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Part 1 1. Introduction
Name of Subject: Marketing 1
Code of Subject: MK101
NQF Level of Subject: 5
Year: 1
Core / Elective: Core
Credits: 20

Welcome to the exciting world of Marketing 1 where you will learn the principles of being on “top of mind” of
every consumer. With Marketing 1 you are taking the first step into the amazing world of marketing. Welcome to
this great new world!

2. What this manual will do for you

The course manual for Marketing 1 replaces neither the textbook nor the material prepared and discussed by the
facilitator. The purpose of this manual is to guide you through the curriculum. Symbols to assist you throughout
this Course Manual:

3. Prescribed textbooks and additional materials

Prescribed textbook:
Cunningham N. (2022). Introduction to marketing 2nd ed. Van Shaik. Pretoria

Recommended reading:
Strydom J. (2014). ‘Introduction to Marketing’5th ed. Juta – Cape Town

Lamb, Hair, McDaniel, Boshsoff, Terblanche, Elliot & Klopper (2015). ‘Marketing’5th ed. Oxford – Cape Town

4. How will we assist you

You will receive summary notes for this module. These notes will be discussed at length during the scheduled
lessons. The notes do not replace the prescribed textbook but should be used in conjunction with them.

Module facilitators are available per appointment to assist with queries.

The on-site library has a variety of marketing and business-related books that students could use.
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5. How you will be assessed

Assessments comprise of both the Continuous Assessment Mark (CAM) and the examination for this subject. You
will be required to complete a practical assessment and a Final Exam (FEM).

The CAM constitutes 50% of your mark. The percentage can make a distinct difference between passing, failing
and obtaining a distinction. Your facilitator will advise you on the content of the CAM as you begin your studies in
the subject.

The FEM comprises of all the material that is prescribed in this subject and will include any additional supporting
material that you may receive from your facilitator. This mark makes up the other 50% of your final mark for this
subject.

FEM (50%) mark + CAM (50%) mark = Final Mark obtained for the subject.

6. What you will learn

Unit
Description of Unit: Intended Learning Outcomes:
:
• Define marketing.
• Define the marketing concept.
Describe how marketing creates ‘customer value’ and why it is important in
• achieving customer satisfaction.
Discuss how a marketing-orientated organisation differs from product
• orientated, and sales orientated firms.
Basic Principles of Identify the elements of the marketing mix as it will apply to both products
1. marketing and services.
• Define relationship marketing.

• Identify opportunities and discuss the Ansoff strategies.

• Explain social responsibility and ethics in marketing.

• Define the marketing environment.

• Explain PESTLE analysis and show how it is used to understand the external environment.
• Discuss the market environment. The Marketing
2. • Discuss the importance of analysing the internal environment and identify
environment
the key resources and capabilities.
• Conduct a basic SWOT analysis.
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• Explain the meaning of environmental scanning, its importance and how
management can execute it.
• Define consumer behaviour and explain the consumer decision-making
process.
Understanding • Discuss the personal, social and situational influences on the consumer’s
3. consumer behaviour buyer behaviour.
• Describe the consumer adoption process.

• Demonstrate understanding of the organisational buying process.

• Define segmentation, targeting and positioning.

• Explain the levels of segmentation.
• Identify and discuss the segmentation variables.
Segmentation, • Identify the most viable target markets for the organisation.
targeting and • Describe the principles of market segmentation, targeting and
4. positioning positioning (STP) process.
• Explain different targeting strategies.

• Discuss the basis for positioning.

• Explain why knowledge of LSM’s are valuable to the marketer.

• Describe the various types and forms of offerings.

• Explain the product life cycle.
Explain the processes and issues associated with the development of new
5. Product offerings.
• Explain how new offerings will be adopted by markets.

• Describe the principles of branding.

• Differentiate between upstream and downstream activities.
• Discuss the value activities performed in the distribution channel.
• Differentiate between the distribution channels for consumer products,
consumer services and industrial products.
• Explain vertical marketing systems.
6. Physical distribution
• Identify and discuss the factors that determine the design of the distribution
channel.
• Discuss the intensity of channel coverage.
• Discuss marketing logistics.
• Discuss the steps involved in managing a distribution channel.
• Define price.
• Identify the steps involved in the process of determining price.
• Explain each step in the pricing process.
7. Price Describe how consumers/customers perceive price.
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• Explain cost-oriented, competitor-oriented, demand-backward-oriented
and customer value-oriented approaches to pricing.
• Explain the nature and scope of marketing communications.
• Define integrated marketing communications (IMC) Discuss
Promotion / the IMC process.
• Describe the role and tasks of promotions.
8. Marketing Discuss the elements in the promotion mix.
• Discuss the media mix.
communications
•
• Discuss the message mix.
• Differentiate between pull communication and push communication.
• Define services.
Services marketing • Explain the uniqueness of services.
9. Discuss the classification of services.
mix •
• Describe the extended marketing mix for services.

