE 1: INTRODUCTION TO BUSINESS MANAGEMENT
This module explains the role of business in society and how a business employs its
resources to satisfy the needs for products and services. The economic systems of
the world are explained in this module, including how small businesses function within
a market economy. The module further describes the role of management in the
business environment and the basic management functions and the skills and
competencies needed by management on different levels within a business.
MODULE 2: THE FUNCTIONS OF MARKETING IN BUSINESS MANAGEMENT
The purpose of this module is to introduce students to the fundamentals of marketing
management. This module covers the nature and the function of marketing
management within the organisation. Furthermore, the marketing process, as well as
the components of the marketing environment are discussed in this module. The
collection, analysis and interpretation are used to segment the market according to
consumer behaviour. The elements of the marketing mix (product, price, promotion,
and distribution decisions) are also covered in this module and how to develop a
simple marketing strategy. The module is concluded with a discussion regarding
customer service and the importance thereof.
MODULE 3: THE FUNCTIONS OF HUMAN RESOURCES IN BUSINESS
MANAGEMENT
The purpose of this module is to provide students with an overview of the tasks
associated with human resource management. The module starts with the scope and
task of human resource management. The determining and formulating policy task,
advising task; rendering a service and controlling employee affairs management tasks
in relation to the HR function and the implication on other functional areas of
management are also discussed. This is followed by a discussion on human resource
provision, retention and governance affecting human resource management.
Copyright © Business Management Training College (Pty) Ltd
vii
MODULE 4: THE FUNCTIONS OF OPERATIONS IN BUSINESS MANAGEMENT
The purpose of this module is to provide students with an understanding of the
operations function in relation to other major business functions. Students are
introduced to concepts related to operations management, including supply chain,
supply chain management, logistics, supply and demand and various demand
forecasting techniques. To conclude the module, students will learn about inventory
management and how to calculate inventory costs.
MODULE 5: THE FUNCTIONS OF FINANCES IN BUSINESS MANAGEMENT
The purpose of this module is to introduce students to financial management from a
secondary or support perspective such as technology, human resource management
and legal services. On completion of this module, students will be able to explain the
scope of financial management, apply basic principles and practices of financial
management and explain budget planning and control issues. Financial statements
are analysed as a source of information for financial management and students must
be able to measure and interpret the financial performance of an organisation.
MODULE 6: BUSINESS COMMUNICATION IN A DIGITAL ERA
The purpose of this module is to introduce management students to the importance of
effective communication within a business environment. This module covers the
basics of communication, including various communication mediums within an
organisation, communication in the digital era, how to deal with multicultural
communication within the organisation, how to overcome barriers to effective
communication and how to conduct meetings.
MODULE 7: BUSINESS INFORMATION SYSTEMS
Information technology is an essential component of the modern organisation. The
evaluation, implementation, and management of Information Systems (IS) have
become a part of business management. This module introduces students to the
importance of reliable and accurate information in a business, the information needs
of an organisation and the relationship between the information function and other
viii
Module 2: The Functions of Marketing in Business Management
business functions. The student will also be able to differentiate between the various
components of information systems and understand relevant IS terminology. The
systems concept is discussed in terms of objectives and characteristics.
Contemporary issues such as information in an online world and information as a
management resource are also discussed.
MODULE 8: MANAGING BUSINESS PROJECTS
The purpose of this module is to introduce business management students to the basic
concepts and principles applicable to manage a project within a business environment.
A detailed overview is given of the project management life cycle and steps in
planning, managing, and controlling a project, using the relevant methods and tools to
manage projects based on scenarios related to real-life business situations. At the end
of this module, students will be required to apply project management principles and
practices to complete a basic project for a given scenario as part of the summative
assessment.
Copyright © Business Management Training College (Pty) Ltd
ix
ASSESSMENTS
The Higher Certificate in Business Management consists of eight compulsory
modules. The outcomes of each module are assessed through a formative and
summative assignment per module. After completing all formative and summative
assessments, students are required to complete a final integrated summative
assessment and participate in a panel interview.
An online formative assignment must be completed for module 1 to 8.
•
The pass mark for formative assignments is 50%.
•
The final formative assignment mark has a weighting of 25% towards the
module mark.
•
Each formative assignment may be attempted more than once;
•
The final formative assignment mark will be the highest results obtained by the
due date for the specific assignment.
•
Summative assignments must be completed for module 1 to 8 online.
•
Students are required to achieve a minimum mark of 50% to pass the
summative assignment.
•
The final summative assignment mark has a weighting of 75% towards the
module mark.
•
Students are allowed two opportunities to complete and pass each summative
assignment.
•
Subject to approval by the Academic Council (AC), a student may be granted
permission for a third opportunity to attempt a summative assignment for a
module at a specific date and pay an additional submission fee.
•
Summative assignments submitted for second and third attempts will be
capped at 65%.
x
Module 2: The Functions of Marketing in Business Management
Note: All students are required to attend a panel interview when all formative,
summative and integrated assessments for this programme have been completed to
determine if the student has achieved BMT College Graduateness, in terms of
scholarship, lifelong learning and ethical and responsible citizenship. The panel
interview also serves as a security measure to verify the student as the authentic
person who has attended and completed this online distance learning programme.
Copyright © Business Management Training College (Pty) Ltd
xi
CHAPTER ONE
The Concept of
Marketing
IN THIS CHAPTER:
1.1
INTRODUCTION ............................................................................................. 2
1.2
DEFINING MARKETING ................................................................................. 3
1.3
THE MARKETING ORIENTATION ................................................................ 12
1.4
THE MARKETING FUNCTION ...................................................................... 18
1.5
SUMMARY .................................................................................................... 20
INTRODUCTION
CHAPTER 1: THE CONCEPT OF MARKETING
LEARNING OUTCOMES
On completion of chapter 1 you should be able to:
•
Explain
definitions,
concepts
and
terminology
related
to
marketing
management.
•
Discuss the marketing function in an organisation.
•
Explain the marketing process.
1.1
INTRODUCTION
Although some may argue that certain business functions are more important than
others, the reality is that every function of business management is essential. For
example, the human resource function is concerned with the management of people
working for the organisation. It is regarded as an essential component of the business
because without people there will be no one to perform the tasks required to operate
the organisation successfully. The financial management function is concerned with
the management of the finances and the flow of money within the organisation. This
function is regarded as an essential component of the business because without
finances or resources, the organisation will not be able to deliver a service or a product.
The same is true about the marketing function. Without marketing the organisation
will not be able to define what customers want and need, and how to use the resources
of the organisation (including human, finances, and information resources) to meet
those wants and needs (Cant et al., 2017).
Marketing is much more than simply placing an advert in the local newspaper, ordering
a billboard, designing beautiful packaging or having a Facebook page. In this chapter,
the marketing function, as the part of the business that essentially generates money
from sales (from products or services), will be discussed in more detail and how the
marketing function fits into the organisation. An overview of marketing instruments,
segmentation of the market (to identify the target market), and market research will
2
Module 2: The Functions of Marketing in Business Management
THE CONCEPT OF MARKETING
also be discussed as components of marketing. Strictly speaking, strategic
marketing forms part of the components of marketing but is important enough to
warrant its own discussion.
For now, it is important to know that marketing consists of various interlinked parts
(functions, actions, components), that forms a cohesive whole (Cant et al., 2017;
Kotler & Keller, 2012).
1.2 DEFINING MARKETING
To better understand the marketing concept, it can be separated into several
interlinking core aspects, as depicted in figure 1.1 below.
FIGURE 1.1: CORE MARKETING ASPECTS
Consumer
Needs and
Wants
Exchange
(eg money for
service/product)
Marketing
The Marketing
Gap
Value Creation
Source: Adapted from Cant et al. (2017 p.5)
The marketing process involves:
•
understanding the market opportunities;
•
customer analysis for such market opportunities;
•
identifying the ideal target market or segment;
•
developing a marketing mix for the segment;
Copyright © Business Management Training College (Pty) Ltd
3
DEFINING MARKETING
•
controlling the various marketing activities; and
•
managing the exchange (Cant, 2010).
The American Marketing Association (AMA) defines marketing as “the activity, set of
institutions, and processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners, and society at large.”
(American Marketing Association, 2017, para. 2)
According to Cant et al. (2017), marketing is defined as “A process whereby an
organisation, in its drive to meet its organisational goals, focuses on meeting customer
needs and wants, by offering the right product, at the right price, at the right place, and
by using marketing communication channels. Through this process, organisations also
strive to establish relationships with customers and to develop and grow these
relationships with relevant stakeholders in an ever-changing environment” (p. )
From the definitions, the following can be concluded:
•
Marketing is a process (not just unconnected actions or tasks).
•
The marketing process aims to meet organisational goals (if it is a business,
then the primary objective is to make a profit).
•
There is a product, service or offering.
•
The marketing process focuses on meeting customer needs and wants with
•
Relevant products, services or offerings
•
At a price, the customer is willing to pay (an exchange will happen).
•
During the process, a relationship is established between the organisation
and the customer (and other stakeholders).
•
4
These relationships need to be managed and developed.
Module 2: The Functions of Marketing in Business Management
THE CONCEPT OF MARKETING
1.2.1 THE EXCHANGE
The primary purpose of business is to make a profit (Erasmus, Strydom, & RudanskyKloppers, 2013; Hellriegel, Slocum, Jackson, & Louw, 2013) because without profit a
business cannot exist. Some business units exist within larger organisations with a
strategic purpose to make a loss. However, that falls beyond the scope of this
module. In its simplest form, profit is made by exchanging a good or service, for
something of more value (usually money) that exceeds all the costs involved in
producing that product or service.
The central focus of marketing is the facilitation of this exchange process. According
to Cant et al. (2017), five conditions are required for the exchange process:
1.
At least two parties are needed.
2.
Each party must have something (goods, services, money) that the other party
wants.
3.
Each party must be able to communicate their wants, needs and expectations
about the exchange and be able to transfer or deliver the goods, services, or
money to the other party.
4.
Each party has a choice to make the trade.
5.
Each party must be willing participants in the process.
An exchange may not necessarily happen, even if all the conditions exist, because
condition four states that ‘each party has a choice to accept or reject a trade’.
To make this exchange process happen, or to facilitate this process, the parties must
be brought together. Before the parties know about each other, or each other’s
goods, services or money available for trade, the gap between the parties needs to be
addressed.
Copyright © Business Management Training College (Pty) Ltd
5
DEFINING MARKETING
1.2.2 THE MARKETING GAP
Before (at least two) parties get together to make an exchange, they first need to know
about each other. Products are not always made where customers for that product is
situated. This creates a gap between the production of the goods and the customers
who may want or need the goods (Cant et al., 2017).
For instance, a clothing manufacturer has a factory in a strategically selected area,
based on the availability of labour, overhead costs, distribution, and transport options,
etc. This area may be in a foreign country or a different location, hundreds of
kilometres away from the customers.
The customer who wants to buy a specific size and colour shirt may not exactly know
about the options available by the manufacturer, and the manufacturer may not
necessarily know about the wants and needs of the customers, (i.e., what colour shirt
is more in demand in a specific area).
According to Cant et al. (2017), typical gaps in the marketing process include:
1.
Space gaps: the physical (geographical) gap between the customer and the
product as in the example above.
2.
Time gaps: this refers to the time between the production of a good or service
and the consumption or use of the good or service. For instance, a stylist wants
to start his/her own hair salon (a service) while still working full time and can,
therefore, only do customer’s hair after hours. However, the customers are not
available after hours because they want to spend time with family. A time gap
exists between the delivery of the service, and when customers can access the
service.
3.
Information gaps: customers need to know about all the product or service
available. If the customer doesn’t know that the company is also selling shoes
besides clothes, the customer will buy shoes from another manufacturer.
Furthermore, the company needs relevant information about the customers, or
the manufacturer may attempt to sell outdated or unwanted clothes to
customers.
6
Module 2: The Functions of Marketing in Business Management
THE CONCEPT OF MARKETING
4.
Ownership gaps: Before the exchange is complete, ownership needs to
change. Before the shirt lawfully belongs to the customer, the agreed trade
needs to be complete (i.e., money for the shirt).
5.
Value gaps: Value is what the customer expects and is willing to pay in
exchange for the product. One customer may be willing to pay and is able to
pay R2500 for an imported shirt from a unique brand while another customer
may not be willing to pay or cannot afford to pay more than R125 for a shirt.
(Once again, information about the customer is important).
Value gaps are an important consideration in the marketing process. The
manufacturer of the R2500 shirts may sell fewer shirts to a very specific market and
may add value by tailoring the shirts for each of their customers. The manufacturer of
the R125 shirt will probably sell a lot more shirts and it will be impossible to tailor each
shirt at that price for every individual.
However, the different groups will find different value in the shirts they bought. The
buyer of the R2500 shirt may find value in the product such as brand status, the quality,
and the specially tailored shirt, while the buyer of the R125 shirt may find value in the
product through affordability and being able to buy more than one in various colours.
1.2.3 WHAT IS MARKETED?
For clarity, this module will continuously refer to “goods and services” as a
comprehensive term for what is being marketed. Marketing is however not limited to
goods and services only. According to Kotler and Keller (2012), marketing can be
done for virtually anything that can be exchanged for something else (as defined
above), including:
•
Goods: Physical or tangible products. Goods include, inter alia, food (i.e., fresh,
frozen, canned), electronics (i.e., televisions, cell phones, computers),
appliances (i.e., washing machines, microwaves, dishwashers), clothes, toys,
plants, etc. Goods can usually be transferred to several owners until it is
completely or partly consumed. For example, a farmer produces freeze and
packages vegetables on a farm (first owner), which is sold to a middleman
Copyright © Business Management Training College (Pty) Ltd
7
DEFINING MARKETING
(second owner), who sells the products to a distribution chain (third owner), who
sells it to an outlet store (fourth owner), who sells it to the consumer (fifth
owner).
•
Services: Services is work done for an exchange (usually in the form of
money). More advanced economies will have a greater ratio of services to
goods. Services can be combined with goods (mobile service provision for a
mobile phone). Services are intangible and cannot be transferred to several
owners (a haircut cannot be transferred to several owners, but the service of a
haircut can be delivered to several clients). Doctors, rental companies,
accountants, repair technicians, bankers, lawyers, programmers, all delivery
services.
•
Events: The Soccer World Cup, 947 Cycle Race, the performance of your
favourite pop star, are all time-based events that are promoted in some form or
another. Marketing can be exclusive (opening of a new club or launch of a
luxury car) to a select few, or open to everyone (opening of a new mass store
outlet).
•
Experiences: A combination of goods and services can be offered as an
experience such as a visit to Disneyland, a tour in Egypt, or meeting your idol.
•
Persons: Self-branding is no longer only for artists, musicians, athletes,
doctors, or high-profile lawyers. With the advent and wide assimilation of social
media, personal brands are easily accessible to potential employers. The
Curriculum Vitae of a new employee are only part of the assessment and
whether the specific brand promoted by the potential employee will fit in with
the organisational brand.
•
Places: Cities, countries, industrial areas, and destinations are marketed as
investment opportunities or tourist destinations.
•
Organisations: The values and principles of organisations are often marketed
over and above the actual services or products of the company.
•
Information: The massive amounts of data produced every day can be
analysed and packaged for specific users.
