hnk.co.zahnk.co.za/.../uploads/2020/04/gr11-t2-01-nc-market… · web viewgather information about...

NORTHERN CAPE EDUCATION DEPARTMENTBUSINESS STUDIES GR. 11CORE NOTES - BUSINESS OPERATIONSMARKETING FUNCTION

Define marketing It refers to all marketing activities that control the flow of goods from the producer to the

consumer Marketing is used to deliver value to the customers√ and satisfying their needs.√ The aim is to link the business products and services√ with the customer needs√ and

wants.√ Marketing also aims to get the right product or service√ to the right customer at the right

place and at the right time.√

Briefly explain the role of marketing Support the overall objectives of a business, √ which is to maximise profits√ The marketing team needs to work closely with staff members√ from other business

functions. √ Gather information about customer needs, √ preferences and buying behaviour and

share information with other departments.√ Assist the development of the marketing strategy√ in collaboration with senior

management from other business functions.√ Develop a marketing plan√ using elements of the marketing mix. (7 P’s) √ Develop sales forecasts and projections√ and provide this information to other business

functions.√ Decide which products or services the business will sell√ and how the products will be

distributed. √ Determine what prices (cash or credit) √ they are going to sell.√

Copyright Reserved 1 Please turn over

Gr. 11: Business Studies CORE NOTES Marketing Function NCED COPS

Outline/Mention/List/Explain/Discuss the marketing activities

Locating the consumer: (NOT IN EXAM GUIDELINES – STILL IMPORTANT)

The business has to know where the customers that are interested in buying their

product are located.

Market research needed in order to execute this activity

Market research is aimed at finding the consumers and obtaining information about:

- The preferences of consumers;

- The buying power of consumers;

- The willingness of consumers to buy;

- The demographics of the market

Standardisation and grading: Standardisation is the process where a uniform set of kriteria is developed in order to

ensure production of quality products.

Grading is the process where agricultural goods are classified into categories.

Storage: Raw materials and finished products must be stored until it is bought by the consumer or

used in the manufacturing process.

Storage is done by all intermediaries in the production chain/marketing channel

The storage facility is influenced by the type of goods that must be stored.

Perishable goods like milk, meat, vegetables, flowers, etc. can only be stored for a

limited period in cold storage facilities.

Transport: Products must be transported from the storage facilities to intermediaries or the

consumer.

The type of transport will be determined by the type of product that needs to be

transported.



Businesses must choose between various types, e.g. road, rail, air, pipeline and sea

transport.

The decision on what type should be used, will be determined by considering the

following factors:

- Speed

- Cost

- Safety

- Reliability

Financing: Money must be made available for all marketing activities.

- Market research

- Transport

- Insurance (shifting risks to professional risk bearers, i.e. insurance companies)

- Storage, etc.

The expenses/financing of the market activities entitles the intermediaries to profit,

therefor they sell for higher prices as the purchasing price.

Risk Bearing: The business who take ownership of raw materials or goods in the marketing channel,

are responsible for those goods.

There are certain risks coupled to ownership of property.

When the next business in the channel accepts ownership, the risks shift to those

businesses who are the new owners.

Risks can be shifted/decreased with the following strategies:

- Future transactions

- Term transactions

- Insurance

- Hedging



Actual buying and selling: Buying and selling take place throughout the marketing channel. It is part of the same

transaction – one party sells, another one buys the same goods.

Examples of items/services bought and sold are:

• Maintenance services

• Water and electricity

• Marketing services, e.g. insurance, transport, etc.

• Raw materials, technology, e.g. machinery and finished goods.

Identify the above mentioned marketing activities from given scenarios/case studies/statements.

ACTIVITY 1Identify the marketing activity from each of the following statements:

1.1 Farmer Brown had the harvested potatoes sorted according to size and quality.1.2 Grain is kept in silo’s until distributed to various factories.1.3 Global Electric manufactures electrical plugs of uniform size and shape.1.4 Dealers who take ownership of stock purchased on credit, must insure it against

possible damage.Solution:

1.1 Grading and Standardisation1.2 Storage1.3 Grading and Standardisation1.4 Risk Bearing

ACTIVITY 2Read the scenario below and answer the questions that follow.

BLUE LABEL (PTY) LTDBlue Label (Pty) Ltd. manufactures identical tin cans for packaging purposes. They sell these tins as packing material to several factories. The customers normally buy the tin cans on credit. The tin cans are delivered via road to the customers.They sell mostly on credit. Customers sign acceptance of responsibility in case of damage upon receipt of the goods.



2.1 Identify THREE marketing activities performed by Blue Label (Pty) Ltd. Motivate your

answers by quoting from the scenario.

Use the following table as a guide to answer QUESTION 2.1:

MARKETING ACTIVITY MOTIVATION

1.

2.

3.

Solution:2.1

MARKETING ACTIVITY MOTIVATION

1. Grading & Standardisation “Blue Label (Pty) Ltd. manufactures identical tins cans…”

2. Actual Buying & Selling “They sell these tin cans as packing material to several factories”OR“The customers normally buy the tin cans on credit.”

3. Transport “The tin cans are delivered via road to the customers”

4. Financing “They sell mostly on credit”

5. Risk Bearing “Customers sign acceptance of responsibility in case of damage upon receipt of the goods”

PRODUCT POLICY

Outline/Mention/ Explain /Discuss the product policy with specific reference to types of product, product development, trademarks and packaging.

