What is Consumer CHAPTER

1
Marketing?

James Lappeman
Vimbai Malandu

Introduction
The purpose of commercial business is to find and retain customers by creating a compelling
value proposition. Marketing is at the very essence of this purpose, and this chapter provides
a holistic view of the marketing concept specifically related to consumers. Not all marketing
is commercial; the principles in this book can therefore be applied to marketing many things,
like ideologies or not-for-profit organisations. Similarly, not all marketing is directly related
to consumers (for example, a company can market nuts and bolts to another company that
makes cars). This book, however, is about marketing to consumers.

Before we get into chapters on the fundamental principles of marketing, this chapter
provides a broad strategic overview of what marketing is, and how to think about consumer
marketing. A clear understanding of this chapter is required before the rest of this book's
contents can be fully understood. In fact, some of the best marketers in the world do not
have formal marketing training, but understand the principles of this chapter and have built
great business empires around this thinking.

Definitions of marketing
In order to define marketing, let us look at two definitions from key sources. According to
Kotler and Armstrong marketing is defined as:

A social and managerial process by which individuals and businesses obtain what they
need and want through creating and exchanging value with others.1

According to the American Marketing Association:

Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society at large.2

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 Marketing to South African Consumers

The role of marketing is to be the link between the consumers (that pay money for goods and
services) and companies (that produce goods and services). There is no formal function in
business that fulfills this crucial role in the same way (See Figure 1.1).

Figure 1.1: Marketing's role in connecting production to consumption

COMPANIES CONSUMERS
(Producing products Marketing (Paying for products
and services) and services)

Different companies may have an inaccurate internal definition of marketing. For example,
an industrial refrigeration company may define marketing as the function of creating
advertisements in industry publications. This is a misleading use of the term marketing since
consumer needs are not met through advertising. Advertising is a component of marketing
used to communicate a brand's value proposition, to create awareness, or to impart
information. These are done with a view to create an action (maybe a sale) or behaviour
change (like recycling). Advertising, however, is only one of many marketing-related tools at
a company's disposal. These marketing tools (or tactics) are small pieces of a larger whole
(see Figure 1.2) that include other tactics, such as pricing strategy or product design.

Figure 1.2: Advertising as a component of marketing

Advertising

Other marketing
components

The role of advertising as part of marketing strategy is explored later in this book when we
look at the marketing mix (also known as the Four Ps) in Chapters 13–16.

Creating value propositions

At the very heart of marketing is the idea of a value proposition. A value proposition is an
offer (or promise) made by the marketer to the potential consumer. The consumer then
decides whether they would be willing to part with their money in order to receive the offering.
While not made as mathematically as the equation below, the essence of value comes from
understanding the benefits (or perceived benefit) on offer minus the cost (or perceived cost)
involved.
Value = Benefit – Cost

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 Chapter 1: What is Consumer Marketing?

While the process is far more organic and complicated than the equation suggests,
understanding value propositions is crucial to successful enterprises. Consumers are
constantly choosing between alternatives based on what they get (benefit) and what it will
cost. Note that costs can also include aspects like time and missed opportunities (known as
opportunity cost). For example, a consumer may consider buying groceries at their nearest
shopping centre. Benefits of this choice could include a saving of time (close proximity)
and money (saving on transport costs). Costs could include the fact that they don't stock
the consumers preferred brand (which is available at a shopping centre at the other side
of town). The consumer makes a calculation over the trade off between benefits and costs.
Consumers will make different decisions based on their wants and needs (for example,
is their brand preference as important as the cost in time and money?). Companies that
understand consumer behaviour and make strong value propositions have a good chance
of success.

In the 1980s, Mr Price was formed in South Africa, building its success on one of its premises:
fashionable clothes don't need to be expensive. Before that, the options in clothing were
mostly either expensive-fashionable or cheap-unfashionable. The fact that you could buy
lower-quality clothes that were fashionable was a new proposition was a new proposition
that had relevance in many markets across the world, including South Africa.

The exchange process

The exchange process occurs when two or more parties give something of value to each
other to satisfy their perceived needs. In a marketing context, it is typically manifested in
terms of a buyer-seller relationship. The seller offers goods and services desired by possible
buyers. In return, the consumer (buyer) returns something of value to the seller (generally
money). Both parties receive something of value in the exchange process. The marketer
makes money and the customer receives goods, services or ideas that satisfy their needs.
This exchange process is the very basis of marketing.

In order for an exchange to occur, at least two parties are needed. The following conditions
also need to exist:

• Both parties must have something of value to exchange.

• Both parties need to be able to communicate. The South African clothing manufacturer
mentioned in the example above must have a means to let people know that they exist
and the products they offer (for example, by purchasing advertising space on Instagram).
• Both parties must be able to exchange something. For example, the manufacturer must
meet the physical and legal requirements for production and the consumer must be able
to buy the product with their money (or on credit).
• Both parties must be willing to exchange (based on perceived equity in the transaction).

The role of marketing is to create the environments in which these exchanges that satisfy
the perceived needs and wants of individuals and organisations can take place. These
exchanges are facilitated by marketing through the distribution plan, the pricing model, the
development of products and services that people want, the communication process to
communicate benefits. It is marketing's role to facilitate the delivery of the total package that
will hopefully achieve a satisfactory exchange.

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 Marketing to South African Consumers

It is important to note too that this exchange is not always immediate. One of the key roles
marketers play is building the brand so that the value is understood and can be acted on
when the time is right for the purchase to be made.

