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University of Zululand
Faculty of Arts
Department of Communication Science
Marketing and Advertising
ACOM172
---------------------------------------------------------------------------------------------------------------------Lecturer: J.M. Magagula
Tel: (035) 902 7036
Fax: (035) 902 6082
Email: [email protected]/ [email protected]
---------------------------------------------------------------------------------------------------------------------
Department of Communication Science: City Campus Room A2-42
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Contents PagesSTUDY UNIT 1..............................................................................................................................71. MARKETING & ADVERTISING.............................................................................................7
1.1 INTRODUCTION................................................................................................................71.2 THE NATURE OF MARKETING......................................................................................8
1.2.1 What Is Marketing?...................................................................................................81.2.2 The Concept of Exchange...............................................................................................91.2.3 Gaps between Production and Consumption..................................................................91.2.4 Needs, Wants and Demands.........................................................................................101.2.5 Intermediaries...............................................................................................................10
1.3. MARKETING ACTIVITIES.............................................................................................111.3.1 Orientation towards Markets........................................................................................121.3.2 Product Orientation.......................................................................................................121.3.3 Sales Orientation...........................................................................................................121.3.4 Marketing Orientation (Pure Marketing Concept).......................................................121.3.5 Consumer Orientation...................................................................................................131.3.6 Profit Orientation..........................................................................................................141.3.7 Organizational Integration............................................................................................141.3.8 Societal marketing orientation......................................................................................14
1.4 WHAT IS RELATIONSHIP MARKETING?..................................................................141.4.1 Define Marketing..........................................................................................................161.4.2 Key Words in the Definition of Marketing...................................................................161.4.3 The Marketing Process.................................................................................................16
1.5 THE MARKETING FUNCTION IN THE BUSINESS..................................................171.5.1The Place of the Marketing Function............................................................................171.5.2 The Managements Task in Marketing..........................................................................181.5.3 Marketing Challenges That Lie Ahead.........................................................................211.5.4 Growth of Non-Profit Marketing..................................................................................211.5.5 Globalisation.................................................................................................................211.5.6 The Changing World Economy....................................................................................221.5.7 The Call for a More Ethical Approach and Social Responsibility...............................221.5.8 The New Marketing Landscape: Value to Customers..................................................22
STUDY UNIT 2............................................................................................................................24
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2.1 THE MARKETING ENVIRONMENT..................................................................................242.1.1 MARKETING MANAGEMENT AND THE MARKETING ENVIRONMENT..........24
2.1.2 Management and Environmental Change.....................................................................242.1.3 The Composition of the Marketing Environment.........................................................252.1.4 The Micro- Environment..............................................................................................252.1.5 The Market Environment..............................................................................................282.1.6 The Macro-Environment..............................................................................................292.1.6.1 The threat of entry.....................................................................................................302.1.6.2 The power of buyers..................................................................................................302.1.6.3 The power of suppliers..............................................................................................302.1.6.4 The threat of substitutes.............................................................................................302.1.6.5 Competitive rivalry....................................................................................................312.1.6.5 Political factors..........................................................................................................322.1.6.6 Economic factors.......................................................................................................322.1.6.7 Sociocultural factors..................................................................................................322.1.6.8 Technological factors.................................................................................................32
STUDY UNIT 3............................................................................................................................343. MARKETING RESEARCH.....................................................................................................34
3.1 MARKETING MANAGEMENT AND THE MARKETING ENVIRONMENT.............343.1.1 Market and Marketing Research................................................................................343.1.2 The Marketing Research Process..............................................................................34Figure 3.1 Steps in the marketing research process.........................................................36
STUDY UNIT 4............................................................................................................................374. CONSUMER BEHAVIOUR....................................................................................................37
4.1 CONSUMER BEHAVIOUR.............................................................................................374.2 TYPES OF PURCHASE DECISIONS..........................................................................394.3 FACTORS INFLUENCING CONSUMER BEHAVIOUR............................................40
4.4 Individual Factors Influencing Consumer Buying Decisions..........................................414.4.1 Motivation.....................................................................................................................414.4.2 Perception.....................................................................................................................414.4.3 Learning ability.............................................................................................................424.4.4 Attitude.........................................................................................................................434.4.5. Personality...................................................................................................................434.4.6 Lifestyle........................................................................................................................43
4.5 GROUP FACTORS INFLUENCING CONSUMER BUYING DECISIONS..............43
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4.5.1 Culture..........................................................................................................................444.5.2 Family...........................................................................................................................44
4.6 ROLE DIFFERENTIATION IN CONSUMER DECISION MAKING IN THE FAMILY...................................................................................................................................................45
4.6.1 Reference Groups.........................................................................................................454.6.2 Opinion Leaders............................................................................................................46
STUDY UNIT 5............................................................................................................................495. MARKET SEGMENTATION..................................................................................................49
5.1 MARKET SEGMENTATION...........................................................................................495.2 MERITS AND DRAWBACKS OF MARKET SEGMENTATION................................515.3 PREREQUISITES FOR MARKET SEGMENTATION................................................525.4 TARGETING...................................................................................................................53
5.4.1 Market Targeting..........................................................................................................535.4.2 Selecting Potential Target Markets...............................................................................53
5.5 TARGETING MARKET SEGMENTS............................................................................545.5.1 Concentrated Targeting................................................................................................545.5.2 Differentiated Targeting...............................................................................................545.5.3 Undifferentiated Marketing..........................................................................................55
5.6 PRODUCT POSITIONING..............................................................................................555.6.1 Identify a Relevant Set of Competitive Brands............................................................555.6.2 Identify relevant determinant or differentiation variables............................................55
5.7 POSITIONING METHODS.............................................................................................575.7.1 Attribute Positioning.....................................................................................................575.7.2 Benefit Positioning.......................................................................................................575.7.3 Use/Application Positioning.........................................................................................575.7.4 User Positioning............................................................................................................575.7.5 Competitor Positioning.................................................................................................575.7.6 Product Category Positioning.......................................................................................575.7.7 Quality and Price Positioning.......................................................................................57
5.8 POSITIONING..................................................................................................................575.8.1 Part of STP - Segment-Target- Position.......................................................................575.8.2 Trout And Ries Suggest A Six-Step Question Framework For Successful Positioning:...............................................................................................................................................58
5.9 MARKETING MIX.............................................................................................................585.9.1 What is the marketing mix?..........................................................................................58
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5.9.2 Place..............................................................................................................................595.9.3 Channels of Distribution...............................................................................................605.9.4 Distribution Facilities...................................................................................................605.10 Product...........................................................................................................................625.10.1 Components of a Product/ Service.............................................................................625.10.2 Product Marketing......................................................................................................625.10.3 Service Quality...........................................................................................................625.10.4 Promotion...................................................................................................................635.10.5 Purpose of promotion.................................................................................................635.10.6 Communication Vehicles............................................................................................64
STUDY UNIT 6............................................................................................................................656.1 ADVERTISING......................................................................................................................65
6.1.1 WHAT IS ADVERTISING?..........................................................................................656.1.2 Types of Advertising....................................................................................................656.1.2.1 Brand advertising.......................................................................................................656.1.2.2 Retail advertising or local advertising.......................................................................656.1.2.3 Direct-response advertising.....................................................................................666.1.2.4 Business-to-business advertising...............................................................................666.1.2.5 Institutional advertising.............................................................................................666.1.2.6 Non-profit advertising.............................................................................................666.1.2.7 Public service advertising........................................................................................66
6.2 ROLES OF ADVERTISING............................................................................................666.2.1 The Marketing Role......................................................................................................666.2.2 The Communication Role.............................................................................................676.2.3 The Economic Role......................................................................................................676.2.4 Societal Role.................................................................................................................68
6.3 FUNCTIONS OF ADVERTISING..................................................................................686.4 THE ADVERTISER..........................................................................................................69
6.4.1 Manufacturers...............................................................................................................696.4.2 Resellers........................................................................................................................696.4.3 Individuals....................................................................................................................696.4.4 Institutions....................................................................................................................69
6.5 THE ADVERTISING AGENCY......................................................................................706.6 WHAT DOES AN ADVERTISING AGENCY DO?......................................................706.7 THERE ARE VARIOUS DIFFERENT TYPES OF ADVERTISING..........................70
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6.7.1 Full-Service Agency.....................................................................................................706.7.2 Specialized Agencies....................................................................................................71
6.8 THE DIFFERENCE BETWEEN ADVERTISING AND PUBLIC RELATIONS........726.8.1 Advertising Promotion..................................................................................................726.8.2 Public Relations............................................................................................................72
6.9 A FULL-SERVICE AGENCY WILL OFFER:................................................................736.9.1 Creative Team...............................................................................................................736.9.2 Traffic and Production Team........................................................................................736.9.3 Account Planning Team...............................................................................................746.9.4 Media Team..................................................................................................................746.9.5 Specialised agencies.....................................................................................................74
6.10 HOW AGENCY WORK IS ORGANIZED...................................................................756.11 MARKETING STRATEGY............................................................................................75
STUDY UNIT 7............................................................................................................................777. MEDIA......................................................................................................................................77
7.1 COMMUNICATION CHANNELS...................................................................................777.1.1 Print Media...................................................................................................................777.1.2 Broadcast Media...........................................................................................................797.1.3 Interactive and Alternative Media................................................................................80
7.2 MEDIA STRATEGIES......................................................................................................827.3 THE MEDIA PLAN...........................................................................................................837.4 MEDIA OBJECTIVES......................................................................................................83
STUDY UNIT 8............................................................................................................................848. CREATING ADVERTISING...................................................................................................84
8.1 CREATIVE ADVERTISING............................................................................................848.2 THE CREATIVE LEAP....................................................................................................848.3 THE CREATIVE CONCEPT...........................................................................................848.4 STRATEGY AND CREATIVITY.....................................................................................848.5 CREATIVE STRATEGY AND THE MESSAGE DESIGN..........................................858.6 CREATIVE THINKING....................................................................................................858.7 FOUR STEP IDEA-GENERATING PROCESS...........................................................86
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STUDY UNIT 1
1. MARKETING & ADVERTISING
1.1 INTRODUCTION
“Principles of Marketing” is a core course in business, which introduces the marketing function in
organizations. It provides a broad overview of all the marketing activities involved in the provision of
products to final and organizational consumers. Marketing is a key ingredient in meeting the global
challenges of organizations worldwide. Marketing should not be confused with advertising and sales. In
this course you will discover the true nature of marketing and why advertising and sales are merely
ingredients of the marketing mix. More specifically, this course provides you with an understanding of
marketing concepts, applies learned marketing concepts to real world situations, and examines the
modification of marketing strategy within a changing environment. Fundamental marketing concepts,
principles, and issues are analyzed within present economic, social, and legal environments. Consumer
behavior and market research are emphasized.
The main objectives of most businesses are survival, profits and growth and marketing contributes
directly to achieving these objectives. Marketing includes the following activities:
Assessing the wants and needs of current and future customers
Developing and managing product offerings,
Determining prices and pricing policies;
Developing distribution strategies;
Communication with current and future customers.
Marketing plays a major role in our everyday life. We participate in the marketing process as consumers
of products and services. About half of every rand spent pays for marketing costs, which includes
marketing research, product development, packaging, transportation, storage, advertising and sales
expenses.
The main aim of all marketing activities is to facilitate mutually satisfying exchanges between parties. The
activities of marketing include the conception, pricing, promotion and distribution of ideas, products and
services.
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The role of marketing and the character of marketing activities within a business are strongly influenced
by its philosophy and orientation. A product oriented business focuses on the internal capabilities of the
company rather than on the needs of the marketplace.
A sales orientation is based on the beliefs that people will buy more products if aggressive sales
techniques are used and that high sales volumes produce high profits.
A marketing oriented business focuses on satisfying customer wants and needs while meeting company
objectives. A societal marketing orientation goes beyond a pure marketing orientation to include the
preservation or enhancement of individuals’ and society’s long-term best interests.
To implement the marketing concept successfully, management must enthusiastically embrace and
endorse the concept and encourage its spread throughout the business. Changing from a production or
sales orientation to a marketing orientation often requires changes in management authority and
responsibility.
The marketing process includes:
Understanding the business’s mission and the role marketing plays in fulfilling that mission;
Setting marketing objectives;
Scanning the environment;
Developing a marketing strategy by selecting a target market strategy;
Developing and implementing a marketing mix;
Implementing the marketing strategy;
Designing performance measures; and
Evaluating marketing efforts and making changes if needed.
The marketing mix combines product, distribution (place), marketing communication and pricing strategies in a way that creates exchanges satisfying to individuals and company objectives. All these
aspects are discussed in this chapter.
1.2 THE NATURE OF MARKETING
1.2.1 What Is Marketing?
The term ‘marketing’ means many things to many people. Some people think it means personal selling,
while others consider marketing to be the same as advertising.
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Others believe that marketing means making products available in shops, arranging displays and
maintaining inventories of products for future sales. Marketing actually includes all of these activities and
more.
More specifically, the definition of marketing can be translated as:
The process of planning and executing the conception, pricing, marketing communication and distribution of ideas, products, and services to create exchanges that satisfy individuals and organizational goals.
1.2.2 The Concept of Exchange
Exchange is the key term in the marketing process. The concept of exchange is quite simple. It means
that people give up something to receive something they would rather have. Money is usually the
medium of exchange. For any kind of exchange to take place, five conditions must prevail;
There must be at least two parties
Each party must have something that the other party values.
Each party must be able to communicate with the other party and deliver the goods or services
sought by the other.
Each party must be free to accept or reject the others offer.
Each party must want to deal with the other party.
1.2.3 Gaps between Production and Consumption
From your own experience of shopping at Pick ‘n Pay, Edgars, spaza shops, supermarkets, the local
pharmacy and so on, you should know by now that different products are made in different provinces,
areas and countries.
In the business environment, the place where a product is produced is not necessarily the place where it
is consumed. This means that “gaps” exist between production and consumption, which are identified by
considering some core marketing aspects.
According to McInnis, five types of gaps can be identified. A proper market offering and successful
marketing are possible only if these five gaps have been effectively bridged.
Space Gap: South African Breweries produces Castle lager mainly in one centre, but beer drinkers are
spread throughout Southern Africa, leaving a geographical space (distance) between the manufacturer
and the consumer.
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Time Gap: Mealies are harvested in North West province in winter, but consumers want their mealie
meal porridge throughout the year.
Information Gap: a first time, uninformed computer buyer may not have enough knowledge to make an
appropriate purchase.
Ownership Gap: When a new car is purchased, the consumer becomes the owner only when it is
registered in his or her name, and this happens only once the car has been paid for.
Value Gap: Seller and buyer must agree on an acceptable exchange rate (price of the product). If
buyers perceive a price to be unacceptably, high, they will not buy; if sellers cannot get the price they
want, they will not offer to sell. The value the buyer attaches to the product should ideally be the same as
that attached by the seller.
