HCBM Fundementals of Marketing January 2021

FUNDAMENTALS OF MARKETING
Module Guide
Copyright© 2021
MANCOSA
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without the written permission of the publisher. Please report all errors and omissions to the following email address:
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This Module Guide,
Fundamentals of Marketing (NQF level 5)
will be used across the following programmes:
 Higher Certificate in Social Media and Communication 20 Credits

 Higher Certificate in Business Management 15 Credits
 All units to be covered for Higher Certificate in Social Media and Communication
 Unit 3 and 4 to be excluded for HCBM
Marketing
FUNDAMENTALS OF MARKETING
Preface.................................................................................................................................................................... 1
Unit 1: Understanding Marketing Management ....................................................................................................... 7
Unit 2: The Marketing Environment ....................................................................................................................... 14
Unit 3: Strategic Planning and the Marketing Process .......................................................................................... 19
Unit 4: Marketing Research and Information Systems .......................................................................................... 25
Unit 5: Consumer Buyer Behaviour....................................................................................................................... 35
Unit 6: Market Segmentation, Targeting and Positioning ...................................................................................... 42
Unit 7: Direct and Online Marketing ..................................................................................................................... 49
Unit 8: New Product Development and Product Life-Cycle Strategies .................................................................. 55
Unit 9: Product and Services Strategy .................................................................................................................. 61
Unit 10: Pricing Strategies..................................................................................................................................... 69
Unit 11: Distribution Channels............................................................................................................................... 77
Unit 12: Advertising and Sales Promotion............................................................................................................. 85
Bibliography ........................................................................................................................................................ 103
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Fundamentals of Marketing
Preface
A. Welcome
Dear Student
It is a great pleasure to welcome you to Fundamentals of Marketing (FMK5). To make sure that you share our
passion about this area of study, we encourage you to read this overview thoroughly. Refer to it as often as you
need to, since it will certainly make studying this module a lot easier. The intention of this module is to develop
both your confidence and proficiency in this module.
The field of Marketing is extremely dynamic and challenging. The learning content, activities and self- study
questions contained in this guide will therefore provide you with opportunities to explore the latest developments
in this field and help you to discover the field of Marketing as it is practiced today.
This is a distance-learning module. Since you do not have a tutor standing next to you while you study, you need
to apply self-discipline. You will have the opportunity to collaborate with each other via social media tools. Your
study skills will include self-direction and responsibility. However, you will gain a lot from the experience! These
study skills will contribute to your life skills, which will help you to succeed in all areas of life.
We hope you enjoy the module.
MANCOSA does not own or purport to own, unless explicitly stated otherwise, any intellectual property rights in or
to multimedia used or provided in this module guide. Such multimedia is copyrighted by the respective creators
thereto and used by MANCOSA for educational purposes only. Should you wish to use copyrighted material from
this guide for purposes of your own that extend beyond fair dealing/use, you must obtain permission from the
copyright owner.
B. Module Overview
 The purpose of this module guide is to introduce students to key fundamentals in marketing, of management
philosophies, the marketing environment, factors influencing consumer buyer behaviour and the stages in the
buyer decision process. Thereafter, students will be able to describe market segmentation, market targeting
and market positioning and discuss the marketing mix elements (4P’s), being the key to any marketing activity.
Lastly students will be able to describe the new product development process and Product Lifecycle stages.
 This module has been divided into Part A and Part B, altogether consisting of 10 sections. Part A introduces
you to core concepts and philosophies of marketing and the other sections give an understanding of the
important aspects of marketing. Part B deals with the Marketing Mix.
 It must be remembered that this module is a distilled version of concepts and applications and to further
enhance your knowledge, it is recommended that you pursue additional reading.
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 By the end of this module, you will be able to understand the principles and concepts and their relationship
to most aspects of marketing.
Contents and Structure
 Unit 1: Understand Marketing Management

 The first unit introduces the student to the field of marketing. In this section a definition of marketing is
formulated, the core concepts of marketing are given and marketing management philosophies are
discussed.
 Unit 2: The Marketing Environment
 Unit two looks at the marketing environment. This is comprised of examining the external and internal
environments to identify opportunities and threats for the business. Once we understand the environment
that the firm operates in, we can move on to developing strategies.
 Unit 3: Consumer Buyer Behaviour
 Unit 5 introduces the student to Consumer Behaviour. We look at common characteristics across consumers.
Once these characteristics are identified, we can begin to segment the market.
 Unit 4: Market Segmentation, Targeting and Positioning
 The market is large, and should be segmented to make marketing efforts more focused (unless we are using
mass marketing). Market segmentation deal with grouping consumers on similar characteristics, thereafter a
segment is targeted and finally our product is positioned to appeal to the target market. A major way to
communicate this position to our target market is through direct and online marketing.
 Unit 5: Direct and Online Marketing
 In Unit 5, we discuss the benefits of direct marketing to customers and the firms. We will identify major forms
of direct marketing. This section will conclude with a short discussion of online marketing
 Now that we have looked at the general topics in marketing, we will discuss the Marketing Mix. This looks at
the Marketing Mix (4 P’s of marketing): Product; Place; Price and Promotion.
 Unit 6: New Product Development and Product Life Cycle Strategies
 In Unit 6, the new product development process will be discussed. We will then look at the Product Life Cycle
(referred to the Product Development Life Cycle in some texts) and marketing strategies to use at each stage
of the Product Life Cycle.
 Unit 7: Product and Services Strategy
 In unit 7, the student will be introduced to products and services. Major classifications of products and
services will be given. The chapter will conclude with a look at branding and packaging and labelling.
 Unit 8: Pricing Strategies
 In this unit, we will look at major pricing strategies that marketers use. We will then look at how marketers
set prices for products, concluding with a discussion on initiating and responding to price changes.
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 Unit 9: Distribution Channels

 Effective distribution of products relates to getting products to the right place and at the right time. In unit 9,
we will understand why firms use distribution channels. We will then move on to a discussion of the various
levels of distribution channels.
 Unit 10: Advertising and Sales Promotion
 In unit 10, we will look at the major decisions involved in developing an advertising campaign. The chapter
ends with an explanation of how sales promotion campaigns are developed and Implemented.
C. Learning Outcomes and Associated Assessment Criteria of this Module

LEARNING OUTCOMES OF THE MODULE ASSOCIATED ASSESSMENT CRITERIA OF THE MODULE
 Discuss the marketing management  Product, production, selling, marketing and societal
philosophies concepts are examined to identify the marketing
management philosophies
 Describe the marketing environment  Micro and macro environment are discussed to describe
the marketing environment
 Describe the factors of consumer buyer  Cultural, social, personal and psychological factors are
behaviour analysed to understand the consumer buying behaviour
 Discuss the stages in the buyer decision  Steps in the buyer decision process are investigated to
process understand the buyers behaviour at each stage
 Describe market segmentation, market  Mass marketing, micro marketing and niche marketing are
targeting and market positioning explained to understand how organisations can segment
the market
 Discuss the marketing mix elements (7  4P’s and 4C’s are evaluated to understand the marketing
P’s) mix
 Describe the new product development  Eight steps in the new product development strategy are
and Product Lifecycle stages analysed to understand how organisations can gain
success from introducing a new product
 Five stages in the product life cycle are analysed
understand product sales and profits over its lifetime
D. Learning Outcomes of the Units

You will find the Unit Learning Outcomes on the introductory pages of each Unit in the Module Guide. The Unit
Learning Outcomes lists an overview of the areas you must demonstrate knowledge in and the practical skills you
must be able to achieve at the end of each Unit lesson in the Module Guide.
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E. How to Use this Module

This Module Guide was compiled to help you work through your units and textbook for this module, by breaking
your studies into manageable parts. The Module Guide gives you extra theory and explanations where necessary,
and so enables you to get the most from your module.
The purpose of the Module Guide is to allow you the opportunity to integrate the theoretical concepts from the
prescribed textbook and recommended readings. We suggest that you briefly skim read through the entire guide
to get an overview of its contents. At the beginning of each Unit, you will find a list of Learning Outcomes and
Associated Assessment Criteria. This outlines the main points that you should understand when you have
completed the Unit/s. Do not attempt to read and study everything at once. Each study session should be 90
minutes without a break
This module should be studied using the prescribed and recommended textbooks/readings and the relevant
sections of this Module Guide. You must read about the topic that you intend to study in the appropriate section
before you start reading the textbook in detail. Ensure that you make your own notes as you work through both the
textbook and this module. In the event that you do not have the prescribed and recommended textbooks/readings,
you must make use of any other source that deals with the sections in this module. If you want to do further reading,
and want to obtain publications that were used as source documents when we wrote this guide, you should look
at the reference list and the bibliography at the end of the Module Guide. In addition, at the end of each Unit there
may be link to the PowerPoint presentation and other useful reading.
F. Study Material
The study material for this module includes tutorial letters, programme handbook, this Module Guide, a list of
prescribed and recommended textbooks/readings which may be supplemented by additional readings.
G. Prescribed and Recommended Textbook/Readings

There is at least one prescribed and recommended textbooks/readings allocated for the module.
The prescribed and recommended readings/textbooks presents a tremendous amount of material in a simple,
easy-to-learn format. You should read ahead during your course. Make a point of it to re-read the learning content
in your module textbook. This will increase your retention of important concepts and skills. You may wish to read
more widely than just the Module Guide and the prescribed and recommended textbooks/readings, the
Bibliography and Reference list provides you with additional reading.
Prescribed Textbook
 Kotler, P and Armstrong G (2018). Principles of Marketing. Pearson: Cape Town
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Recommended Readings
 Kotler, P and Keller, K L. (2016) Marketing Management. . Pearson: Cape Town
 Blythe. J. (2006) Principles and Practice of Marketing. London: Thomson.
H. Special Features
In the Module Guide, you will find the following icons together with a description. These are designed to help you
study. It is imperative that you work through them as they also provide guidelines for examination purposes.
Special Feature Icon Explanation
The Learning Outcomes indicate aspects of the particular Unit you have
LEARNING
to master.
OUTCOMES
The Associated Assessment Criteria is the evaluation of the students’

ASSOCIATED
understanding which are aligned to the outcomes. The Associated
ASSESSMENT
Assessment Criteria sets the standard for the successful demonstration
CRITERIA
of the understanding of a concept or skill.
A Think Point asks you to stop and think about an issue. Sometimes you
THINK POINT are asked to apply a concept to your own experience or to think of an
example.
You may come across Activities that ask you to carry out specific tasks.
In most cases, there are no right or wrong answers to these activities.
ACTIVITY
The purpose of the activities is to give you an opportunity to apply what
you have learned.
At this point, you should read the references supplied. If you are unable
READINGS to acquire the suggested readings, then you are welcome to consult any
current source that deals with the subject.
PRACTICAL Practical Application or Examples will be discussed to enhance
APPLICATION understanding of this module.
OR EXAMPLES
KNOWLEDGE You may come across Knowledge Check Questions at the end of each
CHECK Unit in the form of Knowledge Check Questions (KCQ’s) that will test
QUESTIONS your knowledge. You should refer to the Module Guide or your
textbook(s) for the answers.
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You may come across Revision Questions that test your understanding
REVISION
of what you have learned so far. These may be attempted with the aid
QUESTIONS
of your textbooks, journal articles and Module Guide.
Case Studies are included in different sections in this Module Guide.
CASE STUDY This activity provides students with the opportunity to apply theory to
practice.
You may come across links to Videos Activities as well as instructions
VIDEO ACTIVITY on activities to attend to after watching the video.
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Unit
1: Understanding
Marketing Management
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Unit Learning Outcomes
CONTENT LIST LEARNING OUTCOMES OF THIS UNIT:
1.1 Introduction  Introduce topic areas for the unit
1.2 Marketing Defined  Define of Marketing
1.3 Core Marketing Concepts  Outline Marketing concepts
1.4 The Marketing Mix  Discuss the Marketing mix
1.5 Summary  Summarise topic areas covered in unit
Prescribed Textbook:
 Kotler, P and Armstrong G (2018). Principles of Marketing. Pearson: Cape

Town
 Kotler, P and Keller, K L.(2016) Marketing Management. . Pearson: Cape
Town
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1.1 Introduction
Marketing, more than any business function, deals with customers. Understanding, creating, communicating and
delivering customer value and satisfaction are at the very heart of modern marketing thinking and practice.
Successful companies at all levels have one thing in common, they are strongly customer focussed and heavily
committed to marketing. These companies share an absolute dedication to understanding and satisfying the needs
of their customers. Sound marketing is critical to the success of every organisation, large or small, for – profit or
not – for – profit, domestic or global.
1.2 Marketing Defined

The American Marketing Association defines marketing as the “process of planning and executing the conception,
pricing, promotion and distribution of ideas, goods and services, to create exchanges that satisfy individual and
organisational objectives.”
Marketing starts long before a company has a product. Marketing is the homework that managers undertake to
assess needs, measure their extent and intensity and determine whether a profitable opportunity exists. Marketing
continues throughout the product’s life trying to find new customers and keeping the existing customers happy.
Kotler and Armstrong have defined marketing as “a social and managerial process whereby individuals and groups
obtain what they need and want through creating and exchanging products and values with others.
1.3 Core Marketing Concepts

The following important core marketing concepts are derived from the above definition:
 Needs, wants and demand
 Products and services
 Value satisfaction and quality
 Exchange transactions and relationships
 Markets
Needs, wants and demand

The most basic concept underlying marketing is that of human needs. Needs are a state of depravation. They
include basic physical needs for food, clothing, shelter and social needs for belonging.
Wants are the form human needs take as they are shaped by culture and individual personalities; e.g., an American
needs food, but wants hamburger and french fries.
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When backed by purchasing power, wants become demands. Consumers view products as benefits and choose
those that give them most value and satisfaction for their money.
Products and Services

People satisfy their needs and wants with products and services. A product is anything that can be offered to a
market to satisfy a need or want. The concept of product is not limited to a physical object, anything that can
satisfy a need is a product. In addition to tangible goods, products include services which are activities or benefits
offered for sale that are essentially intangible and do not result in ownership of anything, e.g., banking services,
airlines, hotel services, etc.
Value, Satisfaction and Quality

In deciding which products and services to buy, consumers rely on their perceptions and relative values. Customer
value is the difference between the value the customer gains from owning and using a product and costs of
obtaining the product.
Customer satisfaction depends on a product’s perceived performance in delivering value relative to a buyer’s
expectations. Customer satisfaction is closely linked to quality. Quality has a direct impact on product performance
and hence on customer satisfaction.
Exchange, transactions and relationships

Marketing occurs when people satisfy their needs and wants through exchange. Whereas exchange is the core
concept of marketing, a transaction is marketing’s unit of measurement. A transaction consists of trade of values
between two parties. Beyond creating short-term transactions, marketers need to build long-term relationships
with valued customers, distributors, dealers and suppliers.
Marketing Management Philosophies

There are five alternative concepts or philosophies under which organisations conduct their marketing activities.
These are, production, product, and selling, marketing and societal marketing concepts.
Production Concept
The production concept holds that consumers will favour products that are available and highly affordable.
Therefore, management should focus on improving production and distribution efficiency. The production concept
is one of the oldest philosophies and is still a useful philosophy in two types of situations. The first occurs when
the demand for a product exceeds the supply. Here the management should look for ways to increase production.
The second situation occurs when the product’s cost is too high and improved productivity is needed to bring the
cost down, e.g., Henry Ford perfected the Model T so that its cost could be reduced and more people could afford
it.
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Product Concept
The product concept holds that consumers will favour products that offer the most in quality, performance and
innovative features. Thus an organisation should devote energy to making continuous product improvements.
Selling Concept
Selling concept holds that the consumer will not buy enough of the organisation’s products unless the organisation
undertakes a large scale selling and promotion effort. Most firms practice the selling concept when they have
overcapacity. This concept carries a high risk as the aim is to sell what is made rather than what the market wants,
e.g., Henry Ford wanted to sell only black coloured Model T cars, so as to reduce cost, irrespective of the colour
preference of the consumers.
Marketing Concept
Marketing management concept holds that achieving organisational goals depends on determining the needs and
wants of target markets and delivering the desired satisfaction more effectively and efficiently than competitors,
e.g., British Airways has a colourful way of saying, “To fly to serve”, GE says “We’re not satisfied until you are”.
Societal Marketing Concept

The societal marketing concept holds that the organisation should determine the needs, wants and interests of
target markets. It should then deliver superior value to customers in a way that maintains or improves the
consumers and the society’s well-being. The societal marketing concept calls on marketers to balance three
considerations in setting their marketing policies: company profits, consumer wants and society’s interests.
Activity
Select a company that makes a product that consumers’ want but which may run
contrary to society’s’ interests, e.g., tobacco, liquor, environmentally harmful
products. Considering the company’s profit goals, think of ways in which it might
resolve the conflict that arises between satisfying individual wants and guarding
societal welfare.
1.4 The Marketing Mix

The marketer’s task is to devise marketing activities and assemble fully integrated marketing programmes to
create, communicate, and deliver value for consumers. Figure 1.3 depicts the marketing mix variables that can
be integrated into the marketing programme.
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Figure
1Figure 1.3 – The Four P Components of the Marketing Mix
Source: Kotler and Keller (2012:47).

