History and Background

Company History

• Established in 1967• Brand portfolios cover different target segments• World business leader-- Raymond Ackerman • Customer Right and Social Responsibility

"Rainbow Country"—South Africa

• 3 different capitals• Pretoria (executive); Bloemfontein (judicial); Cape Town(legislative)

• Multiethnic Society--4 ethnic communities• European (white, 9.16%), Asian (Indian,21.5%), and multiracial

(coloured,8.19%) and African(black,79%) • Expenditure 60% came from European, 20% from African • Seperately High-end, low-end,medium consumer market

• 11 official languages• Afrikaans, Northern Sotho,English, Southern Ndebete, Southern Sotho,

Swazi, Tsonga, Tswana, Venda, Xhosa, Zulu

• Safety issues

• Ethnic Marketing Strategy?

South Africa - Society Background

• Rise of the “Black Diamonds“• Upper-middle Country, 17% of Africa’s gross (GDP).• Stable growth rate but Dual economic structure

• Retail Industry:• Established transportation and channel distribution

systems• 3.8% growth, 5.7% of domestic total GDP, 19% of

workforce• 47.8% custmers price sensitivity, demand elasticity is

3.4• Ten year after the abolition of apartheid in South Africa

• Polarization between the rich(white) and the poor(black)

• GDP 3.7%,inflation rate 4.2%, unemployment rate 30.7%

How many main ethnic communities are in South Africa?

Question # 1

A. 1

B. 2

C. 3

D. 4D. 4

The Idea of Social Responsibility

Mission

We Serve

With our HEARTS we

create a GREAT PLACE

to be.

With our MINDS we create an

EXCELLENT PLACE to shop.

Counterculture

Consumer Value

Social Responsibility

Manage Employees

• Its goal – to save time and money and to simplify life for the consumer

• Innovations to make consumer’s life convenient

• Social agenda (self-help, feeding the poor, educational programs, environmental projects, fund raising endeavors)

• Company atmosphere dignity, respect, freedom

• Vuselela program• Opportunities for self-improvement• Hands-on culture

Nature of Competition

Massmart

• A managed portfolio of nine wholesale and retail chains

• Buoyant middle to upper income consumer market

• High volume, low margin, low cost distribution

• Alignment of organic and acquisitive growth and collaboration

between trading divisions

Shoprite

• Investment holdings company and the largest (FMCG) retail operation

• Food retailing to consumers of all income levels

• Good management of the cost and the distribution chain

Spar

• SPAR Retailers & SPAR Distribution Centers

• Uniquely friendly and family orientated store

• A culture of caring and enjoying the shopping experience

Which one of the following is not part of the mission of Pick n Pay?

Question # 2

A. We serve

B. With our hearts we create a great place to be

C. With our hearts we support and participate in our communities

D. With our minds we create an excellent place to shop

C. With our hearts we support and participate in our communities

Customer Segments & Product Positioning

Segment Store Value

Low-income

Score Supermarkets Low priceEasy shopping

TM Supermarkets

Moderate-income

Pick ‘n Pay Family Supermarkets

Fresh foodsFood labelsShopping experience

Discount Supermarkets

High-income Boardman’s QualityExclusiveness

Segment Store Value

Residential community Rite Value ProximityAcquaintance

Urban family Pick ‘n Pay Hypermarkets All-in-one place

Ethnic Segmentation

•Pick ‘n Pay should not overemphasize ethnicity-based marketing as it might clash with

the company vision.

•They should concentrate more on income-based segmentation.

•Local media ads like newspaper ads can cater to the regional ethnicity.

•National ads should cater to a common audience.

Racial distribution

by geography

Black

Colored

White

Asian

Which customer segment does the retail stores Boardman’s cater to?

Question # 3

A. Low-income segmentB. Moderate-income segmentC. High-income segmentD. Royal segmentC. High-income segment

SWOT Analysis

• History of strong customer service• Loyal customers• Diversified store styles and product

offerings• Major rebranding in 2007= Strong

Reputation

• In a dangerous part of the world• Inconsistent in product care• Value store images can affect the store

image of other stores.• Poor market communication – different

languages.• Challenges on advertising

• Competition – international and national• Economic slowdown• Product substitution• External threat – tax policies, government

changes.

• Emerging markets and expansion opportunities

• Product and service expansion• Rebrand market to appeal to young target• Online expansion

Internal and External Programs

• Social agenda of self-help, aiding the poor, education, and environmental projects

• Internal nondiscrimination through employee education and awareness

• Finding and elevating managers from low income situations

Which of the following would Pick n Pay likely support as part of their social agenda?

Question # 4

A. Educating women to become entrepreneurs to support their families

B. Feeding the poor through a self-sponsored food driveC. Donating funds to help end civil war and apartheid through South

AfricaD.Educating their employees to help end racial and ethnic

discrimination towards each other and customers

A. Educating women to become entrepreneurs to support their families

B. Feeding the poor through a self-sponsored food driveC. Donating funds to help end civil war and apartheid through South

AfricaD.Educating their employees to help end racial and ethnic

discrimination towards each other and customers

Beans N’ Jeans

Private Labels

• 5 Private Labels offered – Suppliers must keep up with products or become vulnerable “Twice your money back” guarantee

• Earn 3 times more gross profit on Private Labels

• South African shoppers tend to want well-made basic products rather than many features

• By making quality Private Label products, Pick n Pay extends the image of quality to the rest of the store and its brands

• Other firms (like Wal-Mart or Whole Foods) use the same strategy for having multiple Private Labels

Recommendations for Pick N’ Pay

• Staying close to the consumers’ needs

–Security is a growing concern in South Africa despite actual levels

–Consumers want guards in parking lots and entrances

• Rising spending power of historically disadvantaged segments

–Culture and demographics changing for everyday customers

–Segment analysis needs to be consistent and thorough

What is a growing concern for South African consumers?

Question # 5

A. Rising Prices

B. Social Violence

C. Higher spending power in the disadvantaged segment

D. Revolution

B. Social Violence

Questions, Comments,

Concerns?

Work Cited

• http://www.slideshare.net/WishpondTechnologiesLtd/the-role-of-trust-content-in-the-consumer-decisionmaking-process

• http://www.web-books.com/eLibrary/NC/B0/B64/018MB64.html

• http://www.picknpay.co.za/experience-picknpay-history-interactively

• http://landor.com/#!/work/case-studies/pick-n-pay/

• http://etourism-monitor.ch/aggregator/sources/1?page=6

• http://www.southafrica.info/about/democracy/identity-300606.htm#.VEcNlvnF98E

• http://welections.wordpress.com/guide-to-the-2014-south-african-election/race-ethnicity-and-language-in-south-africa/