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THE MARKETING-LOGISTICS INTERFACE: A WAY TO SUSTAINABLE COMPETITIVE ADVANTAGE

IN THE PASSENGER CAR INDUSTRY IN SOUTH AFRICA

by

S.E. RAMASODI
SHORT DISSERTATION
Submitted in partial fulfilment of the requirements for the degree
MAGISTER COMMERCII
in
BUSINESS MANAGEMENT
in the

FUCULTY OF MANAGEMENT

at the

UNIVERSITY OF JOHANNESBURG

Supervisor:

PROF A. BERNDT

OCTOBER 2007

ACKNOWLEDGEMENTS

Undertaking a research project is a challenging and exciting opportunity that requires both the intellectual
and emotional support from others. I am immensely indebted to:
My supervisor, Prof Adele Berndt, for the guidance and encouragement
The passenger car organisations that participated in the survey
My sisters and the only brother, for the patience and understanding as I walk through this path.
My parents, for continuous encouragement in all aspects of life
Nthabiseng, for volunteering to proof read the work-in-progress.
Tshepo and Pam, for making this a truly enriching experience.
The Almighty God, for bestowing the gift of life upon me.

TABLE OF CONTENTS
SYNOPSIS ..................................................................................................................................................... 1
CHAPTER 1: GOAL AND APPROACH TO THE RESEARCH...................................................................... 3
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8

1.9
1.10
1.11

Introduction ................................................................................................................................... 3
Problem definition ......................................................................................................................... 4
1.2.1
Research questions for this study ............................................................................... 4
1.2.2
Problem Statement for this research ........................................................................... 5
Research objectives ...................................................................................................................... 5
1.3.1
Primary objective ......................................................................................................... 5
1.3.2
Secondary objectives ................................................................................................. 5
The purpose and importance of the study ..................................................................................... 5
Research Proposition .................................................................................................................... 6
Demarcation and the scope of the study ....................................................................................... 7
Clarification of key concepts ......................................................................................................... 7
Research Design .......................................................................................................................... 9
1.8.1
Exploratory research ................................................................................................... 9
1.8.2
Defining the population ............................................................................................. 10
1.8.3
Questionnaire design ................................................................................................ 10
1.8.4
Pre-testing the questionnaire .................................................................................... 11
1.8.5
Data Analysis techniques .......................................................................................... 11
Chapter Outline ........................................................................................................................... 12
Limitations of the study ............................................................................................................... 13
Conclusion .................................................................................................................................. 14

CHAPTER 2: THE MARKETING-LOGISTICS INTERFACE........................................................................ 15


2.1
2.2
2.3
2.4
2.5

Introduction ................................................................................................................................. 15
The Marketing and Logistics components in the interface .......................................................... 15
2.2.1
Marketing components in the interface ..................................................................... 16
2.2.2
Logistics elements in the interface ............................................................................ 21
Linking marketing and logistics activities (the interface) ............................................................. 26
2.3.1
Customer service as a link between logistics and marketing .................................... 26
Creating a sustainable competitive advantage through the Interface ......................................... 29
2.4.1
The process of achieving sustainable competitive advantage .................................. 29
2.4.2
The effect of marketing-logistics interface on sustainable competitive advantage .... 31
Conclusion .................................................................................................................................. 32

CHAPTER 3: THE MARKETING-LOGISTICS INTERFACE COORDINATION TECHNIQUES .................. 33


3.1
3.2
3.3

Introduction ................................................................................................................................. 33
Discussion of the study by Murphy and Poist ............................................................................. 33
Defining the fourteen coordination techniques and their effect on marketing-logistics interface
and sustainable competitive advantage ...................................................................................... 35
3.3.1
Top management support ......................................................................................... 35
3.3.2
Information sharing ................................................................................................... 36
3.3.3
Philosophy of cooperation ......................................................................................... 37
3.3.4
Education and training .............................................................................................. 37
3.3.5
Mutual goals .............................................................................................................. 38
3.3.6
Joint projects ............................................................................................................. 39
3.3.7
Co-ordinating Committee .......................................................................................... 40

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3.4

3.3.8
Situational bargaining ................................................................................................ 40
3.3.9
Joint outings .............................................................................................................. 41
3.3.10
Distribution specialist ................................................................................................ 42
3.3.11
System of incentives ................................................................................................. 42
3.3.12
Unified department .................................................................................................... 43
3.3.13
Job rotation/switching ................................................................................................ 44
3.3.14
Third party intervention ............................................................................................. 44
Conclusion .................................................................................................................................. 45

CHAPTER 4: ANALYSIS OF THE PASSENGER CAR INDUSTRY IN SOUTH AFRICA ........................... 46


4.1
4.2
4.3

4.4
4.5
4.6

4.7

Introduction ................................................................................................................................. 46
Defining and explaining the importance of Porters Five Forces model ...................................... 46
Porters Five Forces model in the South African motor vehicle industry ..................................... 48
4.3.1
Potential entrants ...................................................................................................... 48
4.3.2
Bargaining power of suppliers ................................................................................... 49
4.3.3
Bargaining power of buyers....................................................................................... 50
4.3.4
Availability of substitutes ........................................................................................... 51
4.3.5
Competitive rivalry ..................................................................................................... 52
The impact of industry forces on the marketing-logistics interface and customer service levels 53
Creating a sustainable competitive advantage in the passenger car industry............................. 56
Current situation in the vehicle market ........................................................................................ 57
4.6.1
Sales ......................................................................................................................... 57
4.6.2
Economic trends that impact on vehicle industry sales performance ........................ 58
4.6.3
Motor Industry Development Programme (MIDP) .................................................... 58
Conclusion .................................................................................................................................. 60

CHAPTER 5: RESEARCH METHODOLOGY .............................................................................................. 61


5.1
5.2

5.3
5.4
5.5
5.6
5.7
5.8
5.9

Introduction ................................................................................................................................. 61
The research design ................................................................................................................... 61
5.2.1
The research method ................................................................................................ 61
5.2.2
The research format .................................................................................................. 63
5.2.3
Research techniques to gather the data ................................................................... 65
Types of data being collected ..................................................................................................... 67
5.3.1
Defining the secondary data and its application ........................................................ 67
5.3.2
Defining the primary data and its application ............................................................ 68
Defining the population ............................................................................................................... 69
Data collection instruments, sources and procedures................................................................. 70
5.5.1
The survey instrument ............................................................................................... 70
Pre-testing the questionnaire ...................................................................................................... 75
Data collection ............................................................................................................................ 76
Data analysis .............................................................................................................................. 76
5.8.1
Analysis to be conducted .......................................................................................... 76
5.8.2
Assistance with the analysis...................................................................................... 78
Conclusion .................................................................................................................................. 78

CHAPTER 6: ANALYSIS AND INTERPRETATION OF THE RESULTS .................................................... 79


6.1
6.2
6.3
6.4
6.5

Introduction ................................................................................................................................. 79
Analysis of closed-ended questions ............................................................................................ 79
Open-ended questions ................................................................................................................ 96
Summary of findings ................................................................................................................. 103
Conclusion ................................................................................................................................ 105

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CHAPTER 7: RECOMMENDATIONS AND CONCLUSION ...................................................................... 107


7.1
7.2
7.3
7.4

7.5
7.6

Introduction ............................................................................................................................... 107


Propositions .............................................................................................................................. 107
Managerial implications............................................................................................................ 114
Recommendations based on the literature, industry analysis and empirical findings ............... 116
7.4.1
Recommendations based on the literature review ................................................. 116
7.4.2
Recommendations based on the industry analysis ................................................. 117
7.4.3
Recommendations from empirical findings ............................................................. 118
7.4.4
Suggestions for further research ............................................................................ 118
Limitations of the study ............................................................................................................. 119
Conclusion ................................................................................................................................ 119

Reference List ........................................................................................................................................... 121


Appendix A: Questionnaire (in word format) ......................................................................................... 126
Appendix B: Marketing response sheets................................................................................................ 134
Appendix C: Logistics response sheets ................................................................................................ 139

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LIST OF FIGURE
Figure 2.1: The marketing-logistics interface........................................................................................... 16
Figure 4.1 Porters Five Forces Model ....................................................................................................... 47
Figure 5.1 Flow of qualitative and quantitative research ........................................................................ 63
Figure 5.2 Classification of marketing research format .......................................................................... 64

LIST OF TABLES
Table 2.1: Summary of pricing objectives ..................................................................................................... 17
Table 2.2: Summary of factors that influence transportation cost ................................................................. 22
Table 3.1: The Marketing-Logistics interface coordination techniques ranking ............................................. 34
Table 3.2: Level of cooperation between marketing and logistics functions ................................................. 35
Table 4.1: New vehicle industry sales by segment 2005-2006 ..................................................................... 57
Table 4.2: Comparative new vehicle sales for the first and second quarter of 2006 and 2007 ..................... 58
Table 5.1: Differences between qualitative and quantitative research methods ........................................... 62
Table 5.2: Differences between exploratory and conclusive research .......................................................... 65
Table 5.3: Defining and contrasting open and closed-ended questions........................................................ 72
Table 6.1: The country in which the parent organisation of the enterprise is located ................................... 80
Table 6.2: Number of passenger car brands assembled by your organisation in SA ................................... 80
Table 6.3: Number of passenger car brands marketed by your organisation in SA ...................................... 81
Table 6.4: Logistics job titles and common title names in the passenger car industry .................................. 81
Table 6.5: Marketing job titles and common title names in the passenger car industry ................................ 82
Table 6.6: Number of years that you have been with the organisation ......................................................... 82
Table 6.7: Number of years that you have been employed in the motor vehicle industry ............................. 83
Table 6.8: The level of cooperation in your organisation between marketing and logistics functions ........... 84
Table 6.9: Techniques currently used; plan to use, do not use or do not know ............................................ 84
Table 6.10: Techniques that organisations currently use.............................................................................. 85
Table 6.11: Techniques that organisations plan to use within the next two years ........................................ 86
Table 6.12: Techniques that are not being used and there is no plan to use them....................................... 86
Table 6.13: Techniques that respondents do not know whether they are used or not .................................. 87
Table 6.14: Other techniques being used by organisations .......................................................................... 87
Table 6.15: The impact of marketing-logistics interface coordination techniques ......................................... 88
Table 6.16: Techniques with very high impact on the marketing-logistics interface...................................... 89
Table 6.17: Techniques with high impact on the marketing-logistics interface ............................................. 89
Table 6.18: Techniques with moderate impact on the marketing-logistics interface ..................................... 89
Table 6.19: Techniques with low impact on the marketing-logistics cooperation .......................................... 90
Table 6.20: Techniques with no or very low impact on the marketing-logistics interface .............................. 90
Table 6.21: Not applicable selection of the techniques that have impact or no impact on the marketinglogistics interface ................................................................................................................................. 91
Table 6.22: The most important and the least important techniques ............................................................ 92
Table 6.23: The most important techniques .................................................................................................. 92
Table 6.24: The least important techniques .................................................................................................. 93

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Table 6.25: Advantages resulting from co-operation between marketing and logistics functions in your
organisation ......................................................................................................................................... 94
Table 6.26: The extent to which dealers consult with the manufacturer for additional services to customers
............................................................................................................................................................ 95
Table 6.27: Passenger vehicles are priced higher in SA than in Europe and the US ................................... 96
Table 6.28: Key words and phrases from the response sheets that are relevant to each category .............. 97
Table 6.29: Ways in which cooperation between marketing and logistics creates a sustainable competitive
advantage.......................................................................................................................................... 101
Table 6.30: Factors that influence responses to Question B.9 regarding the price element ....................... 103
Table 7.1: Level of cooperation between marketing and logistics functions ............................................... 108
Table 7.2: Summary of comparison between the study of Murphy and Poist and the current study........... 108
Table 7.3: Techniques mostly used in the study by Murphy and Poist ....................................................... 109
Table 7.4: Similarities in the responses between the study by Murphy and Posit and the current study .... 112
Table 7.5: Differences in the responses between the study by Murphy and Posit and the current study ... 112

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SYNOPSIS
The subject of the study is the way in which the coordinated marketing-logistics interface through the
fourteen coordination techniques creates a sustainable competitive advantage. The investigation is limited
to the passenger car manufactures in South Africa (SA).
The literature has acknowledged that marketing and logistics are inseparable and managers from these
functions have been working on the relationship in order to use it as a competitive advantage strategy. The
fourteen marketing-logistics interface coordination techniques were identified in order to assist these
managers to improve the interface and increase the level of cooperation with the intention of achieving a
sustainable competitive through the interface. The use of fourteen marketing-logistics interface was not
tested during the identification process of such techniques and it is important to find out if they are used in
the passenger car industry in SA.
Each of the fourteen coordination techniques differs on the basis of the level of use in the passenger car
manufacturing organisations. Some techniques are mostly used in organisations than others. For example,
top management support and information sharing are mostly used in these organisations while unified
department and third-party intervention are not used and there is no plan to use them. There are
techniques that have very high- to-high impact on the interface. It is important for the organisations to focus
on those techniques that have very high and high impact on the interface since this can assist in improving
cooperation between marketing and logistics and create the interface that can serve as a way to a
sustainable competitive advantage.
The level of cooperation between marketing and logistics functions in the manufacturing organisations in the
passenger car industry was measured followed by questions relating to the use, the impact and the
importance of the fourteen marketing-logistics interface coordination techniques in order to build and
improve the cooperation and create a sustainable competitive advantage through the interface. Other
techniques, except the predetermined fourteen techniques were identified however most respondents stated
that organisations use the fourteen existing techniques. Some techniques such as a top management
support, joint outings and information sharing were mostly used by organisations. It is interesting to note that
mostly used does not imply that the technique has a high to very high impact on the interface. Although joint
outing is mostly used it was found to have a moderate impact on the marketing-logistics interface.
Recommendations provided should be applied in order to identify the difference in cooperation between
marketing and logistics before and after the study. The marketing-logistics interface coordination can be a

strategic tool for creating a sustainable competitive advantage if there is high level of cooperation between
marketing and logistics through the use of coordination techniques.

CHAPTER 1: GOAL AND APPROACH TO THE RESEARCH


1.1

Introduction

In the 1990s, more and more organisations began to view their businesses as a collection of processes,
rather than as a collection of functions and departments. As processes cut across functional boundaries,
greater attention needs to be devoted to interface activities (Murphy and Poist, 1996: 15). In order to build a
cohesive organisation, it is important that points of commonalities between functions are identified and
emphasised.
The literature has emphasised that logistics and marketing are inseparable in that, logistics is the other half
of marketing (Coyle, Bardi and Langley, 2003:93). Unfortunately, there has been limited empirical research
on the way in which the marketing-logistics interface can be used as a way to a sustainable competitive
advantage in practice.
The purpose of this research is to analyse how the link between marketing and logistics can be co-ordinated
in order to use this link as a way to a sustainable competitive advantage. This will be done through
gathering views from logistics and marketing managers on how coordination techniques can assist in
achieving a harmonious relationship between marketing and logistics and to use this coordinated
relationship as a way to a sustainable competitive advantage.
As a result of interaction between organisational functions, it is important that organisations develop
approaches or mechanisms for effective management of interfunctional activities (Murphy and Poist,
1996:15). The purpose of this study is to specifically focus on the marketing-logistics interface coordination
and its impact on competitive advantage. In a competitive industry where differentiation from competitors is
gained mainly by providing superior service, logistics and marketing integration strategy is important
(Remmel, 1991:27).
Kahn and Mentzer (1996:6) believe that, in order for an integration to succeed, it is important to establish
techniques for building a harmonious interaction. According to Murphy and Poist (1996:18) there are
various techniques that the organisation can apply in coordinating the interaction between logistics and
marketing and have also pointed out that, these techniques can be relevant to other interfaces. This study
will focus on those techniques and also endeavours to identify other techniques.

1.2

Problem definition

Problem definition refers to the crucial first stage in the research process, determining the problem to be
solved and the objective of the research. This is the indication of a specific business decision area that will
be clarified by answering some research questions (Zikmund, 2003: 740). Of all the tasks in a research
project, none is more vital than the accurate and adequate definition of the problem (Malhotra, 1996: 36). An
inadequate problem statement is a call for disaster since all the time, money and effort will be wasted if the
problem is not clearly defined.
The research problem for this study relates to the views of marketing and logistics managers on the use of
the marketing-logistics interface coordination techniques, and the extent to which a coordinated interface is
the way to a sustainable competitive advantage. A successful interface or integration will require
commitment, cooperation and understanding from both logistics and marketing practitioners. The marketinglogistics interface has been regarded as a business strategy that can be used in building the organisations
competitive advantage but it was found that there is still an evident conflict between marketing and logistics
practitioners (Stank, Daugherty and Ellinger, 1999:2).
The research will take place in the passenger car industry in SA. A population of marketing and logistics
managers from passenger car manufacturers who are direct members of the National Association of
Automobile Manufacturers in South Africa (NAAMSA) will be asked to respond to a structured questionnaire
in the presence of the researcher. The reason for this approach is that the population is small and the error
elimination is very important.
1.2.1

Research questions for this study

Three questions that form part of this study:


i.

What are the views of marketing and logistics managers on marketing-logistics interface coordination techniques?

ii.

Do marketing and logistics managers believe that high levels of customer service are important for
the interface to serve as a way to a sustainable competitive advantage?

iii.

To what extend do marketing and logistics managers use co-ordination techniques?

1.2.2

Problem Statement for this research

According to Murphy and Poist (1996:17) the empirical research to date on the application of the techniques
that can be used in the interface co-ordination is very limited. The research problem is to determine the
views of marketing and logistics managers regarding coordination techniques, extend of use of these
techniques and whether they believe that a coordinated marketing-logistics interface can contribute to a
sustainable competitive advantage.
1.3

Research objectives

Research objective refers to the purpose of the research expressed in measurable terms; the definition of
what the research should accomplish. There are two types of research objectives, the primary and
secondary objective (Zikmund, 2003:99).
1.3.1

Primary objective

The primary objective of this study is to establish the significance of various interface co-ordination
techniques in the marketing-logistics interface, and the extent and the manner in which a co-ordinated
interface serves as a way to a sustainable competitive advantage.
1.3.2

Secondary objectives

The specific secondary objectives for this research are:


i.

To identify specific interface coordination techniques used in the passenger car industry.

ii.

To establish the manner in which the marketing-logistics interface serves a way to a sustainable
competitive advantage in the organisation.

iii.

To identify other techniques that marketing and logistics managers consider as important in their
interaction except for the pre-identified ones that will be taken from the literature.

1.4

The purpose and importance of the study

The purpose of this research is to establish the significance of the interface co-ordination techniques and
how a coordinated marketing-logistics interface can be a way to a sustainable competitive advantage. The
literature study will be expanded by empirical research to test the applicability of the identified interface coordination techniques; this will be done by collecting views of marketing and logistics managers from
organisations that manufacture passenger cars in SA.

The current study is unique in that it looks at the importance of co-ordination techniques in the interface in
order to use the interface as a way to a sustainable competitive advantage in the passenger car industry.
This study builds on the research conducted by Murphy and Poist, where marketing and logistics
practitioners were asked to provide co-ordination techniques for the success of the interface between
marketing and logistics. This is the first time that study of this nature is being conducted in SA.
1.5

Research Proposition

A research proposition can be defined as a statement concerned with relationships among concepts, an
assertion of universal connection between events that have certain properties (Zikmund, 2003:43). The
reason for using propositions and not hypothesis is as a result of the small population that does not justify
hypothesis testing. The difference between proposition and hypothesis is that; proposition is based on the
abstract or theoretical aspect that attempts to understand the facts of the science while hypothesis is
empirical aspect concerned with the facts of the science as revealed by observation or experiment
(Zikmund, 2003: 44). Based on the definition, propositions are not empirically testable however hypothesis,
which are empirically testable are deducted from propositions.
Propositions for this research can be stated as follows:
P1: Responses from the study by Murphy and Poist are similar to those in the passenger car market in SA.
The current research builds on the previous study by Murphy and Poist regarding coordination techniques,
as a result it is important to establish a relationship between the current research and the study by Murphy
and Poist.
P2: The marketing-logistics interface that uses the fourteen coordination techniques creates a sustainable
competitive advantage through high levels of customer service
It has been acknowledged that marketing and logistics interface impact on the customer service aspect of
the organisation.
P3: Logistics costs have a negative impact on selling price of passenger cars in SA.
It has been acknowledged in the literature that logistics costs are the most important components when
determining the price. It is important to establish whether they have a positive or negative impact on
passenger car prices in SA.

1.6

Demarcation and the scope of the study

This is an exploratory study aimed at establishing the importance of marketing-logistics interface coordination techniques and how this co-ordination contributes to the interface as a way to a sustainable
competitive advantage in the South African based passenger car manufacturing organisations.
The literature will cover the importance of marketing-logistics interface as a way to a sustainable competitive
advantage based on the components of the marketing mix and logistics activities. It will further explore the
importance of the interface as a way to a sustainable competitive advantage. The industry analysis will also
form part of the literature.
The empirical research will test the marketing-logistics interface coordination techniques by gathering the
views of managers in the two functional areas of the business on the interface co-ordination. It will further
attempt to find out if there are any other techniques that are applied in the organisations that manufacture
passenger cars in SA.
1.7

Clarification of key concepts

Marketing
Kotler (2003:9) defines marketing as a societal process by which individuals and groups obtain what they
need and want through creating, offering, and freely exchanging products and services of value with others.
From the analysis of the definition, marketing consists of two separate but interconnected principal parts,
namely the stimulation of demand (creation) and the satisfaction of demands (offering and exchange).
Organisations achieve this creation and satisfaction of demand through the application of the marketing mix.
Marketing concept
The Marketing concept is the marketing management philosophy that holds that the key to achieving
organisational goals depends on knowing the needs and wants of target markets and delivering the desired
satisfactions better than competitors do (Armstrong and Kotler, 2005:13). According to Kotler (2003:13) the
marketing concept as a philosophy takes an outside-in perspective where the needs of the customer comes
first before the sellers need to convert the product into cash.
Marketing Mix
The Marketing mix refers to a set of marketing tools, namely: product; place; price and promotion that the
organisation uses to pursue its marketing objectives in the target market (Kotler, 2003:15). According to

Remmel (1991:28) these different components of the marketing mix determine the potential interface of
marketing and logistics. According to Helberg and Krishnan (1995:52) the decision on the marketing mix
components or the four Ps of marketing will directly influence logistics ability to add value in terms of time,
place and possession.
The organisation will decide on how to use the marketing mix in order to meet the demand while creating
value. Any marketing effort must integrate the ideas of having the right product, at the right price, combined
with the right promotion, and available in the right place at the right time (Stock and Lambert, 2001:7).
The logistics concept
According to Svensson (2002:427) logistics is usually concerned with satisfying the supply of the customers
needs and wants in a marketing channel (or a place channel or a supply chain). Fawcett, Mcleish and
Ogden (1992: 2) define logistics as a concept that deals with all movement and storage activities that
facilitate product flow, from the point of raw material acquisition to the point of final consumption, as well as
the information flow that set the product in motion for the purpose of providing adequate levels of customer
service at reasonable costs.
Logistics management is concerned with planning, implementing and controlling the efficient and effective
flow of goods and services from point of origin to the point of final consumption for the purpose of satisfying
customer demands in the marketing channel (Coyle et al., 2003:43). It is through logistics systems capability
that the marketing concept rights are delivered, quality relationship in the channel is maintained, good
customer service is achieved and long-term profitability is realised (Van der Laan, 2004:3).
Logistics activities
Remmel (1991:28) points out the following logistics activities as the primary interface of logistics and
marketing: transportation; warehousing and storage; inventory control; order processing; customer service;
packaging; and demand forecasting.
Marketing-logistics interface
This refers to the interaction or link between marketing and logistics as functional areas in the organisation
(Stock and Lambert, 2001:7). The interface between the two functions shows how activities of one cut
across the other function activities. Other words used in the text for interface are interaction or link. The
order cycle example is a good reflection of the marketing-logistics interface, there are marketing and
logistics activities in the order cycle, order transmittal (marketing activity), order processing (logistics
information system, order picking (warehousing activity) and order delivery (transportation activity).

Logistics is important in adding value to a product until it reaches the final consumer while marketing is
concerned with stimulating the demand and providing something of value to the end-customer (Coyle et al.,
2003:44). As a result of logistics and marketing processes cutting across each others functional boundaries,
greater attention needs to be devoted to the marketing-logistics interface (Stock and Lambert, 2001:29).
Sustainable competitive advantage
This refers to sustainable strategies that set the organisation apart from competitors, for example strategystructure fit, price strategy, communication strategy or cooperation between functional areas (Pearce and
Robinson, 2005:326). To survive and win, the organisation has to gain a sustainable competitive advantage
over competitors. Sustainable competitive advantage can be gained by; adopting management approaches
that satisfy customers through cost competitiveness, high quality products and services, speed and
innovation (Bateman and Snell, 1999:19).
A coordinated marketing-logistics interface is also regarded as a way to a sustainable competitive
advantage because it results in improved customer service levels. It is also believed that cooperation
between marketing and logistics can result in lower logistics costs, which translate into competitive pricing
(Stank et al., 1999:3).
Co-ordination techniques
This refers to factors that are important in building the relationship between marketing and logistics. These
techniques are to be tested in this study in order to establish whether they result in the marketing-logistics
interface that creates a sustainable competitive advantage (Murphy and Poist, 1996: 17).