10. Digital media marketing

• Define digital media and digital media marketing
• Understand the key digital media platforms
• Discuss how the key digital media platforms are used in marketing
• Plan a digital marketing strategy
• Understand the legal and ethical issues surrounding digital media marketing
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Part 2 Unit 1: Basic Principles of Marketing

Intended learning outcomes:

• Define marketing.
• Define the marketing concept.
• Describe how marketing creates ‘customer value’ and why it is important in achieving customer satisfaction.
• Discuss how a marketing-orientated organisation differs from product orientated, and sales orientated firms.
• Identify the elements of the marketing mix as it will apply to both products and services.
• Define relationship marketing.
• Identify opportunities and discuss the Ansoff strategies.
• Explain social responsibility and ethics in marketing.

i. Introduction to Marketing 1 (MK101)

Although marketing is at the centre of many business decisions and business successes, many businesses are still
neglecting their marketing function. We would like to take you on a journey where you will learn about marketing
and the immense function that it has in the world around us. We would like to equip you with knowledge that you
can carry into the business world. This knowledge will help you to become the marketer that very company wants.
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This module will cover the principles and concepts of marketing theory. You will be empowered with knowledge
about how a business can identify consumers and then bridge the gap between producer/provider and consumer.

ii. Unit Orientation

This study unit will explain the concepts of marketing and how to reach the target market of the organisation.

iii. Reading Reference

Cunningham N. (2022), Chapter 1

iv. Course Manual Notes

1.1 Introduction
What do you understand by the term marketing? The first thought that comes to your mind may be selling or
advertising, but marketing is a lot more dynamic than that.
Marketing is important to all organisations. If a product does not meet the needs of the customer by offering
value at the right time, in the right place, it will not be successful. To market successfully it is necessary to
research the target customer and design a product that successfully meets their needs and expectations. Refer
to page 3 Cunningham (2022) of the example of a new chocolate being introduced in the market.

1.2 Marketing Orientation (Philosophies)

Marketing is so much more than the activity to advertise and sell products/services. It is a total customer
orientation where marketers focus on customer satisfaction and not sales. It encloses many activities that lead to
a marketing mix that aligns to the needs of the customer.
Marketing has evolved.

Refer to chapter 1 (Cunningham, 2022) on the Marketing philosophies:

a. Production orientation
b. Product orientation
c. Sales orientation
d. Market orientation
e. Societal marketing orientation
f. Relationship marketing orientation

1.3 The Marketing Concept

Marketing is not the responsibility of only the marketing department. It takes all company effort to be focussed on
customer satisfaction. The marketing concept is a strategy that companies implement to satisfy their customer
needs, increase sales, maximise profit and get ahead of the competition.
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1.4 Marketing Defined

The American marketing association defines marketing as the activity, set of institutions and
Marketing
processes of creating, communicating, delivering and exchanging offerings that have value for
satisfies the
customers, clients, partners and society at large (AMA,2021)
needs of the
market and creates customer value

1.5 The Marketing Mix

The marketing mix refers to various tools and choices that an organisation can use or make to encourage
consumers to purchase its products or services. The marketing mix comprises of the 7Ps:
• Product
• Price
• Promotion
• Place
• People
• Process
• physical evidence

Refer to Table 1.1 Chapter 1 Cunningham (2022) Marketing mix elements

1.6 The Scope of Marketing Management

The marketing function translates into marketing plans. The plans result from the phases of the marketing
process. The marketing process requires the following four functions: analysis, planning, implementation and
control.

1.7 The Marketing Landscape

The marketing environment is constantly changing. These changes often have far reached effects on the business.
Ethics and social responsibility are two trends that directly influence marketing.

1.8 Relationship Marketing

Relationship marketing is a facet of customer relationship marketing that focuses on customer loyalty and long-
term customer engagement. The goal of relationship marketing is to create strong customer connections to a
brand. Businesses do not just want to make a sale but to create a long-term relationship with its customers and
increase brand loyalty.

1.9 The Ansoff Matrix

The Ansoff matrix often called the Product or Market expansion grid is a two-by-two framework used by
management teams to help plan and evaluate growth initiatives
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Each box of the matrix corresponds to a specific growth strategy:
• Market Penetration- The concept of increasing sales of existing products into an existing market.
• Market development- focuses on selling existing products into new markets
• Product development- focuses on introducing new products to an existing market
• Diversification - Entering a new market with new products

Source: Mind tools,2024

1.10 Social responsibility in marketing

The concept of social responsibility holds that businesses should be good citizens balancing their profit
objectives with activities that benefit society be it on a national or international scale. Examples of social
responsibility marketing strategies include using recyclable packaging and giving portions of business
profits to charitable organisations.

Discussion questions
1. Explain the term marketing in your own words
2. Describe each marketing philosophy and provide a practical example for each.
3. Examine the relationship between satisfaction and loyalty and its importance in the business. 4.
Differentiate between needs, wants and benefits. Provide an example for each
5. Describe each element of the marketing mix in a product and service context. 6.
Illustrate and explain the Ansoff Matrix

End of Unit 1
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Unit 2: The Marketing Environment

Intended learning outcomes:

• Define the marketing environment.