Outline/Mention/ Explain /Discuss the different types of products.1. Consumer Goods



Goods intended for consumers Examples: food, clothing, housing, means of transport, etc.

2. Industrial goods Goods intended for the production process Examples: machinery, raw materials that need to be processed, etc.

3. Services Services are intangible and not perishable. Rendered to businesses as well as individuals/consumers Examples: insurance, transport, health, education, etc.

Outline/Mention/Discuss categories of consumer goods/products

1. Convenience goods A relatively inexpensive item where little shopping effort is needed. Very little thought goes into buying these goods. Examples: bread, milk and sugar, etc.

2. Select Goods/Shopping goods

Consumer spends time and effort on deciding what to buy Different products are compared to one another before making a decision Examples: furniture, laptops, printers, etc.

3. Speciality goods

More thought and comparison is required when shopping for these goods. The product is usually more expensive, and the consumer will consider the price, quality

and brand name of the product. Consumers know what they want and demand a specific trade mark/brand (they do not

compare, because they are not interested in a different brand/trade mark) Examples: jewellery, clothing or furniture



4. Services: Personal services

- Personal services are aimed at the final consumer and often carried out by professionals.

- Examples: doctor, plumber, hairdresser, etc. Auxiliary or commercial services

- These are all the services involved in taking the goods or services from producers to consumers and are often carried out by intermediaries.

- Examples: transport, banking, telecommunications, etc.

SUMMARY: TYPES OF CONSUMER GOODSConvenience goods

Bought regularly, without hesitation. Consumers are not willing to spend time on buying these goods because it differs very little in terms of price, quality etc.

BreadMilkMaize meal

Select goods

Also known as shopping goods, because consumers spend time and effort in comparing similar goods

Lounge suiteFridge

Speciality goods

Consumers know exactly what they want and are willing to search until the find what they are looking for. Consumers do not compare products because they do not want any product other then what they are looking for

Branded products that consumers insist on buy e.g. Green Cross hoes and Diesel jeans

Service Services are not tangible. They are rendered by service providers to consumers. Services cannot be separated from the service provider

Garden servicesAu-pair services

Unsought goods

Goods that consumers do not know or think of until the need for such product appears

Funeral service

Explain/Discuss the importance of product development Fast technological development results in products getting outdated quickly. Product development is an attempt to design, create and market new products as well

as modify existing products. Businesses must develop new products in order to replace products that are becoming

unpopular. The popularity of products decrease as it moves through the different phases of the

product life cycle – from introduction to withdrawel. This product life cycle can be illustrated as follows:



NOTE THE PROFIT CURVE – LOSS AT FIRST; PROFIT MADE IN GROWHT PHASE

Explanation of the phases:

Development phase- The business needs to develop a new product, or add new features/develop new uses

for the product.- Product development takes place – all phases/steps are followed for this process.- Financing this process results in a loss on the product, as no income is earned because

of zero sales.Start-up (introductory) phase

- The business wants to create product awareness and to develop a market for the product.

- Sales will be low because the business has to create a demand for the product as customers are not aware of it or do not know it well enough

Growth phase - The business wants to build brand preference and to increase market share.- Sales increase as more customers become aware of the product and the business is

more profitable. Mature phase

- Maturity phase is the most profitable.- The primary objective at this point is to defend the market share and to maximise profits.

Decline phase - Sales decrease as the market becomes saturated. At this phase the business can do the

following: • add new features and find new uses for the product


Rands


• reduce costs to offer the product at lower price • discontinue the product

Outline/Mention/Discuss/Explain the steps/stages of product designContinuous development of new products is important to ensure that new ideas are available to replace goods that are becoming less popular or outdated.

Step 1 The first step in product design is identifying consumer needs and if these needs are

satisfied by current goods and services on the market.Step 2

Select and sift product ideas. Once several ideas are generated, each idea must be evaluated and the

best idea selected. The best idea will not necessarily be the cheapest.

Step 3 Design and test the product idea. Once the best idea for the new product has been selected, the design must

be sketched and worked out in a little more detail. The designer will come up with a basic 3D computer design that is detailed enough to be

sure the idea will work. This is the step where an idea is either given the green light or trashed.

Step 4 Analyse the profitability of the product concept. This step will determine if the money that is going to be invested in the product will be

profitable or not. Step 5

Design and test the physical product. If research shows that the product is going to be profitable the product

concept is then transformed into an actual product and the product is made for the first time.

Step 6 The test marketing of the reactions of the consumers to determine how consumers feel about the product. Customers being happy with the product will lead to a decision to go ahead and make the

product.



EXEMPLAR NOV 2019 (Q 6)NAME/EXPLAIN/DISCUSS THE PURPOSE OF PACKAGING

It protects the product, because it is firm and help eliminating damage.

Promotes the marketing of the product, because it can be attractive and draw the eye and also contains trademark/logo/illustrations that makes identification easy.

Prevents the product from becoming spoiled, because holders of eg. milk are tightly sealed and does not take in light/air.

Prevent tampering or theft, because it is sealed and cannot be opened easily.

Ease of use or storage, some products ' packaging is easy to open, and it can be stacked together, so that storage space can be utilized optimally.

OUTLINE/MENTION/ DISCUSS/DESCRIBE/CLASSIFY TYPES/KINDS OF PACKAGINGSpeciality packaging

Designed for a specific product and suiting the characteristic of the product.