1.8

Research Design

A research design is a framework or blueprint for conducting a research project, which details the
procedures necessary for obtaining the information needed to structure or solve a research problem
(Malhotra, 1996:86). The research design will assist the researcher on how to obtain the data, where to
gather the data, who to ask questions, what questions to ask and how to analyse the data gathered.
1.8.1

Exploratory research

When a researcher has a limited amount of experience with or knowledge about a research issue,
exploratory research is a useful preliminary step that helps ensure that a more rigorous, more conclusive
future study will not begin with an inadequate understanding of the nature of the management problem
(Zikmund, 2003:110). Malhotra (1996:88) identified the following qualities of exploratory research:

It provides insight and understanding.

Information needed is defined only loosely.

The research process is flexible and unstructured.

It has a small and non-representative sample

The analysis of primary data is qualitative

Tentative results

It is generally followed by further exploratory or conclusive research.

Exploratory research is important in a situation where research is necessary but with limited prior scientific
research been done on the particular study. It also serves as a starting point for research especially where
the problem might not appear to be clear or the researcher wants to gain insight prior to embarking on
hypothesis testing, examining relationships or making conclusions (Malhotra, 1996:88).
1.8.2

Defining the population

Malhotra (1996:359) defines the population as the aggregate of all the elements, sharing some common set
of characteristics; that comprise the universe for the purpose of the marketing research problem. The
population in this regard will be all logistics and marketing managers of the member organisation of the
(NAAMSA), that assemble passenger cars in SA. Since the population is small a complete enumeration of
the population will be utilised.
The population is drawn from the list provided by NAAMSA, which is an organisation that represents the
interests of the new vehicles manufacturing industry and organisations involved in the importation and
distribution of new vehicles in SA. NAAMSA compiles statistical information on sales and economic trends
that affect the vehicle industry in SA. Currently there are twenty-eight member organisations, with eighteen
of these members holding full membership as they have some of their cars, Light commercial vehicles
(LCV), Medium commercial vehicles (MCV) and heavy commercial vehicles (HCV) assembled in SA. Of
these eighteen, only eight assemble passenger cars both diesel and petrol in SA, these are organisations to
be used in the current study. The remaining ten organisations are associate members, as they do not have
their manufacturing plants in SA (NAAMSA annual report, 2006:5).
1.8.3

Questionnaire design

According to Dillon, Madden and Firtle (1993:303) questionnaire design is a process that comprises of the
following four activities: preliminary consideration, asking questions, constructing questionnaire and pretesting the questionnaire. A questionnaire based mainly on the fourteen coordination techniques will be
designed, as there is no existing questionnaire to utilise.

10

1.8.4

Pre-testing the questionnaire

Pre-testing refers to testing the questionnaire on a small sample of respondents to identify and eliminate
potential problems (Malhotra, 1996:341). It is important to pre-test the questionnaire prior to sending it out or
administering it for the final survey. Benefits of pre-testing the questionnaire:

The researcher is able to identify respondents problems in answering questions

Tabulating the results of the pre-test helps determine whether the questionnaire will meet the
objectives of the research

Interviewers can ask for comments from respondents on how easy and precise questions are

Thus it provides an opportunity to correct mistakes and improve the validity and reliability of the
questionnaire (Zikmund, 2003:359).

The questionnaire was pre-tested by conducting personal interviews in order to increase the level of
feedback and receive comments. Convenience sampling was done, however only marketing and logistics
practitioners from other industries were selected. The reason for using other marketing and logistics
practitioners and not using the ultimate population is because the population size is small.
The questionnaire was administered on four marketing and logistics practitioners in order to rectify errors
and test the validity and reliability of the questionnaire. Results of the pre-test were used to determine
whether questions asked are in line with the research objectives, problem and questions.
1.8.5

Data Analysis techniques

Data analysis or statistical analysis is a process of interpreting the data collected in order to formulate
answers to the hypothesis. There are various methods of statistical analysis that the researcher can choose
from. The method to use is influenced by the type of questions to be answered, number of variables and the
scale of measurement (Zikmund, 2003:504).
In the study conducted by Murphy and Poist (1996:20), the univariate and multivariate analysis were used
for data analysis. Zikmund (2003:505) defines the univariate analysis as a type of analysis that assesses the
statistical significance of a hypothesis about a single variable. According to Malhotra (1996:489) multivariate
analysis is a type of statistical technique suitable for analysing data when there are two or more
measurements on each element and the variables are analysed simultaneously hence multivariate
techniques are concerned with the simultaneous relationship among two or more phenomena.
Based on the population size, the analysis approaches used by Murphy and Poist will not be significant
since they require a large sample. The current research will apply simple statistical analysis such as mean

11

and frequency analysis. Data analysis will be carried-out by Statkon, the Statistical unit at the University of
Johannesburg.

1.9

Chapter Outline

The purpose of this part of the research is to outline chapters flow.


Chapter 1: Introduction
This chapter focused on outlining the basic research objectives. It served as an opening to the main body,
defining and briefly describing the importance of the interface and techniques that can be used in
developing the strategy that enhances the integration and cooperation between logistics and marketing as
business functions.
The purpose of the research was elaborated on, with reference to the measures that were utilised. The
research question and propositions were stated as well as the outline of the methodology used. Finally,
limitations of the research were mentioned. This chapter concluded with a concise outline of the research
report, reviewing the major content in each of the chapters.
Chapter 2: Significant prior research
This chapter was dedicated to reviewing prior literature related to the topic of interest. Although there is a
lack of empirical research on the topic, this chapter attempted to focus on summarising the major findings of
previous studies that are related to the research and it assisted in the formulation of the research problem.
This chapter elaborated on marketing and logistics components in the interface, the link between marketing
and logistics, customer service issues, sustainable competitive advantage and the effect of marketing and
logistics cooperation on organisation performance.
Chapter 3: Exploring the interface coordination techniques
This chapter focused on the research done by Murphy and Poist (1996) in which the marketing-logistics
interface fourteen co-ordination techniques were identified through interviews with both logistics and
marketing practitioners.
Chapter 4: Analysis of the vehicle industry in South Africa
Since the interface coordination techniques were tested in the passenger car industry, a brief analysis of the
industry was important. The analysis identified marketing-logistics interface activities in the industry.

12

Chapter 5: Research problem and Research methodology


The research problem was formulated in Chapter 1 and was elaborated on in Chapter 5. The process of the
problem formulation was clearly specified; propositions were presented, with a brief description of the
objective and purpose underlying each proposition. The methodology of the research was laid out in detail in
this chapter with particular focus on techniques and methods of analysis.
Chapter 6: Discussion of the research results
The major findings were encapsulated in this chapter. The relationship found and the insight gained was
discussed, as well as the limitations or assumptions, which may have led to biases. Outcomes of the
research were described and interpreted. The results were discussed with reference to prior findings
including the underlying theory, which formed part of the research.
Chapter 7: Recommendations and Conclusion
Major findings and understanding gained through the research were summarised in this chapter. The
discussion critically assessed the findings and the potential for further research was considered.
1.10 Limitations of the study
A number of limitations that can be associated with this study include:

There is limited literature and related research on the topic of the marketing-logistics interface as a
way to a sustainable competitive advantage

The marketing-logistics interface topic is fairly new in the field of marketing and logistics

Due to the limited time and financial resource, the population excluded any manufacturer of
passenger cars who manufactures all models of passenger cars outside SA, because the
marketing and logistics covers import and export issues that are outside the scope of the study

Due to the structure of the industry in SA the population size for this dissertation is very small

The marketing-logistics interface in the literature turns to discuss the interface along the four Ps of
marketing however, marketing today refers to the seven Ps of marketing.

13

1.11

Conclusion

This chapter has provided an outline or the road map for this study. All relevant and important key concepts
were defined in this chapter and will be applied through out the study with no definition provided in the
subsequent chapters. The aim was to ensure that the reader understands what is to be achieved in this
research. Subsequent chapters will clarify the study through the literature review, discussions with
marketing and logistics practitioners; providing analysis of the findings, recommendations and suggestion
for further research.

14

CHAPTER 2: THE MARKETING-LOGISTICS INTERFACE


2.1

Introduction

The aim of this part of the study is to explore the literature on the Marketing-logistics interface as a way to a
sustainable competitive advantage. Literature review is important to the study since it can assist in
broadening the understanding of the topic, clarifying the formulated problem statement and propositions
(Zikmund, 2003:63).
Broad topics to be covered in this section:

2.2

Marketing and logistics components in the interface

Linking marketing and logistics activities (the interface)

Customer service from logistics and marketing point of view

Creating a sustainable competitive advantage through a coordinated interface

The effect of marketing and logistics on organisation performance


The Marketing and Logistics components in the interface

In Figure 2.1; the main aspects that are the gist of the study are identified namely; marketing mix
components; logistics components and the marketing-logistics interface. This interaction is where the place
component of the marketing mix and customer service intersects. This figure is a model that proposes the
relationship between the marketing and logistics functions (Stock and Lambert, 2001:8).

15

Figure 2.1: The marketing-logistics interface

Product
Price

Promotion
Place/Customer
Service levels

Inventory

Transportation

Carrying Costs

Costs

Lot Quantity

Warehousing

Costs

Costs

Order Processing
and Information
Source: Stock and Lambert (2001:8)
The discussion that follows is a close examination of Figure 2.1, illustrated above. The top half of Figure 2.1
consists of the marketing components while the bottom half consists of the logistics components. Having
explored each component it is necessary to then move to the marketing-logistics interface.
2.2.1

Marketing components in the interface

Marketing components in the interface refers to the four Ps of the marketing mix as defined in Chapter One.
These tools are classified into four broad groups called the four Ps of marketing: Product, Price,
Place/Customer service levels and Promotion (Kotler, 2003: 11). As can be seen in Figure 2.1, these
marketing mix components are interdependent.
Product
At the core of the marketing effort of the manufacturing organisation is a product that the organisation is
able to offer to the customers. Armstrong and Kotler (2005:223) define a product as anything that can be
offered to a market for attention, acquisition, use or consumption that might satisfy a want or need.
Therefore, a product is not only made of its physical attributes but also, of other benefits that come with it,
such as after-sales service, transportation or allowance for returns.

16

According to Armstrong and Kotler (2005:223) a product is a key element in the market offering. In Figure
2.1 one can see that at the top the diagram is the product, which reflects that organisations activities begins
with its product. There are various types of products that the organisation can sell depending on who buys
the product and the purpose of buying the product. Depending on who will use the product, the product can
be classified as industrial or consumer product (Ballou, 1987:76). For this study, the product refers to the
actual product being offered to the final consumer, for instance the passenger car and its intangibles, thus a
consumer product.
Jooste, Berndt, Herbst and Klopper (2005:2) refer to total product, which means the broad spectrum of
tangible and intangible benefits that the customer might gain from a product once it has been purchased.
When buying a passenger car, the consumer is not only buying the physical product but also the auxiliary
dimensions, which include aspects such as warranty, instruction for use, maintenance service, brand and
reputation. When paying for the product the consumer is paying for the primary product and all its auxiliary
dimensions.
Price
Price is defined as the amount of money charged for a product or service, which the customer has to pay
(Armstrong and Kotler, 2005:57). Price is what the organisation receives in monetary terms for its product
and what the customer is willing to offer in order to can acquire the product.
Traditionally, pricing has been the poor relation of the marketing mix, but price represents the generation
of revenue while the other three Ps create costs. All costs that are incurred in the process of production to
the delivery of the product are factored in the price. The importance of price can be summarised under the
following objectives: financial and marketing objectives as discussed below, and can be seen in Table 2.1.
(Drummond and Ensor, 2005:137).
Table 2.1: Summary of pricing objectives
ROI
Profit optimisation
Generating cash-flows
Maximising market share
Product quality leadership
Market stability

Financial Objectives
Marketing Objectives
Source: Drummond and Ensor (2005:134)

17

Return on Investment (ROI): ROI measures the effectiveness of the organisation in generating
profits with its available assets (Gitman, 1991:274). The organisation makes a profit if it is able to
generate more than the cost incurred and what remains is the return on investing in the business
activity of producing and selling the product.

Profit Optimisation: Profit optimisation refers to the ability to generate an optimum level of profit
but it differs from maximisation in that, maximisation is the absolute maximum price achievable in
the short term while optimisation takes a long-term view of retaining customers (Drummond and
Ensor, 2005: 137). This means that the organisation is willing to negotiate the price as long as it
does not end up loosing its profits in order to meet the customer expectations.

Generating cash flows: Cash is the life blood of any business and as such, it may be a pricing
objective simply to generate sufficient cash (Drummond and Ensor, 2005:137). In order for the
business to survive and continue to grow it needs, cash generated should be higher than the costs
incurred in generating the cash. This means that the price of the product is the sum of the cost and
the profit that makes up the cash generated.

Marketing objectives through pricing include: maximising market share, product quality leadership and
market stability (Kotler, 2003:245), as seen in Table 2.1.

Maximising market share: Organisations choosing the objective of maximum market share
believe that higher sales volume will lead to lower unit costs and higher long-term profits (Kotler,
2003:246). Organisations may accept lower financial returns in order to develop their position
within a market place. Gaining market share at any cost is questionable and may damage longterm viability of the organisation, hence it is important to ensure that using price as a tool for
gaining market share is done wisely and result in profit optimisation (Drummond and Ensor,
2005:138).

Product quality leadership: Organisations that aim to be product-quality leaders will offer
premium products at premium prices (Kotler, 2003:247). BMW offers premium products at premium
prices, and the organisations service and responsiveness to customer queries and requests is
rated one of the best in the industry. BMW offers quality product and service and is able to charge
premium prices (Kemink, 2005:17).

Market Stability: A pricing objective could be to maintain the status quo within the industry by
accepting a going rate rather than challenging competitors through the price. This not only results
in market stability but also has an effect on price stability in the industry (Drummond and Ensor,
2005:138).

18

The importance of pricing should not be undermined among the four Ps of marketing. All costs of operating
the business are factored into the price including logistics, manufacturing and other costs. The other three
Ps result in the cost to the organisation and price is used to recover the costs incurred from activities in the
other three Ps.
Promotion
Promotion is defined as activities that communicate the merits of the product and persuade target
consumers to buy the product (Armstrong and Kotler, 2005:57). Promotion is the manner in which
organisations communicate products to the target consumer in order to inform, influence or remind the
consumer regarding the product or service benefits and availability (Armstrong and Kotler, 2005:399).
There are various ways in which organisations communicate their products and services. Koekemoer
(2004:11) identifies the following elements of promotion:

Advertising: This involves the use of media channels such as television, which normally targets the
mass and not specific groups of people

Personal selling: This is a direct person-to-person interaction and communication

Direct response marketing-An interactive system of marketing that uses one or more advertising
media to effect measurable response or transaction at any location. The key to direct response
marketing is to generate measurable response to the advertisement.

Public relations: The management through communication, of perceptions and strategic


relationships between an organisation and its internal and external stakeholders. Public relations
aims to make the organisation more visible and gain a lot of publicity.

Sales promotion: A blend of marketing communications activities and materials designed to


intensify the efforts of the marketers and sales force, induce intermediaries to stock and sell the
organisation product offering, and/or persuade consumers to buy the product offering within a
specified, limited time period.

Sponsorship: This is the marketing communication activity whereby a sponsor contractually


provides a financial and/or other support to an organisation or individual in return for rights to use
the sponsors name (company, product or brand) and logo in connection with sponsored event or
activity.

21st century media: The 21st century media developed as the world technology evolve, it include
communication through the Internet, World Wide Web, email and mobile technology.

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When a product is promoted to the end-user, it is important to inform the users about the place where the
product can be purchased or how it can be purchased. Promotion should provide information about the
product and its availability in terms of where to access it.
Place
Place in the four Ps of marketing refers to where the customer will be able to go and acquire the product or
receive the service. This is the point where the customer physically interacts with the organisation, its
product and service; it is the point of actual experience Kotler (2003:511). Place is defined as all activities
that make the product available to target consumers that includes:

Channel selection

Selection of channel members

Location

Transportation and

Order processing and storage (Kotler, 2003: 57)

For instance, Ford carefully selects dealerships who are expected to keep or store an inventory of Ford
passenger cars, demonstrate the models, negotiate the price, process the order and offer after-sale service
while Ford as a manufacturer is expected to transport passenger cars to dealerships (Kotler, 2003: 57). In
this example, after the product is with the dealership, it is the responsibility of the dealership to work out the
right price in order to optimise profits. Although there will be set prices from the manufacturer, dealers are
allowed to negotiate in the process of offering the product or service with a view of remaining competitive
while driving profits.
Place is the point where the other elements of the four Ps of marketing and logistics activities come
together in the interface, as can be seen in Figure 2.1. Place is the core of the marketing-logistics interface,
as it brings the decision from marketing and logistics together and offers customers the opportunity to fully
evaluate the ability of the organisation in delivering its product or service, its a defining moment.
Integrating the four Ps of marketing
As can be seen in Figure 2.1, the four Ps are not independent of each other but are interdependent. In
order to can make the consumer aware of the product, there are various means of promotion available.
Through promotion, price can be communicated and the place where the product can be purchased. It is
important not to look at the four Ps as separate entities but as interdependent activities.

20

As can be seen in Figure 2.1, the arrows point in both directions, from product to price and back to product
from price and so forth. This shows that the interface begins with the individual components of a functional
area, for example marketing and the interdependence of those components in the functional area. .
2.2.2

Logistics elements in the interface

There are five core elements of logistics in the interface, which are: transportation costs, inventory carrying
costs, warehousing costs, lot quantity costs and order processing and information costs (Stock and
Lambert, 2001:8), as identified in Figure 2.1. As per logistics definition by (Fawcett et al., 1992:2) in chapter
one, logistics aim is to maintain costs of product movement and storage, information flow while providing
adequate levels of customer service.
The focus of logistics is on maintaining costs as these costs are factored in the product price and impact on
the customer ability to acquire the product and on price objectives as discussed above (Stock and Lambert,
2001:7). As can been seen in Figure 2.1 logistics elements are expressed on the basis of costs; what is
important in the interface is to ensure that the product is delivered at the right place, in the right time and at
the lowest possible cost.
Transportation Cost
In order to ensure that the lowest possible costs of getting the product to the consumer are maintained,
transportation costs should be the first element to assess (Stock and Lambert, 2001:8). Transportation is the
most important single logistics cost for most organisations as it accounts for approximately one-third to two
thirds of the total logistics costs (Ballou, 1987:97).
It is important that efficient means of transport is selected in order to curb or prevent high transportation
costs due to inefficiencies as this could result in loss of profits or unnecessarily high prices. Modes or
means of transportation the organisation can choose from include; rail, road, air, waterway or pipeline
(Kotler, 2003:557).
Kotler (2003:557) identified the following factors important in choosing the right mode of transportation:

Transportation as a major logistics cost affect pricing

On-time delivery performance and

The condition of the goods when they arrive.

Stock and Lambert (2001:314) broadly discuss factors that can influence the transportation cost and pricing
of a product, which must be considered carefully in making transportation decisions, namely; product and
market related factors as discussed below and can be seen in Table 2.2.

21

Table 2.2: Summary of factors that influence transportation cost

Product factors

Market related factors

Density of the product


Stowability
Ease or difficulty in handling
Liability or risk
Location of the market
Government transport regulations

Source: Stock and Lambert (2001:314)


The product related factors: Transportation choices are affected by the characteristics of the product, as
stated in Table 2.2, which are:

Density: This refers to a products weight-to-volume ratio.

Stowability: It is the degree to which a product can fill the available space in a transporting vehicle.

Ease or difficulty in handling the product: Related to stowability is how easy or difficult it is to
handle the product. The easier the product is to handle the lesser the costs.

Liability: Liability refers to risks such as damage to the product during the handling and while in
transit, pilferage and theft.

Market related factors: Important market-related factors that affect transportation include: location of the
market and government transport regulations:

Location of the market: This refers to where the market is situated in relations to the place from
which goods are transported; that is the accessibility of the market and proximity thereof (Coyle et
al., 2003:511). Location of the market is important when making delivery time decisions which
refers to the average time it takes for a shipment to move from its point of origin to its destination
as poor scheduling could result in customer dissatisfaction (Ballou, 1987:116).

Customers are promised the time that the product will arrive as a result, it is important to ensure that such
sales promises are in line with the scheduling times in order to avoid customer dissatisfaction.

Government transport regulations: Transport regulation refers to the legal environment in which
the transportation industry operates (Ballou, 1987:134). For instance BMW transports its vehicles
from Rosslyn to other parts of the country using the trucking system and can only transport from
the early hours of the morning to late afternoon and not in the evening when the traffic congestion
has eased due to safety reasons (Kemink, 2005:17). If the government decides to make a
regulation that no trucks are allowed at certain times of the morning then the organisation might be
negatively affected and delivery times will have to change.

22

All other logistics costs have a major impact on transportation, lot sizes been transported based on the type
of the product determines the cost of transport. The amount of orders processed and handled turn to
influence transport cost and time of delivery (Ballou, 1987:141). Although Figure 2.1 does not reflect the flow
of logistics components it has been confirmed in the literature that transportation cost is the starting point of
logistics elements (Vogt, Pienaar and de Wit, 2003: 28).
Inventory carrying costs
Inventory cost is defined as cost of holding goods, usually expressed as a percentage of the inventory
value. This includes the cost of capital, storage space cost, inventory service cost and risk cost (Coyle et al.,
1996: 614). When calculating the cost of holding inventory, one has to consider all these costs or elements
mentioned.
Elements of inventory carrying costs include:

Capital cost: Capital cost is the interest on the money used to acquire inventory, which is also
referred to as opportunity cost, a term indicating that an investment opportunity has been lost in
order to make investment in inventory (Vogt et al., 2003:78). It is important to ensure that the cost
of investing in the inventory is not higher than the return that can be generated from the
investment.

Storage Space cost: Storage space cost refers to the cost of the space needed to keep the
inventory. The storage space cost include things such as moving of goods in and out of inventory
and rent, heating and lighting (Vogt et al., 2003:26).

Inventory service costs: Stock and Lambert (2001:372) define inventory service costs as costs
such as taxes, fire and theft insurance paid as a result of inventory holding. These costs will
normally depend on the level of inventory however insurance costs are not strictly proportional to
the level. According to Murphy and Wood (2004:274) taxes are normally calculated on the basis of
the inventory on hand on a particular date. It can be postulated that taxes will be proportional to the
level of inventory on hand on a particular date.

Risk costs: Risk costs are costs of inventory becoming unsaleable due to deterioration or
obsolescence, damage, and pilferage (Ballou; 1987:250). Provision for risk costs is made in case
such risk occurs.

23

Carrying inventory potentially has many risks, yet inventory serves a number of purposes for the
organisation, this includes:

Improving customer service

Encouraging production economy

Permitting purchase and transportation economies

Acting as a hedge against price changes and

Protecting against uncertainties in demand and lead-time (Ballou, 1987:243).

It is important to realise that the level of inventory kept has an impact on the Return on Assets (ROA) since
inventory is an asset in the balance sheet (Stock and Lambert, 2001:33). The optimum levels should be
determined and be kept for arising demand.
A company like Toyota has been successful with its Just-in-time supply chain concept. Dealers do not keep
inventory on hand but order as and when the demand arises. For the brand new cars dealers keep demos
only, (Anon (a), 2006:2). Droppa (2006:3) points out that although Toyota does not keep inventory when it
comes to finished products it however, does keep some level of inventory when it comes to after sale
service parts. It discovered that its rating by customers on the issue of parts availability is low. This
demonstrates the purpose of inventory in improving customer service.
In order to reduce logistics costs and efficiency of inventory as an asset, the levels of inventory kept should
be in line with the demand for the product, not too much and not too little.
Warehousing costs
Warehousing is defined as the storage of goods, which include a wide spectrum of facilities and locations
where finished goods and raw material are kept (Coyle et al., 2003:285). It can be deduced from the
definition that warehousing costs are not inventory carrying cost but that it has a relationship with the level of
inventory. Warehousing costs looks at the warehousing facilities costs and can reduce or increase with the
number of warehousing facilities (Stock and Lambert, 2001:47).
In order to understand the relationship between warehousing costs and inventory it is important to learn how
warehousing costs are determined. Stock and Lambert (2001:47) identified two distinct categories of
warehousing costs: throughput costs and inventory storage costs.

Throughput costs refers to the cost of putting and taking out a certain amount of products from the
warehousing facility in a given time period (Murphy and Wood, 2004:299). The charge for
warehouse in this case, depends on the movement of goods in and out of the warehousing facility.

24

Inventory storage costs refers to the costs of warehousing facility based on the level of inventory in
the warehouse, these costs can be included in the inventory carrying costs (Stock and Lambert,
2001:47).

These categories clarify the misconception regarding warehousing costs. It is important to distinguish
between inventory and warehousing in order to avoid under statement of logistics costs. In order to further
understand the difference one can look at the basic warehousing decisions, which include:

Ownership of warehousing facilities

Number of warehouses

What inventory and in what amount must be stocked

Size and location (Ballou, 1987:194).

All these decisions regarding warehousing are made in a trade-off framework. For instance, for marketing
consideration, the location of the warehouse should be as closer to the customer as possible but on the
other hand this will depend on the spread of the market. If customers are spread widely this can be costly
because of a large number of warehouses (Stock and Lambert, 2001:48).
Lot quantity costs
Lot quantity costs arise as a result of production and procurement activities and vary with changes in
production lot size or order size frequency (Stock and Lambert, 2001:48). Lot quantity costs have an effect
on customer service since the amount of products that can be produced at any time affects the
organisations ability to meet customer demands, and transportation costs can also rise due to inconsistent
production runs or orders not delivered complete as per orders placed.
Lot quantity costs are mainly a product of production-logistics issues however it affects marketing in a sense
that the quantity produced should meet the demand. Problems such as untimely deliveries and incomplete
orders increase the order processing and communication costs because customers will have to be kept
informed about problems until resolved and some orders will have to be rescheduled (Stock and Lambert,
2001:48), refer to Figure 2.1.
Order processing and information costs
Order processing and information costs include the cost of order transmittal, order entry, order processing,
related handling costs and associated internal and external communication costs (Stock and Lambert,
2001:48). Order processing costs tend to be minor compared to transportation and inventory maintenance
costs, however they are important. Their importance is due to the critical time element built in the costs;
namely, the time between receiving, processing and transporting the product (Ballou, 1987:8).