Mullins, Walker, Boyd and Larrèchè (2006:18) describe the marketing mix as the combination of controllable
marketing variables that a manager uses to carry out a marketing strategy in pursuit of the firm’s objectives in a
given target market.
Marketing mix decisions must be made for influencing the trade channels as well as the final consumers.
Lauterborn (1990:6) suggests that the seller’s 4P’s correspond to the customers’ 4C’s:
4P’s 4C’s
Product Customer solution
Price Customer cost
Place Convenience
Promotion Communication
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Knowledge Check Questions

1. What do you understand by “Marketing”?
2. What is the single biggest difference between the marketing concept and the
production, product and selling concepts? Which concepts are easier to adopt
in the short run? Which concept offers the best chances of long run success?
Why?
1.5 Summary
Today’s successful companies – whether large or small, for profit or non-profit, domestic or global – share a strong
customer focus and a heavy commitment to marketing. Marketing is not only selling or advertising. Marketing
combines activities such as marketing research, product development, distribution, pricing, etc. These activities
are designed to sense, serve and satisfy consumer needs while meeting the organisation’s goals. Marketing seeks
to attract new customers by offering superior value and retain current customers by delivering satisfaction.
Marketing operates within a dynamic global environment and faces new challenges and opportunities every day.
To be successful in today’s competitive world, companies have to be strongly marketing focussed.
Think Point
1: Explain how the 4ps of marketing corresponds to the customers’ 4 C’s
2: Explain the difference between the marketing mix and the promotional mix?
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Unit
2: The Marketing Environment
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2.2 The Micro Environment  Describe the Micro environment
2.3 The Macro Environment  Outline the Macro environment
Prescribed reading for specific to this unit;
Recommended books/reading:
 Kotler, P and Keller, K L.(2016) Marketing Management. . Pearson: Cape Town
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2.1 Introduction
Marketers today operate in an increasingly connected world. They need to connect effectively with customers,
others in the firm, and consumers in the face of major environmental forces. A firm’s marketing environment
consists of players and forces outside marketing that affect a marketing manager’s ability to develop and maintain
successful relationships with its target customers. The marketing environment offers, both, opportunities and
threats. Successful companies need to constantly watch and adapt to the changing environment.
The Marketing Environment

The marketing environment is made up of:
 The micro environment
 The macro environment
2.2 The Micro Environment

The micro environment consists of forces close to the firm that affect its ability to serve its customers, marketing
intermediaries and public.
2.2.1. Firm – In designing marketing plans, the marketing manager needs to take into account top management,
finance function, research and development, purchasing and manufacturing functions. All these functions are inter-
related and form the internal environment of the firm.
2.2.2 Suppliers – Suppliers are an important link in the firm’s overall marketing system as they provide the
resources needed by the firm to produce its goods and services. Marketing managers must watch supply
availability – supply shortages or delays, labour strikes can affect sales in the short run and damage customer
satisfaction in the long run. Marketing managers also need to monitor the prices of inputs provided by suppliers.
2.2.3. Marketing Intermediaries - Marketing intermediaries help the firms to promote, sell and distribute to the
final buyer. They include:
 Resellers who form the distribution channel of the firm and help the firm to find customers or make sales.
They include wholesalers and retailers
 Physical distribution firms help the company to stock and move goods from their point of origin to their
destination, viz. the transportation firms
 Marketing services agencies are marketing research firm, advertising agencies, media consulting firms that
help the company to target and promote its products to the right market
 Financial intermediaries include banks, credit companies, insurance companies and other companies that
help finance transactions and insure against risks
2.2.4. Customers – There are five types of customers. Each of these have special characteristics that call for
careful study by the marketing manager. These customers are:
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 Consumer markets consist of individuals and households that buy goods and services for personal
consumption
 Business markets buy goods and services for further processing and use in their production process.
 Reseller markets buy goods and services to resell at a profit
 Government markets are made up of government agencies that buy goods and services to produce public
services
 International markets consist of buyers in other countries including consumers, producers, resellers, and
governments in other countries
2.2.5. Competitors – The marketing concept states that to be successful, a firm must provide greater customer
value and satisfaction than its competitors do. Thus marketers must gain strategic advantage by positioning their
products strongly against competitors’ products in the minds of consumers.
2.2.6. Public - A firm’s marketing environment also includes various elements of the public, viz. financial
institutions, media, government, etc. It also includes internal public, like workers, managers, directors, etc. A firm
need to prepare marketing plans for the major public elements as well as its customer markets.
2.3 The Macro Environment

Within the rapidly changing global picture, marketers must monitor six major environmental forces:
2.3.1. Demographic environment – Marketers must be aware of worldwide population growth, changing mixes
of age, ethnic compositions, educational levels, rise of non-traditional families, geographic shifts in population, etc.
2.3.2. Economic environment – Marketers need to focus on income distribution, levels of savings, debt and credit
availability.
2.3.3. Natural environment – Marketers need to be aware of raw material shortages, increased energy costs,
increased pollution levels and the changing role of government in environmental protection.
2.3.4. Technological environment – Marketers should take into account the accelerating pace of technological
changes, opportunities for innovation etc.
2.3.5. Political and legal environment – Marketers must work within the laws regulating business practices and
with various special interest groups.
2.3.6. Social and cultural environment – Marketers must understand people’s social beliefs and their culture and
must produce products that correspond to society’s core and secondary values and address the needs of different
sub-cultures within a society.
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Think Point questions
1. South Africans are becoming more and more concerned about natural
environment. How would this trend affect manufacturers of plastic shopping
bags?
2. Explain the threats that may result from the economic environment by giving
examples.
Responding to the Marketing Environment

Successful firms realise that marketing environment presents a never ending series of opportunities and threats.
The major responsibility for identifying significant changes in the environment falls on the marketing manager.
Marketing managers need to be pro-active and take an environmental management perspective. They should
work to change the environment rather than passively accepting uncontrollable elements and must take advantage
of opportunities as they arise and overcome and avoid threats.
What are the key macro-economic environmental factors that affect a firm’s
marketing policy?
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Unit
3: Strategic Planning and the
Marketing Process
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3.2 Defining the strategic planning,  Discuss the strategic planning, mission, objectives and goals
Mission, objectives and goals
3.3 Setting the Firm’s Objectives and  Understand the importance of setting firm’s objectives and
Goals goals
3.4 Designing the Business Portfolio  Define the Business portfolio

 Kotler, P and Armstrong G (2014). Principles of Marketing. Pearson: South Africa
Recommended books/readings:
 Kotler, P and Keller, K L.(2009) Marketing Management. . Pretence: New Jersey
 Blythe. J (2006). Principles and Practice of Marketing. Thomson: London
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3.1 Introduction
All firms must look ahead and develop long-term strategies to meet the changing conditions in their industries.
Each firm must find the game plan that makes the most sense, given its specific situation, opportunities, objectives
and resources. The hard task of selecting an overall strategy for long-run survival and growth is called strategic
planning.
Strategic Planning
Strategic planning may be defined as the process of developing and maintaining a strategic fit between the
organisation’s goals and capabilities and its changing marketing opportunities.
Strategic planning sets the stage for the rest of the planning in the firm. It involves defining a clear mission, setting
supporting objectives, designing a sound business portfolio and coordinating functional strategies.
Marketing plays a key role in the company’s strategic planning in several ways:
 Firstly, marketing provides a guiding philosophy – the marketing concept – that suggests that company
strategy should revolve around serving the needs of important consumer groups
 Secondly, marketing provides input to strategic planners by helping to identify attractive marketing
opportunities and by assessing the firm’s potential to take advantage of them
 Finally, within individual business units, marketing designs strategies for reaching the unit’s objectives and
carrying them out profitability
3.2 Defining the Firm’s Mission

Many organisations develop formal mission statements. A mission statement is a statement of the organisation’s
purpose – what it wants to accomplish in the long run. A clear mission statement acts as an “invisible hand” that
guides people in the organisation. Formulating mission statements is a difficult task. Some factors to be considered
while defining the mission statement are:
 Traditionally, firms have defined their businesses in product term. For example, “We make cosmetics” or in
technological terms, “We are a chemical processing firm.” Mission statements should be market oriented. For
example, “We sell lifestyle and self-expression” can be a mission statement for a cosmetic firm.
Amazon.com’s mission statement isn’t simply to sell books, CDs, videos, toys, etc. Instead its mission
statement is “Transform internet buying into the fastest, easiest and most enjoyable shopping experience
possible – to be the place where you can find and discover anything you want to buy online”
 Management should avoid making its mission statement too narrow or too broad. Mission statements should
be specific and realistic and must fit the market environment. For example, the mission of Girls Scout once
was “To prepare young girls for motherhood and wifely duties.” In today’s context it is outdated
 The mission statements should be based on the firm’s distinctive competencies. For example, a fast food
manufacturer should not enter electronic business but should rather take advantage of its core competencies
like adding on new products to their line of business
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 Finally, the mission statement should be motivating. The mission statement of Microsoft has been “IAYF” –
“Information at your fingertips”. This statement has proved to be very motivating to its staff
3.3 Setting the Firm’s Objectives and Goals

The firm’s mission needs to be turned into detailed supporting objectives for each level of management. Each
manager should have objectives and be responsible for achieving them.
Marketing strategies must be developed to support the marketing objectives, a company may increase the
availability of its products and promote them in order to increase its market share. To enter new foreign markets,
a firm may cut prices and target markets abroad. These are its broad marketing strategies.
Each marketing strategies must be defined in greater detail, for example increasing the product’s promotion may
require more sales people and more advertising. In this way, the firm’s mission is translated into a set of objectives
for the current period.
The objectives should be as specific as possible. For example, it is insufficient to say that the objective is “increase
our market share.” Instead it should be “increase our market share to 15% by the end of the year.”
3.4 Designing the Business Portfolio

Based on its mission statements and objectives, the management must plan the firm’s business portfolio. A
business portfolio is the collection of businesses and product that make up the firms.
The major activity in strategic planning is business portfolio analysis, whereby the management identifies and
evaluates the various businesses that make up the firm. The steps in planning the business portfolio are:
 Management’s first step is to identify the key businesses of the company. If the key businesses are separate
divisions or units, separate missions and objectives can be set for them
 The next step in business portfolio analysis is for management to assess the attractiveness of its various
businesses, divisions or units and decide how much support each deserves. In some firm’s this is done
informally, but other firms use formal portfolio-planning methods
The purpose of strategic planning is to find ways in which the firm can best use its strengths to take advantage of
attractive opportunities in the environment. So, most standard portfolio-analysis methods evaluate the business on
two important dimensions – the attractiveness of the business to its market or industry and the strength of the
business’s position in the market or industry. The best known portfolio planning method was developed by the
Boston Consulting Group, a leading management consultancy firm. According to them, a portfolio planning method
that evaluates a company’s strategic business units in terms of their market growth rate and relative market share.
This model is called the Growth-share matrix.
MANCOSA 22
Developing Growth Strategies

Marketing has the main responsibility for achieving profitable growth for the firm. Marketing must identify, evaluate
and select market opportunities and lay down strategies for capturing them. A useful device for identifying growth
opportunities is the product-market expansion grid.
The product market expansion grid is a portfolio-planning tool for identifying company growth opportunities
through market penetration, market development product development or diversification.
 Market penetration is the strategy for the firm’s growth by increasing sales of current products in current
market segments without changing the product. E.g. improvements maybe made in advertising or services in
order to increase market share
 Market development is a strategy for the firm’s growth by identifying and developing new market segments
for the firm’s current products
 Product development is a strategy for the firm’s growth, which modifies the product or introduces new
products in the current market segment. E.g. the packaging of a product can be made more attractive to
increase the product sales
 Diversification is a strategy for the firm’s growth by starting up or acquiring businesses outside the firm’s
current products and markets.E.g. a fast food chain can diversify by starting restaurants with an a’la carte
menu or it could make an extreme diversification by selling clothes, but this would mean it would be unable to
take advantage of its core competencies
Implementing Strategies
Planning good strategies is only a start towards successful marketing. It has to be followed up be implementation.
Marketing planning addresses what and why of marketing activities while implementation addresses the who,
where, when and how.
Successful marketing implementation depends on how well the company blends its people, organisational
structure, decision and reward system as well as culture of the firm. At all levels, the firm must have people with
skill and motivation to implement the marketing strategies.
To be successfully implemented, the firm’s marketing strategy must fit with its culture, the system of values and
beliefs shared by the people in the firm.
During the implementation of the marketing strategy, the marketing department must practice constant marketing
control. Marketing control involves evaluating the results of marketing strategies and plans and taking corrective
action to ensure that objectives are attained.
23 MANCOSA
Controlling Strategies
Management must first set specific marketing goals. It then should measure its performance its performance in the
market place and evaluate the causes of any differences between the actual and budgeted performance. Finally,
management needs to take corrective action wherever necessary.
Marketing strategies and programmes can quickly become outdated and each company should periodically assess
its overall approach in the market place. Marketing organisations carry out marketing control, both operating and
strategic control. They use marketing audits to determine marketing opportunities and problems and to recommend
short-term and long-term actions to improve overall marketing performance. Through these activities, the company
watches and adapts to the marketing environment.
Think Point
The missions of three separate companies are described as:
 To make profits
 To create customers
 To fight world hunger
Analyse and discuss what these mission statements tell about each of
the companies. Which statement most closely matches the four criteria
for good mission statements

1. Define strategic planning. List and briefly review the four steps in
strategic planning.
2. Discuss the need to implement and control a marketing plan.
MANCOSA 24
Unit
4: Marketing Research and
Information Systems
25 MANCOSA
4.2 Marketing Information System  Discuss the Marketing Information System
4.3 Marketing Research Process  Discuss the Marketing Research Process
4.4 Defining the problem and research  Discuss Research problems and research objective
objectives
4.5 Development Research Plan  Develop Research Plan
4.6 Implementation a Research Plan  Implementation a Research Plan
4.7 Interpreting and Reporting the  Interpret and report on findings

