MARKETING MANAGEMENT: A

SOUTH AFRICAN PERSPECTIVE

4th EDITION

MC CANT & CH VAN HEERDEN (EDITORS)

M MAKHITHA (CONSULTING EDITIOR)

 
INSPIRING
POSSIBILITIES
TOGETHER
 CHAPTER 1

The World of Marketing

MARKETING MANAGEMENT: A SOUTH AFRICAN PERSPECTIVE 2

INSPIRING POSSIBILITIES 4th EDITION

TOGETHER
• Learning objectives:
– Discuss what is meant by marketing
– Explain what the concept of exchange entails
– Discuss the five marketing gaps and how to bridge them
– Explain the primary, auxiliary and exchange market activities
– Give an overview of the main marketing orientations: the product
concept, the sales orientation and the marketing concept (including
social responsibility)
– Discuss relationship marketing
– Discuss and explain the marketing process
– Discuss the role and place of the marketing function in an organisation
– Explain the management tasks in marketing
– Discuss the importance of strategic marketing management and the
differences between strategic marketing and marketing management
Nature of marketing
What is marketing?
• Marketing has 2 viewpoints:
– 1st: it is a philosophy, an attitude, a perspective or a
management-orientation that stresses customer satisfaction.
– 2nd: it is a set of activities used to implement this
philosophy.
• Therefore marketing is defined as process whereby an organisation
centres its activities on meeting the identified needs and wants of
customers, by offering products that customers want, at a price
acceptable to both parties and at a place suitable for both the
company and the customer, and by informing the customer via the
correct communication channels of these products and services.
Through the process, the organisation strives to meet its own set
goals. In the execution of these actions, the organisation also aims to
establish meaningful relationships with not only customers but all
stakeholders involved with the company.
• Marketing is about satisfying customer needs.
• Marketing encompasses a set of processes for creating,
communicating and delivering value to customers in a mutually
beneficial relationship between the organisation and all its
relevant stakeholders.
• Exchanges takes place between the place of production and
the place of consumption.
Exchange and marketing:
• Exchange is all the activities associated with somebody
(customer) giving up something (money/time/goods) in order
to receive something in return (product or service) from
another.
• Exchange does not necessarily require money.
– For example, 2 people can trade items with each other such as an
iphone for a printer.
• The 5 conditions are required for exchange:
– At least 2 parties must be involved.
– Each party must have something that the other party values.
– Each party must be able to communicate with the other party
– Each party must be free to accept or reject the other’s offer.
– Each party must want to deal with the other party.
• Exchange will not necessarily take place if all these conditions
exist, but they are, however, necessary for exchange to be
possible.
• Customers may enter the store, look and try on products but
do not to buy them.
Marketing gaps:
• During exchange, certain gaps are created.
• Identifying these gaps can be described as core marketing
aspects.
• For example, a consumer who wants to buy a pair of jeans
must have the options of sizes, colours and brands. For this an
exchange of money takes place. The typical gaps identified in
this scenario lie in the transport of the product, availability in
different colours and sizes, and so on.
• The successful marketing of a suitable market offering is only
possible if all the gaps in the process have been bridged:
– Space gap: a geographical distance exists between the manufacturer
and the consumer.
– Time gap: distribution of seasonal products.
– Information gap: inform consumers of the correct information
regarding a product.
– Ownership gap: the buyer becomes the owner of the product.
– Value gap: the seller and the buyer must agree on an acceptable
exchange rate.
Intermediaries:
• The activities intended to bridge the gap between the buyer
and the seller usually involve intermediaries.
• The 3 types of intermediaries are:
– Middlemen: these are organisations directly involved in taking
the title of products which are later sold to others. E.g. Egdars,
sells different products in one location.
– Sales intermediaries: these are agents who do not take the title
of products they sell. They provide services to facilitate the sales
process and are paid for these services. Real estate agents.
– Auxiliary enterprises: are not directly involved in the transfer of
title but provide support services to facilitate the selling process.
E.g. Travel agents, and HR Agencies.
Marketing Activities – carried out to bridge the gap
• Activities used to transfer the market offering to the buyer.
• Activities include primary, auxiliary and exchange activities.
• Primary marketing activity:
– The most basic activity, for example transport.
– Methods of transport have evolved over the years and today
include pipelines, land, water and air traffic.
– The purpose of these forms of transport is to deliver the product
to the consumer in the quickest and safest way possible.
• Auxiliary marketing activities – Refer to additional activities,
includes:
– Sourcing and supplying information: the seller must know who
and where potential buyers are.
– Standardisation and grading: close the gap between buyer and
seller, products must be designed to conform to specific norms
or standards.
– Storage: closes the time gap.
– Financing: costs are incurred in the transfer of products and
services from seller to buyer. Normally financed by financial
houses, & both parties strive to minimise costs to sell at a
sutiable price for both.
– Risk-taking: the owner of the product is exposed to the risk of
loss or damage. The risk is carried by both the seller and buyer.
• Exchange marketing activities:
– Buying and selling
– Ownership is transferred from one person to the other.
– Buying activities are not regarded as a marketing task but rather as the
responsibility of the purchasing department.
Marketing orientations