Products are packed in a certain way to create a certain image

example, sunglasses in a special case or pharmaceutical products in special containers.

Packaging for double use Designed so that it can be used for something else

after the contents have been used for instance, margarine tubs can be used to

freeze left-over food. Combination packaging

Two or more similar/related products are packaged together.

This is useful for special offers or when new products are introduced,


PACKAGINGPackaging refers to the

container or packing

material in which a product

or a number of products

are presented.

It is an important part of the

first P: Product and it often

carries important

information on the product,

e.g. ingredients, nutritional

information or instructions

to use the product. DESCRIBE/DISCUSS THE REQUIREMENTS FOR GOOD PACKAGING(NOT IN EXAM GUIDELINES)

It should be obvious and attract the consumer's attention.

It should match the product, so that the value of the product is reflected by the packaging.

The design must match the target market, such as the presentation of convenience goods in cheap packaging, for example milk in a plastic bottle.

It should be distinguishable from competitive products.

It should promote the image that the business is trying to create.

It should be


example, aftershave with a razor, hairbrush with clips and hair bands. Kaleidoscopic packaging

Certain part of the packaging changes continuously. The main objective with this packaging is to create a consumer demand for the

packaging and the product will then sell itself. For example, the national flags of countries taking part in a sporting event are put on a

series of cold drink cans or the latest Disney movie characters are put on breakfast cereal boxes.

Packaging for immediate consumption/unit packaging The package is effortless and easy to use the content This is suitable for products that are used immediately, and the packaging is then thrown

away after use for example a packet of sweets or a can of cold drink.

Packaging for re-sale/ multiple packaging Buying products in bulk to sell them separately in smaller quantities. The retailer will then sell it in smaller quantities, for instance, a box with 48 chocolates

bars, individually wrapped. Unique packaging

Consumer buys the product to obtain the container. For example, biscuits packed in tin containers that can be used to store something else.

ELABORATE ON THE MEANING OF TRADEMARKS A brand is a name, term, symbol, or design that is used for identification of a product.

A Trademark may consist of words, numbers, drawings, signs, symbols, colors, or

combinations thereof.

Trademarks can be protected only if they are registered in terms of the requirements of

the Law on Trademarks.

This is done to make sure that only a particular business the brand. The rights of the

owners of trademarks are protected for a certain period. After the registration of the

trademark shall be renewed.

The Commission for Companies and intellectual property (CIPC) administer the Register

of Trademarks, that is the record of all the brands in relation to which application is made

for registration and that is in fact registered in South Africa.

a Trademark can be a trade name, slogan, logo or a specific design, or a combination

thereof include, for example:


DESCRIBE/DISCUSS THE REQUIREMENTS FOR GOOD PACKAGING(NOT IN EXAM GUIDELINES)

It should be obvious and attract the consumer's attention.

It should match the product, so that the value of the product is reflected by the packaging.

The design must match the target market, such as the presentation of convenience goods in cheap packaging, for example milk in a plastic bottle.

It should be distinguishable from competitive products.

It should promote the image that the business is trying to create.

It should be


- Trade name is that part of the trademark which can be expressed – words, letters or

figures: Coca Cola, Spur or Nike

- Slogan: '' Let your fingers do the walking. ''

- Logo: MacDonald's or Nike Specific design: Coca Cola-bottle

- Colour: Edgar’s red square, Coca Cola's red cans

- There are three phases in trademark acceptance.

Stage 1 Brand recognition- When consumers are able to identify the product, the marketer has achieved the first step

towards brand acceptance.

Stage 2 Brand acceptance

- If a consumer asks for a special brand, it is seen as brand acceptance.

- If the special brand is not available however, the consumer will buy another brand.

Stage 3 Brand insistence

- When consumers are not willing to buy any other brand except the brand they want, this

is seen as brand insistence.

- All businesses ultimately want their consumers to reach brand insistence because at this

stage consumers will accept no alternative brands.

- This gives the business the competitive edge over other businesses.

DISCUSS/EXPLAIN/DESCRIBE THE IMPORTANCE OF TRADEMARKS FOR BUSINESSESS AND CONSUMERS

It identifies the goods or services of the trademark owner.

It grants protection to the trademark owner, by giving him/her exclusive rights to use the

trademark for identification of the products/services, or to allow others to use the

trademark at a cost.

The trademark represents the basis for advertising the business and its products. It is an

important asset for the business.



The business can easily extend its product range, because it is easy to add new products

under a well-known and popular trademark.

Trademarks can speed up sales transactions and increase sales.

Trademarks create loyalty amongst consumers and they will not easily choose

replacements for that trade mark to which they are loyal.

NAME/DESCRIBE/EXPLAIN THE REQUIREMENTS OF A GOOD TRADEMARK It must stand out from competitive products and make it easy for the consumer to identify

the product.

It must be easily recognizable, easy to remember and also to pronounce.

It must help to build the brand familiarity, therefor it must be easy to add other/new

products to the existing range under the same brand.

It must be an indication of quality, the consumer must relate it to a certain quality.

PRICING POLICY

DEFINE/EXPLAIN THE MEANING OF PRICE The price of a product/service refers to the money that a customer pays for that

product/service. It is the amount the business charges for the product/service. It includes a profit for the business, which is normally calculated as a percentage on the

cost. (Cost refers to the amount which the business spent in order to make the product/service available to the customer. It includes the invoice price paid to the supplier, transport costs, as well as other marketing expenses.)