Findings
4.8 Summary  Summarise topic areas covered in unit

 Kotler, P and Armstrong G (2014). Principles of Marketing. Pearson: South Africa
Recommended books/readings:
 Kotler, P and Keller, K L. (2009) Marketing Management. Pretence: New
Jersey
 Blythe. J (2006). Principles and Practice of Marketing. Thomson: London
MANCOSA 26
4.1 Introduction
In today’s complex and rapidly changing environment, marketing managers need more and better information to
make effective and timely decisions. This greater need for information has been matched by the explosion of
information technologies for supplying information. Using today’s new technologies, firms can now handle greater
quantities of information, sometimes even too much. Yet, marketers often complain that they lack enough of right
kind of information or have an access to the wrong kind. In response, many firms are now studying their managers’
information needs and designing information systems and research methods to satisfy those needs.
4.2 Marketing Information System

Marketing information system (MIS) consists of people, equipment and procedures to gather, sort, analyse,
evaluate, and distribute timely and accurate information to marketing decision makers.
 First step in developing MIS is assessing information needs
 Next is developing needed information
 Finally, the MIS distributes information to managers in the right form at the right time to help them make better
marketing decisions
Assessing Information Needs

A good marketing information system balances the information that managers would like to have against what they
really need and what is feasible to offer. Too much information can be as harmful as too little. The MIS must watch
the marketing environment in order to provide the decision makers the information that they should have to make
key marketing decisions. Marketers should not assume that additional information will always be worth obtaining.
They should weigh carefully the costs of additional information against the additional benefits resulting from it.
Developing Information
The information needed by marketing managers can be obtained from internal data, marketing intelligence, and
marketing research.
Internal Data
Many companies build extensive internal data bases, computerised collection of information obtained from data
sources within the company. Marketing managers can readily access and work with information in the database to
identify marketing opportunities and problems, plan programs and evaluate performance.
Marketing Intelligence
Marketing intelligence is the systematic collection and analysis of publicly available information about competitors
and developments in the marketing environment. A marketing intelligence system gathers, analyses and
distributes information about the firm’s competitive, technological, customer, economic, social and political
27 MANCOSA
environments. Its goal is to improve strategic decision-making, assess and track competitor’s actions and provide
early warning of opportunities and threats.
Marketing Research
Marketing research can be defined as the systematic design, collection, analysis and reporting of data relevant to
a specific marketing situation facing an organisation. Marketing researchers engage in a wide variety of activities,
such as studying market share, assessment of customer satisfaction, etc. A company may conduct marketing
research on its own or may have to buy services of a research firm.
Information Analysis
Information gathered by the firm’s marketing intelligence and marketing research systems often requires more
analysis. This may include advanced statistical analysis for which managers may need more help to analyse.
Distributing Information
Marketing information has no value until managers use it to make better marketing decisions. The information
gathered through marketing intelligence and marketing research must be distributed to the right managers at the
right time. Most firms have centralised marketing information systems that provide managers with regular
performance reports, updates and reports on the results of studies. Managers need both routine and non-routine
information, e.g., a sales manager, having trouble with a large customer may want a summary of the customer’s
accounts’ sales and profitability over a past period.
Developments in information technology have caused a revolution in information distribution. With recent advances
in computers, software and telecommunications, most companies have decentralised their marketing information
systems. Most marketing managers have direct access to the information network at any time from virtually any
location.
4.3 Marketing Research Process

Marketing research process has four important steps:
 Defining the problem and research objectives
 Developing the research plan
 Implementing the research plan
 Interpreting and reporting the findings
4.4 Defining the problem and research objectives

Defining the problem and research objectives is often the hardest step in the research process. The manager may
know that something is wrong without knowing the specific causes, e.g., managers of a large discount retail store
that was facing falling sales assumed that it was caused by poor advertising and they ordered research to test the
MANCOSA 28
firm’s advertising. When this research showed that current advertising was reaching the right people, the managers
were puzzled. It turned out that the real problem was that the store was not delivering the prices, products and
services promised in the advertisement.
After the problem has been defined carefully, research objectives must be set out. A marketing research project
might have one of three types of objectives, viz:
 Exploratory research – The objective of exploratory research is to gather preliminary information that will
help define the problem and suggest hypothesis
 Descriptive research – The objective of descriptive research is to describe things such as the market
potential for a product or the demographics and attitudes of consumers who buy the product
 Casual research – The objective of casual research is to test hypothesis about cause – and – effect
relationships
Managers often start with exploratory research and later follow up with descriptive and casual research.
4.5 Developing the Research Plan

The second step of the marketing research process is developing a research plan. The plan outlines sources of
existing data and spells out the specific research approaches, contact methods, sampling plans and instruments
that the researchers will use to gather data.
Research Approaches
 Determining specific information needs – Research objectives must be translated into specific information
needs. This might call for the following specific information.
 The demographic, economic and lifestyle characteristics of current users
 Consumer usage patterns
 Retailer reactions to implementation of changes
 Consumer attitude towards changes
 Forecasts of sales with current status and new change
 Gathering Information: To meet the manager’s information needs, the researcher can gather, secondary data,
primary data or both.
 Secondary data consists of information that already exists somewhere. Researchers usually start by
gathering secondary data. The firm’s internal database provides a good starting point, however,
external information sources such as libraries, business publications, online data base services,
internet data sources, etc. are important sources of secondary data. Secondary data can usually be
obtained more quickly and at a lower cost than primary data. Also, secondary data sources can
sometimes provide data that individual companies may not be able to collect on its own as the
29 MANCOSA
information may not be readily available or is too expensive to collect. Secondary data can, however,
present problems. The needed information may not exist.
Even when data can be found, it may not be very usable. The researcher must evaluate secondary
information carefully, to ascertain that it is relevant, accurate, current and impartial. Secondary data
provides a good starting point for the research and often helps to define problems and research
objectives.
Activity
Many companies build comprehensive internal data bases that marketing

managers can use to identify marketing opportunities and problems, plan
strategies and programs, and evaluate performance. If you were the marketing
manager for a large software producer, what type of information would you like to
have available in your firm’s internal database?
 Primary data consists of information collected for the specific purpose at hand. Designing a plan for
primary data collection calls for a number of decisions on research approaches, contact methods,
sampling plans and research instruments.
Types of Research
Observational research is the gathering of primary data by observing relevant people, actions and situations.
E.g., a maker of personal care products might pretest its ads by showing them to people and measuring
eye movements and other physical reactions.
Observational research can be used to obtain information that people are unwilling to provide, however, long term
or infrequent behaviour is difficult to observe. It is also difficult to observe feelings, attitudes or motives, hence a
researcher may have to use observations along with other data collection methods.
Survey research – Survey research is the approach best suited for gathering descriptive information. E.g., if a
firm wants to know about people’s attitudes, buying behaviour, etc., it can find out by asking individuals directly.
Survey research is the most widely used method for primary data collection. The major advantage of survey
research is its flexibility. It can be used to obtain may different kinds of information in many different situations.
Depending on the survey design, it may also provide information more quickly and at lower cost than observational
or experimental research. However, sometimes people are unable to answer survey questions or unwilling to
MANCOSA 30
respond to the survey. Other respondents may try to help the interviewer by giving pleasing answers or may say
that they are too busy to answer the survey.
Experimental research – Experimental research is best suited for gathering casual information. Experiments
involve selecting matched groups of subjects, giving them different treatments, controlling unrelated factors, and
checking for differences in-group responses. Thus experimental research tries to explain cause and effect
relationships. Observations and surveys may be used to collect information in experimental research.
Contact Methods
Information can be collected by mail, telephone, personal interview or online.
Mail Questionnaires – This can be used to collect large amounts of information at a low cost. Respondents may
give more honest answers to personal questions on a mail questionnaire that to an unknown interviewer. However,
mail questionnaires are not very flexible, the researcher cannot adapt the questionnaire based on earlier answers.
Mail surveys usually take longer to complete and the response rate is often very low. Finally, the researcher has
little control over the mail questionnaire sample as it is difficult to control that is filling out the questionnaire.
Telephone Interviewing – This is one of the best methods for gathering information quickly as it provides greater
flexibility than the mail questionnaires and the response rates tend to be higher. Interviewers can ask to speak to
respondents with the desired characteristics, however, telephone interviewing is costly and responses depend on
how the questions are asked, also different interviewers may interpret and record responses differently
Personal Interviewing – This takes two forms, individual and group interviewing. Individual interviewing involves
talking with people directly. Such interviewing is flexible and the respondent’s attention can be held for a long time
and difficult questions can be explained. However, it is time consuming and expensive method of collecting data.
Group interviewing consists of inviting 6 to10 people to gather for a few hours with a trained moderator and talk
about a product, service or organisation. The moderator encourages free and easy discussion and the interaction
between the groups can bring out actual feelings and thoughts. Group interviewing has become one of the major
marketing research tools for gaining insight into consumer thoughts and feelings. However, group studies usually
employ small sample sizes and are time consuming and costly.
Internet Surveys and Online Interviews

Advances in computers and communication technology has had a large impact on methods of obtaining
information. Many research firms now do computer assisted telephone interviewing or internet surveys. Some
analysts predict that internet will soon be the primary marketing research tool. Some firms also use computer
interviewing in which respondents sit at a computer, read questions from a screen and answer into the computer.
The advantage of this method is that computers may be located at public places like trade shows, shopping malls
etc.
31 MANCOSA
Sampling Plan
Marketing researchers usually draw conclusions about large groups of consumers by studying a small sample of
the total consumer population. A sample is a segment of the population selected to represent the population as a
whole. Designing the sample requires three decisions.
 Firstly, who is to be surveyed (what sampling unit)? The researcher must determine what information is
needed and who is most likely to have it
 Secondly how many people must be surveyed (what sample size)? Large samples give more reliable results
than small samples. If well chosen, samples of less than 1% of a population can often give good reliability
 Thirdly, how should the people in the sample be chosen (what sampling procedure)? This could be probability
sampling viz. simple random sample, stratified random or cluster sample or non-probability sampling viz.
convenience sampling or judgement sampling. Using probability sampling, each member of the population
has a known chance of being included in the sample and sampling error can be calculated within confidence
limits. Non-probability samples are cheaper but sampling error cannot be measured. Which method is the
best depends on the needs of the research project.
Research Instruments
In collecting primary data marketing researchers have a choice of two main research instruments – the
questionnaire and mechanical devices. The questionnaire is by far the most common instrument. Questionnaires
are very flexible as they may be administered in person, by phone or online and there are many ways to ask a
question. However, questionnaires must be developed and tested carefully before they can be used on a large
scale. Questions may be open ended or close ended. Open ended allow the respondents to answer in their own
words, e.g., it may ask the respondent for his opinion about the product. Close-ended questionnaires include all
possible answers and respondents make choices among them. These are easier to interpret and tabulate.
Presenting the Research Plan

At this stage, the marketing researcher should summarise the plan in a written proposal. The proposal should
cover the management problems addressed and the research objectives, the information to be obtained, the
sources of secondary information, methods of collecting primary data and the way results will help management
decision making.
A written research plan or proposal ensures that the marketing manager and researcher have considered all the
important aspects of the research, and they agree on why and how the research will be done.
MANCOSA 32
4.6 Implementing the Research Plan

The researcher next puts the marketing plan into action. This involves collecting, processing and analysing the
information. Data collection can be carried out by the company’s marketing research staff or by outside firms.
Researcher must process and analyse the collected data to isolate important information and findings. They need
to check data from questionnaires for accuracy and completeness, tabulate the results for analysis and arrive at
conclusions.
4.7 Interpreting and Reporting the Findings

The researcher must now interpret the findings, draw conclusions and report them to management. The researcher
must not load the managers with fancy statistical techniques. Rather, the researcher should present important
findings that are useful in the major decisions to be made by management. Interpretation is an important phase
of the marketing process. The best research is meaningless if the manager blindly accepts faulty interpretations
from the researcher. Managers and researchers must work together closely when interpreting research results
and both must share responsibility for the decision process and resulting decisions.
Shortcomings of the Research Process

In spite of the rapid growth of marketing research, many companies still fail to use it sufficiently or correctly for
several reasons:
 A narrow conception of marketing research: Many managers see marketing research as a fact-finding
operation. They expect the researcher to design a questionnaire, choose a sample, collect data, and report
results without a careful definition of the problem or of the decision alternatives facing management. When
this research fails to be useful, management’s idea of limited usefulness is reinforced
 Uneven calibre of marketing researchers: Some managers view marketing research as little more than a
clerical activity. Less competent marketing researchers are hired. Their weak training and lack of creativity
leads to unimpressive results
 Late and occasionally erroneous findings by marketing research: Good marketing research takes time
and money. Managers are disappointed when marketing costs too much or takes too much time
 Personality and presentational differences: Differences between the styles of line managers and
marketing researchers often get in the way of productive relationships.

1. . Discuss the importance and limitation of marketing research.
2. When conducting a market research survey data can be collected by means
of a personal interview, mail questionnaires, telephone interviews, group
interviews or online. Discuss the merits and demerits of each method.
33 MANCOSA
4.8 Summary
The need for marketing information is greater now than at any time in the past. Firms can conduct their own
marketing research or hire other firms to do it for them. Good marketing research is characterised by the scientific
method creativity, multiple research methods, cost-benefit analysis and ethical focus.
The marketing research process consists of defining the problem and research objectives, developing the research
plan, collecting the information, analysing the information and presenting the findings to management. In
conducting research, firms must decide whether to collect their own data or use data that already exists.
They must also decide which research approach and research instrument to use. In addition, they must decide on
a sampling plan and contact methods.
One major reason for undertaking marketing research is to discover market opportunities. Once the research is
complete, the company must evaluate its opportunities and decide which markets to enter. Marketing research is
an ongoing process, which requires a continuous follow up.
MANCOSA 34
Unit
5: Consumer Buyer Behaviour
35 MANCOSA
5.2 Cultural Factors  Discuss Cultural factors
5.3 Social Factors  Outline Social factors
5.4 Personal Factors  Discuss Personal factor
5.5 Psychological Factors  Describe Psychological Factors
5.6 The Buyer’s Decision Process  Discuss Buyer decision making process

Town.
 Kotler, P and Keller, K L.(2016) Marketing Management. Pearson: Cape Town.
MANCOSA 36
5.1 Introduction
Consumer buyer behaviour refers to the buying behaviour of the final consumers who buy goods and services for
personal consumption. These final consumers include individuals and households and together they make up the
consumer market.
Consumers vary in age, income, education, and taste. They also buy a variety of goods and services. How these
diverse consumers make their choices among products and services is what most firms need to know. Many firms
research consumer buying decisions in great detail to answer questions about what consumers buy, when they
buy, how and how much they buy, and why they buy. Consumer purchases are strongly influenced by cultural,
social, personal and psychological characteristics.
Consumer’s Purchase Characteristics

5.2 Cultural Factors
Cultural factors exert the broadest and deepest influence on consumer behaviour. The marketer needs to
understand the role played by the buyer’s culture, sub-culture and social class.
Culture – Culture is the most basic cause of persons wants and behaviours. The set of basic values, perceptions,
wants and behaviours are learnt by a person as a member of a society, family, and other important institutions.
Every group or society has a culture that influences buying behaviour. These vary greatly and failure to adjust to
these differences can result in ineffective marketing. Marketers also need to spot cultural shifts in order to discover
the change in wants and make products accordingly. E.g., the cultural shift toward greater concern for health and
fitness has created a huge market for exercise equipment, low fat and more natural foods and health and fitness
services.
Sub-culture – Each culture contains smaller sub-cultures or groups of people who share value systems based on
common life experiences and situations. Sub-cultures include nationalities, religion, racial groups and geographic
regions. Many sub-cultures together make an important market segment and marketers often design products to
suit their needs.
Social class – Almost every society has some form of social class structure. Social classes are relatively
permanent and ordered divisions of a society and its members share similar values and interests. Social class is
not determined by a single factor such as income, but is a combination of factors like income, occupation,
education, wealth and other variables. Marketers are interested in social class, because people within a given
social class tend to exhibit a similar buying behaviour in areas such as clothing, home furnishing, automobiles,
electronic and other equipment.
37 MANCOSA
5.3 Social Factors