1.2.4 Needs, Wants and Demands
Needs, wants and demands of people are complex. Needs refer to basic physical needs, such as food,
clothing and safety. Social needs refer to a need to belong to a group and for affection. Unmet or
unsatisfied needs compel people to try and reduce the need or to look for something that will satisfy it.
Products are what people use to satisfy their needs and wants. A product can be defined as anything
offered to a market to satisfy peoples / customers’ needs or wants. Products can be tangible or
intangible.
Value can be defined as the difference between the value the customer gains from owning and using a
product and the costs of obtaining the product. Satisfaction on the other hand, depends on a products
perceived performance in delivering value relative to a buyer’s expectations. Customer satisfaction is
closely linked to quality, as quality has a direct impact on product performance.
1.2.5 Intermediaries
As trade and business practices evolved over time, the distance between buyer and seller increased.
The need for an acceptable medium of exchange which symbolized the value of exchanged products
resulted in the development of a monetary system.
The transporting of products from producer to consumer and the conveying of information also became
increasingly complicated, creating an opportunity for the specialised services of intermediaries, operating
go-betweeners for the participants in the exchange, who were no longer in close contact.
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In today’s business environment, there are mainly three kinds of intermediaries:
Middlemen:
Sales intermediaries
Auxillary enterprises e.g., spoornet, advertising agencies, commercial banks
1.3. MARKETING ACTIVITIES
The different marketing activities involved in the transfer of a market offering to buyers have briefly been
mentioned. The following primary, auxiliary and exchange activities can now be distinguished.
The primary marketing activity is transport. Auxiliary marketing activities are the following:
Obtaining and supplying information. The seller must know who and where potential buyers are. He
or she can find this out by conducting marketing research. Thereafter, he or she can supply information
to potential buyers by using marketing communication methods such as advertising and personal selling.
Standardization and grading. Manufactured products must be designed to conform to specific norms or
standards. Agricultural products are graded according to certain qualities. Eggs, for example, are graded
according to size. This facilitates the buying process, making it easier for the buyer to buy.
Storage. This is an activity that can close the time gap. Seasonal production of agricultural products
necessitates storage to ensure the ready availability of these products throughout the year. Warehouses
are normally used for storage.
Financing. Costs are incurred in the transfer of products and services from sellers to buyers. These
costs must be financed, usually by banks and other financial institutions. All participants in the exchange
process should strive to keep financing costs down to present the product at a price acceptable to the
consumer and worthwhile to the seller.
Risk- taking. The user of the product is exposed to the risk of loss or damage and can insure the goods
against some risks, such as arson, theft and storm damage.
Exchange marketing activities are buying and selling. Ownership is transferred from one party to another.
Buying activities are not regarded as a marketing task but rather as the responsibility of a business’s
purchasing department. Selling on the other hand, is a very important task of the marketing department
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of a business. These marketing activities have been influenced by the orientation towards markets which
prevailed at the time.
1.3.1 Orientation towards Markets
Four competing orientations have strongly influenced business’s marketing activities over the years.
These orientations are commonly referred to as production, sales, pure marketing and societal marketing
orientations.
1.3.2 Product Orientation
A production orientation focuses on the internal capabilities of the business rather than on the desires and
needs of the marketplace. A production orientation means that management assesses its resources and
asks questions such as “what can we do best?”; “what can our engineers design?” what is easy to
produce, given our equipment?” In the case of a service organization, managers ask, “what services are
most convenient for the business to offer? And “where do our talents lie?”
Most importantly, the production orientation’s major shortfall lies in the fact that it does not consider
whether the goods and services that the business produces most efficiently also meet the needs of the
marketplace. A production orientation does not necessarily doom a company to failure, particularly not in
the short run. Sometimes what a company can best produce is exactly what the market wants.
1.3.3 Sales Orientation
A sales orientation is based on the premise that people will buy more products and services if aggressive
sales techniques are used and those high sales results in high profits. Not only are sales to the final
buyer emphasized but intermediaries are also encouraged to push (promote) a manufacturers products
more aggressively. To sales oriented businesses, marketing means selling.
The major shortcoming of a sales orientation is a lack of understanding of the needs and wants of the
market place. Sales oriented companies often find that, despite the quality of their products and their
sales force, they cannot convince people to buy products or services that are neither wanted nor needed.
1.3.4 Marketing Orientation (Pure Marketing Concept)
Because of the widening gap between the producer and the consumer, management needed reliable
information on how best to satisfy consumer needs. A change from sales-oriented management to
marketing – oriented management resulted in an emphasis not only on the sales message and the price
but also on the quality of products, packaging, methods of distribution and the necessity of providing
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information by means of advertising. Consumers also developed more sophisticated needs and were
financially in a better position to satisfy these needs. There was a large variety of competing products
from which they could choose. This led management to realize that importance of the marketing function.
Production could begin only after management obtained market information on what consumers wanted,
how much they were willing to pay and how they could best be reached by means of advertisements,
sales promotion methods, publicity and personal selling.
A marketing orientation, which is the foundation of contemporary marketing philosophy, is based on an
understanding that a sale depends not on an aggressive sales force, but rather on a customer’s decision
to purchase a product. What a business thinks it produces is not of primary importance to its success.
Instead what a customer thinks he or she is buying, the perceived value, defines a business. Perceived
value, also determines a business’s products and its potential to prosper. To marketing-oriented firms,
marketing means building long term relationships with customers.
This orientation has led to what is commonly called the pure marketing concept. The marketing concept
can be regarded as an ethical code or philosophy according to which the marketing task is performed.
The essence of the marketing concept lies in three principles:
Long- term maximization of profitability
Consumer orientation
The integration of all business activities directed at profitability and the satisfaction of consumer
needs, demands and preferences.
Let us now look at these three principles of the marketing concept in detail.
1.3.5 Consumer Orientation
Consumer orientation is the first principle of the marketing concept, indicating that all marketing actions
should be aimed at satisfying consumer needs, demands and preferences. This, however, does not
mean that marketing management must provide for unrealistic consumer needs. The business can
provide need satisfaction only in so far as its resources enable it to do so. Achieving the profitability
objective must also be taken into account in the endeavor to provide for consumer needs. However,
failure to appreciate what the consumer wants creates opportunities for competitors and can adversely
affect profits.
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1.3.6 Profit Orientation
In the free market system, achieving profitability is of crucial importance. Maximising profitability is the
primary objective of a profit-seeking business and can be achieved only with due consideration of
consumer needs.
Profit seeking enterprises attempt to achieve a specific rate of return on total assets in the long term
rather than to obtain unduly high returns in the short term, as a short term approach can endanger its
survival. The long-term nature of the profitability objective distinguishes marketing from the mere
bartering transaction from which it originally developed.
1.3.7 Organizational Integration
A system is an integrated whole, a group of related units working together to achieve a joint objective.
Organizational integration is an important principle of the marketing concept and entails all departments in
the business working together to achieve the successful marketing of the business’s market offering. All
the divisions in the marketing department also direct their activities and decisions towards achieving a
specific objective.
1.3.8 Societal marketing orientation
According to the societal marketing concept, which flows from pure marketing, the enterprise 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 consumer’s and society’s well-being. Societal
marketing orientation is the newest of the marketing management orientations.
A societal marketing orientation question whether the pure marketing concept as it stands is adequate in
an age of environmental problems, resource shortages, rapid population growth, worldwide economic
problems and neglected social services.
It asks if the company that senses, serves and satisfies individual wants is always doing what is best for
consumers and society in the long run. According to the societal marketing concept, the pure marketing
concept overlooks possible conflicts between consumer short-term wants and consumer long term
welfare.
1.4 WHAT IS RELATIONSHIP MARKETING?
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The concept of relationship marketing focuses on the lifetime value of customers on the basis that repeat
business is beneficial for both customers and the supplier organization. Customers can trust the supplier
and expect consistent standards and the supplier earns better profits, as the cost of repeat business is
lower than the efforts in attracting new customers. The focus of the organisation is on the long-term
relationship. This means pursuing marketing activities which encourage and maintain customer loyalty, for
example through improved services, better prices or developing products together. This approach
suggests that customers are satisfied with the company's products and services, however they must
watch for complacency.
Competitors will always try and target lucrative customers. Relationships should therefore be actively
managed with regular and appropriate contact with customers.
Relationship marketing evolved, because so many businesses were paying only lip service to the
marketing concept and where the attitudes of management did not clearly reflect the principles of the
marketing concept. Relationship marketing represents a broader view of the market and the marketing
task.
A bigger market
Relationship marketing also entails a wider view of the market itself. In the total market there are various
smaller groupings all with a greater or lesser influence on the marketing effort. Close relationships,
especially with important groupings must be maintained. The following groups can be identified:
Current customers, whose loyalty is crucially important
Potential customers in unexploited markets, who must be contacted.
Suppliers, who must be made aware of the importance of their co-operation in order to fuller
satisfy the needs of consumers. Suppliers contribute by timely delivery of quality raw materials,
components, and services. The excuse for bad customer service is so often that the spare
parts/stock needed have not yet arrived, ignoring customer convenience.
Potential employees, who must be carefully selected according to their abilities and especially
their attitude towards customer service. Good employees prefer to work for successful
companies.
Reference groups who can convey the marketing message by direct personal contact ( word of
mouth advertising). The advantages of brand-loyal consumers, who not only repeatedly
purchase the product but who also advise friends to do so, can never be underestimated.
The influencers such as government, who may be able to exert an influence on the marketing
activities of the business,
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Current employees, who are part of the internal market. Management has a responsibility to
train, motivate and remunerate employees but must, furthermore, also persuade these
employees to actively support marketing decisions and strategies. For this purpose there must
be open and free communication and employees should hear about products and plans right from
the beginning. It very often happens that an employee is unaware of the business’s new
advertising campaign until confronted with it on the television screen. Sometimes new products
are noticed on the super market shelf. When something like this happens, the business loses out
on input in terms of employee enthusiasm and willingness.
1.4.1 Define Marketing
The study guide has thus far provided you with a frame of reference from which to gauge an
understanding of what marketing is. However providing a firm definition of marketing will help place the
rest of this course in its proper perspective. According to Cant (1999:20) marketing can be defined as a
combination of management tasks and decisions aimed at meeting opportunities and threats in a dynamic
environment in such a way that its market offerings lead to the satisfaction of consumers’ needs and
wants in such a way that the objectives of the business, the consumer and society are achieved.
1.4.2 Key Words in the Definition of Marketing
Management tasks Planning, implementation and controlDecisions Regarding product, distribution, marketing communication methods and price
(4p’s)Opportunities Favorable circumstances in the marketing environment which must be
utilized by marketing managementThreats Unfavorable conditions which marketing management must endeavor to
change into opportunitiesDynamic environment Continually changing environment variables which necessitate appropriate
reaction from marketing managementNeed satisfying Properties of a product based on what the consumer wants
Market offering Product, price ,distribution, marketing communication as well as service by
people and processes
Attainment of objectives
the enterprise Maximization of profitability in the long term.
the consumer Need satisfaction within the resources and abilities of the business
society Ensuring the well-being of society in the longer term.
Table:1 Key words in the definition of marketing
1.4.3 The Marketing Process
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The marketing process which has evolved from a simple bartering transaction between two participants
has become a very complex task. In a large business there is usually a marketing department which is
responsible for the marketing task. Heading this department is a Marketing Manager and a team of
specialists involved in the marketing task. All the activities discussed in the previous section must be
performed by the marketing department in such a way as to ensure the maximum advantage for the
company as a whole.
There are four variables about which the marketing management team must take decisions: the product,
itself, the place where it is to be sold (distribution), the marketing communication methods to be used to
inform the consumer and the price of the product, which should reflect its value to the consumer. The
four variables combine in a market offering which the consumer may decide to buy if it provides
satisfaction of his or her needs. These four variables are known as the marketing instruments. They are
also known as the marketing mix, consisting of four P’s ( product, place, promotion or marketing
communication, and price) decisions regarding the four marketing instruments combine to form an
integrated marketing strategy (or marketing plan). The marketing strategy for a specific market offering is
directed at a group of consumers in a specific environment. If anything should change in the
environment, the market offering and the marketing strategy must be changed accordingly.
It is a fact that the market offering is seldom directed at the satisfaction of one single consumer, rather a
group of people is usually involved. The larger this group, usually the more advantageous it is for the
manufacturer and the intermediaries. In the total consumer market there are many different groups. The
members of each of these groups (also called market segments) have more or less similar characteristics
needs and product preferences. After careful consideration, marketing management selects from many
different market segments, a specific way or another to meet the preferences of different target markets.
It seldom happens that an enterprise has only one single target market.
1.5 THE MARKETING FUNCTION IN THE BUSINESS
1.5.1The Place of the Marketing Function
The marketing function can be regarded as a key function in the business because of its contribution to
profit and its closeness to the consumers. Seven different functional departments can be identified in the
modern large business. The managers heading these seven departments must work together to realize
the business’s objectives.
The operation function comprises the physical utilization of raw materials and components and
their conversion into manufactured materials and finished products usually found in a factory.
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The human resources function pertains to the acquisition, training, utilization and retaining of a
sufficient number of competent personnel.
The financial function includes the acquisition, utilization and control of the funds necessary for
running the business. The main activities here are the acquisition and application of funds for the
profitability, liquidity, solvency and continuity of the business.
The purchasing function ensures that the materials necessary for production are bought at the
right places, at the right times, in the right quantities and at the right prices.
The public relations function maintains and cultivates a favourable and objective image of the
business among those whose opinion is important to the achievement of the business’s
objectives.
The information function makes available internal information for planning and control.
The marketing function generates income from sales and is responsible for managing the
marketing process.
General management includes the activities of people in managerial positions. The people in top,
middle and lower management have to plan for organize, lead and control the business as a
whole as well as its individual functions. The general manager is at the head of the management
team.
1.5.2 The Managements Task in Marketing
The management tasks consist of a continuous process of planning organizing, leading and controlling,
marketing activities. Marketing management is responsible for the following:
Identifying opportunities and threats in the marketing environment
Identifying those opportunities which can be utilised in terms of internal strengths and
weaknesses.
Compiling marketing data
Selecting a specific target market
Deciding on the products to be produced in order to satisfy consumer needs.
Deciding on the selling price of the product in order to attain the objective of profitability
Deciding on specific distribution channels
Deciding on marketing communication methods whereby consumers are informed, reminded
and persuaded.
17
Deciding on selection, training, remuneration and motivation of marketing personnel
Organizing and leading the activities of the marketing department
Controlling the marketing process
These responsibilities are part of the four management tasks which are summarized in figure 1.1 and
discussed below.
Planning
Planning by marketing management entails the examinations of and the choice between various ways of
utilizing marketing opportunities, countering marketing threats and achieving marketing objectives.
Marketing decision thus begin with the identification and evaluation of marketing opportunities and threats
and internal strength and weaknesses.