25

The time promised to the customer that the order will be concluded affects the transportation time. It is
important to consider transportation time with the time it takes to have the order processed. In Figure 2.1,
order processing and information costs are the last components of the logistics components in the interface
however, their importance should not be underestimated.
Although each logistics element in the interface was discussed as a separate component, it is important to
view them as a total cost of the logistics system. Total cost analysis is the key to managing the logistics
function and management should rather strive to minimise the total cost rather than the individual costs
(Stock and Lambert, 2001:46). The total cost concept allows improved efficiency as all costs are taken into
consideration when making decisions. The interaction between the logistics elements has an influence on
the marketing-logistics interface. There has to be co-operation between the logistics elements in order for
the logistics to interact with marketing.
Having discussed individual elements of both marketing and logistics in the interface, it is important to now
link the elements in order to understand how they influence each other and the benefits of linking marketing
and logistics.

2.3

Linking marketing and logistics activities (the interface)

In Figure 2.1 the interface between marketing and logistics takes place where the place element and
customer service levels interacts. High levels of customer service are important to the success and
sustainability of the organisation. It is important to understand what customer service and customer service
levels means from marketing and logistics point of view since these are critical elements of the interface.
2.3.1

Customer service as a link between logistics and marketing

In Figure 2.1 customer service levels are where the collaboration or the interface between marketing and
logistics takes effect, i.e. they are in the middle of the figure. High customer service levels are achieved if all
components from marketing and logistics have been able to deliver in line with the promises that the
organisation makes during its communication or promotion to clients (Stock and Lambert, 2001:9).
It is believed that customer service is a difficult concept and a broad concept to define but yet a very
important aspect of the organisation (Van der Laan, 2004: 3). Customer service can be defined as the
ability of knowledgeable, capable and enthusiastic employees to deliver products and service to their
internal and external customers in manner that satisfies identified and unidentified needs and ultimately
result in the positive word of mouth and return business (Jooste et al., 2005:6). The manner in which the

26

organisation personnel deliver product and service to both internal and external customers have an impact
on customer service levels.
Customer service is measured where the interface takes place, which is at the place element (Vogt et al.,
2003:23). Place is also where the customer comes into contact with the service personnel. It is important to
understand what customer service and customer service levels means in order to can clearly understand its
relationship to the place component.
The interface between marketing and logistics is critical to achieving high levels of customer service and if
customer service is approached from the perspective of marketing-logistics interface, it will result in the
interface being a sustainable competitive advantage tool (Emmerson and Grimm, 1996: 29). In order to
provide the correct and exceptional levels of customer service the organisation has to realise the strong
interdependence between logistics and marketing (Svensson, 2002:427).
An example of this interaction: In order to get the product at the right place and time, at BMW the distribution
process is the responsibility of both marketing and logistics, marketing and logistics are responsible for local
distribution of the product to the dealers whilst logistics is also responsible for exporting the product
(Kemink, 2005:17).
Previous research has often examined customer service in the context of only one functional area, such as
logistics or marketing, but without the successful link of marketing and logistics customer service, the
organisation may be unable to meet customer expectations, resulting in dissatisfied customer or lost sales
(Emerson and Grimm: 1996:29). Customer service should be seen as a responsibility of both logistics and
marketing and in order to provide the level that will result in customer service as a competitive advantage
tool, it is important to have the two functions working together (Mentzer, Rutner and Matsuno, 1997:1).
Stock and Lambert (2001:8) link logistics and marketing through customer service by discussing the
interface based on the concept of utility creation or creation of value to the customer through the marketing
and logistics components:

Place utility

Time utility and

Possession utility.

Place and time utility


According to (Murphy and Wood, 2004:5) place utility refers to having products available to customers
where they are needed, products are moved from the warehouse to the dealer or the supermarket where
the customer can access them easily. The place element as in Figure 2.1 is where the customer expects to

27

find the product according to the promotion/marketing communication promises. This is the point where
customer service levels are measured.
Place and time utilities focus on the marketing concept of having the product at the right place at the right
time for the benefit of the customer and that of the organisation (Fawcett et al., 1992: 2). This maximises
sale opportunities and contributes to the organisations ability to maximise profits.
Logistics creates place utility since it is responsible for the movement of raw materials, in-process inventory
and finished goods from point of origin to point of consumption and getting such products at that place at the
right time (Stock and Lambert, 2001: 9). Physical handling and place of goods create time and place utilities
and the cost of creating these utilities is approximately one-half of the total cost of logistics and marketing
(Svensson, 2002:133). Both marketing and logistics are responsible for getting the product at the right
place, at the right time, in the right quantity and at the right price.
It will be difficult to meet customers expectations and demand if marketing and logistics are separated and
have no communication flowing between the two functions. Figure 2.1 shows that the place element is the
point where the two functions combined effort results show, customers evaluate the organisations ability to
deliver on its promises at the place element. Marketing and logistics should communicate so that the
promises that marketing make regarding product availability are supported by prompt delivery of the
product. While having the product at the right place and at the right time is important, it is also essential to
ensure that the customer is able to acquire the product as promised at the right price.
Possession utility
Possession utility refers to the value or usefulness that comes from a customer being able to take
possession of a product, it is normally influenced by issues such as; payment terms and quantity discounts
(Murphy and Wood, 2004:5). Possession utility is created through marketing activities related to
promotion/communication and pricing; while logistics supports and enhances possession utility through
transportation and carrying of inventory (Vogt et al., 2003:21).
Promotion or marketing communication as another marketing mix component creates the possession utility
by creating and stimulating the demand (Stock and Lambert, 2001:10). It is important to create and
stimulate demands that can be met with the existing logistics system and to inform the logistics manager so
that sufficient inventory quantities are made available to customers. While it is important to make the
product available to customers it is also important to ensure that the customer is able to afford the price of
the product, as this will influence the ability to acquire the product.

28

Bearing in mind that price is influenced by the logistics and the other marketing mix components costs,
marketing and logistics should culminate in the possession utility in order to meet customer demands while
optimising the organisation profits. Price is critical to the issue of possession utility. If costs of getting the
product at the right place and quantity are high from the customer perspective then the customer might still
not be able to purchase the product (Stock and Lambert, 2001:10).
Transportation and inventory carrying costs are considered to be the first two main costs that influence the
product price (Stock and Lambert, 2001:11). As already discussed, transportation is the first logistics cost
that has to be considered followed by inventory carrying costs, if these two costs are not minimised, then
they will have a negative impact on customers ability to acquire the product.
Place, time and possession utility reflect how the organisation can utilise the marketing-logistics interface in
creating a sustainable competitive advantage. The discussion shows how the marketing-logistics interface
through all elements as stated in Figure 2.1 play a role in meeting customer demands while providing high
levels of customer service.
2.4

Creating a sustainable competitive advantage through the Interface

An organisation strives very hard to stay in business but in order to achieve this; organisations have to gain
and sustain competitive advantage (Pearce and Robinson, 2005:326). Competitive advantage means that
an organisation is well placed to achieve better results compared to its competitors in the same
environment. Gaining competitive advantage is not enough if rivals soon learn and imitate the organisations
competitive advantage, it is important to gain and sustain competitive advantage (Rijamampianina, Abratt
and February, 2003:362).
A sustainable competitive advantage refers to the strategy that set the company apart from its competitors
over a long period of time (Czinkota, Kotabe and Mercer, 1997:93). When an organisation has achieved a
competitive advantage and successfully raises barriers preventing imitations by competitors it thereby resist
erosion by competitor behaviour and achieves sustainable competitive advantage (Porter, 1985:2). Since
sustainable competitive advantage is an achievement, it is important to understand the process by which it
is achieved.
2.4.1

The process of achieving a sustainable competitive advantage

Sustainable competitive advantage is achieved through various strategies (Rijamampianina et al.,


2003:362). There are three generic strategies of cost, differentiation and focus, which are considered as
starting points for creating a sustainable competitive advantage:

29

Cost: Under this strategy, the organisation works hard to achieve lower production and place costs
in order to price lower than its competitors. The organisation that successfully utilises cost strategy
will experience cost advantage.

Differentiation: The organisation concentrates on achieving superior performance in an important


customer benefit area valued by a large part of the market, for example, quality leadership. The
organisation that utilises this strategy successfully is said to have differentiation advantage.

Focus: The organisation focuses on one or more narrow market segment and know the segment
intimately and pursues either cost or differentiation strategy within the target segment (Porter,
1985:1).

Cost and differentiation strategies are considered as basic strategies because they can be utilised
separately or together by an organisation that chooses to focus on various market segments (Porter,
1985:2). Organisations that are able to create a sustainable competitive advantage by using one or more of
these generic strategies depending on the target market; turn to experience above-average profitability and
better organisation performance (Rijamampianina et al., 2003:363).
In order to achieve a sustainable competitive advantage; the organisation must perform one or more primary
value creating activities in a way that creates value than competitors. Primary value creating activities refers
to activities in the value chain, which are: logistics, marketing and sales, operations and service (Pearce and
Robinson, 2005:159). The above generic strategies should be successfully applied to one or more of these
primary value-creating activities in order for the organisation to consider having an advantage over its rivals
(Porter, 1985:3).
The Value chain analysis holds it that, marketing and logistics are primary activities in the value chain, as a
result if the two fail to connect and work together then the chain will fail (Pearce and Robinson, 2005:159).
There is a need to coordinate all activities in the value-chain in order to utilise these activities in creating a
sustainable competitive advantage. Value-chain is defined as a way of looking at the organisation as a chain
of activities that supports each other in transforming inputs into outputs that customer value (Pearce and
Robinson, 2005:159).
The current study does not aim to explore the value chain as this is outside the scope but by looking at the
value-chain, it can be deduced that the relationship between marketing and logistics plays a major role in
the organisations ability to deliver expected levels of customer service.

30

2.4.2

The effect of marketing-logistics interface on sustainable competitive advantage

A sustainable competitive advantage comes from the way organisation functions and the manner in which
activities fit and reinforce each other (Sharkie, 2003:24). Marketing and logistics collaboration results in the
strategy that combines competencies of two functional areas that reinforce and fit each other in order to
meet customer needs and expectations (Svensson, 2002:735). It is important to coordinate those activities
that fit and reinforce each other since a lack of coordination results in reduced performance and competitive
advantage (Rijamampianina et al, 2003:4).
Emmerson and Grimm (1996: 29) purport that the interface between marketing and logistics is critical to
achieving customer value and building sustainable competitive advantage. It is important to coordinate the
link between marketing and logistics for the benefit of the organisation and the customer (Murphy and Posit,
1996:17). Effective logistics management has been recognised as a key element in improving both
profitability and the competitive performance of the organisation. Coupled with operational efficiencies,
effectiveness and marketing orientation, this will provide the organisation with a sustainable competitive
advantage (Stock and Lambert, 2001:6).
The following are ways in which sustainable competitive advantage can be achieved through the marketinglogistics interface:

Investigate what the customer wants: It is important that the customers viewpoint determines
the framework for a competitive strategy integrating marketing and logistics

Assess the organisation logistics and marketing performance: It is crucial to measure the
organisations marketing and logistics strategy against customer expectations since this will
support the organisation in identifying strengths and weaknesses in marketing and logistics
performance in the interface.

Develop an integrated strategy: An integrated strategy between marketing and logistics is


necessary to achieving a sustainable competitive advantage through the interface. Marketing and
logistics should be viewed as equally important in the organisation in order to utilise the synergies
which marketing and logistics provides (Remmel, 1991:30).

The above are some guidelines on how the marketing-logistics interface can be utilised in order to create a
sustainable competitive advantage. It is important to realise that it all starts with the understanding of what
the customer wants by both marketing and logistics functions in order to provide the right product, at the
right time, right place, at the right price and in the right quantity.

31

2.5

Conclusion

The focus of this chapter was the discussion of Figure 2.1, which is the marketing-logistics interface model.
In this model, it is clear that the interaction between marketing and logistics components takes place at the
centre of Figure 2.1 at the place element of the marketing mix and where customer service levels are
measured.
The marketing-logistics interface is important to the organisation that is concerned with providing high levels
of customer service and wants to create a sustainable competitive advantage through various capabilities.
Although other interfaces are important to the organisation, such as marketing and manufacturing, the
interface between logistics and marketing plays a major role to customer services issues.
It is important to understand marketing and logistics components separately and then link the two functions,
however this does not imply that these components are separate from each other. There is a link all the time
between marketing and logistics components through customer service and place components. The aim is
to utilise the marketing-logistics interface in order to create a sustainable competitive advantage. As already
stated, the marketing-logistics interface result in the organisation that combines capabilities of two different
functions.

32

CHAPTER 3: THE MARKETING-LOGISTICS INTERFACE COORDINATION TECHNIQUES


3.1

Introduction

This chapter aims is to explore the fourteen marketing-logistics interface coordination techniques, which
were identified in the study conducted by Murphy and Poist (1996:8). These techniques contribute to the
objectives of this dissertation and are utilised in the designing of the questionnaire.
The structure of this section will be as follows:

Discussing the study by Murphy and Poist (1996:15)

Defining each of the fourteen coordination techniques and their effect on marketing-logistics
interface and sustainable competitive advantage

This section forms part of the literature review and only examples from the passenger car industry where
these techniques are evident are provided.
3.2

Discussion of the study by Murphy and Poist

The aim of the study by Murphy and Poist (1996) was to identify, determine the level of importance of
techniques that could assist in coordinating the link between marketing and logistics and to establish the
level of cooperation in the respondents organisations between marketing and logistics. Three hundred
members of the Council of Logistics Management (CLM) and four hundred members of the American
Marketing Association (AMA) were randomly selected to take part in the study and the fourteen techniques
identified, refer to Table 3.1. Based on the findings of the study, fourteen techniques were identified and a
ranking was done based on responses in order to determine techniques that are more important, mostly
used and those that are least important (Murphy and Poist, 1996:26). Table 3.1 shows the ranking of the
fourteen coordination techniques according to the use and importance.

33

Table 3.1: The Marketing-Logistics interface coordination techniques ranking


List of Techniques

Ranking-Marketing

Ranking-Logistics

Top management support

74.6 (1)

74.7 (1)

Information sharing

65.7 (2)

73.5 (2)

Instilling philosophy of cooperation

64.2 (3)

70.4 (3)

Education and training

62.7 (4)

61.4 (5)

Establishment of mutual goals

55.2 (5)

57.8 (7)

Joint Projects

43.9 (6)

43.4 (9)

Coordinating Committees

41.8 (7)

67.5 (4)

Distribution specialist

37.3 (8)

59.7 (6)

Situational bargaining

25.4 (9)

55.5 (8)

Third party intervention

19.4 (10)

15.9 (11)

Joint Outings

16.4 (11)

20.5 (10)

System of incentives

13.4 (12)

13.3 (13)

Job rotation

10.4 (13)

7.2 (14)

Unified departments

7.5 (14)

14.5 (12)

Source: Murphy and Poist (1996:22)


The level of cooperation between marketing and logistics was also determined in order to determine how
much improvement is required in the organisations. None of the respondents stated that there was no
cooperation while (7.6%) of marketing and (7.4%) of logistics respondents stated that there was slight
cooperation. Maximum level of cooperation was not significant, however the difference between marketing
and logistics respondents that stated maximum level of cooperation is significant with (9.1%) of marketing
respondents and (3.7%) of logistics respondents stating maximum level of cooperation. It can be concluded
based on the findings that the cooperation is moderate to high. The findings by Murphy and Poist regarding
the level of cooperation are presented in Table 3.2.

34

Table 3.2: Level of cooperation between marketing and logistics functions


Level of cooperation

Marketing respondents

Logistics respondents

No cooperation

0%

0%

Slight co-operation

7.6%

7.4%

Moderate co-operation

40.9%

45.7%

High co-operation

42.4%

43.2%

Maximum co-operation

9.1%

3.7%

Source: Murphy and Poist (1996:20)


3.3

Defining the fourteen coordination techniques and their effect on the marketing-logistics
interface and sustainable competitive advantage

The discussion on the fourteen coordination techniques flows according to the marketing ranking as it has a
linear pattern.
3.3.1

Top management support

Top management support refers to seeking and gaining top management commitment for greater cooperation between marketing and logistics functions (Murphy and Poist, 1998:26). By gaining clear signal
from top management regarding the importance of the link between marketing and logistics result in people
involved in those functions directing their efforts towards efficient and effective operation (Mollenkopf,
Gibson and Ozanne, 2000:3).
Top management support results in the interface that serves as a strategy for creating sustainable
competitive advantage since it instils cooperation between marketing and logistics and this result in high
customer service levels (Fawcett and Cooper, 2001:400). It can be argued that top management support as
a coordination technique for marketing-logistics interface can result in a win/win position of the interface.
The marketing-logistics interface is directly related to the organisation competitiveness and profitability
(Stank et al., 1999:1). The interface between marketing and logistics has strategic importance as it affects
the organisations ability to deliver value to customers. The interface allows the organisation to pull
resources together resulting in better quality at lower costs, it creates an organisation that contains costs
while providing high quality service, this is an example of strategic importance of the interface (Emmerson
and Grimm, 1996:32).

35

BMW provides an example of the importance of having marketing and logistics working together and the
effect that top management support has on marketing-logistics interface as a way to the organisation
sustainable competitive advantage. At BMW, the marketing-logistics collaboration is emphasised from the
chairman to the bottom part of the organisation. The support of top management for the marketing-logistics
collaboration at BMW results in the right parts arriving at the right time, at the right line of production, and
the product is made available at the dealer at the right time at reasonable logistics costs (Benko and
McFarlan, 2003:5).
Murphy and Poist (1996:21) find that top-management support is ranked as the first aspect to look at as the
marketing-logistics interface coordination technique by both marketing and logistics practitioners, (refer to
Table 3.1). It was found that organisations characterised by high levels of top management support on
collaboration between marketing and logistics are able to utilise the marketing-logistics interface as a way to
a sustainable competitive advantage through high levels of customer service (Mollenkopf et al., 2000:3).
3.3.2

Information sharing

Information sharing means establishing systems and procedures that allow sharing of information between
marketing and logistics (Mollenkopf et al., 2000:4). When marketing and logistics share information the cost
of order processing, warehousing and transportation comes down since the correct orders are processed,
warehoused and transported (Murphy and Poist, 1996:18).
It can be argued that, the effect of information sharing on the marketing-logistics interface is that it improves
communication of customer wants resulting in efficient order processing and place of the product (refer to
Figure 2.1). Information sharing in this regard refers to sharing of information through electronic system
such as Electronic Data Interchange (EDI) and Enterprise Resource Planning Systems (Murphy and Poist,
1996:18).
It is important to have information systems that link marketing and logistics especially if the two functions are
situated in different locations. These information systems allow the interface to result in high levels of
customer service, as marketing communicates to customers based on logistics ability to deliver on said
promises (Fawcett and Cooper, 2001:399).
BMW has a well-linked information system that offers a sustainable competitive advantage since it allows
quick flow of information from the dealer to marketing to logistics and this allows the organisation to deliver
its product speedily and in line with customer requirements and expectations (Benko and McFarlan, 2002:5).

36

Poor information system links was found to be a barrier to high levels of customer service, which result in
marketing and logistics failing to deliver the product at the right time in the right quantity. This was found to
lead to high logistics costs as a result of delays and rework of incorrect orders (Fawcett and Cooper,
2001:299).
BMW prides itself with its information system that allows standardisation of the supply chain process, which
results in the same logistics processes wherever it operates. Standardised processes assist BMW in
offering high quality product and service while containing logistics costs. The organisation is able to offer
customers the right prices through lower in-house interest finance while optimising profits (Benko and
McFarlan, 2003:5). It can be argued that information sharing as discussed above, leads to marketing and
logistics efficiency through improved customer service.
3.3.3

Philosophy of cooperation

Philosophy of cooperation refers to instilling or providing a spirit of cooperation towards marketing and
logistics departments personnel (Murphy and Poist, 1996:19). Philosophy of cooperation is a behavioural
issue between individual departments that can be shaped by making it part of day-to-day values of the
organisation. Since cooperation should form part of the organisations values, it has to be supported from
the top management of the organisation (Mollenkopf et al., 2000:4).
Cooperation between marketing and logistics results in positive effect on the effectiveness of place and
customer service levels. This effectiveness is the result of increased speed of product delivery and efficient
processing of orders (Gimenez and Ventura, 2005: 5). Cooperation in the marketing-logistics interface
increases customer satisfaction, levels of customer service, reduces faults at the place element, which
results in optimum prices (Sezen, 2005:351). It can be argued that cooperation between marketing and
logistics result in the interface that creates a sustainable competitive advantage through positive benefits to
the customer and the organisation.
BMW is an example of the company that gained sustainable competitive advantage through the marketinglogistics interface as already demonstrated above. Based on the above discussion, it can be argued that
philosophy of cooperation result in the marketing-logistics interface that creates a sustainable competitive
because it result in positive impact at the place element and customer service levels, (refer Figure 2.1).
3.3.4

Education and training

Education and training as a coordination technique refers to providing opportunities for logistics/marketing
personnel to get additional education and training regarding marketing/logistics functions (Murphy and Poist,
1996:19). Education and training of marketing/logistics in the principles of the other creates greater

37

awareness for working together, particularly as related to understanding customers and service levels
(Mollenkopf et al., 2000:4). Training across functional areas is important as it puts the organisation in a
position to be responsive to customers needs (Christopher and Peck, 2003:109).
There are various effects of education and training on the marketing-logistics interface, which are:

Marketing/Logistics managers making decisions that support each others initiative and overall
organisation strategy

Increased customer service levels are achieved through efficient performance of marketing and
logistics elements, (refer to Figure 2.1.).

Ease of information sharing and resolving conflict since marketing/logistics personnel have clear
understanding of each others role in the organisation (Mollenkopf et al., 2000:8).

Education and training in each others discipline assist marketing/logistics in understanding


marketing/logistics issues since marketing/logistics is able to understand decisions taken by
marketing/logistics (Murphy and Poist, 1996:26).
3.3.5

Mutual goals

Mutual goals refer to establishing joint/collective goals and performance measures between marketing and
logistics (Murphy and Poist, 1996:19). Marketing and logistics set goals to be achieved through the
interface, which are in line with the organisation strategy and overall goals. Performance measures are set
to monitor the success of set goals between marketing and logistics in order to identify need for
improvement when marketing and logistics work together (Mukhopadhyay and Gupta, 1998:7).
Goals that marketing and logistics share include, maximisation of customer satisfaction, increasing
customer service levels and profit optimisation (Mollenkopf et al., 2000:3). In order to measure performance
of the link between marketing and logistics, the following areas are important:

Percentage of order corrections

Percentage of timely product delivery

Response time to customer requests (Mukhopadhyay and Gupta, 1998:7).

It can be argued that mutual goals are important in improving the manner in which marketing and logistics
work together.
Mutual goals as the marketing-logistics interface coordination technique result in the following:

Marketing and logistics having the same view on the issue of customer service (Emmerson and
Grimm, 1996:2)

38

Working towards increasing customer service levels through understanding of customer


requirements and expectations (Stock and Lambert, 2001:8)

High levels of customer service as a result of timely delivery of products and service (Mollenkopf et
al., 2000:4)

Optimisation of profits through efficient processing of orders and well-planned transportation


(Mollenkopf et al., 2000:4).

Since the aim of linking marketing and logistics is to create a sustainable competitive advantage through
improved customer service levels, it is important that these goals are linked to the overall goals of the
organisation in order to can instil commitment.
3.3.6

Joint projects

Joint projects refer to establishing joint work-related projects or studies, between marketing and logistics
(Murphy and Poist, 1996:18). A project is defined as an activity with the following characteristics:

Project involves change: This could be integration of various parts of the organisation in order to
create value for the organisation

Projects have an objective or end point: Unlike day-to-day activities, which are repeated as
required, once a project reaches its objective, it finishes

Projects tackle mostly the unknown: They create their own processes; hence they are more risky
than day-to-day business processes (Nokes, Major, Greenwood, Allen and Goodman, 2003:13).

This definition and its characteristics shows that in the case where marketing and logistics embark on joint
projects, the initiative will have life span and does not apply to the two functions day-to-day processes.
Projects should be embarked on provided they create value for the organisation (Nokes et al., 2003:13). It is
important that the marketing-logistics projects have the objective of creating a sustainable competitive
advantage by improving on customer service levels.
The effects of joint projects on the marketing-logistics interface and sustainable competitive advantage have
not been identified in the literature. The literature on joint projects as a marketing-logistics interface
coordination technique is limited. In the study, the findings on joint projects were that, is mainly used by
marketers rather than logisticians. The reason for this is not provided (Murphy and Poist, 1996: 22).
A practical example available on the effect of joint projects on sustainable competitive advantage comes
from BMW. At BMW, marketing and logistics are expected to work together on projects that result in
improved customer service levels and transportation system. This results in optimised long-term profits
through savings in logistics costs, which can translate to reasonable prices (Benko and McFarlan, 2003:2).

