2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Positioning Strategies of Firms in South Africa

Charles Blankson, Ph.D.

Department of Marketing & Logistics,

University of North Texas

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Map of Africa

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Introduction and Literature Review

• This study assesses the employment of positioning strategies by firms (domestic and foreign) in South Africa.

• According to Arnott (1992, 1994), positioning is a strategic concept that can be operationalized.

• One of the key elements of modern marketing management (Kotler, 2000).

• It is important in international/global marketing (Johansson and Thoreli, 1990; Alden et al, 1999) and marketing communications.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Defining the concept of Positioning

• Positioning is defined by Arnott (1992) as: “…the deliberate, proactive, iterative process of defining, measuring, modifying and monitoring consumer perceptions of a marketable offering…”

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Introduction and Literature Review contd.

• Despite the central role in:

• (a) Modern marketing management, (b) Marketing communications, and in (c) International marketing,

• Positioning research appears to be prevalent in Western Europe, North America and Asia (see Park et al., 1986; Muhlbacher et al., 1991; McAlexander et al., 1993; Alden et al., 1999) to the exclusion of African markets.

• Development and/or validation of positioning strategies (typologies) (e.g. Crawford, 1985; Easingwood and Mahajan, 1989; Kalafatis et al., 2000).

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Introduction and Literature Review

• At the practitioner level:• Africa has often been neglected in general discussions

about global economy/marketing.

• Despite the continent’s rich natural resources and the well established firms (domestic and foreign) in mining and oil, manufacturing, tourism and services in several parts of Africa – South Africa.

• Nestle, Toyota, Honda, Mitsubishi, BP, Shell, Microsoft, Anglo-Gold, M-Net, Lucent Technologies, First National Bank, Barclays, Standard Chartered, PZ, CISCO, DHL, Ford, Fiat, Canon etc.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Introduction and Literature Review contd.

• Not surprising:

• Relatively weak economies, few “homegrown” multi-national businesses, political instability, lower per capita income, high infrastructure/transaction costs, debt dependency and negative perceptions about governance (Nwankwo, 2000).

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Introduction and Literature Review contd.

• In recent years:

• (a) following trade liberalization and democratic governance by some countries,

• (b) influx of foreign capital, FDI and joint ventures and

• (c) the dismantling of apartheid system of government in South Africa,

• (d) there has been effort on the part of some African governments (e.g. South Africa) to embark upon development projects, creation of investment/business climate and image building, i.e., positioning.

• Such a climate paves the way for positioning activities by firms doing business in Africa.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Introduction and Literature Review contd.

• South of the Sahara are underdeveloped,• South Africa is recognized as an

open/competitive market and a developed country (Morris and Pitt, 1993; Ross II, 2004).

• It is asserted that positioning activities will be a priority amongst firms in South Africa, in search of competitive advantages.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Research Aim and Objectives

• To assess the application of a newly developed positioning typology using the South African market as an illustration.

• The objectives are to:• Identify the positioning strategies employed by

firms in South Africa, and• Determine the applicability of a newly

developed typology of positioning strategies.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Overall purpose of study

• To assess the applicability of a marketing framework developed in a Western business environment (UK) in a liberalized African economy - South Africa.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Construct and Measurement

• Due to criticisms raised about extant positioning typologies,

• It was decided to adopt a newly developed consumer-derived positioning typology (Kalafatis and Blankson, 2000, 2001, 2004) and then validate it in the South African market environment.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Typology of Positioning Strategies

• Top of the range: upper class, top of the range, status, prestigious, posh

• Service: impressive service, personal attention, consider people as important, friendly

• Value for money: reasonable price, value for money, affordability

• Reliability: durability, warranty, safety, reliability.

• Attractiveness: good aesthetics, attractive, cool, elegance

• Country of origin: patriotism, country of origin

• The Brand Name: the name of the offering, leaders in the market, extra features, choice, wide range

• Selectivity: discriminatory in the choice of customers, non-selectivity, high principles.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Research Methodology

• Advertisements from two main channels of firms’ communication were considered (a) newspapers and (b) radio.