A marketing concept related to value is that of utility. Utility is the state of being useful,
profitable or beneficial. In a marketing context, this is any quality or status that provides a
product with the capability of satisfying the consumer's wants and needs.3 Utility is used to
define the degree to which a product can satisfy a functional or emotional need-state.
Within the framework of functional or emotional need-states, there are five types of utility
that a consumer marketer must take into consideration when creating a strategy:

• Form utility: The process of increasing the attractiveness of a product to a group of

consumers by altering its physical state.

• Place utility: Making the product available where consumers will buy it. Chocolate
manufacturers, for example, secure shelf space for their chocolates at a wide variety of
retailers, including supermarkets, cafés, cinemas and garage convenience stores.

• Time utility: Making the product available when consumers want to buy it. An example
of this is ensuring that convenience products are placed in garage convenience stores,
which are often open 24 hours a day.

• Possession utility: Once a consumer has purchased a product (for example, a software
product that may have restricted usage permission), what rights do they have to use the
product?

• Image utility: This is the satisfaction acquired from the emotional or psychological
meaning attached to products. For example, when buying a gift, some people pay more
for a chocolate perceived to be of better quality.

The outcome of a positive exchange is mutual satisfaction (utility) and, hopefully, a loyal
consumer. The next subsection briefly discusses some of the terminology used in consumer
marketing and provides a framework for terminology.

Marketing to consumers
This book is about marketing to consumers and does not include other subsets of marketing
that may be included in the above definitions. For example, marketers may sell their
products and services to companies (and not end consumers). This form of marketing is
called business-to-business (B2B) marketing and it carries a different set of theoretical
and practical principles. In discussing consumer marketing, however, there are a number
of challenges in the way consumers are described in the marketing literature. The terms
'shopper, 'buyer', 'user', 'customer', 'target market', and 'audience', to name a few, may be
used to refer to a consumer. In order to provide some clarity, Table 1.1 provides a framework
and definitions to better understand the terminology used in the field to describe consumers.
In many cases the same person can occupy multiple roles (shopper, decision maker and
end-user). In other cases, the person may only fulfil one role in the ultimate consumption of
the product.

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 Chapter 1: What is Consumer Marketing?

Table 1.1: Definitions of terms used to describe consumers

Term found Definition for the purposes of this book

in marketing
literature
Actual consumer The person in a household who consumes a product or service. For example, a child
or end consumer will consume a bowl of breakfast oats that they did not shop for nor pay for. They are,
(also user) however, the end consumer.
Decision-maker The person in a household that decides which product or service to buy. For example,
a father may decide that, if his child is going to eat oats, then it must be a specific
brand. He may not be the shopper or consumer, but he is the decision maker.
User The person who uses a service or platform. For example, a family might start using
(online usage) Ecommerce to shop for non-perishable groceries. While everyone agrees with the
benefits, only one member is tasked with the shopping. They would be the user of the
Ecommerce platform, but not necessarily the end consumer of the product.
Shopper The person who makes the retail transaction but is not necessarily the consumer. For
example, a child may be sent to a spaza to buy hand cream for a parent. The child was
the shopper, but not the end consumer. Sometimes a retailer might refer to shoppers
as 'customers' since they may not be the end consumer.
Purchaser/buyer The person who pays for the product or service but does not always consume it. One
partner in a household may purchase an item for the other. They pay for it but don't
necessarily consume it themselves. A purchaser might be differentiated from a shopper
in that this role is usually assigned to more complex decisions than retail shopping (for
example, purchasing a car).
Audience A term used to describe a consumer of media (for example, a television
advertisement). Often the audience and target consumer are the same, but one can
also be part of the audience but not be a consumer of the product or service promoted.
Customer A term sometimes used interchangeably with consumer, but best used to describe
an intermediary relationship. For example, Coca-Cola deals with many customers
(shopping outlets) in order to supply its product to the end consumer. Most often used
in B2B (business-to-business) marketing. Some institutions, like banks, also refer to the
end customer as the client. In hospitality and retail, sometimes the term patron is used.
People Aside from all of the above terms, it's important to remember that marketers work with
people.

In contemporary literature, some of these terms are used interchangeably. This can be
confusing. A business may refer to a customer as the company that it supplies products
to (for example, a shampoo brand may supply to customers like Pick n Pay, Checkers
and hair salons). These customers then sell the shampoo to consumers. A similar article
describing this might, however, say that the shampoo brand sells to intermediaries that
then sell to customers. Since there is no universal convention, reading marketing literature
can be confusing. Figure 1.3 is an attempt to distil the various consumer definitions under
the umbrella of 'consumer'. While the terminology landscape is not so clearly defined and
there is much overlap in terminology (even when their meanings are clearly different), for
the purposes of this book we group the purchaser/buyer (financing the exchange), decision-
maker (choosing the brand), audience (consuming messages about the brand), user (using
the product/service, but not necessarily paying for it or even choosing it), and shopper (the
person who visits the retail outlet) under the umbrella of 'consumer' unless clearly explained
(for example, the use of 'audience' in media planning).

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 Marketing to South African Consumers

Figure 1.3: Understanding some of the complexity and interchangeable terminology that we find in
marketing literature

COMPANY
(Marketer)

CUSTOMER CUSTOMER CUSTOMER

(Retailer) (Retailer) (Retailer)

CONSUMER

Actual consumer User Purchaser Shopper

Buyer Decision-maker Audience

PEOPLE

The term 'customer' (while often used interchangeably with 'consumer' or 'shopper') is used
to represent an intermediating business that the marketer sells to, for example, a distributor or
retailer (see Chapters 6 and 15). In all cases, from the company to the consumer, marketers
work with people, so understanding people is crucial to any marketing activity.