39

3.3.7

Co-ordinating Committee

Co-ordinating committee refers to the establishment of joint a committee that assist in communicating
matters of interest to both marketing and logistics, which are not captured by information systems (Murphy
and Poist, 1996: 18). Having a co-ordinating committee allows the flow of communication through
communication activities such as: having meetings together and working as a team. These communication
aspects of integration provide the structure for marketing and logistics departments to interrelate (Kahn and
Mentzer, 1996:6).
Frequent formal exchange of information helps reduce misconception and misunderstandings between
marketing and logistics functions. Co-ordinating committee assists in formalising communication between
marketing and logistics (Stank et al., 1999:2). A co-ordinating committee as an interface coordination
technique is not strongly supported by marketing practitioners, (refer to Table 3.1). A co-ordinating
committee can only succeed if liaison activities are instilled as part of everyday values of the organisation
since they are important in marketing and logistics understanding of each others needs (Mollenkopf et al.,
2000:4).
The effect of co-ordinating committee on the marketing-logistics interface and sustainable competitive
advantage:

Marketing and logistics work towards the same goal of achieving high customers service levels
(Kahn and Mentzer, 1996:7)

Transportation, inventory and order processing costs reduce as a result of marketing


communication that is in line with the ability of the logistics system in meeting customer demands

Sustainable competitive advantage is achieved through marketing and logistics elements


(Mollenkopf, et al., 2000:4)

Although marketing practitioners did not show support of the co-ordinating committee, they have agreed to
use this coordinating technique in future. The study did not show the percentage of marketers willing to use
this technique but specified that most of them agree to its use (Murphy and Poist, 1996:26).
3.3.8

Situational bargaining

Bargaining or negotiation is defined as a give-and-take process between conflicting interdependent parties


(Kreitner and Kinicki, 2001:466). Robbins (1998:450) points out that there are two approaches to
negotiations:

40

Distributive bargaining: The negotiation that seeks to divide up a fixed amount of resources, a winlose situation. Distributive bargaining operates under zero-sum gain.

Integrative bargaining: Refers to negotiation process that seeks one or more settlements that can
create a win-win situation.

Situational bargaining refers to negotiations as the need arises to resolve issues between marketing and
logistics. As the need to negotiate arises, the two functional areas should seek a win/win situation for the
success of the organisations marketing-logistics interface (Murphy and Poist, 1996:19). It can be argued
that integrative bargaining results in the marketing-logistics interface that improves the place element and
customer service levels.
Through the application of integrative negotiation both marketing and logistics could be able to perform
towards the integrated effort that can result in maximised customer satisfaction, long-term profitability and
lowest total cost given an acceptable level of customer service. Findings in Murphy and Poist (1996:22)
suggest that 55.5% of the logistics practitioners believe in situational bargaining as a coordination technique
for the interface as compared to 25.4% of marketing practitioners.
Situational bargaining as a marketing-logistics coordination technique can result in:

Higher satisfaction between marketing and logistics on issues of marketing and logistics
performance

High level of organisation performance based on customer service levels (Sezen, 2005:3)

It can be argued that situational bargaining is important for the marketing-logistics interface as it result in the
interface that create a sustainable competitive advantage through improved overall organisation
performance.
3.3.9

Joint outings

Joint outings refers to providing opportunities for employees of marketing and logistics to interact outside
normal business hours, for example, have picnics and sports events together (Murphy and Poist, 1996:19).
It can be argued that joint outings are informal ways of building cooperation between logistics and
marketing. Organisations that do not always emphasise formal interaction between marketing and logistics
encounter better marketing and logistics activities coordination (Mollenkopf et al., 2000:5).
Informal interaction is as important as formal interaction since it can have major impact on individuals
performance and behaviour in their work activities (Robbins, 1998:241). A formal group that creates an
informal group is advantageous as opposed to a pure informal group since it fulfils both organisational and
individual functions (Kreitner and Kinicki (2001:380). Marketing and logistics departments as formal groups

41

in the organisation can interact informally in order to improve the interaction that impact on customer service
levels. Murphy and Poist (1996:22) found that joint outings as a coordination technique; is least supported
and is considered to have low impact on the interface by both marketers and logistician, (refer to Table 3.1)
3.3.10 Distribution specialist
Distribution specialist refers to designating an employee or manager within logistics (marketing) department
to act as a special liaison or contact to marketing/logistics. A Distribution specialist should ensure that
information that cannot be shared through electronic means is relayed between the marketing and logistics
functions (Murphy and Poist, 1996:18). The person must be in a position to speak language of both groups
and understand their problems. This means that the person must have both marketing and logistics
background in order to be able to relay correct issues (Robbins, 1998:461).
The use of a distribution specialist as the marketing-logistics interface coordination technique is supported
mainly by logistics practitioners rather than marketing practitioners, (refer to Table 3.1). The study by
Murphy and Poist (1996:18) does not elaborate on the difference and whether marketing practitioners will
use distribution specialist in the future. Although distribution specialist as a co-ordinating technique, is
supported mainly by logisticians; it has the following positive results on the marketing-logistics interface and
sustainable competitive advantage:

It results in new product success through speed of availability in line with the promised time

Increased customer service levels since marketing/logistics is always aware of each others
activities as presented in Figure 2.1

Logistics is kept aware of market changes and customer preferences, this result in the right product
made available, at the right place and at the right time (Stank et al., 1999:3).

Based on the above advantages it can be argued that distribution specialist is still important as the
marketing-logistics interface coordinating technique.
3.3.11 System of incentives
System of incentives refers to the manner in which employees are rewarded for achieving set goals
(Bateman and Snell, 1999:351). A system of incentives refers to establishing an incentive system, which
involves determination of benefits between marketing and logistics for any cooperative effort (Murphy and
Poist, 1996:19).
There are various ways in which the organisation can provide incentives or pay for performance:

Profit sharing: This is when individual employees or work groups are granted a specific portion of
any economic profits earned by the organisation as a whole

42

Gain-sharing: Bonuses tide to measurable productivity increases

Team-based pay: This is when the organisation links pay to teamwork behaviour or team results
(Kreitner and Kinicki, 2001:292).

A system of incentives did not receive support as an important marketing-logistics coordinating technique
(Murphy and Poist, 1996:22). A system of incentives was further tested in another study where five of the
coordinating techniques identified in Murphy and Poist (1996:15) were used. It was found that a system of
incentives was not relevant to creating the marketing-logistics interface that result in a sustainable
competitive advantage; it bears no significance on customer service delivery and efficient marketinglogistics interface activities (Mollenkopf et al., 2000:10).
System of incentives will not be discarded based on the above findings but will further be tested in the
current study as a technique to utilise in order to have a coordinated marketing-logistics interface that
serves as a way to a sustainable competitive advantage.
3.3.12 Unified department
A Unified department refers to establishing a single department that combines both marketing and logistics
functions (Murphy and Poist, 1996:19). A unified department means that the organisation has no separate
marketing or logistics department; rather there is one department that performs all elements as stated in
Figure 2.1.
It is not feasible to have one single department called marketing/logistics department since the two
functional areas still have certain specialised activities to perform (Mollenkopf et al., 2000:2). The following
factors should be considered prior to forming a single department

The name of such a department is important as this could create hostility between the two
functions if one name is used

Marketing creates demand and identify customers for a product while logistics focuses on demand
satisfaction

The aim of the marketing-logistics interface should be considered because the interface does not
aim to turn marketing into logistics or vice-versa (Mollenkopf et al., 2000:2).

From the above considerations, it can be argued that a unified department is not a coordination technique
that could create the marketing-logistics interface that serves as a way to sustainable competitive
advantage.
Passenger cars manufacturers encourage marketing and logistic interaction but still have marketing and
logistics department as separate functional areas (Benko and McFarlan, 2003:6). Despite the fact that in

43

studies by Murphy and Poist (1996:15) and Mollenkopf et al., 2000:2), a unified department does not result
in marketing-logistics interface that creates a sustainable competitive advantage, it still forms part of the
current study in order to see if the same results on this technique are found.
3.3.13 Job rotation/switching
Job switching or rotation calls for moving employees from one specialised job to another, rather than having
only one job, workers are trained and given the opportunity to perform two or more separate jobs on a
rotating basis (Kreitner and Kinicki, 2001:216). With regards to logistics and marketing interface, job rotation
refers to the situation where employees are provided with the opportunity to switch between marketing and
logistics function as part of learning each others area of specialisation (Murphy and Poist, 1996:19).
Daimler-Chrysler supports job rotation at the start of new graduates career. Marketing/logistics graduates
spend time in each of these departments for the purpose of learning about marketing/logistics but for a
specified period (Benko and McFarlan, 2003:7). Job rotation supports the issue of education and training as
it provides the opportunity for marketing/logistics to learn from each other, however, it does not have to form
part of day-to-day way of operating (Kahn and Mentzer, 1996:11).
Job rotation can have a positive effect on marketing-logistics interface provided it is viewed as part of
education and training and not necessarily as a separate coordination technique. If job rotation forms part of
education and training it could result in providing marketing/logistics with the necessary knowledge in order
for the two functions to work together (Kahn and Mentzer, 1996:11). It can be argued that job rotation is still
important to the marketing-logistics interface but should not result in personnel just switching between the
two functions at all times.
Job rotation should be used up to the point that it result in marketing/logistics practitioners understanding of
the decisions of marketing/logistics on the marketing-logistics interface elements. This will result in
marketing and logistics ability to support and work together at the place element and could increase
customer service levels while creating a sustainable competitive advantage (Mollenkopf et al (2000:2). Job
rotation is a technique less sighted by both marketing and logistics practitioners; refer to Table 3.1 (Murphy
and Poist, 1996:26).
3.3.14 Third party intervention
Third party intervention is a form of bargaining where a neutral person is involved in resolving issues
between two parties that must work together (Robbins, 1998:455). In the case of marketing and logistics,
third party intervention refers to using a neutral party outside marketing and logistics departments to resolve
issues between marketing and logistics (Murphy and Poist, 1996:19).

44

Third party intervention should be applied in situations where conflict between marketing and logistics is due
to power/dominance by one function over another. A third party should be someone preferably from top
management who will indicate the impact that such conflict has on the organisation ability to deliver quality
service and products (Mollenkopf et al, 2000:4). It can be argued that third party intervention is necessary
when marketing/logistics fail to resolve issues due to the need for power from either marketing or logistics.
Third party intervention is least supported by both marketing and logistics practitioners as the marketinglogistics interface coordination technique (refer to Table 3.1) Although third party intervention has least
support of marketing and logistics practitioners as a coordination technique, it can assist in resolving conflict
that affects the marketing-logistics interface ability to deliver quality customer service and increase service
levels.
3.4

Conclusion

The importance and the meaning of the fourteen coordination techniques have been elaborated upon. From
the discussion it is clear that the level of support of each coordination technique by marketing and logistics
differs in some areas and have similarities in other areas. This shows that in the current research within the
passenger car industry some techniques will be favoured as a means to create the interface that results in a
sustainable competitive advantage whilst others will not be as favourable.
For the purpose of this research, all techniques will be included when developing the questionnaire. Other
alternatives to the techniques already identified will also be considered in the open-ended question. This will
assist in determining whether organisations in the passenger car industry utilise mainly the predetermined
techniques from the study of Murphy and Poist or other techniques.

45

CHAPTER 4: ANALYSIS OF THE PASSENGER CAR INDUSTRY IN SOUTH AFRICA


4.1

Introduction

Designing viable strategies for the organisation requires a thorough understanding of the organisation
industry. The aim of this chapter is to analyse the motor industry in order to understand how the marketinglogistics interface can create a sustainable competitive advantage in the industry. Porters five forces model
will be adopted for the industry analysis. The main focus of the discussion will be on one segment of the
industry, the passenger car.
The following issues will be covered in this section:

4.2

Defining and explaining the nature and importance of Porters five forces model

Application of the model to the passenger car industry

The impact of industry forces on the marketing-logistics interface

Creating a sustainable competitive advantage in the passenger car industry

Current situation in the vehicle industry


Defining and explaining the importance of Porters Five Forces model

In order to understand the model application to the industry, it is important to define the word industry. An
industry is defined as a collection of organisations that offer a product or service that, are similar and are
close substitutes for one another (Kotler, 2003:245). It can be argued that an industry is formed by
organisations that compete for the same customer, income and preferences.
The presence of one organisation can be a threat to other organisations in the industry since they both look
to offer product or service that can fulfil similar customer needs. Since in an industry organisations offer
substitutable products or services, it is important that the organisation have an understanding of the
industry. Industry analysis refers to the organisations process of understanding the nature of the
relationship within its industry in order to allow the organisation to develop strategies to gain advantage of
the current relationships. A useful framework that can be utilised when undertaking this analysis is Porters
Five Forces model of establishing industry attractiveness (Kotler, 2005:35).

46

Figure 4.1: Porters Five Forces Model

Potential Entrants
(Threat of mobility)

Bargaining
Power of Suppliers

Competitive Rivalry

Bargaining
Power of
Buyers

Substitute Products

Source: Kotler (2003:242)


Porters Five Forces model as presented in Figure 4.1 shows factors that the organisation considers when
analysing its potential to make and sustain profits and when formulating strategies in order to succeed in the
industry. The Five forces can be defined as follows:

Potential entrants: Refers to the threat of potential entrants as determined by a number of barriers
to entry into the industry such as capital investment, well-entrenched competitors, government
legislations and gaining access to appropriate place channels

Bargaining power of suppliers: The power that suppliers can exert on participants in the industry
where control over suppliers is concentrated into the hands of few players, cost of switching to a
new source is higher and where the supplier has a strong brand

Bargaining power of buyers: The ability of buyers to play competitors off against each other and
their power to force prices down and demand for higher quality

Substitute Products: Availability of other products that can fulfil similar needs.

Competitive rivalry: The intensity of rivalry in the industry, this is determined by the number and
size of competitors, fixed costs requirements and barriers to withdraw from the industry
(Drummond and Ensor, 2005:37).

The above forces will be applied to the South African vehicle industry in order to understand the nature of
the industry.

47

4.3

Porters Five Forces model in the South African motor vehicle industry

4.3.1

Potential entrants

The arena in which the vehicle manufacturer in (SA) competes has changed. In the past the industry was
dominated by seven manufacturers and about a dozen brands. Today there are more than thirty brands and
over one thousand model variations (Furlonger, 2006:9). This reflects that there are potential entrants into
the industry. The Japanese and Chinese manufactured models, which were not in SA in the past, are
entering the industry in large quantity (Cokayne, 2006:4).
Despite the fact that there were seven strong manufacturers in the vehicle industry of SA in the past and the
production and logistics costs are still high as a result of most parts being imported, it is not difficult to enter
the market (Robertson, 2006:3). The ease of entry into the South African vehicle industry is due to the
following factors:

Easy access to distribution channels, for instance, the Imperial Holdings Vehicle import division
offers place or place element for fully built imported cars such as Kia, Tata and Proton (Furlonger,
2006:52)

High production and logistics costs are a concern for local manufacturers; since most parts are
imported and labour costs in SA are high (Cokayne, 2006:3)

The industry is not strict on quality of product and service. As a result, foreign manufacturers take
advantage of this and bring in low quality product into the market (Droppa, 2006:7).

The above factors show that it is not difficult to enter the industry especially for foreign manufacturers. High
logistics and production costs are a major concern as they result in high prices of locally manufactured cars.
This results in importers of fully built passenger cars taking advantage of the situation on prices and pricing
their vehicle higher despite lower manufacturing and logistics costs in the countries where they manufacture
(Robertson, 2006:3).
Local manufacturers are not able to bargain for better prices on parts because they are controlled by their
parent organisations abroad. Local manufacturers in SA are not originally from SA and are still controlled in
the country of origin when it comes to parts purchases; they work on contracts as agreed by parent
organisations (Cokayne, 2006:3).

48

4.3.2

Bargaining power of suppliers

In terms of the bargaining power of suppliers, the focus will be on genuine new parts supply and the place
element for the final passenger car to the final customer. Focusing on suppliers of components has an
impact of the logistics performance at the place/ customer service levels element; it determines the ability to
meet customer needs at the right price and time.
Genuine new parts supplies
Genuine new parts are parts that are sourced from a component supplier who supplies specialised parts, for
example, BMW supplier (Pretorius, 2006:8). The reason for focusing on genuine new parts and not
substitute availability is that substitutes effect will be covered as a separate force. As already mentioned
above, parts supply in SA has a negative influence on the price of finished locally produced passenger cars.
Manufacturers in SA are locked in agreements that parent organisation abroad have concluded. For
instance, BMW (SA) finds most of its parts from subsidiaries of multinational organisations serving BMW
internationally (Furlonger, 2006:33). Toyota (SA) also provides an example of the bargaining power of
suppliers since it can only import its components from Hino Motors Tokyo as per an agreement with Toyota
Motor Corporation in Japan (Holton, 2006:31).
This shows that when it comes to acquiring new parts suppliers have more powers because of contractual
agreements and local manufacturers find it hard to work around price reduction of the finished product.
There is an argument that local manufacturers are in a position of reducing logistics costs despite the above
issues, based on the availability of support received through the Motor Industry Development Programme
(MIDP). Components importers enjoy rebates and that should translate into lower prices of components,
which can benefit the final consumer (Furlonger, 2006:6).
Manufacturer/dealership relationships
In SA, manufacturers are found to have more power over dealerships. Dealers are directly controlled by
manufacturers, this result in a less reciprocal relationships (Watson, 2006:40). As suppliers of the final
product, manufacturers determine issues such as the show room appearance, signage, training and aftersale service arrangements. Dealers are expected to spend on all these aspects with no say regarding how
their businesses should operate (Watson, 2006:40). It can be argued that dealers are being coerced into
spending but have no control over their businesses.
In order to deal with the issue of less reciprocal relationship, National Automotive Dealers Association
(NADA) conducted a survey on dealer-manufacturer relationships in order to identify organisations in the

49

vehicle industry that have improved on the dealer/manufacturer relationship. It was found that, BMW and
Hyundai, are the top two organisations with good and favourable dealer/manufacturer relationship. The
survey focuses on the impact that the relationship between the dealer and manufacturer have on customer
satisfaction and brand value. Improved relationship between dealers and manufactures has a major impact
on the brand and customer satisfaction and is important to the brand profitability (Pretorius, 2006:5).
It is important to have a relationship that is based on win/win situation. This means that manufacturers
should negotiate and reach agreements with the dealers in terms of how dealers run their businesses. If this
result in high levels of customer satisfaction then it is necessary to have a new approach on how dealers
and manufacturers work together.
4.3.3

Bargaining power of buyers

For the purpose of this research, buyers refer to final customers when considering and acquiring a new
passenger car. The two main aspects that will be covered when discussing the bargaining power of
customers in the SA passenger car market are, pricing and customer service.
Vehicles in SA are regarded as being expensive and that improved affordability is the key to unlocking sales
and profits potential. Compared to twenty-six weeks that it takes an average US citizens to acquire a
passenger car, an average SA citizen takes one hundred and sixty four weeks earnings to have enough
money to buy and finance an average priced new car, (Cokayne, 2006:6). Despite imports coming into the
market, prices are still not allowing people to possess vehicles easily, possession utility is still not easily
realised.
Buyers are not able to put pressure on vehicle prices due to the fact that SAs regulatory bodies are not
strict on issues of prices however the competition board is looking into this matter (Pretorius, 2006:14).
Although prices are higher the quality of passenger cars available on the South African market has declined.
Locally produced passenger cars with one hundred and sixty nine problems per hundred passenger cars,
fared worse than imported cars, which had one hundred and forty problems per hundred vehicles (Cokayne,
2006:3). In order to increase customer satisfaction with the product, it is important to address product quality
issues.
Quality of service, price of passenger cars and the price paid for maintenance of passenger cars, are major
issues to customers and manufacturers. Service refers to customer experience while purchasing the
passenger car and the after-sale service when bringing the car in for interval checks and maintenance
(Pretorius, 2006:14). According to the Synovate survey, there has been an improvement in the overall

50

aspect of service among local and foreign manufacturers, however local manufacturers are leaders while
foreign manufacturers are lacking behind (Droppa, 2006:1).
It can be argued that imported vehicles are lacking on the service aspect due to:

Difficulties in acquiring replacement parts when a car comes in for interval service

Distribution is through contractual agreements with local organisations such as Imperial Motors
(Pretorius, 2006:8).

It can be concluded that buyers do not have bargaining power in the vehicle industry as a result of noncompetitive prices and not much strict regulations on the issue of prices and quality.
4.3.4

Availability of substitutes

In terms of availability of substitute, the focus will be on customer substituting one manufacturer brand for
the other and substituting same manufacturers individual products. Substitution can also be considered
from the point of customers choosing to purchase second hand passenger cars instead of a new passenger
car or customer substituting the use of public transport for a new passenger car or vice versa. For the
purpose of this research, the focus is on substituting between new passenger car brands.
Substituting between brands and individual products is as a result of factors such as interest rates,
availability of discounts and exchange rate, which have an impact on the price. For the past three years
vehicle prices have barely moved up resulting in customers ability to upgrade. For instance, switching from
economy passenger car to the expensive sports car, however with interest rates movements towards the
end of 2006 and the weak Rand/Dollar exchange this seem to be something of the past (Robertson,
2006:3).
It shows that price has a major influence when it comes to model and brand switching. Other factors that
influence the switching between brands and individual products are, the level of income growth, economic
growth and employment. As the level of income grows, customers move from other manufacturers believed
to offer economy passenger cars to those focusing on luxurious cars such as Mercedes Benz.
Some manufacturers enjoy high levels of loyalty than others in the passenger car industry. Toyota
customers appear to be most loyal to the brand and as a result switch between Toyota models (Naudi,
2006:5). Toyota continues to enjoy best sales in all categories as a result of repeat buying of Toyota brand
by customers. On the other hand Volkswagen (VW) finds that someone who drove VW Chicco upgrades to
other manufacturers model than to purchase another VW brand (Naudi, 2006:5). Although customers

51

switch between manufacturers, they seem to later go back to the previous manufacturers brand, so
customers do not permanently move away from the manufacturer brand (Mokopanele, 2006:2).
4.3.5

Competitive rivalry

As already stated, the nature of competition in the vehicle industry has changed. In the past only seven local
manufacturers dominated the industry, today there is an increase in the imported vehicles whose
manufacturers do not have any assembling plants in SA. To counter the competition, manufacturers such as
Toyota are importing models that are not manufactured in SA. For instance Toyota manufactures only
Corolla models such as Run X and Corolla sedan in SA while models such as Avanza and Prius are
imported from the parent organisation in Japan (Cokayne, 2006:4). The number of rivals has increased and
local manufacturers are also increasing their models in order to continue to have a higher market share.
Local manufacturers are taking advantage of the MIDP and are also importing as much of their fully built
vehicles. The MIDP offers rebates on imports and such rebates are converted into points and used for the
exporting of vehicles manufactured in SA. These points allow reduction in export duties that assist local
manufacturers to afford to export (Furlonger, 2006:10). The export market is important if local manufacturers
want to maintain increased sales and maximise profits.
As a result of this intensifying competition, customers have a wider variety to choose from, however
passenger car prices are an issue and turns to limit those choices. It is not easy to gain market share in the
industry as competition intensify, as a result, manufacturers and dealers are utilising aggressive marketing
strategies which focus on price reduction through lower in-house financing costs, cash-back options, road
side assistance, free service plans, additional extras and reduced instalments (Robertson, 2007:3). Both
local and foreign manufacturers as well as dealers are competing around the price, however they do not
necessarily reduce prices directly but add benefits that will make customers realise that there is value for
money.
Other factors that should be considered in terms of competitive rivalry in the industry:

High logistics costs that local manufacturers are faced with. Transportation and security in SA
especially while goods are in transit result in high logistics costs. Although MIDP benefits local
manufacturers when shipping their fully-build models abroad, inland transportation costs are fuelled
by security issues (Robertson, 2006:3)

Quality of some models such as VW City Golf and Mercedes-Benz SLK 360, which are produced in
SA fall behind in product quality as compared to imported passenger cars (Cokayne, 2006:3)

52

In terms of fixed costs, SA is still lagging behind its foreign counterparts, for instance (SA) has high
labour costs. The emergence of new, low-cost manufacturing bases like China and India are a
long-term threat to SA (Furlonger, 2006:10).

The passenger car industry in SA is continuing to change; competition is rife while prices are high.
Aggressive marketing communication is used to attract customers who appear price conscious, however
there is still a need to improve the product quality and service offered with the product.
4.4

The impact of industry forces on the marketing-logistics interface and customer service
levels

Having examined Porters Five Forces model, it is important to understand how these forces impact on
marketing-logistics interface and customer service levels as discussed earlier. This will be done in order to
understand based on the analysis of the industry how the marketing-logistics interface can creates a
sustainable competitive advantage (refer to Figure 2.1).
Product
Product is regarded as the core of marketing efforts of the manufacturing organisation. In the vehicle
industry, a product is the complete manufactured passenger car as well as passenger car components. The
focus of this research is on the final product and excludes detailed discussion on parts/components.
Based on the above discussion it is clear that the SA vehicle industry has increased its offering as imports
increases. This creates the place and time utility since it allows customers easy access when trying to
purchase a passenger car. Although competition has enhanced availability and provided the customer with
the advantage to acquire the passenger car where it is most accessible. Vehicle prices in SA are still
considered higher than what they are in US and Europe resulting in the difficulty in acquiring a vehicle
(Cokayne, 2006:3).
Price
It is important that the product is made accessible not only in terms of variety but also at the price that
customers can afford. Although the competition board argues that passenger car prices are too high in SA,
manufacturers argue that other factors such as logistics costs, interest rates and Rand/Dollar exchange
have a negative influence on prices. The competition board disagree on the matter stating that even in times
when the Rand is stronger to the dollar with decreasing interests rates coupled with MIDP initiative
passenger car prices in SA are still far much higher than in Europe and the US (Anon (b), 2006:1).