• Explain PESTLE analysis and show how it is used to understand the external environment.
• Discuss the market environment.
• Discuss the importance of analysing the internal environment and identify the key resources and capabilities.
• Conduct a basic SWOT analysis.
• Explain the meaning of environmental scanning, its importance and how management can execute it.

i. Unit Orientation

In this unit you will learn that the organisation is surrounded by a marketing environment with both internal and
external factors that will influence the running and existence of the business. As a marketer you must be aware of
the factors and the far-reaching influence that they can have to your organisation.
ii. Reading Reference

Cunningham N. (2022), Chapter 2

iii. Notes

2.1 Introduction

The marketing environment is all around the organisation. This environment is constantly changing. The changes
sometimes pose threats to the organisation, but other times could offer opportunities to the business. It is
therefore important to scan and analyse the marketing environment.

The marketing environment is defined as all factors and forces internal and external to an
organisation, that affect marketing management’s ability to develop and maintain successful
transactions with their customers (Strydom, 2014).
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2.2 The Components of the Marketing Environment

The marketing environment consists of three main environments:

• Micro-environment- made up of factors close to the company and have an impact on the company’s ability to
satisfy its customers
• Marketing-environment- comprises of the Micro and Macro environment
• Macro-environment – variables outside the organisation. PESTEL factors

Each of these environments consists of different factors and forces that affect the organisation’s ability to serve its
customers. These variables are not always controllable, therefor the manager must identify and understand them
and then align the organisation to them.

2.3 Scanning the Marketing Environment.

Environmental scanning is the process of identifying, gathering and analysing information on

changes in the marketing environment, including the macro, market and internal environments
(Strydom 2014)

Environmental scanning is vital to the business. It enables the business to not only identify opportunities and
threats but to prepare themselves to seize the opportunities and to avoid the damaging effects of the threats.

Strategic environmental issue management includes four stages.

2.4 SWOT Analysis

A SWOT analysis helps managers to identify their internal company Strengths and Weaknesses and the external
Opportunities and Threats.

The best strategies will maximise Strengths and Opportunities while minimising Weaknesses and Threats. Not all
the factors are equal in the organisation.

Refer to figure 2.4 Chapter 2 Cunningham (2022) SWOT analysis of Nandos

Discussion questions
1. Discuss the effect of the external environment on marketing
2. Explain the purpose of environmental scanning
3. Examine the role that the legal and political environment plays in marketing
4. In this digital age, discuss the impact of changing technology on a company
5. Discuss the importance of analysing the internal environment 6. Formulate a SWOT analysis for a coffee
shop
End of Unit 2
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Unit 3: Understanding Consumer Behaviour

Intended learning outcomes:

• Define consumer behaviour and explain the consumer decision-making process.

• Discuss the personal, social, and situational influences on the consumer’s buyer behaviour.
• Describe the consumer adoption process.
• Demonstrate understanding of the organisational buying process.

i. Unit Orientation

We have mentioned in unit 1 that the customer is central to the marketing concept. In this unit we will place
emphasis on the customer as the focal point of the business.

ii. Reading Reference

Cunningham N. (2022), Chapter 4

iii. Course Manual Notes

3.1 Introduction

The behaviour of the consumer has a direct effect on the organisation. It is important that the marketer knows the
consumers’ needs and wants and how the consumer makes his/her decisions about buying and using products.
Markets must gather information on factors that influence the consumer’s decision to buy.

Consumer behaviour is the dynamic interaction of affect and cognition, behaviour, and the
environment by which human beings conduct the exchange aspects of their lives (Strydom, 2014).
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3.2 The Consumer Decision-Making Process (CDP)

Every time that the consumer wants to buy something he/she (often unconsciously) goes through a decision-
making process. The first time that he/she makes a specific purchase the process is longer but a repurchase are
often a shorter process. Think of your decision to study marketing – you did not make the decision lightly, you
probably weighed some option up and have taken many factors into account before making the final decision.

Refer to figure 4.1 Cunningham 2022 pg. 89 for the steps in the CDP.
• Problem- recognition
• Information search
• Evaluation of alternatives
• Outlet selection and purchase
• Post purchase behaviour

3.3 Factors that Influence the CDP

Refer to Cunningham 2022 pg. 77 onwards for the factors influencing consumer behaviour

There are four main groups of influences that affect the consumer:

Individual Socio-cultural Situational Marketing Mix

Personality Social class Socio-cultural 4 Ps
Perception Culture Technological
Motivation Reference groups Economic/competitive
Attitude Family Political/regulatory

The factors that influence consumers may not be equally important to all consumers. Some consumers may for
example view perception as more important than culture, while other consumers may view culture as the most
important influence.

3.4 The Consumer Adoption Process

The adoption process focuses on the stages through which an individual consumer passes in arriving at a decision
to try or not to try, to continue using or to discontinue using a new product. Customers do not all adopt
products/services at the same speed.

Refer to Cunningham 2022 pg. 179-182 for the consumer adoption process
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3.5 The Organisational Buying Process

The organisation as a buyer purchases differently from individual consumers. Organisational buying is often more
rational and less emotional than consumer purchases. The buying situations and buying centre are also different.

