Marketing

Management

Topic 2
(Textbook: Chapter 10)
Adapted from Juta slides: R. Gericke

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What you need to know

● Understand the need for marketing in the modern business environment.

● Discuss the gaps that a market offering should bridge in order to be
successful.
● Understand the marketing research process, market segmentation
and target marketing.
● Discuss the impact of the product life cycle and the
corresponding response in the marketing strategy.
● Describe the positioning methods that marketers can pursue in practice.

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Introduction
• Business environment is increasingly
dynamic, complex and competitive.
Businesses have to fight harder
• - to gain and grow market share
• - to keep pace with fast changing and
sophisticated customer tastes and
preferences. The focus of marketing – and all
its activities and decisions – is a mutually
satisfying exchange between all parties
involved.
© Juta & Company 2019 3
 The marketing landscape

• Defining marketing

• The marketing process

• Marketing orientation, or the concept of pure marketing

• The need for marketing

• Marketing activities

• The marketing environment

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 Defining marketing

Marketing is the process of planning and executing the

conception, pricing, marketing communication and distribution of,
products, and services [4 Ps] to create exchanges that satisfy
individual and organisational goals

Not mere advertising or selling. A customer focused perspective

and its accompanying activities

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Marketing is getting the right goods and
services to the right people at the right
places at the right time at the right price
with the right communications and
promotion.”

- Phillip Kotler
The need for marketing, p. 278.

• Space gap

• Time gap

• Information gap

• Ownership gap

• Value gap

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 The marketing process

The four variables (4 Ps) about which the marketing management team must
take decisions are

• the product itself

• the place where it is to be sold (distribution of the product)
• the promotion, or marketing communication methods to be used to
inform the consumer
• the price of the product, which should reflect its value to the
consumer

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 • Research the consumers
The marketing process explained • Consumer behaviour
• Market segmentation
• Target market

• Target market
• Market mix/strategy 4Ps
Services -7 Ps
• Product positioning 11
The marketing process, p. 281.

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• The role marketing plays, in any organisation, is
determined by the philosophy and orientation as
followed in the company
Market Orientation
Marketing orientation, or the concept of pure marketing

Marketing concept has evolved over time.

Production concept – availability and affordability. Deciding for the consumer

what they need

Selling concept – sales oriented. Sell for consumers to buy ENOUGH. All you
need is to let them know. Pushing sales and profit.

Marketing concept – focus on identifying customer needs and satisfying them

better than competitors. Market oriented. Sales message. Customer focus.
Market driven decisions. Produce based on marketing information instead of
producing then push selling.
Societal marketing concept – ethical and avoid harm to all stakeholders and
communities 15
The essence of the marketing concept lies in three principles, namely:

• long-term maximisation of profitability

• consumer orientation
• the integration of all business activities directed at profitability and the
satisfaction of consumer needs, demands, and preferences
 Business
Production Orientation Marketing Orientation
function
 Company sells what it can make  Company makes what it can sell
Product offering  Primary focus on functional performance and  Primary focus on customers' needs and market
cost opportunities

Product line  Narrow  Broad

 Based on production and distribution costs  Based on perceived benefits provided
Pricing

 Technical research  Market research

 Focus on product improvement and cost cutting  Focus on identifying new opportunities and
Research in the production process applying new technology to satisfy customer
needs

 Protection for the product  Designed for customer convenience

Packaging  Minimise costs  A promotional tool

 A necessary evil  A customer service

Credit  Minimise bad debt losses  A tool to attract customers
 Emphasis on product features, quality, and  Emphasis on product benefits and ability to
Promotion price satisfy customers' needs or solve problems
Consumer behaviour
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Individual factors influencing consumer buying decisions

• Motivation – starts with needs and wants

• Perception – process of receiving, organizing and assigning meaning to

information detected by five senses

• Learning ability – a combination of motivation, attention, experience and

repetition

• Attitude - specific feeling that individual experiences about an object

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Individual factors influencing consumer buying decisions
(Continued)

• Personality – those psychological characteristics of people that determine

and reflect their reaction to environmental influences

• Lifestyle – refers to individuals’ ways of living

• describes behaviour and purchasing patterns
• Personality, motives and attitudes influence lifestyle

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Group factors influencing consumer buying decisions p. 285

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Group factors influencing consumer buying decisions

• Culture – a complex system of values, norms and symbols that have developed over
period of time that all its members share

• Family – members live in close contact with one another – act as decision-making unit

• Reference groups - two or more people who interact with each other to accomplish
a
goal, e.g. co-workers, hobby groups.

• Opinion leaders – person acting as the go-between a two-step flow of

communication.
• Person interprets and evaluates information, relay acceptance or rejection of the
message to other consumers in the target market

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The buying decision-making process p. 286

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Marketing Research
 Marketing research p. 287 - 290
Without information marketing is impossible. The marketer should know the
target market. Marketing decisions as good as their information basis.