Implementation
Organizing and co-coordinating calls for the creation of an organizational structure best suited to the
implementation of the marketing decisions in order to achieve marketing objectives. Marketing activities
are grouped rationally and individual divisions and managers are tasked with carrying them out. Finally,
the levels of authority, areas of responsibility, lines of communication and methods of coordination
between the divisions and individuals are determined. Cooperation is achieved by integrating the
interests of divisions, individuals, consumers, investors, suppliers and the community as a whole. Are
grouped rationally and individual divisions and managers are tasked with carrying them out.
PLANNINGIdentify opportunities and
threats
Set marketing objectives
according to business’s
objectives
Decide on the marketing
instruments
Consider the internal strong and weak points
IMPLEMENTATION Organizing- Organize and co-ordinate the activities in the marketing department.
Leading- Provide leadership in planning and implementation of marketing strategies.
CONTROL/EVALUATION Set standards and measure performance
Table: 2 The management tasks of marketing management
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Source: Adapted from Van der Walt., A; Strydom; JW Marx, S and Jooste, CJ. 1996. Marketing Management. 3rd edition. Cape Town: Juta, p.14
Table 3 shows a typical organization chart of the different divisions in the marketing department under the
leadership of the marketing manager.
MARKETING MANAGER
MANAGER
Marketing
planning and
information
MANAGER
New product
development
MANAGER
Advertising
MANAGER
Distribution
MANAGER
Sales
Table: 3 Functional marketing organisations
Leading involves a wide range of tasks, such as staffing, communicating and motivating. From a
marketing viewpoint, leading embraces all the marketing decisions for putting preparation (planning,
organizing, co-ordinating and controlling) into practice. Briefly, once the marketing strategy has been
formulated, people have to be found to perform the required marketing activities (staffing); they have to be
instructed as to what they should do and told how well they are doing it (communicating) and a positive
attitude towards work and the enterprise must be carefully cultivated and maintained (motivating).
Leading is therefore of paramount importance in the effective performance of the other management
tasks.
Control
Controlling or evaluation is the regulatory task of marketing management, and its purpose is to align
actual performance with marketing plans. In order to exercise control, it is essential first to set standards,
which requires determination of what has to be controlled and where marketing control is necessary.
Secondly, actual marketing performance has to be measured and compared with these standards.
Thirdly, the differences between actual performance and standards have to be evaluated. Finally, if
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necessary, corrective measures should be taken to ensure that future performance is in line with
marketing plans.
If marketing management does not perform the management tasks properly:
Purchasing management will not know which raw materials and components to purchase
Public relations management will not know how to perform or improve its liaison function;
Financial management will not know how much funding is required; and
Human resource management will not know how many people to employ.
1.5.3 Marketing Challenges That Lie Ahead
The marketing environment is dynamic and global. The new century will once again produce challenges
for marketers. Rapid changes can quickly make yesterday’s winning strategies obsolete.
We now look more deeply into several key trends and forces that are changing the marketing landscape
and challenging marketing strategy: growth of non-profit marketing, rapid globalization, the changing
world economy, and the call for more socially responsible actions.
1.5.4 Growth of Non-Profit Marketing
In recent years, marketing has become a major component in the strategies of much non-profit
organization, such as colleges, hospitals, museums, symphony orchestras and even churches. The arts
and museums in South Africa in particular, have been hit by severe cutbacks in government allocations.
In the same way, many hospitals in South Africa have closed down because of a lack of funds. These
institutions now have to find their own funds and they need to become more marketing oriented. The
continued growth of non-profit and public sector marketing presents new and exciting challenges for
marketing managers.
1.5.5 Globalisation
Geographical and cultural distances have shrunk with the advent of jet airplanes, email, global computer
and telephone hook-ups, world television satellite broadcasts, and especially the phenomenal worldwide
growth in access to and use of the4 Internet. This has allowed companies to expand their geographical
market coverage enormously. The result is a vastly more complex marketing environment for both
companies and consumers.
Today almost every company, large or small, is affected in some way by global competition. Think about
the many small importers in South Africa selling computers, toys and other items. South African
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companies have been challenged at home by the entry to the S.A. market of many competitors form the
United States of America and Asia, since 1994.
Companies around the world are asking: Just what is global marketing? How does it differ from domestic
marketing? How do global competitors and forces affect our business? To what extent should we ‘go
global’? Many companies are forming strategic alliances with foreign companies, even competitors, who
serve as suppliers or marketing partners. The past few years have produced some surprising alliances
between competitors such as BMW and Rover, Mercedes- Benz and Chrysler. Winning companies in the
next century may well be those that have built the best global networks.
1.5.6 The Changing World Economy
The past few decades have seen the world in general growing poorer. A sluggish world economy has
resulted in more difficult times for both consumers and marketers.
Around the world, people’s needs are greater than ever, but in many areas people lack the means to pay
for needed goods. In South Africa, this has been harsh. Although wages have risen real buying power
has declined, especially for the less-skilled members of the workforce. Many workers have lost their jobs
as manufacturers have ‘downsized’ to cut costs. In all sectors of the economy, jobs have been lost.
Current economic conditions create both problems and opportunities for marketers. Some companies are
facing declining demand and see few opportunities for growth. Others however are developing new
solutions for dealing with consumer problems. Many are finding ways to offer consumer ‘more for less’.
1.5.7 The Call for a More Ethical Approach and Social Responsibility
A third factor in today’s marketing environment is the increased call for companies to take responsibility
for the social and environmental impact of their actions. Corporate ethics has become a hot topic in
almost every business arena.
The ethics and environmental movements will place even stricter demands on companies in the future,
and companies will be held to an increasingly higher standard of environmental responsibility in their
marketing and manufacturing activities.
1.5.8 The New Marketing Landscape: Value to Customers
The past decade has taught businesses everywhere a humbling lesson. Domestic companies learned
that they can no longer ignore global markets and competitors. Successful businesses in mature
industries found that they cannot overlook emerging markets, technologies and management approaches.
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Companies of every sort learned that they cannot remain inwardly focused, ignoring the needs of
customers and their environment.
A business does not operate in isolation and many factors contribute to the success of a company.
Marketing is a managerial process aimed at satisfying the needs and wants of customers. These needs
and wants are met by creating the correct products and services. Marketing operates within a dynamic
global environment and is facing new challenges as we approach the turn of the century.
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STUDY UNIT 2
2.1 THE MARKETING ENVIRONMENT
2.1.1 MARKETING MANAGEMENT AND THE MARKETING ENVIRONMENT
2.1.2 Management and Environmental Change
The underlying problem for the successful survival of contemporary business in the western world is the
fact that the environment usually changes more quickly than the business is able to adapt. Hence the
study of the marketing environment mainly revolves around change in the environment.
Change is a difficult term to define. Simply put, it is any alteration in the status quo. This implies a
change from a condition of stability to one of instability- in other words, a shift from the predictable to the
unpredictable. It cannot be measured and causes uncertainty. No single factor can be held responsible
for change and in different places and communities, it occurs in different ways and at different rates.
Technological innovation, economic fluctuations, changing social values and demographic trends, political
change, aggressive international competition and countless other variables are constantly changing in the
marketing environment, to such an extent that they affect not only the performance of business
detrimentally but also threaten their existence. During the past decade or so, the structure of South
African society and its lifestyles, values and expectations have changed perceptibly. As a component of
environmental change business expansion is constantly exposed to change. The end result of this
change is a new environment with new trends which can be classified into three groups, namely:
Trends which constitute opportunities for marketing management- that is a favorable situation in
the environment in which the business has a competitive advantage and has the necessary
resources to utilize it. The main advantages resulting from change are probably the creation of
new markets and the broadening of existing ones.
Trends which pose particular threats to marketing management that is an unfavorable situation in
the environment which, if it is allowed to go unchecked may have a detrimental effect on the
performance or survival of the business.
Trends which may appear but which have no implications for the business or the industry.
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Successful businesses that adapt to the environment are those that constantly scan the environment and
adjust their strategies to keep abreast of change. Adjusting strategies is therefore nothing more than
those steps which marketing management takes to gain a particular environmental fit for the business.
Successful marketers do not delay their strategy adjustments until the environment has changed so
drastically that nothing can be done about it. They continually scan the environment and management
proactively.
2.1.3 The Composition of the Marketing Environment.
The introductory definition of the marketing environment stated that it is the sum total of the factors or
variables and players which influence the ability of marketing management to successfully develop
strategies for its target market. In order to scrutinize the multiplicity of environmental variables that
influence the marketing management, it is necessary to conduct a meaningful classification of the
marketing environment to identify certain trends for further analysis in each group of sub-environment.
Figure 2.1 shows the composition of the marketing environment. It is clear from this figure that the total
marketing environment comprises three principal components: the micro- marketing and macro-
environments.
Figure: 2.1 The marketing environment
2.1.4 The Micro- Environment
All factors that are internal to the organization are known as the 'internal environment'. They are generally
audited by applying the 'Five Ms' which are Men, Money, Machinery, Materials and Markets. The internal
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environment is as important for managing change as the external. As marketers we call the process of
managing internal change 'internal marketing.'
Essentially we use marketing approaches to aid communication and change management.
The first component of the total environment is the micro-environment or the internal environment which
comprises the business organization itself. Although this refers to those variables which are largely
controlled by the business itself, such as its mission and objective, its management structure, its
resources and culture, cone should remember that these variables are not solely under the control of
marketing management.
Marketing management does have a significant influence on these variables and marketing provides the
central input in developing overall strategies, but it should be clear that while top management controls
certain micro-variables, marketing management can also control some variables in the micro-
environment.
Figure: 2.2 Composition of the marketing environmentSource: Cronje GJ de J et al (eds). 1994. Introduction to business management.
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The enterprise only has a slight influence on the macro-environment
Influence the market by its strategy
MICRO-ENVIROMENT
* Mission and objectivesof the business
* The business and itsmanagement, eg.;
marketing, financial,purchasing
Direct influence by competitors, consumption, expenditure etc.
MACRO-ENVIRONMENT
*Technological environment* Economic environment
* Social environment* Physical environment
*Institutional / political environment* International environment
MARKET ENVIRONMENT
* The market, consisting of consumers, their needs, purchasing power and behaviour
*Competitors
Influence the business indirectly by means of market environment, eg., effects of taxation on consumer spending
The macro environment influences the business directly, eg. effect
Johannesburg: Southern, p 46
Although top management, that is the executive management which includes the functional managers,
mainly focus their decision making on the organizations mission, objectives and overall strategies, there
are four basic top management decisions which are of particular importance for marketing management:
the basic line of business ( product or service), the overall goals of the business, the role of marketing
management in the above and the role of the other management functions in reaching the overall goals.
Table 4 gives a brief description of the four basic decisions taken by top management.
Table 4 Variables in the Micro-Environment Controlled By Top Management
VARIABLE ALTERNATIVES
Basic line of business (product or service)
Product/service category
Technology category
Geographic category
Ownership
Specific business category
Overall goals
Sales
Profit
Customer acceptance
The role of marketing management
Tourism, fast food, clothing, hotel industry,
computers
Manufacturing, distributor, wholesaler
Neighborhood, city, region, province, national,
international
Sole proprietor, partnership, close corporation,
public corporation
City Lodge ( hotel industry, national)
Premier foods ( food manufacture, national)
Hatfield Bakery ( bakery industry, PTA only)
Certain percentage increase per year or
percentage market share
Minimum percentage gross on net profit (on
sales), profit rations per product (patents),
geographic area or rate of return on
investment.
Environmentally- friendly products and socially
responsible products ( toys and medicine
Line or staff functions, extensive budget and
resources, role in strategy formulation
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The macro environment influences the business directly, eg. effect
Importance in the business
Functions
Integration
The role of other management functions
Human resources management
Financial management
Operations management
Purchasing management
Market research, planning, distribution,
franchising
Integration, decentralization
Determine responsibilities of each function,
position of each in the organizational structure,
relationship between functions, eg. Should
operations management be responsible for
purchasing or should purchasing do the
procurement?
The decisions controlled by top management ultimately reflect the mission and overall goals of the
business organization.
From these top management decisions, marketing management must determine the variables for which it
is responsible.
Marketing management must therefore constantly scan the micro- environment. Marketing
management’s activities should also complement and support top managements decisions if the business
is to function as a unit.
2.1.5 The Market Environment
The second component of the marketing environment is the market environment, which is found just
outside the business organization. In this environment, all the variables are relevant to virtually every
business because they determine the nature and strength of the competition in any industry. The key
variables in this environment are the following:
CONSUMERS with a particular buying power and behaviour, which in turn determine the number
of entrants to the market
COMPETITORS who are established in the market and wish to maintain or improve their position,
including existing, new and potential competitors.
INTERMEDIARIES who compete against each other to handle the business’s products or wish to
handle only those of competitors.
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SUPPLIERS who provide or do not wish to provide products, raw materials, services and even
financing to the business.
All these variables create particular opportunities and threats. Although marketing management can
influence certain variables by adjusting its strategy, it has no control over these variables. The principal
task of marketing management in this environment is therefore to identify, evaluate and utilize
opportunities that arise in the market and then to develop its strategies in order to meet competition. For
these reasons, the market environment is also called the task environment. The market environment is
also influenced by developments in the macro-environment, ultimately to reach the market environment.
2.1.6 The Macro-Environment
This includes all factors that can influence and organization, but that are out of their direct control. A
company does not generally influence any laws (although it is accepted that they could lobby or be part of
a trade organization). It is continuously changing, and the company needs to be flexible to adapt. There
may be aggressive competition and rivalry in a market. Globalization means that there is always the
threat of substitute products and new entrants. The wider environment is also ever changing, and the
marketer needs to compensate for changes in culture, politics, economics and technology.
The external environment can be audited in more detail using other approaches such as SWOT Analysis,
Michael Porter's Five Forces Analysis or PEST Analysis.
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Figure: 2.3 Michael Porter's Five Forces Analysis
Five Forces Analysis helps the marketer to contrast a competitive environment. It has similarities with
other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone,
business or SBU (Strategic Business Unit) rather than a single product or range of products. For example,
Dell would analyse the market for Business Computers i.e. one of its SBUs.
Five forces analysis looks at five key areas namely the threat of entry, the power of buyers, the power of
suppliers, the threat of substitutes, and competitive rivalry.
2.1.6.1 The threat of entry.
Economies of scale e.g. the benefits associated with bulk purchasing.
The high or low costs of entry e.g. how much will it cost for the latest technology?
Ease of access to distribution channels e.g. Do our competitors have the distribution channels
sewn up?
Cost advantages not related to the size of the company e.g. personal contacts or knowledge that
larger companies do not own or learning curve effects.
Will competitors retaliate?
Government action e.g. will new laws be introduced that will weaken our competitive position?
How important is differentiation? e.g. The Champagne brand cannot be copied. This desensitizes
the influence of the environment.
2.1.6.2 The power of buyers.
This is high where there a few, large players in a market e.g. the large grocery chains.
If there are a large number of undifferentiated, small suppliers e.g. small farming businesses
supplying the large grocery chains.
The cost of switching between suppliers is low e.g. from one fleet supplier of trucks to another.
2.1.6.3 The power of suppliers.
The power of suppliers tends to be a reversal of the power of buyers.