Social factors such as, small groups, family and social roles and status influence a consumer’s behaviour.
Groups – A person’s behaviour is influenced by many small groups. Groups that have a direct influence and to
which a person belongs are called membership groups. In contrast, reference groups serve as direct or indirect
points of comparison or reference in forming a person’s attitude or behaviour. Marketers try to identify the reference
groups of their target market. The importance of group influence varies across products and brands. It tends to be
the strongest when the product is visible to others whom the buyer respects, e.g., a teenager may want to wear a
t-shirt of a soccer club that he/she supports.
Family – The family is the most important consumer buying organisation in the society. Marketers are interested
in the roles and influences of the different members of the family on the purchase of their products and services.
E.g., the involvement of husband/wife varies widely by product category and by stage in the buying processing.
Buying roles also change with evolving consumer lifestyle, e.g., marketers who have typically sold their product to
only men or only women are now marketing it to the opposite sex as research now reveals that women are also
buying hardware products, luxury cars and men have a say in buying household products, food and clothing items.
Roles and Status – A person belongs to many groups, viz., family, clubs, organisations and others. The person’s
position in each group can be defined in terms of both, role and status. A role consists of activities that people are
expected to perform by persons around them. Each role carries a status reflecting general esteem given to it by
society. People often choose products that show their status in society, e.g., choice of cars, houses, electronic
equipment, clothing, etc.
5.4 Personal Factors

A buyer’s decision is also influenced by personal characteristics such as age, occupation, economic situation,
lifestyle, personality and self-concept.
Age – Marketers often define their target markets in terms of age of their customers and develop appropriate
products and marketing plans for each age.
Occupation – Marketers try to identify the occupational groups that have an above average interest in their
products and services. E.g., pharmaceutical companies approach doctors to inform them about any new medicines
in the market.
Economic situation – Marketers of income sensitive goods watch trends in personal income, savings and interest
rates. If economic indicators point to a recession, marketers need to take steps to re-design or re-position, or re-
price their products.
MANCOSA 38
Lifestyle – Lifestyle is a person’s pattern of living as expressed in his or her activities, interests and opinions.
Lifestyle captures something more than the person’s social class or personality. When used carefully, the lifestyle
concept can help the marketer understand changing consumer values and how they affect buying behaviour.
Personality and Self-Concept – Personality refers to the unique psychological characteristics. Personality is
usually defined in terms of the traits such as self-confidence, adaptability, aggressiveness, etc. Personality can
be useful in analysing consumer behaviour for certain products or brand choices. E.g., coffee marketers have
discovered that coffee drinkers tend to be highly social, hence coffee houses like Mugg and Bean create an
environment in which people can relax and socialise. Self-image or self-concept also determines consumer
behaviour. E.g., people may buy fancy equipment or branded clothing to improve their self-image.
5.5 Psychological Factors

A person’s buying choices are further influenced by four major psychological factors, viz., motivation, perception,
learning and beliefs and attitudes.
Motivation – A person has many needs at any given time. Some are biological and others are psychological.
Most of these needs will not be strong enough to motivate the person to act at a given point in time. Motivation
researchers collect information from small samples of consumers to uncover their motives for their choice of
products. Motivation researchers have some interesting and sometimes odd conclusions on what may be in the
buyer’s mind regarding certain purchases. However, motivation research is a useful tool for marketers seeking a
deeper understanding of consumer behaviour.
Perception – Perception is the process by which people select, organise and interpret information to form a
meaningful picture. How a person acts is influenced by his or her own perception of the situation. People can
form different perceptions of the same situation because of three perceptual processes, viz., selective attention,
selective distortion and selective retention.
Learning – Learning describes changes in an individual’s behaviour arising from experience. E.g., a person may
buy a Defy Tumble Dryer because he or she is happy with other Defy products like Washing Machine, Refrigerator,
etc. The marketers can build up demand for a product by associating it with a strong drive, using motivating cues
and providing positive reinforcement.
Beliefs – Through doing and learning, people acquire beliefs and attitudes. These in turn influence their buying
behaviour. Marketers are interested in the beliefs that people formulate about specific products and services
because these beliefs make up product and brand images that affect buying behaviour.
39 MANCOSA
Attitudes – Attitudes describe a person’s relatively consistent evaluations, feelings and tendencies towards an
object or idea. Attitudes put people into a frame of mind of liking or disliking things and are difficult to change.
Thus a firm should usually try to fit its products into existing attitudes rather than attempt to change attitudes. The
cost of trying to change attitudes is often very high, but rewards may be excellent.
Think Point Questions
1. Consumer buyer behaviour refers to the buying behaviour of the final consumers who buy
goods and services for personal consumption. Explain the factors that strongly influence
consumer purchases?
2. Explain the decision process that consumers under go when making purchases of goods
and services.
5.6 The Buyer’s Decision Process

When making a purchase, the buyer goes through a decision process, consisting of need recognition, information
search, evaluation of alternatives, purchase decision and post purchase behaviour. The marketer’s job is to
understand the buyer’s behaviour at each stage and influences that are operating.
Need recognition – The consumer recognises a problem or need that could be satisfied by a product or service
in the market.
Information search – Once the need is recognised, the consumer is aroused and will try to seek more information
about the product and alternatives.
Alternative evaluation – With information in hand, the consumer proceeds to evaluate various alternatives
available.
Purchase decision – Based on the evaluation of alternatives, the consumer makes a purchase decision and buys
a product.
Post purchase behaviour – In the final stage of buyer decision process, post purchase behaviour, the consumer
takes action based on satisfaction or dissatisfaction.
The Buyer’s Decision Process for New Products

With regard to new products, consumers respond differently. The responses depend on consumer’s characteristics
as well as the product’s characteristics. Consumers may be innovators, early adopters, early majority, late majority
or laggards. Manufacturers and marketers try to bring their new products to the attention of potential early adopters
especially if they are opinion leaders.
MANCOSA 40
Activity
Think about a very good or a very bad experience with a product. How did this
experience shape your beliefs about the product, the brand, the purchasing
process etc.? How long did these beliefs last? What made you change these
beliefs?

Explain the social factors that influence consumer behavior.
41 MANCOSA
Unit
6: Market Segmentation,
Targeting and Positioning
MANCOSA 42
6.2 Steps in Target Marketing  Discuss Target Marketing
6.3 Market Segmentation  Outline Market Segmentation
6.4 Micro Marketing  Discuss Micro Marketing
6.5 Segmenting Consumer Markets  Discuss Segmenting Consumer Markets
6.6 Market Targeting  Discuss Market Targeting

6.7 Product Positioning  Outline product positioning
 Kotler, P and Armstrong G (2018). Principles of Marketing. Pearson: Cape Town.
 Kotler, P and Keller, K L.(2016) Marketing Management. Pearson: Cape Town
43 MANCOSA
6.1 Introduction
Today, buyers are too numerous, widely scattered and varied in their needs and buying practices. Rather than
compete in an entire market, each company must identify the parts of the market that it can serve best and most
profitably. Most firms have moved away from mass marketing and towards target marketing.
6.2 Steps in Target Marketing

The three major steps in target marketing are:
 Market Segmentation: This is dividing a market into smaller groups of buyers with distinct needs,
characteristics or behaviour that might require separate products or marketing mixes
 Market Targeting: This is the process of evaluating each market segment’s attractiveness and selecting one
or more segments to enter
 Market Positioning: This includes setting the competitive positioning for the product and creating a detailed
marketing mix
6.3 Market Segmentation

Market segmentation can be carried out at several different levels. Firms can practice no segmentation (mass
marketing), complete segmentation (micro marketing) or something in-between (segment marketing or niche
marketing).
Mass Marketing: Mass marketing is mass production, mass distribution and mass promotion of the same product
in about the same way to all consumers. E.g., Coca Cola at one time produced only one product hoping that it
would appeal to everyone.
Segment Marketing: A firm that practices segment marketing isolates broad segments that make up a market and
adapts its products to match the needs of one or more segments. Segment marketing offers several benefits over
mass marketing. The firm can market more efficiently, targeting its products or services only towards consumers
that it can serve best and most profitably. It can fine tune its products, prices and programmes to the needs of
each segment.
Niche Marketing: Niche marketing focuses on sub groups within market segments. A niche is a more narrowly
defined group, e.g., users of sports cars. Niche marketing offers smaller firms an opportunity to compete, by
focusing their limited resources by serving niches. However, large firms also practice niche marketing. E.g. makers
of sports shoes make shoes for running, soccer, tennis etc. and also for smaller niches like biking.
MANCOSA 44
6.4 Micro Marketing

Micro marketing is the practice of tailoring products and marketing programmes to suit the tastes of specific
individuals and locations. Micro marketing includes local marketing and individual marketing.
Local Marketing: This involves tailoring brands and promotions to the needs and wants of local customer groups.
Individual Marketing: This involves tailoring products and marketing programmes to the needs and preferences of
individual customers. This is also called one to one marketing or customised marketing. E.g., tailor made suits,
specially designed furniture and even computers to suit specific needs.
6.5 Segmenting Consumer Markets

A marketer has to try different segmentation variables alone and in combinations to find the best way to view the
market structure. Major variables are geographic, demographic, psychographic and behavioural.
Geographic Segmentation: This calls for dividing the market into different geographic units, such as countries,
states, regions, cities etc. A firm may decide to operate in one or a few geographical areas and localize their
product advertising, promotion and sales efforts to fit the needs that individual market.
Demographic Segmentation: This divides the markets into groups based on variables, such as age, gender,
family size, income, occupation, nationality, etc. Consumer needs, wants and usage rates often varies closely with
demographic variables. Demographic variables are also easy to measure as compared to other variables; hence
demographic segmentation is the most popular basis for segmenting consumer groups.
Psychographic Segmentation: This divides buyers into different groups based on social class, lifestyle or
personality characteristics. People in the same demographic groups can have different psychographic make up
and is reflected in their lifestyle, personality or characteristics.
Behavioural Segmentation: This divides buyers into groups based on their knowledge, attitudes, or responses to
a product. Many marketers believe that behavioural variables are the best starting point for building market
segments. Some of the aspects of behavioural segmentation are occasions (Mother’s Day, Father’s Day,
Christmas, etc.), benefits sought (travelling could be fun, could be for business, could be for leisure), user’s status
(first time users, ex-users, potential users), etc.
45 MANCOSA
Segmenting Markets
To be useful, market segments must be:
Measurable – The size, purchasing power and profiles of the segment should be measurable.
Accessible – The market segments should be effectively reached and easily served.
Substantial – A segment should be the largest possible homogenous group worth pursuing at a profit.
Differentiable – The segment should be distinguishable and should respond differently to different marketing mix
elements and programmes.
Actionable – Effective programmes can be designed for attracting and serving the segments.
Activity
Visit three large supermarkets. Study the location of the shop as well as its décor,
merchandise and prices. Are these stores appealing to the same or different
market segments? Describe the segments that you can identify.
6.6 Market Targeting

Market segmentation reveals the firm’s market segment opportunities. The firm then has to evaluate the various
segments and decide how many and which ones to target.
Evaluating Market Segments: In evaluating different market segments, a firm must consider three factors, viz.
segment size and growth, segment structure and attractiveness and company objectives and resources. The firm
should enter only those segments in which it can offer superior value and gain advantages over competitors.
Selecting Market Segments: After evaluating different market segments, the firm must decide its target market.
A target market consists of a set of buyers who share common needs or characteristics that the firm decides to
serve. This may be undifferentiated marketing (or mass marketing), differentiated marketing (segment marketing),
concentrated marketing (niche marketing).
Choosing Market Coverage Strategy: Many factors need to be considered when choosing a market coverage
strategy. The selection of market coverage strategy depends on the firm’s resources, product variability, product
life cycle stage and competitive marketing strategies.
6.7 Product Positioning

Product positioning involves implanting the product’s unique benefits in the customers’ minds. The positioning task
consists of three steps:
Identifying Possible Competitive Advantages: A firm or market can gain advantage over competitors by offering
consumers greater value either through lower prices or by providing more benefits that justify higher prices.
MANCOSA 46
Choosing the right competitive advantage: The firm must choose which advantage is best for it and how many
advantages it should consider.
Selecting an overall positioning strategy: Consumers typically choose products and services that give them the
greatest value. Thus marketers want to position their brands on the key benefits that their products offer relative
to competing brands. This is also called the value proposition. Value propositions that give a firm competitive
advantages are:
 More for More – This involves providing the most upscale product or service and charging a higher price to
cover higher cost, e.g., a Rolls Royce
 More for Same – This involves a firm attacking a competitor’s More for More position and introducing a brand
offering comparable quality but at a lower price or with better benefits. E.g., Pick and Pay Choice products
are marketed as better value than other premium brands
 Same for Less – This involves a firm offering same product at a lesser price, e.g., discounts and specials
 Less for Much Less – This involves offering products with lesser price and quality to the consumers who,
otherwise cannot afford the better quality products. E.g., Pick and Pay’s No Name products
 More for Less – This is a winning value proposition. In the short run it can help firms to achieve good market
position, but in the long run firms may find it very difficult to sustain this proposition
Communicating and Delivering the Chosen Position: Each firm must develop its own winning positioning
strategy. Once it has chosen a position, the firm must take strong steps to deliver and communicate the desired
position to target customers. The firms marketing mix efforts must support the positioning strategy. Establishing a
position or changing a position takes a long time. In contrast, positions that have taken years to build up can be
lost quickly. Once a firm has built the desired position, it must take care to maintain the position through consistent
performance and communication. It must closely monitor the position over a time and adapt to match changes in
consumer needs and competitors’ strategies.

Describe positioning by giving examples
47 MANCOSA
Think Point Questions

1. Explain the bases for segmenting consumer markets.
2. Define Target Marketing by giving examples
MANCOSA 48
Unit
7: Direct and Online
Marketing
49 MANCOSA
7.2 Direct Marketing  Discuss Direct Marketing
7.3 Online Marketing  Discuss Online Marketing
 Kotler, P and Keller, K L.(2016) Marketing Management. . Pretence: Cape Town.
MANCOSA 50
7.1 Introduction
Mass marketers have tried to reach millions of buyers with a single product and a standard message through the
mass media. Most mass marketing communications were one-way communications directed at consumers rather
than two-way communications with consumers. Today, many firms are turning to direct marketing in an effort to
reach targeted customers more efficiently and to build stronger, more personal, one-to-one relationships with
consumers.
7.2 Direct Marketing

Direct marketing consists of direct connections with carefully targeted individual consumers to obtain an immediate
response and cultivate lasting customer relationship. direct marketers communicate directly with customers. Using
detailed data base, they tailor their marketing offers and communications to their needs of narrowly defined
segments or even individual buyers. They seek to build up brand and image of the product as well as establish a
direct immediate and measurable consumer response.
Benefits of Direct Marketing

Both, customers and sellers benefit from direct marketing.
Benefits to Customers
For consumers, home shopping is fun, convenient, hassle free and time saving.
Direct marketing gives customers a bigger selection of merchandise.
Customers can compare different products in different shops using mail catalogues and online shopping services
and then order their products without dealing with sales people.
Benefits to Sellers
Direct marketers can target almost any group, customise offers to special wants and needs and use individualised
communications to promote these offers.
Direct marketers can also build an ongoing relationship with each customer.
Direct marketers gain an advantage because their offer and strategy are less visible to competitors.
Reasons for Growth of Direct Marketing

Various trends have led to the rapid growth of direct marketing.
Market de-massification has produced a constantly increasing number of market niches with specific preferences.
Direct marketing enables sellers to focus efficiently on these many markets with differentiated offers that match
consumer wants and needs.
Other trends encouraging at home shopping include higher costs of driving, traffic and parking congestion, lack of
time, long lines at checkout counters.
51 MANCOSA
Consumers like the convenience of direct marketers’ toll free phone numbers to place their orders round the clock.
The growth of quick delivery via couriers and express carriers has also made direct shopping fast and easy.
The increased affordability of computers and customer data bases has allowed direct marketers to single out the
best prospect for each of their product.
The cost per contact media in direct marketing in reaching and selling to more customers and prospective
customers is less than the cost of using sales force.
Major Forms of Direct Marketing

The main forms of direct marketing include:
Face-to-Face Selling – Most firms today rely heavily on face-to-face selling through a professional sales force or
they hire representatives or agents who reach the target customers.
Tele-Marketing – Tele-marketing consists of using the telephone to sell directly to consumers.
Direct Mail Marketing – Direct mail marketing consists of the firm sending an offer, announcement or any other
item to a person at a specific address, e.g., flyers distributed at robots, brochures sent by post, etc.
Fax, email and Voice Mail – These are recent forms of direct marketing and have become very popular.
Catalogue Marketing – Many marketers mail their catalogue to a selected list of customers or make the catalogues
available in stores. Consumers can place their orders from the catalogues and goods will be delivered to them
within a reasonable period of time.
Television Marketing – Television marketing has two forms. There are infomercials during which marketers
advertise their product and encourage customers to place orders directly with them. Televisions also have home
shopping channels. E.g., Verimark and Glo Mail advertise most of their products on television during infomercial
time.
Think Point
1. Discuss the benefits of direct marketing to customers and marketers.