8
Module 2: The Functions of Marketing in Business Management
THE CONCEPT OF MARKETING
1.2.4 WHERE IS THE MARKET?
According to Cant et al. (2017), the primary markets used to be the physical spaces
where traders would come together to exchange goods and/or services. Although the
markets of old still exist in some form or another today (think of Farmer’s Markets),
these are no longer the primary or major exchange platforms.
Economists classify markets as a specific grouping of buyers and sellers (Kotler &
Keller, 2012). In Figure 1.2 below the flow between markets are illustrated and is also
known as the Circular flow of the economy (Schiller, Hill, & Wall, 2013).
The outer flow in Figure 1.2 shows how the Consumer Market provides resources (in
the form of work) to the resource market. The Resource Market provides resources
to the manufacturing market to produce either services or goods to the Intermediary
Market. The Intermediary Market sells those goods and services to the consumers.
The inner flow depicts how money is exchanged between the various markets for
resources or goods and services.
FIGURE 1.2: FLOWS BETWEEN MODERN EXCHANGE MARKETS
Source: Adapted from Kotler and Keller (2012, p. 30)
Copyright © Business Management Training College (Pty) Ltd
9
DEFINING MARKETING
A simple depiction of the marketing flow is shown in Figure 1.3 below. The Industry
comprises of anyone who wants to sell something to a specific or various Markets.
According to Kotler and Keller (2012), a market can be for a specific demographics
group (i.e., young adults for specific TV series, movies or books), a group with specific
needs (i.e., need for exercise and fitness), a product market (i.e., entertainment
electronics such as TVs and HiFis), or a geographic market (i.e., concentrating a
specific restaurant chain only in Cape Town or the Western Cape or the South African
market vs the American market). The clustering of markets can incorporate various
aspects, (i.e., the youth market in Asia for mobile phones). In the marketing context,
this is specifically referred to as market segmentation.
FIGURE 1.3: SIMPLIFIED MARKETING FLOW
Source: Adapted from Kotler and Keller (2012, p. 31)
Figure 1.3 shows how the Industry communicates the properties of the product or
service to the Market. The Market, in turn, providing information to the Industry
regarding the consumers’ specific wants and needs. Goods and/or services are
exchanged between Industries and Markets for money.
Although markets can be segmented into specific clusters, Kotler and Keller (2012)
distinguish the following key markets:
•
Consumer Market (markets where customers purchase products for
consumption that are not meant for resale);
10
Module 2: The Functions of Marketing in Business Management
THE CONCEPT OF MARKETING
•
Business Markets (a marketplace where organisations purchase natural
resources, components of other products or raw materials to resell to the public
or to use in manufacturing other products);
•
Global Markets (markets where goods and services of one country are traded
to people in other counties);
•
Non-profit markets (consists of organisations that are not driven by profit, such
as charity, religious or environmental groups) and Government Markets
(markets where the customers are local, state, and federal governments).
In conclusion, in terms of marketing management, the market is not considered to be
a physical space where goods and services are exchanged, but rather a cluster or
segment of willing buyers for whom a specific product or service is offered.
To conclude, the market is not necessarily always where the industry is, and in some
way, the industry needs to manage the exchange process of the industry’s goods and
services for the market’s money.
1.2.5 CLOSING THE MARKETING GAP
Marketers use specific tools to close the marketing gap between the industry and the
consumers or intended clients of products and services (Cant, 2010). A combination
or mix of the different tools are used to inform a specific market about what is on
offer, how or where it can be purchased, and at what cost (Blythe, 2009; Erasmus et
al., 2013; Kotler & Keller, 2012).
This is also known as the marketing mix or the Four P’s (product, place, promotion
and price):
•
Product refers to the actual goods (products) or services. Key words: variety,
quality, design, features, brand, packaging, sizes, services, warranties, returns.
•
Place or distribution refers to where the products or services can be
purchased, how it is distributed and how it is delivered to the client. Key words
relating to place include channels, coverage, locations, inventory, transport,
delivery, distribution.
Copyright © Business Management Training College (Pty) Ltd
11
THE MARKETING ORIENTATION
•
Promotion or communication refers to the communication methods used to
inform potential customers about the products or services. Key words relating
to promotion include sales promotion, advertising, sales force, public relations,
direct marketing.
•
Price refers to the agreed value of the products or what the industry is willing
to sell them for and what the customers are willing to pay for it. Key words
relating to price include list prices, value, allowance, payment period, credit
terms, discounts, sale.
The tools described in the marketing mix are core to the decision-making process in
terms of the intended exchange for both the industry and the consumers (Cant et al.,
2017).
1.3 THE MARKETING ORIENTATION
According to Cant (2010), top management may view the marketing function differently
in different organisations. These marketing management philosophies have evolved
over the years, even though some of these (older) orientations may still be observed
in organisations today.
1.3.1 PRODUCTION ORIENTATION
From the onset of the Industrial Revolution around 1760 up until the 1920s, the focus
of most businesses was the transition to the then-new mechanical manufacturing
processes (Cant et al., 2017). The standardisation of production allowed businesses
to make a few specific or select products in much larger quantities, at reduced costs
and in shorter periods.
The manufacturers did not focus on what consumers wanted, but rather on
streamlining production processes. The sentiment of manufacturers was to produce in
bulk as much as possible, and the products will sell themselves. These products,
however, did not continue to sell themselves and eventually top management realised
that they need to focus on also selling the products. This introduced the sales
orientation marketing phase (Cant et al., 2017).
12
Module 2: The Functions of Marketing in Business Management
THE CONCEPT OF MARKETING
Today production orientated business still exists. Small businesses often focus more
on production and neglect to spend time on the marketing function of the business.
Larger companies that do not have a lot of (or any) competition or who introduces a
new product to the market may also be more production orientated. Think for instance
of the electricity supplier, Eskom. Very little effort is made to actively sell electricity to
consumers. Their focus is more on the production of electricity in larger quantities.
Key Term: Consumers mostly favour products that are available and affordable.
1.3.2 SALES ORIENTATION
During the Production Orientation phase, businesses often produced more products
than what potential customers could consume and as more competition became
available consumers now had a choice between products from different
manufacturers. Top Management realised that time and effort must also be spent on
selling products to consumers (Erasmus et al., 2016).
In a sales-orientated organisation, the focus is on maximising sales. Sales volume is
the key to profitability. Advertisements are used to inform potential clients of the
products available. Little concern is usually given as to whether the consumer will be
satisfied with the purchase or not, as long as the sale is made (Cant et al., 2017).
According to Cant et al. (2017), examples of sales orientated businesses include mailorder businesses, which may advertise products that are not readily available or are
not worth the selling price in a shop. Door-to-door and telesales (cold calling) have
obtained bad reputations because some salespeople will not allow the customer to
think about the purchase, and the product is “pushed” onto the customer. Working
from scripts and often being excellent communicators, these salespeople can
persuade customers to make hasty and foolish decisions.
Key term: Consumers will not buy enough products unless a concentrated effort is
made by the organisation to sell and promote the products, which may often be
overpriced.
Copyright © Business Management Training College (Pty) Ltd
13
THE MARKETING ORIENTATION
1.3.3 MARKETING ORIENTATION
Previous efforts from top management focussed first on production and then on sales
and price. However, customers’ buying behaviour also evolved. With more buying
power, customers developed more refined wants and needs. During the 1950s top
management realised other important factors need to be considered as well, such as
the quality of the product, the distribution of products, packaging, and communication
methods and channels. Advertising products and services became more widespread
(Cant et al., 2017).
From where the focus was mostly on either production methods or sales methods, the
focus was now on the customer. According to Cant et al (2017), four principles make
up the marketing orientation that focuses on (1) customers; (2) profit; (3) systems and
(4) social responsibility of the organisation as illustrated in Figure 1.4 below.
Focusing on the four principles, resulting in the marketing orientated organisations to
align business processes and efforts to satisfy customer needs and wants at a
profit.
FIGURE 1.4: PRINCIPLES OF THE MARKETING ORIENTATION
Customer
Oriented
Social
Responsibility
Marketing
Orientation
Profit
Orientated
Systems
Orientated
Source: Adapted from Cant et al. (2017, p. 12)
14
Module 2: The Functions of Marketing in Business Management
THE CONCEPT OF MARKETING
According to Cant et al. (2017), the four principles should be applied in a balanced
manner. One principle cannot be ignored in favour of another. The organisation that
ignores all or any of these principles, are not customer focussed or market-driven and
may have short-term success and will not be sustainable in the long run.
1.3.3.1 Customer Orientated
The first principle of the marketing orientation is to be customer focussed. All
functions of the organisation should be aimed at satisfying needs and wants.
However, this is not about individual clients but rather the needs and wants of a
specific identified group (Cant et al., 2017).
According to Cant et al. (2017), a customer orientated business understands the wants
and needs of its target market and focus its efforts on satisfying the customer
requirements of that target market. A business will strategically shape and form its
product or service offering for a specific target market, at a specific price with specific
terms and conditions that shapes the offering.
A common misperception is that a customer focussed organisation or customer
service means that the crazes of every individual customer should be catered for. If
the focus of the business is on individual customer care, then the focus will be on the
individual customer. However, a steep premium will usually be charged for such
extreme customer focussed service.
Customer-orientated businesses do not consider the task complete once the sale is
made but continue to be in contact with the customers to evaluate their satisfaction
levels with the product or service. This marketing information is used to inform on the
improvement of products or services, which may be of benefit to the target group.
Customer orientation further leads to relationship marketing where the focus is on
customer loyalty and long-term customer engagement.
Copyright © Business Management Training College (Pty) Ltd
15
THE MARKETING ORIENTATION
1.3.3.2 Profit Orientated
Research has shown that organisations that are more customer focussed, (focus on
the wants and needs of the target group), are usually more profitable (Cant et al.,
2017). Customer focus can also increase customer loyalty, leading to organisational
growth, and increased investor commitment (Kotler & Keller, 2012).
The primary goal of any business is to make a profit (Erasmus et al., 2013). Profit in
the marketing orientated organisation is made by offering a product or service that a
target market wants and needs (and will come back for), at a price that both the
organisation and the customer agree upon.
1.3.3.3 Systems Orientated
A system is formed from various interrelated parts. These parts must work together
for the system to function optimally or correctly. Some systems can form part of a
larger system (Hellriegel et al., 2013).
According to Hellriegel et al. (2013), the decisions made in a systems-orientated unit
or business are informed by the analysis of how such decisions will impact the various
parts of the system (i.e., customers, employees, delivery, communications).
According to Cant et al. (2017), systems orientation means organisational integration.
All the parts or departments of the organisation works together to achieve the
organisational goals of making a profit by being customer focussed.
1.3.3.4 Social Responsibility
As much as an organisation is a system, it is also part of a larger system in society.
The organisation is responsible and can be held accountable for its performance within
a society (Cant et al., 2017).
Social responsibility can be demonstrated in many forms, from the small, medium, or
micro-enterprise concentrating on making a profit and being sustainable up to the
investment in infrastructure and community-driven projects of large organisations.
16
Module 2: The Functions of Marketing in Business Management
THE CONCEPT OF MARKETING
Social responsibility, according to Blythe (2009), is the social contract between the
organisation and the society within which it operates. Blythe (2009) states that the
company should act within the accepted morals of society to maintain good public
relations.
For long-term profitability and business sustainability, an organisation needs to
consider how the public will perceive its actions. With the widespread accessibility of
social media, the perceived amoral or unethical actions of a company and even that
of its employees may cause severe harm to an organisation’s reputation and public
image within minutes of a breaking story.
Customer focussed, market-driven organisations may stretch the relationship even
further by building long-term relationships with customers, suppliers, shareholders and
other stakeholders for the benefit of the organisation (Cant et al., 2017).
1.3.4 RELATIONSHIP MARKETING
Establishing positive long-term relationships with various stakeholders is beneficial to
the organisation. A well-established good relationship between the organisation and
its loyal customers can lead to more profitability and even market expansion when
these customers introduce other customers to the organisation (Cant et al., 2017).
However, according to Cant et al. (2017), relationship marketing does not stop at the
customer. Other stakeholders, such as the employees of the organisation are also
important. A good relationship between the organisation and its employees can lead
to higher retention of key personnel. Employees may also be more driven to achieve
the goals of the organisation. Relationships with suppliers are essential, especially if
a specific delivery is required quickly for an out-of-stock item to maintain customer
relationships.
Relationship marketing goes beyond the scope of just the marketing department.
Marketing is a system, as much as it is a part of the bigger whole of an organisation.
Copyright © Business Management Training College (Pty) Ltd
17
THE MARKETING FUNCTION
Relationship marketing includes various other departments or functions within the
organisation such as the Human Resource Management, Financial and Operations
departments. (Cant et al., 2017)
1.4 THE MARKETING FUNCTION
Every organisation needs to perform certain tasks. In small businesses (i.e., a bed and
breakfast), a single person (usually the owner) may perform several of the
organisational tasks or functions of the organisation. These groups of tasks may
include, amongst others, marketing, human resources, financial management,
production, operations, and purchasing. However, in larger organisations with several
departments, the organisation often requires specific managers or people to run these
departments.
Departmentalisation
may
be
departmentalisation,
product
in
various
formats,
such
as
or
service
departmentalisation,
functional
geographic
departmentalisation, or customer departmentalisation, subject to the organisational
set-up (Hellriegel et al., 2013).
Depending on the organisational structure, the marketing department can therefore be
responsible for all marketing activities in the organisation - marketing of a specific
product, marketing in a specific region or wherever the marketing function fits into the
organisational design.
According to Cant et al. (2017), the marketing function is a key function in the
organisation because of its relationship and knowledge about the customer, and its
direct contribution to profit. The modern organisation will most likely be marketing
orientated with an emphasis on systems design. This means that the marketing
function cannot operate on its own, or independently from the rest of the organisation.
The marketing function is therefore dependent on other organisational functions (such
as the finances, operations, and human resources), and vice versa (other
organisational tasks are dependent on the marketing task).
18
Module 2: The Functions of Marketing in Business Management
THE CONCEPT OF MARKETING
Marketing is defined as a much broader term than just advertising. Similarly,
marketing management is the “ongoing process of setting the marketing goals for an
organisation (taking internal resources and marketing opportunities into account),
planning and executing the marketing activities needed to meet these goals, and
measuring the progress towards achieving these goals” (Cant et al., 2017, p.p 25).
Cant et al. (2017) further state that marketing also forms part of the planning cycle, to
enable the organisation to continuously respond to external and internal changes in
the organisational environment. The planning cycle of an organisation is an ongoing,
repetitive process, and is essential for any organisation to remain relevant and
competitive.
According to Cant et al. (2017), the management task of marketing management is a
continuous, repetitive task of planning, implementing, and controlling marketing
activities, and include the following responsibilities:
•
Identifying opportunities and threats in the marketing environment;
•
Identifying relevant opportunities that can be utilised according to the
organisational (internal) strengths and weaknesses;
•
Compiling marketing data;
•
Choosing a specific target market;
•
Deciding on the products that will satisfy customer needs and wants;
•
Deciding on a selling price that the customer is willing to pay, while the
organisation still makes a profit;
•
Deciding on specific distribution channels;
•
Deciding on the relevant communication channels that will inform the specific
target customers;
•
Organising and leading the activities of the marketing department;
•
Controlling the marketing process.