Where the switching costs are high e.g. switching from one software supplier to another.
Power is high where the brand is powerful e.g. Cadillac, Pizza Hut, Microsoft.
There is a possibility of the supplier integrating forward e.g. Brewers buying bars.
Customers are fragmented (not in clusters) so that they have little bargaining power e.g.
Gas/Petrol stations in remote places.
2.1.6.4 The threat of substitutes
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Where there is product-for-product substitution e.g. email for fax Where there is substitution of
need e.g. better toothpaste reduces the need for dentists.
Where there is generic substitution (competing for the currency in your pocket) e.g. Video
suppliers compete with travel companies.
We could always do without e.g. cigarettes.
2.1.6.5 Competitive rivalry
This is most likely to be high where entry is likely; there is the threat of substitute products, and suppliers
and buyers in the market attempt to control. This is why it is always seen in the center of the diagram.
It is very important that an organization considers its environment before beginning the marketing
process. In fact, environmental analysis should be continuous and feed all aspects of planning. The
organization's marketing environment is made up of:
1. The internal environment e.g. staff (or internal customers), office technology, wages and finance,
etc.
2. The micro-environment e.g. our external customers, agents and distributors, suppliers, our
competitors, etc.
3. The macro-environment e.g. Political (and legal) forces, Economic forces, Sociocultural forces,
and Technological forces. These are known as PEST factors.
Figure 2.4 PEST
30
2.1.6.5 Political factors.
The political arena has a huge influence upon the regulation of businesses, and the spending power of
consumers and other businesses. You must consider issues such as:
How stable is the political environment?
Will government policy influence laws that regulate or tax your business?
What is the government's position on marketing ethics?
What is the government's policy on the economy?
Does the government have a view on culture and religion?
Is the government involved in trading agreements such as EU, NAFTA, ASEAN, or others?
2.1.6.6 Economic factors.
Marketers need to consider the state of a trading economy in the short and long-terms. This is especially
true when planning for international marketing. You need to look at:
Interest rates.
The level of inflation Employment level per capita.
Long-term prospects for the economy Gross Domestic Product (GDP) per capita, and so on.
2.1.6.7 Sociocultural factors
The social and cultural influences on business vary from country to country. It is very important that such
factors are considered. Factors include:
What is the dominant religion?
What are attitudes to foreign products and services?
Does language impact upon the diffusion of products onto markets?
How much time do consumers have for leisure?
What are the roles of men and women within society?
How long are the population living? Are the older generations wealthy?
Does the population have a strong/weak opinion on green issues?
2.1.6.8 Technological factors
Technology is vital for competitive advantage, and is a major driver of globalization. Consider the
following points:
Does technology allow for products and services to be made more cheaply and to a better
standard of quality?
31
Do the technologies offer consumers and businesses more innovative products and services
such as Internet banking, new generation mobile telephones, etc?
How is distribution changed by new technologies e.g. books via the Internet, flight tickets,
auctions, etc?
Does technology offer companies a new way to communicate with consumers e.g. banners,
Customer Relationship Management (CRM), etc?
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STUDY UNIT 3
3. MARKETING RESEARCH
3.1 MARKETING MANAGEMENT AND THE MARKETING ENVIRONMENT
3.1.1 Market and Marketing Research
Market research and marketing research are often confused. 'Market' research is simply research into
a specific market. It is a very narrow concept. 'Marketing' research is much broader. It not only includes
'market' research, but also areas such as research into new products, or modes of distribution such as via
the Internet. Here are a couple of definitions:
"Marketing research is the function that links the consumer, customer, and public to the marketer through
information - information used to identify and define marketing opportunities and problems; generate,
refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of
marketing as a process. Marketing research specifies the information required to address these issues,
designs the methods for collecting information, manages and implements the data collection process,
analyzes, and communicates the findings and their implications."
American Marketing association - Official Definition of Marketing Research
Obviously, this is a very long and involved definition of marketing research.
"Marketing research is about researching the whole of a company's marketing process."
Palmer (2000).
This explanation is far more straightforward i.e. marketing research into the elements of the marketing
mix, competitors, markets, and everything to do with the customers.
3.1.2 The Marketing Research Process.
Marketing research is gathered using a systematic approach. An example of one follows:
Define the problem. Never conduct research for things that you would 'like' to know. Make sure
that you really 'need' to know something. The problem then becomes the focus of the research.
For example, why are sales falling in New Zealand?
33
How will you collect the data that you will analyze to solve your problem? Do we conduct a
telephone survey, or do we arrange a focus group? The methods of data collection will be
discussed in more detail later.
Select a sampling method. Do we us a random sample, stratified sample, or cluster sample?
How will we analyze any data collected? What software will we use? What degree of accuracy is
required?
Decide upon a budget and a timeframe.
Go back and speak to the managers or clients requesting the research. Make sure that you agree
on the problem! If you gain approval, then move on to step seven. 7. Go ahead and collect the
data.
Conduct the analysis of the data.
Check for errors. It is not uncommon to find errors in sampling, data collection method, or analytic
mistakes.
Write your final report. This will contain charts, tables, and diagrams that will communicate the
results of the research, and hopefully lead to a solution to your problem. Watch out for errors in
interpretation.
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Figure 3.1 Steps in the marketing research process
Sources of Data - Primary and Secondary
There are two main sources of data - primary and secondary. Primary research is conducted from
scratch. It is original and collected to solve the problem in hand. Secondary research, also known as desk
research, already exists since it has been collected for other purposes.
35
Decide whether a formal marketing investigation is required
Conduct preliminary marketing investigationStep 1: Define marketing problem/opportunityStep 2: Formulate hypothesesStep 3: Determine objectivesStep 4: Determine data needs
Internal marketing environmentAnalyse internal secondary source of information
External marketing environment
Analyse external secondary sources of information
If yes conduct a formal investigation.Step 5: select method of collecting informationStep 6: Design means of collecting informationStep 7: Determine extent of formal investigationStep 8: Select, train and control interviewersStep 9: FieldworkStep 10: Data processingStep 11: Communicate information to decision maker.
We have given a general introduction to marketing research. Marketing research is a huge topic area and
has many processes, procedures, and terminologies that build upon the points above. (See also lesson
on market research, primary marketing research and secondary marketing research)
STUDY UNIT 4
4. CONSUMER BEHAVIOUR
4.1 CONSUMER BEHAVIOUR
If a marketer can identify consumer buyer behaviour, he or she will be in a better position to target
products and services at them. Buyer behaviour is focused upon the needs of individuals, groups and
organisations.
It is important to understand the relevance of human needs to buyer behaviour (remember, marketing is
about satisfying needs).
Figure 4.1 Abraham Maslow’s Hierarchy of needs
Let's look at human motivations as introduced by Abraham Maslow by his hierarchy of needs: The
hierarchy is triangular. This is because as you move up it, fewer and fewer people satisfy higher level
needs. We begin at the bottom level.
Physiological needs such as food, air, water, heat, and the basic necessities of survival need to be
satisfied. At the level of safety, man has a place to live that protects him from the elements and predators.
At the third level we meet our social and belongingness needs i.e. we marry, or join groups of friends, etc.
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The final two levels are esteem and self-actualisation. Fewer people satisfy the higher level needs.
Esteem means that you achieve something that makes you recognised and gives personal satisfaction,
for example writing a book. Self-actualisation is achieved by few. Here a person is one of a small number
to actually do something. For example, Neil Armstrong self-actualised as the first person to reach the
Moon.
The model is a little simplistic but introduces the concept a differing consumer needs quite well.
Figure 4.1 Buyer decision process
To understand consumer buyer behaviour is to understand how the person interacts with the marketing
mix. As described by Cohen (1991), the marketing mix inputs (or the four P's of price, place, promotion,
and product) are adapted and focused upon the consumer.
The psychology of each individual considers the product or service on offer in relation to their own culture,
attitude, previous learning, and personal perception. The consumer then decides whether or not to
purchase, where to purchase, the brand that he or she prefers, and other choices.
If a marketer can identify consumer buyer behaviour, he or she will be in a better position to target
products and services at them. Buyer behaviour is focused upon the needs of individuals, groups and
organisations.
It is important to understand the relevance of human needs to buyer behaviour (remember, marketing is
about satisfying needs).
4.2 TYPES OF PURCHASE DECISIONS
37
Consumer decision making varies with the type of purchase decision. There are four types of purchase
decisions based on the degree of buyer involvement and the degree of difference among brands
HIGH INVOLVEMENT LOW INVOLVEMENT
Significant differences
between brands
Complex purchasing
behaviour
Variety seeking purchasing
behaviour
Few differences between
brands
Dissonance reducing
behaviour
Habitual purchasing
behaviour
Table 4 Types of purchasing decisions Source: Adapted from Assael, H. 1987. Consumer
behaviour and marketing action. Boston: Kent p.87
Complex purchase behaviour: Consumer engages in complex purchasing behaviour when they
are highly involved in a purchase and aware of significant differences among brands. This is
usually the case when the product is expensive, being bough infrequently, involves risk and is
self-expressive (for example motor cars, computers, clothes furniture and electronic equipment).
Buyers need assistance in learning about the products attributes and benefits.
Dissonance reducing behaviour: buyers are highly involved in the purchase but believe that there
are few differences between the brands. The buyer will shop around to determine what is
available on the market but will buy fairly quickly (for example, lawnmowers and carpets)
Habitual purchasing behaviour: buyers demonstrate low involvement and significant brand
differences are absent. Buyers buy out of habit but are not brand loyal (eg, salt, milk, bread and
deodrants). The products are mostly low cost, frequent purchases.
Variety seeking purchasing behaviour: these buying situations are characterized by low
consumer involvement but significant brand differences. Consumers do a great deal of brand
switching for the sake of variety (for example, take-away food, restaurants, ice cream,
entertainment, salad dressing and coffee)
Two further types of decision making also occur:
Routine decision making: this occurs when a consumer, without consciously thinking about it,
consistently purchases the same branded products. This loyalty to specific branded products is
the result of the extended decision making process of the preceding period. Routine purchasing
reduces the necessity of repeating the decision making process each time an item is needed,
thereby facilitating the purchasing task. Household necessities which must be re-stocked
regularly, such as toiletries, detergents, margarine, coffee and tea, are often purchased on this
basis.
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Impulsive decision making: Implies unplanned action, on the spur of the moment in contrast to
the purposeful planning visible in true decision making. This is not completely correct. In
impulsive decision making the consumer also progresses through all the phases of the decision
making process. Usually action follows immediately after the decision has been reached and to a
bystander it seems as though planning (which includes purposefully searching for and evaluating
information) did not precede the action. Impulsive action viewed in this light indicates a decision
made at the point of purchase and therefore cannot be regarded as an irresponsible approach to
purchasing. It can be concluded that decision making is lengthy when the decision is deemed
important. Decision making can also occur spontaneously when the consumer impulsively buys
immediately after becoming aware of an unsatisfied need.
4.3 FACTORS INFLUENCING CONSUMER BEHAVIOUR
Several individual and group factors strongly influence the decision making process. Figure 4.1
summarizes these influences
Figure 4.2 Overview of consumer behaviour
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INDIVIDUAL FACTORS Motivation Perception Learning ability Attitude Personality lifestyle
GROUP FACTORS The family Reference group Opinion leaders Social class Cultural group
DECISION MAKING PROCESS Awareness of a need or problem Gathering information Evaluation Decision making Action Post purchase evaluation
CHOICE OF A MARKET OFFERING
4.4 Individual Factors Influencing Consumer Buying Decisions
Individual factors refer to factors inherent in human behaviour that will influence an individual’s behaviour
as a consumer.
4.4.1 Motivation
All behaviour starts with needs and wants. Needs are basic forces that motivate an individual to do
something. Wants are needs that are learned during an individual’s lifetime. It is sometimes quite easy to
identify the motives that underlie a buying decision, while at other times it is impossible to identify these
motives, buying motives may be grouped into three different levels, depending on the consumers
awareness of them and their willingness to divulge them:
Conscious need level: Consumers know the motives and are quite willing to talk about them.
Preconscious need level: consumers are aware of the motives but will not reveal them to others.
Unconscious need level: consumers cannot explain the factors motivating their buying actions
because they are unconscious or sub-conscious motives.
4.4.2 Perception
A motive activates behaviour intended to satisfy the aroused need. Since behaviour can take many
forms, an individual gathers information from the environment to help in making a choice. The process of
receiving, organizing and assigning meaning to information or stimuli detected by the five senses is
known as perception. It is the way that consumers interpret or give meaning to the world surrounding
them. The consumer can for example, form a perception of the quality of a product by feeling it, or just by
looking at the product. Perception involves, seeing, hearing, feeling, tasting and smelling. Stimuli picked
up by the senses are relayed to the brain, where they are interpreted. The consumer reacts according to
this interpretation and not always according to the objective reality. Because so many often conflicting
stimuli are perceived, simultaneously, individuals tend to defend themselves. They may ignore, or distort
the meaning of unwelcome stimuli. Such perceptual defense mechanisms are used to protect a person
against undesirable stimuli from the environment and include the following:
Selective exposure occurs when people selectively choose to expose themselves only to certain
stimuli. A consumer can, for example, avoid unwelcome stimuli by quickly paging through a
magazine and missing the advertisements or by turning off the radio or television when
commercials come on.
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Selective attention occurs when the individual does not pay full attention to the stimuli picked up
by the senses. Selective attention causes a consumer not to comprehend the content of the
marketing message.
Selective interpretation occurs when the stimuli are perceived, but the message itself is not
interpreted as it was intended to be. The consumer can interpret the marketing message
incorrectly by distorting the meaning or by misunderstanding it.
Selective recall refers to the individual’s ability to remember only certain stimuli and to forget
others which may be important. At the point of purchase, consumers may have forgotten the
advertisement and must therefore once again be reminded to purchase the product.
4.4.3 Learning ability
The consumers learning ability also influences behaviour. The consumer must or example, learn which
product attributes relate to which brand and where it can be purchased. Consumers must also be able to
recognize the distinctive packaging. Consumers must remember the information supplied in the
marketing message when they are in a position to purchase the product. Learning can be defined as the
result of a combination of motivation, attention, experience and repetition.
The following learning principles are important when formulating marketing messages.
Repetition is important to reinforce the message
A unique message is best remembered
A message which is easy to understand is easy to learn
The law of primacy states that the aspect mentioned at the beginning of the message is best
remembered but according to the law of decency, the last mentioned aspect is best remembered.
Demonstrations facilitate the learning process
Promise of rewards facilitate learning
Serious fear producing messages are avoided; consumers tend to distort such messages.
4.4.4 Attitude
An attitude is a positive or negative feeling about an object (for example a brand, product or company)
that predisposes a person to behave in a particular toward that object. Attitudes also encompass an
individual’s value system which represents personal standards of good and bad, right and wrong, and so
forth.
Attitudes have the following in common:
Attitudes are learned through previous experience with a product or indirect experience such as
reading about the product or interaction with social groups.