2. Identify the major forms of direct marketing
MANCOSA 52
7.3 Online Marketing

Online marketing is a form of direct marketing which involves online channels and e-commerce and is usually
conducted through interactive online computer systems, which electronically link consumers with sellers. There
are two types of online marketing channels:
Commercial Online Services – Commercial online services offer online information and marketing services to
subscribers who pay a monthly fee. This kind of service is not yet available in South Africa.
Internet – Commercial online services have been overtaken by the internet as the primary online marketing
channel. Today, all the online services offer internet access as a primary service. Internet is used to obtain or share
information on almost any subject and to interact with other users. Internet usage has created a new world of e-
commerce or electronic commerce, a term that refers to the buying and selling process that is supported by
electronic means. In e-commerce, sellers offer products and services electronically, posting their information at
various internet sites. Buyers search for information regarding products and services they need and identify the
products they want to buy and then place orders using electronic methods of payment or a credit card.
Benefits of Online Marketing

For consumers, online marketing is beneficial for many reasons. Online marketing is interactive, immediate and
provides access to an abundance of comparative information about products, firms and competitors.
Marketers also benefit from online marketing. It helps them to build consumer relationship, reduces costs,
increases efficiency and provides flexibility.
Buyers and sellers in different countries are able to interact with each other in seconds through internet.
Marketers can conduct online marketing by creating an electronic storefront, placing advertisements online,
participating in internet forums or using email.
Activity
Contact one of the direct marketing firms. Find out how does the firm make it
easy to order its products. How is this firm different from traditional retailers or
manufacturers? How does it provide security to its customers.
53 MANCOSA
Revision Question
Identify the benefits of online marketing to consumers and marketers.
MANCOSA 54
Unit
8: New Product Development
and Product Life-Cycle
Strategies
55 MANCOSA
8.2 New Product Development Strategy  Discuss New Product Development Strategy
8.3 Product Life Cycle  Discuss Production Life Cycle
8.4 Marketing Strategies during the  Identify Marketing Strategies during the Product Life-Cycle
Product Life-Cycle
 Kotler, P and Keller, K L.(2016) Marketing Management. . Pearson: Cape Town.
MANCOSA 56
8.1 Introduction
A firm has to develop and manage new products. Every product goes through a life-cycle. The product life-cycle
presents two major challenges to a firm. Firstly, because all products eventually decline, a firm must be good at
developing new products to replace ageing ones. Secondly the firm must be good at adapting its marketing
strategies in the face of changing tastes, technologies and competition as products pass through the various stages
of the product life-cycle.
8.2 New Product Development Strategy

New product development is the development of the original product, product improvement, product modification
and new brands through the firm’s own research and development efforts. The new product’s success depends
on developing a unique superior product, one with higher quality, new features and higher values. Another key
success factor is a well-defined product concept prior to development. A third factor for success is senior
management’s commitment to the product development process. Hence the firm must have strong new product
planning. Eight major steps in this process are:
1. Idea Generation – New product development starts with a systematic search for new product ideas. A firm
has to generate many ideas in order to find few good ones. At Gillette, of every 45 new product ideas, 3 make
it to a serious development phase and only 1 finally reaches the market. Major sources of new product ideas
include internal staff, customers, competitors, distributors, and suppliers.
2. Idea Screening – The purpose of idea generation is to create a large number of ideas. The first idea reducing
stage is idea screening. This helps to spot good ideas and drop poor ones as soon as possible.
3. Concept Development and Testing – An attractive idea must be developed into a product concept. A
product concept is a detailed version of the new product idea stated in meaningful consumer terms. The firm’s
task is to develop new product ideas into alternative product concepts and find out how attractive each concept
is to customers and choose the best one. This can be done through concept testing by presenting the concept
to the consumers symbolically or physically, to find out if the concept has strong consumer appeal.
4. Marketing Strategy Development – The marketing strategy statement consists of three parts.
 The first part describes the target market, the planned product positioning, sales, market share and the
profit goals for the first few years.
 The second part of the marketing strategy statement outlines the product’s planned price, distribution and
marketing budget for the first year.
 The third part of the marketing strategy statement describes the planned long term sales, profit goals, and
marketing mix strategy.
57 MANCOSA
5. Business Analysis – Business analysis involves the review of sales, cost and profit projections for a new
product to find out if they satisfy the firm’s objectives. If they satisfy the objectives, the product can move to
the product development stage.
6. Product Development – Product Development is a strategy for a firm’s growth which offers modified or new
products to current market segments. It is developing the product concept into a physical product in order to
ensure that the product idea can be turned into a workable product. The Research and Development
Department will test one or more physical versions of the product concept. Developing a successful prototype
can take days, weeks, months or even years. Products have to undergo rigorous functional tests to ensure
that they perform safely and effectively.
7. Test Marketing – Test marketing is the stage at which product and marketing programme are introduced into
more realistic market settings. At this stage the firm tests the product and its entire marketing programme, i.e.,
positioning, advertising, distribution, pricing, branding, packaging and budget levels. When using test
marketing, firms usually choose one of three approaches, standard test markets or controlled test markets or
simulated test markets. The firm will test market its product depending on its investment in developing the
product.
8. Commercialisation – Test marketing gives management the information needed to make a final decision
about whether to launch the new product. Introducing the new product into the market is called
commercialisation. While launching a new product, a firm must decide on the timing, where to launch the new
product i.e., in a single location or national or international market. Few firms have confidence, capital and
capacity to launch new products into full national or international markets. They generally develop a planned
rollout over a period of time.
Think Point
1. Choose a product of your choice and explain the new product development
process.
8.3 Product Life-Cycle

Product life-cycle is the course of a product’s sales and profits over its lifetime. It involves five distinct stages:
 Product Development – Product development begins when the firm finds and develops a new product idea.
During product development stage, sales are zero and the firm’s investment costs are high
 Introduction – This is a period of low sales growth as the product is introduced in the market. Profits are non-
existent at this stage because of heavy expenses of product introduction
MANCOSA 58
 Growth – This is a period of rapid market acceptance and increasing profits

 Maturity – This is a period of slowdown in sales growth because the product has achieved acceptance by
most potential buyers. Profits level off or decline because of increased marketing outlay to defend the product
against competition
 Decline – This is the period when sales fall off and profits drop
Not all products follow this product life-cycle. Some products are introduced and die quickly, while others stay in
the mature stage for a long time. The product life-cycle concept can describe a product class, a product form or a
brand.
 Product classes have the longest life-cycle. The sales of many product classes stay in the maturity stage for
a long time. E.g., cleaning aids
 Product forms such as some soaps and detergents have passed through a regular history of introduction,
rapid growth, maturity and decline and enjoyed a fairly long life-cycle
 The life-cycle of specific brands tends to be much shorter
8.4 Marketing Strategies during the Product Life-Cycle

 Introduction Stage
In the introduction stage, the firm must choose the launch strategy consistent with its intended product
positioning. Investment is needed to attract distributors and build their inventories as well as to inform
consumers of the new product.
 Growth Stage
In the growth stage, firms continue to educate potential consumers and distributors. In addition, the firm works
to stay ahead of the competition and sustain rapid market growth by improving product quality, adding new
product features, introducing new models, entering new market segments and distribution channels, building
product awareness and lowering prices at the right time to attract new buyers.
 Maturity Stage
In the maturity stage, firms continue to invest in maturing products and consider modifying the market, the
product and the marketing mix.
 Decline Stage
Once the firm recognises that a product has reached the decline stage, management must decide whether
to maintain the brand without change, hoping that the competitors will drop out of the market or harvest the
product by reducing costs and trying to maintain sales or drop the product by selling it to another firm or
liquidating it.
59 MANCOSA
Activity
The maturity stage of the PLC is the stage where sales are increasing, but at a
declining rate. Discuss what you understand by this statement and why you think
it is very critical to review the performance of the product portfolio.

Explain the stages of the product life cycle and how marketing strategies change
during the product’s life-cycle.
MANCOSA 60
Unit
9: Product and Services Strategy
61 MANCOSA
9.2 Product  Define product
9.3 Branding  Define Branding
9.4 Services Marketing  Identify Service Marketing
 Kotler, P and Keller, K L.(2016) Marketing Management. Pearson: Cape Town.
MANCOSA 62
9.1 Introduction
A product is a key element in marketing. Marketing-mix planning begins with formulating an offer to meet target
customers’ needs and wants. The customer will judge the product by three basic elements, product features and
quality, service mix and quality and price appropriateness. These three elements must be combined into a
competitively attractive offering.
9.2 Product
A product is anything that can be offered to a market to satisfy a want or need. Products include more than just
tangible goods. Broadly defined, products include physical objects, services, events, or mixes of these. Services
are a form of product that consists of activities, benefits or satisfactions offered for sale that are essentially
intangible and do not result in ownership of anything, e.g., banking services, hotel industry, etc.
Level of Products
Product planners need to think about products and services on three levels.
 Core Products – The core product stands at the centre of the total product. When designing products,
marketers must define the core benefits the product will provide to consumers. They must understand the
total consumer experience that surrounds the purchase and use of a product. E.g., a lipstick may be more
than lip colour, it may mean looking more attractive, looking youthful, making a consumer feel good about
herself.
 Actual Product – An actual product is built around the core product. Actual products may have as many as
five characteristics, quality level, features, design, brand name and packaging. E.g., a lipstick may be
presented in an attractive packaging to encourage customers to start using that particular brand of lipstick.
 Augmented Product – Augmented product is built around the core and actual product. It offers additional
customer services and benefits. E.g., if a person buys a Sony Digital Camera, then he may get a buyer’s
warranty on parts and workmanship or a quick repair service and a toll free number to call for problems or
questions.
Product Classification
Products and services fall into two broad classes based on the type of consumers that use them, viz. consumer
products and industrial products.
63 MANCOSA
Consumer Products
Consumer products are those that are bought by final consumers for personal consumption, these include:
 Convenience Products – These are products and services that customers usually buy frequently,
immediately and with minimum comparison and buying effort. Convenience products are low priced and
readily available. E.g. soaps, milk, candy, newspaper etc.
 Shopping Products – These are consumer products and services that customers compare carefully on
suitability, quality, price and style. Shopping products are usually distributed through fewer outlets but have
more sales support. E.g., furniture, clothing, major household appliances etc.
 Speciality Products – These are consumer products and services with unique characteristics or brand
identification for which a significant group of buyers is willing to make a special purchase effort. Buyers
normally do not compare speciality products and invest only time needed to purchase the product. E.g., luxury
cars, designer clothes, services of specialist doctors etc.
 Unsought Products – These are consumer products and services that the consumer either does not know
about or knows about but normally does not think of buying. Unsought products require a lot of advertising,
personal selling and other marketing efforts. E.g., products offered by banks, life insurance agencies etc.
Industrial Products
Industrial products are those purchased for further processing or use in conducting a business. The three groups
of industrial products and services include:
 Materials and Parts – These include raw materials and manufactured materials and parts. Most material and
parts are sold directly to industrial users. Price and service are major marketing factors; brand and advertising
tend to be less important.
 Capital Items – These are industrial products that aid in buyer’s production or operation including installation
and accessory equipment, e.g., generators, elevators etc.
 Supplies and Services – Supplies include operating supplies like lubricants, coal, stationery, and repairs and
maintenance items like nails, paint etc. Supplies are convenience products of the industrial field. Business
services include maintenance and repair services, e.g., cleaning of factory premises, repairs of equipment
etc., and business advisory services like legal or management consultancy services.
Individual Product Decisions

Individual product decisions have many variables, viz. product attributes, branding, packaging and labelling.
Product Attributes
Developing a product or service involves defining the benefits that it will offer. These benefits are communicated
and delivered by product attributes such as quality, features, style and design.
MANCOSA 64
 Product Quality – Product quality is the ability of a product to perform its function. It includes the product’s
overall durability, reliability, precision, ease of operation and other valued attributes. Product quality has two
dimensions, level and consistency. Quality level of a product should be such that it supports the product’s
position in the target market. E.g., a Rolls Royce provides higher performance quality than a BMW. The other
aspect of product quality is consistency, which means that products must be consistent in their level of
performance.
 Product Features – A product can be offered with varying features. Features are a competitive tool for
differentiating a firm’s products from the competitor’s products. Features that customers value little in relation
to cost should be dropped while those that customers value highly in relation to cost should be added.
 Product Style and Design – Style describes the appearance of the product. A sensational style may grab
attention, but it does not necessarily make the product perform better. Design goes to the very heart of the
product. Good design contributes to the product’s usefulness as well as its looks. Black and Decker have a
reputation for outstanding style and design in cordless appliances and tools.
9.3 Branding
A brand is a name, term, sign, symbol, or design, or a combination of these factors, intended to identify the goods
or services of one seller or group of sellers and to differentiate them from those of competitors. A brand can convey
up to six levels of meaning.
 Attributes – A brand first brings to mind certain attributes. A Sony television conveys expensive, well built,
well-engineered, durable, good quality product
 Benefits – Customers do not buy attributes, they buy benefits. The television should be durable, can be
translated into the benefit that it should have a long life, good quality can be translated into good picture, good
sound etc
 Values – The brand also says something about the producer’s values. Sony stands for high performance,
durability and so on
 Culture – The brand may represent a certain culture. Sony represents Japanese culture, high efficiency, high
quality, organised and so on
 Personality – The brand can also project a certain personality. Sony may represent a sleek and elegant
product
User – The brand suggests the kind of consumer who buys or uses the product. The users will be those who
respect the product’s values, culture and personality.
Branding is a major issue in product strategy. Branding is expensive and time consuming and can make or break
a product.
65 MANCOSA
Brand Equity
Brands vary in the amount of power and value they have in the market place. A powerful brand has high brand
equity. The brand equity is the value of a brand based on the extent to which it has high brand loyalty, name
awareness, perceived quality, strong brand association and other assets such as patents, trademarks and channel
relationships.
A brand with a strong brand equity is a very valuable asset. Measuring the actual equity of a brand name is difficult.
However, according to one estimate, the brand equity of Coca Cola is USD 84 Billion and that of Microsoft USD
57 Billion.
A high brand equity provides a high level of consumer brand awareness and loyalty. The brand name carries high
credibility and this enables the firm to launch new products and brand extensions easily. A brand is also a powerful
tool against price competition.
Brand Name Decision

Firms which decide to brand their products must choose a brand name. Among desirable qualities for a brand
name are:
 A brand should suggest something about a product’s benefits
 A brand should suggest product qualities
 A brand name should be easy to pronounce, recognise and remember.
 A brand name should be distinctive
 A brand name should not carry a different or a poor meaning in other countries or languages, e.g., Nova is a
name for a car, but if sold in Spanish speaking countries, it would be a poor brand, as it means “Doesn’t go”
in Spanish
Brand Strategy
A company has four choices when it comes to brand strategy.
 Line Extensions – Existing brand names extended to new forms, sizes, or flavours of an existing product
category.
 Brand Extensions – Existing brand names extended to new product categories
 Multibands – New brand names introduced in the same product category
 New Brands – New brand names in new product categories
MANCOSA 66
Activity
Choose a company of your choice and show how the company has used brand
extension as a strategy to increase sales.
Packaging and Labelling

Packaging includes the activities of designing and producing the container or wrapper for a product. The package
might include up to three levels of materials, viz. primary package, i.e. a cardboard box, secondary package, i.e.,
a corrugated box to pack 10 cardboard boxes and shipping package i.e., a pallet which contains many cardboard
boxes.
Developing effective packing for a product requires several decisions.