DISCUSS/EXPLAIN THE IMPORTANCE OF PRICING Decisions on price has a direct influence on the income of the business, because it

determines the number of products that will be sold If it is too high, consumers won’t buy the product/service and if it is too low, the business

will not be able to make a worth-wile profit It determines the attitude of consumers towards the product and the trade mark It must make provision for all costs and VAT and it must specify when and to whom

discount should be allowed

OUTLINE/MENTION/EXPLAIN/DISCUSS THE PRICING TECHNIQUES



Cost-based/orientated pricing (cost-plus pricing) Price is fixed at a level where production costs are covered, and a specific profit

amount is added. Applied in cases where selling price must be aligned with buying power of customers –

cost of production is lowered in order to lower selling price. E.g. Cost of production can be reduced by increasing the rate of production, which will

then reduce the selling price

Mark-up pricing Price is determined by adding the cost of production and a percentage of that cost The higher the cost, the higher the price will be

Customer/target-based pricing Businesses will set certain targets to achieve. The targets are used to calculate the pricing. The cost-plus pricing techniques is used to determine the prices. Prices will always set above the break-even analysis point, to avoid making a loss. Demand orientated pricing is where consumers control the price of the good or service. With large bulk orders the consumers is often able to negotiate a good price.

Competition based/orientation pricing Prices are fixed based on what competitors charge consumers in the same market. Businesses often set their prices below the value of their competitors to obtain an edge

on their competitors. Business will watch for changes in prices and adjust their prices accordingly. The more competition in the market, the lower the prices are likely to be. Example: In the retail industry Pick ‘n Pay, Checkers and Spar will often adjust the prices

of certain products in response to the prices of the competitor.

Promotional pricing Many businesses offer sales or special offers to attract customers. Prices are decreased for a short period Specials such as “two for the price of one” can influence the pricing of the goods or

services.

Penetration pricing Prices are made artificially low in relation to production costs and quality The reason is for the business to enter a market with a new product and win a share of

the market over As soon as a share of the market is won, the price will increase



Example – introductory offers on new products It is not a profitable long term strategy

Psychological pricing A price strategy whereby the business wants the client to perceive the price as lower than

what it really is The client reacts on an emotional, rather than a logical reason to buy a specific product,

based on the perception that the price is lower than what it is. Example: Product is priced at R2 999, rather than R3 000

Bait pricing Prices are set low as “bait” in order to draw customers to the shop The intention is that they will visit the shop to buy the low-priced articles, and then also

buy other products which are normally priced (or even slightly over-priced). Supermarkets often use bait articles and price them below the cost of the product

Skimming prices Prices of new products/new technology are set high in relation to cost These prices are charged for the period during which there is no competition and therefor

prices cannot be compared to those of competitors The business aims to make maximum profits while the products are still new and there is

no competition The prices will be lowered after a while in order to make the products affordable to a

larger group of consumers

Prestige prices (NOT IN EXAM GUIDELINES) Prices are set artificially high in order to suggest good quality This is done in cases where the consumers are concerned about the quality of products If the price is low, consumers might think that there is something wrong with the product Often used for the price of services, because consumers perceive the quality of the

service on the basis of what they pay for it.

IDENTIFY THE ABOVE-MENTIONED PRICING TECHNIQUES FROM GIVEN SCENARIOS/STATEMENTS. QUOTE FROM THE SCENARIO TO SUPPORT YOUR ANSWER.OUTLINE/MENTION/EXPLAIN/DISCUSS FACTORS THAT INFLUENCE PRICING

Factors influencing pricingInput cost Includes manufacturing-, distribution-, marketing costs

The higher the input cost, the higher the final price. The lower the input cost, the lower the final price.



Demand for the product

The higher the demand, the higher final price. The lower the demand, the lower the final cost The nature of the demand can be elastic or inelastic An elastic demand is when the demand will change as to the buying

power and price of the product changes (e.g. luxury goods) Inelastic demand means that the demand remains unchanged,

irrespective of the price, e.g. fuel, toothpaste, etc.Form of the Target market

Perfect competition (many buyers and sellers, products are similar and there are many substitutes available; Prices are determined by supply and demand and profit margins are relatively low)

Monopolistic competition (many suppliers/sellers; each has its own trade mark; substitutes not freely available, e.g. the many types of beer manufactured by SAB, that compete with one another)

Oligopoly (only a few suppliers/sellers; they control the prices; products are similar, e.g. MTN, Vodacom OR Kulula, 1Time and Mango)

Monopoly (only one supplier; this supplier controls the price; consumers have no alternatives, must buy from this supplier, e.g. Eskom)

Type of the product

Luxury products are normally priced higher Essential products are normally priced lower

Availability of Substitutes

Substitutes are products that are used for the same purpose e.g. butter and margarine

If products become too expensive or scarce, consumers will start using substitutes

Reaction of Consumers

If prices of goods become too high, consumers will seize buying those products

If prices are too low, they might think something is wrong with the product and also not buy it

Reaction of distributers / sellers

If distributors think products are too expensive and consumer will not buy it, they will not stock it in their stores

They will rather stock cheaper alternatives which will result in bigger profits

Normal trade practices

Sometimes certain products are normally sold at discount prices to consumers

This must be taken into account when determining the price of products in order to ensure that a profit is still made after the discount

E.g. motor tyres

IDENTIFY THE THESE FACTORS FROM GIVEN SCENARIOS/ STATEMENTS. QUOTE FROM THE SCENARIO TO SUPPORT YOUR ANSWER.