Copyright © Business Management Training College (Pty) Ltd
19
SUMMARY
1.5 SUMMARY
In this chapter marketing was defined as a process of various activities, including
analysing the marketing environment, selecting a target market, communicating the
products and services to consumers and facilitating the exchange process.
The marketing gap is the term used for the lack of knowledge customers have about
an organisation and its products or services, such as knowledge about the products
and services, where or how it can be purchased, for what price it can be purchased,
how the exchange process is managed and how the products will be delivered or
distributed to the customers.
The marketplace is seldom a physical space, but rather refers to groupings of people.
Organisational orientations were discussed in terms of production orientation, sales
orientation, marketing orientation and relationship marketing.
As much as marketing is a process within an organisation, marketing management
is an essential function of the organisation because of its direct relationship with the
customers, management of the exchange process and role in ensuring profitability.
20
Module 2: The Functions of Marketing in Business Management
CHAPTER TWO
The Marketing
Environment
IN THIS CHAPTER:
2.1
INTRODUCTION ........................................................................................... 22
2.2
COMPONENTS OF THE MARKETING ENVIRONMENT ............................. 22
2.3
THE MICRO-ENVIRONMENT ....................................................................... 25
2.4
THE MARKET-ENVIRONMENT .................................................................... 27
2.5
THE MACRO-ENVIRONMENT...................................................................... 31
2.6
ANALYSING THE ENVIRONMENT............................................................... 37
2.7
SUMMARY .................................................................................................... 40
INTRODUCTION
CHAPTER 2: THE MARKETING ENVIRONMENT
LEARNING OUTCOMES
On completion of chapter 2 you should be able to:
•
Discuss components of the marketing environment.
•
Explain how to use market research to understand the environment.
2.1 INTRODUCTION
Organisations form part of a larger system in society and of the world. The organisation
is also a system within this larger system. A way to think about it is your mobile phone.
On your phone has various “applications” (apps) that interact independently from one
another. However, the apps require the mobile phone (a larger system), to operate.
The phone, again, requires an even larger system to be fully functional.
The purpose of studying and understanding the marketing environment is to first
understand where the organisation fits into the system. Secondly, for the marketing
manager or general manager to understand how to react to the inevitable changes
within the various types of environments in a way that ensures business sustainability
and profitability.
According to Cant et al (2017), the business environment is essentially made up of
internal and external components. Because both environments are subject to
changes, they must be monitored to make the necessary changes in the planning,
organising, controlling, and leading activities of the organisation.
2.2 COMPONENTS OF THE MARKETING ENVIRONMENT
The business environment is made up of an internal environment and the external
environment. As shown in figure 2.1 below, the internal environment is also referred
to as the “Micro-environment”. The external environment consists of the market- and
macro environment.
22
Module 2: The Functions of Marketing in Business Management
THE MARKETING ENVIRONMENT
Depending on what subject you are studying, the market environment can be referred
to as the “business environment” or the “industry environment”. Because this module
is focused on ‘marketing management, the external environment will be referred to as
the “market” environment.
FIGURE 2.1: THE MARKETING ENVIRONMENT
Microenvironment
(Internal)
Marketenvironment
(External)
Macro
Environment
(External)
Source: Adapted from Hellriegel et al. (2013, p. 179)
2.2.1 INTERNAL (MICRO) ENVIRONMENT
The internal environment, also referred to as the micro-environment, refers to the
business itself and the components within the management of the business has
complete control over these components, such as, amongst others, the appointment
of employees, the vision and mission of the organisation, and the marketing objectives.
2.2.2 EXTERNAL (MARKET AND MACRO) ENVIRONMENT
The external environment consists of two environments namely the market
environment nested within the macro environment.
Copyright © Business Management Training College (Pty) Ltd
23
COMPONENTS OF THE MARKETING ENVIRONMENT
The market environment is directly outside the internal environment and consists of
clients or consumers, suppliers, and competitors. This environment can be partially
controlled or influenced by the organisation.
The macro-environment refers to those forces the business has no or very little
control over such as political, economic, socio-cultural, technological, environmental,
and legal forces. The macro-environment, however, can have a direct or indirect
impact on the organisation.
FIGURE 2.2: COMPONENTS OF THE MARKETING ENVIRONMENT
Macro-enviroment
Political
Economic
Market environment
Socio-cultural
Consumers
Micro-environment
Technology
Physical
Environment
Suppliers
Marketing strategy
Resources
Marketing mix
Legal
Competitors
International
Source: Cant et al. (2017, p. 35)
An organisation cannot simply create a marketing or business plan and blindly follow
that plan as it will be a recipe for disaster. A successful business continuously monitors
all three environments and adjust the initial plan to react to changes within the
environment. This may also require the business to shift its focus and objectives to
remain sustainable and competitive within the market.
For instance, Nikon in South Africa had to adjust its marketing strategy because of the
technological shift in the macro-environment from film-based technology to digital
technology. This technological change affected how consumers in the market
24
Module 2: The Functions of Marketing in Business Management
THE MARKETING ENVIRONMENT
environment no longer use cameras as predominantly photographic equipment, but
rather as communication tools. The popularity of compact cameras at a fraction of the
price drove consumers to emerge and existing competitors. With a strong strategic
marketing plan, Nikon was able to increase its market share from around 6% at the
top end of the market, to be the industry leader in South Africa. (Nieuwenhuizen, 2012,
p. 83).
Another example is the BlackBerry cell phone, which was year after year named as
the ‘coolest phone brand’ among South African youth, with BlackBerry Messenger
(BBM) rated as the ‘coolest’ app.
However, BlackBerry did not keep up with the
technological changes, such as WhatsApp, which overtook BBM and BlackBerry was,
almost overnight, no longer the ‘darling’ of the South African consumer. No matter
how successful your business is today, it is important to keep abreast of changes in
the macro-environment.
2.3 THE MICRO-ENVIRONMENT
The Micro-environment is the business itself. According to Erasmus et al. (2016), the
Micro-environment is all the internal factors of the company which can be controlled
by management. Cant et al. (2017), extend this definition to include the ability of the
company to meet the expectations of the customer.
Marketing management does not directly control all the variables in the microenvironment. According to Cant et al. (2017), the marketing manager, as head of a
core function in the organisation, will be able to influence some of the decisions made
about the use of resources in other departments. Other functional managers, such as
human resources, finances, and operations may also influence the decision made in
the marketing function. The marketing manager is however directly responsible for the
marketing activities and instruments. This involves planning, organising, leading, and
controlling. Table 2.1 below shows the general elements controlled by marketing
managers:
Copyright © Business Management Training College (Pty) Ltd
25
THE MICRO-ENVIRONMENT
TABLE 2.1: MICRO-ENVIRONMENT ELEMENTS CONTROLLED BY THE
MARKETING FUNCTION
Component
Description
Marketing Strategy
Mission Statement
Describes the direction of the organisation and its
purpose. It often describes the actions and activities of
the organisation and may reflect the organisation’s core
values.
Marketing Objectives
Specific goals that must be achieved by the organisation
to enact the mission statement. Identify targets that the
organisation should achieve to make a profit - if it is profitorientated.
Target Market Selection
The target market selected to achieve the marketing
objectives and described in terms of race, age, gender
income or hobbies. (market segmentation)
Resources
Human Resources
Refers to the skills and abilities needed for the marketing
function to work and usually include product knowledge,
sales skills, and customer support.
Resources
Control of marketing budget (financial resources), and
facilities. The ability of the organisation to respond to
threats and make use of opportunities (also include
human resources)
Marketing Mix
Products (or Services)
Products or services offered to meet the needs of
customers (identified target market), considering the
resources available to the organisation.
Place (Distribution)
Where the product will be sold, or the service will be
offered.
Price
The price of the product or service must be relevant and
reflected in the perceived value customers are willing to
place on it. The marketing manager will also have to
consider the economic climate, price of competing
products or substitute products.
Refers to how the target audience will be informed of the
product or service offering. The decision is usually
Promotion
(Marketing
influenced by resources available to the organisation, the
Communication)
target audience to be reached and the type of media
available.
Source: Adapted from Cant et al. (2017, p. 36)
26
Module 2: The Functions of Marketing in Business Management
THE MARKETING ENVIRONMENT
2.4 THE MARKET-ENVIRONMENT
The market environment is directly outside the micro-environment (see figure 2.2). It
refers to elements that the organisation may be able to influence but have no control
over. According to Cant et al. (2017), the market environment always has a demandside and a supply-side.
Demand in the market environment refers to all the possible consumers, including
individuals, households, government, and organisations. It is any entity that demands
something from the market, be it a service or a product.
Supply in the market refers to any entity that supplies something to the market, be that
a service or a product.
Most entities in the market environment will both supply something to the market, and
demand something from the market. For example, an employee supplies his/her
service or work to the market for which the employee is compensated. The employee
may also demand products from the market (i.e., food, housing, technology etc.) or
services (i.e., hospital, doctors, haircut etc.).
It should be understood that the participants in the market environment are not limited
to private organisations but may also include government and government parastatals.
FIGURE 2.3: DEMAND AND SUPPLY SIDES OF THE MARKET
ENVIRONMENT
Demand
Supply
• All possible
consumers
• Suppliers of raw
material or services
• Competitors offering
similar or substitue
products
Market
Environment
Source: Cant et al. (2017, p. 42)
Copyright © Business Management Training College (Pty) Ltd
27
THE MARKET-ENVIRONMENT
The organisation itself forms part of the market environment. As a “consumer” it
requires raw materials and services (demand), and as a supplier, it supplies a service
or product to the market (supply).
2.4.1 SUPPLY
As illustrated in Figure 2.3 above, the market environment has a supply side. This
supply-side can be split into suppliers and competitors.
•
Suppliers: The organisation needs reliable suppliers to deliver its product or
service to the customer. According to Cant et al (2017), without reliable
suppliers, the organisation will be unable to meet its obligations towards the
customers. The organisation’s supply chain and network are important factors
in organisational success. Factors to keep in mind are cost and quality. If the
raw material purchased or service delivered to the organisation is too
expensive, then the organisation may be unable to be competitive in the market.
•
Competitors: According to Cant et al. (2017), any organisation has competition
or competitors. In the marketplace, consumers have limited resources to
exchange for goods and services. Organisations compete in some form or
another for a share of these limited resources.
•
Competition may therefore be product or service orientated where similar
products or services are offered (for example burger meal at Wimpy or a burger
meal at McDonald's).
•
Competition may also be substitute orientated in terms of products (for example
a health shake vs a burger meal).
•
Competition may also be needs orientated (for example the needs of a specific
consumer could be for transport money, burger meals, school fees, data
access, and concert tickets).
The marketing manager must have sufficient information about the organisation’s
consumers to effectively promote a product at an acceptable price at the right place.
28
Module 2: The Functions of Marketing in Business Management
THE MARKETING ENVIRONMENT
2.4.2 DEMAND
The second element in the market environment is demand. Demand is created by the
consumers who purchase products or services for personal consumption. It is also
referred to as the end-user. An organisation that purchases paper to print letters and
annual reports is a consumer.
The market environment is however not limited to consumers (or end-users) only.
Customers may purchase products or items for other purposes than personal
consumption. Cant et al (2017) distinguished between five types of customer markets:
•
Consumer markets are the end-users (i.e., individuals, households,
organisations) buying products or services for personal consumption.
•
Industrial markets (business-to-business markets) buy goods and services for
further processing or use in the manufacturing process.
•
Reseller markets buy goods and/or services (usually in bulk) to be resold at a
profit.
•
Government markets are local or national government departments that buy
goods and services to deliver public services.
•
International markets are buyers from other countries and may include
consumers
(end-users),
producers
(industrial
markets),
resellers
or
governments.
2.4.2.1 The law of supply and demand equilibrium
Figure 2.4 depicts the demand and supply equilibrium. The higher the price of a
product, the lower the quantity consumers’ demand for that product and the higher the
price of a product, the higher the quantity producers’ supply for that specific product.
Copyright © Business Management Training College (Pty) Ltd
29
THE MARKET-ENVIRONMENT
FIGURE 2.4: DEMAND AND SUPPLY EQUILIBRIUM
Source: Debreu (1956)
The consumer surplus is the difference between what a consumer is willing and able
to pay and the actual price for the product or service. The producer surplus is the
difference between the price of the product and the lowest price a producer is willing
to pay. Producers want to sell their product or service at the highest price while still
being competitive in the market. Consumers want to buy the product or service at the
lowest price possible. The equilibrium price is the market price where supply and
demand curves meet. If producers raise their price for a product too high, the demand
will be less than what is offered, which will result in a surplus of the product that will
force producers to lower the price until the entire supply is sold. When the price of a
product is low, there would be more quantity demanded than supplied, which will result
in a shortage in the market.
2.4.3 NEEDS AND TRENDS
Kotler and Kotler (2012) state that a successful business supplies solutions for
consumers’ needs that are not being catered for in the current market. A market niche
can be identified where a customer’s needs are almost met, but not completely by
existing providers. The question ‘Why our consumers would buy our products, and not
the competitors’, can help to identify a market niche.
30
Module 2: The Functions of Marketing in Business Management
THE MARKETING ENVIRONMENT
According to Kotler and Kotler (2012), products and services can be classified as fads,
trends or megatrends. When identifying opportunities or analysing the market
environment, the organisation may make different types of decisions regarding
budgeting, product development or future plans, depending on which category best
describes a product or service.
•
Fads are “unpredictable, short-lived, and without social, economic or political
significance” (Kotler & Keller, 2012, p. 96). It is difficult to get the timing just
right with these types of products and often requires mostly luck to successfully
market them.
•
Trends are more durable and predictable than fads. According to Kotler and
Kotler (2012), trends reveal and shape the future of products or services. For
instance, a focus on health and wellness has brought more government
legislation, such as listing the nutritional values of food on processed storebought products. Many restaurants have also expanded or adjusted their
menus to include “healthier alternatives” to their patrons.
•
Megatrends are “large social, economic, political, and technological change
that is to form, and once in place, influence us for some time” (Kotler &
Keller,2012, p. 96). Think for instance of smartphones. Smartphones allow for
more widespread access to mobile computing. Over the Top (OTT)
applications, applications that make use of the smartphone operating system
and mobile providers’ infrastructure (such as Facebook and WhatsApp), have
changed how people communicate and share information.
Kotler and Kotler (2012) however warn that identifying an opportunity in the market
environment is not enough. Market research must be done to ensure that the product
is properly introduced to the appropriate target market at the right time.
2.5 THE MACRO-ENVIRONMENT
According to Blythe (2009), the elements in the macro-environment or external
environment affect all organisations. It is a dynamic environment that is constantly
subject to rapid changes. Since no organisation can exist in isolation, these rapid
changes can impact the industry or business environment within a very short time. A
Copyright © Business Management Training College (Pty) Ltd
31
THE MACRO-ENVIRONMENT
changing business environment may create new opportunities or threats for the
organisation that the marketing manager must respond to.
Blythe (2009) claims that some very large organisations can also form part of the
macro-environment, going so far as to suggest that some firms may even influence
the elements in the macro-environment. However, even the largest companies may
be influenced by the macro-environment.