Discussion Questions
1. Provide an overview of consumer behaviour
2. Discuss the importance of understanding consumer behaviour
3. Discuss the factors that influence consumer behaviour
4. Think about a product that you bought recently. Discuss any two internal and any two external factors that
influenced you when you purchased the product.
5. Identify and discuss the five roles fulfilled by family members during family decision making. Apply each
role to a decision that you and your family have made in the past.

End of Unit 3
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Unit 4: Segmentation, Targeting and Positioning

Intended learning outcomes:

• Define segmentation, targeting and positioning.

• Explain the levels of segmentation.
• Identify and discuss the segmentation variables.
• Identify the most viable target markets for the organisation.
• Describe the principles of market segmentation, targeting and positioning (STP) process.
• Explain different targeting strategies.
• Discuss the basis for positioning.
• Explain why knowledge of LSM’s are valuable to the marketer.

i. Unit Orientation

Consumers have unlimited wants and needs, and the marketer cannot satisfy all of those. To satisfy as many as
possible of the consumers’ needs and wants the marketer must “sort and group” the need according to
similarities and then try to satisfy the groups of needs.

ii. Reading Reference

Cunningham N. (2022), Chapter 6

iii. Course Manual Notes

4.1 Introduction

The Segmentation, targeting and positioning process is used by the marketer to group customers’ needs, choose a
segment, aim the 4 Ps at the segment and thereby establish a good position in the customers’ mind.
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Market segmenting – selecting individuals from a broader market to form smaller groups of people with similar
characteristics, similar expectations and who are seeking similar benefits from a product. The
marketer needs to divide the broad heterogeneous (dissimilar) group of individuals into smaller
cluster groups of people exhibiting similar (homogeneous) needs, wants and desires for a specific
product and/or its performance
Targeting – careful evaluation of each emerging segment against pre-set criteria to assist in
selecting the most appropriate targets.
Positioning – how the product is perceived in the mind of the consumer relative to competitive products.

4.2 Why Segmentation?

The main reason to segment the market is to save costs. In a targeted approach consumers are more involved and
have a higher likelihood to purchase.

Using the “rifle” approach rather than the “shotgun” approach is more profitable.

4.3 The Levels of Market Segmentation

refer to Cuningham (2022)

• Mass marketing
• Segment marketing
• Niche marketing
• Micro marketing

4.4 The STP Process

Market segmentation is part of a three-step process, namely: Segmentation, Targeting and Positioning.

The STP model is shown in Cunningham (2022) pg. 163-167.

Step 1 – Basis for segmentation
Basis of segmentation include geographic segmentation, demographic segmentation, psychographic
segmentation, benefits segmentation and market-value-based segmentation.

In South Africa LSMs are used for psychological segmentation. Refer to table 5.8 Strydom (2014) pg. 128-131 for
LSM characteristics. You need to be able to explain how the marketer will use LSMs in the segmentation process.
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Step 2: Develop a segment profile
The segment profile will assist in describing each segment in terms of age, demographics, psychographics and
lifestyle, behaviour patterns and product usage.

Step 3: Segment assessment

Each segment is assessed in terms of its:
Accessibility
Defend-ability
Tangibility
Distinctiveness

Step 4: Selecting the market coverage

The chosen segments can be targeted in one of many ways including:
Undifferentiated marketing
Differentiated marketing
Concentrated marketing

Step 5: Identify possible positioning concepts

Marketers must use product positioning to influence how the consumers perceive their brand relative to the
competitor’s product.

Bases for positioning include:

Product
Product benefit
Price versus quality
Use or application positioning
Product user
Competitor
Origin

Step 6: Select, develop and communicate the chosen positioning concept.

Once the product positioning has been selected the marketer can attempt to influence the product’s demand by
describing the positioning through communication and branding strategies.

4.5 Bases for segmenting consumer markets

refer to Cuningham (2022) Chapter 6

• Geographic
• Demographic
• Geodemographic
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• Psychographic
• Behaviour graphic

4.6 Targeting

Selecting specific target markets involves marketers making decisions about which market segments a
business should prioritise for its marketing efforts. Once the potential target segments have been selected
based on their profiles, they need to be evaluated to find out whether they will be sustainable as an ongoing
target market.

refer to Cuningham (2022) Chapter 6

4.7 Positioning

Positioning refers to where your product or service stands in relation to that of competitors in the mind of the
consumer

Positioning strategies
There are six basic strategies by means of which companies can position their products in the minds of their
Consumers.
• Positioning by attributes or benefits
• Positioning by quality or price
• Positioning by use
• Positioning by user
• Positioning by product category
• Positioning by competitors
• Positioning by origin

4.8 Living standards measure

refer to Cuningham (2022) Chapter 2

End of Unit 4
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Unit 5: Product

Intended learning outcomes:

• Describe the various types and forms of offerings.