In a narrower consumer business context, marketing involves building and managing

profitable relationships with consumers. Consumer marketing is, therefore, the process by
which companies create value for consumers and build strong consumer relationships in
order to capture value from consumers in return. Alternatively phrased, the goal of consumer
marketing is to attract new consumers (consumer acquisition) by promising to deliver superior
value and to keep and grow a current consumer base (consumer retention) by delivering
satisfaction.4

Understanding what a consumer needs or wants is fundamental to marketing. The next

section unpacks a foundational principle in strategic marketing based on the work of
Theodore Levitt (1960).

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 Chapter 1: What is Consumer Marketing?

The marketing concept

As with many other areas of management, marketing has evolved over the last century. In
particular, a few authors have shaped how we understand marketing. This section summarises
the evolution of modern marketing from a field that was orientated around manufacturing
towards a field that is far more consumer focused. While many of these ideas are decades
old, businesses still make mistakes based on an unevolved view of the marketing concept.

Marketing myopia
Marketing Myopia is a paper written by Theodore Levitt in 1960.5 In this paper, he suggested
that businesses thrive when their focus is on consumer needs and wants, rather than selling
products. The paper addresses the blind spot (myopia) that entire industries experienced as
a result of a short-sighted view of their business. In one of his more famous examples, Levitt
asked why the railroad industry of old was not more instrumental in the development of the
motor car or commercial aircraft. His conclusion was that the railroad industry defined their
business according to the product they made (trains and tracks), as opposed to the need
that they were fulfilling (mass efficient transport). While they focused on making better and
safer railroads, others were looking at how transportation could be revolutionised. In time,
the railroad industry declined as the main mass transportation business because they were
'railroad oriented instead of transportation oriented; they were product oriented instead of
customer oriented'6. The major railroad industry declined not because of the invention of
cars, trucks, and aeroplanes, but because of its own shortsightedness. The same principle
applied to Hollywood, which almost imploded when television was launched. Television
became a bigger commercial engine than 'big screen'' movies ever were. Levitt said:

Had Hollywood been customer oriented (providing entertainment) rather than product
oriented (making movies), would it have gone through the fiscal purgatory that it did? I
doubt it.

The problem with being too product-orientated is that the focus moves to incremental
improvements, and the needs of the consumer are assumed. Another more recent example
of marketing myopia is Encyclopaedia Britannica. Britannica was a huge company ($650
million annual revenue in 19907) that prided itself on selling the best reference books. It
quickly lost out to companies like Encarta (that were CD-ROM based) and, eventually,
Wikipedia (and arguably the internet) which were better at meeting the need for knowledge
(in terms of both format and cost).8

Some of the consequences of defining your business according to your product, as opposed
to needs, are:

• Intense focus on incremental improvements.

• Arrogance regarding smaller companies meeting the same needs in different ways.
• Over-focus on competitors' actions rather than on changing consumer needs.
• Complacency during times of success.

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 Marketing to South African Consumers

The publication of Levitt's paper marked a new era in marketing, often referred to as 'modern
marketing'. Marketing managers were urged to re-evaluate their vision and redefine the
businesses they were in. At this point, companies began to develop more consumer-
orientated marketing strategies, phasing out product-orientated ones.

A key question faced by many older companies is: to what extent can an industry change
its production model? Can a petrol company become a solar or electric company, thus
satisfying the consumer need for energy in a different way? Consumers do not buy petrol
for its taste, colour or smell; they buy the ability to drive their cars. The future is not about
technology for its own sake but seeking a new means to satisfy consumer needs. This process
may lead companies to see the need to dispose of profitable assets in order to survive in
the long term. Examples of companies that are accused of missing this principle include
Kodak (a camera film producer that lost out when photography digitised) and Blockbuster (a
DVD rental store that lost out when internet streaming started). An industry is a consumer-
satisfying continuum of transactions.

Understanding marketing management orientations

In the light of Levitt's marketing myopia principle, a set of management orientations are
observable in various companies. Knowing the reality of a company's management
orientation can assist in shaping long term strategic direction. The key concepts associated
with understanding management orientation are as follows:

Production concept. This is the notion that consumers will give preference to available and
highly affordable goods. It follows that management should emphasise improved production
and efficient distribution. Although this concept is a useful one, it can result in marketing
myopia, by which companies will focus on the product rather than customer satisfaction.

Product concept. This is the notion that customers will give preference to products that offer
the highest quality, performance and innovative features. This concept directs the marketing
strategy at product improvements and can lead to marketing myopia if the company neglects
consumer needs and relationships.

Selling concept. This is the notion that unless a company invests largely in selling and
promotion, it will not make sufficient sales. This concept refers mainly to goods that are not
necessarily sought-after. This type of good would usually require companies to direct their
strategies to consumer recruitment through special promotions (for example, the use of call
centres) in order to boost sales. However, this concept focuses on making sales rather than
consumer retention, through the creation of long-term and profitable relationships. The main
aim of the concept is not to please the consumer, but to make them buy what the company
has to offer. This concept makes a poor assumption that the recruited consumers remain
loyal to the product, regardless of any disappointments, which is not always true.

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 Chapter 1: What is Consumer Marketing?

Marketing concept. This is a marketing management philosophy that a company's goal

achievement relies on the knowledge of the needs and wants of the target market and
satisfying the consumer more than do competitors. The marketing concept is consumer-
orientated and focuses on matching the right product to the consumer, in contrast to the
selling concept, which matches the consumer to their product. This concept seeks to offer
the consumer exactly what they are looking for; in return, the company generates profits by
creating long-term relationships based on consumer value and satisfaction. The marketing
concept also includes research on current consumers to acquire accurate knowledge of
their desires, as opposed to giving a simple response to their obvious needs. This enables
companies to explore new product and service ideas and to evaluate new suggestions.

