Table Of ContentMARKETING MIX STRATEGY ADAPTATION: A RETAIL ORGANISATION’S
RESPONSE TO THE GLOBAL ECONOMIC DOWNTURN
by
SHIREEN KHAN (204151309)
Dissertation submitted in partial fulfilment of the requirements for the degree
Master of Technology Marketing
in the Faculty of Business
at the Cape Peninsula University of Technology
Supervisor: Mr Pieter Steenkamp
Co-supervisor: Mr Nobert Haydam
Cape Town
November 2011
DECLARATION
I, Shireen Khan, declare that the contents of this dissertation/thesis represent my own
unaided work, and that the dissertation has not previously been submitted for academic
examination towards any qualification. Furthermore, it represents my own opinions and not
necessarily those of the Cape Peninsula University of Technology.
30 November 2011
Signed Date
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ABSTRACT
The global economic downturn of 2008 spread around the world and few business sectors
remained unaffected. While organisations in some sectors were forced to close down or lay
off employees, organisations in the retail sector mainly had to adapt to consumer’s
preferences, which change in times of economic downturn. The purpose of this research was
therefore to examine how one of the most prominent retailers in South Africa adapted their
marketing mix strategies to changing consumer buying behaviour during the economic
downturn.
The research applied a qualitative approach and a case study methodology as its research
design. An interview guide was designed for the in-depth face-to-face interviews. Additional
data was collected from annual reports, various articles and the retailer’s websites.
Decreased spending by consumers was one of the main consequences of the economic
downturn. Throughout the economic downturn the retailer found it increasingly difficult to
attract consumers to its stores, which prompted changes to retain and attract consumers.
Therefore the main challenge for the retailer was to alter consumers’ perception that it was
an expensive store to a value for money store, without compromising its quality proposition.
The study found that the retailer did indeed adapt its marketing mix strategy extensively in
response to the global economic downturn. The retailer recognised a change in their
consumers’ buying behaviour and made responsive changes to their marketing strategies.
This research can be useful to academics and practitioners highlighting the importance of
adapting the marketing strategy to the changing environment to consolidate or even improve
a retailer’s position in the market. The research can also be used by organisations in a
similar situation facing an economic downturn. Even though these findings cannot be
statistically generalised to a population, the findings can be used in similar situations or for
theoretical generalisations, depending on homogeneity.
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ACKNOWLEDGEMENTS
I wish to thank:
§ Pieter Steenkamp, my supervisor, who guided me and supported me throughout this
dissertation.
§ Nobert Haydam, my co-supervisor, for his assistance when it was most needed.
§ My dad, for all his emotional and financial support in my academic career.
§ My fiancé, for all his undivided support and encouragement.
§ Woolworths for allowing me permission to research their organisation.
§ I would like to express my gratitude to my family and friends for their support and
encouragement through the whole study period.
iv
DEDICATION
I wish to dedicate this dissertation to Francisco Daams and Steve Langford. Thank you for
your undivided support and encouragement. Without both of you this would not have been
possible.
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TABLE OF CONTENTS
Declaration ii
Abstract iii
Acknowledgements iv
Glossary x
CHAPTER ONE: INTRODUCTION
1.1 Introduction 1
1.2 Background to the economic downturn 1
1.3 Marketing strategy in changing environments 2
1.4 South African retail sector 3
1.5 Competitors 8
1.6 Problem statement 10
1.7 Research question 10
1.8 Purpose and objectives of the study 10
1.8.1 Purpose 10
1.8.2 Primary objective 11
1.8.3 Secondary objectives 11
1.9 Significance of the study 11
1.10 Research design and methodology 12
1.11 Research execution 12
1.12 Limitation of data 12
1.13 Validity and reliability 13
1.14 Conclusion 13
CHAPTER TWO: MARKETING CONCEPTS AND MODELS
2.1 Introduction 15
2.2 Marketing 15
2.3 Marketing strategies 16
2.3.1 General marketing strategies 17
2.3.2 Growth market share matrix 18
2.3.3 Decision area strategies 20
2.3.3.1 The basics of strategy 20
2.3.3.2 Resource based theory 22
2.3.3.3 Porter’s industry view 23
2.4 The marketing mix 28
2.4.1 Product mix 29
2.4.1.1 Branding 30
2.4.1.2 Packaging 31
2.4.2 Price mix 31
2.4.2.1 Pricing strategies 32
2.4.2.2 Product mix pricing situations 34
2.4.3 Placement mix 35
2.4.3.1 Distribution 35
2.4.3.2 Types of distribution 36
2.4.3.3 Distribution strategies 36
2.4.4 Promotion 36
2.4.4.1 Promotion mix 37
2.5 Strategic planning process 38
2.6 Marketing influences on consumer decision-making 40
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2.6.1 Product influences 40
2.6.2 Price influences 40
2.6.3 Promotion influences 40
2.6.4 Place influences 41
2.6.5 Psychological influences on consumer decision-making 41
2.6.6 Product knowledge 41
2.6.7 Product involvement 42
2.7 Conclusion 42
CHAPTER THREE: CONSUMER BUYING BEHAVIOUR
3.1 Introduction 43
3.2 Consumer buying behaviour 43