53

With these arguments over the issue of pricing, organisations such as Toyota and Renault finds that
increasing warehousing capacity result in better service to customers and this offset the warehouse cost as
it boosts customer satisfaction and loyalty (Campling, 2006:17). Increase in lot quantity of parts and vehicles
result in transportation costs reductions, which is a major cost component of logistics in the industry
(Campling, 2006:17).
This shows that by improving on logistics performance, manufacturers can be in a possession to offer
affordable prices to customers. According to Cokayne (2006:6) the vehicle industry needs to have a strong
customer orientation in order to improve affordability of all vehicles. It can be argued that creating
possession utility through pricing in the vehicle industry is still an issue. As a result, manufacturers and
dealers will have to depend on aggressive marketing approach in order to attract customers (Robertson,
2007:3).
Promotion
Price is not only influenced by logistics costs but by economic factors that manufacturers have no control
over. As a result, manufacturers and dealers communicate various offers that can improve customers
affordability of the passenger car. Aggressive promotion of additional extras that customers can add to the
passenger cars features at low cost, discounts and special services are used to attract the customer
(Robertson, 2007:3).
Although dealers and manufacturers promise through promotions that there is value for money customer
experiences when purchasing and after-sale service are still not in line with the promises. The SA vehicle
industry falls behind when it comes to customer focus. This is as a result of poor customer service
performance, which affects customer service levels (Pretorius, 2006:4). It is important that promises are
delivered in order to keep customers satisfied.
Place
As discussed earlier, the place element is where all components of marketing and logistics come together. It
is the point that reveals the efficiency of marketing and logistics. Marketing promotes models that are
coming and the time that they will be made available for purchase and also promote available products and
where they are made available. With new models, the manufacturer announces the time that the model will
be available on the SA market (Robertson, 2007:3). Dealers should be kept informed of the new models and
the time that customers can expect the product in order for them to take orders and provide the correct
information with regards to the time it will take to have the product available.

54

Place, time and possession utility will not be realised without dealer/manufacturer effective communication.
It is important to ensure that the product is available at the right place and time as per promotions. BMW has
announced that the new 3-Series will be available in 2012, and customers can expect to find the new 3Series at the dealerships in 2012 (Stadler, 2006:32). With increased number of franchised dealerships
selling new BMWs, customers will easily find the new model provided the manufacturer keeps to the
promised time that the model will be made available. To achieve this, BMW has a distribution system that is
constantly monitoring production, vehicle availability and dealer invoicing to ensure optimal delivery
(Kemink, 2004:17). This system results in high levels of customer service since the dealership and the
manufacturer communicate efficiently and effectively.
Customer service levels
Customer service is a major debate in the SA passenger car industry. Various surveys such as Synovate
and NADA show that customer service levels are still an issue. Customers measure the service based on
the number of problems they experience after purchasing a new vehicle and how after-sale service support
as promised in the marketing communication is delivered (Cokayne, 2006:3). These experiences determine
the customer service levels and customer satisfaction.
Toyota has realised the importance of maintaining good relationships with dealers since customer service
levels are measured based on customer experience during the encounter with the dealer. The organisation
now allows their dealership to make decisions on issues such as product modification and price provided
the product changes are in line with the quality standards of Toyota (Campling, 2006:7). As the relationship
between the manufacturer and dealers improves, customer experience during the purchase and after-sale
service improves.
Factors that should be considered by manufacturers and dealers when improving customer service levels in
the industry include:

Improved manufacturer/dealership relationship since this has a major impact on customer first time
experience of acquiring a passenger car (Campling, 2006:17)

Availability of parts through expansion in warehouse and stock since this can lower transportation
costs and lot size quantity costs resulting in better response to received orders (Robertson, 2007:3)

Improving product quality during the production process and during interval services of the
passenger car (Cokayne, 2006:3).

Improved customer service through the marketing-logistics interface is important to the industry since it can
result in brand loyalty and continuous increase in long-term profitability.

55

4.5

Creating a sustainable competitive advantage in the passenger car industry

As already discussed there are various factors that local manufacturers should consider in order to remain
competitive especially with the current level of competition by importers. Individual local manufacturers
initiatives will be assessed in order to identify how sustainable competitive advantage can be created in the
industry. Two organisations were chosen based on the information presented in the literature regarding their
capabilities to deliver high level of customer service through marketing and logistics cooperation.
Toyota

High product quality of both imported and local manufactured Toyota passenger car models.
Customer experiences with Toyota models show that customers are satisfied with Toyota product
quality (Cokayne, 2006:3).

Dealer/manufacturer relationship is key to Toyotas service quality. Dealerships are left to


independently make decisions while maintaining basic guidelines and best practices. This allows
dealers and customers to negotiate prices and upgrades to the interior and exterior features at
prices profitable to the dealer while meeting customer requests (Campling, 2006:17).

The organisation logistics planning result in transportation and stock carrying costs saving, this has
resulted in on-time delivery of passenger car and parts orders to the dealers (Holton, 2006:32)

BMW

The organisation prides itself on good manufacturer/dealer relationship, which result in dealerships
providing high levels of customer service. Communication and support throughout the place
element between the manufacturer and the dealer result in dealers being able to keep to their
promises with customers (Pretorius, 2006:4)

Logistics and marketing work together in getting the product to dealerships. The time that
marketing communicates in terms of product delivery and quality are in line with logistics
capabilities (Kemink, 2005:17).

The organisation utilises a logistics system that allows efficient stock carrying which result in
reduction in stock carrying costs and efficient and effective processing of orders. This has resulted
in overall reduction in order processing and communication and inventory carrying costs (Holton,
2006:19).

56

4.6

Current situation in the vehicle market

The discussion on current situation in the market will focus on the following issues: sales and economic
conditions. The information summarised in this section is based on NAAMSA 2006 annual report.
4.6.1

Sales

Projected passenger car sales showed an expected increase of 14.1% in passenger car sales for 2006
however a decline is expected for 2007 as a result of the National Credit Act (NCA), increasing interest rates
and not released the actual total sales figure and the breakdown but it is anticipated that the actual figure is
below the projection (NAAMSA annual report, 2006:6).
Comparative presentation of breakdown of sales performance in units in the industry is presented in Table
4.1. NAAMSA breakdown sales figures according to the four segments, as stated in chapter one of this
research.
Table 4.1: New vehicle industry sales by segment 2005-2006
Segments

2005

2006-Projections

Cars

376 845

430000

LCV

160 723

184000

MCV

12 243

14500

HCV

15 207

18500

Total

565 018

647000

Source: NAAMSA annual report (2006:6)


Despite rising interest rate, NAAMSA projects an increase in demand for commercial vehicles due to the
increase in economic activities as a result of preparation for 2010 and the promise that the government
made in spending R372billion now till 2014 on the infrastructure (Furlonger, 2006:10). The first and second
quarter sales figures for passenger cars in 2007 showed a substantial decline while commercial vehicle
sales in the same period showed an increase. There is no breakdown in terms of commercial vehicles,
however figures confirm NAAMSAs projections that there will be a decline in the demand for cars and an
increase in the demand for commercial vehicles in 2007. Table 4.2 is the comparative presentation of sales
figures for the first and second quarter of 2006 and 2007 respectively.

57

Table 4.2: Comparative new vehicle sales for the first and second quarter of 2006 and 2007
Segments

First

First

Second quarter Second quarter 2007

quarter

Quarter

2006

2006

2007

Cars

104174

103997

103987

88235

Commercial vehicles

58622

50990

51104

56976

Total

162796

154987

155091

145211

Source: NAAMSA quarterly bulletin (2007:2)


4.6.2

Economic trends that impact on vehicle industry sales performance

There are various economic trends that impact on vehicle sales in SA. These include factors such as
interest rates, taxes, individual level of income and economic development (Mokopanele, 2006:2).
Increasing interest rates are set to put breaks on vehicle sales increase in 2007.
Strict monitoring of car allowances can be expected to exacerbate affordability problem of passenger cars
(Van Zyl, 2006:2). The full effect of changes to the car allowance taxation provisions; announced in 2006,
would be felt by taxpayers in the current year of assessment. The increase in the deemed fringe benefit on
a company car from 1,8 percent of the determined value to 2,5 percent in 2006 as well as the increase in
the proportion of the car allowance subject to PAYE from fifty to sixty percent were cause for concern to the
automotive industry as this will have a major impact on sales. Vehicle industry depends heavily on car
allowances since it makes it easier for customers to purchase passenger cars (Van Zyl, 2006:2).
Although manufacturers and dealers are using aggressive marketing strategies to boost affordability and
make it easier for customers to purchase passenger cars, the above economic factors still hamper
possession utility. In order to assist manufacturers improve affordability whilst reducing costs and
encouraging investment, the government has introduced the Motor Industry Development Programme
(MIDP).
4.6.3

Motor Industry Development Programme (MIDP)

MIDP was designed by the government in collaboration with local vehicle manufacturers in order to
encourage investment in local vehicle manufacturing (Furlonger, 2007:59). The government is the driver of
MIDP, which serves as a support vehicle to local manufacturers in the motor industry. MIDP has governed
the motor industry since its announcement by the Department of Trade and Industry (DTI) in 1995
(Furlonger, 2006:7).

58

Aims of MIDP can be outlined as follows:

To encourage investment in vehicle manufacturing processes in SA

To reduce logistics costs through import duties rebates gained through export initiatives in order to
have competitive prices of locally manufactured cars

To encourage local vehicle manufacturers investment in training and development of the industry
required skills (Socia, 2007:58).

During its first announcement of MIDP the DTI succinctly outlined the above aims.
Despite the aims of the MIDP, industry experts believe that the MIDP falls short of the World Trade
Organisation (WTO) requirements since it encourages importation of components used in the manufacturing
process. Import rebates are based on export volumes whereby manufacturers export and earn points, which
can only be used to reduce import duties (Cokayne, 2006:2). Other criticisms of MIDP are:

Since its introduction importation of components have increased resulting in trade deficit

It does not provide incentives required for investment such as tax and production incentives

There is no clear plan of the duration of the programme, which result in other manufacturers
reducing levels of investments in manufacturing and training (Socia, 2007:59).

The industry expects the DTI to announce its plan regarding the duration and to amend the import duty
rebates in order to curtail import impetus (Cokayne, 2006:2). Trade deficit is when imports exceed export for
both components and finished products. Manufacturers utilise the points earned through exporting to import
more and this result in trade deficit (Socia, 2007:59).
Although manufacturers argue that the MIDP has not benefited the industry, some critics of the MIDP as a
support vehicle for the motor industry believe that manufacturers have benefited without sharing such
benefits with the consumers. It is believed that manufacturers have the opportunity to save on logistics costs
through MIDP but such savings are not transferred to the customer (Furlonger, 2006:6). Amongst the aim of
the MIDP one was to assist local manufacturers in having competitive and affordable prices of finished
products.
There are still hanging issues surrounding the MIDP:

Changing the programme from being an import incentive to tax and total production incentive

Extending the programme to 2020 and not cease it in 2012

Introducing an alternative programme to MIDP (Socia, 2007:58).

Until the above issues are resolved consumers and manufacturers may not enjoy the benefits of the MIDP.

59

4.7

Conclusion

This part of the study focused on exploring the vehicle industry through the application of Porters Five
Forces model. It also outlined the impact that the five forces have on the marketing-logistics interface and
customer service. Through the application of the Porters model, it was clear how organisations in the
industry create a sustainable competitive advantage through the interface. Two organisations were chosen
in the discussion of creating a sustainable competitive advantage based on their ability to achieve high
levels of customer service.
Summary of the current situation in the vehicle industry was also presented by analysing sales trends,
economic factors that have influence on sales performance and the MIDP. The economic factors such as
interest rate and personal tax structure could have a negative impact on possession utility. Despite
aggressive marketing strategies that manufacturers and dealers are applying and the introduction of the
MIDP, prices of locally manufactured passenger cars are still regarded as non-competitive.

60

CHAPTER 5: RESEARCH METHODOLOGY


5.1

Introduction

The aim of this part of the study is to detail procedures necessary for obtaining information needed in order
to understand the phenomenon. Research methodology is important since it provides a guide to everyone
involved in the study on how the required information is to be obtained and the type of research being
conducted. A research design indicates activities the investigator and respondents should perform and the
order in which they should occur (Thomas: 1990:60). A research design or methodology encompasses all
mechanisms employed in planning for the research such as, procedures and techniques used to reach
findings about the research (De Vos, 2001:77).
This section will cover the following topics:

The research design

Research data collection methods

Defining the population

Data collection instruments, sources and procedures

Data analysis

Some of these aspects were covered briefly in chapter one and will now be discussed in detail.
5.2

The research design

The research design was defined in chapter 1, in this chapter a detailed discussion of its practical
application is presented. The research design is discussed under the following headings:

The research method: This section clarifies whether the research is qualitative and/or quantitative
in nature and the suitability of the method selected

The research format: This section outlines whether the format is exploratory, descriptive or causal
in nature

The research technique to gather the data: This section outlines whether the data is collected
through personal interviews or focus group.

5.2.1

The research method

Research methodology can be classified under two broad generic categories: qualitative and quantitative. A
hybrid approach is obtained when qualitative and quantitative approaches are used because this allows for
greater depth of understanding and insight than when one approach is used (Roberts, 2004: 113).

61

Differences between qualitative and quantitative research are presented in Table 5.1 while the flow of
qualitative and quantitative research application is presented in Figure 5.1.
Table 5.1: Differences between qualitative and quantitative research methods
Qualitative research
Quantitative research
To gain a qualitative understanding of the To quantify the data and
underlying reasons and motivations
generalise the results from the
sample of the population of
interest
Sample
Small number of non-representative cases
Large number of representative
cases
Data collection
Unstructured
Structured
Data analysis
Non-statistical
Statistical
Outcome
Develop an initial understanding
Recommend a final course of
action
Source (Malhotra, 1996:164)
Objectives

The current research has both qualities of the qualitative and quantitative research. The objective is to gain
insight, however the data was quantified but not generalised since the population was small. Sampling is not
used but the entire population is taken into consideration. A structured data collection was applied because
a structured questionnaire was used and statistical analysis performed. Results were used to develop initial
understanding without recommending final course of action. Qualitative and quantitative methods were
applied to this research since they complement each other and make analysis of the results easier to
understand.
Qualitative research was used when exploring the literature and in the questionnaire for open-ended
questions. Quantitative research was applied in the questionnaire for closed-ended questions where
statistical analysis can be made. The study was largely quantitative as there was statistical analysis of the
data.
Figure 5.1 shows when the qualitative and quantitative research, are applicable in the research process.
Qualitative research is applicable to both the secondary and the primary data while quantitative research is
applicable to the primary data only. This flow is important to understand because it reflects how the research
method and the data collected relate.

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Figure 5.1: Flow of qualitative and quantitative research

Marketing research data

Primary data

Secondary Data

Qualitative
research

Qualitative
research

Quantitative
research

Source: Malhotra (1996:164)

5.2.2

The research format

Deciding on research objectives first requires understanding of the type of research being done. The most
common categorisation ranges from exploratory to causal. A useful categorisation is exploratory, descriptive
or causal research (Lehmann, 1985:56). Descriptive and causal research formats are used where the
research takes characteristics of the quantitative research method (Malhotra, 1996:165). Descriptive and
causal research formats are considered as conclusive research where the outcome of the research is to
recommend a final course of action (Lehmann, 1985: 56). The flow of the conclusive and descriptive
research is presented in Figure 5.2.

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Figure 5.2: Classification of marketing research format

Research Format

Conclusive Research

Exploratory Research

Descriptive Research

Causal Research

Source: Malhotra (1996:87)


Exploratory research is defined as a study designed to find out enough about a problem to usefully
formulate propositions or hypothesis. It assists in gaining insight and understanding of the problem
confronting the researcher (Lehmann, 1985:57). Exploratory research is the starting point of the research
where the problem requires clarification. Analysis of secondary data, which were discussed separately, is an
example of the exploratory research since it is normally the starting point of the research for the purpose of
gaining insight (Malhotra, 1996:165). Based on the discussion of exploratory research, the relationship
between Figure 5.1 and 5.2 was established since the secondary data is a qualitative research method and
also an exploratory format of the research.
While exploratory research is the starting point where the researcher wants to gain insight and
understanding, it cannot be used where statistical analysis and recommendations are to be made,
conclusive research should also be applied (Zikmund, 2003:55). Unlike the exploratory research that can
take several subjects that are related to the problem, conclusive research is based on some previous
understanding of the nature of the problem and focuses on the research at hand (Zikmund, 2003:55). As
already stated, conclusive research can be descriptive or causal, refer to Figure 5.2:

Descriptive research: Research designed to describe characteristics of a population or a


phenomenon. Descriptive research is based on some previous understanding of the nature of the
research problem. Descriptive research is part way along the continuum from exploratory to causal.
Descriptive research assumes that relevant variables are known (for example, in Figure 2.1 it can
be assumed that all marketing elements are known and have an effect on customer service levels)
(Lehmann, 1985:57).

64

Causal Research: Research conducted to identify cause-and-effect relationships among variables


when the research problem has already been narrowly defined. The research attempts to establish
that when we do one thing, another thing will follow (Zikmund, 2003:56). Causal research on the
other hand, assumes that not only do we know what the relevant variables are, but that we know
how they affect each other. In Figure 2.1 causality can be made that logistics and marketing
elements affect each other based on how they interlink (Lehmann, 1985:57).

Exploratory and descriptive research normally precedes causal research (Lehmann, 1985:57). The
differences between exploratory and conclusive research are summarised in Table 5.2.
Table 5.2: Differences between exploratory and conclusive research
Factors
1.Objectives

Exploratory
To provide insight and understanding.

Conclusive
To test specific hypotheses and
examine relationships.
2.Characteristics
Information needed is defined only Information needed is clearly
defined.
loosely.
Research process is flexible and Research process is formal and
structured.
unstructured.
Sample
is
large
and
Sample is small and non-representative.
representative.
Analysis of primary data is qualitative.
Data analysis is quantitative.
3.Findings/Results
Tentative
Conclusive
4.Outcome
Generally followed by further exploratory Findings used as input into
or conclusive research.
decision-making.
Source: Malhotra (1996:87).
Although the research is exploratory based on the population size and that it is applied to the SA passenger
car manufacturer for the first time, it applies exploratory and conclusive research. The current study aims to
describe the phenomenon that a coordinated marketing-logistics interface is a way to a sustainable
competitive advantage. It follows some characteristics and objective of a conclusive research however it is
not conclusive, refer to table 5.1 and the definition of descriptive research. As already stated the research is
both qualitative and quantitative in nature, this is clarified further when discussing the data collection
methods and instruments.
5.2.3

Research techniques to gather the data

Techniques used to gather data refers to the approach used to communicate with respondents (Zikmund,
2003:198). The researcher can either use focus group or personal interviews. The technique selected
depends on the format and method of the research (Lehmann, 1985:144). It is important to ensure that the

65

technique used provides relevant information that is in line with the research objective and problem. In order
to achieve this; the technique should be suitable to the format and method of the research.
Various techniques that can be used to gather the data
A Survey
A survey is a technique in which information is gathered from a sample of people by use of a structured
questionnaire or interview, a method of data collection based on communication, with a representative
sample of individuals (Zikmund, 2003:742). Based on the definition of the survey, it can be stated that the
survey is a technique suitable when conducting a quantitative and conclusive research since it is structured
and requires that the sample be representative.
Data can be collected in the following ways:

Telephone: This involves phoning a sample of respondents and asking them a series of questions

Mail: Mailing the questionnaire together with cover letter and return envelope to pre-selected
potential respondents

Person: Personal interview where information is gathered through face-to-face contact with an
individual (Lehmann, 1985:145).

When using survey technique the researcher can select from the three collection methods above. The
current research utilised the person method of survey since a questionnaire was designed and personal
interviews conducted. Although the research is exploratory, results were quantified and questions were
structured. Although the research used the survey method where personal interviews were conducted, other
techniques were also discussed.
Experiment
This is a research method in which conditions are controlled so that one or more variable can be
manipulated in order to test hypothesis. Business experiments hold the greatest potential for establishing
cause-and-effect relationships (Zikmund, 2003:737). The experiment is normally used for quantitative
research and causal research however this method is expensive and requires a very large sample size
(Lehmann, 1985:92).

66

Observation
Observation refers to the recording of behavioural patterns of people, objects and events in a systematic
manner to obtain information about the phenomenon of interest. Observation can be structured in this case
the behaviour to be observed is defined or can be unstructured where the behaviour is not defined in
advance (Malhotra, 1996:213). The main advantage of observation is that it records behaviour without
relying on reports from respondents, however the technique is more complex and difficult to administer
(Zikmund, 2003:69).
Focus group
A focus group refers to an interview conducted among a small group of respondents in an unstructured and
natural manner. Focus group is the most important qualitative research technique (Malhotra, 1996:166).
This means results from focus group should not be considered conclusive but exploratory.
Having identified various techniques that can be used to gather the data it is important to understand the
collection of different data. It is important to understand the type of data collected in order to evaluate the
relevance of a selected collection technique.
5.3

Types of data being collected

There are two broad types of data that the researcher collects, the secondary and the primary data
(Zikmund, 2003:63). Figure 5.1 shows the link between the market research data and the method of the
research. As already discussed in section 5.2.2 and 5.2.3 secondary data is part of the exploratory and
qualitative research methods while primary data is part of both qualitative and quantitative research
methods. This means that primary data is important to the exploratory and conclusive research. This does
not imply that secondary data is not used in conclusive research however if the researcher has a thorough
knowledge of the phenomenon, secondary data may not be collected.
5.3.1

Defining the secondary data and its application

Secondary data is defined as data that has been previously collected for some project other than the one at
hand (Zikmund, 2003:63). This means secondary data can be any data available that could add value to the
research and not necessarily a data that is specifically for the research at hand. For this research Chapters
2, 3 and 4 are based on the secondary data available.
Chapter 2 was a literature review that clarified the interface between marketing and logistics. Chapter 3
discussed techniques that were identified in the previous study by Murphy and Poist, which formed the basis
for the research problem. These two chapters put together the information needed in order to formulate the

67

problem and gain insight and understanding of the phenomenon. The data was gathered from the library
and via the Internet. Chapter 4 was the analysis of secondary data relating to the industry that forms the
population of the study, which was collected from NAAMSA annual report, the Internet and periodicals.
Aims of gathering the secondary data, which is exploratory and qualitative as discussed in section 5.1 and
5.2:

To gain insight and understanding of the phenomenon

To guide the researcher on variables to consider when gathering and analysing the primary data

To assist in the formulation of an appropriate research design

To assist in the formulation of hypothesis or proposition (Malhotra, 1996:117)

Since secondary data is collected for purpose other than the research at hand, it is important to ensure that
it is accurate, relevant and useful to the study at hand. During the analysis, interpretation and
recommendations chapters the relevance and the appropriateness of the secondary data is tested. The
secondary data in chapter 2, 3 and 4 should serve as a guide to these chapters.
5.3.2

Defining the primary data and its application

Primary data is defined as data gathered specifically for the research project at hand (Zikmund, 2003:63).
Figure 5.1 shows that primary data can be either qualitative or quantitative or both. The nature of the
primary data collected depends on the method and the format of the research. Both qualitative and
quantitative primary data was used in the current study since the study combines both qualitative and
quantitative research methods. This is elaborated when discussing the data collection instrument used. The
reason for combining the qualitative and quantitative was that the research is exploratory; the sample size
was small, a structured questionnaire was used and results were quantified.
Aims of gathering the primary data, that is exploratory, conclusive, qualitative and quantitative as discussed
in section 5.1 and 5.2:

To conduct survey research

To gather information specific to the research at hand

To determine the current situation of the phenomenon (Zikmund, 2003:175).

When the researcher begins to gather the primary data it is important to ensure that the phenomenon is
clear and understood or unnecessary information is gathered. The secondary data should have been fully
analysed at this stage. In order to gather the data it is important to identify the research population from
which the primary data can be collected.