Societal marketing concept. This concept holds that a company should not only consider
the consumer and company's immediate desires, but the consumer's long-term interests
and a sustainable society at large. This concept suggests that a marketing strategy should
deliver consumer value in a manner that is sustainable to the consumer, the environment
and society as a whole. The societal marketing concept is linked to the idea that building
goodwill through ethical practices and doing good will promote loyalty to the company. Figure
1.4 illustrates the relationship between company, consumers and society, in the context of
the social marketing concept.

Figure 1.4: The societal marketing concept

SUSTAINABLE
SOCIETY
(Human welfare
and environmental
sustainability)

SOCIAL MARKETING
CONCEPT

CONSUMERS COMPANY
(Want satisfaction) (Profits)

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 Marketing to South African Consumers

Signs of danger are when the marketing effort is still viewed as a 'necessary consequence'
of the product. Companies and industries are in danger of having a product orientation
(marketing myopia) instead of a market orientation in the following business environments:

• Where growth is assured by an expanding and affluent population.

• Where there is no competitive substitute for the company or industry's major product.
• Where too much faith is placed in mass production and in the advantages of rapidly
declining unit costs as output rises.
• Where there is a preoccupation with a product that lends itself to carefully controlled
scientific experimentation, improvement and manufacturing cost reduction.

Marketing myopia is the legacy of mass production, with its narrow view that profit resides
essentially in low-cost full production.9 Selling (the selling concept) focuses on the needs
of the seller while marketing focuses on the needs of the buyer. Selling consists of tricks
and techniques focusing on the seller's need to convert the product into money (starting on
the inside of the company). Marketing is dedicated to the idea of satisfying the needs of the
consumer by means of the product or service (starting with the outside consumer). Figure
1.5 provides a comparison between the selling concept and marketing concept models.
The selling concept model depicts a process by which the factory creates products in order
for marketers to sell (Inside-out). The marketing concept model depicts the market and
consumer needs at the start of the process (outside-in). Production is then included in an
integrated marketing design that comes after needs are understood. Market (consumer)
orientation is the start of the value creation process.

Figure 1.5: Comparing the selling concept to the marketing concept

INSIDE-OUT OUTSIDE-IN
(company produces inside and then finds VS (company looks outside to understand
willing buyers outside) consumer needs and then produces inside)

STARTING FOCUS MEANS ENDS

The selling Profits

Existing Selling and
concept Factory through sales
products promoting
before Levitt volume

Profits
The marketing
Consumer Integrated through
concept after Market
needs marketing consumer
Levitt
satisfaction

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 Chapter 1: What is Consumer Marketing?

A natural consequence of marketing myopia is paying too much attention to research and
development without enough consumer understanding. While innovation is crucial, there
can be an illusion that a superior product will sell itself (especially when this seems to
be happening). Today, too many engineers, accountants and scientists fill management
positions as they create increasingly complex and sophisticated products and systems to
track wealth creation. The marketing function can be reduced to advertising the products
developed. When consumer needs are brought to the discussion, it is often without the
controllable and concrete variables that satisfy engineers and scientists.

Here are some questions to help your management team avoid marketing myopia:

• What need is being met and are there ways for that need to be met by companies outside
the industry?
• When decisions are made, is the consumer represented in the discussion? If not, what
pitfalls could result?
• What emerging technologies could make your product obsolete in the long term (for
example, compact cameras becoming obsolete as mobile phone companies improve
their product)?
• Is innovation internally defined as incremental improvement? If so, how could innovation
be expanded to engage with a broader context?
• Have we become so focused on cost cutting and technological development that we are
missing some obvious ways to better meet fundamental needs?

The new marketing myopia

During the past half century, marketers have heeded Levitt's (1960) advice to avoid marketing
myopia by focusing on consumers. Smith et al. (2010)10 argued that marketers have learned
this lesson too well, resulting in a new form of marketing myopia. The hyper consumer focus
in many firms 'causes distortions in strategic vision and can lead to business failure'11. As
marketers have moved away from the 'old myopia', a new myopia has emerged, by which
short-sightedness limits the company to only considering itself and its consumers, ignoring
other stakeholders and society. There are three states of this new myopia. First, to only
focus on the consumer. Second, to have too narrow a definition of consumers' wants and
needs. Finally, ignoring societal changes and the existence of multiple stakeholders, for
example, the impact a company may have on climate change. As a result, many companies
have become so focused on their own company and consumers' needs that they ignore
society as a whole.

Here are two examples of the new marketing myopia that illustrate the complexity and
importance of an expanded view of marketing:

The obesity crisis

For generations, food marketers catering to children have focused only on satisfying the
short-term appetites of young consumers, with little thought given to their longer-term well-
being. These marketers have excluded other stakeholders' concerns about health and
nutrition. What if they had led the way by recognising the long-term needs of consumers and
collaborating with, rather than resisting, stakeholders who are championing healthy eating?

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 Marketing to South African Consumers

South Africa has recorded accelerated obesity statistics, with 70% of women and 40% of
men obese or overweight. Furthermore, for ages 2-14, one in five boys and one in four
girls are either obese or overweight. These statistics have seen obesity-related diseases
accounting for significant numbers of deaths in South Africa.12

The plight of the auto industry

Likewise, with their narrow reading of consumers' preferences, large automobile
manufacturers have largely ignored pleas from scientists, environmentalists, politicians and
journalists to attend to the problems posed by the oil industry and to develop the potential of
alternative energy sources. They have held fast to their long-held emphasis on large, fuel-
guzzling cars, trucks and sport utility vehicles. Lured by large margins on big vehicles, they
have catered to only one component of consumer preference and have ignored the need for
cleaner, fuel-efficient vehicles.