 First task is to establish the packaging concept. The packaging concept defines what the package should
basically be or do for the particular product. E.g., should it offer more protection or should it make the product
attractive?
 Once the packaging concept has been determined, decisions need to be made on additional packaging
elements, like size, shape, material, colour, and text
 After the packaging is designed, it needs to be tested
Developing effective packaging may be costly and may take from a few months to a year. The importance of
packaging cannot be over-emphasized, considering that it performs the function of attracting and satisfying
customers. Well-designed packages can create convenience value for customers and promotional value for
producers.
E.g. plastic carry bags of Nike may be reused by customers to carry other products, but will be visible and create
promotional value for Nike.
Physical products also require labelling for identification, possible grading, description and product promotion.
Sellers may be required by law to present certain information on the label to protect and inform consumers. E.g.,
“Tobacco smoking is injurious to health” must be printed on all cigarette packets.
9.4 Services Marketing

Services are characterised by four key elements:
Intangible – Services are intangible, i.e. they cannot be seen, touched, felt, smelt or tasted.
Inseparable – Services are inseparable from their service providers.
Variable – Quality of services depend on who provides them and when, where and how.
Perishable – Services cannot be stored for later sale or use.
67 MANCOSA
Good service firms focus attention on both, customers and employees. Services marketing strategy calls not only
for external marketing, but also for internal marketing to motivate employees to create service delivery skills and a
drive to succeed.
Knowledge Check Questions z
1. Discuss the three levels of products and services that product planners
need to understand.
2. Describe the two broad classifications of products and services that

consumers use.
Discuss in detail the variables that influence individual consumers in product

decision making.
MANCOSA 68
Unit
10: Pricing Strategies
69 MANCOSA
10.2 New Product Pricing Strategies  Identify product pricing strategies
10.3 Product-Mix Pricing Strategies  Understand Product-Mix Pricing Strategies
10.4 Price Changes  Understand price changes
 Kotler, P and Keller, K L. (2016) Marketing Management. Pearson: Cape Town.
MANCOSA 70
10.1 Introduction
Pricing decisions are incredibly complex and are determined by environmental and competitive forces. A firm set
not a single price, but rather a pricing structure that covers different products in its line. The pricing structure
changes as products move through their life cycles. The firm adjusts product prices to reflect changes in costs and
demands as well as the in competitive environment.
10.2 New Product Pricing Strategies

The introductory stage of a product is challenging, as firms’ have to set the price for the first time. They can choose
between two broad strategies, market – skimming pricing and market – penetration pricing.
Market – Skimming pricing: Market – skimming pricing is setting a high price for a new product to skim maximum
revenue layer by layer from the segments willing to pay the high price. With this strategy, the firm makes fewer buy
more profitable sales. Intel is one of the users of this strategy. Market – skimming makes sense only under certain
conditions.
 The product’s quality and image must support its high price
 Enough buyers must want the product at that price
 The cost of producing a small volume should not be high
 Competitors should not be able to enter the market easily or undercut the high price
Market – Penetration pricing: Market – penetration pricing is setting a low price for a new product in order to
attract a large number of buyers and a large market share. Here, the firm sets its initial price at a low level in order
to penetrate the market quickly and deeply. This results in high sales volumes and consequently lower costs
allowing the firm to cut its prices even further. Several conditions must be met for this low price strategy to work.
 The market must be highly price sensitive so that a low price produces more market growth.
 Production and distribution costs must fall as sales volumes increase.
 The low price must keep out competition; otherwise the price advantage may only be temporary.
10.3 Product-Mix Pricing Strategies

The strategy for setting a product’s price often has to be changed when the product is part of a product-mix. In
such cases, the firm looks for a set of prices that maximises the profits on the total product-mix. Product-mix pricing
is difficult because various products have related demand and cost structures and face varying competition. The
five product-mix pricing situations are:
Product Line Pricing

Firms usually develop product lines rather than single products. E.g., Kodak offers not just one type of film, but
also several types, including regular Kodak film, higher priced Kodak Royal Gold film, Black and White film, etc. It
offers each of these brands in a variety of sizes and film speeds. In product line pricing, management must decide
on the price steps between the various products in a line.
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This is based on cost differences between a product, customer evaluation of different features of a product, and
competitors’ prices for similar products.
Optional Product Pricing

Many firms use optional product pricing, e.g., a car buyer may choose to order power windows, cruise control,
leather seats, air conditioning, and other similar options. Manufacturers have to decide which items to include in
the base price and which others to offer as options. The pricing of optional or accessory products along with a main
product is optional product pricing.
Captive Product Pricing

Firms that make products that must be used along with a main product are using captive product pricing. E.g.,
razor blades, camera films, video games, computer software. Producers of main products often price them low
and set high mark ups on the subsidiary product. Gillette sells low priced razors, but makes money on the
replacement cartridges.
By-Product Pricing
In producing certain products like processed meats, petroleum products, chemicals, etc., there are, often, by-
products. If the by-products have no value, and the cost of disposing them is high, then this cost will be added to
arrive at the price of the main product. Manufacturers, therefore, seek a market for these products and sell them
at a price that covers more than the cost of storing and delivering them. This allows the manufacturer to reduce
the cost of the main product and make it more competitive. E.g., many lumber mills sell bark chips and sawdust
profitably as decorative items for commercial landscaping.
Product Bundle Pricing

Product bundle pricing means that sellers combine several of their products and offer the bundle at a reduced
price. E.g., computer makers include attractive software packages with their computers.
Price bundling can promote the sales of products consumers might otherwise not buy. It is important that the
combined price must be low enough to get them to buy the bundle and for the firm to make a profit.
Price Adjustment Strategies

Firms usually adjust their basic price to account various different customers and changing situation. The various
price adjustment strategies are:
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Discount and Allowance Pricing

Many firms adjust their prices to reward customers for certain responses, such as, early payment of bills, bulk
volume purchases and off-season buying. These price adjustments are called discounts and allowances and may
take many forms:
Cash Discount – A cash discount is a price reduction to buyers who pay their bills promptly
Quantity Discount – A quantity discount is a price reduction to buyers who buy large volumes
Functional Discount – A functional discount is offered by the seller to trade channel members who perform functions
such as selling, storing and record keeping
Seasonal Discount – A seasonal discount is a price reduction to buyers who buy goods or services out of season
Allowances – Allowances is promotional money paid by manufacturers to retailers in return for an agreement to
feature the manufacturers products in a particular way.
Segmented Pricing
In segmented pricing, the firm sells a product or service at two or more prices even though the difference in price
is not based on differences in cost. Segmented pricing takes several forms:
Customer Segment Pricing – Under customer segment pricing, different customers pay different prices for the
same product or service. E.g., pensioners and learners are charged lower rates than adults at museums, parks,
exhibitions, etc.
Product Form Pricing – Under product form pricing, different versions of the product are priced differently but not
according to difference in their cost. E.g., Phillips prices its most expensive iron at R269 and the next one is priced
at R220, however, the different in the price does not indicate the extra price for the additional features that the
expensive product has.
Location Pricing – Using location pricing, a firm charges different prices for different locations, even though the
product may be the same. E.g., Pick and Pay and other supermarkets have priced their products differently at
different locations, depending on the market segment’s ability to pay.
Time Pricing – Using time pricing, a firm varies its price by the season, the month, day or even time. E.g., Telkom
charges a lower rate during Call more hours as compared to normal hours. For segmented pricing to be effective,
the market must be segmental and the segments must show
different degrees of demand. Segmented pricing must reflect real differences in customers perceived values
otherwise, in the long run; it can lead to customer resentment and ill will.
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Psychological Pricing
In using psychological pricing, sellers consider the psychology of prices and not simply the economics. E.g., one
study found that consumers perceived higher priced cars as having higher quality. Psychological pricing is useful
when consumers cannot judge quality because they lack information and skill and price becomes an important
quality signal.
Promotional Pricing
With promotional pricing, firms or manufacturers will temporarily price their products below list price and sometimes
even below cost. Promotional pricing takes several forms. Supermarkets and departmental stores will price a few
products at a low price to attract customers to the store and hope they will buy other items at normal mark-ups.
When a new shopping mall opened in Umhlanga, Durban, most shops offered opening discounts and special prices
to lure customers to visit them for a “trial” purchasing experience and hope that the price and service would convert
them to repeat customers.
Geographical Pricing
A firm must decide how to price its products for customers located in different parts of the country or world. Here,
the firm has to decide whether to pass on the cost of shipping, transporting to customers who are far away or have
uniform pricing for everyone. E.g., petrol pricing in South Africa is different in different areas, depending upon the
distance from the refineries.
International Pricing
Firms that market their products internationally must decide what prices to charge in the different countries that
they operate in. The price that a firm should charge in a specific country depends on many factors, like economic
conditions, competitive situations, laws and regulations, consumer preferences and perceptions. A McDonald’s Big
Mac costs R 17,50 in South Africa, but it costs GBP 2.50 (Rands 40 at December 2002 exchange rates) in the
United Kingdom.
10.4 Price Changes

After developing their pricing structure and strategies, firms often face situations in which they must initiate price
change or respond to price changes by competitors.
Initiating Price Changes

Firms may initiate price changes by either a price cut or a price increase.
Initiating Price Cuts – Several situations may lead a firm to consider cutting its price.
 Excess capacity – in this case, the firm needs more business and cannot get it through increased sales efforts
or other measures. Hence it may cut prices to boost sales
 Falling market share – a firm may cut prices in a situation where its market share is falling in the face of strong
competition, e.g., when Japanese products entered the American market, the existing market could not
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compete against the Japanese whose high quality products carried lower prices and the American market
responded by aggressive price cutting
 Market domination – A firm may also cut price in a drive to dominate the market through lower cost. Bausch
and Lomb used an aggressive low cost, low price strategy to become an early leader in the competitive soft
contact lens market
Initiating Price Increases – A successful price increase can increase profits greatly. Major factors that lead to
price increases are:
 Cost inflation – rising costs lead to lower profit margins and the firms then pass on the cost increases to
consumers.
 Over demand – When a firm cannot supply all its customer’s needs, it raises prices to reduce the demand.
Firms can increase their prices in a number of ways. Prices can be raised by dropping discounts or adding high
priced units to the line. This way the price rise is not noticeable. Alternatively, prices can be pushed up openly by
passing price increases on to the consumers. Wherever possible, the firm should consider ways to meet high
demands or costs without raising prices. Price increases should be supported with a communication programme,
telling customers why prices are being increased.
Buyer Reactions to Price Changes

Customers do not always interpret price changes in a straightforward way. If Sony were to suddenly cut its VCR
prices, a buyer may think that the current model is about to be replaced by a newer model or the current model is
not selling well and has some defects. The buyer could also think that the price may come down even further and
it would pay to wait and purchase later.
Similarly, a price increase, which would normally lower sales, may have some positive meaning for some buyers.
E.g., if Sony was to raise the price of its VCRs, buyers may feel that this is a good product and has enhanced
features and there is a high demand, and hence may purchase it quickly before it is unobtainable. Alternatively,
buyers may view it as an expensive product and feel that Sony is being greedy and this could affect the reputation
of the firm.
Competitors Reaction to Price Changes

A firm considering a price change has to worry about the reaction of its competitors as well as its customers.
Competitors are more likely to react when the number of firms involved is small, when the product is uniform and
when the buyers are well informed.
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The competitors can interpret a firm’s price cut in many ways. It might think that a firm is trying to grab a larger
market share or that the firm is doing poorly and is trying to boost its sales or that the firm wants the competitors
also to cut prices to increase total demand.
When there are several competitors, different competitors will behave differently because of differences in size,
market share or policies. However, if some competitors match the price change, there is a good reason to expect
that the rest will also match it.
Activity
1. Visit four different supermarkets or stores in your area or different stores of

the same chain in different areas. Study the prices of 10 essential items in
each of these stores and compare the variations in the prices. What do you
think are the reason for price variations?

1. Which of the two strategies should a firm use in pricing new products – Market
skimming pricing or market penetration pricing? Why?
2. Explain how firms find a set of prices that maximises the profit from a total
product-mix.

Discuss how firms adjust their prices to take into account different types of
customers and situations.
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Unit
11: Distribution Channels
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11.2 The Need for Distribution Channels  Discuss Distribution channels
11.3 Setting Channel Objectives and  Identify Channel Objectives and Constraints
Constraints
11.4 Evaluating the Major Alternatives  Evaluating the Major alternatives
 Kotler, P and Keller, K L.(2016) Marketing Management. . Pearson: Cape Town.
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11.1 Introduction
Distribution channel is a set of interdependent organisations involved in the process of making a product or service
available for use or consumption by the consumers or business users. Marketing channel decisions are among the
more important decisions that management faces. A firm’s channel decisions directly affect every other marketing
decision. Each channel system creates a different level of revenues and costs and reaches a different segment of
target consumers. Management must make channel decisions carefully, incorporating today’s needs and
tomorrow’s likely selling environment. Some firms do not pay sufficient attention to their distribution channels, but
others use imaginative distribution system to gain competitive advantage.
11.2 The Need for Distribution Channels

The use of distribution channels or intermediaries results from their greater efficiency in making goods available to
target markets. Through their contacts, experience and specialisation as well as their scale of operations, they
usually offer more than what the firm can achieve on its own.
Firms make narrow assortment of products in large quantities. Consumers want broad assortments of products in
small quantities. In the distribution channels, intermediaries buy large quantities from many producers and divide
them into smaller quantities and broader assortments as required by the consumers. Thus the intermediaries play
an important role in matching supply and demand.
Distribution Channel Functions

The distribution channel moves goods and services from producers to consumers. It overcomes the major time,
place and possession gap that separates goods and services from their users. Members of the marketing channels
perform many key functions.
 Firstly, they help to complete transactions.

Information – Gathering and distributing marketing research and intelligence information about factors and
forces in the marketing environment needed for planning and aiding the sale.
Promotion – Developing and spreading persuasive communication about an offer or product.
Contact – Finding and communicating with prospective buyers.
Matching – Shaping and fitting the offer to the buyer’s needs, including activities such as manufacturing,
grading and packing.
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Negotiation – Reaching an agreement on price and other terms of the offer so that ownership or possession
can be transferred from the producer to the consumer.
 Secondly they help to fulfil the completed transactions.