• Explain the product life cycle.
• Explain the processes and issues associated with the development of new offerings.
• Explain how new offerings will be adopted by markets.
• Describe the principles of branding.

i. Unit Orientation

Product is the first ‘P’ in the traditional marketing mix. Consumers expect a bundle of benefits that will satisfy their
needs and wants. If the product is wrong the other 3 Ps will no longer matter.

ii. Reading Reference

Cunningham N (2022), Chapter 8

iii. Course Manual Notes

5.1 Introduction

The traditional marketing mix consists of product, price, place and promotion. The 4Ps/elements of the marketing
mix are used in a unique combination to satisfy the needs of the customer.
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5.2 The Product Offering

The product is a need-satisfying “package” that consist of different layers namely the core benefit, tangible
product, expected product, augmented and potential product image.

Need: a basic requirement.

Want: a specific requirement to satisfy the need.
Demand: the want and desire for a product as well as the willingness and means to pay for it.

The product level, need, want and demand contribute to a product value package that aims at satisfying the
consumer and building profitable customer relationships.

5.3 How Can the Marketer Add Value to the Product?

Marketers could add tangible or abstract value at any of the five product levels. The more a company differentiate
its product the more valuable it will become.

Refer to Table 8.1 Cunningham (2022)

5.4 Classifying Products

Two main categories of products apply: Consumer products and Industrial/ business products

Consumer products Industrial products

Convenience products Raw products .
Shopping products Major equipment
Speciality products Accessory equipment
Unsought products Component parts
Process materials
Consumable supplies
Business services

5.5 Deciding on the Type of Product

Product mix – the total number of products (assortment of products) that a business has on the
market.
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Product line width
Product line length
Product line depth
Product line consistency
There are many product mix and product line decisions to be made.

5.6 Adjusting Product Items, Lines and Mixes

One or more of the characteristics of a product can be altered.

Adjustments include product modifications, repositioning, extending product lines and contracting product lines.

5.7 Decisions About Tangible and Intangible Products

Different variables and benefits apply to tangible vs intangible products.

5.8 The PLC And Its Impact on Product Decisions

The Product Life Cycle (PLC) shows the general pattern of the sales performance of products.

Refer to figure 8.2(pg. 195) and Table 8.2 Cunningham (2022).

Although all products go through the stages, not all go at the same speed. PLCs seem to become shorter all the
time. Marketing managers must know the stages of the PLC and what actions should be taken during each stage.
The business will aim to have high sales levels for the longest possible time.

5.9 New Product Development Process

New products go through several stages from being an “idea” until being fully launched:
1. Idea Generation
2. Idea screening
3. Concept development and testing
4. Business analysis
5. Beta testing and market testing
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6. Technical Implementation
7. Commercialisation
8. New product pricing

5.10 Product attributes

Product attributes should address the following elements:

• Product features
• The quality of the product
• Product style and design

5.11 The product offering or concept

Refer to figure 8.1 (pg. 189) and Table 8.1 Cunningham (2022).

5.12 Branding

A brand is a unique design, sign, symbol, words or a combination of these employed in creating an image that
identifies a product and differentiates it from competitors.
Refer to (pg. 191/192) Cunningham (2022).

Discussion Questions
Refer to (pg. 202) Cunningham (2022).

End of Unit 5
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Unit 6: Physical Distribution

Intended learning outcomes:

• Differentiate between upstream and downstream activities.

• Discuss the value activities performed in the distribution channel.
• Differentiate between the distribution channels for consumer products, consumer services and industrial
products.
• Explain vertical marketing systems.
• Identify and discuss the factors that determine the design of the distribution channel.
• Discuss the intensity of channel coverage.
• Discuss marketing logistics.
• Discuss the steps involved in managing a distribution channel.

i. Unit Orientation

The physical distribution of goods can be performed by any member in the marketing channel. Final goods
need to make their way to the end user. Producers and consumers are mostly not in the same place. There is
a special gap between them that needs to be bridged to give place value to goods. If the greatest product is
not at the right place, then the product has low value.

ii. Reading Reference

Cunningham N. (2022), Chapter 10

iii. Course Manual Notes

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6.1 Introduction

Various wholesalers, retailers and other intermediaries are used to bridge the spatial gap between the producer
and the final consumer. The main activities in the physical distribution are carried out in the process.
• Order processing
• Inventory management
• Warehousing
• transportation

Refer to pg. 226-227 Cunningham (2022)

6.2 The Basic Distribution Decisions

The main types of functions that are performed by marketing channel intermediaries:
• Transactional functions
• logistical functions
• facilitating functions

Refer to pg. 229 Cunningham (2022)

6.3 Value Activities in the Distribution Channel.

The distribution channel performs different activities and thereby adds value to products and services.

The value adding activities include:

Buying
Risk taking
Transporting
Storage
Rearrangement
Creating possession value for customers
Providing information
Ensuring a uniform quality standard of product

6.4 Basic Channels

Intermediaries are either organisations, such as wholesalers or retailers, or agents that operate between the
manufacturer and the final buyer of a product and that forms part of the basic distribution channel.

Intermediaries include sales intermediaries and resellers.

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Distribution channels for consumer products could be one-link chains; two-link chains; three-link chains or fourlink
chains.