68

5.4

Defining the population

The population is drawn from the member list provided by NAAMSA. The population refers to all
organisations that have some or all of their passenger car models manufactured in SA. According to the
NAAMSA list, the following organisations manufacture passenger car models in SA:

Toyota

Nissan

BMW

Daimler Chrysler SA

Ford Motor Corporation of SA (FMCSA)

Volkswagen (VW)

General Motors South Africa (GMSA)

Fiat Auto SA

Although there are sixteen member organisations, the above-mentioned organisations are the only ones
manufacturing passenger car models in SA. The reason for using only those organisations manufacturing
passenger cars in SA while excluding those that import and manufacture commercial vehicles only is that,
their logistics and marketing decisions could be different resulting in various population groups to deal with.
The number of respondents interviewed was determined based on the organisations willingness to provide
time for interviews. Telephonic requests were made and organisations were willing to assist. It was agreed
that marketing and one logistics personnel should be available for the interview. The following organisations
agreed to take part in the study:

Toyota

Nissan

BMW

Daimler Chrysler SA

Ford Motor Corporation of SA (FMCSA)

Volkswagen (VW)

General Motors South Africa (GMSA)

Fiat Auto SA

Sixteen respondents were interviewed, two respondents from each organisation representing marketing and
logistics respectively. Since the population was small, all components were included hence no sampling was
done in the actual survey. The fact that the total population was used means that this research is a census.
A census is defined as an investigation of all individual elements making up a population (Zikmund,
2003:369). A Census is normally used when collecting information regarding communities in order for policy

69

makers to make decisions. The importance of using a census is to ensure that information regarding all
members of the community is known since the community is usually not homogenous based on factors such
as income, education and race. Census is not only used where the population is small but also in cases
where the elements of the population cannot be generalised under a single category (Dillon et al., 1993:
300).
Research design and definition of the population serve as guides in determining the data collection
instrument, sources and procedures for collecting the data. In order to collect the data, it is important to
establish the purpose of the research, its objectives, propositions or hypothesis, research design and define
the population. All these aspects have been covered in chapter 1 and the previous section of chapter 5, it is
at this stage that data collection instruments can be designed and administered.
5.5

Data collection instruments, sources and procedures

This section is discussed under the following broad headings:

The survey instrument

The method of data collection

Procedure for collection

5.5.1

The survey instrument

Techniques for collecting the data were discussed under the research design section and it was mentioned
that personal interviews through a structured questionnaire is utilised. A questionnaire is a data collection
instrument that formally sets out the way in which the research questions of interest should be asked (Dillon
et al., 1993:301). Advantage of using the questionnaire:

It translates the information needed into a set of specific questions that the respondents can
answer

It uplifts, motivates and encourages respondents to become involved in the interview

It minimises response error

It is relatively economical

It can involve a large group

Information can usually be interpreted easily

Confidentiality can be assured because questionnaire can be completed anonymously (Strauss


and Myburgh in Baloyi, 2005: 45).

70

Since there was no questionnaire to adopt a questionnaire was developed for this study. The questionnaire
developed; is mainly based on the study by Murphy and Poist. Previous research from the literature and
information about the industry were used to identify important issues relevant to the research problem.
In order to design a questionnaire the following aspects need to be considered:

The nature of the questionnaire

Phrasing of questions

Scaling used in the questionnaire

Flow of questions

The nature of the questionnaire


As already discussed, the questionnaire was used to collect the primary data that can either be qualitative or
quantitative or both. This depends on the type and the aim of the research. The current research is
exploratory however it aims to quantify results and describe a phenomenon. The questionnaire was both
qualitative and quantitative.
Phrasing of questions
This stage determines how questions should be phrased since if only qualitative, the questionnaire will
normally have open-ended questions or if quantitative closedended questions will be asked (Zikmund,
2003:331). Questions can be open or closed-ended depending on the type of the research and the amount
of prior knowledge of the problem (Zikmund, 2003:331). Open-ended questions refer to questions that allow
respondents to provide responses in their own words. These are considered free-answer questions
(Zikmund, 2003:332). Closed-ended or fixed alternative questions are questions in which respondents are
given specific limited alternative responses and asked to choose the one closest to their viewpoint. The
manner in which the response is provided is determined by the way in which questions are phrased. Table
5.1 provides comparison between open and closed-ended questions.

71

Table 5.3: Defining and contrasting open and closed-ended questions


Open-ended
Closed-ended
It poses some problem and asks respondents to Respondents are given specific limitedrespond in their own way.
alternatives and asked to choose the one closes to
their viewpoint
Beneficial for exploratory research when the Beneficial in descriptive or conclusive research
response range is unknown
Some individual will provide lengthy responses Individuals can only select from provided list
while others less articulate will be at an advantage resulting in the same response range
High cost of coding, editing and analysing the data

Low cost and less time spent on coding, tabulating


analysing the data
High interviewer bias since responses can be Standardising alternatives reduces interviewer bias
easily manipulated
on responses
(Zikmund, 2003:333)
The current study blends both qualitative and quantitative research approaches hence both open and closed
ended questions were asked. Open-ended questions were asked in order to clarify answers to some of the
close-ended questions, refer to Appendix A, the questionnaire. Since closed-ended questions were included
in the questionnaire, the scaling used in each question should be discussed.
Scaling in the questionnaire design
Scaling may be defined as any series of items that are arranged progressively according to value or
magnitude, into which an item can be placed according to its quantification (Zikmund, 2003:296). In order to
can construct a questionnaire it is important to consider how objects or characteristics can be measured.
Measurement involves rules for assigning numbers to objects to represent quantities or attributes. We
measure not the object but its characteristics (Malhotra, 1996:271). There are various ways in which we can
measure characteristics (Zikmund, 2003,296). For the purpose of this research, only scales applied in the
study are explained. When discussing individual questions, the scale applied to the question is indicated.
Scales applied in this research:

Ordinal-Ranking scale: A scale in which, numbers are assigned to objects to indicate the relative
extent to which the objects possess some characteristics.

Ratio scale: The highest scale that allows the researcher to identify or classify objects; rank order
the objects and compare interval and differences. (Malhotra, 1996:275).

Category scale: An attitude scale consisting of several response categories to provide the
respondent with alternative ratings (Zikmund, 2003:311)

Likert scale: It is defined as a measurement of attitude designed to allow respondents to indicate


how strongly they agree or disagree with carefully constructed statements that range from very
positive to very negative toward an attitudinal object (Dillon et al., 1993:292).

72

Interval scale: A scale in which the numbers are used to rank objects such that numerically equal
distances on the scale represent equal distances in the characteristic being measured (Malhotra,
1996:274)

Rank order: A comparative scaling technique in which respondents are presented with several
objects simultaneously and asked to order or rank them according to some criterion (Malhotra,
1996:279)

Rating scale: A measurement task that requires the respondent to estimate the magnitude of a
characteristic or quality that an object possesses (Malhotra, 1996:280).

The use of any of the scaling depends on the research type, problem and objectives however, a mixing
measuring-scales is acceptable if it is in line with the research being conducted (Dillon et al., 1993:290). The
aim is to have questions that support the objectives and provide responses to the research questions and
propositions as stated in Chapter 1.
Having identified the nature of the questionnaire, the type of questions and the scaling applied, it is
important to assess each question in order to ensure that the flow is easy to follow and understand.
Flow of questions
The questionnaire was divided into two parts; section A and B. Section A of the questionnaire was designed
in such a way that it gathers personal, organisation and industry background. The aim of this section was to
gather some background on issues such as the number of brands that are available in SA, the number of
brands manufactured in SA and the work experience that the individual respondent have in the industry,
refer to Appendix A.
Section B aimed at providing responses to the research questions. Each individual question was assessed
in order to identify its relevance to the current study based on the data from which the questionnaire was
designed. As already stated the data used to design the questionnaire was the secondary data collected in
chapters 2-4 of the research.
Assessing individual questions in section B
Individual questions in Section B of the questionnaire were assessed in order to ensure that they provide
responses to the research questions and propositions:

Question B.1 asked respondents to rate the degree or level of cooperation between marketing and
logistics in the organisation. It is valid and reliable to the current study, as its responses showed
whether there is cooperation between the marketing and logistics functions. Question B.1 applied a

73

four point ordinal scale; refer to Appendix A. This question was formulated based on the responses
from the study by Murphy and Poist.

Question B.2 required respondents to identify the marketing-logistics interface co-ordination


techniques that are currently used, not used or planned to be use. It also allowed respondents who
are not sure to provide an honest answer. The aim of this question was to provide responses that
identify specific interface coordination techniques used in the passenger car industry from the
predetermined ones in the study by Murphy and Poist. A four point category scale was applied to
this question where techniques were categorised as being used, plan to use, do not use or do not
know if they are used or not, refer to Appendix A.

Question B.3 flows from question B.2 since it allowed respondents to provide other techniques not
mentioned in question B.2, which are used in a particular organisation. There was no scaling
applied to this question since it is an open-ended question, however this question can be replaced
with a no or yes answer or a checklist (Zikmund, 2003:331), refer to Appendix A.

Question B.4 required respondents to rate the impact that the marketing-logistics coordination
techniques have on the marketing-logistics interface. A six-point ordinal scale was used in order to
determine the impact based on techniques identified in question B.2, refer to Appendix A. In the
study by Murphy and Poist respondents were also asked to rate the impact that each technique
has on the interface.

Question B.5 asked respondents to identify the most and the least important technique from the
predetermined techniques. Rank order was applied where a number of the technique was placed
as either the most or least important technique.

Question B.6 asked respondents to agree or disagree with statements regarding the advantages
resulting from cooperation between marketing and logistics functions in the organisation. A fivepoint Likert-scale was used in Question B.6. The literature review found that there were several
advantages such as high levels of customer service, quality service and achieving a sustainable
competitive advantage that result from cooperation between marketing and logistics in the
organisation.

Question B.7 intended to find out how co-operation between marketing and logistics creates a
sustainable competitive advantage. This was an open-ended question and no scaling was applied.
The aim was to identify what respondents consider as ways in which the marketing-logistics
interface creates a sustainable competitive advantage.

Question B.8 was important to the research as it addressed the impact that the relationship
between manufacturers and dealers has on customer service levels and addressed the issue of the
place element of the marketing components. It applied the rating scale, where respondents were
asked to rate the extent to which their organisations consult with the manufacturer on certain
issues.

74

Question B.9 aimed to address the issue of possession utility, which is mainly affected by the price
element of marketing. A five-point Likert scale was used where respondents were asked to agree
or disagree with two statements on pricing, refer to Appendix A.

B.10 flows from question B.9 where respondents were asked to provide reasons for their choices in
question B.9. This was an open-ended question aiming to understand reasons that result in
respondents perceiving passenger car prices as high or not agreeing with statements as stated in
B.9, refer to Appendix A.

Based on the assessment of each question, it is clear that questions formulated relates to the research
problem and support the research objectives. After satisfying the researcher that questions formulated are in
line with the research problem, research questions and objectives, the questionnaire is constructed and pretested prior to the actual survey being conducted.
5.6

Pre-testing the questionnaire

Pre-testing refers to testing the questionnaire on a small sample of respondents to identify and eliminate
potential problems (Malhotra, 1996:341). It is important to pre-test the questionnaire prior to sending it out or
administering it for the final survey. Benefits of pre-testing the questionnaire:

The researcher is able to identify respondents problems in answering questions

Tabulating the results of the pre-test helps determine whether the questionnaire will meet the
objectives of the research

Interviewers can ask for comments from respondents on how easy and precise questions are

Thus it provides an opportunity to correct mistakes and improve the validity and reliability of the
questionnaire (Zikmund, 2003:359).

The current study pre-tested the questionnaire by conducting personal interviews, in order to allow
interaction with respondents with an aim of increasing the level of feedback and ask for comments.
Convenience sampling was used, however only marketing and logistics practitioners from other industries
were selected. The reason for using other marketing and logistics practitioners and not using the ultimate
population was due to the small population size.
The questionnaire was pre-tested on two marketing and two logistics practitioners in order to rectify errors
and test the validity and reliability of questions. Results of the pre-test managed to show that questions
asked were in line with the research objectives, problem and questions. Question B.2 was refined as its
previous wording appeared confusing to the respondents.

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5.7

Data collection

Once the stages of the research design, research data collection methods, definition of the population,
development of the research instrument and pre-testing of the instrument are accomplished, the process of
gathering information from the target population begins. Data collection is the step where the questionnaire
is tested on the targeted population in order to can answer specific research questions (Zikmund, 2003:72).
Various methods of collecting the data and the techniques that can be used to collect the data were
discussed. For the current study the researcher collected the secondary data through literature review
sourced from the library, periodicals, NAAMSA and the Internet. Personal interviews were conducted for the
primary data collection with the aid of the structured questionnaire. This technique of gathering the primary
data was selected based on the population size. This has reduced errors such as question skipping and
incorrect interpretation.
Data was collected in two parts, by pre-testing the questionnaire and conducting the final survey. The final
survey was conducted through the month of April and May. Respondents took long to offer interviewing
opportunities to the researcher hence the collection took six weeks to conclude. Interviewing opportunities
were requested via emails and telephonically. After collecting the data it is important to consider how the
data will be transformed into useful information.
5.8

Data analysis

The goal of most research is to provide information, however responses from the questionnaire in their raw
form will not assist in providing the information, hence it is important to make such responses usable as
information. Data and information differs but information is generated from the data. Data refers to recorded
measures of certain phenomena (Zikmund, 2003:453). Information refers to a transformed data that is
presented in a format suitable for decision-making (Zikmund, 2003:453). Data analysis is the process of
transforming the data collected into useful information.
The data analysis for this research focused on the data collected through the questionnaire and not on
secondary data presented in chapter 2,3 and 4. The questionnaire was used in order to incorporate closedended quantitative questions in the exploratory research. Scaling was applied to these questions in order to
be able to quantify the results and describe the phenomenon. Open-ended questions were analysed
through the appropriate methods for open-ended questions.
5.8.1

Analysis to be conducted

Open and closed-ended questions were used in the questionnaire, as a result of having both close and
open-ended questions two groups of analysis were conducted. The aim of the phenomenon was to describe

76

views of marketing and logistics practitioners employed by the passenger car manufacturers in SA on the
marketing-logistics interface as a way to a sustainable competitive advantage in their organisations.
Closed-ended questions were analysed using the descriptive statistics methods. Descriptive statistical
analysis refers to the transformation of raw data into a form that will make them easy to understand and
interpret, rearranging, ordering and manipulating data to provide descriptive information (Zikmund,
2003:473). Although descriptive statistical analysis was applied, the research was not considered conclusive
since the population size was small. There are various methods of descriptive analysis; however for the
purpose of this research only the ones applied to the data are defined.
Descriptive statistical analysis
There are four statistical methods that were applied when analysing closed-ended questions.

Mean: A measure of central tendency, the arithmetic average (Zikmund, 2003:404)

Frequency distribution: A mathematical distribution whose objective is to obtain a count of the


number of responses associated with different values of one variable and to express these counts
in percentages (Malhotra, 1996:506)

Standard deviation: Quantitative index of a distribution spread or variability or the square root of the
variance (Zikmund, 2003:405).

Range: The difference between the smallest and the largest values of a distribution (Malhotra,
1996:506).

The above statistical methods were applied to various questions that were closed-ended with scale of
measurements as already discussed under questionnaire design. As a result of the population size, it was
difficult to apply the univariate analysis as applied in the study by Murphy and Poist. Univariate technique
refers to the descriptive statistical method that can be applied when there is one large sample size
(Malhotra, 1996:489).
Analysing open-ended questions
Open-ended questions were analysed using the content analysis, which refers to classifying many words,
sentences, paragraphs and themes of the text into much fewer content categories (Tesch, 1990:79). The
basic procedure of content analysis involves:

Transcribing and editing: Transferring data from the questionnaire or coding sheets onto disks or
magnetic tapes or directly into computers by keypunching. For the purpose of this research a
response sheet will be on the computer and responses will be punched onto the response sheet.

Designing categories that are relevant to the research purpose

Sort all occurrences of relevant words or other units into these categories

Count the frequency of occurrences in each category

77


5.8.2

Make inferences based on the frequency of occurrences (Tesch, 1990:80).


Assistance with the analysis

Open-ended questions were analysed manually by the researcher. Content analysis requires the manual
keypunching of the data into computers, deciding on the categories, manual sorting and counting of
occurrences in each category. There is no computer package that can provide categories required, the
researcher should manually determine using a chart designed on the computer in MS word or hand write the
categories to use.
Closed-ended questions were analysed using the descriptive statistical analysis procedures, which were
carried out by Statkon, Statistical unit at the University of Johannesburg. The results were presented in the
tables by Statkon and interpreted by the researcher.
5.9

Conclusion

Research methodology outlines the process by which the research is conducted. It is the gist of the
research as it shows the road map through which the research problem is answered and the research
objectives achieved. It is important to start with the research methodology as soon as the research problem,
objectives and hypothesis or proposition have been stated. This allows the identification of the link between
the method and what the research aims to achieve. Although the research methodology is presented
towards the final part of the research paper, it is important to work on it in the early stage of the research.
Formulating the methodology at an early stage, allows the researcher to tie the introduction and all other
parts of the research. The methodology reveals if the literature covered and the purpose of the research
based on objectives of the research, research problem and hypothesis or propositions supports each other.

78

CHAPTER 6: ANALYSIS AND INTERPRETATION OF THE RESULTS


6.1

Introduction

The purpose of this Chapter is to present the research findings and the interpretation of the results. As
already stated, closed and open-ended questions were used and presented separately in the interpretation.
Propositions rather than hypothesis were used in this study. Reasons for using propositions and not
hypothesis were; the size of the population was small and the research was exploratory in nature (Zikmund,
2003: 44).
This chapter will cover the following topics:

Analysis of closed-ended questions

Analysis of open-ended questions

Interpretation of the results

6.2

Analysis of closed-ended questions

Since the questionnaire was divided into two parts, section A and section B; analysis followed the same
sequence.
6.2.1

Analysis of section A

The focus of Section A of the questionnaire was on the demographic information. Each question was
presented and a profile of respondents was formulated at the end of analysis of section A. The profile
provided a complete picture of who respondents were, what they do and where they work, how long they
have been with the organisation and the industry and the number of brands that their organisation
manufacture and market in SA.
Sixteen questionnaires were completed where eight respondents were from marketing and the other eight
from logistics. Two representatives from marketing and logistics were interviewed from each organisation
and a 100% response rate was achieved. This means that all respondents returned the questionnaire and
all questionnaires were usable. This was achieved due to personal collection of the data. As already stated
in the discussion regarding the research techniques to gather the data, personal interviews were used to
collect the data.

79

Question A.1: In which country is the parent organisation of your enterprise located?
Question A.1 aimed to establish the organisation country of origin in order to determine the country that has
the most passenger vehicle manufacturers in SA. (Refer to Appendix A).
Based on the population size and the fact that there were only sixteen respondents, 50% of respondents
work for German car manufacturers, followed by Japan with 25%. Germany is the country that has most of
its assembling plants in SA. US and Italy are the least, with 12.5% of the two countries passenger car
manufacturers or assemblers in SA. Refer to Table 6.1 for findings.
Table 6.1: The country in which the parent organisation of the enterprise is located
Country

Frequency

Percentage to the total number of responses

1. Germany

50%

2. Japan

25%

3. Italy

12.5%

4. US

12.5%

Question A.2: How many passenger car brands are assembled by your organisation in SA?
Question A.2 asked about the number of passenger cars brands assembled in SA by each organisation that
took part in the study. The mean value showed that on average, each organisation assembles 1.75
passenger vehicles in SA; this can be rounded off to 2 brands per organisation. Refer to Table 6.2 for
findings.
Table 6.2: Number of passenger car brands assembled by your organisation in SA
Number of participants

Mean

16

1.75

Question A.3: How many passenger car brands are marketed by your organisation in SA?
The mean value showed that on average organisations market 7.75 brands in SA. This is higher than the
average number of passenger vehicles assembled in SA. This could mean that the SA market is attractive
for sales, however the environment is not favourable for assembling due to some factors (managerial
implications). Question A.2 and A.3 showed that organisations tend to market more brands than what they
produce in SA. Refer to Table 6.3 for findings.

80

Table 6.3: Number of passenger car brands marketed by your organisation in SA


Number of participants
16

Mean
7.75

Question A.4: What is your job title in the organisation?


Question A.4 attempted to establish different job titles that respondents held in the logistics and marketing
departments in the organisation. This is important because it provides information regarding the level of
knowledge the respondent have about the logistics or marketing function in the organisation. Based on the
discussion with the respondents on what responsibilities are for each title, some titles have the same
responsibilities. A title grouping was done based on what respondents regard as common titles based on
responsibilities of the job. Job titles were divided into logistics and marketing titles.
Logistics titles
With respect to logistics, it would appear that there are seven different titles, which can be grouped into
three common names. In terms of the job title common names, (25%) are logistics coordinators. Logistics
managers account for a large percentage of respondents (62.5%). Refer to Table 6.4 for a summary of
these titles and percentages of the total number of logistics respondents (8).
Table 6.4: Logistics job titles and common title names in the passenger car industry
Job title

Common names

Logistics coordinator
Logistics consultant
Senior Buyer-Mechanical parts
Logistics and quality manager
Logistics manager
Manager- Logistics services
Logistics and distribution specialist

Logistics coordinator
Logistics coordinator
Buyer-Mechanical parts
Logistics manager
Logistics manager
Logistics manager
Logistics manager

Percentage of respondents to the


job titles
25%
12.5%
62.5%

Marketing titles
With respect to marketing, it would appear that there were eight different titles, which can be grouped into
five common names. In terms of the job title common names, a significant percentage (50%) of respondents
stated that they can be referred to as Customer service managers. Refer to Table 6.5 for a summary of titles
and percentages of the total marketing respondents (8).

81

Table 6.5: Marketing job titles and common title names in the passenger car industry
Job title

Common names

Key accounts manager


Marketing communication specialist
Manager-Dealer relations
Product specialist
Customer affairs manager
Customer relations manager
Customer service manager
Customer support manager

Key accounts manager


Marketing communication manager
Manager-Dealer relations
Product manager
Customer service manager
Customer service manager
Customer service manager
Customer service manager

Percentage
of
respondents to the job
titles
12.5%
12.5%
12.5%
12.5%
50%

None of the respondents could provide an explanation as to the reason same responsibilities carry different
job titles. This is not within the scope of this research as it has Human Resources implications.
Question A.5: Indicate the number of years that you have been with the organisation.
The focus of the question was to establish the respondents knowledge of the organisation based on the
years that the respondent has been with the organisation. Most of the respondents (81.3%) have been with
the organisation for a period of 2-4 years. There were no respondents who had been with the organisation
for longer than seven years. Refer to Table 6.6 for findings.
Table 6.6: Number of years that you have been with the organisation
Number
responses
16

of Number of years with the Frequency


organisation
Less than two years
2-4 years
5-7 years
More than 7 years

1
13
2
0

Percentage to the total


number of responses
6.3%
81.3%
12.5%
0%

Question A.6: Indicate the number of years you have been employed in the vehicle industry.
The aim of this question was to establish the industry knowledge of the respondent. In terms of the industry
experience, the maximum number of years that a respondent has been in the industry is 8-10 years with a
minimum of less than two years. Most of the respondents (43.8%) have been in the industry 5-7 years. This
is followed by 2-4 years, which is (31.3%) of respondents. Most respondents worked for the organisation for
2-4years. Refer to Table 6.6 and 5-7years in the industry. Refer to Table 6.7 for findings. This shows that
there is high movement between organisations in the industry.

82

Table 6.7: Number of years that you have been employed in the motor vehicle industry
Number
of Number of years in the Frequency
respondents
industry
16
Less than two years
1
2-4 years
5
5-7 years
7
8-10
3

6.2.2

Percentage to the total number of


responses
6.3
31.3
43.8
18.8

Profile of the typical respondent

The typical respondent works for a German motor company (50%) of respondents. Their organisation
assembles an average of 1.75 passenger cars in SA but markets an average of 7.75 passenger cars in SA.
They hold Logistics (62.5%) or Customer service manager (50%) positions within the logistics and
marketing departments respectively. They have worked for the organisation for 2-4years (81.3) and for the
industry, 5-7years (43.8%).
6.2.3

Analysis of Section B

Section B focused on the marketing-logistics interface coordination techniques. Section B was analysed in
two parts, closed-ended and open-ended questions were analysed as separate sections. Closed-ended
questions were analysed using the statistical methods as defined in Chapter 5 and content analysis was
applied to open-ended questions.
Question B.1: On a scale of 1-4 with 1 being no cooperation and 4 being a maximum cooperation;
please rate the degree of cooperation in your organisation between marketing and logistics
functions.
Question B.1 focused on the level of cooperation between marketing and logistics in the organisation, it
applied a four point ordinal scale, (refer to Appendix A). Most respondents (43.8%) believed that there is a
maximum level of cooperation in their organisations. This is followed by (31.3%) of respondents saying
there is moderate cooperation. A considerable number (25%) specified that there is minimum cooperation.
No respondents (0%) chose the option that there is no cooperation; this means that there is some level of
cooperation in all organisations that took part in the study, however there is still a room for improvement.
This has managerial implications, which is covered in chapter 7.

83

Table 6.8: The level of cooperation in your organisation between marketing and logistics functions
Number of Cooperation Level
responses
16
Minimum cooperation

Frequency

Moderate cooperation
Maximum cooperation
No cooperation

Percentage to the total number


of participants
25%

5
7
0

31.3%
43.8%
0%

Question B.2: Please indicate whether your organisation currently use each of the following
techniques to establish cooperation between the marketing and logistics functions. If your
organisation does NOT CURRENTLY USE a specific technique, please indicate whether your
organisation PLANS to use this technique within the next two years. If you are unsure or do not
know, please tick DO NOT USE or DO NOT KNOW.
Responses were presented as a summary of all categories in terms of currently use, plan to use, do not use
and do not know in Table 6.9. Refer to Appendix A for definitions of techniques.
Table 6.9: Techniques currently used; plan to use, do not use or do not know
In order to establish cooperation between
the marketing and logistics functions, my
organisation uses/ plans to use the
following techniques
1.Top management support
2. Mutual goals
3. Joint projects

3=Do
not use

87.5%
56.3%
62.5%

2=Plan to use
within the
next two
years
12.5%
37.5%
37.5%

93.8%

7. Cross-functional training and education


8. Situational bargaining

81.3%
12.5%
62.5%
62.5%

6.3%
18.8%
25%
37.5%
6.3%

9. System of incentives

37.5%

4. Distribution specialist
5. Information sharing

6. Co-ordinating committees

1=Currently
using

10. Unified department


11. Job switching or rotation
12. Joint outings
13. Third-party intervention
14. Philosophy of co-operation

6.3%

50%

12.5%

12.5%

18.8%

31.3%

31.3%

100%
87.5%

6.3%
12.5%

93.8%
100%

68.8%

Note: Respondents could indicate more than one response

84

31.3%

4= Do not
know

Currently used techniques


The following techniques are mostly used; top management support (87.5%), Joint outings (87.5%) and
information sharing (81.3%). This is followed by philosophy of cooperation (68.8%). Refer to Table 6.10 for
findings. The findings differ from the study by Murphy and Poist where information sharing, philosophy of
cooperation and top management support were mostly used. Top management support is still ranked first in
the same way as in the study by Murphy and Poist however in the study by Murphy and Poist, Joint outings
was considered the least used technique.
Table 6.10: Techniques that organisations currently use
Techniques

Currently using- Currently Using-Percentage of


Frequency
total responses

Top Management support


Joint outings
Information sharing
Philosophy of cooperation
Cross-functional training and education
Situational bargaining
Joint projects
Mutual goals
System of incentives
Coordinating committees

14
14
13
11
10
10
10
9
6
2

87.5%
87.5%
81.3%
68.8%
62.5%
62.5%
62.5%
56.3%
37.5%
12.5%

Techniques planned to be used in the next two years


Techniques that organisations mostly plan to use within the next two years included mutual goals, joint
projects and cross-functional training and education with (37.5%) of respondents specified that their
organisations plan to use these techniques. Techniques that organisations indicated they are least likely to
use included distribution specialist, situational bargaining and job switching or rotation with equal
percentage of (6.3%) for all these techniques. Mutual goals, philosophy of cooperation and cross-functional
training and education were amongst the top five goals that organisations would mostly use. Refer to Table
6.11 for the findings on techniques organisations plan to use.