OUTLINE/MENTION/EXPLAIN/DISCUSS PRICE ADJUSTMENTS (NOT IN EG’s) Reasons for adjustments:



- To draw new customers- To maintain a market share when life cycle near its decline phase- Inflation- Decrease in the buying power of customers

Ways in which prices are adjusted:- Discounts Bulk, i.e. decrease in price when many goods are bought at once; Cash i.e. decrease in amount to be paid on account, because of prompt payment; Seasonal, i.e. decrease in price of goods out of season, e.g. ice cream in winter;

Trade, i.e. decrease in price given by wholesaler to retailer, because of continuous loyalty of the latter towards the wholesaler, or to indicate expected selling price to retailers.

Decrease in selling price in order to persuade buyers to buy immediately and not wait until they actually need the product.

- Price discrimination Consumers discrimination – different prices charged for different consumers, e.g.

loyal customers are given discounts, others not. Product discrimination – soft drinks sold at the movies are more expensive that

those sold at a supermarket Place discrimination – the prices for front seats at a show are higher than those for

the back seats Time discrimination – agricultural produce are more expensive out of season than

during the season / prices of holiday accommodation are higher during low season than high season when it is school holidays

DISTRIBUTION POLICY

DEFINE/EXPLAIN THE MEANING OF DISTRIBUTION AND CHANNELS OF DISTRIBUTION Distribution refers to the way in which a business gets the product to the customer Products must be made available to customers at the right time, at the right place

OUTLINE/DISCUSS/EXPLAIN THE CHANNELS OF DISTRIBUTION Channels of distribution refers to the route the products follow from the producers in order

to reach the consumer Channels of distribution consist of the intermediaries who form part of the marketing

process Channels of distribution can be direct (no or only a few intermediaries) or indirect (many

intermediaries)DIFFERENTIATE/DISTINGUISH BETWEEN DIRECT AND INDIRECT CHANNELS OF DISTRIBUTION



DRAW THE CHANNELS OF DISTRIBUTION- Direct distribution Involves only the producer and the consumer. The manufacturer, wholesaler and the retailers are cut out of the process. Example: The consumer going to a milk farmer and buy a bucket milk from him/her.

- Indirect distribution Involves many intermediaries, i.e. the manufacturer, wholesaler and retailer are part of

the distribution process Example: A sweet manufacturer would produce sweets and send them to a wholesaler in

large quantities. The wholesaler sells the sweets in large boxes at bulk prices to retailers. The retailers would then sell them to the consumer.

OUTLINE/MENTION TYPES OF INTERMEDIARIES AND EXPLAIN THE ROLE OF INTERMEDIARIES IN THE DISTRIBUTION PROCESS

Wholesalers Buy large quantities from the producers/manufacturers and sell it to the consumers. Wholesaler is able to get cheaper prices on the products it purchases from the producer. The wholesaler transport and stores the product for the producer. Transport and storage cost must be factored into the wholesaler’s price when it sells its

good to the consumer.Retailers

Retailers are shops that sells to the consumers. Many retail outlets have staff that can advise and assist the customer on their purchase. Some retailers specialise in one specific type of product. Example: cell phone retail outlet.

Agents / Brokers Large manufacturers usually contracts agents and brokers to distribute their products. The agents will create a link between the manufacturer and the retailers. Brokers are specialised agents in a certain field of expertise, example insurance brokers. Agents and brokers are normally remunerated on a commission basis.


Producer

ConsumerProducer

Wholesaler Retailer ConsumerManufac-turer


BRIEFLY EXPLAIN THE REASONS WHY MANUFACTURES MAY PREFER TO MAKE USE OF DIRECT OR INDIRECT DISTRIBUTION METHODS

Producer and the rest of intermediaries decide wehether they have the time, capital and knowledge to market the goods themselves, or whether they must use other intermediaries.

Nature of the product will also play role in decision on which channel to use Geographical distribution of market also plays a role

Direct distribution Indirect distribution Manufacturers want complete control

over the marketing process Manufacturers sell goods more

effectively to consumers that intermediaries do

Products can become too expensive when each intermediary adds its own profit

Manufacturers who are in direct contact with consumers, know the target market better

There might not be any suitable intermediaries available to sell on behalf of the manufacturer.

Consumers are spread over a large geographical area

Manufacturers might not have the knowledge/expertise required for direct marketing

Direct marketing requires a large investment in marketing. Manufacturers do not always have enough capital, or they prefer to use available capital on their core activities

Manufacturers cannot perform marketing activities, e.g. storage, financing, etc.

Intermediaries are experts in performing the marketing activities and can do it more effectively/cost effectively

COMMUNICATION POLICY

DEFINE/EXPLAIN THE MEANING OF A MARKETING COMMUNICATION POLICY The marketing communication policy refers to different ways of selling products Involved with making potential customers aware of your product, convincing them to buy

it and reminding them about it. Promotion consist of three stages

- Create awareness among customers of goods and services that are available.- Inform customers about the benefits of buying the goods and services.- Persuade the customer to buy the goods and services

OUTLINE/MENTION/EXPLAIN/DISCUSS/DESCRIBE THE COMPONENTS OF THE MARKETING o Sales promotion

• Many companies combine different tools and elements of promotion to achieve the most effective sales promotion.