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Attitudes related to an object- consumers can hold attitudes only about something and attitudes
will vary from object to object
Attitudes have direction and intensity. Attitudes towards the object are either favorable or
unfavourable. The consumer either r likes or dislikes soft drinks. The strength of the liking can
also differ.
Attitudes tend to be stable- once formal, attitudes usually endure and the longer they are held, the
more resistant to change they become.
4.4.5. Personality
Personality refers to those psychological characteristics of people which both determine and reflect their
reaction to environmental influences. Personality distinguishes one individual from another and one
group of individuals with similar characteristics from another group.
4.4.6 Lifestyle
Lifestyle refers to the way of living of individuals or families. The lifestyle concept provides descriptions of
behaviour and purchasing patterns, especially the ways in which people spend their time and money.
Personality, motives and attitudes also influence lifestyle.
Decision making process
The Adoption Process (also known as the Diffusion of Innovation) is more than forty years old. It was first
described by Bourne (1959), so it has stood the test of time and remained an important marketing tool
ever since. It describes the behaviour of consumers as they purchase new products and services. The
individual categories of innovator, early adaptor, early majority, late majority and laggards are described
below.
4.5 GROUP FACTORS INFLUENCING CONSUMER BUYING DECISIONS
The consumer is a human being who needs to be affiliated with other groups in the social environment in
order to satisfy social needs. Group norms will therefore influence the individuals’ behaviour patterns.
These norms include habits, rules and regulations. Considering the fact that an individual can belong to
many different groups (all of which maintain distinctive norms of behaviour), one can appreciate the
degree of social pressure placed on the economic activities of an individual. There are very few products
that are without any social significance at all, and usually a consumer succumbs to the pressure of social
needs. The different groups that can compel a consumer to confirm to group norms are the cultural
group, the family, reference groups and opinion leaders.
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4.5.1 Culture
Culture comprises a complex system of values, norms and symbols which have developed in society over
a period of time and in which all its members share. The cultural values, norms and symbols are created
by people and are transmitted from one generation to another to ensure survival and also to facilitate
adaptation to the circumstances of life. They are transmitted from parents to children. In this process, the
school, church and other social institutions also play an important role.
South African society is fragmented into many cultural groups and subgroups. Although whites are not
numerically dominant, their norms, values and symbols do exert influence on economic activity. Most
advertisements therefore reflect Western culture. Advertising messages are directed simultaneously at
the black and white consumer markets and are often variations of the same theme. Marketing
management must however, be careful not to use symbols which can be interpreted incorrectly and not to
portray unacceptable behaviour patterns. Effective communication can take place only if the theme of the
advertising message reflects the cultural norms, values and symbols of the cultural group to which it is
directed.
4.5.2 Family
Of all the groups influencing consumer behaviour, the individual maintains the closest contact with the
family. In the family interaction, the child learns behaviour patterns by means of the socialisation process.
The family can be regarded as a nuclear group whose members live in close contact with one another
and act as a decision making unit when they attempt to satisfy individual needs from one shared source.
This fact implies that individual needs must necessarily be subordinated to those of other members to a
greater or lesser extent. This leads to consultation and joint decision making among family members.
With regard to influence of the family there are two aspects which are of importance to the
enterprise in developing its marketing strategy: the family life cycle and role differentiation
between family members.
The family life cycle phases are as follows:
Newly wed phase: both members of this unit are usually economically active and pool their
incomes, which means they can usually afford to buy durables and even luxuries.
Phase of family growth: this phase starts with the arrival of the first child in the relationship, and
markedly changes previous consumer behaviour patterns.
Maturity phase. The children in the family have reached the adolescent stage where in addition
to their basic needs, they have also developed their own norms, preferences and lifestyles.
Post parental phase. All the children have left home and the parents spend proportionally less on
basic household necessities. They have greater disposable income to spend n luxuries.
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Sole survivor: the consumption patterns and the lifestyle of the surviving spouse change
drastically.
4.6 ROLE DIFFERENTIATION IN CONSUMER DECISION MAKING IN THE FAMILY
ROLES FAMILY MEMBERSThe Initiator is the person who makes the first
suggestion regarding products to be
purchased.
Teenagers often act as initiators, for example,
requesting a soft drink or ice-cream
The Influencer is the person who implicitly or
explicitly influences the final decision because
this person’s suggestions and wishes are
reflected in the ultimate decision made by the
family
Children’s preferences ( for example a specific
breakfast cereal) influence family decision
making.
The Decision Maker, is the person who actually
chooses between alternatives and makes the
decision
This is usually the mother or the father
The Purchaser purchases the product It is usually the mothers responsibility to
purchase the groceries
The User is the person who actually uses the
product and the one who had initiated the need
for the product
The baby consumes the vegetable puree’
purchased by the mother.
Table 4 Role differentiation in consumer decision making in the family
4.6.1 Reference Groups
Individuals may belong to many sorts of groups. A group consists of two or more people who interact with
each other to accomplish some goal. Examples include families, close personal friends, co-workers,
members of an organization, leisure and hobby groups, and neighbours. Any of these groups may
become reference groups.
A reference groups involves one or more people that a consumer uses as a basis for comparison of point
of reference in forming responses and performing behaviours.
In all reference groups there are distinctive norms of behaviour and members are expected to conform to
these norms in order to avoid sanctions being applied against them. The following types of reference
groups influence consumer behaviour patterns:
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Membership groups are groups to which the person has obtained membership, for example
friends or a social club.
Automatic groups are groups to which a person belongs has a result of age, sex or occupation. A
peer group is an example of an automatic group.
Negative groups are groups with which a person does not wish to be associated. A person
intentionally avoids the norms of the negative group, e.g. Smokers/ drinkers
Associative groups are those groups to which a person aspires to belong, for example, a group
with higher status or level of acceptance amongst peers.
Typically members of associative reference groups are often used as models in advertisements in order
to show potential consumers the type of person who buys the product and also the way in which the
product can be used. The advertising message attempts to persuade potential customers to follow the
example set by these models. Members of perceived negative groups can also be used in advertising; for
example overweight models in health food advertisements.
Reference groups affect consumer behaviour in three ways:
Normative influence- norms of behaviour are laid down by the reference group and group
members behave accordingly.
Value- expressive influence- behaviour portrays certain values- for example health
consciousness, environmental consciousness or ethical behaviour
Informational influence- consumers often accept the opinion of group members as credible,
especially when it is difficult to assess product or brand characteristics by observation
4.6.2 Opinion Leaders
The opinion leader has an important function in the marketing communication process, acting as a go-
between in what is known as the two-step flow of communication. Research results have indicated that
information does not flow directly from the mass media to individual consumers in the target market but is
channeled through a person, the opinion leader, who interprets and evaluates the information, relaying
acceptance or rejection of the message to other consumers in the target market.
The role of the opinion leader is especially important in purchasing high-risk new products. In the case of
a new fashion, for example, the fashion opinion leader is willing to accept the risk of ridicule or financial
loss, which the ordinary consumer is usually anxious to avoid. The latter will only become interested after
the new fashion has been vetted and approved by the opinion leader. This process of gradual
acceptance is known as diffusion.
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Figure 4.3 The adoption Process
Innovators are the first to adopt and display behaviour that demonstrates that they likely to want to be
ahead, and to be the first to own new products, well before the average consumer. They are often not
taken seriously by their peers. The often buy products that do not make it through the early stages of the
Product Life Cycle (PLC).
Early adopters are also quick to buy new products and services, and so are key opinion leaders with
their neighbours and friends as they tend to be amongst the first to get hold of items or services.
The early majority looks to the innovators and early majority to see if a new product or idea works and
begins to stand the test of time. They stand back and watch the experiences of others. Then there is a
surge of mass purchases.
The late majority tends to purchase the product later than the average person. They are slower to catch
on to the popularity of new products, services, ideas, or solutions. There is still mass consumption, but it
begins to end.
Finally, laggards tend to very late to take on board new products and include those that never actually
adopt at all. Here there is little to be made from these consumers.
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There are a number of examples of products that have gone through the adoption process. They include
Ipods or DVD players (or even video players and digital watches). Initially only a small group of
younger or informed, well off people bought into these products. Opinion leaders or the early adopters
then buy the product and tend to be a target for marketing companies wishing to gain an early foot hold.
The early majority is slightly ahead of the average, and follow. Then the late majority buys into the
product, followed by any laggards. New adoption process or curves begin all the time. Who knows what
will happen with solid state technology or Internet purchases of media?
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STUDY UNIT 5
5. MARKET SEGMENTATION
5.1 MARKET SEGMENTATION
This is the first of three lessons based upon SEGMENT - TARGET - POSITION. To get a product or
service to the right person or company, a marketer would firstly segment the market, then target a single
segment or series of segments, and finally position within the segment(s).
Segmentation is essentially the identification of subsets of buyers within a market who share similar
needs and who demonstrate similar buyer behavior. The world is made up from billions of buyers with
their own sets of needs and behavior. Segmentation aims to match groups of purchasers with the same
set of needs and buyer behavior. Such a group is known as a 'segment'. Think of you r market as an
orange, with a series of connected but distinctive segments, each with their own profile.
Figure 5.1 Market segmentation example
Of course you can segment by all sorts of variables. The diagram above depicts how segmentation
information is often represented as a pie chart diagram - the segments are often named and/ or
numbered in some way.
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Segmentation is a form of critical evaluation rather than a prescribed process or system, and hence no
two markets are defined and segmented in the same way. However there are a number of underpinning
criteria that assist us with segmentation:
Is the segment viable? Can we make a profit from it?
Is the segment accessible? How easy is it for us to get into the segment?
Is the segment measurable? Can we obtain realistic data to consider its potential?
There are many ways that a segment can be considered. For example, the auto market could be
segmented by: driver age, engine size, model type, cost, and so on. However the more general bases
include:
by geography - such as where in the world was the product bought.
by psychographics - such as lifestyle or beliefs.
by socio-cultural factors - such as class.
by demography - such as age, sex, and so on.
A company will evaluate each segment based upon potential business success. Opportunities will depend
upon factors such as: the potential growth of the segment the state of competitive rivalry within the
segment how much profit the segment will deliver how big the segment is how the segment fits with the
current direction of the company and its vision.
Figure 5.2 Segmentation Matrix
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The Segmentation Matrix Business Battlemap is a useful segmentation tool. There are two bases for
segmentation. Here we use beer brand versus ages groups. The various products are then plotted on the
matrix. The result is a 'battlemap'.
5.2 MERITS AND DRAWBACKS OF MARKET SEGMENTATION
Market segmentation offers the following benefits to marketers:
Firstly, it forces marketers to focus more on customer needs. In a segmented market, the
marketer can fully appreciate the differences in customer needs, and respond accordingly. A
greater degree of customer satisfaction can be achieved, if the market offering is developed
around customer needs, demands and preferences.
Secondly, segmentation leads to the identification of excellent new marketing opportunities if
research reveals an unexplored segment. Without proper segmentation, such a market segment
may remain untapped for years.
Thirdly, market segmentation provides guidelines for the development of separate market
offerings and strategies for the various market segments.
Lastly segmentation can help guide the proper allocation of marketing resources.
Market segmentation also has the following disadvantages which must be considered by the marketer:
The development and marketing of separate models and market offerings is very expensive. One
standardized model is much cheaper to manufacture and to market.
Only limited market coverage is achieved since marketing strategies would be directed at specific
market segments only
Excessive differentiation of the basic product may eventually lead to a proliferation of models and
variation and finally cannibalization. Cannibalisation occurs when one product takes away market
share from another product developed by the same enterprise.
There are major segmentation variables for consumer markets. This means that market segments and
target markets are based on various consumer characteristics and behaviours. The variables are:
geographic, demographic, psychographic and behaviouristic. You should be aware of the components of
each variable as indicated in the table below.
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Geographic variables: Region, size of country, size of city, density, climate
Demographic variables: Age, gender, size of family, family life cycle, income, occupation,
education, religion, race, nationality
Psychographic variables: Social class, lifestyle, personality
Behaviouristic variables: Purchase occasion, benefits sought, user status, user rate, loyalty
status, readiness stage, attitude towards product.
5.3 PREREQUISITES FOR MARKET SEGMENTATION
Market segmentation must enhance customer satisfaction and profitability of shareholders. To subdivide
the market for small delivery vehicles into Western Cape and Natal, farmers would make little marketing
or business sense. In this case, geographic location makes no difference since the requirements of the
farmers remain the same regardless of location. Geographic location would be very effective as a means
of segmenting the market for insecticides, since farmers in the Western Cape have to deal with different
insects, to the farmers in KZN. For market segmentation to be effective, it must meet the following
criteria:
It must be measurable. The size, purchasing power, potential profit and profile of the segment
must be measurable. If this is not possible, it would be extremely difficult to compare such a
segment with others, or to properly assess its attractiveness.
It must be large enough. Pursuing a market segment that is too small is not profitable. A
segment must be the largest homogeneous group of people worth exploiting with a tailored
market offering and marketing strategy. Although South Africa boasts a large variety of cultures,
some of them such as the Chinese community may be so small that it does not warrant special
attention by marketers.
It must be accessible. The marketer must be able to reach the market segment with his/her
market offering and strategy. How is it possible, for example, to reach rural people if they cannot
read or do not listen to the radio? Such a segment is largely inaccessible to the marketer.
It must be actionable. It must be possible to develop separate market offerings for different
market segments. Smaller enterprises are often unable to develop different market offerings or
marketing strategies, even if they realize that there are distinct differences between various
segments.
It must be differentiable. Different market segments must exhibit heterogeneous needs. In
other words, people in different segments must have different needs, demands and desires.
People in the same segment on the other hand, must exhibit similar characteristics and needs.
The marketer should also be able to distinguish the segments from each other without too much
difficulty.
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Once marketing management is satisfied that a specific segment conforms to these conditions it can
be considered as a possible target market.
5.4 TARGETING
5.4.1 Market Targeting
Once the marketer has developed a complete profile of the various segments in the market, he or she
must select one or more segments on which to concentrate the market offering.
This is known as market targeting. In this section, the focus is firstly on the criteria to be used to
evaluate market segments, and secondly on the approaches available to the enterprise.
5.4.2 Selecting Potential Target Markets
Before a specific market segment is selected as a target market it must first be evaluated according to
five important evaluation criteria:
Segment size and growth possibilities
A target market need not necessarily be big. A small segment can often be more profitable than one in
which a large sales volume can be realized. Marketing management must be convinced that there are
further growth possibilities, thus making the segment sustainable.
attractiveness and potential profitability
The attractiveness of a target market lies not only in its size and growth possibilities, but also in the
promise of long term profitability. Attractive segments attract competitors and intense competition can
have a detrimental effect on future profits. Serious threats to attractive segments are aggressive
competitors that can launch price wars or intensive advertising campaigns or competitors who are able to
develop new substitute products. The growing power of buyers an suppliers also threatens attractive
target markets. If the threat is very serious, an enterprise that does have the necessary resources and
skills can decide not to take the opportunity to select the segment as a target market.