For the most part, technology giant Apple dictates to the market how its products will
look and operate. Customers adapt to Apple’s products, and not Apple to its
customers. To remain efficient and streamline production, Apple standardised the
production of its phones to the point where a specific model would be as similar as
possible, globally. That is, until the introduction of the iPhone Xs that was launched in
September 2018. The Xs model featured dual SIM (Subscriber Identify Module)
technology, one physical SIM and one “e-SIM”. However, because of various
restrictions in the Chinese market, Apple could not release this technology in China,
Hong Kong or Macau. Instead, Apple produced a phone with two physical slots for
SIM cards, specifically for this market. Apple did this because of the importance of the
Chinese market, which in 2017 generated about 20 percent of Apple’s total annual
sales (Apple Bends to China’s Will Again With Latest iPhone Feature, 2018).
The marketing manager must constantly evaluate the macro environment to ensure
that the organisation reacts appropriately to changes in the macro-environment.
According to Kotler and Kotler (2012), the major forces to consider when evaluating
the macro environment is the political-, economic-, social-, technological- and legal
environments. Cant et al (2017), identified the international environment as another
major force to consider in the modern business world. A popular mnemonic to
remember this is PESTELI. PESTELI analysis forms an important part or should be
done in conjunction with SWOT analysis where opportunities and threats are
concerned.
32
Module 2: The Functions of Marketing in Business Management
THE MARKETING ENVIRONMENT
NOTE: PESTELI is traditionally referred to as PESTEL or PESTLE analysis.
However, with international businesses and globalisation, very few organisations can
still afford to have the notion that some activities happen in isolation. Considering
international trends, and the impact of international businesses on local markets is
essential in the modern marketplace.
2.5.1 POLITICAL AND LEGAL ENVIRONMENT
Investors want assurance that their investment will be safe and that it will grow. An
entrepreneur may find it difficult to get investors for a business idea that will be set up
in a country with political instability. Cant et al. (2017) state that any uncertainty about
political stability can halt investments and limit tourism. This usually affects a country’s
economy in the form of increased interest rates, higher inflation, and lower credit
ratings.
Organisations must also be aware and comply with the relevant laws where it
operates, be that provincial, national, or international. According to Cant et al. (2017),
legislation can impact individual businesses differently.
For example, AGOA (The African Growth and Opportunity Act) is a United States
(US) trade act. It promotes market access to the US for qualifying Sub-Saharan African
countries. Under this act and in conjunction with the US Generalised System of
Preferences (GSP) Programme, approximately 6500 product tariff lines have Dutyfree access to the U.S. market.
This meant that, before 2018, several industries in South Africa (which included the
steel and aluminium industries), could export their products to the US duty-free. During
this time South African officials and US officials were trying to reach a solution, under
the AGOA agreement, regarding concessions on the import of US poultry, and
specifically chicken, to the South African market. After a long battle, a quota of 65,000
tons of meat that could be imported duty-free to South Africa was agreed upon. This
agreement was in part to preserve the benefits other South African industries enjoy
under the AGOA agreement.
Copyright © Business Management Training College (Pty) Ltd
33
THE MACRO-ENVIRONMENT
Although the agreement benefitted other industries, the effect was almost devastating
on the South African poultry farmers. Many South African farmers could simply not
compete with the US producers, who were able to sell the US chickens way below the
cost of production.
During 2018, some of the industries that originally benefited from the AGOA
agreements were left in the dark after President Donald Trump reverted on some of
the old tariff-free line items and imposed huge import tariffs, specifically 25% tariffs on
steel and 10% on aluminium, under his “Bringing jobs back to America” campaign
(About AGOA, 2018; Bavier, 2018; Mkentane, 2018; Reuters, 2018).
The local industries may have very little or no impact on decisions made in other
countries, although as a consortium the industry may attempt to influence local
policymakers. Notwithstanding the outcome of such attempts, the local company must
be able to react to the legislative and political changes in a strategic manner that leads
to the best outcome for the stakeholders of the organisation.
2.5.2 ECONOMIC ENVIRONMENT
Cant et al (2017) state that the economic environment of a country affects every
business and consumer. The economy in turn is affected by many variables, of which
the political and legal forces are the most influential. According to Cant et al (2017),
the mismanagement of the economy by a country's government will have serious and
often disastrous consequences on a global scale.
The variables in the economy may in turn affect organisations in various ways.
Organisations must be aware of these forces and react appropriately to changes or
economic events. Some of the economic variables to consider include:
•
Inflation has a direct impact on the price of products or services, and how much
consumers can spend on these products and services. For instance, if inflation
is above average annual salary increases, consumers will not be able to spend
relatively the same amount of money on products and services.
34
Module 2: The Functions of Marketing in Business Management
THE MARKETING ENVIRONMENT
•
Interest Rate is the premium paid to borrow money. Businesses that are
established on business loans will be very sensitive to even minor changes in
the interest rates. For instance, a 0,5 percent or 50 basis points increase in the
prime lending rate by the reserve bank will lead to an increase of an additional
R 4167 in monthly interest fees alone on an R10 million business loan. For a
new business, this may be devastating.
•
Unemployment is a serious economic problem and rising unemployment have
serious repercussions for the economy of any country. Lower demand for
products and services often lead to additional layoffs or retrenchments, leading
to even higher unemployment figures.
•
The exchange rate influences how much-imported goods cost and how much
local producers can get for exports. Higher exchange rates may be favourable
to exporters, but the cost of imports such as oil, directly influences the price of
petrol and diesel, thereby increasing transport costs.
2.5.3 SOCIO-CULTURAL ENVIRONMENT
According to Kotler and Kotler (2012), the socio-cultural environment informs our
worldviews, usually in an unconscious manner. These worldviews determine the
relationship people will have with other people, organisations, society and nature. Core
values and beliefs are passed on from parents to children and reinforced by social
institutions such as schools, businesses, governments, and religious institutions.
Cant et al (2017) reckon that social and cultural changes are strongly influenced by
the economy and technology. Social trends determine the marketing strategies an
organisation will use to communicate a product to a specific target market. Social
trends can help organisations determine consumer needs and thereby influence
purchasing decisions.
2.5.4 TECHNOLOGICAL ENVIRONMENT
Cant et al (2017), describe technological innovation as "the process that expands
people's capacity." Technological innovation originates in the research and
development departments of both private and public organisations (businesses,
government, parastatals, military). For example, according to Cant et al (2017), 80
Copyright © Business Management Training College (Pty) Ltd
35
THE MACRO-ENVIRONMENT
percent of medicine in use today was invented in the last 5 to 10 years because of
technological innovation.
Technological advances influence how businesses operate, deliver products, design
marketing campaigns, and interact with their customers. Marketing communication
tools have expanded to the use of social media marketing. Some experts estimate
that, by 2021, a huge chunk of internet activity will be by bots, a small computer
programme that performs specific tasks, such as answering customer queries on
messaging programmes or searching for information and reference on the internet
related to marketing decisions.
2.5.5 PHYSICAL ENVIRONMENT (THE ENVIRONMENT)
Colloquially when referring to "the environment", most people will assume that
reference is being made to nature in general that includes natural resources such as
water, coal, oil, gold, and other minerals.
The basis of the economy is to satisfy people's unlimited wants and needs with limited
resources. Businesses must be aware that only a limited amount of resources are
available and determine if the number of resources available for a specific product or
service will be enough for the company to continue making a profit.
For example, data costs and mobile communication in South Africa is extremely
expensive when compared to international providers. Part of the problem is the limited
radio spectrum available to mobile operators. Although the SA Government has
recently made way for mobile companies to have additional spectrum available in the
700Mhz and 800Mhz bands, mobile companies and subsequently, their customers,
may still have a long wait ahead of them before these bands become available.
Currently, these bands are still occupied by outdated analogue TV broadcasts, simply
because analogue broadcasters have failed to switch over to digital broadcasting. The
extended delays in digital migration are costing South African consumers, and the
economy dearly (McLeod, 2018; McLeod, 2017; Mofokeng, 2018; Nair, 2018).
36
Module 2: The Functions of Marketing in Business Management
THE MARKETING ENVIRONMENT
The digital migration example above is not only an example of limited natural
resources. It is also an example of how the different forces in the macro-environment
influence one another, the market, and the organisation.
2.6 ANALYSING THE ENVIRONMENT
According to Blythe (2009), the marketing department, like any other department,
relies on information for effective decision making. The information must be reliable,
valid and extensive. Depending on the resources available, the organisation may have
a limit on how much information is available or can be sourced. According to Blythe
(2009), some of the information may be available internally, usually in raw format or in
a different format other than for marketing purposes. This means the marketing
department must evaluate all information available and disseminate what can be used
for marketing decision-making purposes.
For example:
•
A drop in third-quarter income (a financial report), may indicate that the
seasonal products are not relevant for the target market.
•
However, combined with national indicators, the drop-in sales may be a result
of a rise in fuel prices during the same period.
•
But when compared to industry performance, it shows that consumers adjusted
quickly to the new fuel prices and resumed their normal spending habits.
Further investigation reveals that a substitute inferior product was introduced
by an international competitor.
Each bullet in the example indicates relevant and valid information relating to the
product line. An organisation that only uses internal information to make decisions may
have decided to introduce a completely new product based on the financial figures.
With a little more information, the marketing department may decide to incentivise
consumers who buy their products or offer free delivery.
Copyright © Business Management Training College (Pty) Ltd
37
ANALYSING THE ENVIRONMENT
It is with the final bullet when all relevant information is gathered, that the marketing
department can respond appropriately, by probably rewarding customer loyalty.
Remember, consumers will not just know that this product is superior, marketing
communication is about informing customers about the product. An adjusted
marketing campaign may then focus on the superiority of a product (long-lasting, most
durable, guarantee and warranty policies may be extended etc.). What other
alternatives can be used to retain customers?
It is important to understand that marketing is never-ending. Change happens
constantly, and the business must respond appropriately. The only way to do that is
to constantly evaluate the various environments to ensure that the organisation is
performing optimally.
2.6.1 THE SWOT ANALYSIS
The SWOT analysis helps managers to identify internal Strengths and Weaknesses
and external Opportunities and Threats.
According to Cant et al. (2017), an underlying principle of the SWOT analysis is that
an effective organisational strategy will maximise strengths and opportunities and
minimize threats and weaknesses. According to this type of strategy, the organisation
should therefore use its internal strengths to exploit external opportunities and
eliminate external threats. Internal weaknesses must be minimised, or plans should
be adjusted to avoid such weaknesses affecting the implementation and success of
the plan.
Important with SWOT (or any type of analysis) is the quality of information. The
evaluator will need to gather extensive information about the organisation itself, the
market (needs and wants), and competitors.
Cant et al. (2017) describe the components of SWOT as:
•
Strengths – Internal resources or skills that are superior to the competition. It
is the advantage an organisation has in the market. A strength is therefore more
38
Module 2: The Functions of Marketing in Business Management
THE MARKETING ENVIRONMENT
than what the organisation can do and is rather what the organisation can do
exceptionally well. An organisational strength is a unique position that sets it
apart from everyone else in that market.
•
Weaknesses – Internal deficiencies or severe limitations in resources, skills
and capabilities that may affect the performance of a plan or business. It is not
simply “everything that is not a strength”. Weakness is what makes the
organisation perform below par compared to the industry.
•
Opportunities – Elements within the market environment may present
themselves because of legislative or regulatory changes, changes in offerings
by competitors, improved relationships with suppliers, the introduction of new
technologies, access to new markets or any other chance that can advance the
organisation’s position in the market.
•
Threats – Any unfavourable change that may negatively affect the effective
offering of the product or service in the current market environment.
FIGURE 2.5: SWOT ANALYSIS
Source: Sargeant (1999)
Copyright © Business Management Training College (Pty) Ltd
39
SUMMARY
2.7 SUMMARY
In this chapter, it was highlighted that organisations do not operate in isolation. Several
forces, both internal and external, influence the success of the organisation and its
marketing activities. The marketing environment consists of an internal and an external
environment. The internal environment is the organisation itself where management
has complete control over all elements.
It was also discussed in this chapter that organisations have limited or no control over
the external environment where the market environment is nested within the macro
environment. The market environment is influenced by forces of supply and demand
for the products and services offered by the organisation and its competitors. Included
in the market environment are the consumers (demanding the product) and suppliers
of the organisation (and competitors).
This chapter concludes by explaining that fluctuations and often rapid changes in the
macro-environment influences both the market environment and the organisation,
although the market and micro-environment mostly have an insignificant impact on the
macro-environment. Some of the major forces in the macro-environment includes the
Political-; Economic-; Socio-Cultural-; Technological-; Legal and Natural Environment
(PESTEL). The SWOT analysis was also discussed and can be applied to analyse the
internal Strengths and Weaknesses, and external Opportunities and Threats for an
organisation.
40
Module 2: The Functions of Marketing in Business Management
CHAPTER THREE
Understanding the
Target Market
IN THIS CHAPTER:
3.1
INTRODUCTION ........................................................................................... 42
3.2
CONSUMER BEHAVIOUR ............................................................................ 43
3.3
MARKET SEGMENTATION .......................................................................... 51
3.4
MARKET RESEARCH AND INFORMATION ................................................ 54
3.5
SUMMARY .................................................................................................... 57
INTRODUCTION
CHAPTER 3: UNDERSTANDING THE TARGET MARKET
LEARNING OUTCOMES
On completion of chapter 3 you should be able to:
•
Describe consumer behaviour and determinants of consumer behaviour.
•
Apply market segmentation principles.
•
Market research, market research methods and the power of information are
explained and applied.
3.1 INTRODUCTION
Part of the responsibilities of management is the efficient use of resources to ensure
the profitability and success of a business. Spending money on marketing activities
that do not yield optimal results, is not an efficient use of resources. For instance, it
will not be viable for an auditing firm to have a stall at the annual Rage expo. (Rage is
an expo dedicated to electronic gaming, geek culture, esports and technology drawing
over 30,000 visitors throughout the event (Rage Expo, 2018).
The more knowledge marketers have regarding their customers, the more targeted
marketing efforts can be. Some of this information is readily available, a lot of the
information must be researched and disseminated from raw data, and a little bit of
intuition is sometimes required to fine-tune marketing efforts. Unfortunately, a lot of
"lazy" marketing is done with very little or no effort to understand a target market,
literally meaning millions of Rands are wasted on ineffective marketing. For example,
when a single guy gets a Facebook advert pop-up for maternity clothes. With the tools
and information available from print- and online publications, marketers can ensure
that they target their specific market. This, however, also means that the marketer
must understand and have a clear idea of who their target market is and how their
consumers behave.
42
Module 2: The Functions of Marketing in Business Management
UNDERSTANDING THE TARGET MARKET
Cant et al. (2017) claim that connectedness and abundant availability of information
makes customers more knowledgeable than ever. It is tougher for salesmen or
organisations to convince customers to buy their products with confusing information
or sales tactics. Getting an opinion on a product or service is as easy as posting a
question on social media where existing or previous customers are more than willing
to share their experiences.
The phrase "the customer is king" is truer than ever. Cant et al. (2017) reiterate that a
business cannot exist without customers. It is therefore not only important to know
what a target market will buy, but also how customers make their decisions to buy
specific products and services.
3.2 CONSUMER BEHAVIOUR
According to Blythe (2009), consumer behaviour consists of all the activities people
undertake when obtaining, consuming and disposing of products and services. Blythe
(2009) further states that studying consumer behaviour should focus on determining
what influences people to behave in a certain way.