Physical Distribution – Transporting and storing goods.
Financing – Acquiring and using funds to cover the cost of the channel work.
Risk Taking – Assuming the risks of carrying out the channel work.
Channel Levels
Distribution channels can be described by the number of channel levels involved. A layer of intermediaries that
performs some work in bringing products and ownership closer to the final buyer is a channel level. Channels may
be of two kinds:
Direct Marketing Channels – A direct marketing channel has no intermediary level. It consists of a firm selling
products or services directly to consumers. E.g., Avon, Amway, and Tupperware sell their products directly, door
to door, or through home and office sales parties.
Indirect Marketing Channels – Indirect marketing channels contain one or more intermediary levels. In consumer
marketing this level is typically a retailer. E.g., makers of televisions, cameras, furniture, major appliances, and
many other products sell their goods directly to large retailers such as Game, Dion, Makro etc., who then sell the
goods to the final consumers. The manufacturers of foods, drugs, hardware and other products use two
intermediary levels, a wholesaler and a retailer. Distribution channels may have even more levels. From the
producer’s point of view, greater number of levels means less control and greater channel complexity.
Channel Organisation
Historically, distribution channels have been loose collection of independent entities, each showing little concern
for overall channel performance. A conventional distribution channel consists of one or more independent
producers, wholesalers and retailers. Each is a separate business, seeking to maximise its own profits, even at
the expense of the profits for the system as a whole. No channel member has much control over the other members
and no formal means exist for assigning roles and resolving channel conflicts. These conventional distribution
channels have lacked strong leadership and have been troubled by conflict and poor performance. The recent
channel development has been:
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Vertical Marketing Systems – Vertical marketing systems (VMS) have emerged to challenge conventional
marketing channels. A vertical marketing system consists of producers, wholesalers, and retailers acting as a
unified system. One channel member owns the others, has contracts with them or is so powerful that others must
cooperate. The producer, wholesaler, or retailers can dominate this system. There are three major types of VMS:
 A Corporate VMS combines successive stages of production and distribution under single ownership, or,
channel leadership is established through common ownership. E.g., Edgars in South Africa obtains over 50%
of its goods from companies that it partly or wholly owns
 A Contractual VMS consists of independent firms at different levels of production and distribution who join
together through contracts to obtain more economies or sales than they could achieve alone
 An Administered VMS coordinates successive stages of production and distribution, not through common
ownership or contractual ties, but through size and power of one of the parties. Large retailers like Woolworth
can exert strong influence on the manufacturers that supply them the products they sell
Horizontal Marketing System – Horizontal marketing system is a channel arrangement in which two or more
firms at one level join together to follow a new marketing opportunity. By working together, firms can combine their
capital, production capabilities or marketing resources to accomplish more than what one company could do alone.
E.g., McDonald sells Coke, while KFC sells Pepsi. This way both the fast food outlets and the soft drink companies
have combined resources to improve their distribution.
Hybrid Marketing System – Hybrid marketing system is a multi-channel distribution system in which a single firm
sets up two or more marketing channels to reach one or more customer segment. Hybrid channels offer many
advantages to firms facing large and complex markets. With each new channel, the company expands its sales
and market coverage and gains opportunities to tailor its production and services to specific needs of diverse
customer segments. IBM uses such a hybrid channel effectively. For years IBM sold computers only through its
own sales force, which only sold its large system to business customers. However, with the competition hitting up
in the computer market, IBM had to change its distribution channel. IBM added 18 channels in less than 10 years.
In addition to selling through its own sales force, IBM also sells through a comprehensive network of distributors
and resellers who sell IBM computers, to a variety of special business segments. Final customers can now buy
from speciality computer stores or large retailers.
Channel Design
In designing marketing channels, manufacturers struggle between what is ideal and what is practical. Deciding on
the best channel might not be a major problem. The problem might be how to convince one or more intermediaries
to handle the line. For maximum effectiveness, channel must be purposeful, hence designing a channel system
calls for analysing consumer service needs, setting channel objectives and constraints, identifying major
alternatives and evaluating them.
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Analysing Consumer Service Needs

Designing the distribution channel starts with finding out what the target consumers want from the channel. Do
consumers want to buy from nearby locations? Or are they willing to travel to more centralised locations? Do they
want many add on services? Or will they obtain these elsewhere? Similar questions need to be answered. The
firm and its channel members may not have the resources or skills needed to provide all the desired services. Also,
providing high level of services can result in high costs and higher prices for consumers. The firm must balance
consumer service needs against the feasibility and costs of meeting these needs and also against customer price
preferences.
11.3 Setting Channel Objectives and Constraints

Channel objectives should be stated in terms of desired service levels of target consumers. The firm should decide
which segments to serve and the best channels to use in each segment. The firms channel objectives are
influenced by the nature of the product, marketing intermediaries, competitors and the environment. E.g., the firm’s
size and financial condition determine which marketing function it can handle itself and which it must give to the
intermediaries.
Environmental factors such as economic conditions and legal constraints may affect channel objectives and
design. E.g., in a depressed economy, producers want to distribute their goods in the most economical way, using
shorter channels and dropping special services that add to the final price of the goods.
Identifying Major Alternatives

When the firm has defined its channel objectives, it should next identify its major channel alternatives in terms of
types of intermediaries, the number of intermediaries and the responsibility of each channel member.
Types of Intermediaries – A firm should identify the types of channel members available to carry out its channel
work. These may include:
 Firm’s sales force.
 Manufacturers agency.
 Industrial distribution.
Number of Marketing Intermediaries – Firms must determine the number of channel members to use at each level.
Three strategies are available:
 Intensive distribution, i.e., stocking the product in as many outlets as possible, e.g., toothpaste, chocolates
and other similar products are sold in millions of outlets to provide maximum exposure
 Exclusive distribution, i.e., giving a limited number of dealers the exclusive rights to distribute the firm’s
products in their territories. Exclusive distribution is often found in the distribution of new automobiles and
branded clothing
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 Selective distribution, i.e. distribution which uses more than one but fewer than all of the intermediaries who
are willing to carry the firm’s products. Selective distribution lies in between intensive distribution and
exclusive distribution. Most television, furniture, and small appliance brands are distributed in this manner
Activity Question
Discuss how channel members interact and how they organise to perform the
work of the channel.
11.4 Evaluating the Major Alternatives

Each alternative channel should be evaluated against economic, control and adaptive criteria.
Economic Criteria – Using economic criteria, a firm compares the likely profitability of different channel
alternatives. It estimates the sales that each channel would produce and the costs of selling different volumes
through each channel.
Control Issues – The firm must also consider control issues. Using intermediaries usually means giving them
some control over the marketing of the product. Some intermediaries take more control than others. Other things
being equal, the firm would prefer to keep as much control as possible.
Adaptive Criteria – The firm must apply adaptive criteria. Channels often involve long term commitment to other
firms making it hard to adapt the channel to the changing marketing environment. The firm wants to keep the
channel as flexible as possible. Thus a channel involving long term commitment is greatly superior on economic
and control grounds.
Channel Logistics
Producers must decide on market logistics, i.e., the best way to store and move their goods to their market
destination. The logistical tasks are to coordinate the activities of suppliers, purchasing agents, manufacturers,
marketers, channel members and customers. Advances in information technology have helped to improve the
logistic efficiency. The cost of market logistics can be high, but a well-planned market logistic programme can be
a potent tool in a competitive market. The ultimate goal of market logistics is to meet customer requirements in an
efficient and profitable way.
Logistics managers make four major decisions:

Order Processing – How should orders be handled?
Warehousing – Where should stocks be located?
Inventory – How much stock should be held?
Transportation – How should goods be transported?
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The integrated logistics concept recognises that improved logistics requires teamwork in the form of close working
relationships across functional areas inside the firm and across various organisations in the supply chain. Firms
can achieve logistics harmony among functions by creating cross functional logistics team and senior level logistics
executive. Channel partnerships can take the form of cross company teams, shared projects and information
sharing systems. Today, many firms are outsourcing their logistics functions from third party logistics providers to
save costs, to increase efficiency, and gain faster and more effective access to global markets.
1. Identify the major channels of distribution alternatives open to a firm.
2. Discuss the alternatives that firms use to evaluate the major alternatives.
 Identify the four major decisions that logistics managers make in meeting
customer requirements.
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Unit
12: Advertising and Sales
Promotion
85 MANCOSA
12.2 Developing and managing an  Developing and managing an advertising programme

advertising programme
12.3 Sales Promotion  Discuss sales promotion
12.4 Developing the sales promotion  Understand Sales promotion programme

programme

Town.
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12.1 Introduction
It is not sufficient for the firms to make good products. They have to inform consumers about product benefits, and
carefully position products in the consumer’s mind. To do this, they need to employ mass promotion tools like
advertising and sales promotion in addition to personal selling.
12.2 Developing and Managing an Advertising Programme

Advertising is one of the most common tools firms use to target buyers and public. Advertising is any paid form of
non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. Advertisers include
not only business firms but also government agencies, charitable organisations that advertise to various target
public. Advertisements are cost effective ways to pass on a message whether to build a brand preference for a
product or to educate people about a theme, such as AIDS awareness, organ donation programmes, etc.
In developing an advertising programme, marketing managers must start by identifying target markets and buyer’s
motives. Thereafter, they need to make five major decisions in developing an advertising programme. These five
Ms are:
Mission – What are the advertising objectives?
Money – How much can be spent?
Message – What message should be sent?
Media – What media should be used?
Measurement – How should the results be evaluated?
12.2.1 Mission
The first step in developing an advertising programme is to set its mission or its advertising objectives. Advertising
objectives can be classified according to whether their aim is to inform, persuade or remind.
Informative Advertising – This is used mainly in the introductory stage of a product where the objective is to build
primary demand. Thus the yoghurt manufacturer had to initially inform consumers of the benefits of yoghurt.
Persuasive Advertising – This form of advertising becomes important in the competitive stage where a firm’s
objective is to build selective demand for a particular brand or product. Most advertising falls into this category.
Advertisements for Rolex watches attempt to persuade consumers that it delivers more status than any other brand
of watches.
Reminder Advertising – This form of advertising is highly important for mature products. Coca Cola
advertisements have the purpose not of informing or persuading, but of reminding consumers to purchase Coca
Cola. A related form of advertising is reinforcement advertising which seeks to assure current purchasers that they
have made the right choice. Automobile advertisements often depict a satisfied customer enjoying special features
of a new car.
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Activity
Advertising objectives can be classified by primary purpose: to inform, to persuade

or to remind. Using your local newspaper or a magazine, find examples of
advertisements pursuing each of the above objectives. Explain your answers, using
the 5 Ms of advertising.
12.2.2 Money
There are five specific factors to consider when setting the advertising budget.
Stages in the Production Life Cycle – New products typically receive large advertising budgets to build
awareness and gain consumer trials. Established brands are usually supported with lower advertising budgets.
Market Share and Consumer Base – High market share brands usually require less advertising expenditure as
a percentage of sales. Products that need to build their market share require larger advertising expenditure.
Competition and Clutter – In a market with a large number of competitors and high advertising spending, a brand
must be advertised more heavily to be heard above the noise in the market.
Advertising frequency – The number of repetitions needed to put across the brand’s message to consumers has
an important impact on the advertising budget.
Product substitutability – Brands in a commodity class, e.g., soft drinks, toothpastes, soaps, etc. require heavy
advertising to establish a differential image.
12.2.3 Message
To gain and hold attention of consumers, advertising messages must be planned, imaginative, entertaining, and
rewarding.
Message Strategy
Identifying Benefits – The first step in creating effective advertising messages is to decide what general message
will be communicated to consumers. The purpose of advertising is to get consumers to think about or react to the
product or firm in a certain way. Thus, developing an effective message strategy begins with identifying customer
benefits that can be used as advertising appeals.
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Creative Concept – Message strategy statements tend to be plain, straightforward outlines of benefits and
positioning points that the advertiser wants to stress. The advertiser must next develop a compelling creative
concept that will bring the message to life in a distinctive and memorable way.
Advertising Appeals – Advertising appeals should have three characteristics:

 First they should be meaningful, pointing out benefits that make the product desirable and interesting to
consumers.
 Secondly, appeals must be believable. Consumers must believe that product or service will deliver the
promised benefit.
 Thirdly, appeals should be distinctive. They should tell how the product is better than the competing brands.
The most meaningful benefit of owning a wristwatch is to keep accurate time, yet few watch advertisements feature
this benefits. For years, Timex has been projected as the affordable brand. In contrast, Swatch has featured style
and fashion and Rolex stresses luxury and status.
Message Execution
The creative people must find the best style, tone, words and format for executing the advertising message. Any
message can be presented in different execution styles like:
Lifestyle – This style shows how a product fits in with a particular lifestyle. E.g., Chivas Regal projects an image
of a gracious lifestyle.
Fantasy – This style shows creates a fantasy around the product or its uses. E.g., Red bull gives you wings.
Mood or Image – This style builds a mood or image around the product such as beauty or serenity, e.g., Mauritius
tourism creates an image of relaxed holiday. The advertiser must use memorable and attractive diction in the
advertisement, e.g., “BMW is a well-engineered automobile” is a simple claim, whereas “BMW – the ultimate driving
experience” is a more creative and higher impact phrase.
12.2.4 Media
The major steps in selecting advertising media are:
Reach, frequency and impact – Reach is a measure of percentage of people in the target market who are
exposed to the advertising campaign during a given period of time. E.g., the advertiser may reach 75% of the target
market during the first two months of the campaign.
Frequency is a measure of how many times the average person in the target market is exposed to the message.
The advertiser must decide on the desired media impact of a message through a given medium. E.g., the message
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may have more impact on television than on radio as television uses audio and video effects. In general, the more
reach, frequency and impact the advertiser seeks, the higher will the advertising budget have to be.
Choosing the Media – Media planners consider many factors when making their media choices.
 Media to which the target consumers are exposed, e.g., advertisements of children’s products during a cartoon
show on television
 Nature of the product, e.g., fashions are best advertised in colour magazines or on television
 Different types of messages may require different media, e.g., a major sale in the next two days will require
television or radio advertisement or newspapers, whereas a sale next month could be advertised in
magazines, through direct mailers or on-line
 Cost is another major factor in media choice, e.g., network television is very expensive, whereas newspaper
or radio advertisement is relatively cheaper
Deciding on media timing – The advertiser must also decide on how to schedule advertising over the course of
a year. Suppose the sales of a product peak in December and drop in March, the firm can vary it’s advertising to
follow the seasonal pattern, or to oppose the seasonal pattern, or to be same all year round. Finally, the advertiser
has to choose the pattern of the advertisements.
12.2.5 Measurement of the Advertisement Effect

The advertising programme should evaluate both, the communication effect and the sales effect:
Communication Effects – Measuring the communication effects of an advertisement tells whether the
advertisement is communicating well. Before the advertisement is placed, the advertiser can show it to the
consumers and ask them how they like it and measure recall or attitude changes resulting from it. After the
advertisement is run, the advertiser can measure how the advertisement affected consumer recall or product
awareness, knowledge or preference.
Sales Effects – The sales effect of advertising is harder to measure than the communication effects. Sales are
affected by many factors besides advertising, such as, product features, price and availability. One way to measure
the sales effect of advertising is to compare past sales with past advertising expenditure.
12.3 Sales Promotion

Sales promotion consists of short-term incentives to encourage the purchase or sale of a product or service.
Advertising and personal selling offer reasons to buy a product or service but sales promotion offers reasons to
buy the products just now. E.g., sales promotion of Dove soap in a supermarket consists of a 50c price reduction
voucher, sales promotion of a new perfume consists of a sales person spraying the new perfume for interested
passers-by in a shopping mall.
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12.3.1 Sales Promotion Objectives

Sales promotion objectives vary widely. Sellers may use consumer promotions to increase short-term sales or to
help build long term market share. It is preferable for sales promotions to build consumer relationship. Rather than
create only short-term sales or temporary brand switching, sales promotion schemes should help reinforce the
product’s position and build long-term relationships with consumers. South African Airways’ Voyager Programme
is intended to encourage its customers to use its service often and build long-term relationships.
12.3.2 Major Sales Promotion Tools