The resources and skills of the enterprise
Promising segment opportunities that do not fit in with the long-term objectives set by management
cannot be utilized. The same applies when resources and skills to exploit the opportunity are lacking. A
segment can only be chosen as a target market if marketing management is fully committed to serving
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this target market better than any other competitor. This implies that the market offering must have an
undoubted differential advantage to target market members.
Compatibility with the enterprises objectives
Apart from the resources and skills of the enterprise, the choice of a target must also consider the
compatibility with the objectives of the enterprise. If it is found that the objectives of the enterprise cannot
be enhanced by the choice of a particular market segment, it should be disregarded.
Cost of reaching the target market
When a potential target market is inaccessible to an enterprise marketing strategies, of the cost to reach it
is too high, it should not be considered.
5.5 TARGETING MARKET SEGMENTS
Marketers may choose one, two or multiple segments to target. In essence, marketers can choose
between three broad segmentation approaches to the market: concentrated targeting differentiated
targeting, and undifferentiated targeting.
5.5.1 Concentrated Targeting
Concentrating the market offering on one specific segment can lead to greater expertise in production,
distribution and marketing communications. Because the product offering is aimed at one market
segment only, it would be fair to argue that the enterprise will also be able to achieve greater customer
satisfaction in this singular market segment. A big disadvantage however is that all efforts are then
concentrated on one source. The risk of the product failure and non-acceptance of the product is thus
concentrated in a single target market. Should the preferences of the target market change, or should
competitors enter the market with an improved offering, the enterprise may find itself without any
business.
5.5.2 Differentiated Targeting
In differentiated market segmentation, the enterprise elects to target two or more market segments,
developing a unique marketing strategy for each one. This strategy allows the organization to cater for
the diverse needs of the different segments. It is however a costly strategy. In order to cater for the
diverse needs, the enterprise incurs extra production costs as production runs becomes smaller,
advertising costs increase because communication strategies must be adapted for the different market
segments, administrative costs will increase as separate marketing plans have to be developed, and
inventory costs increase as a greater variety of products must be maintained.
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5.5.3 Undifferentiated Marketing
When an undifferentiated marketing strategy is employed, the enterprise chooses to ignore the difference
found in the market.
Instead they pursue the total market with one basic market offering. In practice the enterprise would
concentrate on the commonalities of the market segment, rather than on the differences.
5.6 PRODUCT POSITIONING
Product positioning refers to the way customers perceive a product in terms of its characteristics and
advantages and its competitive positioning. It therefore involves the creation, in the minds of the targeted
buyers, of a distinctive position with regard to the organisations product relative to the products of
competing organisations. For positioning to be effective, it is important that the marketer understands
customer buying criteria and recognizes the performance of each competitor on each of the evaluation
criteria.
The positioning process (A seven step approach can be adopted when positioning brands)
5.6.1 Identify a Relevant Set of Competitive Brands
The positioning process starts with the identification of a relevant set of competitive brands to which a
particular producers brand will be compared. It is essential that all relevant competing brands must be
identified in order to make the positioning effort worthwhile. This enables the marketer to identify the
strengths and weaknesses of his/her own brand against a competing brand. This will lead to
repositioning.
5.6.2 Identify relevant determinant or differentiation variables
In essence product positioning has to do with competitive differentiation and the effective communication
of this to customers. An enterprise or market offering can be differentiated along four different
dimensions: product, services, personnel or image.
PRODUCT SERVICES PERSONNEL IMAGE Product features Performance
quality Durability Reliability Style Design
Delivery
InstallationCustomer trainingConsulting serviceRepair
CompetenceCourtesyCredibilityReliabilityResponsivenessCommunication
SymbolMediaAtmosphereevents
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The marketer must decide which of the above differentiation variables should be used in developing a
positioning map. Marketers must select those variables that play a major role in helping customers to
differentiate among alternative brands in the market.
Determine consumers’ perceptions
The marketer must establish how consumers perceive the various brands. This step involves the
collection of primary data from a sample of consumers. Using a structured questionnaire, these
consumers are questioned about their perceptions of the various brands. The collected data is then
analyzed.
Analyze the intensity of a brands current position
When a consumer is unaware of a brand, such a brand cannot occupy a position in the mind of a
consumer. In such instances, brand awareness must first be established. However, when a consumer is
aware of a brand, the intensity of awareness may vary. Marketers of lesser known brands must attempt
to increase the intensity of awareness by developing a strong relationship between brand and a limited
number of variables.
Competing directly with dominant brands is not advised, instead, the marketer must identify as a target
position within a market segment that is not dominated by a leading brand.
Analyze the brands current position
From the data collected, about consumers’ perception of the various brands in the market, the marketer
can establish how strongly a particular brand is associated with a variety of determinant variables.
Determine customers most preferred combination of attributes
The discussion so far has focused on consumers’ perceptions of existing brands and has not given any
insight into the positions that would appeal most to consumers. This can be achieved by asking survey
respondents to think of the ideal product or brand within a particular product category. Respondents
would then be asked their ideal brand/ product and existing products on a number of determinant
variables.
Selecting positioning strategies
Deciding where to position a new brand or where to reposition an existing one depends on the market
targeting analysis discussed earlier, as well as the market positioning analysis. The position chosen must
reflect customer preferences and the positions of competitive brands. The decision must also reflect the
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expected future attractiveness of the target market and the relative strengths and weaknesses of
competitors as well as the organizations own capabilities.
5.7 POSITIONING METHODS
5.7.1 Attribute Positioning
The enterprise positions itself in terms of one or more outstanding attributes.
5.7.2 Benefit Positioning
This method emphasizes the unique benefits that the product offering offers to its customers.
5.7.3 Use/Application Positioning
An enterprise can position itself in terms of the product use or application.
5.7.4 User Positioning
The enterprise may position their products with their users in mind.
5.7.5 Competitor Positioning
Some products can best be positioned against competitive offerings.
5.7.6 Product Category Positioning
An enterprise can position itself in a product category not traditionally associated with it.
5.7.7 Quality and Price Positioning
The enterprise may claim their product is of exceptional quality or the lowest price.
5.8 POSITIONING
5.8.1 Part of STP - Segment-Target- Position.
The third and final part of the SEGMENT - TARGET - POSITION (STP) process is 'positioning.'
Positioning is undoubtedly one of the simplest and most useful tools to marketers. After segmenting a
market and then targeting a consumer, you would proceed to position a product within that market.
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Remember this important point. Positioning is all about 'perception'. As perception differs from person to
person, so do the results of the positioning map e.g what you perceive as quality, value for money, etc, is
different to my perception. However, there will be similarities.
Products or services are 'mapped' together on a 'positioning map'. This allows them to be compared and
contrasted in relation to each other. This is the main strength of this tool. Marketers decide upon a
competitive position which enables them to distinguish their own products from the offerings of their
competition (hence the term positioning strategy).
The term 'positioning' refers to the consumer's perception of a product or service in relation to its
competitors. You need to ask yourself, what is the position of the product in the mind of the consumer?
5.8.2 Trout And Ries Suggest A Six-Step Question Framework For Successful Positioning:
1. What position do you currently own?
2. What position do you want to own?
3. Whom you have to defeat to own the position you want.
4. Do you have the resources to do it?
5. Can you persist until you get there?
6. Are your tactics supporting the positioning objective you set?
Positioning Map for Cars
The six products are plotted upon the positioning map. It can be concluded that products tend to bunch in
the high price/low economy (fast) sector and also in the low price/high economy sector. There is an
opportunity in the low price/ low economy (fast) sector. Maybe Hyundai or Kia could consider introducing
a low cost sport saloon. However, remember that it is all down to the perception of the individual.
5.9 MARKETING MIX.
5.9.1 What is the marketing mix?
The marketing mix is probably the most famous marketing term. Its elements are the basic, tactical
components of a marketing plan. Also known as the Four P's, the marketing mix elements are price,
place, product, and promotion. Read on for more details on the marketing mix.
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The concept is simple. Think about another common mix - a cake mix. All cakes contain eggs, milk, flour,
and sugar. However, you can alter the final cake by altering the amounts of mix elements contained in it.
So for a sweet cake add more sugar!
Figure: 5.3 Marketing mix
It is the same with the marketing mix. The offer you make to you customer can be altered by varying the
mix elements. So for a high profile brand, increase the focus on promotion and desensitize the weight
given to price. Another way to think about the marketing mix is to use the image of an artist's palette. The
marketer mixes the prime colours (mix elements) in different quantities to deliver a particular final colour.
Every hand painted picture is original in some way, as is every marketing mix.
5.9.2 Place
Distribution System
Designing a distribution system for a service involves two tasks:
Parties through which ownership will pass (Channel of Distribution)
Facilities for physically distributing the services
Place element is concerned with….
The degree of accessibility required to a service,
How the service will be distributed to clients,
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The level of control required over intermediaries that might be used, and
Geographical coverage of the service that is desired
5.9.3 Channels of Distribution
A channel is a conduit for bringing together a marketer and a target customer at some place and
time for the purpose of facilitating a transaction.
Among the channels a marketer can use are:
Specific buildings, salespeople, independent middlemen, telephones, advertising media, direct
mail.
Inseparability of services
Short channels usually mean more control on the part of the seller
5.9.4 Distribution Facilities
Good Location is vital when the distribution of a service requires personal interaction between the
producer and the consumer
Use of technology to increase customer convenience
Make donor contributions easy and convenient.
Price
In nonprofit organisations, price can take on many disguises. It can take the form of entrance fees, tuition
fees, service charges, donations, contributions etc.
Price determination in nonprofit organisations
Price becomes less important when profit making is not an organisational goal.
However, the product/ service received by clients are rarely free, that is without a price of some
kind.
The client pays a price (in the form of travel, waiting time, and perhaps degrading treatment?) that
a paying client-customer would not have to pay for the same service.
Some non-profits (museums, universities) must determine how much to charge for tuition.
Non-profits must determine the base price for their product offering and establish pricing
strategies in several areas of their pricing structure.
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Non-profit marketing
Non-profit marketing seeks to achieve a goal other than generating profits. Some nonprofit marketers
exist to protect the natural environment, some to safeguard the health and welfare of citizens, and some
to advance a social or political cause.
Setting the price
Cost plus –identifying what it costs to provide the service and adding on a profit margin if
appropriate.
What they can afford- setting price to match the organisation’s expectations of what the recipient
group can afford to pay
Competitor matching- identifying what competitors are demanding for their products/services and
setting your won price accordingly.
Pricing to achieve organisational objectives- using price as a tool to affect the overall levels of
demand for the service in the market.
Price Discrimination
By market segment
By place
By time
By service category
Pricing Strategies
Discounts
Flexible –price strategy
One-price strategy
Dynamic pricing
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Components of a product / service
Core benefitOr
service
Packaging
Brand name Features
StylingQuality
Installation
After-saleservice
Warranty
DeliveryAnd credit
Core Product
Tangible Product
Augmented Product
5.10 Product
5.10.1 Components of a Product/ Service
Figure 5.4 Components of a product/ service
5.10.2 Product Marketing
Core product: ‘What is the customer really seeking’ ‘What need is the product really satisfying?’
Tangible product: The core product is made available to the buyer in some tangible form.
Augmented product: additional services and benefits that go beyond the tangible product.
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5.10.3 Service Quality
Definition: “the delivery of excellent or superior service relative to customer expectations”
(Zeithaml and Bitner, 1996)
‘Quality…is…behaviour – an attitude- that says you will never settle for anything less than the
best in service for your stakeholders, whether they are customers, the community, your
stakeholders or the colleagues with whom you work every day’ (Harvey, 1995)
5.10.4 Promotion
The process of presenting an integrated set of stimuli to a market with the intent of evoking a set of
responses within that market set …and….setting up channels to receive, interpret and act upon
messages from the market for the purposes of modifying present company messages and identifying new
communication opportunities” (Delozier)
Non-profits communicate with various publics in an effort to influence their knowledge, attitudes and
behaviour.
Communication:
Organizations’ products, employees, facilities and actions- communicate something.
Each organization should examine its communication style, needs, and opportunities and develop a
communication program that is influential and cost-effective.
Nonprofits must communicate effectively with external publics such as the press, government agencies,
and the financial community.
5.10.5 Purpose of promotion
Inform potential customers of the existence and benefits of the service;
Persuade potential customers that the benefits offered are genuine and will adequately meet all
their requirements;
To remind members of the target group that the service exists and of the key benefits that it can
offer;
To differentiate the service in the minds of potential customers from the others currently on the
market
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Figure 5.5 The communication process
5.10.6 Communication Vehicles
An organization may use a number of communication vehicles to inform and motivate target publics.
These include:
– Space and time advertising - Catalogs
– Loudspeaker advertising - Films
– Mailings - Sales conferences
– Speeches - Corporate publicity
– Sales presentations - Endorsements
– Demonstrations - Special events
– Posters ad show cards - Sales literature
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STUDY UNIT 6
6.1 ADVERTISING
6.1.1 WHAT IS ADVERTISING?
The standard definition of advertising has six elements. First, advertising is usually paid for and that the
sponsor is identified in the advertisement. Most advertisers use advertisements to persuade or influence
the consumer to buy a product or to use a specific service. Advertisers try to reach large audiences, by
using mass media such as newspapers, television, radio and magazines. Since advertisers use mass
media, advertising is non-personal.
We, therefore, have to define advertising as “…paid nonpersonal communication from an identified
sponsor using mass media to persuade or influence a large audience”. Advertising is a nonpersonal
because it is a form of mass communication.
6.1.2 Types of Advertising
The seven basic types of advertising are explained below:
6.1.2.1 Brand advertising
Brand advertising is known as a national consumer advertising. This type of advertising focuses on the
development of a long-term brand identity and image. It tries to develop a distinctive brand image for a
product, such as Coca-cola and Koo.
6.1.2.2 Retail advertising or local advertising
Retail advertising focuses on local stores such as SPAR and Pick ‘n Pay, where a variety of products can
be purchased or where a service is offered. The message announces products that are available locally,
stimulates store traffic and tries to create a distinctive image for the store. Emphasis is placed on price,
availability, location and trading hours.
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DEFINITION OF ADVERTISING: “…paid non personal communication from an unidentified sponsor using mass media to persuade or influence an audience”.
6.1.2.3 Direct-response advertising
Direct-response advertising tries to stimulate a sale directly. Direct-response advertising can use any
advertising medium, including direct mail. The consumer can respond by telephone or mail, and the
product is delivered directly to the consumer by mail or some other carrier. A good example of this type of
adverting is the ‘infomercials’ we see on television.
6.1.2.4 Business-to-business advertising
Business-to-business advertising includes messages directed at retailers, wholesalers, distributors,
industrial purchasers and professionals. This type of advertising tends to be concentrated in business
publications or professional journals. A good example of this type of advertising is advertisements of the
Audit Bureau of Circulations of Southern Africa in Marketing Mix, a magazine for communications
professionals.