Marketing has evolved over time and led to new

marketing management philosophies, also known as
alternative marketing concepts.
Marketing philosophies; production, sales, marketing
and social responsibility.
1. Production concept/orientation
– Focused on producing or manufacturing the products as
efficiently as possible.
– Believed that consumers will favour products that are readily
available and highly affordable.
2. Sales orientation
– Focuses on the selling of products and services rather than on
whether or not they are actually needed.
3. Marketing concept/orientation
– Over time, the attention moved from production and sales to
marketing following the realization of the importance of customers,
being considered the heart of any business.
– The essence of the marketing concept lies in four principles, namely
customer orientation, profit orientation, systems orientation and social
responsibility.
• Consumer orientation: all marketing actions should be aimed at
satisfying consumer needs, demands and preferences.
• Profit orientation: all marketing actions should be aimed at
making a profit.
• Systems orientation: a group of units that work together to
achieve a joint objective.
4. Societal responsibility and green marketing
– Social responsibility is a concept that maintains that businesses are part
of a bigger society in which they exist and are accountable to society for
the organisations performance.
– Marketers should strike a balance between targeting customers’ needs,
customers’ long-term interests, society’s best long-term interests and the
long-term financial goals of the business.
– Green marketing is a further example of social responsibility marketing.
• Environmental issues have become more important.
• Green marketing involves the promotion of products and services
based on environmental factors or awareness.
• It incorporates a broad range of activities, such as product
modification, changes to the production process, packaging changes,
alternative distribution methods and modifying advertisements.
Relationship marketing
• ‘A relationship with its customers provides an organisation
with long-term, lower-risk revenues and the opportunity to
grow both revenue and profit.’
• The focus of relationship marketing is to identify core
customers; establish relationships with these customers;
maintain and enhance those relationships; and, if and when
necessary, terminate those relationships so that the objectives
of all parties involved are met.
• This is done by mutual exchange and the fulfilment of
promises.
• Relationship marketing places its main focus on the
development, maintenance and expansion of long-term
relationships between the organisation, its customers and
other stakeholders.
• Stakeholders may include government, suppliers of raw
materials and the organisation’s employees.
• All the efforts of an organisation should be geared towards
building these relationships.
• Everybody employed in all sections of the organisation must
co-operate to ensure the fullest possible consumer satisfaction
with product quality and service excellence.
• This is crucial for survival and growth, especially in today’s
world of economic uncertainty, increasing competition and the
power of technology
Customer retention
• Repeat customers can be much more profitable for a company
than customers who buy the market offering once only.
• Relationship marketing: Defined as a form of marketing that
includes marketing activities aimed at developing and
maintaining trust.
• It also seeks to build long-term relationships with customers by
providing consistent satisfaction and, in the process, meeting
the company’s objectives.
• The four marketing Ps (product, place, promotion and price)
alone are therefore insufficient to guarantee full consumer
satisfaction. Additional P’s, people & processes.
An extended market:
As relationship marketing entails a broader view of the market itself, the total
market has smaller groupings which make up the entire market with more or
less influence, the groupings include:
• Current customers, whose loyalty is crucially important.
• Potential customers; those in unexploited markets, and they must be
contacted.
• Suppliers contribute by timely delivery of quality raw materials and spare
parts.
• Potential employees, who must be carefully selected according to their
abilities and according to their attitudes towards customer service.
• Reference groups who can convey the marketing message
• The influencers, such as government.
• Current employees, who are part of the company’s internal market.
Defining marketing
• Marketing is a combination of management tasks and
decisions aimed at meeting opportunities and threats in a
dynamic environment. It is done in such a way that its market
offerings lead to the satisfaction of consumer needs and wants,
so that the objectives of the enterprise, the consumer and
society are achieved.
• Table 1.1 below shows the key words in the definition of
marketing.
 MANAGEMENT TASKS PLANNING, IMPLEMENTING AND CONTROL