85

Table 6.11: Techniques that organisations plan to use within the next two years
Techniques
Mutual goals
Joint projects
Cross-functional training and education
Philosophy of cooperation
Co-ordinating committees
Information sharing
Top management support
Joint outings
Distribution specialist
Situational bargaining
Job switching or rotation

Frequency
6
6
6
5
4
3
2
2
1
1
1

Percentage of total responses


37.5%
37.5%
37.5%
31.3%
25%
18.8%
12.5%
12.5%
6.3%
6.3%
6.3%

Techniques that organisations do not use


According to the study finding, the following techniques were the most significant in terms of not being used
by most of the organisations: unified department (100%), third-party intervention (100%), distribution
specialist (93.8%) and job switching or rotation (93.8%). The study by Murphy and Poist shows that unified
department, third party intervention and job switching as the least preferred techniques for coordinating the
marketing-logistics interface, thus SA findings are consistent with the study by Murphy and Poist. Refer to
Table 6.12 for findings.
Table 6.12: Techniques that are not being used and there is no plan to use them
Techniques
Unified department
Third-party intervention
Distribution specialist
Job switching or rotation
Coordinating committees
System of incentives
Situational bargaining

Frequency
16
16
15
15
8
5
2

Percentage of total responses


100%
100%
93.8%
93.8%
50%
31.3%
12.5%

Techniques that respondents do not know whether they are used


Nearly a third of respondents (31.3%) did not know whether their organisation used the system of incentives
as a technique. The percentage of respondents who identified techniques that they are not aware of their
use was very low ranging between (6.3%) and (31.3%). This could indicate that respondents are aware of
the techniques that their organisations use. Refer to Table 6.13 for the findings.

86

Table 6.13: Techniques that respondents do not know whether they are used or not
Techniques

Frequency

Percentage of total responses

System of incentives

31.3%

Situational bargaining

18.8%

Co-ordinating committees

12.5%

Mutual goals

6.3%

Question B.3: What other techniques not mentioned above does your organisation use or intends to
use in order to establish cooperation between the marketing and logistics functions?
The main objective of this question was to determine if there were other co-ordination techniques that the
organisation utilises except for the ones specified. Although question B.3 is an open-ended question it can
be quantified without the use of content analysis. Question B.3 was analysed under close-ended questions.
A significant percentage of respondents (69%) specified that there were no other techniques except for the
pre-determined techniques. A small percentage (31%) of respondents specified other techniques being
used in their organisations. Techniques that were mentioned by respondents:

Maintaining dealer-manufacturer relationship

Centralisation of decisions that affect marketing and logistics

Informal interaction during office hours

Value chain coordination- Bringing marketing and logistics together as part of customer value
creation.

Refer to Table 6.14 for the findings.


Table 6.14: Other techniques being used by organisations
Frequency
Other techniques
No other techniques

Percentage to the total number of


respondents
69%
31%

11
5

Question B.4-On a scale of 0-5 with 0 being N/A, 1 being a very low impact and 5 being a very high
impact, please rate the impact of each of the following coordination techniques on the extent to
which the marketing and logistics functions work together in your organisation. If your organisation
does not use the techniques at present, please tick N/A (not applicable)
The objective of Question B.4 was to identify the impact that each of the predetermined techniques has on
the cooperation between marketing and logistics. This question builds on question B.2, since it further

87

wanted to determine, based on the techniques being used and plan to use; what impact do they have on the
cooperation between marketing and logistics. A six-point ordinal scale was used in order to determine the
impact based on techniques identified in question B.2, refer to Appendix A.
Responses were presented as a summary of all categories in terms of not applicable, no or very low impact,
low impact, moderate impact, high impact and very high impact in Table 6.15 and were then divided
according to these categories in separate tables in order to make the findings easy to follow. Please note
that Table 6.15 follows the exact format as the questionnaire, no rearranging of results is done at this stage.
Table 6.15: The impact of marketing-logistics interface coordination techniques
Cooperation techniques

0=N/
A

1.Top management support

12.5
%
37.5
%

2. Mutual goals
3. Joint projects
4. Distribution specialist
5. Information sharing
6. Co-ordinating committees
7. Cross-functional training and
education
8. Situational bargaining
9. System of incentives
10. Unified department
11. Job switching or rotation

1=No or
very
low
impact

2=Low
impact

3=Mode
rate
impact

81.3
%

5=Very
high
impact
87.5%

6.3%

31.3%

37.5%
93.8
%

4=High
impact

50%

12.5

31.3%

50%

6.3%
6.3%
6.3%

6.3%

12.5%

25%

62.5
%
100%
100%

12. Joint outings

6.3%

13. Third-party intervention


100%
14. Philosophy of co-operation
Note: Respondents could indicate more than one response

25%

37.5%

31.3%
12.5%

25%

68.8%

12.5%

31.3%

37.5%

Findings for question B.4 showed that top management support has a very high impact (87.5%) on
marketing and logistics interface as a coordinating technique, it is important to the success of the interface.
Although there was a difference in terms of percentages between the current study and the study by Murphy
and Poist on techniques with very high impact, the four techniques in Table 6.16 were the mostly used and
the mostly planned to be used techniques in the study by Murphy and Poist. Refer to Table 6.16 for findings.

88

Table 6.16: Techniques with very high impact on the marketing-logistics interface
Techniques

Frequency

Percentage of total responses

Top Management support


Information sharing
Philosophy of cooperation
Mutual goals
Joint projects

14
8
6
5
2

87.5%
50%
37.5%
31.3%
12.5%

Joint projects as a technique, also had a high impact (50%) on marketing-logistics interface. In the study by
Murphy and Poist there was no elaboration on the impact that joint projects had on the marketing-logistics
interface, however (43.9%) of marketing respondents and (43.4%) of logistics respondents indicated that the
technique is important. Refer to Table 6.17 for findings for all other techniques in this category.
Table 6.17: Techniques with high impact on the marketing-logistics interface
Techniques
Joint projects
Cross-functional training and education
Information sharing
Philosophy of cooperation
System of incentives
Joint outings

Frequency
8
6
5
5
4
2

Percentage of total responses


50%
37.5%
31.3%
31.3%
25%
12.5%

Although joint outings was significant (87.5%) in terms of the techniques that are currently used it had a
moderate impact (68.8%), which is significant in the category. The study by Murphy and Poist found joint
outings to have the least impact on the interface and was regarded as the least important. Refer to Table
6.18 for other techniques with moderate impact.
Table 6.18: Techniques with moderate impact on the marketing-logistics interface
Techniques
Joint outings
Situational bargaining
Cross-functional training and education
Co-ordinating committees
System of incentives

Frequency
11
5
4
2
2

Percentage of total responses


68.8%
31.3%
25%
12.5%
12.5%

The significant technique with low impact (25%) is situational bargaining. Although 62.5% of respondents
specified that is currently being used, it does not have a high impact on the marketing-logistics interface.
The study by Murphy and Poist indicates that there is a significant difference in terms of how marketing and
logistics practitioners view situational bargaining. Logisticians considered situational bargaining as a

89

technique with high impact (55.5%) while marketing respondents (25.4%) considered it to have low impact
on the interface. As a result of the population size for the current study comparison as done in the study by
Murphy and Poist was not possible. As a result of this factor, it was concluded based on the current findings
that situational bargaining is a technique with low impact on the marketing-logistics interface.

Refer to

Table 6.19 for finding.


Table 6.19: Techniques with low impact on the marketing-logistics cooperation
Techniques
Situational bargaining
Joint outings

Frequency
4
1

Percentage of total responses


25%
6.3%

There was no technique that showed significant frequency in terms of the no or very low impact. All
techniques had the same impact of 6.3% in terms of no or very low impact. Refer to Table 6.20 for the
techniques with no or very low impact on the marketing and logistics interface.
Table 6.20: Techniques with no or very low impact on the marketing-logistics interface
Techniques
Mutual goals
Distribution specialist
Information sharing
Co-ordinating committees
Situational bargaining

Frequency
1
1
1
1
1

Percentage of total responses


6.3%
6.3%
6.3%
6.3%
6.3%

Some techniques were identified as Not Applicable. Techniques that were significant in this category were
unified department, job switching or rotation and third-party intervention (100%) of respondents. Although
their level of impact cannot be identified, those that are most significant in this category were also
considered to have no impact and were also the techniques with the lowest impact in the study by Murphy
and Poist. Refer to Table 6.21 for findings

90

Table 6.21: Not applicable selection of the techniques that have impact or no impact on the
marketing-logistics interface
Techniques
Unified department
Job switching or rotation
Third-party intervention
Distribution specialist
Co-ordinating committees
System of incentives
Mutual goals
Joint Projects
Cross-functional training and education
Situational bargaining
Philosophy of cooperation
Top management support
Information sharing
Joint Outings

Frequency
16
16
16
15
13
10
6
6
6
6
5
2
2
2

Percentage of total responses


100%
100%
100%
93.8%
81.3%
62.5%
37.5%
37.5%
37.5%
37.5%
31.3%
12.5%
12.5%
12.5%

Question B.5: In your organisation, which ONE of the above mentioned techniques (technique 1 to
14), do you consider being the MOST important, and which ONE do you consider the LEAST
important.
The objective of Question B.5 was to determine, based on the predetermined marketing-logistics interface
co-ordination techniques, which ones are the most important and least important, refer to Table 6.22 for a
summary of all important and least important techniques.
A summary of findings for the most and the least important techniques is presented in Table 6.22. Those
techniques that showed zero value were not ranked as either most important or least important. After a
combined summary of findings, the findings were then presented in two parts, a table for the most important
and another table for the least important techniques. For this question there was a missing value of one
respondent on both the most important and least important techniques. One missing value is 6.3% of
respondents. The percentages are worked out on the total of sixteen responses including the missing value.

91

Table 6.22: The most important and the least important techniques
Techniques
Top management support
Mutual goals
Joint projects
Distribution specialist
Information sharing
Coordinating committees
Cross-functional training
education
Situational bargaining
System of incentives
Unified department
Job switching or rotation
Joint outings
Third-party intervention
Philosophy of cooperation

Most important techniques


68.8%

Least important techniques

25%
12.5%
and
6.3%
18.8%
6.3%
37.5%
12.5%

Top management support was the most significant (68.8%) important technique among the three selected.
Both information sharing and philosophy of cooperation were considered equally important with (12.5%) of
respondents choosing the two techniques. Refer to Table 6.23 for the most important techniques in order of
their sequence. It is important to note that the three techniques were also considered amongst the ones that
have a very high impact on marketing-logistics interface, refer to Table 6.16.
According to the study by Murphy and Poist these three techniques as listed in Table 6.23 were ranked as
the first three most important techniques and the mostly used in various respondents organisations. In the
study by Murphy and Poist both marketing and logistics practitioners identified the three as the mostly used
and most important techniques with a major impact on the interface. Thus findings in SA passenger car
industry are similar to the study by Murphy and Poist.
Table 6.23: The most important techniques
Techniques

Frequency

Top management support

11

Percentage to the total number of


responses
68.8%

Information sharing
Philosophy of cooperation

2
2

12.5%
12.5%

The least important technique is third-party intervention, these techniques were cited as the least important
by (37.5%) and distribution specialist (25%) of respondents. Refer to Table 6.24 for findings. In the study by

92

Murphy and Poist third-party intervention was considered the least important and was not currently used
technique by both marketing and logistics practitioners.
The use of distribution specialist was considered important by logisticians and least important by marketing
practitioners. As already stated, for the current study, comparison was difficult due to the small population
size. Refer to Table 6.24 for findings.
Table 6.24: The least important techniques
Techniques

Frequency

Percentage to the total number of


responses

Third-party intervention

37.5%

Distribution specialist

25%

Unified department

18.8%

Situational bargaining

6.3%

Job switching or rotation

6.3%

Question B.6: On a scale of 1-5 with 1 being strongly disagree and 5 being strongly agree please
indicate to what extent you agree with the following statements regarding the advantages resulting
from co-operation between marketing and logistics functions in your organisation
The aim of Question B.6 was to determine advantages resulting from cooperation between logistics and
marketing functions in an organisation. A five-point Likert-scale was used from strongly disagree to strongly
agree. Three statements were stated and respondents were required to choose their responses using the
five-point Likert-scale.
Respondents equally agree (50%) and strongly agree (50%) with the statement that cooperation between
marketing and logistics results in high levels of customer service. Most respondents (62.5%) strongly agree
with the statement that cooperation between marketing and logistics is critical to achieving a sustainable
competitive advantage. This shows that the marketing-logistics interface is perceived as important to
achieving a sustainable competitive advantage. Most of the respondents (75%) chose agree on the
statement that co-operation between marketing and logistics result in the product that is available at the
right price, time and place. Overall, respondents agreed with the statements supplied. Refer to Table 6.25
for findings.

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Table 6.25: Advantages resulting from co-operation between marketing and logistics functions in
your organisation
Advantages

1=Strongly
disagree

2= disagree

Co-operation
between marketing
and logistics result in
high
levels
of
customer service
Co-operation
between marketing
and logistics is critical
to
achieving
a
sustainable
competitive
advantage
Co-operation
between marketing
and logistics result in
the
product
availability at the right
price, time and place

3=Neither
4=Agree
agree
nor
disagree
50%

5=Strongly
agree
50%

6.3%

31.3%

62.5%

75%

25%

Question B.8: On a scale of 1-4 with 1 being to no extent and 4 to a large extent, please indicate to
what extent can dealerships in your organisation offer each of the following to customers without
consulting the manufacturer
The aim of this question was to determine the ability of dealerships to provide additional services and
products to customers as another way of providing high levels of customer service, without consulting the
manufacturer. A four-point scale was used in this question. Respondents had to rate the extent to which
dealerships consult with the manufacturer prior to providing certain services.
It appeared that to a large extent dealerships have to consult the manufacturer prior to offering extra service
features as 93.8% of respondents agreed that this is the situation. Since giving discount on a customers
request depends on the profit margins of the dealer, most dealers (81.3%) do not consult with the
manufacturer when giving discounts. Dealers have to consult with the manufacturer to a moderate extent
(62.5%) prior to offering extra interior features. In order to provide extra exterior features, respondents
stated that this is done largely to a moderate extent (56.3%). Refer to Table 6.26 for findings.
Consulting the manufacturer to a large extent could have a positive or negative effect on the dealers
customer service levels and customer satisfaction depending on the responsiveness of the manufacturer. It
can also have a negative effect on the dealer and the manufacturer if dealers provide poor workmanship

94

when making changes to the standard features without consulting the manufacturer. As stated in Chapter 4,
Toyota dealers have a high level of autonomy, however extra product features and service offered by the
dealer have to be in line with the manufacturer standards.
Consultation is important especially on factors that can result in poor performance of the product and
additional service such as road assistance. Most manufacturers of exclusive passenger cars such as BMW
provide road assistance at the manufacturer level and not the dealer. When advising customers on service
such as road assistance, dealers should make customers aware that the manufacturer does it centrally for
all the dealers.
Table 6.26: The extent to which dealers consult with the manufacturer for additional services to
customers
Services and products

To
extent

no To a
extent

Extra service features e.g.


road assistance or service
plans
Extra interior features, e.g.
hands free devices
Exterior
features,
e.g. 6.3%
spoilers
Discounts on customer 81.3%
request

small To a moderate To a large extent


extent
6.3%
93.8%

25%

62.5%

12.5%

25%

56.3%

12.5%

18.8%

Question B.9: On a scale of 1-5 with 1 being strongly disagree and 5 being strongly agree, please
rate your level of agreement or disagreement with following statements:

Passenger cars are priced higher in SA than what they are priced in Europe

Passenger cars are priced higher in SA than what they are priced in the US

The aim of Question B.9 was to establish how easy or difficult it is to possess a passenger car in SA based
on affordability. A five-point Likert-scale ranging from, strongly disagree to strongly agree was used.
Respondents used only neither agree nor disagree and agree options in their responses. Most of the
respondents agreed with both statements (66.7%) and the balance of respondents were neutral. Refer to
Table 6.27 for findings. This means that the majority of respondents believe that passenger cars are priced
higher in SA than in the US and Europe. This is in line with the industry analysis that passenger car prices
are 25%-30% higher in SA than in most developed countries like US and Europe.

95

Table 6.27: Passenger vehicles are priced higher in SA than in Europe and the US
Statements

Strongly disagree Disagree

Passenger vehicles are priced


higher than what they are priced
in Europe
Passenger vehicles are priced
higher in SA than what they are
priced in the US

Neither
agree
nor
disagree
33.3%

Agree

33.3%

66.7%

Strongly
agree

66.7%

In order to interpret and make a summary of findings open-ended questions were analysed.
6.3

Open-ended questions

As stated in Chapter Five of the research, personal interview was the method used to collect the primary
data. Reason for including open-ended questions was to uncover underlying motivations and feelings on a
topic. All open-ended questions in Section B were generated based on the closed-ended questions.
The process of analysing has already been stated, content analysis method is to be followed. In order to
transcribe the data, a response sheet was developed for each respondent and responses were recorded.
Names of respondents were specified at the top of the response sheet. Since respondents were from
marketing and logistics, transcribing was grouped into marketing and logistics responses.
6.3.1

Designing response sheets

A response sheet per questionnaire was developed in order to record the responses in an easier format.
Response sheets are used for transcribing and for recording edited responses (Miles and Huberman,
1994:85). Response sheets were grouped into marketing and logistics responses, refer to Appendix B for
marketing responses and Appendix C for logistics responses.
6.3.2

Designing categories relevant to the study

In order to make categorisation, relevant words and phrases were bolded for ease of reference. To come up
with relevant categories for the study, responses and the relevant literature should be read several times
(Tesch: 1990, 80). Categories were designed based the on the literature relevant to the study and were
aligned with the responses. Based on the previous research, responses and the literature the following
categories were identified as relevant to the study:

High levels of customer service

Price

96

Promotion

Product

Place

Having determined categories under which responses were analysed, responses were discussed under
each category and these are used in Table 6.28. It is important to note that categories were summarised in
Table 6.28 and were then divided into two groups in order to address Question B.7 and B.10.
6.3.3

Discussing responses under each category

Marketing and logistics responses were stated in a table according to the categories identified. A summary
of responses was presented in a table format and was then applied to questions. Both marketing and
logistics responses were discussed together and not as separate entities in response to the relevant
questions. This allowed a holistic and easy understanding of responses in relation to questions. Key words
and phrases, which were identified and underlined, in the response sheets were recorded under various
categories in the table. Refer to Appendix B for marketing response sheets and Appendix C for logistics
response sheets. For identified key words and phrases under each category refer to Table 6.28, which is a
reflection of all responses received.
Table 6.28: Key words and phrases from the response sheets that are relevant to each category
High levels of
Customer
service (A)
High levels of
customer
service
and
customer
satisfaction
(Marketing)
Cooperation
results in high
levels
of
customer
service
(Marketing)
Quality
customer
service
and
customer
satisfaction are
achieved
through
cooperation
(Marketing)

Price (B)

Product (E)

Place (F)

High production None


costs
which
negatively affect
selling prices

None

None

None

None

None

Marketing
communication
that is based
on
the
organisation
capabilities

Availability of the product


Marketing
communication that at the right place as per
emphasises
the marketing communication
product features,
uniqueness
and
quality
without
over-promising

High
transportation
cost
of
components and
finished products
affects prices
Rebates through
MIDP result in
discounts offered
to
customers.
Price
issue
depends on the
market segment

Promotion C

97

High
and
sustainable
levels
of
customer
service
and
customer
satisfaction
(Marketing)
None
(Marketing)

None
Competitive
prices
despite
costs
disadvantage

Quality
customer
service while
maximising
profits
(Marketing)
Customer
value creation
and high levels
of
customer
service
(Marketing)

High prices due None


to
increasing
logistics
and
production costs
negatively affect
selling prices
It takes approx None
hundred
and
sixty four weeks
for an average
SA citizen to
afford a car due
to high prices.

Capitalising on
customer
service as a
competitive
strength
(Marketing)

None
Affordability
problem is due to
high
transportation
costs.
It takes an
average SA
citizen
3-4
years
to
acquire an
economy
passenger
car
None
Locally
manufactured
cars
are
normally
priced higher
due
to
logistics costs

None
(Logistics)

Affordability is a
problem in SA
due to high
logistics costs.
An average SA
citizen takes 2-3
years of working
to can afford a
car

Marketing
communication
that is aligned
with logistics
capabilities

98

None

None

Cooperation
creates
a
sustainable
competitive
advantage
because
it
allows
the
organisation to
deliver the right
product
None

None

None

None

None

None

None

Efficient distribution is
achieved
through
cooperation
between
marketing and logistics

None

Creating
a Prices in SA are None
not as high as in
sustainable
the US and
competitive
Europe and SA
advantage
cannot
be
through
compared to the
customer
two
countries
service
because
of
(Logistics)
different
economic
positions
High
logistics None
Delivering
and production
sustainable
costs influence
quality
selling prices
customer
service during
and after sale
(Logistics)
High
and
sustainable
levels
of
customer
service

Availability of the Efficient


product at the right process
place, time and
place as a result of
cooperation

distribution

None

None

Prices in SA are None


25% higher than
in the US and
Europe due to
high
logistics
costs

None

None

High production None


and
logistics
costs
have
negatively
influenced prices

Cooperation has an Product availability at the


influence on the right place and time
product cost and
availability

High
logistics None
costs such as
import duties and
transportation
costs influence
prices

Cooperation has an Customer satisfaction as


influence on the a result of the product
product availability availability at the right
place and time

(Logistics)
Meeting
customer
expectations
and achieving
high levels of
customer
service while
maximising
profits
(Logistics)
Customer
satisfaction
due to the
product being
available at the
right time and
place
(Logistics)

99

High levels of
customer
service
and
customer
satisfaction
while
increasing
long-term
profits
(Logistics)

High
logistics None
costs such as
transportation
negatively
influence selling
prices

Delivering
the Delivering the product at
product at the right the right place
time,
quantity,
quality, price and
place

Delivering on
the promised
product at the
right
time,
quality,
quantity, price
and place has
an influence on
customer
service
(Logistics)

Car prices are None


approx 25-30%in
SA and logistics
costs are high

Cooperation has an Availability of the product


influence on the at the right place
product availability
and price.

Question B.7- In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
Initially identified Categories as stated in Table 6.28 that provided responses to this question were found to
be:

High levels of customer service

Price

Promotion

Product

Place

The above categories responses were quantified in order to express them in percentages to the total
respondents that specified a response that fall within that category. Refer to Table 6.29 for findings. Refer to
Appendix B and C for complete responses.

100

Table 6.29: Ways in which cooperation between marketing and logistics creates a sustainable
competitive advantage
Categories

Percentage of responses to the categories

1. High levels of customer service (A)

87.5%

2. Price (B)

19%

3. Promotion C

6.25%

4. Product (E)

43.8%

5. Place (F)

43.8%

High levels of Customer service


High levels of customer service was cited as a way in which marketing-logistics interface creates a
sustainable competitive advantage by a significant number of respondents (87.5%). This shows that
respondents agree that; cooperation between marketing and logistics has an effect on customer service
levels. Refer to Figure 2.1 for the interface. Refer to Table 6.29 for findings.
Price
Price was cited by (19%) of respondents as a way in which cooperation between marketing and logistics
creates a sustainable competitive advantage. It can be argued that it is difficult to create a sustainable
competitive advantage in the industry through the price element. This supports the argument in Chapter four
that SA prices of passenger cars are not competitive and are much higher than the selling prices in the US
and Europe. This shows that competing on prices in the industry is not achievable. This also supports the
selection in B.9; where the majority of respondents agreed with the two statements, refer to Appendix A for
the statements and Table 6.27 for the findings on the issue of price element.
Promotion
Promotion as a way in which the marketing-logistics interface creates a sustainable competitive advantage
did not receive much support (6.25%). It can be concluded that promotion as one element of marketing
cannot be regarded as a way in which marketing and logistics cooperation creates a sustainable competitive
advantage. Refer to Table 6.29 for the results. It was stated that all marketing elements should work
together before collaborating with other functions such as logistics in order to have an interface that serve
as a way to a sustainable competitive advantage.
Product
Factors that affect the product can have an influence on the marketing-logistics interface as a way to a
sustainable competitive advantage. Product as a marketing element was cited as a way in which
cooperation creates a sustainable competitive advantage by a large percentage of respondents (43.8%).