6.1.2.5 Institutional advertising
Institutional advertising is also called corporate advertising. It focuses on establishing corporate identity or
on winning the public over the point of view of the organization.
6.1.2.6 Non-profit advertising
Non-profit advertising is used by charities, foundations, associations, hospitals, museums, et cetera.
6.1.2.7 Public service advertising
Public service advertising communicates a message on behalf of some good cause. It is usually created
for free by advertising professionals, and the space and time involved are donated by the media
6.2 ROLES OF ADVERTISING
Advertising plays different roles in business and society. Let us take a brief look at the four different roles
of advertising.
6.2.1 The Marketing Role
According to the prescribed book, marketing is the strategic process a business uses to satisfy consumer
needs and wants through goods and services. From this definition of marketing we infer that consumer
needs and wants are the most important objectives of marketing. It is therefore essential to satisfy the
needs and wants of the consumer.
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The target market is the particular consumers at whom the company directs its marketing effort. The tools
available to marketing include the product, its price, the place and the promotion or marketing
communication, which are called the marketing mix or the 4 Ps of marketing. The marketing mix is
basically the combination of marketing tools, including advertising, used to sell a product. All these tools
are combined to create the marketing strategy.
Marketing communication (promotion) is also further broken into down into four related communication
techniques (known as the promotional or marketing communication mix):
Advertising
Sales promotion
Public relations and
Personal training
Marketing communication is the element in the marketing mix that communicates key messages about
the organization’s product or service to its target audiences. Advertising is only one element of a
company’s overall marketing communication programme, but it is the most visible. The inclusion of the
above elements differs from author to author; other authors might also include elements such as direct
marketing, sponsorship, the internet and marketing public relations (MPR).
6.2.2 The Communication Role
As we have seen in the definition, advertising is a form of mass communication. Mass communication is
described as messages conveyed to a large audience through many different kinds of mass media.
Advertising transmits different types of market information, and informs and transforms the product by
creating an image that goes beyond straightforward facts.
6.2.3 The Economic Role
There are two major schools of thought concerning the effects of advertising on the economy. The market
power school says that advertising is a persuasive communication tool used by marketers to destruct
consumer’s attention from the price of the product.
The market competition school sees advertising as a source of information that increases consumer’s
price sensitivity and stimulates competition.
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6.2.4 Societal Role
Advertising also has a number of social roles. It informs us about new and improved products, and
teaches us how to use these innovations it helps us to compare products and features and to make
informed consumer decisions. It mirrors fashion and design trends and contributes to our aesthetic sense.
Critics are still debating whether advertising reflects or creates social values, and whether advertisements
can manipulate people. It is generally known that advertisements try to persuade consumers to buy
certain products, but most people are also aware that advertisers are biased in favour of their own
products.
It is evident from the above that advertisement plays different roles in our daily lives and that we should
be aware of these roles in order to evaluate different advertisements.
6.3 FUNCTIONS OF ADVERTISING
Not all advertising attempts to achieve the same objectives. Every advertisement and every advertising
campaign try to reach unique goals, but there are two basic functions that advertising performs:
Product advertising aims to inform the market about the sponsor’s product and to stimulate the
market. The intent is clearly to sell a particular product and to persuade consumers that it is a
better choice than the competitor’ products
Institutional advertising is designed to create a positive attitude towards the seller. The intent is to
promote the sponsoring organization rather than the things it sells. With this function of
advertising, an advertiser such as Pick ‘n Pay wants consumers to buy at the store, regardless of
what type of product they buy.
Advertising also performs several sub functions:
Direct-action advertising is designed to stimulate demand over a longer period of time. These
advertisements that include a coupon with an expiry date or a sale with an expiry date fall under this
heading. This function of advertising is aimed at convincing the consumer to buy immediately, without
thinking about the purchase.
Indirect-action advertising is designed to stimulate demand over a longer period of time. These
advertisements inform customers that the product exists, indicate its benefits, state where it can be
purchased, remind customers to repurchase and reinforce customers’ decision to buy.
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Primary advertising aims at promoting demand for a generic product, such as meat or chicken. Selective
advertising attempts to create demand for a particular brand, such as Rainbow Chicken. It usually follows
the principles of primary advertising, which sets the stage for selective advertising.
Commercial advertising promotes a product with the intent of making a profit and non-commercial
advertising tends to be sponsored by nonprofit organizations. Charities and nonprofit organization such as
museums produce this type of advertising.
Advertising can also fulfill other functions. Read more about these functions of advertising on page 10 of
your prescribed book.
6.4 THE ADVERTISER
Advertising usually begins with the advertiser, that is, the organization or individual who initiates the
advertising process. The advertiser makes the final decisions about the target audience of the
advertisement, the media in which it will appear the size of the advertising budget and the duration of the
campaign.
We identify and briefly discuss four different types of advertisers below:
6.4.1 Manufacturers
Manufacturers make the products or services and distribute them to sellers or the end users for profit.
They usually base their advertising on a product brand name, such as Ceres and Stork.
6.4.2 Resellers
Resellers are wholesalers and retailers such as SPAR and Shoprite Checkers, which in turn distribute the
manufacturer’s products to other resellers or to the end user.
6.4.3 Individuals
An individual advertiser is a private citizen who wishes to sell a personal product for a profit, to request a
particular need, or to express a perspective or an idea. A student who hopes to sell a motorcycle and
places a classified advertisement in the university paper is an example of an individual advertiser.
6.4.4 Institutions
The last group of advertisers includes institutions, government agencies and social groups. Their primary
objective is not to sell a product or to generate profits, but to raise issues, influence ideas, affect
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legislation, provide a social service or alter behaviour in ways that are seen as socially desirable. For
example, the Arrive Alive campaign tells us that drinking, drinking and speeding kill.
6.5 THE ADVERTISING AGENCY
Most advertisers prefer to contract advertising agencies to run their advertising campaigns, because
advertising agencies have the skills and expertise to give the advertiser optimal media exposure and to
send the most effective message to the consumer. When advertisers use an agency, they expect the
agency to be a partner in the development of advertising and to help make the company more competitive
in the marketplace.
The essence of the agency business and the goal each agency strives to achieve is to add perceived
value to the product or service of its client. This is done by giving the product a personality, by
communicating in a manner that shapes the basic understanding of the product, by creating an image or
memorable picture of the product, and by setting the product apart from its competitors.
6.6 WHAT DOES AN ADVERTISING AGENCY DO?
The role of the advertising agency is not nearly as mystifying as it seems. Their job is simply to help you
reach your goals by presenting your company to the public in the best possible light.
They accomplish this by helping you fine-tune your message and by laying out an advertising campaign
that fits within your budget and marketing plan parameters.
That sounds easy, but it’s not. The process requires them to gain a detailed understanding of your
products, your customer base, and your company. Once they have done that, they will use that
information to connect you with your customers.
Depending on the kinds of ads that are appropriate for your product and market, you can expect to see
drafts of several different ads for your campaign. They might come in the form of storyboards (comic-strip
style sketches that describe a TV commercial), scripts (for radio spots), or mock-ups (of print ads).
Typically these will all support a central idea or concept for your campaign.
6.7 THERE ARE VARIOUS DIFFERENT TYPES OF ADVERTISING
6.7.1 Full-Service Agency
The full-service agency is an agency that has on staff the four major staff functions, namely:
Account management
Creative services
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Media planning and buying, and
Research
A full-service advertising will also have its own accounting department, a traffic department to monitor and
track the completion of projects internally, departments for broadcast and print production, and human
resources department. This agency analyses market data, proposes a strategy, prepares a
recommendation, produces the advertising, places it in approved media, verifies the advertising’s
appearance as ordered, invoices the client against the approved budget, collects funds from the client,
and disburses those funds to media and suppliers.
6.7.2 Specialized Agencies
There are many agencies that do not use the traditional full-service agency approach. The specialized
agencies either specialize in certain functions, audiences or industries:
Industries-focused agencies: concentrate on certain fields or industries, such as agriculture, medicine and
pharmaceuticals, healthcare and computers. Because they handle a variety of clients within that field,
they are able to bring their particular expertise to the service of their clients.
Minority agencies: focus on an ethnic group and are organized in much the same way as full-service
agencies, but they specialize in reaching and communicating with the market.
Creative boutiques: are usually relatively small agencies that concentrate entirely on preparing the
creative execution of client communications. Such agencies have one or more writers and artists on their
personnel, and are capable of preparing advertising to run in print media, outdoors, on radio and on
television. The organization focuses entirely on the idea or the creative product.
Media-buying services: are agencies that consist of media experts that buy media at lowest possible
rates. After the advertisement has been created, for example, by a creative boutique, the advertiser uses
a medium-buying service to plan or buy media.
In-house agencies: are advertising agencies owned and supervised by the companies that advertise. A
large retailer such as Pick ‘n Pay may have its own in-house advertising department or agency, because
its daily advertising budget would overwhelm most outside agencies. The advantages of in-house
agencies are that they save money, they specialize in what they are doing because they know the
business, and they are immediately available for high-priority projects. In-house agencies also require the
minimum personnel.
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Freelancers: are in business for themselves, they have a variety of agency clients but usually do not work
exclusively for any one.
Virtual agencies: a recent phenomenon is the virtual agency that operates like a group of freelancers. The
trend to use virtual agencies also sees the abandonment of conventional office space. Personnel do not
have fixed offices, they work at home, in their cars or at their clients’ offices.
Agency philosophies: regardless of the focus or size of agencies, most of the have philosophies of
business that separates one agency from another. Agencies use these statements when they bid for
contracts and when they introduce their staff members to the corporate culture.
6.8 THE DIFFERENCE BETWEEN ADVERTISING AND PUBLIC RELATIONS
6.8.1 Advertising Promotion
Space or time in the mass media must be paid for.
You determine the message.
You control timing.
One-way communication - using the mass media does not allow feedback.
Message sponsor is identified.
The intention of most messages is to inform, persuade, or remind about a product - usually with
the intention of making a sale.
The public may view the message negatively, recognizing advertising as an attempt to persuade
or manipulate them.
Very powerful at creating image.
Writing style is usually persuasive, can be very creative, often taking a conversational tone - may
even be grammatically incorrect.
6.8.2 Public Relations
Coverage in mass media, if any, is not paid for.
Interpretation of the message is in the hands of the media.
Timing is in the hands of the media.
Two-way communication - the company should be listening as well as talking and the various PR
venues often provide immediate feedback.
Message sponsor is not overtly identified.
The intention of public relations efforts is often to create good will, to keep the company and/or
product in front of the public, or to humanize a company so the public relates to its people or
reputation rather than viewing the company as a non-personal entity.
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The public often sees public relations messages that have been covered by the media as more
neutral or believable.
Can also create image, but can sometimes stray from how it was originally intended.
Writing style relies heavily on journalism talents - any persuasion is artfully inserted in the fact-
based content.
6.9 A FULL-SERVICE AGENCY WILL OFFER:
Account management.
Creative.
Media.
Traffic and production.
Account planning.
Account management.
Account managers work for an agency with the client (an agency's customers are called 'clients'). Very
often they will spend a lot of time with the client working as part of their marketing team. This is one way
in which an agency works closely with its client and why the 'chemistry' between a client and its agency
needs to be right. The account manager makes sure that the correct information is passed from the client
to the other members of the agency. He or she is a co-ordinator and time manager. The account planner
will work on a brief that is fed back to the agency team.
6.9.1 Creative Team
The first internal agency team members to see the brief tend to be the creative and the media planners.
The brief contains a 'proposition' that the client wishes to communicate to the target audience. The
creative team will transform the proposition into something exciting and attractive to the target audience.
The creative team decides upon the 'creative concept.' This will be a motivational idea. The words used to
express the creative concept are called 'copy.' The images, pictures and diagrams are created i.e. the
'design' or 'layout.' This is done by 'designers' and 'copywriters.' Beware some creatives! Creatives tend
to be artistic and innovative. Hence their advice should be highly regarded and any cr iticism should be
constructive.
6.9.2 Traffic and Production Team.
The traffic and media team are in charge of the production of the physical and artistic output, i.e. the
marketing communication. In the case of a TV advert, they would commission scripts, recruit actors
(mainly via agents), film crews and supporting activities (such as costumes and catering). All ads are
different and so the specifics will vary. In the case of print advertising, the traffic and production team
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would commission and sign-off all printed advertising material such as direct marketing materials,
magazine ads or posters.
6.9.3 Account Planning Team
The account planning teamwork on the 'customer's' perspective, and take an outward look at the world.
They support the creative teams by supplying data and opinion on what I actually occurring in the
marketing in which advertising is to be placed. They tend to use secondary data to support decisions, and
would rarely commission original research. However, with material supplied my organisations such as
Mori, Datamonitor, ACORN, and other - the account planning team can build an image of segments to
help the creatives.
6.9.4 Media Team
The media team will organise the timing and scheduling of the marketing communications campaign.
They will look at the range of media to be exploited, and then look at the best slots in which to run
advertising. They will help a client to decide upon the duration of and individual slot, and how many of
them to run. Here the expense and return to the client are key factors that influence decision-making. The
two main skills of the media team are media planning and media buying. Today there is a wealth of data
on which media buying can be based. There is software for planning and simulation.
6.9.5 Specialised agencies
There are many agencies that do not follow the traditional full-service agency approach. The specialized
agencies specialize in either certain functions, audiences, or certain industries.
Industry focused agencies: Industry focused agencies concentrate on certain fields or industries,
such as agriculture, medicine and pharmaceuticals, health care and computers. They handle a
variety of clients within that field so they are able to bring their particular expertise to the service
of their clients.
Minority agencies: focus on an ethnic group and are organized much the same as full-service
agencies. They are specialists in reaching and communicating with their market.
Creative boutiques. Are usually relatively small agencies that concentrate entirely on preparing
the creative execution of client communication. These agencies will have one or more writers
and artists on their staff. These organizations are capable of preparing advertising to run in print
media, outdoor, on radio and on television. These organizations focus entirely on the idea and
the creative product.
Media buying services. Are agencies that consist of media experts who buy media at the lowest
possible rates. When the advertisement is created, for example, by a create boutique, the
advertiser will use a media buying service to plan or buy media.
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In house agencies. Are advertising agencies owned and supervised by the companies that
advertise. A large retailer like Pick ‘n Pay, for example may have its own in-house advertising
department or agency because its daily advertising budget would overwhelm most outside
agencies. The advantages of in-house agencies are that they save money and that they are
specialists in what they do. They know the business and they are immediately available for high
– priority projects. This type of advertising agency also requires the minimum personnel.
Freelancers. Are in business for themselves. They have a variety of agency clients but usually
do not work exclusively for any one.
6.10 HOW AGENCY WORK IS ORGANIZED
The advertising agency offers all the services required for the total advertising function. As the agency
grows larger, a division of labour occurs. Specific functions of advertising are handled by different
specialists. Smaller agencies offer the same basic functions, they employ fewer people who are less
specialized and may perform more than one function.
