Chapter seven : The marketing function
What is marketing?
Marketing: the ongoing activities a business uses to connect and engage with its target market (LSM) to convince them of the
value of its products or services, with the aim of selling them and making a profit.
The “brand” is the perception of the business – everything the business does affects it.
KEY TERMS :
1. Strategic role of marketing: creating a strong positive brand identity through a well-planned and well-implemented
marketing strategy.
2. USP (Unique Selling Proposition): what differentiates the business’s product from competitors.
3. LSM (Living Standards Measure): groups consumers from LSM 1 to 10 based on 29 variables.
4. Brand: the name or image of the business, and the impression consumers have of it.
A) Role of marketing in the overall strategy
Strategic planning → vision, mission → formulate the marketing strategy (brand image) → implement and evaluate.
Why keeping customers matters:
Chance of selling to an existing customer: 60–70%, a new one: 5–20%
2% more customer retention = 10% lower costs
A new customer costs 6–7 times more than keeping one
Happy customer tells 4–6 people, unhappy one tells 9–15
55% will pay extra for better service
Three approaches:
1) Focus on the overall brand (eg. Famous Brands – Wimpy, Steers, Debonairs)
2) Focus on individual products (eg. LG)
3) Both brand and products (eg. Revlon – Charlie, Max Factor)
, B) Formulating the marketing strategy – 5 steps
1) Step 1: Environmental scan
a. External analysis (opportunities and threats):
i. Industry analysis – PESTLE
ii. Competitor analysis – Porter’s six forces
iii. Market mapping – visual map of competitors by two variables (eg. price and quality: PnP vs Woolworths)
iv. Customer analysis – LSM
b. Internal analysis:
i. SWOT
ii. Value chain
iii. Resource-based analysis
c. LSM:
i. Lower LSM = lower disposable income
ii. Helps understand segments, how they spend and their wants
iii. Criticised as “outdated” – lower LSMs also own cellphones and TVs
iv. SEM (Socio-Economic Measurement) looks at living structure and access to technology
v. Eg. Woolworths LSM 8–10, PnP 4–10, Shoprite 4–7
2) Step 2: Target market and USP
a. Who is the target market, what do they need and why would they buy OUR product?
b. USP may be based on costs, brand identity, technology or quality
3) Step 3: Marketing budget
a. Marketing is an investment, not just an expense
b. TV is expensive – consider cost AND effectiveness
4) Step 4: Implement the marketing mix (7 Ps)
5) Step 5: Evaluate and take corrective action
a. Identify performance gaps
b. Check the needs of consumers are satisfied
C) The 7 Ps of marketing
Traditional 4 Ps (product, price, place, promotion) + 3 service Ps (people, physical evidence, process).
What is marketing?
Marketing: the ongoing activities a business uses to connect and engage with its target market (LSM) to convince them of the
value of its products or services, with the aim of selling them and making a profit.
The “brand” is the perception of the business – everything the business does affects it.
KEY TERMS :
1. Strategic role of marketing: creating a strong positive brand identity through a well-planned and well-implemented
marketing strategy.
2. USP (Unique Selling Proposition): what differentiates the business’s product from competitors.
3. LSM (Living Standards Measure): groups consumers from LSM 1 to 10 based on 29 variables.
4. Brand: the name or image of the business, and the impression consumers have of it.
A) Role of marketing in the overall strategy
Strategic planning → vision, mission → formulate the marketing strategy (brand image) → implement and evaluate.
Why keeping customers matters:
Chance of selling to an existing customer: 60–70%, a new one: 5–20%
2% more customer retention = 10% lower costs
A new customer costs 6–7 times more than keeping one
Happy customer tells 4–6 people, unhappy one tells 9–15
55% will pay extra for better service
Three approaches:
1) Focus on the overall brand (eg. Famous Brands – Wimpy, Steers, Debonairs)
2) Focus on individual products (eg. LG)
3) Both brand and products (eg. Revlon – Charlie, Max Factor)
, B) Formulating the marketing strategy – 5 steps
1) Step 1: Environmental scan
a. External analysis (opportunities and threats):
i. Industry analysis – PESTLE
ii. Competitor analysis – Porter’s six forces
iii. Market mapping – visual map of competitors by two variables (eg. price and quality: PnP vs Woolworths)
iv. Customer analysis – LSM
b. Internal analysis:
i. SWOT
ii. Value chain
iii. Resource-based analysis
c. LSM:
i. Lower LSM = lower disposable income
ii. Helps understand segments, how they spend and their wants
iii. Criticised as “outdated” – lower LSMs also own cellphones and TVs
iv. SEM (Socio-Economic Measurement) looks at living structure and access to technology
v. Eg. Woolworths LSM 8–10, PnP 4–10, Shoprite 4–7
2) Step 2: Target market and USP
a. Who is the target market, what do they need and why would they buy OUR product?
b. USP may be based on costs, brand identity, technology or quality
3) Step 3: Marketing budget
a. Marketing is an investment, not just an expense
b. TV is expensive – consider cost AND effectiveness
4) Step 4: Implement the marketing mix (7 Ps)
5) Step 5: Evaluate and take corrective action
a. Identify performance gaps
b. Check the needs of consumers are satisfied
C) The 7 Ps of marketing
Traditional 4 Ps (product, price, place, promotion) + 3 service Ps (people, physical evidence, process).