There are many other examples of the new marketing myopia in marketing practice and
marketing research. Attention to stakeholders beyond the consumer often means engaging
with groups that managers sometimes view as adversaries. These stakeholders include
activists, scientists, politicians and members of the local community. However, such
collaboration provides many benefits, which include helping marketers develop foresight
regarding the markets of the future and providing the impetus for innovation.

As marketing evolves, marketers that give insufficient attention to all stakeholders are likely
to be adversely affected in the long run. Here are five activities that can help marketers
correct marketing myopia:

1. Map all the company's stakeholders

2. Determine stakeholder importance
3. Research stakeholder issues and expectations and measure impact
4. Engage with stakeholders
5. Embed a stakeholder orientation

These activities suggest many avenues for research, from researching communication
practices to developing metrics for the measurement of stakeholder orientation. Both
marketing practitioners and researchers need to better comprehend the company's deeply
embedded position in society and shift from a narrow focus on consumers to a stakeholder
orientation, if companies are to prosper in the unpredictable business environment of the
21st century.

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 Chapter 1: What is Consumer Marketing?

What is a marketing strategy?

Up until this point, we have discussed marketing as a concept that centres around meeting
consumers' needs. A full history of the development of marketing strategy is beyond the
scope of this book. Implementing a marketing strategy, however, is a skill that requires a
combination of theoretical understanding and tactical application. A key point came in the
1930s when Neil McElroy, an employee of Procter and Gamble (P&G), recommended dividing
brands into separate teams (at the time marketers would work with product categories rather
than individual brands). 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 its
competitors.13 McElroy suggested splitting the P&G soap brands (Camay and Ivory) into two
entities that should be built separately. In a famous memo (you can still find a typed copy
on the internet), he outlined a process for marketing strategy that is just as valuable today.

Figure 1.6: Summarised overview of marketing strategy14

DIAGNOSIS STRATEGY TACTICS

Understanding the
Alignment with
micro and macro Product
corporate strategy
environment

Consumer needs
and wants Objectives
Price
(market orientation) (how to win)

Marketing sizing,
research and insights Targeting
(based on the Place (distribution)
segmentation map)
Segmentation (map
of options to target)

Positioning Promotion
Competitor analysis

Based on outcome of
FEEDBACK LOOP
strategy and tactics,
(Marketing metrics and
diagnosis is continually
research)
influenced

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 Marketing to South African Consumers

In summary, marketing strategy entails brand teams studying the past to uncover
weaknesses and opportunities. They then develop a detailed tactical plan and prepare the
necessary resources to carry it out while keeping records to measure whether the plan has
been successful. Figure 1.6 provides a summarised approach to marketing strategy.15 The
summary includes phases of diagnosis, strategy and tactics.

All three elements of a strategy must work together. Making errors in just one area can cause
problems for a company. Some elements of this perspective on strategy are summarised in
this next section, with chapter references for more detail.

Diagnosis component
Before crafting a strategy with true market orientation, marketers must understand consumer
needs and wants as well as all the micro factors (Chapter 4) and macro factors (Chapter
8) that impact on the marketing environment. Research is a crucial component in diagnosis
(Chapters 17-18). In addition, any understanding of consumer behaviour (Chapter 9) and
decision-making (Chapter 10) in the category of interest is important. Before devising a
strategy, the market (all possible consumers) must also be segmented into identifiable
groups with similar characteristics (Chapter 11). This segmentation provides a 'map' of the
market. Finally, a competitor analysis will help marketers understand the other companies
(and other forces) that do or will compete with the eventual value proposition (Chapters 4
and 18).

Strategy component
Before designing marketing tactics like advertising or pricing, the strategy component must
be created. Unfortunately, some untrained marketers implement tactical decisions without a
clear strategy. This may work in the short or medium term, but even successful companies
can be outmanoeuvred by competitors with a clearer strategy. The building blocks of strategy
include questions like: What brands should the marketer focus on (in large multi-brand
companies) in the next year? Which consumers should the marketer target?

A crucial component of marketing strategy is positioning. In asking how brands should be

positioned, the marketers are asking about what space the brand takes up in the mind
of consumers relative to various competitors (Chapter 12). Positioning strategy is about
key benefits, perceptions and value (intrinsic and extrinsic). Many categories are hard to
differentiate on product attributes, price or availability. For this reason, communicating a
clear and distinctive brand position is crucial. Finally, what are the actionable and measurable
objectives for the brands in question? All of the above need to align with an overall corporate
strategy, as discussed in Chapter 2.

Tactics component
Marketing tactics are the elements of marketing with which the end consumer is most familiar.
These are essentially the means by which a company implements its strategy. While there
are a number of views on what makes up a tactical toolbox, the most common approach is
known as the marketing mix.

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 Chapter 1: What is Consumer Marketing?

This set of tactical tools is often mistaken for strategy, but is actually at the tactical end of
the strategic process discussed above. The marketing mix (Figure 1.7) is also known as the
Four Ps (Produce, Price, Place and Promotion), each of which is summarised in the figure.