Many tools can be used to accomplish sales promotion objectives:
Samples – Samples are offers of a small amount of a product to consumers for a trial. E.g., when a new shampoo
is introduced in a market, producers often give away small sachets of the shampoo as a sample to consumers in
supermarkets or through direct mailing or door-to-door.
Coupons – Coupons are certificates that give buyers a saving when they purchase specified products. E.g., a
discount coupon may be given along with the product in a supermarket which will enable the customer to purchase
the product at a lower price.
Cash Refund Offers (Rebates) – Offer to refund part of the purchase price to consumers who send a proof of
purchase to the manufacturer is called a cash refund offer or a rebate.
Point of Purchase Promotion – Point of purchase promotions include displays and demonstrations that take
place at the point of purchase or sale. E.g., display signs and posters might be put by manufacturers in
Supermarkets next to their product display.
12.3.3 Trade Promotion Tools

Trade promotion tools include discounts and allowances.
Discount – Discount is a straight reduction in price on purchases during a stated period of time. Discount offers
encourage dealers to buy in bulk quantities and carry new items, and encourage customers to buy and pay
immediately.
Allowances – Manufacturers may offer an allowance in return for retailers’ agreement to feature the
manufacturer’s product in a certain way. An advertising allowance compensates the retailer for advertising the
product. A display allowance compensates for using special displays.
Manufacturers may give retailers free speciality advertising items, such as pens, diaries, calendars, and memo
pads, which carry the firm’s logo and name. This is an indirect advertisement for the product.
91 MANCOSA
12.4 Developing the Sales Promotion Programme

The marketer must make several decisions in order to define the full sales promotion programme.
These include:
Size of the Incentive – First the marketer must decide on the size of the incentive. A certain minimum incentive
is necessary if the promotion is to succeed. A larger incentive will produce more sales response.
Conditions for Participation – The marketer must also set conditions for participation, e.g., who is eligible to
receive the incentive.
Promote and distribute the promotion – The marketer must decide how to promote and distribute the promotion
programme itself. A discount coupon could be given out in a package or at a store or by mail or in an advertisement.
Each distribution method involves a different level of reach and cost.
Length of the Promotion – The length of the promotion is also important. If the sales promotion period is too
short, many prospective buyers might miss it. If the promotion runs for a long period of time, the deal will lose
some of its importance and not encourage the customers to act immediately.
Evaluation – Evaluation of the sale promotion programme is very important. Manufacturers can use one of the
many methods of evaluation. The most common method is to compare sales before, during and after a promotion.
Another method is to conduct a survey to find out what kind of people responded to the promotion and what they
did after the promotion ended.
Think Point
1. Describe the major decisions involved in developing an advertising

programme.
2. Explain the major sales promotional tools that ca be used to
accomplish sales promotion objectives

1. Discuss the decisions that a marketer must make in order to define the
full sales promotion.
MANCOSA 92
Answers to self-test and Think Point Questions

Knowledge Check Questions - Unit 1
1. What do you understand by “Marketing”?
Answer:
Marketing according to the CIM, England is a process of management responsible for identifying, anticipating and
satisfying customers’ need and wants profitably.
2. What is the single biggest difference between the marketing concept and the production, product and selling
concepts? Which concepts are easier to adopt in the short run? Which concept offers the best chances of
long run success? Why?
Answer:
 Marketing concept centers on customer long –term customer relationships
 Product concept centers on product and service quality
 Production concept centers on availability of goods and services in the right time and at the right place and
in required quantities
 Selling concept centers on promotion
 Selling concept is easier to adopt as it involves the use of the promotional mix elements to promote the
products
 Marketing concept (long-term customer relations) will provide a long term success to the company
Answers to Think Point Questions – Unit 1

Question 1: Explain how the 4ps of marketing corresponds to the customers’ 4 C’s
Answer.
 Product as an element of the marketing mix is aimed providing Customer solutions through satisfaction and
giving customer life time value
 Price involves the Customer Cost. The customer pays price on the product or services
 Place must offer great Convenience to the customer when buying goods and services
 Promotion involves Communication to the customer about the offerings of the organization
Question 2: Explain the difference between the marketing mix and the promotional mix?
Answer:
 Marketing mix consists of the 4ps which are normally referred to as the elements of the marketing mix
(product, price, promotion and place)
 Promotional mix refers to the integrated communication or promotional mix elements of advertising, sales
promotion, personal sales, public relations, publicity and direct sales promotion)
93 MANCOSA
Think Point – Unit 2

Question 1: South Africans are becoming more and more concerned about natural environment. How would this
trend affect manufacturers of plastic shopping bags?
Answer Guide:
 Government regulations (increased government intervention) may prohibit or scale down on the use of raw-
materials used to produce plastic bags and there is likely to be a shortage of plastic bags for retail
companies in the industry
 Manufactures will be affected with reduced production of plastic bags due to shortage of raw-materials
resulting into reduced sales
 High costs are likely to be incurred in terms of research and development for alternatives
Question 2: Explain the threats that may result from the economic and political environment.
Answer Guide:
 Increase in interest rates may slow down consumer borrowing from financial institutions
 Increase in exchange rates depreciates the currency and becomes costly to buy goods and services on the
international markets
 High taxation – corporate tax will erode the profitability of companies
 Changes in laws and regulations by the government may work against companies and individuals
 High rate of inflation may erode the buying power.
Knowledge Check Questions – Unit 2

What are the key macro environmental factors that affect a firm’s marketing strategies?
Answer Guide:
 Social
 Economic
 Legal
 Political
 Technological

Question 1:
Consumer buyer behaviour refers to the buying behaviour of the final consumers who buy goods and services for
personal consumption. Explain the factors that strongly influence consumer purchases?
MANCOSA 94
Answer Guide
 Cultural factors
 Social factors
 Personal factors
 Psychological factors
Question 2
Explain the decision process that consumers under go when making purchases of goods and services.
Answer Guide
 Need recognition
 Information search
 Alternative evaluation
 Purchase decision
 Post purchase decision
Knowledge Check Question – Unit 3

Explain the social factors that influence consumer behavior.
Answer Guide:
 Groups
 Family
 Roles and status
Question 1
Explain the main bases for segmenting consumer markets.
Answer Guide
 Geographic
 Psychographic
 Demographic
 Behaviour
95 MANCOSA
Question 2
Define Target Marketing by giving examples
Answer Guide
 Target Marketing is the process of selecting the best segment/s from a list of segments identified. A target
segment is one that suits the company’s business and aimed to give profits. The target market must be
accessed and large enough to do business.

Describe positioning by giving examples
Answer Guide
Positioning is the perception that consumers have in their minds about the company they buy from like: Shoprite
in terms of product quality, delivery, satisfaction, price and all elements about the company offerings to consumers.
Think Point Question – Unit 5
Question 1
Discuss the benefits of direct marketing to customers and marketers.
Answer Guide
Benefits to customers:
 Convenience
 Hassle free and time saving
 Customers can easily compare different products in different shops using catalogues
Benefits to sellers
 Better understanding of consumer needs and wants
 Production of consumer focused goods and services
 Relationship building
 Focused communication
Question 2
Identify the major forms of direct marketing
Answer Guide
 Face to face selling
 Tele-marketing
 Direct mail Marketing
 Fax, email, and voice mail
 Catalogue marketing
 Television marketing
MANCOSA 96

Identify the benefits of online marketing to consumers and marketers.
Answer Guide
Consumers:
 Interactive
 Immediate response
 Easily available information on services and products
Marketers:
 Builds consumer relationships
 Reduces costs
 Increases efficiency and provides flexibility
Think Point Question – Unit 6

Question 1
Explain the new product development process
Answer Guide
 Idea Generation
 Idea Screening
 Concept Development and Testing
 Marketing Strategy Development
 Business Analysis
 Product Development
 Test Marketing
 Commercialization

Explain the stages of the PLC and why marketing strategies change during the product’s life-cycle.
Answer Guide
Marketing strategies change at each stage of the PLC due to the following reasons:
 Customers’ needs and wants change over years
 Time lapse cause products to be obsolete and hence need for new products
 Competitive threats compel new ways of production, and marketing products
 Innovation strategies to achieve desired objectives
 Product expansion into new markets may require new strategies
97 MANCOSA
Think Point Questions – Unit 7

Question 1
Discuss the three levels of products and services that product planners need to understand.
Answer Guide.
Question Guide
 Core Products
 Actual Product
 Augmented Product
Question 2
Describe in detail the two broad classifications of products and services that consumers use.
Answer Guide
 Consumer Products
 Industrial Products

Discuss in detail the variables that influence individual consumers in product decision making.
Answer Guide
 Product attributes
 Branding
 Packaging
 Labeling

Question 1:
Which of the two strategies should a firm use in pricing new products – Market skimming pricing or market
penetration pricing? Why?
Answer Guide
 All the two pricing strategies for new products of skimming and market penetration can be used.
 Much depends on the following in the choice decision
 Target customers
 Firm’s objective
 Market competition
 Demand of the product
MANCOSA 98
Question 2:
Explain how firms find a set of prices that maximises the profit from a total product-mix.
Answer Guide
 Product line pricing
 Optional product pricing
 Captive product pricing
 By- product pricing
 Product bundle pricing
Self – Test assessment – Unit 8

Discuss how firms adjust their prices to take into account different types of customers and situations.
Answer Guide
 Discount and allowance pricing
 Segmented pricing
 Psychological pricing
 Promotional Pricing
 Geographical pricing
 International pricing

1. Identify the major channels of distribution alternatives open to a firm.
Answer Guide
 Vertical marketing system
 Horizontal marketing system
 Hybrid marketing system
2. Discuss the alternatives that firms use to evaluate the major alternatives.
Answer Guide
 Economic criteria
 Control issues
 Adaptive criteria
Self- Test Assessment Question – Unit 9

Identify the four major decisions that logistics managers make in meeting customer requirements.
99 MANCOSA
Answer Guide
 Order processing
 Warehousing
 Inventory
 Transportation

Question 1.
Describe the major decisions involved in developing an advertising programme.
Answer Guide
These are the 4Ms:
 Mission
 Money
 Message
 Media
 Measurement
Question 2
Explain the major sales promotional tools that ca be used to accomplish sales promotion objectives
Answer Guide
 Samples
 Coupons
 Cash refund offers
 Point of purchase promotion
MANCOSA 100
Self – Test Question – Unit 10

Discuss the decisions that a marketer must make in order to define the full sales promotion.
Answer Guide
 Size of the incentive
 Conditions for participation
 Promote and distribute the promotion
 Valuation
Revision Questions: Case Study

(Questions are mainly based on units 1, 2, 4, 6, 7, 8, 9 and 10 of the module guide)
Lifestyle (Pty) Ltd, manufactures Fast Moving Consumer Goods (FMCG) which are sold in many of its retail outlets
(shopping malls) country wide in South Africa. The financial results of Lifestyle (Pty) Ltd, have not been pleasing
in the past 3 years. As a marketing Director of the company, you are concerned with the poor trading results,
following the analysis of the company’s trading performance for the recent financial year ended 31 December 2019.
The following are the performance results of company Lifestyle (Pty) Ltd as at 31 December 2019:
 Sales of fast moving consumer goods (fmcg) declined by 50% in the past 12 months, to 31 December 2019.
 Profits in the same period (to 31 December 2019) declined unbelievable and now in loss making situation,
from a profit making company, 4 years ago and now in red.
 The market share declined by 20%. The biggest customers who frequented the company reduced their
business transactions as noticed from decline in the order book while some of them no longer trade with
company.
 The labour turnover in the company has risen by 30% in the last 3 years.
 Suppliers have since limited the supply of their raw materials required by company.
 According to the latest management accounts and age analysis, outstanding debtors increased from 30 days
to 120 days within 6 months.
 Trade Creditors’ days increased from 60 days to 120 days within the same 6 months’ period.
 Above all, it was discovered that some of the monthly expenses remain unpaid and utility companies supplying
water and electricity have threatened to take company Lifestyle (Pty) Ltd to task for the unpaid portion of the
bills.
101 MANCOSA
From the depicted information in the scenario, answer the following questions:
i. Describe how you can apply each element of the marketing mix (4Ps) as a strategy to improve the declining
sales turnover of company Lifestyle (Pty) Ltd (21 Marks)
ii. From the scenario, identify and describe the two major Micro environmental factors that cause threats to
company Lifestyle (Pty) Ltd in its trading activities. (4 Marks)
iii. Explain how Lifestyle (Pty) Ltd can use the five alternative concepts or marketing management philosophies
as a strategy in its marketing activities. (15 Marks)
iv. The marketing Director’s first course of action is to review opportunities for improving the business
performance of company Lifestyle (Pty) Ltd. Describe the market segmentation variables that can be used
as strategic tools to improve the sales and profitability of company Lifestyle (Pty) Ltd (20 Marks)
MANCOSA 102
Bibliography
103 MANCOSA
MANCOSA 104

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FUNDAMENTALS OF MARKETING

 Higher Certificate in Social Media and Communication 20 Credits

Unit 1: Understanding Marketing Management ....................................................................................................... 7

Unit 2: The Marketing Environment ....................................................................................................................... 14

Unit 3: Strategic Planning and the Marketing Process .......................................................................................... 19

Unit 4: Marketing Research and Information Systems .......................................................................................... 25

Unit 5: Consumer Buyer Behaviour....................................................................................................................... 35

Unit 6: Market Segmentation, Targeting and Positioning ...................................................................................... 42

Unit 7: Direct and Online Marketing ..................................................................................................................... 49

Unit 8: New Product Development and Product Life-Cycle Strategies .................................................................. 55

Unit 9: Product and Services Strategy .................................................................................................................. 61

Unit 10: Pricing Strategies..................................................................................................................................... 69

Unit 11: Distribution Channels............................................................................................................................... 77

Unit 12: Advertising and Sales Promotion............................................................................................................. 85

Bibliography ........................................................................................................................................................ 103

We hope you enjoy the module.

Contents and Structure

 Unit 1: Understand Marketing Management

 Unit 9: Distribution Channels

C. Learning Outcomes and Associated Assessment Criteria of this Module

D. Learning Outcomes of the Units

E. How to Use this Module

G. Prescribed and Recommended Textbook/Readings

Special Feature Icon Explanation

The Associated Assessment Criteria is the evaluation of the students’

PRACTICAL Practical Application or Examples will be discussed to enhance

APPLICATION understanding of this module.

Case Studies are included in different sections in this Module Guide.

You may come across links to Videos Activities as well as instructions

VIDEO ACTIVITY on activities to attend to after watching the video.

Unit Learning Outcomes

CONTENT LIST LEARNING OUTCOMES OF THIS UNIT:

1.1 Introduction  Introduce topic areas for the unit

1.2 Marketing Defined  Define of Marketing

1.3 Core Marketing Concepts  Outline Marketing concepts

1.4 The Marketing Mix  Discuss the Marketing mix

1.5 Summary  Summarise topic areas covered in unit

 Kotler, P and Armstrong G (2018). Principles of Marketing. Pearson: Cape

1.2 Marketing Defined

1.3 Core Marketing Concepts

Needs, wants and demand

Products and Services

Value, Satisfaction and Quality

Exchange, transactions and relationships

Marketing Management Philosophies

Societal Marketing Concept

1.4 The Marketing Mix

1Figure 1.3 – The Four P Components of the Marketing Mix

Source: Kotler and Keller (2012:47).

Product Customer solution

Price Customer cost

Knowledge Check Questions

1: Explain how the 4ps of marketing corresponds to the customers’ 4 C’s

Unit Learning Outcomes

CONTENT LIST LEARNING OUTCOMES OF THIS UNIT:

2.1 Introduction  Introduce topic areas for the unit

2.2 The Micro Environment  Describe the Micro environment

2.3 The Macro Environment  Outline the Macro environment

The Marketing Environment

2.2 The Micro Environment

2.3 The Macro Environment

Think Point questions

Responding to the Marketing Environment

Knowledge Check Questions