Distribution channels for consumer services could be first channels; second channel or third channels.

Distribution channels for industrial products are like those of consumer products.

6.5 Vertical Marketing Systems (VMS)

VMS: a distribution channel where the members are working closely together to obtain the best
operating efficiency for the whole channel

VMS is obtained through the following mechanisms:

a) Ownership of the different levels of the distribution channel.
b) Contractual agreement between channel members.
c) The market power of one or more of the channel members.

6.6 Factors Determining the Design of the Distribution Channel

Not all distribution channels have the same number of intermediaries. Each channel differs in its design as
different factors influence the channels.

Factors include:
Customer characteristics
Product characteristics
Characteristics of the manufacturer
Characteristics of the existing distribution system

There are many types of wholesalers and retailers in South Africa.

6.7 Marketing Logistics

Managers must make sure that their range of products are stored and moved in such a way that they are available
to the consumers when and where they want it.
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Marketing logistics: The process of planning, implementing and controlling the physical flow of
products, services and information in such a manner that the customer receives the best value and
the organisation incur the lowest costs

6.8 Distribution Management

The distribution channel must be managed properly. Planning, implementing and controlling are important
functions within the distribution channel.

Different products will make use of different distribution channels. Some products should be available in every
possible outlet (intensive distribution) while others will be available in selected outlets (selective distribution) or
even in only a few exclusive outlets (exclusive distribution).

6.9 Channel Conflict

To manage the distribution channel and to control conflict a channel leader is required. The bigger role players in
the channel have a degree of authority over smaller intermediaries. Channel leaders have power in the channel.
Types of power include legitimate power, reward power, coercive power, information power and referent power.

6.10 Main channel combinations in the consumer market and B2B market

Refer to Table 10.1 and 10.2 pg,231-233 Cunningham (2022)

6.11 Marketing channel distribution intensity

• Exclusive distribution system

• Selective distribution system
• Intensive distribution system

Discussion question
Bongani’s Shisanyama
Refer to pg. 241-242 Cunningham (2022)

End of Unit 6
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Unit 7: Price

Intended learning outcomes:

• Define price.
• Identify the steps involved in the process of determining price.
• Explain each step in the pricing process.
• Describe how consumers/customers perceive price.
• Explain cost-oriented, competitor-oriented, demand-backward-oriented and customer value-oriented
approaches to pricing.

i. Unit Orientation

The price that the consumers pay is the income of the business. Price setting is not an easy task. On the one hand
if the price is set too low it will lead to bankruptcy, on the other hand if the price is set to high consumers will
support the business. A good and fair price provides value for money.

ii. Reading Reference

Cunningham N. (2022), Chapter 12

iii. Course Manual Notes

7.1 Introduction

Setting the selling price is an important part of the marketing mix. The price must be set to reflect value to both
the firm and its consumers. Value is the perception that the benefits outweigh the costs.
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7.2 The Nature of Pricing

Price is the amount of money charged for a product or service.

Price is the amount of money charged for a product or service. This price consists of all the costs that the
consumer incurs or everything that he/she needs to give up, in exchange for a product or service that he/she
beliefs have the benefits that he/she is looking for.

7.3 The Price Determination Process

Step 1 – Pricing constraints

There are many internal and external factors that limit the marketer when setting the price of a product or service.

Internal factors include the business objectives; the PLC; the organisational structure and culture; the cost of
developing the product or service and the business model.

External factors include the price sensitivity of consumers; the role of competitors; ethical considerations; general
economic conditions and legal considerations.

Step 2 – Pricing objectives

Pricing objectives are general goals that describe what an organisation hopes to achieve through
its pricing activities.

Pricing objectives must be measurable.

Refer to figure 8.3 Strydom 2014 pg. 196 for the pricing objectives.

Step 3 - Estimate the demand, supply and revenue

Through market research the marketer can determine how much the consumer is willing and able to pay for a
product/service and what price the supplier could sell at. The expected revenue is calculated from demand and
supply. The price that is set will influence the demand for the product.

Step 4 – Determine cost, volume and profit relationships

Profit = Total Revenue – Total Cost
Total Cost = Fixed Cost + Variable Costs
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Total Revenue = Quantity X Price

Step 5 – Select approximate price levels

All the information gathered in the first four steps are considered to select a price level. Three basic methods of
selection are considered namely customer value-based methods: cost-based methods and competition-based
methods. As a marketer it is important to know the pricing techniques available in each method.

Refer to figure 8.5 Strydom 2014 pg. 203 for the selection methods and to Table 8.2 Strydom 2014 pg. 206 for a
summary of the characteristics of each method.

Step 6 – List price/quoted price

Set the selling price that you expect the final consumer to pay.
Step 7 – Make special adjustments
Adjustments like allowances and discounts encourage intermediaries to purchase and sell and final consumers to
purchase more of the product.

Allowances include advertising allowance; stocking allowance; push money allowance and trade-in allowance.

Discounts include quantity discounts; cash discounts; trade/functional discounts; seasonal discounts and sales
price.

