BUSINESS NOTES
GRADE 12
CHAPTER 7: THE MARKETING FUNCTION
Definition of Marketing:
Ongoing activities of the business to reach the target market (LSM)
and connect/engage with them, aiming to convince them of the
value of the product/service in order to sell and make a profit.
1. Role of marketing as part of the overall business strategy
1.1 Strategic role of marketing
Strategic planning drives business performance.
Strategic planning involves:
o Formulating a vision
o Translating the vision into a mission statement (what to
do today to achieve the future vision)
o Setting objectives, strategies, and implementation
The brand is the perception of the business; all business
activities affect the brand.
Strategic role of marketing:
Creating and supporting a strong, positive brand identity
through a well-planned and implemented marketing strategy.
Strategic planning:
Vision
Mission
Formulating the marketing strategy
Marketing strategy: BRAND IMAGE
Identify the overall market scope (environmental scan)
Determine the USP
Determine the marketing budget
Implementing marketing strategy:
1
, Market the product/service (marketing mix → 7Ps)
Evaluate the effectiveness of the strategy and its
implementation
Additional facts about the strategic importance of marketing:
Creating a “marketing buzz” makes consumers talk about the
product/service.
Strong awareness increases the chance of future reference
and sales.
Marketing builds brand awareness and reminds customers of
the business.
Feedback from customers strengthens the product/service.
Marketing helps businesses:
Gain and retain customers
Statistics that highlight importance:
o Existing customer = 60–70% chance of sale
o New customer = 5–20% chance of sale
o 2% increase in customer retention = same as 10%
decrease in operating costs
o Costs 6–7 times more to get a new customer than to
keep one
o Satisfied customer tells 4–6 people
o Unhappy customer tells 9–15 people
o 55% of customers will pay more for better service
1.2 Formulating the Marketing Strategy
Three basic approaches:
Focus on marketing the overall brand, not individual p/s. (e.g.
LG)
Focus on marketing the product/service offering, not too
much on overall brand. (e.g. Famous Brands – Wimpy, Steers)
2
, Focus on both business and individual product/service
offerings (e.g. Revlon – Charlie perfume, Max Factor,
appliances)
Five-step process to formulate a Marketing Strategy:
1. Perform an environmental scan
2. Define the target market and USP
3. Determine the marketing budget
4. Implement the marketing mix
5. Evaluate the effectiveness and take corrective measures
Step 1: Environmental scan – analyse/investigate market scope
External Analysis:
o Industry
o Competitor
o Consumer
Internal Analysis:
o SWOT
o Value chain
o Resource-based
o USP
External analysis identifies opportunities and threats (external
elements).
A. Industry Analysis:
Assess the sector that the business operates in, using PESTLE
to identify opportunities and threats.
B. Competitor Analysis:
Gives a full picture of competitors in the market.
Business evaluates competitors’ strengths and weaknesses to
adjust marketing.
Based on Porter’s Six Forces, competitors may include:
3
GRADE 12
CHAPTER 7: THE MARKETING FUNCTION
Definition of Marketing:
Ongoing activities of the business to reach the target market (LSM)
and connect/engage with them, aiming to convince them of the
value of the product/service in order to sell and make a profit.
1. Role of marketing as part of the overall business strategy
1.1 Strategic role of marketing
Strategic planning drives business performance.
Strategic planning involves:
o Formulating a vision
o Translating the vision into a mission statement (what to
do today to achieve the future vision)
o Setting objectives, strategies, and implementation
The brand is the perception of the business; all business
activities affect the brand.
Strategic role of marketing:
Creating and supporting a strong, positive brand identity
through a well-planned and implemented marketing strategy.
Strategic planning:
Vision
Mission
Formulating the marketing strategy
Marketing strategy: BRAND IMAGE
Identify the overall market scope (environmental scan)
Determine the USP
Determine the marketing budget
Implementing marketing strategy:
1
, Market the product/service (marketing mix → 7Ps)
Evaluate the effectiveness of the strategy and its
implementation
Additional facts about the strategic importance of marketing:
Creating a “marketing buzz” makes consumers talk about the
product/service.
Strong awareness increases the chance of future reference
and sales.
Marketing builds brand awareness and reminds customers of
the business.
Feedback from customers strengthens the product/service.
Marketing helps businesses:
Gain and retain customers
Statistics that highlight importance:
o Existing customer = 60–70% chance of sale
o New customer = 5–20% chance of sale
o 2% increase in customer retention = same as 10%
decrease in operating costs
o Costs 6–7 times more to get a new customer than to
keep one
o Satisfied customer tells 4–6 people
o Unhappy customer tells 9–15 people
o 55% of customers will pay more for better service
1.2 Formulating the Marketing Strategy
Three basic approaches:
Focus on marketing the overall brand, not individual p/s. (e.g.
LG)
Focus on marketing the product/service offering, not too
much on overall brand. (e.g. Famous Brands – Wimpy, Steers)
2
, Focus on both business and individual product/service
offerings (e.g. Revlon – Charlie perfume, Max Factor,
appliances)
Five-step process to formulate a Marketing Strategy:
1. Perform an environmental scan
2. Define the target market and USP
3. Determine the marketing budget
4. Implement the marketing mix
5. Evaluate the effectiveness and take corrective measures
Step 1: Environmental scan – analyse/investigate market scope
External Analysis:
o Industry
o Competitor
o Consumer
Internal Analysis:
o SWOT
o Value chain
o Resource-based
o USP
External analysis identifies opportunities and threats (external
elements).
A. Industry Analysis:
Assess the sector that the business operates in, using PESTLE
to identify opportunities and threats.
B. Competitor Analysis:
Gives a full picture of competitors in the market.
Business evaluates competitors’ strengths and weaknesses to
adjust marketing.
Based on Porter’s Six Forces, competitors may include:
3