3.3 The buying process 44
3.4 Factors that influence consumer behaviour 46
3.5 Levels of consumer decision-making 48
3.5.1 Consumer decision rules 50
3.5.2 Importance of the decision rule in marketing strategy 51
3.6 Culture and consumer behaviour 51
3.7 Social stratification 54
3.7.1 Social class 54
3.7.2 Social class and consumption 55
3.7.3 Social class indicators 56
3.7.4 Social class stratification 57
3.7.5 Marketing strategy and family decision-making 60
3.8 Consumerism 64
3.8.1 Consumerism movement 64
3.8.2 Meaning of consumerism 64
3.8.3 Consumer rights 66
3.8.4 Factors that contribute to the rise of consumerism 66
3.8.5 The importance of consumerism in South Africa 67
3.9 Conclusion 68
CHAPTER FOUR: THE GLOBAL ECONOMIC DOWNTURN
4.1 Introduction 70
4.2 Marketing strategy in changing environments 70
4.3 The global economic downturn 70
4.3.1 South African economic downturn 71
4.3.2 Real gross domestic product 72
4.3.3 Gross domestic expenditure 76
4.3.4 Final consumption expenditure by households 77
4.3.5 Consumption expenditure by general government 78
4.3.6 Gross fixed capital formation 80
4.3.7 Manifestation of the global economic downturn 81
4.3.8 Employment 81
4.3.9 Inflationary pressures 86
4.4 Conclusion 90
CHAPTER FIVE: RESEARCH METHODOLOGY
5.1 Introduction 91
5.2 Research approach 91
5.3 Methods of reasoning 92
5.4 The qualitative approach 92
5.4.1 Limitations of quantitative research 94
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5.4.2 Limitations of qualitative research 94
5.5 The case study method 94
5.5.1 Limitations of case study method 95
5.5.2 Validation 96
5.6 Research execution 96
5.6.1 Primary data 96
5.6.2 In-depth interviews 97
5.6.3 Sample 98
5.6.4 In-depth interview process 99
5.6.5 Secondary data 100
5.7 Measurement instrument 100
5.7.1 Measurement structure 100
5.7.2 Interview guide 101
5.8 Conclusion 102
CHAPTER SIX: WOOLWORTHS CASE STUDY
6.1 Introduction 103
6.2 Context of case study 103
6.3 Introduction to Woolworths 104
6.3.1 Subsidiaries of Woolworths 104
6.3.2 Woolworth’s retail strategy 105
6.3.3 Furthering change within the country 107
6.3.4 Improving societal expansion 108
6.3.5 Escalation in the number of donations made 109
6.3.6 Ecological developments 109
6.3.7 Dealing with frequent, erratic weather changes 110
6.3.8 Effects of the Woolworths marketing plan 112
6.3.9 Allocation of resources 113
6.4 Consumer behaviour during a recession 113
6.5 Conclusion 114
CHAPTER SEVEN: PRESENTATION OF DATA AND ANALYSIS
7.1 Introduction 115
7.2 Woolworth’s target market 115
7.3 Impact of the global economic downturn on Woolworths 116
7.4 Financial services 117
7.5 The effect of the global economic downturn on Woolworths 120
7.6 Changing demand 120
7.7 Strategy 121
7.8 Internet strategy 122
7.9 Woolworth’s marketing mix 123
7.9.1 Product 123
7.9.2 Price 123
7.9.3 Place 125
7.9.4 Promotion 126
7.10 Woolworth’s changed during the economic downturn 128
CHAPTER EIGHT: CONCLUSION AND RECOMMENDATIONS 128
REFERENCES 134
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LIST OF FIGURES
Figure 1.1: Percentage contribution to GDP by sector 4
Figure 1.2: Employment by sector 4
Figure 2.1: A model of marketing 16
Figure 2.2: Growth market share matrix: Product portfolio chart 19
Figure 2.3: The basics of strategy 21
Figure 2.4: Research based theory of an organisation 22
Figure 2.5: Porter’s five forces model 26
Figure 2.6: Marketing mix tools 28
Figure 2.7: Pull and push promotional strategy 37
Figure 2.8: The marketing planning process 38
Figure 3.1: An overview of consumer behaviour 43
Figure 3.2: The buying process 44
Figure 3.3: Factors that influence consumer behaviour 46
Figure 3.4: Areas of consumer behaviour 47
Figure 3.5: Decision rules 50
Figure 3.6: The effects of culture on consumer behaviour 52
Figure 3.7: The Ash experiment 63
Figure 4.1: Real gross domestic product 72
Figure 4.2: Real gross domestic product and final demand 74
Figure 4.3: Real gross value added and capacity utilisation in manufacturing 75
Figure 4.4: Quarterly final consumption expenditure by households 78
Figure 4.5: Real gross domestic and governments expenditure 79
Figure 4.6: Private sector employment and real gross domestic product 83
Figure 4.7: Employment in selected industries 84
Figure 4.8: Imported producer prices, nominal effective exchange rate and foreign 87
prices
Figure 4.9: Inflation 88
Figure 4.10: Prices of consumer goods and services 89
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Figure 5.1: Model of qualitative interview process 93
Figure 5.2: Diagram model of interview process 99
Figure 7.1: Target market analysis 115
LIST OF TABLES
Table 2.1: Industry dynamics versus leadership perspectives 24
Table 2.2: Four P’s responding to five competitive forces 27
Table 2.3: Characteristics of the marketing mix 29
Table 2.4: External influences on pricing strategies 33
Table 2.5: Product mix pricing situations 34
Table 3.1: Consumer buying process 45
Table 4.1: Real gross domestic product by sector 73
Table 4.2: Real gross domestic expenditure 76
Table 4.3: Real final consumption expenditure by households 77
Table 4.4: Gross fixed capital formation 80
Table 4.5: Change in enterprise-surveyed formal non-agricultural employment 85
Table 5.1: Methods of research 91
Table 5.2: Research methods 92
Table 5.3: Profile of respondents 98
Table 7.1: Summary of participant’s responses to changing mix elements 127
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