Figure 1.7: The marketing mix (or Four Ps)

For example: For example:

Features Pricing
Quality T PR Allowances
Packaging UC Payment Terms
D

IC
Discounts
O

E
PR

(See Chapter 13)

(See Chapter 14)
MARKETING
MIX
For example: For example:
Advertising Distribution
PR

Sales promotion Channels

OM

CE
Public relations O A Inventory
TI
ON PL Logistics
(See Chapter 16)
(See Chapter 15)

Product
This is a summary term for the actual offering of the company. The product may be a physical
product, service or even an idea. Once a strategy has been designed, marketers can work
on creating the features, quality levels, packaging and so on that match the strategy. Notice
that if a product is produced before appropriate diagnosis and strategy, there is a danger
of marketing myopia (i.e., the selling concept is being followed, not the marketing concept).
See Chapter 13 for a detailed overview of product tactics.

Price
This is the cost of the transaction to the consumer. Often price is about perception as much
as anything else; hence understanding consumer behaviour is key to pricing strategy. Price
should also account for other hidden costs, like the cost of public transport to the point of
sale. Notice that it may be tempting to view price as a financial function (i.e., determined
by cost plus desired profit margin), but seeing price this way will severely limit strategy, as
many consumers are more swayed by price than any other marketing mix elements. See
Chapter 14 for a detailed overview of pricing tactics.

Place
This is a general term for the distribution and physical availability of the product. A product
may meet a specific consumer's need and be well priced, but if it is not available from a
local retailer (or through eCommerce) it cannot be sold to that consumer. Place includes
decisions about where a product is sold, how it gets there and any elements connected to
the point of purchase. See Chapter 15 for a detailed overview of place tactics.

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 Marketing to South African Consumers

Promotion
Promotion is the communication of the value proposition in the form of advertising, public
relations or any other promotional activity. Essentially, a compelling offering needs to be
communicated in order for it to get into consumers' minds and to eventually translate into
a purchase decision. Promotional activity is often the most visible of marketing tactics and
is therefore sometimes seen as marketing. This is an error that must be corrected in order
to produce strategy that delivers holistically in the long run. See Chapter 16 for a detailed
overview of promotional tactics.

Feedback loop
Finally, measurable results from the implementation of tactics must be used to inform future
changes in the strategy. These measurements, known as marketing metrics, are discussed
in Chapter 17.

Overall, a robust marketing strategy will have synergy between all of these elements; with
diagnosis informing strategy, strategy informing tactics, and measurable outcomes feeding
back into diagnosis. Most companies will have an annual strategic planning session.
Arguably, any timeline beyond a year is too far in the future to account for rapidly changing
conditions. The next section gives some very brief historical insight into dynamics and shifts
in the South African consumer landscape.

Consumer marketing in South Africa: Past and

present
The comprehensive history of marketing in South Africa is a story that is yet to be written.
Nevertheless, we have attempted to provide some insight into the history of marketing in
South Africa in order to provide the background to the phenomena that you will encounter
in this book. This section is divided into two sub-sections: Apartheid (1948‒1994) and
Democracy (1994‒present).

Marketing in South Africa during Apartheid (1948‒1994)

In 1948, the National Party came to power in South Africa and began to formalise existing
racial oppression in a way never experienced before. Apartheid laws were implemented
that suppressed the majority of South Africans on the basis of race and provided extreme
privilege to the white minority (who were mostly Afrikaans and English speaking). Legislation
such as the Group Areas Act and the Bantu Education Act restricted movement of everyone
except white citizens and downgraded the education of everyone except the white minority.
The full consequence and incredible nature of Apartheid is better understood by knowing that
South Africa is 80% Black and only 9% white (See Chapter 5). This oppression continued
until the first democratic election in 1994, when, for the first time, all South Africans of voting
age could choose their government. The African National Congress won the election and
Nelson Mandela became the first Black, democratically elected president of the country.

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 Chapter 1: What is Consumer Marketing?

While this book is not a comprehensive history book, some historical facts are important to
appreciate when understanding past and present consumer marketing in South Africa. A few
of these are summarised below:

Majority of Black consumers excluded from the formal economy

The segregated and oppressive Apartheid system gave the white minority access to a
rapidly industrialising economy that grew in sophistication. The financial services sector, for
example, was highly regulated and mirrored many top global trends. Formal retail (big chain
stores) were restricted to outside of the impoverished township areas, leading to a growing
informal sector (see chapters 5 and 6). The majority of the population was excluded from
many aspects of the economy, like bank loans and upmarket shopping malls. Most brands
targeted at the middle class and above would, therefore, only cater to white consumer
needs and tastes. Despite the skewed allocation of resources by marketers, many of today's
strongest brands across all segments did emerge during South Africa's Apartheid years.
Some of these legacy brands (pre-1994) were Pep Stores, Tastic Rice, Sunlight, Lifebuoy,
Black Label, Omo, Oxo, Iwisa, Bovril, Joko and Nugget.

Migrant labour
While the majority of South Africans were excluded from the benefits of South Africa's
economic engine, many people were used as cheap labour. Since segregation meant that
homes were often far removed from places of work (often mines or urban areas), many
nuclear families were broken by the fact that income-earners often needed to travel great
distances and live in other provinces in order to be closer to work. The impact on the size
and makeup of the South African household was catastrophic, with deep socio-economic
and personal consequences.

Townships
Because the middle class was almost exclusively white, and because legislation, such as the
Group Areas Act, meant Black South Africans were confined to living in townships, suburban
South Africa was exclusively white. Townships (and informal settlements), were therefore
created as residential areas for the Black population. White-owned businesses were not
permitted to operate in these areas and basic groceries were supplied to wholesalers on the
fringes of townships. Small informal retailers (spaza shops) would purchase from wholesalers
and sell goods in the townships.