• Based on a convenience sample of advertisements.

• Television, Bill boards, Leaflets/pamphlets not obtained due to difficulties in availability.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Analytical Approach

• Content analysis (Holsti, 1969) was employed in analyzing positioning strategies as evidenced in ads appearing in newspapers and radio.

• Analysis involved:• (a) the character (overall meaning), • (b) nature and purpose of the ad, • (c) the character of the language in terms of

rhetorical focus, written jargons, • (d) the social situations and surroundings

displayed in the ad.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Analytical Approach contd.

• Coding procedure based on Frequency system.• In line with Hugo-Burrows (2004), only

English-based ads were examined and content analyzed. SA has eleven official languages.

• Content of the ads was coded using the scale-items of the 8 positioning constructs (typology) by Kalafatis and Blankson (2004).

• Coding was based on the appearance of any of the scale-items in a particular ad.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Analytical Approach contd.

• Reliability:

• Reproducibility reliability was employed via the inter-judge reliability test (between researcher and a student judge/checker) revealed 80% agreement in all cases (Kassarjian, 1977).

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Results (Positioning Strategies from Newspapers)

Positioning Strategies

Frequency Percentage Rank Residual

The Brand Name

105 70 1 58.0

Attractiveness 75 50 2 28.0

Value for money

47 32 3 .0

Top of the range

38 26 4 -9.0

Services 33 22 5 -14.0

Reliability 33 22 5 -14.0

Selectivity 27 18 6 -20.0

Country of origin

18 12 7 -29.0

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Results (Positioning Strategies from Radio)

Positioning Strategies

Frequency Percentage Rank Residual

The Brand Name

43 52 1 26.1

Services 23 28 2 6.1

Reliability 22 27 3 5.1

Value for money

16 20 4 .9

Attractiveness 13 16 5 -3.9

Top of the range

7 9 6 -9.9

Country of origin

6 7 7 -10.9

Selectivity 5 6 8 -11.9

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Discussion

• Out of the eight positioning strategies investigated in newspapers:

• (1) The Brand Name and (2) Attractiveness ( = 124.723; df = 7; sig. = 0.000) are the most preferred by firms.

• Radio:• Only one strategy (The Brand Name: = 66.304; df = 7;

sig. = 0.000) stands out as the most popular. “Service”, “Reliability” and “Value for money” are in second, third and fourth places – and, minimally pursued.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Discussion contd.

• Emphasis placed upon branding activities and competitive positioning.

• Positioning strategies in newspapers appear to

be aiming at the middle class target audience.

• Positioning strategies in radio ads appear to be geared toward the mass market and to an extent, middle-lower class target market.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Discussion contd.

• Positioning strategies aimed at portraying the attractiveness, friendly service and affordability are pursued but only second to the “The Brand Name”

• Firms place less emphasis on strategies depicting discrimination/selectivity/social class in their positioning.

• Firms also avoid issues surrounding nationalistic sentiments (see Hugo-Burrows, 2004) in view of the low emphasis on country of origin and

• Rather firms are bent on all other positioning strategies/activities that will enhance their brands and competitive positions.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Conclusions

• This research has made an attempt to operationalize a newly developed typology of positioning strategies.

• Has identified the positioning strategies employed by firms in South Africa.

• Tentatively, this study lends support to the relevance of the concept of positioning in the South African market environment.

• It can be concluded that the adopted typology of positioning strategies (developed in the UK) is relevant/applicable in the liberalized South African market environment.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Conclusions contd.

• Our attempt answers Radder’s (1996) call for research into the applicability of conventional marketing paradigms in liberalized market environments.

• This study responds to Rwelamila and Lethola’s (1998) suggestions for further research to establish whether the conventional marketing frameworks still apply to the unique situation of changing market environment such as South Africa.

2006 Winter AMA Conference, St. Petersburg, FL Feb 17-20

Map of South Africa