Essential to effective marketing is to understand how a consumer thinks about making
a purchase. The motivation to buy, the decision-making process, how people make
the transaction and the post-purchase behaviour of the consumer all play a role in
determining what the marketer should focus on when promoting a product to potential
customers.
3.2.1 DETERMINANTS OF CONSUMER BEHAVIOUR
According to Parumasur and Roberts-Lombard (2012), there are three major
determinants of customer behaviour: customer types, customer roles and
activities.
Copyright © Business Management Training College (Pty) Ltd
43
CONSUMER BEHAVIOUR
FIGURE 3.1: CUSTOMER TYPES, ACTIVITIES AND ROLES
Source: Parumsur and Roberts-Lombard (2012, p. 3)
Parumasur and Roberts-Lombard (2012), distinguished between an individual or
household customers and business customers. The authors reiterate that the
customer is usually the focal point of any business. They also state that there is a
difference between consumers’ (individuals or households) buying behaviour and
business’ buying behaviour.
Parumasur and Roberts-Lombard (2012), also state that there are three roles
customers can fulfil in relation to any transaction:
•
The customers participating in selecting or choosing products are the ones
responsible for the choice of product or service procured.
•
The customers participating in paying for the products are physically
responsible for the finances in purchasing the product or service.
•
The customers participating in using the product enjoys the benefits of the
service or the actual user or consumer of the product.
Customers may play one, two or all three roles in the purchasing process. However,
marketers need to consider all three roles when focussing their marketing efforts. For
example, consider the three roles in a medium office or business unit regarding the
purchase of a new laptop for an administrator. The administrator needs to be able to
use the laptop effectively to do the work required, the procurement officer must be
convinced that the laptop is the best option available, and the financial manager must
be willing to pay for the purchase. The price must be right for the payer role, the quality
of the product and distribution (place) must be right for the chooser role and the
usability of the product must be right for the user of the laptop.
44
Module 2: The Functions of Marketing in Business Management
UNDERSTANDING THE TARGET MARKET
The activities involved in the buying process include:
•
Physical activities such as visiting a store or website, talking to a salesperson
or gathering information for comparison and buying the product or service.
•
Mental activities occur when customers consider if the product or service will
satisfy their needs. Customers will consider personal perception about the
brand, their knowledge about the industry or other brands (even if such
knowledge is incorrect), experience regarding the brand and any other views or
information about the brand.
According to Cant et al. (2017), the buying decision is not determined by a single factor
but is influenced by several factors. Figure 3.2 below provides an overview of
consumer behaviour during the buying process. The figure illustrates that several
factors influence the buying decision and not only individual or internal determinants.
The environment, group behaviour and marketing efforts influence the final decision
an individual will make about a product or service.
Copyright © Business Management Training College (Pty) Ltd
45
CONSUMER BEHAVIOUR
FIGURE 3.2: CONSUMER BEHAVIOUR MODEL
Source: Cant et al. (2017, p. 57)
3.2.2 INDIVIDUAL FACTORS THAT INFLUENCE CONSUMER BEHAVIOUR
According to Cant et al. (2017), individual factors (or internal determinants) refer
specifically to factors that determine human behaviour. The authors state that it is not
(currently) possible to completely understand how the human mind works, or exactly
how the mind transforms inputs or stimuli into outputs or a purchase decision. It is
however possible to determine how certain stimuli will influence the purchasing
decision.
Cant et al (2017) state that modern marketing is based on needs and more specifically
consumer needs. "Needs are the essence of the marketing concept. The key to a
company's survival, profitability and growth in a highly competitive marketing
environment is its ability to identify and satisfy unfulfilled consumer needs better than
the competition." (Cant et al. 2017, p 58)
46
Module 2: The Functions of Marketing in Business Management
UNDERSTANDING THE TARGET MARKET
Internal determinants include motivation, perception, learning ability, attitude,
personality, and lifestyle.
3.2.2.1 Motivation as an influence on consumer behaviour
If a marketer knows what motivates a consumer to buy the product or service, the
marketing of that product will become much easier. According to Cant et al. (2017),
understanding motivation is to understand why consumers do what they do. It is one
thing to have a need, but it is another to do something about it. Cant et al. (2017)
provide the following definitions:
•
Need - "A need is a gap that exists between the actual state the consumer is in
and the state he or she would like to be in" (Cant et al., 2017, p 59).
•
Motives – "Motives are the psychological drives or urges that compel
individuals towards actions that satisfy their needs" (Cant et al., 2017, p 59).
Abraham Maslow identified specific human motives and classified these motives in a
hierarchy of needs. According to Maslow's theory, an individual is motivated to fulfil
whichever need is most strongly felt at any given moment. This means an individual
can at any specific moment in his or her life, have needs at different levels of the
hierarchy. For instance, an individual may have Physiological Needs related to
medicine to feel better, while at the same time have Self-Actualisation Needs to travel
and explore the world to experience different world cultures.
According to Parumasur and Roberts-Lombard (2012) Maslow's hierarchy of needs is
based on three basic ideas:
1.
People adopt a set of motives through genetic endowment and social
interaction.
2.
Some motives are more basic than others.
3.
The most basic motives need to be satisfied to a minimum level before other,
more advanced motives come into play.
Copyright © Business Management Training College (Pty) Ltd
47
CONSUMER BEHAVIOUR
The basic idea that basic needs must be satisfied before more advanced motives
come into play may seem like a contradiction when compared to the statement that a
person may have a basic physiological need while also having an advanced selfactualisation need. These are however two distinct categories of needs, as portrayed
in table 3.1 below:
TABLE 3.1: MASLOW'S HIERARCHY OF NEEDS AND MARKETING
MOTIVATION
LEVEL OF
HIERARCHY
Physiological
TYPE OF NEED
Basic
needs
Safety or
EXAMPLE OF AN
PRODUCTS
APPEAL
Medicines, basic food
"Relieves wet & dry
items (staples)
coughs"
– Vicks Acta Plus
Basic
security needs
Social needs
RELEVANT
Basic
(belonging)
Insurance, alarm
"Insurance, good
systems, retirement
and proper."
annuities
- Santam
Fashionable clothing,
"It starts with you"
grooming products,
- Nivea Men
beverages
Advanced
Esteem or ego
Cars, furniture, credit
"Live for
cards
Greatness"
- Rolex
needs
Cosmograph
Daytona
Selfactualisation
Advanced
Hobbies, travel,
"Prosperity through
education
Knowledge"
needs
- BMT College
Source: adapted from Parumasur and Roberts-Lombard (2012, p. 171)
Table 3.1 shows the basic and advanced needs as identified by Maslow, relevant
products, and examples of appeal for those types of products.
48
Module 2: The Functions of Marketing in Business Management
UNDERSTANDING THE TARGET MARKET
It is important for a marketer to understand what type of product or service is offered,
to ensure that the marketing message or communication appeals to the right audience.
For example, Rolex will probably not appeal as an ego or esteem need if their
marketing message were something like: "Accurate time, every time, for anyone"
unless Rolex drastically adjusts its pricing strategy.
3.2.2.2 Other Individual Factors that influence consumer behaviour
Cant et al. (2017) identified several other internal determinants, namely:
•
Perception is influenced by what a consumer knows about a product, service
or brand or what the consumer has learned about the product, service or brand.
It is very difficult to change a perception once it is formed. Perception is formed
in four distinct steps namely: (i) exposure, (ii) attention, (iii) interpretation, and
(iv) recall.
•
Learning ability is important to marketers as everything a person learns about
an object or situation influences that person's behaviour. Different people learn
differently and learn different things about objects and situations. All learning
consists of stimulus, response, reinforcement, and repetition.
•
Attitude is the positive or negative opinion a person has about an object or
situation. Marketers try to influence a person's opinion or attitude positively
about the organisation. It is important to note that attitudes are mostly
influenced by beliefs and that such believes do not need to be correct or true,
but the believes only need to exist.
•
Personality is the inner psychological characteristics that determine and
reflects how a person will respond to the environment. The characteristics are
made up of qualities, attributes, traits, and mannerisms that distinguish one
person from another.
•
Lifestyle refers to how a person spends their time, what the person finds
interesting and important, and what a person values. A set of values plays an
important part in how individuals will spend their money. Desired lifestyles
influence needs and desires, and therefore spending habits.
Copyright © Business Management Training College (Pty) Ltd
49
CONSUMER BEHAVIOUR
3.2.3 GROUP FACTORS
Have you ever you the expression ‘No man is an island’?. Learning does not happen
in isolation. Most people tend to be part of society in some form or another and are
involved with a group, be that family, cultural groups, social groups, reference groups
or opinion leaders. According to Cant et al. (2017), these groups have a major
influence on how a consumer behaves.
•
Family is the most important group when it comes to shaping a consumer's
behaviour. Family (and people) that live in close contact for many years
gradually develop similar and fixed patterns of spending and consumption. Most
children acquire their spending habits or consumer behaviour from their parents
or close relatives.
•
Cultural groups share common values, rules, norms, symbols, and
experiences that are passed down from generation to generation. Culture also
determines a person's priorities in respect of products and activities.
•
Social classes are the different groups of people with the same social standing
(i.e., high earning celebrities, income groups, political leaders, education level)
and who shows similar patterns of behaviour. Social classes are generally
defined as lower-, middle- and upper class. Consumers' relevant social classes
are usually a good indicator of what products or services they would be
interested in. Marketers often know what consumers generally aspire for to
experience a sense of belonging to a "higher" social class. Therefore, some
marketing campaigns may claim that buying a certain product may elevate a
consumer to a higher social level.
•
Reference groups are what a consumer uses as a standard when making a
purchasing decision. Types of reference groups include membership groups,
automatic groups (i.e., male, female, age, occupation), negative groups (i.e.,
groups the consumer avoids), associative groups (i.e., groups that the
consumer want to belong to).
•
Opinion Leaders are very similar to reference groups but refer to an individual
or reference person. These are specific people who are respected or whose
opinion are valued by other people.
50
Module 2: The Functions of Marketing in Business Management
UNDERSTANDING THE TARGET MARKET
3.3 MARKET SEGMENTATION
Marketers can and do utilise a broader total-market or market aggregation
approach when it comes to more widely used, everyday consumables (e.g. milk or
bread). However, even within a broader approach, there are divergent needs and
wants to influence consumer behaviour. This necessitates a more tailored product and
thus a more consumer-specific marketing approach. For instance, health-conscious
individuals may search for a healthier alternative to conventional bread products.
As stated by Cant et al. (2017), market segmentation is the process by which
marketing professionals may divide their consumer group into specified subsets,
according to the group’s specific needs or wants. As discussed in the previous chapter,
an essential part of effective marketing is to understand how a consumer thinks about
making a purchase. Therefore, creating these segmented groupings can facilitate a
more streamlined, consumer-specific marketing process in accordance with the
consumers’ behaviour.
Once a market has been segmented, the marketer will be better equipped to create a
tailored plan addressing that segment’s specific needs- this is known as target
marketing. For example, MAC Cosmetics may tailor its advertising towards young
women who have recently entered the workforce. This target market would now be
able to afford these products and might identify with the prestige of the brand.
By using product positioning techniques, marketers can create the image of a
product in the minds of their target consumer. In line with the MAC Cosmetics example,
marketers may choose to market the product to young women as an accessible luxurythrough placements on social media or celebrity collaborations. This will provide the
perception of glamour that might appeal to their target demographic.
Copyright © Business Management Training College (Pty) Ltd
51
MARKET SEGMENTATION
3.3.1 BASES FOR SEGMENTATION
As segmentation forms the basis of the marketing approach and strategy to follow,
time and careful attention should be utilised when choosing the organisation’s basis
for segmentation. The major market segmentation bases are outlined below:
•
Geographic Segmentation: Geographic segmentation is the oldest form of
segmentation. This involves dividing a market into geographical areas on the
assumption that people who reside in a specific area have similar needs. For
example, population groups in a colder area will have a greater need for home
heating devices than those who live in a more tropical geographic location.
•
Demographic Segmentation: Demographic segmentation involves division by
characteristics such as age, gender and ethnicity. This is used as the most
common form of segmentation and can be utilised with ease in concurrence
with other variables. By this method; twenty-something, female mothers may
be the target market for many consumable products as they are conventionally
the individual in the home who does the grocery shopping.
•
Psychographic Segmentation: This form of segmentation involves classifying
attributes such as social class and personality to better understand the
consumer behaviours of that specific grouping. For example, a gentleman of
the upper-middle class will be classified as the target market for a sports car,
as the individuals entering this specific social class have endeavoured to
purchase a sports vehicle as a status symbol.
•
Behavioural Segmentation: Behavioural segmentation is the division of
markets according to their buying behaviour. This form of segmentation has a
wide scope and many subsets, including benefits sought segmentation (i.e., the
requirements of a customer and the value that the consumer is willing to pay),
user status segmentation (divide all customers into segments based on the
characteristics they share i.e. region, language, age etc.), brand loyalty
segmentation (i.e., a pattern of customer behaviour through which customers
are committed towards a specific brand or product and will make repeat
52
Module 2: The Functions of Marketing in Business Management
UNDERSTANDING THE TARGET MARKET
purchases) and buyer readiness segmentation (i.e., the state of willingness or
preparedness to purchase a product). Another example includes, the rate of
usage of shampoo will vary from household to household. By segmentation,
marketers will be able to target high-volume users towards making their brand
the brand of choice.
Cant et al. (2017) identified three factors that should be considered when choosing the
bases of segmentation:
1.
The buying behaviours of individuals or groups can be incredibly complex, and
it is thus difficult to trace the outcomes back to one single segmentation factor.
2.
In acknowledging the first point, marketers should recognise that there are
important interactions between factors that can be useful in narrowing down the
relevant target market.
3.
Finally, although there are norms that guide the segmentation bases within an
industry, the objectives, strengths, and weaknesses of the specific organisation
will and should play a large part in their segmentation decision making.
3.3.2 LEVELS OF MARKET SEGMENTATION
Depending on the size of an organisation, its objectives, strengths, weaknesses, the
nature of its product and the size of the intended market, the organisation will utilise a
chosen level of market segmentation. These levels act as a strategic guideline for
decision making.
As the market size decreases, the level of marketing segmentation will vary. These
levels are micromarketing (a marketing strategy in which advertising or marketing
efforts focus on a small group of targeted consumers), niche marketing (an advertising
strategy that focuses on a unique target market), segment marketing (dividing a
market of potential customers into groups or segments based on different
characteristics) and mass marketing (advertising or promoting a product to a wide
variety of audiences).
Copyright © Business Management Training College (Pty) Ltd
53
MARKET RESEARCH AND INFORMATION
For products that have a much larger target market, a single message communicating
the efficiency of the product can be utilised. For example, a company that sells bread
might make marketing the freshness and thus superiority of their bread a priority as
this is a marketing message that appeals to a wide segment of their market. Whereas
niche marketing will require more attentive segmentation and a more tailored
message.
3.4 MARKET RESEARCH AND INFORMATION
Marketing research is described by Erasmus et al., (2016, p. 417) as a ‘function that
links the people from the public including the customers of an organisation to the
marketer through information. Expanding on this market research is defined by (Cant
et al. (2017, p. 126) as the ‘process of gathering, analysing and interpreting information
about a product or market and in researching the characteristics, spending habits and
needs of a target market or industry as a whole.
