Chapter 13

• Marketing


  A part of the management process
• Evolution of marketing thought

  • Operation-oriented management
  • Sales-oriented management
  • Marketing-oriented management
  • Consumer-oriented management
  • The strategic approach to marketing
  • Relationship marketing
• Marketing concept


  An ethical code to which the marketing task is performed
• Marketing concept


  Directs all marketing decisions about products, distribution methods, marketing communication and price determination
• Principles of the marketing concept

  • The principle of profitability
  • The principle of consumer orientation
  • The principle of social responsibility
  • The principle of organisational integration
• Marketing


  Consists of management tasks and decisions directed at successfully meeting opportunities and threats in a dynamic environment, by effectively developing and transferring a need-satisfying market offering to consumers, in such a way that the objectives of the business, the consumer and society will be achieved
• Components of the marketing process

  • Market research
  • Consumer behaviour
  • Market segmentation
  • Target-market selection and positioning
  • The marketing instruments
• Market research process


  1. Define problem

  2. Identify objectives

  3. Investigate secondary resources

  4. Compile questionnaire

  5. Pre-test questionnaire

  6. Select sample

  7. Train fieldworkers

  8. Analyse data collected

  9. Interpret information

  10. Report and recommend

  11. Evaluate and implement
• Market research


  Information is needed in order to manage a business effectively
• Market research


  Such information needs to: Increase understanding of relevant market segments, Be pertinent to planning and controlling, Help in decision-making
• Consumer behaviour


  Behaviour patterns of decision-making units directly involved in the purchase and use of products, including the decision-making processes preceding and determining these behaviour patterns
• Determinants of consumer behaviour

  • Individual factors
  • Group factors
• Consumer decision-making process


  1. Awareness of an unsatisfied need or a problem

  2. Gathering of information on how best to solve the problem

  3. Evaluation of the possible solutions

  4. Decision on a course of action or purchase

  5. Post-purchase evaluation
• Markets that can be segmented

  • The consumer market
  • The industrial market
  • The resale market
  • The government market
• Steps to follow when segmenting a market

  • Identify the needs
  • Group needs into homogenous subgroups
  • Select target markets
  • Position product within market segment
• Requirements for meaningful market segmentation

  • Segment must be identifiable and measurable
  • Segment must be substantial and sustainable
  • Segment must be reachable
  • Segment must be responsive
• Criteria for market segmentation

  • Geographic
  • Demographic
  • Psychographic
  • Behavioural
• Target-market selection and positioning

  The marketer must select the segment with the most promising target market, and link the abilities and expertise of the business to the characteristics of the consumers in each segment, while carefully considering the competitive situation in each market/segment
• Marketing Instruments


  • Product
  • Distribution
  • Marketing communication
  • Pricing
• Product


  A composition of tangible and intangible need-satisfying utilities offered to consumers, so consumers can take note of them, procure them, and use them
• Components of a consumer product

  • Core product
  • Formal product
  • Need-satisfying product
  • Product image
  • Total product
• Classification of consumer products

  • Convenience products
  • Shopping products
  • Specialty products
• Brand


  A mark that is unique to the product items or ranges produced and marketed by a particular business and that is chosen to distinguish them from similar competing products
• Types of brands


  • Manufacturer
  • Dealer
  • Generic
  • Individual
  • Family
• Packaging


  A group of activities concerned with the design, manufacturing and filling of a container or wrapper with a product so it can be protected, stored, transported, identified, and marketed
• Types of packaging


  • Family packaging
  • Specialty packaging
  • Reusable packaging
• Product differentiation


  A business distinguishes its product physically and/or psychologically, from essentially identical competing products, so that the product is regarded as different by consumers in a specific target market
• Types of product differentiation

  • Differentiation by means of packaging and brand
  • Differentiation by advertising appeals
  • Differentiation on the basis of price
  • Differentiation on the basis of distribution outlet
• Product obsolescence


  A situation where a product may intentionally be made technically and/or psychologically obsolete in order to compel the consumer to make repeat purchases
• New product development process

  1. Development of product ideas

  2. Screening of product ideas according to financial criteria

  3. Elimination of product ideas that do not appear to be viable (profitable)

  4. Physical product development by the production division during which a prototype is manufactured

  5. Development of the marketing strategy

  6. Test marketing in a specific small segment of the market

  7. Introduction into the market
• Product life cycle


  Illustrates the curve of a product's sales/profits over a period of time
• Phases in the product life cycle

  • Introductory phase
  • Growth phase
  • Maturity phase
  • Declining phase
• Price


  The exchange value of a product or service, and is closely linked to benefit and value
• Price-determination process


  1. Determination of the cost price

  2. Determination of the market price

  3. Determination of the target price

  4. Determination of the final price
• Adaptations of the final price

  • Skimming prices
  • Market-penetration prices
  • Market-price level
  • Leader prices
  • Odd prices
  • Bait prices
• Distribution


  Activities that have to be carried out to direct the flow of products and services from the business to the consumer in such a way as to satisfy the primary objective of the business and meet the needs of the consumer
• Types of market coverage

  • Intensive market coverage
  • Exclusive market coverage
  • Selective market coverage
• Components of physical distribution

  • Selecting warehouses
  • Selecting the most suitable mode of transport
  • Selecting optimal inventory holding levels
• Elements of marketing communication

  • Advertising
  • Personal selling
  • Direct marketing
  • Sales promotion
  • Publicity
  • Public relations
• Advertising


  Controlled and paid-for non-personal marketing communication related to a needs-satisfying product and directed by a marketer at a specific target audience