• Marketing research and the marketing mix

• Consider practical questions see p. 288

• Identifying marketing opportunities by means of research

• Eg increasing concerns about health as an opportunity. Marketing research
monitors environmental trends.

• Monitor performance

• Marketing research process. Research on improving the marketing

process and its elements.

• Market potential and sales forecasting.

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Market segmentation
and target marketing
 Market segmentation and target marketing

• Segmenting the market

• Prerequisites for market segmentation

• Bases for segmenting consumer markets

• Market targeting

• Product positioning

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 Segmenting the market
Dividing the heterogenous market into fairly homogenous subsets of
customers so as to better satisfy customer needs. Then select
segments to pursue (market targeting). Make decisions about how to
competitively position the product in the target market.

Market segmentation offers the following benefits to marketers:

• It forces marketers to focus more on customer needs
• Segmentation leads to the identification of excellent new marketing
opportunities
• Market segmentation provides guidelines for the development of
separate market offerings and strategies
• Segmentation can help guide the proper allocation of marketing
resources
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 Prerequisites for market segmentation p. 292

For it to be effective, market segmentation must meet the following criteria:

• Measurable
• Large enough
• Accessible
• Actionable
• Differentiable

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 Bases for segmenting consumer markets

The marketing manager can utilise different variables to segment a market.

These can generally be classified according to:

• Geographic segmentation, e.g. Johannesburg, Winelands

• Demographic segmentation, e.g. age, income, education level
• Behavioural segmentation, e.g. benefits sought, user status
• Psychographic segmentation, e.g. social class, lifestyle, personality

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 Market targeting p. 294 - 297
Selecting potential target markets
•Segment size and growth possibilities
• Attractiveness and potential profitability
• The resources and skills of the organization
• Compatibility with the organisation’s objectives
•Cost of reaching the target market
Targeting market segments
• Concentrated targeting
• Differentiated targeting
• Undifferentiated marketing

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Market targeting p. 297

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Product positioning
The steps in the positioning process, p. 298

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Product positioning maps aid decision making, p.298

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Product positioning strategies p. 300 - 301

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Marketing Mix
 The marketing mix

•
Product
•
Price
•
Marketing communication (promotion)
•
Distribution decisions (place)

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Product strategies to consider p. 302
● Should the product mix be extended through product diversification?

● Must the product range be reduced in favour of more specialisation?

● Should the organisation standardise the product range?

● How should the organisation differentiate or distinguish their product

from other competitive products?

● How must the organisation manage possible obsolescence of the product?

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Price p.
303
Setting the right price depends on:

● The pricing objective of the organisation.

● The demand for the product or service and spending patterns of customers.
● The costs to deliver the product or service.
● Competitor activity.

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Marketing Communication p. 303

• Tools to be used include advertising, sales promotions, personal

selling
and publicity.
• Message to be delivered must be specific to the target market
• Must manage communication budget
• Communicate internally and externally
• Media choice must me effective to reach target market in effective manner
• Effectiveness and impact of campaigns must be monitored 43
Distribution – four different types of channels

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The Product Life Cycle
The product life cycle

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Stages of the product life cycle

The main stages of the product life cycle are:


Introduction – researching, developing and then launching the product

Growth – when sales are increasing at their fastest rate

Maturity – sales are near their highest, but the rate of growth is slowing
down, e.g. new competitors in market or saturation

Decline – final stage of the cycle, when sales begin to fall

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 Product life cycle p. 304 - 307
• Marketing in the introductory phase
• Rapid skimming
• Low skimming
• Rapid penetration
• Slow penetration
• Marketing in the growth phase
• Marketing in the maturity phase
• Marketing in the decline phase
• Withdraw marketing support
• Eliminate the product
• Initiate a phased withdrawal
• Sell

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Relationship with
Other Functions
 Four strategic roles for marketing management to play
● Responsible to manage the product and market relationship in line with the overall
mission and strategy of the organisation.

● Ensure that top management understands that successful marketing requires that
customer needs must be satisfied.

● Act as a strategic interface between the business and their external market environment,
i.e.
focus on their consumers, competitors and changes in the market.

● Highlight new ideas and marketing opportunities to corporate planners and assist to
include
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the four Ps of marketing in the total strategy.
 Marketing control and implementation

• The implementation of marketing plans depends, largely on the organisational structure and close
cooperation of all marketing personnel

• Control is the directing or redirecting of a company’s actions to ensure that they meet objectives

• Evaluation is a necessary adjunct of control because, before actions can be controlled, they must
be evaluated to determine whether results are on target

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Marketing is a key function in the business p. 307

• Marketing contributes to the profit of the organization

• Seven other functional departments must work together to realise the

organisation’s objectives

• Make sure that you understand the relationship between marketing and the
other business functions

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Relationship between the marketing function and the other
business functions p. 307
Seven different functional departments must work together to realise the
organisation’s objectives
1. The operations function
2. The human resources function
3. The financial function
4. The purchasing function
5. The public relations function
6. The information function
7. The marketing function
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