Although these terms differ in their definition, the overall objective of both terms is
aligned. The major objective is to better understand the market and its many
complexities to ensure that they are able to identify and influence the targeted
consumers and tailor their consumer behaviours.
The information retrieved from the market research can be used for a variety of
purposes including, but not limited to marketing strategy formulation, defining target
markets, refining existing strategies, identifying emerging market needs and providing
checks and balances for strategies in effect.
The basic processes of marketing research as displayed in figure 3.3 below can be
adapted and can vary from project to project. However, the basic steps can be found
in some form in all research endeavours.
54
Module 2: The Functions of Marketing in Business Management
UNDERSTANDING THE TARGET MARKET
FIGURE 3.3: CONSUMER BEHAVIOUR MODEL
Step1
Step 2
Step 3
Step 4
Step 5
Step 6
• Describing the research problem and objectives
• Selecting the research design
• Preparing the research design
• Fieldwork
• Processing, tabulation and analysis
• Reporting the research result
Source: Cant et al. (2017, p. 127)
3.4.1 TYPES OF RESEARCH
Depending on the objective or the nature of the information required, a choice must
be made on the type of research conducted. The various types of research design are
outlined below (Cant et al., 2017):
•
Qualitative Research: This form of research tends to be more exploratory in
nature, eliciting free-flowing information through open-ended interview
questions about a specific topic. For instance, a researcher may gather
information about a proposed change to the packaging of a product by forming
a focus group and allowing for a mediated discussion to take place, whilst the
researcher notes the relevant reactions and opinions.
•
Quantitative Research: Quantitative research tends to be more statistical in
nature. Using information-gathering tools such as surveys and questionnaires,
statistical analysis tools are used to process this information, providing
outcomes that are descriptive in nature. This information can be used as the
basis for decision making or can be used to verify an identified target market.
Copyright © Business Management Training College (Pty) Ltd
55
MARKET RESEARCH AND INFORMATION
•
Predictive Research: This form of research is useful as a forecasting tool.
Using existing and garnered research, the researchers can outline the potential
of a target market or the success of a product. For instance, looking to
celebrities as trendsetters may enable researchers to pre-emptively meet the
demand created by a celebrity by ensuring that a supply is readily available.
•
Causal Research: Causal research focuses on assessing the effect of one
variable on another For example, research may find that consumers purchased
fewer frozen dessert items during specific months of the year, the variable
affecting this change is the weather.
•
Ex Post Facto Research: This research focuses on studying an occurrence
after the fact. For instance, reviewing the sudden craze for a specific children’s
toy will provide insight into the strength and/or weaknesses of the research
strategy and provide a guideline for future strategy.
These research methods and their outcomes can be used on their own or concurrently.
However, the most important factor is not the research or the corresponding
information, but how the information is utilised through decision making.
3.4.2 THE POWER OF INFORMATION
Information needs might differ according to the nature of an organisation and/or their
product/s as well as their overall mission and objectives. Research endeavours are
likely launched to retrieve a specific form or nature of information for a specific
purpose. These market research objectives usually fall into two broad categoriesproblem-identification research helps marketers identify what types of problems
they might endeavour, and problem-solving research helps identify ways to solve
those problems through segmentation and segmentation mix.
Without being equipped with the necessary information, marketing departments and
marketers are simply using their past experiences and/or intuition to gauge an
understanding and make decisions. Therefore, information is the key that allows the
marketing department to come up with a holistic strategy, ensuring that all variables
are accounted for. Although information can predict some of the relevant outcomes,
the usage of gathered information towards a strategy tends to be more useful.
56
Module 2: The Functions of Marketing in Business Management
UNDERSTANDING THE TARGET MARKET
There are three sources of information marketers utilise to ensure they consider all the
variables (Cant et al., 2017):
1.
Marketing Research: The problem solving or problem identification research
mandated by the marketing management.
2.
Internal Data Sources: This includes, but are not limited to productivity reports,
sales records and tax filings.
3.
External Data Sources: Taking the organisation’s external environment into
account, such as published research papers, identified shifts in global trends
and market rivals and finally, statistical records.
3.5 SUMMARY
We have learned in this chapter that marketing management is a fundamental
organisational function. Ensuring that the product of an organisation (whether a
physical product or a professional service) is efficiently showcased to the correct target
market at the correct time will decide the success or failure of the organisation’s profit
creation efforts.
Therefore, information gained from market research is an essential means by which
marketing managers can make informed decisions about the direction of their
marketing strategy and predict their outcomes (Cant et al., 2017).
In this chapter it was highlighted that understanding consumer behaviour, identifying
the determinants and motivations behind consumer decision making can be done
using tools such as market research and information processing, to more effectively
segment the market and tailor the marketing message. Essentially this comes down
to one point; the more marketers know about their target groups, the better their
potential for marketing success.
Copyright © Business Management Training College (Pty) Ltd
57
CHAPTER FOUR
The Marketing
Instruments
IN THIS CHAPTER:
4.1
INTRODUCTION ........................................................................................... 60
4.2
PRODUCT DECISIONS ................................................................................ 61
4.3
DISTRIBUTION DECISIONS ......................................................................... 64
4.4
COMMUNICATION DECISIONS ................................................................... 65
4.5
PRICING DECISIONS ................................................................................... 65
4.6
SUMMARY .................................................................................................... 66
INTRODUCTION
CHAPTER 4: THE MARKETING INSTRUMENTS
LEARNING OUTCOMES
On completion of chapter 4 you should be able to:
•
The marketing mix instruments (product, price, promotion and distribution
decisions) are described and compared for two organisations by conducting an
e-site visit.
•
Apply basic marketing principles and practices to create a marketing mix.
•
The five layers of a product are determined with examples.
•
The major factors that need to be considered when choosing a distribution
method are described.
•
Marketing communication decisions and communication tools are explained
and applied.
•
The factors influencing pricing are discussed.
4.1 INTRODUCTION
Identifying and efficiently segmenting a market is only the beginning of the overall
marketing journey. As discussed in the previous chapter, the information gathered
from the above endeavours is only useful if it is correctly utilised. This entails ensuring
that the product of an organisation (whether a physical product or a professional
service) is correctly showcased to the correct target market at the correct time. This is
where the marketing-mix comes into play.
The marketing mix, also known as the 4 P’s, entails decision making on the stipulated
aspects: product, price, place and promotions. In most cases, these decisions are
ongoing and require modification in reaction to changes in the environment and other
influencing factors (Erasmus et al., 2016). However, the mark of an effective marketing
mix is that these macro-environmental factors are usually accounted for when making
these decisions to ensure that contingencies are in place as a safeguard (Cant et al.,
2017).
60
Module 2: The Functions of Marketing in Business Management
THE MARKETING INSTRUMENTS
A marketing mix is only as good as its weakest component. Therefore, each variable
of the mix requires attentiveness and efficient application to the relevant market.
Ensuring that you have a strong product or marketing approach is not enough to
ensure the success of a product.
For example, if a makeup product intended for the luxury market was packaged in
cheap plastic, this market might not acknowledge the product for its opulent nature.
This in turn limits the product’s potential for success. A shortcoming or ill-conceived
idea regarding one component can limit the effectiveness of the other component
(Lamb, Hair, McDaniel, Boshoff, & Terblanche, 2008)
As an aspect that is under the direct control of marketing management, it is of utmost
importance that these decision-makers are well informed about the outcomes or
results of the research. This information will provide a most vital source for decision
making (Cant et al., 2017). Likewise, decisions should be made with the desired target
market in mind, ensuring that the plan is specifically tailored to an organisation’s
desired outcomes.
4.2 PRODUCT DECISIONS
In defining a product, Cant et al., (2017, p. 162) stated “a product is more than what is
seen by the eye. A product includes everything that a customer receives in an
exchange”. The product component (variable) can be broken down into five layers or
subsets that all work together in collaboration to provide a cohesive experience for the
consumer regarding the product (see Figure 4.2.)
•
Core Product
The core product is considered the ‘dominant benefit’ that a consumer expects
when purchasing either a physical product or a professional service. At this
level, marketers are not selling a product, but the benefits of this product.
For instance, you are not simply purchasing an item of makeup, you are
purchasing the way the product makes you feel when applied. Marketers need
Copyright © Business Management Training College (Pty) Ltd
61
PRODUCT DECISIONS
to acknowledge that the objective of product design is primarily to ensure that
the target market understands the benefits and not simply the specifications of
a product.
•
Tangible or generic Product
Tangible products can be defined as the actual physical product or specification
of service. It is those characteristics that are absolutely necessary for a product
to function. This is considered the stage at which the core product is made ‘real’
for the consumer. As this is the point at which branding, quality and design
become a factor, it is important to distinguish these factors as a cut above the
rest. For instance, to process digital images could be satisfied by a low-end,
generic, personal computer, using free image processing software.
•
Expected product
The expected product is the characteristics that consumers normally agree with
and expect when they purchase a product. For instance, a specific type of
computer is specified to deliver fast image processing and has a high-resolution
colour screen.
•
Augmented Product
An augmented product is the non-physical part of a product and usually
consists of lots of added value for which a customer may or may not pay a
premium. For example, when buying a car, part of the augmented product
would be the service support and warranty offered by the manufacturer.
•
Potential Product
Finally, the potential product is the quantification of the adjustments and/or
developments that can be made to ensure that a product remains the leader in
its market. In other words, the potential product includes all the augmentations
62
Module 2: The Functions of Marketing in Business Management
THE MARKETING INSTRUMENTS
and transformations a product might undergo in the future. For example, Apple
has ensured that they remain the leader in their market by constantly
highlighting the fact that they are constantly striving for innovation in their
marketing campaigns.
The five different levels of a product are depicted in Figure 4.1below:
FIGURE 4.1: PRODUCT LEVELS
Source: Kotler, Kartajaya and Setiawan (2010)
Classification of a product is also an important factor, as characteristics of a product
can vary between classes. For instance, a consumable item such as milk is required
weekly by consumers as it has the potential to spoil. Whereas canned food products
have the potential to last much longer in the homes of consumers.
Identifying the classification of a product allows marketers to identify some market
norms for their product and can influence decisions of aspects such as price and
packaging (Cant et al., 2017).
Copyright © Business Management Training College (Pty) Ltd
63
DISTRIBUTION DECISIONS
4.3 DISTRIBUTION DECISIONS
Distribution channels are described by Cant et al., (2017, p. 294) as consisting of
‘producers, consumers, and any other intermediaries that are aligned to provide a
means of transferring title or possession of a product or service from a producer to a
consumer.
The major factors that need to be considered when choosing a distribution method
include:
•
Availability
•
Location
•
After-sale services
•
Convenience
•
Price
For instance, marketers may ensure that their prices are kept low by removing a
distribution channel. A milk production company may purchase their own trucks and
remove the distributors from their distribution channel. This can in turn lead to a
reduction in price.
The figure below is an example of basic food distribution channels, which will provide
you with a brief insight into the major players in this process (Figure 4.2). As stated
above, channels can be removed and/or added to ensure that the product is made
available at the right time and in the right location.
FIGURE 4.2 BASIC FOOD DISTRIBUTION CHANNELS AND
INTERMEDIARIES
Importers
Producers
Manufacturers
Suppliers
Food Processors
Food Wholesalers
Distributors
Retailers
Restaurants
Hotels
Takeaway Outlets
Retail Food Chains
Source: Cant et al. (2017, p, 296)
64
Module 2: The Functions of Marketing in Business Management
THE MARKETING INSTRUMENTS
4.4 COMMUNICATION DECISIONS
The main purpose of communications decision making, according to Lamb et al.,
(2008), is to convince target markets that the goods and/or services offered provide a
differential advantage over competitors.
For instance, Apple promises that their technology is the most cutting edge. They
promote the fact that they are constantly innovating which in turn implies that their
consumers are at the cusp of technological wonder. Therefore, communication
decisions are based largely on the segment of the market that the research team has
identified.
The promotional methodology is utilised best if a combination of tools and processes
are used. Choosing the correct tool to ensure that their message reaches the desired
target market is the most important aspect of the promotional methodology. Examples
of the promotional options include advertising, personal selling, shopper marketing,
direct response marketing, public relations, sponsorship or event marketing and a very
popular emerging tool, digital media marketing.
4.5 PRICING DECISIONS
Simplistically, ‘price is the value expressed in Rands and cents’ (Cant et al., 2017, p.
249). However, this variable is much more complex than this definition - an
organisation’s profits are as a result of pricing (Lamb et al., 2008). Pricing has to cover
the variable costs of the product, whilst still earning a profit (Cant et al., 2017).
However, as much as profitability is the main aim of any pricing endeavour, marketers
also need to consider the market norms and the perceived value of the product in the
eyes of the consumer (Cant et al., 2017). Therefore, pricing decisions need to be
considered from the product conception and/or product production stage/s. In this way,
every stage of the process is mediated to ensure that the product pricing remains
competitive.
Copyright © Business Management Training College (Pty) Ltd
65
SUMMARY
As pricing is a variable that can be more easily adjusted than other marketing mix
variables, price tends to be the most fluid factor and a competitive weapon, even once
the product has been on the market for a while and has proceeded toward the end of
its life cycle (Lamb et al., 2008).
For instance, when introducing a new product to the market, the price can be reduced
for a period to garner interest and brand intrigue.
Many influencing factors contribute to the way that decisions are made by marketing
management, including the availability of substitute products, the pricing and
availability of complementary products, the size of the market and the income of the
desired target market, and price elasticity (Cant et al., 2017).
There are also external factors that influence the pricing of a product, depending on
the degree to which they hold power in that product market. These include; consumer
behaviour, competition, supplier behaviour, government regulations and economic
condition (Cant et al., 2017). These factors cannot be controlled but can be accounted
for during decision making.
For instance, an upcoming increase in import taxes by the government can be factored
into the price. Pre-empting this regulatory increase will allow for fewer forced price
increases and sudden decision making at a later stage.
4.6 SUMMARY
In this chapter, it was highlighted that the overall objective of marketing strategy and
thus the marketing mix is to ‘produce mutually satisfying exchanges with target
markets’ (Lamb et al., 2008, p.398). Depending on the comprehension and
considerations of a given marketing mix, it can equip the organisation with a
competitive advantage within their given market. Making the marketing mix an
instrumental key in ensuring the success of a product, whether a physical product or
professional service.
66
Module 2: The Functions of Marketing in Business Management
THE MARKETING INSTRUMENTS
We have also learned in this chapter that the concepts or variables of a marketing mix
cannot be considered in isolation. Factoring in the interaction of the variables and the
external influencing factors will be a deciding factor in the successful utilisation of
marketing instruments.
Likewise, the process of implementing the marketing strategy will bring its own issues
as there are many factors that we can only predict to a certain point, whereafter the
marketing plan has to be evaluated, adjusted and reimplemented (Lamb et al., 2008).
Copyright © Business Management Training College (Pty) Ltd
67
CHAPTER FIVE
Customer Service
IN THIS CHAPTER:
5.1
INTRODUCTION ........................................................................................... 69
5.2
DEFINING CUSTOMER SERVICE ............................................................... 69
5.3
PERCEIVED VALUE ..................................................................................... 70
5.4
IS THE CUSTOMER ALWAYS RIGHT? ........................................................ 73
5.5
CUSTOMER RETENTION ............................................................................ 74
5.6
SUMMARY .................................................................................................... 76
CUSTOMER SERVICE
CHAPTER 5: CUSTOMER SERVICE
LEARNING OUTCOMES
On completion of chapter 5 you should be able to:
•
Explain customer service and the importance thereof.