Decisions Regarding product, place, promotion and price

Favourable circumstances in the marketing environment which
Opportunities
must be utilised by marketing management

Threats Unfavourable conditions which marketing management must

endeavour to change into opportunities
Continually changing environmental variables which necessitate
Dynamic environment appropriate reaction from marketing management
Need-satisfying Properties of a product based on what the consumer wants
Product, price, distribution, marketing communication, service by
Market- offering people and processes

Attainment of objectives: Maximisation of profitability in the long term

The enterprise, Need-satisfaction within the resources and abilities of the
enterprise
The consumer society Ensuring the well-being of society in the long term
The marketing process:
• Marketing process is more complex and entails analysing
marketing opportunities, selecting appropriate target markets,
developing the most suitable marketing mix for these
segments, and managing the marketing efforts through
implementation and control activities.
• Figure 1.2 below shows the marketing process.
The marketing function in an organisation
Where marketing fits in the organisation:
• This is a key function in an organisation owing to its
contribution to profit and its proximity to the consumer.
• Functional organisational structure:
Functions in an organisation:
• Operations function focuses on the activities and processes of
an organisation that involve the production of goods or the
provision of services sold to customers.
• All companies need people and the tasks performed by the
human resource function that relate to the acquisition,
training, utilisation and retention of a sufficient number of
competent personnel.
• The financial function is aimed at the acquisition, utilisation
and control of the funds necessary for running the business.
• The purchasing function ensures that the materials necessary
for production are bought at the right places, times, quantities
and at the right prices.
• The public relations function maintains and cultivates a
favourable and objective image of the organisation among
those whose opinions are important to the achievement of the
business objectives.
• The administration function makes available internal
information for planning and control.
• The marketing function is the only function that has the main
aim of generating an income through its actions.
• General management includes the activities of persons in
managerial positions.
The management tasks in marketing

• Marketing management is the process of setting marketing

goals for an organisation (considering internal resources and
market opportunities), the planning and execution of
marketing activities needed to meet these goals, and
measuring progress toward their achievement.
• It is also an ongoing and repetitive process within the planning
cycle, and enables an organisation to continuously adapt to
internal and external changes in the organisation’s
environment.
• These changes continuously create new problems and new
opportunities.
• The management task consists of a continuous process of planning,
implementing and controlling marketing activities.
• Marketing management:
– Identifies opportunities and threats
– Identifies those opportunities which can be utilised in terms of internal
strengths and weaknesses
– Compiles marketing data
– Chooses a specific target market
– Decides on the products to be produced in order to satisfy consumer
needs
– Decides on the selling price of products in order to attain the objective
of profitability
– Decides on specific distribution channels
– Decides on marketing communication methods
– Decides on selection, training, remuneration and motivation of
marketing personnel
– Organises and leads the activities of the marketing department
– Controls the marketing process
Strategic marketing management

The meaning of strategic marketing management:

• Strategic marketing management includes the decisions the
marketing department will make with a view to long-term
growth and survival in a competitive environment.
• Strategic marketing is a continuous process that mainly (but
not exclusively) takes place at top-management level.
Strategic business units (SBUs):
• Strategic marketing takes place through the establishment of
independent divisions called ‘strategic business units’. These
SBUs are normally a result of various product offerings by
larger firms.
• A SBU directs its product offering at a specific market and
manages the production, distribution and marketing
communications function with a degree of independence.
• A strategic fit is the degree to which an organisation matches
its resources and capabilities with the opportunities in the
external environment.
Difference between strategic marketing and marketing
management:
Difference between strategic marketing and marketing
management (continued):
QUESTIONS?