Sanctions
In the latter years of Apartheid, there was growing pressure from the international community
for South Africa to abandon Apartheid for democracy. Part of this pressure came from trade
sanctions whereby some countries and multinational organisations refused to trade with
South Africa due to Apartheid. A number of global brands that South Africans are familiar
with today were not available during Apartheid. This phenomenon allowed some brands that
remained after the transition to democracy to entrench themselves, while brands returning
after democracy were initially at a disadvantage.

These phenomena, and many like them, have shaped the consumer landscape to make
South Africa unique among developing nations.

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 Marketing to South African Consumers

What has shifted in South Africa post-Apartheid (1994‒present)?

Following the first democratic election in 1994, South Africa witnessed significant shifts in the
demographic landscape, specifically in the majority Black population. Some of these shifts are
briefly explained below.

The impact of Apartheid lingers

While Apartheid ended in 1994, the impact continues to be felt. South Africa remains a deeply
divided country with huge inequality and structural racism. From a marketing perspective, the
same retail outlet may serve one extremely poor consumer and at the same time a very wealthy
consumer. In many cases, they may be purchasing the same brands. The impact of migrant
labour on the nuclear family is still ripping apart families in South Africa, many years after
democracy. Only 33,8% of households have children with both biological father and mother
living in the home and there are tens of thousands of child-headed households.16 The remnants
of Apartheid spacial planning still place the Black poor (those that were disadvantaged most by
Apartheid) far away from commercial hubs, while the privileged few (many of whom benefitted
directly from Apartheid) continue to benefit from the country's economic core (See Chapter 5).
The impact of Apartheid on marketing could be a whole book on its own, and must always be
considered in the South African context.

Significant inequality
South Africa is recognised as one of the world's most unequal countries.17 The wealthy and
middle class form less than 10% of the population. The poor, middle and wealthy segments
display unique characteristics, but often coexist in similar contexts, with the lives of the rich and
poor separated by only a few hundred metres. This consumer heterogeneity makes marketing
to South African consumers a complex task.

A growing Black middle class

After 1994, millions of Black households gained middle class status and joined a consumer
class with significantly more disposable income. Seeing South Africa's Black majority start
to have fair compensation, better access to jobs and more financial inclusion was crucial
to marketers, as it indicated a major change in the consumer landscape, with fundamental
changes to the nature of large scale middle-class consumption. After a long period of there
being a predominantly white middle class, the Black middle class began to significantly outgrow
the white middle class, as can be seen in Figure 1.8.

Social grants
By 2022, the South African government is set to spend annually over R200 billion on social
grants for the millions of households that did not migrate out of poverty after 1994.18 These
grants are given to poor households (primarily in child support, but also pension and disability
grants). In addition, many poor households also receive free housing, subsidised electricity
and free water. The injection of a stable household cash income (social grants) and the subsidy
of certain living expenses means that South Africa's low-income majority has more income
stability than most other low-income segments around the continent.

Myopia still exists in South Africa, as many companies do not comprehend the needs and
desires of their market. Many still tend to make assumptions about their potential customers
and do not realise that each segment can be further segmented, helping to differentiate needs
of one segment from another.

18
 Chapter 1: What is Consumer Marketing?

Figure 1.8: Growth of the Black middle class in South Africa (2004–2015)19

6 000
5610
5330

5 000

4224

4 000

2872
3 000
2800 2798 2688
2636 2620

2 000

1747
951 981
1 000
657 721
563
641 680
406 506
307
0
2004 2008 2012 2014 2015

Black Coloured Indian White

In the next section, developments in the global marketing landscape are discussed. While
these developments will differ in significance between sectors, understanding these trends is
crucial to developing a strategy in most areas of marketing.

The new global marketing landscape

Marketing is a continuously changing discipline. The core principles or marketing, however,
do not change. Changes mainly occur in the shifting set of tools, environments and consumer
trends that marketers apply the marketing concept. Some of these are detailed in this next
section.

Digitisation of channels
Growth in digital technology has had a significant impact on how companies deliver superior
value to their consumers. Digital technology has revolutionised the way marketers produce,
communicate, price, research, service and distribute their products and services. Of note is
the shift to an internet enabled omnichannel experience. Omnichannel is an approach that
integrates different marketing channels. Instead of multiple channels working independently,
omnichannel seeks to integrate the consumer experience. For example, a consumer may
search for a product on social media and then receive a promotion specific to their local
retail outlet.

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 Marketing to South African Consumers

Globalisation
The world has become more integrated, with marketers making global connections with their
consumers and marketing partners. In this age, companies face global competition within
their domestic boundaries. As a result, some companies take both a local and global outlook
on their market, industry, competitors and opportunities. Not all businesses, however, are
able to compete in the global market. Companies need to evaluate the risks and rewards of
being a global player in order to make informed decisions. Companies also need to evaluate
whether they can operate within the context of challenges presented by different languages,
laws and cultures.

Ethics and social responsibility

As social and environmental awareness prevails, companies are under pressure to take
responsibility for their actions. Companies are urged to strike a balance between making
profit and doing what is best for society in the long run. With the increasing number of
cultural and socio-political movements, making decisions to do good can be complicated for
commercial entities that have profit as a goal. Those that embrace the importance of social
responsibility view it as an opportunity to do good, and many are rewarded by the consumer.

The rise of data-driven approaches

The increase in information and communication technology use has led to an upward spiral
of more data-driven marketing tactics. Marketers use various methods to collect data on
their consumers in an attempt to understand wants and needs. Many companies employ
data professionals to analyse consumers in an attempt to deliver superior value. An example
of this might be what is called 'social listening', by which social media data is collected on
what consumers say about a brand and its competitors.