Familiarize yourself with the five different areas of agency work, namely:
Account management
Creative development and buying
Account planning and research, and
Internal agency services
6.11 MARKETING STRATEGY
When you develop a marketing strategy, you should remember the role of each of these elements:
The product is the reason for marketing and the object of advertising, the product is what the whole
marketing strategy is all about. Without a product, there can be no marketing effort.
The place or channel of distribution is the mechanism for delivering and servicing the product, and
receiving payment. The channel of distribution includes those individuals and institutions involved in
moving products from producers to consumers. These could be retailers such as SPAR and SHOPRITE
CHECKERS.
The price of a product is based on the production and marketing s=costs of the product, and on the
sellers’ expected level of profit. The price of the product therefore also influences the development of the
marketing strategy and is reflected in the advertisement.
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Advertising, personal selling, sales promotion, public relation, direct marketing and point-of-sale\
packaging represent the primary techniques available to the marketer for communicating with target
markets. These combined techniques are referred to as the promotion or marketing mix.
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STUDY UNIT 7
7. MEDIA
7.1 COMMUNICATION CHANNELS
Although the print media have been the only readily accessible means of storing information and
retrieving it throughout most of the history of mass communication, broadcast advertising is the dominant
way to reach consumers today, followed by the fastest growing communications medium in history,
interactive online media (the Internet).
Remember that the print media keeps records; it is vault of great literature and the storehouse of historic
accomplishments.
On one hand, print media deliver messages on one topic and one thought at a time. An advertisement of
the Communication Science course placed by UniZulu, for example, delivers a message on one topic and
one thought in a structured information-processing style.
Broadcast media, on the other hand, uses a simultaneous approach, delivering a great deal of information
in rapid-fire manner. The same UniZulu advertisement in the broadcast media would use a combination of
visual and oral information like background music, images of students who are registering, background
information on UniZulu achievements, et cetera (add your own ideas).
Print media allow for selective targeting, for example, potential UniZulu students, but do not reach all
people, especially not in a broadcast-oriented society. Print is a space medium, because it allows the
reader to digest information and images at his or her own speed.
By contrast, broadcast is a time medium, because it affects the viewer’s emotions for a few seconds and
then disappear. Advertisements in the broadcast media use different human senses (sight through
movement, imaginary and sound) than advertisements in the print media (where visual and verbal
messages are used).
Before we can discuss the media as channels of communication in advertising, we have to define the
concepts print, broadcast, and interactive and alternative media.
7.1.1 Print Media
The print media can be defined as media that are:
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Manufactured by a printing process;
Characterized by their public nature; and
Produced by unique communications such as media workers, for example, journalists and
advertisers.
Various types of print media exist, but we focus on the two primary print media, namely newspaper and
magazines.
Newspapers
Broadly speaking, newspapers can be divided into mass, local or speciality newspapers.
Mass newspapers are circulated nationally and are aimed at the general audience.
The circulation of local and speciality newspapers may be limited and are aimed at special target
audiences.
The South African press and its foremost publications and associated business constitute four
main groups, namely:
o Nasionale Pers
o Caxton
o Independent newpapapers
o Times media
There are also smaller organizations and even individuals that produce smaller publications.
You should also know the difference between daily and weekly newspaper, and be able to provide
examples of each. “Daily”, “weekly” or “monthly” relates to a classification of print media in terms of the
frequency of the publication.
For example:
You could have identified The Star or Sowetan, which are daily newspapers, the Sunday Times, which is
a weekly newspaper or the Engineering News, which is a specialized monthly newspaper. Some
newspapers are also available in electronic format on the Internet (for instance Beeld, The star, Weekly
Mail and Guardian).
Magazines
Within the advertising context, a distinction is made between trade, technical and professional
publications, on the one hand, and consumer magazines on the other. Magazines are also categorized
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according to frequency, that is, weekly, biweekly, monthly, quarterly and half-yearly. In order to
understand the categorization of magazines, you should be able to give examples of each.
For example: The Drum or You magazines are weekly consumer magazines, the Marketing Mix is
monthly professional publication, et cetera.
7.1.2 Broadcast Media
Broadcast media is the process of transmitting sound or images, and includes both the radio and
television media.
Television
Television: The creation of impressions through images and personalities.
Television is the most persuasive and powerful medium of communication today owing to the number of
people it can reach and the impact of a single appearance on the target audience. Television provides
viewers and listeners with regular, reliable news and information.
Television was first introduced in South Africa in 1976.
The following stations have been established since then: SABC television service, which consists of three
channels (SABC1, SABC2 and SABC 3) broadcasting in 11 languages and reaching a daily audience of
about 12 million viewers.
M-Net, which began broadcasting in October 1986 was the first pay television network (subscription
television network) in the southern hemisphere and only the second in the world to provide direct-to-
home-satellite television. The name “M-Net” is an acronym for ‘media-network’, which indicates that the
channel is owned by the press.
e.Tv started its broadcasts on 1st October 1998. Unlike the SABC and M-Net, e.Tv did away with
continuity announcers or presenters.
DStv, which had been offered by Multichoice since 1995 via five satellites over Africa, is the second pay
television network (subscription television network) available in South Africa. It currently broadcasts 55
video and 48 audio channels 24 hours a day. Included are also six data channels, which pioneer the first
interactive television offerings in Africa.
Future developments in the television broadcasting would be in the direction of regional and community
television stations, with free-to-air- licences (such as e.Tv).
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Radio
Radio, however, is a more flexible medium that reaches a wider cross-section of the public throughout the
day and often provides the opportunity of talking directly to a specific target market) for example, via talk
shows). The basis of radio is factual news value, public interest and clarity. Radio is flexible and portable,
and it can reach specialized publics. It is a cost-effective medium that can reach people of different ethnic
and language groups and languages. Numerous community radio stations are operating nationwide.
In South Africa, three types of broadcasting licences exit, namely: public, private and community
licences.
Public broadcasting is not primarily market driven. It is defined as a service provided by the SABC or any
other statutory body or person who receives all or some income from licence fees, and can include a
commercially operated service.
Private radio is defined as a service operated for profit and it finances itself through advertising revenue.
A community broadcasting service refers to a broadcasting service that is fully controlled by a non-profit
entity and is operated for non-profitable purposes. It serves a particular community, encourages members
of the community to participate in promoting the interests of such a community and may be funded by
donations, grants, sponsorship or advertising or membership fees or a combination thereof.
7.1.3 Interactive and Alternative Media
Interactive media technology is another form of broadcast media. Although a primary advantage of
interactive online media is their selectivity, they are still available to a mass audience. The interactive
medium is also known as the Internet.
Internet
The Internet is a system of computers linked to one another through a vast array of networks consisting of
telephone cables, satellite communication, optical fibre lines, office computer networks and various other
means.
These computers are constantly active (or online) to ensure a core of permanently linked units. Users link
up to the Internet through telephone modems. An international network is established, also referred to as
the Internet. This network enables people to distribute information in computer format to any user who
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has the necessary hardware components (electrical and mechanical equipment used in computer system)
components to establish a link with the Internet.
The message structure of information on the Internet consists of text, graphic images, audio clips and
even video images, or a combination of these. Through its multimedia side, products and services can be
advertised on the Internet using full colour graphics, sound and video.
It can be used to introduce your company and its new products to a potentially wide audience, create
corporate and product awareness, inform the market, advertise existing products, solicit feedback from
current customers and facilitate post-purchase evaluation.
You should now be aware of the existence of the print, broadcast and interactive online (the Internet)
media.
In the next activity, we want you to become familiar with the difference in the message structures of these
media and to evaluate it in terms of your working environments.
You had to compare the advertisements in terms of the message structures outlined below:
Message structure
Print media Text Graphic images
Broadcast media Sound images
Internet Text graphic images, audio clips, video images,
combination of above
Table 6 The advertisements message structures
Use of the Internet
The most popular uses of the Internet are:
The World Wide Web (Web):
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The World Wide Web is a collection of hypermedia information storage systems which links resources
around the world. The Web is an extremely large Internet facility that provides textual, graphical, audio
and video information to any user who has access to it. It allows users to obtain (or display) information,
to access computer software or programmes, or to communicate interactively. A particular website can
have a number of graphic images and text which contain ‘hot links’ or ‘hyper links’, which will take the
user to another site to acquire further information. The Web offers advertising opportunities in the form of
full-colour virtual catalogues. It also offers on-screen order forms, online customer support, and
opportunities to announce and distribute certain products and to elicit customer feedback. A website is a
directional plan or painters to information about various topics.
E-mail (electronic mail)
An e-mail is a piece of writing delivered from the sender’s computer to the recipient’s computer. Most of
us are familiar with the use of email. E-mail enables you to send text, graphic images, sound clips,
computer programmes and video images at the cost of a local call via the Internet to anyone in the world
who has an e-mail address. Before the Web came along, email was the most powerful tool available to
business and home users on the Internet. E-mail allows immediate response or feedback from the
receiver, which makes it a valuable evaluation tool.
User groups or news groups:
These are discussion forums conducted entirely by e-mail, but with contributions called postings rather
than messages or letters. You can also create your own user groups or news groups, which include
people interested in a specific topic who can talk to one another on a daily basis. Each message is posted
to the news group in an online equivalent of bulletin board. Thousands of news groups are dedicated to
specific interests, hobbies and current affairs. User groups or news groups are used for entertainment
and, serious on trivial issues, but they can also be used as serious business tools.
Electronic news and electronic newspapers:
Most traditional newspapers also have electronic versions on the Internet. News agencies and
newspapers use the Internet to update people on the latest news (as it breaks). Electronic newspapers
can supply new information and add or update existing news as frequently as required, SundayTimes,
The Times. The main disadvantages of this type of use of the Internet usage are the high cost of the
required equipment to access it, and the absence of the necessary infrastructure, especially in developing
nations.
7.2 MEDIA STRATEGIES
Aspects of the media strategy:
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Delivering on the objectives
Target audience strategies
media mix selection
cost efficiency
scheduling strategies
the media budget
global media planning
7.3 THE MEDIA PLAN
The media plan includes the planned specifics of each recommended medium. It enables the media
planner to list the media, indicate the frequency, record dates, to add costs and to evaluate the overall
plan performance.
Media planning entails the development of a specific and detailed process to reach the right number of
appropriate people, the right number of times, in the right environment at minimum cost to achieve the
marketing objectives of an advertised product or service.
7.4 MEDIA OBJECTIVES
Media planners need to consider media objectives in their selection of media. These media objectives
include, for instance, the degree of exposure (impressions), the number of people exposed to the
message (reach), and the repetition needed to reach those people and make an impression on them
(frequency).
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STUDY UNIT 8
8. CREATING ADVERTISING
8.1 CREATIVE ADVERTISING.
There are many definitions of creative advertising, but one word dominates all of these definitions, namely
originality. A design is considered to be creative when it is new, fresh and even unexpected. It is
however, important to bear in mind that the design must still communicate the right message to the target
audience. No amount of creativity will work if the message is inappropriate. Ideas must mean something
to the audience; they must be relevant. Apart from being relevant, ideas should also have impact which
will help people see themselves or the world in a new way. Remember advertising tries to deliver the
right message to the right person at the right time and that creativity should enhance the advertising
message.
8.2 THE CREATIVE LEAP
Let us reflect for a moment on how originality creates impact. An idea is a thought that comes from
placing two previously unrelated concepts together. This sets up new patterns and new relationships and
it creates a new way of looking at things. The big idea involves a mind shift. A creative idea is different
from a normal idea in that it looks at something in a different way and from a totally different angle.
8.3 THE CREATIVE CONCEPT
Think of any effective advertisement that you recently saw on television or in a magazine. Behind every
effective advertisement is a big idea or a creative concept. This creative concept starts with the
organizations advertising strategy which attracts attention to the advertising message which in turn can be
part of a series of advertisement s in a specific campaign. Apart from being creative, advertising also
needs to be strategic and we refer to this as the creative leap. Strategic thinking in a creative advertising
environment refers to the advertisement being right for the product and right for the target audience.
8.4 STRATEGY AND CREATIVITY
As we have seen in previous sections, a creative concept should be original and strategic. To be
strategically creative, an idea should be aimed at the target audience, so that consumers can identify with
the message in the advertisement. The copywriters should have empathy with consumers and be able to
put themselves in the place of the target audience. It is very important that the target audience be the
main consideration when coming up with a creative strategy.
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8.5 CREATIVE STRATEGY AND THE MESSAGE DESIGN
Apart from creating an original advertisement, your advertising message should be focused and it should
address the needs of the organizations target audience. The structural analysis method where the
message design is analysed in a way that helps keep both the strategy and creativity working together.
This method consists of three steps:
Evaluating the power of the narrative or story line, to ensure that the target audience be able to
identify with it.
Evaluating the strength of the product claim to ensure that the target audience remembers the
product after seeing the advertisement
Considering how well the two aspects have been integrated. In other words, whether the story
line brings the claim to life.
8.6 CREATIVE THINKING.
How can you make this creative leap and get creative ideas? To answer this, you need to consider the
nature of creativity. Creativity is a special form of problem solving. All of us are able to solve problems to
some extent. If you just let your mind wander you will get a lot of new ideas or see your problems in a
different way. In the advertising field it is not only the writers and art directors that are creative, but also
the media planners and market researchers. These people are all searching for new ideas and innovative
solutions.
Below are structured techniques that creative thinkers use to come up with innovative ideas. You need to
familiarize yourself with the meanings of the following techniques.
Free association means that: you think of a word and then describe everything that comes into
your mind when you imagine that word.
Divergent thinking, uses association and exploration to look for all possible alternatives
Analogies and metaphors are used to see new patterns or relationships between things
Right brain thinking people tend to see things in visual images. They rely on emotions, intuition,
and complex ideas and they believe that things should form holistic whole rather than fragmented
pieces.
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8.7 FOUR STEP IDEA-GENERATING PROCESS
Four step idea generating process
Facts You are asked to come up with a list of facts about a product, such as a
washing machine, etc
New names During this step you create new “names” for the new product based on its
facts.
Similarities During this step you consider similarities between the new names and the
product
New definitions During the last step you create a new definition for product related nouns.
This four step idea generating process is designed to help you obtain an idea for the product and to take
that idea further by applying specific principles.
Creative roles
Advertising agencies make use of various creative people who all perform different creative roles. Let us
take a brief look at each of these roles.
Copywriters and art directors work in teams to develop the creative concept and implement the
advertising idea. Think of an advertisement that you recently saw on television or in a magazine. The
written and spoken messages in these advertisements were created by the copywriter. Every word in the
advertisement is important and should convey a tailor- made message to the clients target audience. The
art director is responsible for the graphic image of the advertisement; he/she creates the visuals in both
print and video and lays out the advertisement elements in print. Artists often do the specific illustrations,
but the art director is the head designer. The art director therefore has a huge responsibility in the
development of an effective advertisement.
Broadcast directors can also be part of the team when a television commercial is created. The creative
director manages the creative process and plays an important role; he focuses on the strategy for the
advertisement and he ensures that the creative concept is strategic.
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