Geographical adjustments include value pricing, dumping and price fixing.

Step 8 – Determine the final price

Once the list price has been adjusted to accommodate allowances, discounts and geographical allowances, the
final price for the product or service is determined.

7.4 Phases for establishing the right price

Refer to figure 12.1 pg. 277 Cunningham (2022)

7.5 Types of pricing strategies

The following pricing strategies are discussed in Cunningham (2022). Chapter 12

• Premium pricing
• Penetration pricing
• Price skimming
• Price lining
• Odd pricing
• Price bundling
• Cost plus pricing
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• Value based pricing
• Leader pricing
• Competition pricing

Discussion question

1. Analyse the airline industry in South Africa and identify the pricing strategies used by the airline companies.

End of Unit 7
 30
Unit 8: Promotion / Marketing Communications

Intended learning outcomes:

• Explain the nature and scope of marketing communications. • Define integrated marketing
communications (IMC)
• Discuss the IMC process.
• Describe the role and tasks of promotions.
• Discuss the elements in the promotion mix.
• Discuss the media mix.
• Discuss the message mix.
• Differentiate between pull communication and push communication.

i. Unit Orientation

Consumers can only buy products and services if they are aware of its availability. Consumers need to know
what the product is, where it is available and at what price it is available. Promotion is the 4 th P in the
marketing mix and has the task of communication the product, price and place to the consumer.

ii. Reading Reference

Cunningham N. (2022), Chapter 17

iii. Course Manual Notes

8.1 Introduction

Promotion or Marcom is communication by marketers that informs, persuades and reminds

potential buyers about the firm’s offerings for them to take action or change their behaviour.
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8.2 Integrated marketing communication.

IMC refers to marketing communication that uses a variety of methods to reach the potential consumer. The IMC
process creates synergy in the promotion mix and ensures that all promotions speak with one voice.

Elements in the IMC promotion mix include advertising, direct marketing, personal selling, sales promotion, public
relations and publicity.

8.3 Advertising

Advertising is a non-personal presentation and promotion of ideas, products and services by an

identifiable sponsor that pays for it.

Categories of advertising include paid advertising; controlled advertising; non personal message; information
advertising; direct advertising and mass advertising.

Refer to Cuningham 2022 pg.310-311

8.4 Direct marketing

Direct marketing is a two-way process that uses advertising options to obtain a measurable reply
from the customer.

Types of direct marketing include telemarketing; direct mail; catalogue displays; direct action/response
advertising; internet commerce and in-home personal selling.

8.5 Personal Selling

Personal selling is one-to–one personal communication between the organisation (through

representatives) and the consumer, to convince the consumer to buy.

Personal selling is mostly focussed on business-to-business customers. Some salespeople are order getters while
others are order takers. Order getters must follow the steps in the personal selling process.
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8.6 Sales Promotion

Sales promotion is the direct encouragement or incentive offered to the salesforce of the
organisation, the distribution channel members or the consumer, with the objective of ultimately
creating an immediate sale.

Types of sales promotions include customer sales promotions; trade promotions and sales-force promotions.
Trade promotions are push strategies that encourage intermediaries to purchase more and sell more. Customer
sales promotions are pull strategies.
Refer to Cunningham 2022 pg. 325 for sales promotion tools

8.7 Public Relations and Publicity

It is important that the business have good relationships with all their stakeholder. Public relations is the
promotion activity that focusses on building and maintaining healthy relationships.

Publicity refers to media coverage that the organisation does not pay for in a direct manner. Publicity can be both
positive and negative.

Refer to Cunningham 2022 from pg. 330

8.8 Ethical marketing communication

Business ethics are important to the success of any business. Ethics apply to different functions and levels within
the organisation, but due to the public nature of marketing and specifically marketing communication ethical
behaviour is under more scrutiny in the marketing and sales functions. Unethical marketing communications can
lead to negative publicity with far reaching effects.

Marketers must avoid misleading, deceptive and offensive advertisements.

8.9 A Marketing communications planning framework

Refer to figure 17.5 Cunningham 2022 pg. 430 for the Marketing communications planning framework

8.10 Promotional objectives

• To build primary demand

• To create brand awareness
• To provide relevant information
• To create interest
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• To influence attitudes and feelings
• To create desire
• To create preferences
• To facilitate purchase and trial
• To create loyal customers

Refer to Cunningham 2022 pg. 307-310

8.11 Media mix

A media mix is a strategy that companies use where they send their content out through different media channels
like magazines, television, social media channels and video. This combines different marketing and advertising
strategies to reach a wider audience.

8.12 Push and Pull strategy

• A push strategy is where the manufacturers promote, recommend, and sell the brand to the members of
the distribution channel, such as intermediaries and retailers through personal selling and sales promotion.
Therefore, a push strategy encourages the intermediaries to purchase the product to sell to the end
consumer. E.g., a wine maker would participate in a wine exhibition- which restaurant owners attend to find
new wines. The winemaker would use trade promotions and personal selling to entice restaurant owners to
purchase wine.
• A pull strategy is where the manufacturer directs promotions to end consumers to convince them to have
their intermediaries’ stock and supply the product. E.g., A bakery creates a unique type of bread which
has a different cut and texture to normal bread. Advertising this product on tv compels supermarkets to
purchase the bread as consumers ask for it in stores.