Data can also be sourced from purchase transactions and can be used by marketers to
make assumptions about purchases and the reasons behind the purchase of particular
products. Marketers increasingly try to use focused or targeted marketing in order to ensure
that relevant content is marketed to the right consumer at the right time, in an attempt to
persuade them to buy their product instead of just irritating them. Most companies today
use cookies on their websites to track their consumers' online movement and to gather
data on who they are, what they are interested in and where they are from. This gives
companies an idea of which markets to target with which products. Companies also collect
data through online surveys and sales records in particular places. They do this to gauge
trends in consumer behaviour and to predict future trends. This enables them to identify
new opportunities and threats. Although strong data-driven marketing is reliable, consumers
change over time (for example, lifestyle shifts, changes in financial status). If a company
emphasises data-driven marketing, it needs to be up to date with data and have a deep
understanding of consumer behaviour. There is still much room for growth in this area with
the growth of big data (the use of huge data sets) in order to drive customisation and the
fact that data driven personalisation is far from perfect (for example, promoting products that
have already been purchased).

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 Chapter 1: What is Consumer Marketing?

More innovation
Influenced greatly by the digital age, modern consumers are comfortable with change and
well informed about trends. Marketers are therefore required to be more innovative in order
to position themselves in these consumers' minds. Innovation drives competitiveness,
increases sales and boosts product development. Companies are required to respond to
consumers in a timely fashion and take advantage of the technological and social changes
brought about by technological developments. Online and social marketing comprise
significant innovations.

More strategic (in some places)

A consumer-orientated marketing plan is, in general, a strategic marketing plan. Today,
most companies engage in more strategic marketing, whereby they identify the needs and
wants of their target consumers to achieve consumer satisfaction. In return, they capture
consumer value to increase business operations and sales. Companies are increasingly
able to access consumer data (feedback loop) and identify their competitive advantages
(and those of competitors).

Conclusion
This chapter introduced the main principles and definitions of consumer marketing. By
exploring a combination of history and core theory, the chapter surveys the content that is
explored in more detail throughout this book. Each of the main concepts introduced in this
chapter has been aligned to a chapter later in the book.

1
Kotler, P. & Armstrong, G,. 2015, Principles Of Marketing: Global And South African Perspectives, Cape Town: Pearson Education South Africa
2
American Marketing Association n.d. Definitions of Marketing, viewed 30 June 2020, from https://www.ama.org/the-definition-of-marketing-what-is-
marketing
3
Boshoff, C. (ed.), 2017, Principles of Marketing, Oxford University Press South Africa, Cape Town.
4
Zeder, R., 2020, The Four Types of Economic Utility, Quickonomics, viewed 30 June 2020 from https://quickonomics.com/the-four-types-of-economic-
utility/
5
Levitt, T., 2004, 'Marketing Myopia. (Best of HBR)(Reprint)', Harvard Business Review, July-August, 138–149.
6
Levitt, T., 2004, 'Marketing Myopia. (Best of HBR)(Reprint)', Harvard Business Review, July-August, 138–149.
7
Channick, R., 2014, 'Encyclopaedia Britannica sees digital growth, aims to draw new users', Chicago Tribune, viewed 30th June 2020, from https://www.
chicagotribune.com/business/ct-britannica-digital-0911-biz-20140910-story.html
8
Cauz, J., 2013, 'Encyclopædia Britannica's President on Killing Off a 244-Year-Old Product', Harvard Business Review, viewed 30th June 2020, from
https://hbr.org/2013/03/encyclopaedia-britannicas-president-on-killing-off-a-244-year-old-product
9
Levitt, T., 2004, 'Marketing Myopia. (Best of HBR)(Reprint)', Harvard Business Review, July-August, 144.
10
S Smith, C. N., Drumwright, M. E., Gentile, M. C., 2010, 'The New Marketing Myopia', Journal of Public Policy & Marketing, vol. 29, No. 1, 4 – 11
11
Smith, C. N., Drumwright, M. E., Gentile, M. C., 2010, 'The New Marketing Myopia', Journal of Public Policy & Marketing, vol. 29, No. 1, 4.
12
National Department of Health South Africa, 2016, World Obesity day 2016, National Department of Health South Africa, viewed 29 May 2020, http://www.
health.gov.za/index.php/gf-tb-program/323-world-obesity-day-2016
13
American Marketing Association n.d. Definitions of Marketing, viewed 30 June 2020, from https://www.ama.org/the-definition-of-marketing-what-is-
marketing
14
Based on Ritson, M., 2018. On the contrary. APG Strategy Conference, London, 8 October 2018, from https://www.youtube.com/watch?v=d4S5PEm0DDM
15
Grenier, L., 2018. Mark Ritson: 4 Steps To Creating A Rock-Solid Marketing Strategy. Everyone Hates Marketers. Accessed 10 July 2020 from https://www.
everyonehatesmarketers.com/63-mark-ritson-marketing-week/
16
Statistics South Africa, 2018, General Household Survey 2018, viewed 30 June 2020, from http://www.statssa.gov.za/publications/P0318/P03182018.pdf
17
World Bank n.d., The World Bank in South Africa, viewed 30 June 2020, from https://www.worldbank.org/en/country/southafrica/overview#:~:text=South%20
Africa%20remains%20a%20dual,increased%20from%200.61%20in%201996.
18
National Treasury Republic of South Africa, 2019, Estimates of National Expenditure 2019, viewed 10th July 2020, from http://www.treasury.gov.za/
documents/National%20Budget/2019/enebooklets/Vote%2017%20Social%20Development.pdf
19
Simpson, J., & Lappeman, J., 2017, Marketing in South Africa (4th edition), Van Schaik Publishers. Johannesburg

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