• Sales promotion can include the following Customer loyalty cards- This card allow customers to get money back on the points they have earned with their purchases- Example: The smartcard of Pick ‘n PayFree gifts - Many cosmetic companies give away free samples when they sell items.- Some fast food outlets attracts children by providing children’s toys in a meal pack.- Example” Happy meal of McDonaldsJoint Promotion- Many large companies do joint promotions to encourage customers to purchase their brands- This provides benefits to both companies and it reduces the cost of promotion.Point of sale- Some items are placed carefully in strategic places to encourage customers to buy them.- Example: chocolates are often placed at the checkout till on a display standSpecial offers - Many shops offer special offers.- Example: Washing powder may have a buy one, get one free” promotion.- Some shops may offer a discount when paying with cash rather than credit cardDiscounts- At certain times of the year, many shops have clearance sales of their seasonal items.- Some shops may sell off older stock at reduced prices

o Advertising Advertising is the most popular method for manufacturers to get their message to the

target market and consumers. A good advertisement should include the following:

- Attract Attention - Spark/Hold Interest- Arouse Desire- Result in/Inspire Action

The above is commonly referred to as the “AIDA” effect. There are many different places to advertise and ways to advertise. These different advertising media have different advantages and disadvantages. It is essential for the business to find the most effective method to get the message

across to the target audience

o Publicity Refers to on-going exposure that the business gets. The public relations function together with marketing is responsible for publicity.



Publicity and public relations build relations between customers and the business. Different ways in which a business can do this:

- Maintaining a good corporate image;- Competitions;- Endorsements by famous people- Gifts and samples- Sponsorship to sporting events.

o Personal selling Special attention is given to the customer’s needs and requirement. Effective way to build relationships between the sale person and the customer. Good way to maintain relationships. After sales service and individual customer attention is very important when selling

large expensive items. Requires well-trained and knowledgeable people that understand the market and

customers. Often done through agents.

Explain the purpose of sales promotion and give examples Customers are more selective in; their buying choices and a good

promotional programme is needed to reach them. The main purpose of sales promotion is to boost sales of a product by

creating demand, that is, both consumer demand as well as trade demand. It improves the performance of middlemen and acts as a supplement to

advertising and personal selling. Examples: See notes above.

Explain the purpose of advertising and give examples of advertising medium Advertisements create awareness Reminding buyers to use the product Advertising to change belief about brand: General purpose of an advertisement is to market a product: Advertisement is a tool to promote direct sales Advertisements builds Company’s Image Advertising media:

o Broadcasting advertising/Electronic media, e.g. Television, Radio, etc.o Online advertising, e.g. websites, internent, cellphone applicatioins, etc.o Print Media, e.g. Newspapers, Magazines, Flyers, Posterso Exhibit Advertising, e.g. at festivals, agricultural shows, etc.o Outdoor advertising, e.g. on lamp posts, school fences, etc.



o Mobile advertising, e.g. on trucks & busseso Sponsorship advertising, e.g. logo of company on sport attire (Nike, MTN, etc.)

ALTERNATIVE: EC NOV 2016 Q 5.3 Print media. Outdoor advertising. Mobile advertising. Broadcasting advertising. Exhibit advertising. Sponsorship advertising. Online advertising

Elaborate on the meaning of publicity See notes above.

Differentiate between advertising and publicity (not in EG’s) EC NOV 2017 Q 5.3

ADVERTISING PUBLICITY Paid for √ by the business. √ Has control √ over the messages. √ Only positive. √ Low level of credibility √ done by the

business. √ Not presented as news √ consumers likely

to ignore. √ Any other relevant answer related to

advertising

Free of charge √ to the business. √ No control √ over the message. √ Can be positive or negative. √ High level of credibility √ done by a third

party. √ Presented as news √ consumers likely to

pay attention. √ Any other relevant answer related to

publicity.

Elaborate on the meaning of publicity Refers to on-going exposure that the business gets. The public relations function together with marketing is responsible for publicity. Publicity and public relations build relations between customers and the business. Different ways in which a business can do this:

- Maintaining a good corporate image;- Competitions;- Endorsements by famous people- Gifts and samples- Sponsorship to sporting events.

Explain the role of the public relations in publicity



Maintaining good relations with press might lead to positive messages publicised often.

Negative publicity might not be so harsh, because of good relations the press will try to also give positive side of the story.

Sound public relations will create loyalty amongst customers and negative publicity will not result in substantial loss of sales.

Sound public relations will create good image of business with the general public, which might result in support from community in times of negative publicity

Give examples of publicity e.g. press release to the media Press release to media News clips in newspapers Articles in magazines Interviews on radio stations

Explain the meaning of personal selling See notes above

Justify the effectiveness of personal selling in promoting a business product It is more trustworthy/legitimate than advertising or promotions. Special attention is given to the customer’s needs, resulting in customer satisfaction. Products that are complicated/difficult to use can be explained by sales person. Effective way to build relationships between the sale person and the customer. Good way to maintain relationships that have been built previously After sales service and individual customer attention are very important when selling

large expensive items.

MARKETING IN THE INFORMAL SECTOR

Define the informal sector Refers to all businesses that do not keep record of their economic activities The informal sector includes all those businesses that are not taxed and not

monitored by government or included in the calculation of the gross domestic product.