Discussion questions
1. Explain integrated marketing communication and describe its elements.
2. Illustrate the marketing communication planning framework.

End of Unit 8
 34

Unit 9: Services Marketing Mix

Intended leaning outcomes:

• Define services.
• Explain the uniqueness of services.
• Discuss the classification of services.
• Describe the extended marketing mix for services.

i. Unit Orientation

Services are entwined in everything around us. We use a variety of services every day. Services add value to
products and can change the perception that customers have about firm or products.

ii. Reading Reference

Cunningham N. (2022), Chapter 9

iii. Course Manual Notes

9.1 Introduction

Services are a major part of any economy and contribute to a country’s GDP growth and employment. Services
consist of industries such as tourism, financial services, telecommunications, and education.

9.2 Service Definitions

The American marketing association defines services as activities, benefits, and satisfactions that are offered for
sale or are provided in connection with the sale of goods.
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• Services do not result in the ownership of anything
• Think of examples of services

9.3 The Tangibility Spectrum of services

According to Kotler all offerings lies on a tangibility continuum starting with pure tangible goods on the one side
and ending with pure services on the other side.

9.4 The Unique Characteristics of Service Products

Service is different from products because services have:

• Intangibility
• Inseparability
• Perishability
• Variability
• Non ownership

9.5 Classification of Services

According to Christopher Lovelock’s services can be classified in terms of the degree of tangibility; the recipient;
the place and time of delivery; customisation versus standardisation; the nature of the relationship with clients,
the extent to which demand, and supply are in balance and the extent to which facilities, equipment and people
are part of the service experience.

9.6 Service Marketing Triangle

The services marketing triangle identifies three key players:

1 - Company
2 - Providers
3 – Clients

Interaction between these players is vital.

External, internal and interactive marketing are required.

9.7 Services Marketing Mix

• Product – service products have four levels.

• Promotion – different promotion tools of the promotion mix could be used.

• Place – the provider could go to the client; the client could go to the provider or there could be no physical
contact.
 36

• Price – the knowledge (or lack off) that customers have about service pricing as well as the non-monetary cost
that they incur has an influence on their perception of the price.

The services mix adds three more Ps to the mix:

• Physical evidence

All aspects of the organisation’s physical facility, as well as other forms of tangible communication.

Refer to figure 9.1 Cunningham 2022 pg. 211.

• Processes

The actual procedures, mechanisms and flow of activities by which the service is delivered –the
service delivery and operating systems.

• People
People are the key factor in services. The employees and the clients are mutually responsible for smooth service
delivery.

Discussion question
How can marketers convince customers to purchase their services rather than those of competitors when
customers cannot see and touch the services before purchase? Think about how your college convinced, you and
your parents to apply and register for a qualification with that institution rather that other academic institutions.

End of Unit 9
 37
Unit 10: Digital Media Marketing

Intended leaning outcomes:

• Define digital media and digital media marketing

• Understand the key digital media platforms
• Discuss how the key digital media platforms are used in marketing
• Plan a digital marketing strategy
• Understand the legal and ethical issues surrounding digital media marketing

i. Unit Orientation

Over the past decade technology and the internet have advanced rapidly. These advancements in technology have
changed the way in which we interact and communicate with each other.

Ii. Reading Reference

Cunningham N. (2022), Chapter 16

Iii. Course Manual Notes

Introduction
In this unit we define digital media and look at the use of various digital media as marketing tools. The unit also
addresses social media and the various social media tools used in digital marketing.

Digital media and digital marketing Definition

Digital media refers to videos, audio, photos, or any content that has been coded to be transmitted through any
wireless signal or electronically through the internet on any screen, computer, mobile or digital device. It is
 38
defined as the promotion of a company and its products and services through various forms of electronic media
such as broadcast media, a website, social media, mobile and other digital devices, and applications, e.g., using
Facebook or YouTube.

The importance and benefits of digital media marketing

Refer to Pages 385-387, Cunningham 2022

Key Digital media platforms

Internet enabled digital media channels include:
• Websites
• Search engine marketing
• Mobile devices
• Email
• Blogs and podcasts
• Online advertising
• Social media

Digital Marketing Strategy

There are certain steps that a company needs to take when developing a digital marketing strategy:

• Context
• Value proposition
• Objectives
• Digital tools
• Ongoing flexibility

Refer to Pages 405-407, Cunningham 2022

Legal and Ethical considerations

Digital marketing provides many benefits for companies such as the ability to gather customer data, to track
customers online purchases history and even locate customers through geolocation technology. This however
raises legal and ethical issues such as customer privacy, online fraud and the misuse of intellectual property.

Refer to Pages 407-408, Cunningham 2022

Discussion Question
Peps superstore is thinking of making use of digital media to create more awareness for the company. Convince
Pep of why he should make use of digital media marketing by discussing its benefits.

End of Unit 10