•
Explain perceived value and the different types of perceived value.
•
Describe what is customer retention and ways that customers may be retained.
•
Explain and reflect on the importance of customer service as the centre of the
marketing strategy.
5.1 INTRODUCTION
Harley Davidson was named one of the most customer-centric organisations of the
2017/2018 business year, by Forbes Magazine (Morgan, 2018). Harley Davidson has
created a brand identity that revolves around community. They have implemented this
by creating platforms for their customers to connect and share in the excitement of the
Harley experience.
Harley Davidson identified what their customers were looking for - a brand with a
powerful emotional appeal and a relationship-building experience (Hasanaj, 2017). By
identifying the needs of their market, they can cater to and cultivate the feeling of
belonging to a quality brand. In doing so, Harley Davidson has captured the essence
of customer service; they have cultivated loyalty in their customers by attending to
their emotional needs.
5.2 DEFINING CUSTOMER SERVICE
The long-term survival of an organisation is in part dependent on its customer service
initiatives (Cant et al., 2017). It is therefore in the best interest of the organisation and
marketing team to ensure that customer service is their top priority.
Copyright © Business Management Training College (Pty) Ltd
69
PERCEIVED VALUE
Customer service can be described as any form of activity that enhances the
customer’s experience and thus fosters loyalty (Erasmus et al., 2016). However,
customer service cannot be limited to this definition. It is all about finding a solution
that is specific to the targeted market.
For instance, you would expect attentive and knowledgeable service when purchasing
an expensive item, such as a car. However, you would not expect the same level of
attentive service when visiting a supermarket to purchase a carton of milk.
Front line employees (those that deal directly with customers) are instrumental in
creating the perception of customers care that certain target markets require. It is not
simply a product or service that they are selling, but the impression of an overall culture
of care on the part of the organisation (Erasmus et al., 2016).
Customer service can take many forms, including but not limited to incentive schemes
as a show of appreciation and improvements in quality for existing products, thus
showing a willingness on the part of a company to meet both the needs and wants of
their targeted market (Erasmus et al., 2016). For instance, rewarding loyal customers
with in-store vouchers, VIP events or first access to new products.
The main objectives of customer service are thus to make the customers of an
organisation feel appreciated, their opinions heard and create the perception of a
willingness to act when a customer is dissatisfied with their experience (Erasmus et
al., 2016). It is an approach that is translated into actions by employees on behalf of
an organisation.
5.3 PERCEIVED VALUE
The perceived value of products, services and/or organisations can provide an
organisation with a competitive advantage (Nanang et al., 2018). By initiating the
perception of value to a targeted market, organisations are set on a path toward both
customer satisfaction and brand loyalty.
70
Module 2: The Functions of Marketing in Business Management
CUSTOMER SERVICE
Identifying and matching the pre-determined expectation of consumers to the
capabilities of an organisation is an efficient means by which the perceived value of a
product and/or service can be managed (Erasmus et al., 2016).
5.3.1 TYPES OF PERCEIVED VALUE
There are many forms of perceived value. Some of these paradigms are briefly
outlined below:
•
Perceived Value for Money
In a discussion about quality and benefit, the concept of value for money is sure
to enter the debate. Consumers are only willing to pay what they perceive a
product or service is worth. Therefore, creating the impression that the “benefits
of a product gained by the consumer are greater than the long-term costs
he/she might be paid for a product” is the key to ensuring that consumers
believe that are receiving value for their money (Nanang et al., 2018, p. 2).
For instance, food items that are sold at a lower cost if purchased in bulk
provides the consumer with the impression that they are receiving value for
their money.
•
Perceived Utility Value
Utility value quantifies the benefits a consumer receives from using a product.
This form of value can be tricky as the market may be flooded with similar
products. Therefore, certain benefits or features that would set the product of a
given organisation apart would be its utility properties. The various types of
utility value include (Kenton, 2018):
o
possession utility. This utility refers to the value customers have when
buying a product. Some companies allow customers to buy products on
credit or in instalments so that the customer can take possession of the
item before it is paid in full.
Copyright © Business Management Training College (Pty) Ltd
71
PERCEIVED VALUE
o
place utility:
The place utility is the premise that customers need
convenient access to products. For example, retailers try to set up shops
in standalone or mall-based locations that make them accessible to
target customers.
o
information utility: This utility refers to the communication companies
engage in with customers to trigger the buying activity and to manage
purchasing processes. Promotional messages through advertising are
used by companies to share product, service or company information.
The goal is to attract interested buyers.
Sales associates at car
dealerships who share useful information with customers is an example
of information utility.
o
form utility: Form utility is a simple utility and involves the development
of a product that meets the size, shape, format, and scope that
customers need. For example, sleek nature and small size are primary
traits required in the form of a compact car.
o
time utility: This utility refers to the efficiency with which a customer
gets to experience a solution or product after desiring it. An example of
time utility is the availability of a plumber after regular working hours.
•
Perceived Brand Value
A company’s brand “plays a vital role in developing attitudes and customer
behaviour” (Nanang et al., 2018, p. 3). The perception of quality and/or luxury
can be established through a brand by positioning itself in a certain light. The
brand creates an ideal that its target market connects with and can only be
attained when associated with the said brand.
For instance, a luxury shoe brand may be introduced to an emerging market as
the key to tapping into a luxury lifestyle. The marketing team would create an
element of esteem that surrounds the brand, by placing their brand within an
idealistic vision, in this case, likely on the feet of celebrities and the incredibly
wealthy.
72
Module 2: The Functions of Marketing in Business Management
CUSTOMER SERVICE
In this way, the power of brand identity has ensured that consumers are willing
to pay large sums of money to partake in even a small part of the esteem the
brand carries.
5.4 IS THE CUSTOMER ALWAYS RIGHT?
There is no simple answer to this question.
There tends to be a bit of a grey area when it comes to balancing the needs of an
organisation’s consumers with the needs of the organisation’s employees and the
organisation overall. For instance, front line employees who are forced to deal all the
time with demanding customers (due to issues that are not in their control), might begin
to feel frustrated and demoralised by the situation. In this way, the bottom line of the
organisation is attended to, but other issues might arise such as high staff turnover
and explosive confrontations between customers and employees, due to pure
frustration.
The nature of the business should also be considered. For instance, front line staff in
a day spa will be expected to attend to the customers’ overall experience, whereas the
baker at a corner cafe is not expected to ensure the clients’ overall experience at the
café. This is because the objectives of the consumer in visiting the varied
establishments are quite different.
In his article, ‘Right or wrong, the customer always matters’, Mr Skapinker (2010), cited
the phenomenon experienced by Mr Bethune and Mr O’Leary in their efforts to rescue
Continental Airlines from the dire financial situation they experienced in the 1990s. He
told staff that for every month the airline was in the top five for on-time arrivals in the
United States, each employee would receive a $65 cash bonus.
By incentivising customer service for each employee, towards a greater organisational
level goal, Mr Bethune created a self-serving ethos of excellent customer service
directed behaviour. Likewise, if the airline failed to meet this overall goal and
customers remained frustrated, despite every effort by the airline, he would protect
and support his employee. He held the belief that employees, who experienced being
Copyright © Business Management Training College (Pty) Ltd
73
CUSTOMER RETENTION
protected and supported by their managers would be willing to do more for a customer,
in line with the incentivised objective, and in doing so trusted their decision making
when it came to customer service matters.
Although many organisations have experienced success in a ‘the customer is always
right or a ‘the customer is the reason we are here’ approach, this is not necessarily the
only means by which to elicit good customer service from their employees.
Skapinker (2010) concluded with the statement “Customers may not always be right,
but they certainly matter. Unless you can give them what your competitors cannot, you
have no business”. This profound statement epitomises this debate, it comes down to
the organisation finding a customer service approach that works for their specific target
market, and enhancing it for positive, long term effects.
5.5 CUSTOMER RETENTION
Considering customer services as covered in this chapter, and its immense impact on
customer loyalty, the philosophy of customer retention follows. As stated by Cant et
al., (2017, p, p. 481), customer retention is the maintenance of a ‘trading relationship
with profitable customers for a specific period.
The motivation behind this approach is that it tends to be more economical to engage
in customer retention than customer acquisition. Likewise, an engaged customer is
more likely to recommend the product and/or brand to other consumers (Cant et al.,
2017). Therefore, customer retention is a tool that has the potential to ensure that
organisations can maintain and/or grow their business whilst utilising minimal
resources.
Some of the incremental ways in which customers may be retained include; ensuring
that your customers are delighted by the offerings being communicated to them,
cultivating a perception that they are receiving value and are valued, alongside feeling
socially bonded with the brand, organisation and/or product (Cant et al., 2017).
74
Module 2: The Functions of Marketing in Business Management
CUSTOMER SERVICE
An example of this would be how certain brands have been engaged with their
customers on social media. Responding to both positive and negative feedback on the
media platforms with helpful, sometimes quirky and extremely timeous feedback, the
brands are humanising themselves and engaging in a manner that consumers
understand.
FIGURE 5.1: EXAMPLE OF PERSONALISED CUSTOMER ENGAGEMENT
ON SOCIAL MEDIA
Source: Rose (2017)
Customer retention, when carried out correctly, is about creating ease of choice in the
minds of their customers (Cant et al., 2017). In the case of MacDonald’s example
above, they are using social media engagement as a means of reinforcing themselves
in the minds of their consumers as the most obvious choice when craving fast food.
Copyright © Business Management Training College (Pty) Ltd
75
SUMMARY
5.6 SUMMARY
In this chapter, we have learned that the benefits of a satisfied, engaged customer
base go beyond the immediate profit-earning capacity of an organisation. The success
or failure of customer service planning is dependent on how efficiently a plan is tailored
to a targeted market and their needs. Knowing your market is the key to tapping into
your market and ensuring their loyalty to your brand and/or product.
It was also highlighted in this chapter that the lasting impact of ensuring that customer
service endeavours are appropriately tailored to the specified market includes
product/brand loyalty, favourable word of mouth reviews, habitual brand/product
purchasing and inevitably customer retention (Cant et al., 2017).
It was further conveyed in this chapter that the main objectives of customer service
are to (1) ensure that the customers of an organisation feel appreciated; (2) that their
opinions are heard; and (3) a willingness to act if a customer is dissatisfied with a
situation - to not only attract interest in a product but to retain the purchasing loyalty of
the targeted market (Erasmus et al., 2016).
76
Module 2: The Functions of Marketing in Business Management
CHAPTER SIX
A Basic Marketing
Plan
IN THIS CHAPTER:
6.1
INTRODUCTION ........................................................................................... 78
6.2
INTENTION AND OUTCOMES ..................................................................... 79
6.3
MARKETING PLAN FRAMEWORK .............................................................. 79
6.4
SUMMARY .................................................................................................... 88
INTRODUCTION
CHAPTER 6: THE BASIC MARKETING PLAN
LEARNING OUTCOMES
On completion of Chapter 6: you should be able to:
•
The intention and outcomes of a marketing plan are described.
•
A marketing plan framework and steps in marketing planning are outlined.
•
Create a simple marketing plan for a business organisation based on a given
scenario.
6.1 INTRODUCTION
Creating, implementing and monitoring a marketing plan is an intensive process that
is instrumental in assuring the long-term survival and growth of an organisation (Cant
et al., 2017).
The structure of marketing planning is fairly standardised. Before any real strategic
decision making can be undertaken, information needs to be gathered, empirical
evidence alongside estimations and projections, to make informed decisions, and that
all the potential outcomes of a marketing plan have been considered.
The process of marketing planning, although somewhat laborious and overwhelming
due to constant changes in both the internal and external environment of an
organisation, is worthy of the time and effort it requires.
The main objective of an organisation as per Cant et al. (2017), is the maximisation of
profitability. There is no deviation from this objective when it comes to marketing
planning. If profit is the objective, marketing planning is simply a fundamental means
to an end.
78
Module 2: The Functions of Marketing in Business Management
THE BASIC MARKETING PLAN
6.2 INTENTION AND OUTCOMES
The intent and desired outcomes of a marketing plan do not have to be singular and/or
separated. Multiple outcomes can be actualised by a single plan. For instance, a
marketing department might want to introduce a new product, whilst simultaneously
desires to build brand identity, through a single campaign. In this way, the company
attends to both present and future market conditions (Cant et al., 2017).
However, conceiving the desired outcomes of a marketing plan cannot be done
without considering the capacity of the organisation and its ability to carry out this plan
at every level.
The overarching aim of all marketing planning is to achieve a level of synergy
achieved, the marketing instruments giving way to strategic decisions that underpin
each other. Marketing planning is not a standardised process, but a means by which
to explore opportunities, assess risks, strategies, implementation and streamlining the
approach, and in so doing, ensuring a greater likelihood of success (Cant et al., 2017).
An effort towards co-operation is required to assure the success of a given marketing
plan. Marketers should be willing and able to work with upper management, towards
their desired outcomes and overall strategic decisions for the organisation. Besides
planning, marketers will also be required to work with various functional departments,
to ensure that the means justify the end, as well as ensuring transparency and
accountability (Cant et al., 2017).
6.3 MARKETING PLAN FRAMEWORK
The steps of marketing planning can be efficiently grouped into basic phases. These
phases are not limited to chronological ordering. Marketers may arrive at their goals
and objectives before endeavouring to research the market or marketers could begin
with an existing plan which they endeavour to research and adapt to a current market.
MARKETING PLAN FRAMEWORK
Likewise, phases can run parallel to each other, allowing for an interaction that could
prove quite fruitful. Marketers are then empowered to research as they formulate
objectives and build on a plan that they can then adjust as they gain further
information.
Figure 6.1 below breaks the planning process down into 7 steps. These steps are
discussed below as phases for ease of reference, conveying the fluidity and interaction
of the steps and their fundamental importance in ensuring the efficiency of a marketing
plan.
FIGURE 6.1: STRUCTURE OF THE MARKETING PLAN
7.
Review of plan
1.
Investigation of
the past
6.
Implementation
2.
Evalaution of
internal and
external factors
3.
Gathering
estimations and
assumptions
5.
Strategy
formulation
4.
Formulating
goals
Source: Adapted from Cant et al. (2017)
6.3.1 THE RESEARCH PHASE
As stated above, planning cannot occur without considering the context. In line with
this thinking, the first step of the planning process involves a large portion of research
and evaluation.
80
Module 2: The Functions of Marketing in Business Management
THE BASIC MARKETING PLAN
This research can include an evaluation of historic trends, analysis of internal and
external environments, investigating segregations in the market, SWOT analyses and
forecasting potential trends and opportunities (Cant et al., 2017).
The use of planning models reduces risks in the planning process. Using matrixes in
the market growth-market share matrix facilitates the categorisation of products into
predetermined groups that indicate their position as a representation of their market
share or potential market share.
The market attractiveness- enterprise-strength model focuses on the rate of return
strength a product holds. This is measured on several indexed variables per category.
These models can be used together to provide a more complete understanding (Cant
et al., 2017).