Explain the advantages of marketing in the informal sector Owners running the informal business gain business knowledge through experience. Offers the opportunity for someone who was previously unemployed to earn and

income.



Cheap start-up costs an structures are used because they often only need a small table with an umbrella/low capital layout.

Justify the reasons why the informal sector prefers to use direct distributionGP INFORMAL TASK

The seller has control√ over the product. √ Better end user price √as no intermediary costs. √ Direct contact with customers for feedback and improvements Well trained sales staff are able to promote products effectively√ and establish good

relationships with customers. √ By cutting out the middleman,√ prices are lower.√ Sales staff provides customer information√ for future market research. √

Explain/Discuss how the informal sector uses indirect distribution Spaza shops are informal retail outlets that act as distribution agents. Farmers may deliver their products to the spaza shops or the spaza shops may

purchase from a wholesaler. Many informal businesses rely on agents to distribute information or carry out services. Although wholesalers may not exist in the informal market, the retailer in the informal

sector may purchase products from the wholesaler in order to sell them in the informal market

Compare the marketing mix of the formal sector with the formal sector e.g. the product of the informal sector usually does not have a logo or trade mark as compared to the formal sector.

Marketing Mix Informal sector Formal sector

Product no trademark/packaging

lack of market research

inferior products

trademark & packaging

Price low/small units low prices

prices often based on demand or what customers can afford

larger qualities/bigger – higher prices

Place Distribution: Direct selling

mainly retail

residential/EBD areas

Distribution: all

EBD/ shopping areas

Promotion small posters outside, small billboards, radio advert, all Copyright Reserved 24 Please turn over


handwritten flyer

mostly personal selling

communicates directly to customers

forms

ELECTRONIC MARKETING

Define electronic marketing and give examples e-Bemarking (elektroniese bemarking) is ook bekend as aanlyn- of internet bemarking

wat internet-tegnologie gebruik om aanlynboodskappe aan kliënte te bevorder/produkte en dienste te bemark.

(GP INFORMAL TASK)

Email marketing.√√ Websites.√√ Search engine marketing.√√ Mobile marketing.√√ Banner marketing.√√ Social networking/ Facebook/ Instagram /Twitter.√√ Blogging.√√ Content creating and sharing/ You Tube.√√ Viral marketing.√√ SMS marketing.√√

Identify methods of electronic marketing from given scenarios/case studies/cartoons/pictures etc.

Types of electronic marketingE-mail marketing

Marketing information is forwarded to prospective clients email addresses. Customer satisfaction is also followed up via emails. Enables the producer to form relationships with customers and build customer loyalty. Fairly inexpensive. Large number of people can be reached at a low cost

Websites Websites provides details about the products and services, pricing, location and contact details. Many businesses use their websites to promote the success of their products. Testimonials of people who are happy with their products are placed on the website.

Search engine marketing Search engines allows people to search for products or businesses and the website will list all



the results. Search engine optimisation allows businesses to rank themselves above other pages by linking

key words to their websites. Examples of search engines: Google, Yahoo, Bing, AOL and other smaller search engines.

Mobile marketing The use of cell phones for advertising reaches a very large potential market. The most popular form of mobile marketing and advertising is via SMS. Bulk SMS’s have become very popular to send a small amount of information to a large number

of people.Banner advertising

Developed by a website advertising agent who places a business website banner onto someone else’s website.

Example: Outsurance banner is placed on the website of Supersport. The advertisement is paid for according to the number people that click on the advert.

Explain/Discuss the impact (advantages and disadvantages) of electronic marketingEC NOV 2018 Q5.8

Advantages of electronic marketing- Consumers are worldwide√ and can shop anytime that they want.√- Ability to market services√ at a low cost.√- Easier to establish how effective an advertising campaign is√, by getting an response to

advertising.√- Customers can be greet with targeted offers√, due to customer database being linked to

the website.√- Having a reputation for being easy to engage with√, by having a social media presence.√- Is immediate and easy√, only a few clicks away from completing a purchase√.- Has the ability to sell√ anything online.√

(EC NOV 2019 Q4.7)Disadvantages of electronic marketing on businesses

- The cost of software, hardware, website design, maintenance of the site, online distribution costs and time√ must all be included in the cost of providing your service/product.√

- The number of local households that shop online is only a small percentages√, because most customers are still motivated to buy in person.√

- The majority of internet marketers lack customer service and have poor navigation√ which make it difficult for customers to find what they are looking for.√

- There is the risk of security on the internet√ many customers will not want to use their credit cards to make a purchase.√

- There is a lot of competition to sell products√ and unless customers finds what they are looking for quickly they will move on to another site.√



FOREING MARKETING(GP INFORMAL TASK)

Define foreign marketing The meaning of foreign marketing

Businesses market their products in more than one country, √ across national borders.√

Local companies can expand their local target market√ and take advantage of overseas prices and exchange rates.√

Businesses are also able to export and import goods√ and services through e-marketing and advertising.√

Outline/Mention/Explain/Discuss restrictions and regulations that control foreign marketing e.g. o Tariffso trade agreemento export subsidieso protection policies

(GP INFORMAL TASK)Restrictions and regulations that control foreign marketing

Trade agreements√√ Certain countries enter into trade agreements √in order to promote trade between those two

countries√

Tariffs√√ Custom tariffs or import duties are taxes placed on goods√ brought into South Africa. The import taxes are imposed on imports in order to control the amount of money leaving the

country√ and to encourage South Africans to buy local goods. √

Export subsidies√√ South Africa wants to encourage exports to foreign countries√ and therefore provides a subsidy

on certain goods and services that are exported. √ Certain products that are exported may get reduced transport rates√ to encourage lower prices

and therefore increase international sales.√

Protection policies/Protectionism√√ The South African government puts laws in place√ to protect local industries√ Goods that fall under these protection policies will have additional taxes added to them√ which

make them more expensive than local ones√ This is done to ensure that consumers buy local goods√ and money stays in the country.√

Suggest ways in which South African businesses can enter into a foreign market e.g. exports, licensing, joint ventures, direct investments etc.

(EC NOV 2019 Q 3.3) Copyright Reserved 27 Please turn over


- Businesses can export by selling goods and services√ to individuals/businesses in other countries.√

- Businesses can sell the license/transfers the right to the use of a product/service√ to another businesses in other country.√

- Businesses can form a partnership/joint venture with a other company (in a foreign country)√ by forming a third company together that will benefit both of the companies.√

- Businesses can directly investment in facilities in a foreign market√ by establishing a new venture or acquiring an existing company.√

(GP INFORMAL TASK)6.5.4 Ways in which South African businesses can enter into foreign marketing.

Direct exporting√√ Businesses sell directly into the market the business has chosen using in the first instance their

own resources√√ Once businesses are established a sales programme, they turn to agents and/or distributors to

represent them further in that market√√ Agents and distributors work closely with businesses in representing the business’s interests√√ Agents/distributors become the face of the company and thus it is important that the choice of

agents/distributors are handled in the same way used in hiring staff√√

Licencing√√ Licencing is an arrangement where a firm transfers the rights to the use of a product or service to

another firm. √√ It is a useful strategy if the purchaser of the licence has a relatively large market share in the

market they want to enter√√ Licences can be for marketing or production√√

Franchising√√ Franchising works well for firms that have a reputable business model e.g. food outlets that can

be easily transferred into other markets√√ When a business uses franchising, the business model should be unique or have a strong brand

recognition that can be used internationally√√

Partnering√√ Partnering is almost a necessity when entering foreign markets and in some part of the world it

may be required, e.g in Asia√√ It can take a variety of forms from a simple co-marketing arrangement to a sophisticated strategic

alliance for manufacturing. √√ Partnering is a useful strategy in those markets where the culture is different from that of the

business as local partners bring local market knowledge, contacts and customers. √√

Joint ventures√√ Joint ventures are a particular form of partnership that involves the creation of third independently

managed company. √√ Two companies agree to work together in a particular market, either geographic or product and

create a third company to undertake this. √√ Risks and profits are normally shared equally, e.g. Sony/Ericsson√√

Buying a company√√ Buying an existing local company may be the most appropriate entry strategy√√



It may be the most costly and determining the true value of a firm in a foreign market will require substantial due diligence√√

This entry strategy will immediately provide you the status of being a local company √√ The business will receive the benefits of local market knowledge, an established customer base

and be treated by the government as a local firm. √√

Piggybacking√√ Piggybacking is a particularly unique way of entering the international arena√√ If a business has a unique product or service that they sell to large domestic firms that are

currently involved in foreign markets, the business may want to approach them to see if their service or product can be included in their inventory for international markets. √√

This reduces the business’s risk costs because they are selling domestically and the larger firm is marketing their product or service for them internationally. √√

Turnkey projects√√ Turnkey projects are particular to companies that provide services such as environmental

consulting , architecture, construction and engineering√√ A turnkey project is where the facility is built from the ground up and turned over to the client

ready to go- turn the key and the plant is operational√√ This is a very good way to enter foreign markets as the client is normally a government and often

the project is being financed by an international financial agency such as the World Bank√√ The risk of not being paid is eliminated√√

Greenfield Investments√√ Greenfield Investments require the greatest involvement in international business. √√ A Greenfield investment is where you buy the land, build the facility and operate the business on

an ongoing basis in a foreign market. √√ It is the most costly and holds the highest risk but some markets may require the business to

undertake the cost and risk due to government regulations, transportation costs, and the ability to access technology or skilled labour. √√

Explain/Discuss how the production function can align its processes in order to meet the global demand e.g.

o Production systemso Planningo Safetyo Qualityo Costing



(GP INFORMAL TASK)6.5.5 Ways in which the production function can align its processes in order to

meet global demand. The production function needs to be closely involved in this planning√ and

decision making.√ Products might need to be adapted, modified or redesigned√ to suit different

customer needs. √ Production methods and quality management systems implemented by business

can change √as some countries have strict quality and safety requirements.√ All countries have different standards in terms of quality√. Export products have

to meet the international standards. √ Although exports bring money into the country √ transportation, custom duties

can add up and potentially make the good or service very expensive.√ Processes should be as efficient as possible√ and that the most appropriate

process is used for the particular good or service√ The laws relating to trade vary from country to country √and a South African

business may experience difficulties√ unless research into safety , quality and packaging regulations are taken into account. √

New sources of raw materials/labour may mean that new production facilities can be developed in a foreign country,√ leading to globalisation of production as well as sales. √

Copyright Reserved 30

hnk.co.zahnk.co.za/.../uploads/2020/04/gr11-t2-01-nc-market… · web viewgather information about...

Documents