6.3.1.1 Market growth-market share matrix
The market growth-market share matrix is designed to help with long-term planning
and to help a business consider growth opportunities by reviewing its products to
decide where to invest. This matrix is divided into four quadrants, based on an
analysis of market growth and relative market share, as shown in FIGURE 6.2 below:
FIGURE 6.2: THE BCG (MARKET GROWTH-MARKET SHARE) MATRIX
Source: Barksdale and Harris (1982)
MARKETING PLAN FRAMEWORK
•
Quadrant 1: Dog: These are products with low market share or growth. The
marketing advice in this quadrant is to aim to remove any ‘dogs’ from your
product as they are a drain on resources.
•
Quadrant 2: Question mark (or problem child): These are products in high
growth markets with low market share. In this quadrant, it is not known if the
product will become a star or drop into the dog quadrant. These products often
require significant investment to push them into the star quadrant. However, a
lot of investment may be required to get a return on investment.
•
Quadrant 3: Star: These are products in high growth markets with a high
market share. These products can be the market leaders although it will require
ongoing investment to sustain.
•
Quadrant 4: Cash cows: These are products in low growth markets with high
market share. The rule here is ‘Milk these products as much as possible without
killing the cow’. These products are often well-established, mature products.
Companies such as Procter & Gamble which manufactures Pampers nappies
have often been regarded as a ‘cash cow’ company.
6.3.1.2 The market attractiveness-enterprise strength model
The market attractiveness-enterprise strength model is a two-dimensional matrix that
depicts a company’s products or strategic business units, showing the industry or
market attractiveness on one axis and the business ability or strength on the other
axis. The position of each product on the matrix gives guidance as to which product
can be used for further investment and growth and which products might be
eliminated. The matrix has nine boxes which are used as a strategy tool. The Y-axis
measures market attractiveness while the x-axis measures the business strength.
The scale is high, medium and low, as illustrated in Figure 6.3 below:
82
Module 2: The Functions of Marketing in Business Management
THE BASIC MARKETING PLAN
FIGURE 6.3: THE GE MCKINSEY MATRIX (MARKET ATTRACTIVENESSENTERPRISE STRENGTH MODEL)
Source: Udo-Imeh, Edet and Rajunor (2012, p. 111)
Market attractiveness is a dimension that helps to determine the attractiveness of
the market by analysing the benefits an organisation is likely to get by entering and
competing within a market. Some facts that are studied in this analysis are the size of
the market, profit potential and the weaknesses and size of the competitors within the
industry.
An assessment in the Business strength helps to determine whether a company has
the required competence to compete in a particular market. Internal factors such as
market share, development of the market share, creativity, handling of market
changes, assets etc. are taken into account. The external factors such as legislation,
environmental concerns, energy consumption etc. are also used to determine the
strength of the business.
MARKETING PLAN FRAMEWORK
6.3.1.3 Difference between the BCG (Market growth-market share matrix) and
GE McKinsey (Market attractiveness-enterprise strength model) matrix
Table 4.1 illustrates the differences between the Market growth-market share matrix
and the Market attractiveness-enterprise strength matrix:
TABLE 4.1: COMPARISON BETWEEN THE BCG AND GE MATRIX
BASIS FOR
BCG MATRIX
GE MATRIX
COMPARISON
Meaning
BCG Matrix is a growth share GE
Matrix
implies
multifactor
model, representing the growth portfolio matrix, that assist firm in
of business and the market making strategic choices for product
share enjoyed by the firm.
lines based on their position in the
grid.
Number of cells
Four
Factors
Market
Nine
share
and
Market Industry
growth
Objective
attractiveness
and
Business strengths
To help companies deploy To
prioritize
investment
among
their resources among various various business units.
business units.
Measures used
A single measure is used.
Multiple measures are used.
Classification
Classified into two degrees
Classified into three degrees
Source: Udo-Imeh et al. (2012)
6.3.2 THE FORMULATION PHASE
6.3.2.1 Objectives and directives
Once a clearer, holistic understanding of the current and potential environment has
been established, objectives can be more efficiently discussed and specialised goals
can be set for the marketing project. The goals of the project must be aligned with the
wider goals of the organisation.
The marketing objectives set out will be most effective if they encompass the
following requirements (Cant et al., 2017).
84
Module 2: The Functions of Marketing in Business Management
THE BASIC MARKETING PLAN
Objectives should be:
•
Quantifiable and measurable
•
Specific and void of generalised wording
•
Time-specific
•
Reachable and reasonable (considering the implications of the research
ascertained)
•
And finally, officially ranked as per their importance and/or timeline
6.3.2.2 Strategy
Marketing objectives need to become a marketing strategy. The necessary tasks,
programmes, steps, and responsibilities need to be outlined in detail. Whether the plan
is communicated verbally or in writing- the objectives, timelines and expectations need
to be made clear for everyone involved.
6.3.2.3 Assessments
Assessment of the plan at this stage entails rechecking its feasibility in terms of the
market share, sales, costs and profits. At this point, the plan should be acceptable to
the major stakeholders, technically feasible, cost-effective and adaptable where
necessary, amongst other criteria (Cant et al., 2017).
6.3.2.4 Budget
A budget needs to be formulated- considering all the needs of the marketing plan as
well as the contingencies and the resources these contingencies may necessitate.
Activities within the plan can then be assessed by comparing the financial cost of an
activity against the expected return and overall impact it will have on the organisation’s
profit-making capacity (Cant et al., 2017).
Completing the plan with a comprehensive budget will assure management and
relevant stakeholders that circumspect has been used in the allocation and utilisation
of available resources.
MARKETING PLAN FRAMEWORK
6.3.3 THE IMPLEMENTATION PHASE
Perpetuating successful change in an organisation has become increasingly difficult
and requires not only a well-thought plan but also an adaptable plan. With more than
70% of organisations failing to successfully implement new strategic initiatives, the
pressure is on management to ensure that planning was not been carried out in vain
(Cant et al., 2017).
Planning and implementation cannot function as two separate steps or phases: the
success of implementation is based on the efficiency of the planning and the success
of planning on the adaptability of the implementation. Conceiving an elaborate strategy
without considering the intricacies of implementation is an act in futility (Cant et al.,
2017).
The driving forces that are influential inefficient implementation of marketing
endeavours
include
organisational
structure,
organisational
leadership,
organisational culture and managerial processes (Cant et al., 2017).
In contrast, there are distinct barriers to implementation that will need to be addressed
either during planning or as a contingency during implementation. These barriers may
include deviation from the schedule, poor communication, lack of coordination from
management and resistance from lower levels and poorly planned activities.
A solution to poor communication might be to provide a communication stipulation in
your planning, outlining what is expected of management when it comes to ensuring
that staff are not only informed but efficiently prepared to handle all the phases of the
implementation process. For instance, organisation-wide memos on movements from
phase to phase and their impact on the day-to-day running of specific departments
(Cant et al., 2017).
86
Module 2: The Functions of Marketing in Business Management
THE BASIC MARKETING PLAN
6.3.4 THE REVIEW PHASE
As stated by Cant et al. (2017, p. 542), “no strategy or project can be successfully
implemented if proper control is not administered, and the effects and effectiveness of
the project are not evaluated”. Evaluation and review are useful tools in assessing
performance, displaying accountability, and promoting learning in an organisation and
fundamentally when inciting change during marketing endeavours.
Various methods can be used to evaluate the efficiency of marketing planning. This
may be carried out through a sales analysis, marketing cost analysis, an efficiency
analysis, customer value analysis, regular customer feedback, business review
comparing to set standard to those achieved.
Additionally, if periodic assessments are required, standardised audits can be
scheduled to ensure that systematic investigations are carried out. The audit should
assess elements such as environment, strategy, organisation, systems, productivity
and function. This comprehensive approach ensures that all relevant dimensions are
assessed by their directive and rectifications made where necessary.
Review and evaluation act as a powerful tool in ensuring that every aspect of a given
endeavour is kept according to the plan, by constant redirection and adaptation (Cant
et al., 2017).
SUMMARY
6.4 SUMMARY
Having a means by which to plan, implement and review marketing endeavours is
essential in simplifying and streamlining this process for both small and large
organisations. To ensure the efficiency and success of a marketing endeavour, not a
single phase can be marginalised or forsaken.
We have learned in this chapter that the phases do not have to run in chronological
order, but they do need to be comprehensive. A marketing department may choose to
utilise the tools as they wish as they have decided on product, brand or service-specific
outcomes. However, the major objective remains the same; ensuring that the product,
brand or service has been brought to the attention of the desired market in the correct
manner, at the correct time (Cant et al., 2017).
Therefore, if marketers can correctly utilise the planning tools to create the perfect
marketing mix, their chances of success have been substantially strengthened.
88
Module 2: The Functions of Marketing in Business Management
BIBLIOGRAPHY
BIBLIOGRAPHY
About AGOA. (2018). Retrieved March 27, 2019, from https://agoa.info/aboutagoa.html
American Marketing Association. (2017). About AMA. Retrieved September 13,
2018, from https://www.ama.org/AboutAMA/Pages/Definition-of-Marketing.aspx
Apple Bends to China’s Will Again With Latest iPhone Feature. (2018). Retrieved
March 27, 2019, from https://www.bloomberg.com/news/articles/2018-09-12/applebends-to-china-s-will-again-with-latest-iphone-feature
Barksdale, H. C. and Harris Jr., C. E. (1982). Portfolio Analysis and the Product Life
Cycle. Long Range Planning. (Vol. 15 Issue 6). p74-83.
Bavier, H. (2018). South African poultry group targets U.S. import quota. Retrieved
March 27, 2019, from https://trainingmag.com/6-key-competencies-effectivemanagers/
Blum, A. (2014). Six key competencies of effective managers. Retrieved March 27,
2019, from https://trainingmag.com/6-key-competencies-effective-managers/
Blythe, J. (2009). Principles and Practice of Marketing (2nd ed.). Andover: SouthWestern Cengage Learning.
Cant, M. (2010). Marketing: An introduction. Johannesburg: Juta.
Cant, M. C., van Heerden, C. H., & Makhitha, M. (2017). Marketing Management, A
South African Perspective (3rd ed.). Cape Town: Juta.
De Beer, A., & Rossouw, D. (2012). Focus on management Principles - A generic
approach (2nd Ed.). Cape Town: Juta.
Debreu G. (1956). Market Equilibrium. Proceedings of the National Academy of
Sciences of the United States of America, 42(11), 876–878.
doi:10.1073/pnas.42.11.876
Erasmus, B. J., Strydom, J. W., & Rudansky-Kloppers, S. (2013). Introduction to
Business Management (9th Ed.). Cape Town: Oxford University Press.
Erasmus, B. J., Strydom, J. W., & Rudansky-Kloppers, S. (2016). Introduction to
Business Management. (10th Ed.). Cape Town: Oxford University Press.
BIBLIOGRAPHY
Hasanaj, E. (2017). 5 Lessons From Harley-Davidson Brand Tactics to Revolutionize
Your Customer Experience. Retrieved March 27, 2019, from
http://customerthink.com/5-lessons-from-harley-davidson-brand-tactics-torevolutionize-your-customer-experience/
Hellriegel, D., Jackson, S. E., Slocum, J., & Staude, G. (2008). Management (2nd
Ed.). Cape Town: Oxford University Press.
Hellriegel, D., Slocum, J., Jackson, S. E., & Louw, L. (2013). Management (4th Ed.).
Cape Town: Oxford University Press.
Kenton, W. (2018). Perceived Value. Retrieved March 27, 2019, from
https://www.investopedia.com/terms/p/perceived-value.asp
Kotler, P., Kartajaya, H., & Setiawan, I. (2010). Marketing 3.0: From products to
customers to the human spirit. New Jersey: Wiley.
Kotler, P., & Keller, K. L. (2012). Marketing Management (14th ed.). Harlow: Pearson
Education Limited.
Lamb, C. W., Hair, J. F., McDaniel, C., Boshoff, C., & Terblanche, N. S. (2008).
Marketing (2nd Ed.). Cape Town: Oxford University Press.
McLeod, D. (2017). We have run out of spectrum: Vodacom. Retrieved March 27,
2019, from https://techcentral.co.za/run-spectrum-vodacom/76040/
McLeod, D. (2018). Government to direct Icasa to license broadband spectrum.
Retrieved March 27, 2019, from https://techcentral.co.za/government-to-direct-icasato-license-broadband-spectrum/83907/
Mkentane, L. (2018). US defends dumping of cheap poultry. Retrieved March 27,
2019, from https://www.iol.co.za/business-report/companies/us-defends-dumping-ofcheap-poultry-13856978
Mofokeng, T. (2018). A fix to South Africa’s never-ending spectrum woes. Retrieved
from https://techcentral.co.za/a-fix-to-south-africas-never-ending-spectrumwoes/82578/
Morgan, B. (2018). The 10 Most Customer-Obsessed Companies in 2018. Retrieved
March 27, 2019, from https://www.forbes.com/sites/blakemorgan/2018/02/15/the-10most-customer-obsessed-companies-in-2018/
90
Module 2: The Functions of Marketing in Business Management
BIBLIOGRAPHY
Nair, N. (2018). SA’s data is so expensive because there is too little spectrum
supply. Retrieved March 27, 2019, from
https://www.businesslive.co.za/bd/national/2018-09-11-sas-data-is-so-expensivebecause-there-is-too-little-spectrum-supply/
Nanang et al., 2018. (2018). Consumer, customer and perceived value: past and
present. Academy of Strategic Management Journal, 17(4). Retrieved from
https://www.abacademies.org/articles/Consumer-customer-and-perceived-value1939-6104-17-4-248.pdf
Nieuwenhuizen, C. (2012). Business and Marketing Cases. Cape Town: Juta.
Parumsur, S. B., & Roberts-Lombard, M. (2012). Consumer Behaviour (2nd Ed.).
Cape Town: Juta.
Rage Expo. (2018). Retrieved March 27, 2019, from
https://www.rageexpo.co.za/2018/10/rage-2018-spreads-the-love-does-the-things/
Reuters. (2018). SA farmers to fight US over cheap chicken imports. Retrieved
March 27, 2019, from https://www.fin24.com/Companies/Agribusiness/watch-safarmers-to-fight-us-over-cheap-chicken-imports-20180830
Rose, K. (2017). 10 Tips for Increasing your Social Media Engagement. Retrieved
March 27, 2019, from https://socialmediaweek.org/blog/2017/10/10-tips-increasingsocial-media-engagement/
Sargeant, A. (1999), Marketing Management for Nonprofit Organizations. Oxford,
UK: Oxford University Press.
Schiller, B. R., Hill, C. D., & Wall, S. L. (2013). The Economy Today (13th ed.). New
York: McGraw-Hill Education.
Sineriz, M. (2018). Characteristics and attributes of a good manager. Retrieved
March 27, 2019, from https://smallbusiness.chron.com/characteristics-attributesgood-manager-34592.html
Skapinker, M. (2010). Right or wrong, the customer always matters. Retrieved March
27, 2019, from https://www.ft.com/content/88a3791a-35e8-11df-aa43-00144feabdc0
Udo-Imeh, P.T., Edet, W.E. & Rajunor, B. (2012). Portfolio analysis models: a
review. European Journal of Business Management, 4(18): 101-120.
BIBLIOGRAPHY
92
Module 2: The Functions of Marketing in Business Management