101

Refer to Table 6.29 for the results. Product is the core or the starting point of the organisation. If the
organisation fails to deliver quality product whether tangible or intangible it will be difficult to realise a
sustainable competitive advantage.
Place
A large percentage of respondents (43.8%) believed that the place element is important in realising the
cooperation between marketing and logistics as a way to a sustainable competitive advantage. It is
important that the product is available at the right time and place, time and place utility as discussed in
Chapter 2 are important for the interface as a way to a sustainable competitive advantage. Refer to Table
6.29 for the results.
Based on the responses, it can be concluded that marketing and logistics cooperation creates a sustainable
competitive advantage to a large extent through customer service element and to a moderate extent through
place and product elements of marketing. The result for product and place are neutral since they have all
been supported equally (43.8%) by respondents.
Question B.10-Provide not more than three reasons on which you base your response in B.9.
The aim of Question B.10 was to gain insight regarding the responses provided in B.9. Question B.9 aimed
at addressing the passenger car prices comparison between SA, US and Europe. Price as a marketing
element was used as a category. Refer to Table 6.28.
Price
Obviously the question related to the issue of price and as a result respondents knew exactly what was
being assessed.

In order to analyse question B.9 under this category, factors that influenced the

respondents to consider a certain choice of response in B.9 were stated and quantified. Based on the
responses, the price category can be broken into the following factors:

High logistics costs: In terms of high logistics costs, a large percentage of respondents (68.8%)
believed that logistics costs have negatively influenced passenger car prices in SA. Transportation
was cited as the main logistics cost that disadvantages the manufacturers in SA. According to
respondents transportation infrastructure in SA is not as developed as in the US and Europe and
this has had a negative impact on logistics costs. Since SA is considered to be located far from
other markets where it export finished products and import components, transportation becomes a
major cost disadvantage.

High production costs: High production cost was cited by (25%) of respondents as a reason for
high prices. Respondents do not consider the impact of production costs as significant however
high production and logistics costs were stated together in the responses.

102

MIDP rebates: MIDP was not supported as a means to boost affordability of passenger cars. MIDP
as a benefit to customers was stated by (6.25%) of respondents. This confirms that MIDP has not
benefited final customers in the opinion of the respondent. Refer to Appendix B and C for complete
responses.

Market segment analysis: An argument that the issue of whether prices are higher in SA or not
should be looked from the market segment point of view was not supported, (6.25%) of
respondents believe that it cannot be generalised across market segments that affordability and
high prices are a problem, refer to Appendix B and C for complete responses.

Price competitiveness: SA prices were considered competitive when compared to US and Europe
however this factor was not significant, (12.5%) of respondents believes that prices are
competitive. Refer to Appendix B and C for complete responses.

Affordability statistics: This factor was considered important and a separate issue for the analysis in
order to show that respondents are aware of the statistical information regarding affordability
(31.25%) of respondents stated responses that provide statistical information. Refer to Appendix B
and C for complete responses.

It can be concluded that high logistics costs results in high selling prices of passenger cars. Refer to Table
6.30 for the results.
Table 6.30: Factors that influence responses to Question B.9 regarding the price element
Category
Price

6.4

Factors
High logistics costs
High production costs
MIDP rebates
Market segment analysis
Price competitiveness
Affordability statistics

Percentage of responses to factors


68.8%
25%
6.25%
6.25%
12.5%
31.25%

Summary of findings

Findings will be summarised in the same format as the analysis of findings. A summary of section A based
on the profile of respondents was presented followed by Section B that is based on the marketing-logistics
interface coordination techniques.
6.4.1

The respondents

Sixteen respondents were interviewed from the passenger car industry. The majority of respondents have
been in the industry for long, 43.8% of respondents have been in the industry for 5-7 years followed by
31.3% who have been in the industry for 2-4. However majority of respondents have been with the current
organisation for 2-4 years accounting for 81.3% of respondents. Based on this information, it can be
concluded that respondents have the necessary knowledge to can respond to the questions. This has

103

managerial implications that there could be high employee mobility in the industry considering that
respondents have been in the industry for 5-7 years and only 2-4 years with current organisations.
Response to Question A.1 shows that 50% of manufacturers of passenger cars in SA are from Germany.
This means German manufacturers have a large production investment in SA. The least investors are Italy
and US manufacturers accounting for 12.5% each of the total number of manufacturers. The average
number of passenger car brands manufactured in SA is less than the average number of brand marketed by
these manufactures.
6.4.2

The Marketing-Logistics interface

The reason for low investment in assembling processes is due to the fact that SA does not offer good
investment incentives and is located far from major markets. This result in high logistics costs of operating in
SA (Furlonger, 2006:10). Logistics costs as a reason for higher selling prices accounted for (68.8%) of
responses. Low investment translates to high prices as a result of narrow selection of locally assembled
passenger cars. Despite the flood of imports into SA, prices are high due to minimal range of brand choices
available. Possession utility in SA has to improve by making passenger cars affordable. This has the
managerial implications because it could mean that management has no confidence in SA for investment
and the possibility of withdrawing the existing investment even exists.
Response to B.1 shows that there is co-operation between marketing and logistics, (43.8%) of responses
agree that a maximum level of co-operation exists and (31.3%) agree that moderate level exists in their
organisation. This findings support the study by Murphy and Poist (1996:26) where it was established that
most respondents agree that there is co-operation between marketing and logistics. Although a large
percentage of respondents stated that there is maximum cooperation, the percentage of those stating
moderate cooperation is still high (31.3%). This means that there is room for improvement and top
management, information sharing and philosophy of cooperation as the most important techniques could be
applied in driving that improvement. Management should focus on techniques with very high and high
impact on the interface. Refer to Tables 6.16 for very high impact techniques and 6.17 for high impact
techniques.
Management should focus less or not at all on techniques such as unified department; third-party
intervention; distribution specialist and job switching as they are regarded as the least likely to be used.
This shows that employees might not support management in the use of these techniques. The findings in
this regard agree with the study by Murphy and Poist (1996:26). The number of respondents who mentioned
other techniques was low, (25%) of respondents mentioned other techniques. This implies that respondents
use mainly predetermined techniques.

104

Based on the use of coordination techniques in building cooperation between marketing and logistics,
respondents were required to identify benefits that result from the interface. Three statements were posed
as advantages. Refer to Table 6.25. Results show that respondents mainly agree or strongly agree with the
statements. The most important outcome was on sustainable competitive advantage where 62.5% of
respondents strongly agree with the statement that co-operation between marketing and logistics is critical
to achieving a sustainable competitive advantage.
Other aspects of Question B.6 are important and it was interesting to find out that properties of responses to
Question B.6 were also provided as ways in which the cooperation between marketing and logistics creates
a sustainable competitive advantage when responding to Question B.7. High levels of customer service is
mainly a way in which the marketing-logistics interface creates a sustainable competitive advantage
(87.5%). Product and place elements of marketing were considered (43.8%) as some ways in which the
cooperation can create a sustainable competitive advantage.
This is important since it reflects that not all elements are important in building a sustainable competitive
advantage. Logistics elements were not stated as part of ways in which the interface creates a sustainable
competitive advantage. However it is important to realise that the price element is highly impacted by
logistics costs. Price determines possession utility, which is important to high levels of customer service,
which then influence sustainable competitive advantage. Since it is difficult to use price as a way in which
sustainable competitive advantage can be created, it is not possible to use logistics costs or elements to
create a sustainable competitive advantage in the industry. This is due to high logistics costs that put
manufacturers of passenger cars at a cost disadvantage. It can be concluded that all these factors have an
impact on each other when considering how marketing-logistics interface can create a sustainable
competitive advantage.
6.5

Conclusion

The chapter covered analysis and interpretation of both closed and open-ended questions. The
questionnaire was administered to gather the responses. The benefit of using a structured questionnaire
was that it made the most part of the analysis and interpretation easier. Content analysis method was used
to analyse open-ended questions. The advantage of content analysis was that it provided an opportunity to
check responses at various stages of the analysis process.
Findings have showed that there are issues that have managerial implications and could serve as a guide to
the improvement of cooperation between marketing and logistics and the realisation of the interface that can
create a sustainable competitive advantage. This chapter has also opened ways to the general conclusion

105

and suggestion for further research. In order to suggest further research it is important to test propositions
identified based on the findings.

106

CHAPTER 7: RECOMMENDATIONS AND CONCLUSION

7.1

Introduction

The aim of this part of the study is to bring together all parts of the research in order to identify whether the
propositions are supported, make recommendations, suggestions for further research and conclusion. This
is the chapter in which the researcher interprets all that is learned in his/her own words. It is an important
chapter since it gives the researcher an opportunity to determine the level of knowledge and understanding
of the study. At this stage of the research it is important to ensure that every aspect covered is clarified,
tested and concluded.
The following broad topics will be covered in the in this section:

7.2

Propositions

Managerial implications

Recommendation

Suggestion for further research and conclusion


Propositions

This is an exploratory study that incorporated quantitative research approach. The population size was small
and the topic was applied for the first time in SA, as a result propositions and not hypothesis were
determined. Three propositions were determined in chapter one and will be analysed in order to identify
whether the findings supports the propositions.
Proposition 1: Responses in the study of Murphy and Poist (1996) are similar to those in the
passenger car market in SA among marketing and logistics practitioners.
This proposition aimed at comparing the two studies to identify similarities and differences in the responses.
A general discussion, followed by a summary of similarities and differences was presented. The aim of the
study by Murphy and Poist was to identify the fourteen marketing-logistics techniques, to rank them in order
of importance, to identify those that are most and least likely to be used and to determine whether
cooperation between marketing and logistics exists in the respondents organisations.
Comparing the level of cooperation responses
According to the study by Murphy and Poist the level of cooperation in the respondents organisations was
moderate to high level of cooperation where (40.9%) of marketing respondents agreed that the level of

107

cooperation is moderate and (45.7%) of logistics respondents agreed that the level of cooperation is
moderate. With regard to the high levels of cooperation (42.4%) of marketing respondents and (43.2%)
stated that there are high levels of cooperation. For ease of reference Table 3.2 is presented again as Table
7.1 for Murphy and Poist study findings on the level of cooperation between marketing and logistics.
Table 7.1: Level of cooperation between marketing and logistics functions
Level of cooperation

Marketing respondents

Logistics respondents

No cooperation

0%

0%

Slight co-operation

7.6%

7.4%

Moderate co-operation

40.9%

45.7%

High co-operation

42.4%

43.2%

Maximum co-operation

9.1%

3.7%

Source: Murphy and Poist (1996:20)


Although different scaling was used between the two studies comparison can be made. A five-point ordinal
scale was applied in the study of Murphy and Poist, while the current study applied four-point ordinal scale
where maximum cooperation was used in the place of high-cooperation. The current study showed that
moderate to maximum level of cooperation exists where maximum levels of cooperation equals to the high
levels of cooperation in the study of Murphy and Poist, refer to Table 7.1. The current study showed that no
respondents stated that there is no cooperation (0%) while (25%) stated minimum levels, (31,3%) of
respondents stated moderate levels and (43.8%) stated maximum levels. In the current study minimum
represents slight cooperation in the study of Murphy and Poist. Refer to Table 7.2 for summary of
comparison.
Table 7.2: Summary of comparison between the study of Murphy and Poist and the current study

Level of cooperation

Study of Murphy and Poist (1996)

Current study in the SA

Marketing respondents

Total Responses

Logistics
respondents

No cooperation

0%

0%

0%

Slight co-operation

7.6%

7.4%

25%

Moderate co-operation

40.9%

45.7%

31.3%

High co-operation

42.4%

43.2%

43.8%

Maximum co-operation

9.1%

3.7%

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Although the current study had similar findings that cooperation exists at moderate to maximum/high levels
of cooperation, the difference is in the spread of percentages of respondents.
Comparing the mostly used techniques
The study by Murphy and Poist showed that top management support is mostly used (76.4%) of marketing
respondents cited it and (74.7%) of logistics respondents also cited this technique, while Information sharing
was cited by 65.7% of marketing and 73.5% of logistics respondents in the study by Murphy and Poist.
Instilling philosophy of cooperation as a technique mostly used, was cited by 64.2% of marketing and 70.4%
of logistics respondents. Refer to Table 7.3 for the summery of findings and to Table 3.1 for complete.
Table 7.3: Techniques mostly used in the study by Murphy and Poist
Techniques

Percentages of responses in the study by Murphy and Poist


Marketing

Logistics

Top management support

76.4%

74.7%

Information sharing

65.7%

73.5%

Instilling philosophy of cooperation

64.2%

70.4%

Both marketing and logistics responses ranked these techniques the same way. Since the current study
applied a combined result of marketing and logistics, the focus of comparison will be on comparing the
current findings to the three techniques of Murphy and Poist study. The current study is similar to the study
by Murphy and Poist with regards to top management support and information sharing. The difference
between the two studies is on the philosophy of cooperation. The philosophy of cooperation was mostly
used by 68.8% in the current study while joint outing was used by 87.5% of respondents in the current
study. In the current study, findings show that the following techniques are mostly used:

Top management support

Information sharing

Joint outings

This differs from the study by Murphy and Poist since joint outing was considered the least used technique;
refer to Table 7.3 of Murphy and Poist findings and Table 6.10 for the current findings.
Comparing techniques that organisations plan to use
The discussion of the findings in the study by Murphy and Poist (1996:26) as techniques that organisations
consider important and plan to use in the future:

Education and training

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Mutual goals

Joint projects

According to the discussion of the findings, these techniques are currently being used, however the plan to
use imply that a significant number is planning to increase their use and those that do not use them will
most likely use them in future. Refer to table 6.11 for all techniques that organisations plan to increase their
use in the future.
In the current study education and training, mutual goals and joint project score equally (37.5%) in terms of
plan to use techniques. This is in line with the study by Murphy and Poist where the three techniques were
identified as the ones that organisations plan to use as much as the three that are mainly used; top
management support, information sharing and philosophy of cooperation.
Comparing the least used or no plan to use techniques
When comparing the current study to the study by Murphy and Poist, the following techniques were
considered as the least likely used:

Job switching or rotation

Unified department

System of incentives

The above techniques in the study by Murphy and Poist are ranked as the three techniques found to be
least important and least likely to be used. These three are also considered least likely to be used in the
current study. (Refer to Table 6.12). Although the two studies are similar in terms of the above-mentioned
techniques, the difference lies with joint outing technique. In the study by Murphy and Poist joint outing was
regarded as the least used technique ranking ten and eleven for logistics and marketing respondents
respectively. In the current study joint outing is mostly used (87.5%).
Comparing the most important techniques
The current study and the study by Murphy and Poist showed the following techniques as the most
important:

Top management support

Information sharing

Philosophy of cooperation. (Refer to Table 6.23)

This showed that the top three mostly used techniques are the most important techniques in both studies,
however the difference lies in the percentages of support received by the techniques in the studies. In the
study by Murphy and Poist the gap in ranking is not wide between the techniques for both marketing and

110

logistics however the current study shows a gap. Refer to Table 3.1 for Murphy and Poist ranking and Table
6.23 for the current findings.
Comparing the least important techniques
In the study by Murphy and Poist, the least important techniques that were ranked closely together by both
marketing and logistics practitioners were:

System of incentives

Job rotation

Unified departments

Third party intervention

Refer to Table 3.1 for the above techniques ranking in the study by Murphy and Poist.
The current study shows the following as the three least important techniques:

Third party intervention

Distribution specialist

Unified department

Refer to Table 6.24 for the percentages of respondents that considered the above to be the least important
techniques. Unified department is the only technique consistent with the results by Murphy and Poist from
both marketing and logistics respondents. Distribution specialist was not among the bottom three in the
study by Murphy and Poist and was even ranked higher than mutual goals (59.7%) for logisticians in terms
of the level of importance. Third party intervention although not ranked among the bottom three in the
previous study, it is still ranked lower and considered to be of use by few respondents (19.4%) for marketing
and (15.9%) for logistics, refer to Table 3.1 for findings.
In the study by Murphy and Poist, system of incentives was considered the least important technique,
however in the current study system of incentives was not selected as the most or least important
technique. A possible reason for not ranking the system of incentives as the most or least important
technique could be that the respondents did not understand how it contributes to the interface.
A summary of comparisons is presented in Table 7.4 where factors refer to the level of cooperation, the
fourteen coordination techniques and elements of comparison.

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Summery of comparisons
Table 7.4: Similarities in the responses between the study by Murphy and Posit and the current
study
Elements of comparison

Factors

Level of cooperation

No cooperation
Moderate cooperation
High cooperation

Mostly used techniques

Top management support


Information sharing
Instilling philosophy of cooperation

Plan to use techniques

Education and training


Mutual goals
Joint projects

Least used or no plan to use techniques

Job switching
Unified department
System of incentives

Most important techniques

Top management support


Information sharing
Philosophy of cooperation

Least important techniques

Unified department
Third party intervention

Table 7.5: Differences in the responses between the study by Murphy and Posit and the current
study
Elements of comparison

Factors

Mostly used techniques

Philosophy of cooperation
Joint outings

Least used or no plan to use techniques

Joint outing

Least important techniques

Distribution specialist
Job rotation
System of incentives

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Based on the findings and analysis, P1 is supported since there are similar responses in all elements with
seventeen factors that prove the similarities. The difference is in three elements with six factors that make
the difference.
Proposition 2: The marketing-logistics interface creates a sustainable competitive advantage
through high levels of customer service
Three advantages resulting from cooperation between marketing and logistics were stated in Table 6.25. It
was found that (62.5%) of respondents strongly agree with the statement that cooperation between
marketing and logistics is critical to achieving a sustainable competitive advantage. Since marketing and
logistics interface, as a way to a sustainable competitive advantage is the gist of the research, it is important
to understand how the interface creates a sustainable competitive advantage. The aim of Question B.7 was
to determine how sustainable competitive advantage is achieved through the interface.
Various ways in which the interface creates a sustainable competitive advantage were identified through
content analysis and classified under the following categories:

High levels of customer service

Price

Promotion

Product

Place

High levels of customer service as a category was largely supported (87.5%) as a way in which coordinated
marketing-logistics interface creates a sustainable competitive advantage. This proposition is supported
since respondents agree with the fact that coordinated interface creates a sustainable competitive
advantage through high levels of customer service.
Proposition 3: Logistics costs have a negative impact on selling price of passenger cars in SA.
It has been acknowledged in the literature that logistics costs are the most important component, when
determining the price of the passenger car. It is important to establish whether they have a positive or
negative impact on passenger car prices in SA. The findings showed that logistics costs in SA have a high
and negative impact on the price element of marketing.
The impact of high logistics costs on price is higher than all other components that have an impact on price.
Majority of respondents (68.8%) pointed out that high logistics costs in SA have resulted in high prices of
passenger cars, which have negatively affected affordability, refer to Table 6.30). Other factors that have an

113

effect on price can positively influence the selling price, however it is difficult for manufacturers and dealers
to offer such incentives to customers in order to improve affordability because of high logistics costs.
As already stated, price as an element of marketing can be used in creating a sustainable competitive
advantage, however this is not possible with high logistics costs. This confirms the arguments in Chapter 4
that manufacturers of passenger cars in SA find it difficult to set competitive car prices. Thus findings
support P3 that logistics costs have a negative impact on selling price of passenger cars in SA.
7.3

Managerial implications

Managerial implications are deduced from the findings and are supported by the discussions in the literature
regarding aspects that relate to the study. These implications are important as a learning tool to the
management regarding the findings. Managerial implications will be discussed under the following headings:

Comparison between passenger cars assembled and those marketed SA

Employee mobility in the passenger car industry

Level of cooperation

Improving the level of cooperation

Customer service

Comparison between passenger cars assembled and those marketed in SA


The findings showed that organisations that assemble passenger cars in SA assemble a lesser number of
passenger cars than what is marketed. On average 1.75 passenger cars are assembled in SA and 7.75
passenger cars are marketed. This has an implication on the economy and not just on management since it
reflects the level of foreign investment that the existing manufacturers are willing to make in SA on
assembling processes. It confirms the argument that the industry struggles to create jobs in the same way
as in Europe, US and Asia (Furlonger, 2006:22). SA is considered an attractive market for sales despite
high passenger car price, which is attributed to high logistics costs (Furlonger, 2006:24).
Manufacturers are looking at MIDP as an initiative that can offset high logistics costs, however this is not the
case. MIDP effects have not reduced the logistics costs as anticipated and has not encouraged further
investments (Furlonger, 2006:234). It is important for the organisations and the government to work together
in getting the MIDP initiative to work towards encouraging investment thereby increasing brands assembled
or manufactured in SA. Organisations in the passenger car industry believe that MIDP should move from
being an initiative that encourages imports and exports to an initiative that encourages investment and
increase local content use of components. Organisations believe that by offering tax rebates and improving

114

the transport infrastructure a positive effect on cost could be realised, which could improve affordability of
passenger cars.
Employee mobility in the passenger car industry
Majority of respondents (81.3%) have been with the current organisation 2-4 years however a large
percentage (43.8%) have been employed in the industry 5-7 years. This shows high level of employee
mobility in the industry and this could have a negative impact on the process of improving cooperation
between marketing and logistics. With lack of stability in keeping employees in the organisation for longer, it
will be difficult to work on the cooperation since it will be difficult to make progress on the improvement.
Level of cooperation
A large percentage of respondents (43.8%) stated a high level of cooperation between marketing and
logistics and this is followed by respondents stating moderate level of cooperation 31.3% and 25% stated
minimum cooperation. This shows that there is room for improvement, with respect to the level of
cooperation motor vehicle manufacturers should reduce the percentage of minimum and moderate level of
cooperation and increase the percentage of high level of cooperation.
Improving the level of cooperation
In order to improve the level of cooperation, the use of other techniques that have high to very high impact
on the marketing-logistics interface should be considered if not mostly used or not used at all. Management
should be aware of those techniques mostly used but with a large percentage of respondents stating that
they have moderate to low impact on the interface. For instance, joint outing is mostly used (87.5%)
however it has a moderate impact (62.5%) on the cooperation between marketing and logistics. Mutual goal
which scored lower than joint outing in terms of being the mostly used technique (56.3%) is considered by
(31.3%) of respondents to have a very high impact on the marketing-logistics interface.
Certain coordination techniques can be applied in improving the level of cooperation. Since the majority
(69%) of respondents stated that there are no other techniques used in their organisations, a different use of
the fourteen predetermined techniques should be considered. Some techniques that are not used and
organisations are planning to use can be put to use in order to improve the level of cooperation.
Greater use of mutual goals as a technique should be considered since mutual goals means that the two
functions are able to establish joint or collective goals and performance measures. When these goals are
shared the organisation is able to realise customer satisfaction and improved overall customer service
performance (Mukhopadhyay and Gupta, 1998:7). Other techniques that organisations could increase their
use include:

115

Cross-functional training and education: This will increase the level of knowledge that employees
have on each others functions and create a responsive organisation to customer needs.

Joint projects: This will encourage further use of mutual goals since it encourages working together
in projects with the same goal. BMW provides a practical example of the importance of joint
projects (Benko and McFarlan, 2003:2).

High levels of customer service


It is important for management to consider high levels of customer service, which can be achieved through
continuous improvement on product performance, product availability, service delivery and assisting
customers in possessing a passenger car. The findings show that high levels of customer service depend
on other aspects such as customer satisfaction. High levels of customer service as a category that included
other aspects is important (87.5%) to the way in which marketing-logistics interface creates a sustainable
competitive advantage. Other categories that followed customer service as ways in which competitive
advantage is created through the interface, were product and place (43.8%).
It is important to note that customer service, is impacted by other aspects considered as ways in which,
competitive advantage is created. Factors such as price are important to customer service levels and in this
industry it is difficult to create a sustainable competitive advantage through price. This means to some
extent customer service is affected. Price dissatisfaction could affect customer satisfaction with the overall
product and service and negatively affects customer service levels.
7.4

Recommendations based on the literature, industry analysis and empirical findings

The purpose of this section is to provide recommendations to the organisations based on the literature,
industry analysis and empirical findings in order to make changes where necessary with regards to
improving cooperation, improving affordability of passenger cars, the use of the fourteen marketing-logistics
interface coordination techniques, and customer service elements. Suggestions for further research will also
be stated.
7.4.1

Recommendations based on the literature review

The main aim of this research was to analyse the views of marketing and logistics managers on the use of
the marketing-logistics interface coordination techniques and the extent to which a coordinated marketinglogistics interface serves as a way to a sustainable competitive advantage. A successful interface or
integration will require commitment, cooperation and understanding from both logistics and marketing
practitioners. In order to realise the aim of the research, the literature review was undertaken and this

116

served as a foundation upon which the empirical research was formulated. A recommendation was made
based on the literature:

Based on the definition of mutual goal and the fact that marketing and logistics practitioners in the
study by Murphy and Poist aim to use the technique more often, it is important that managers in
the passenger car industry use this technique in order to improve the level of cooperation.

7.4.2

Recommendations based on the industry analysis

Analysis of the industry was done in order to understand and gain insight into issues that are of critical
importance in the industry, which have an impact on the study. Two recommendations based on the industry
analysis were identified.
Recommendation 1
The structure of MIDP requires change if the programme is to encourage local manufacturers and
components suppliers to increase their level of investment in the assembling processes. There has to be a
shift from import rebates to offering incentives such as tax rebates, which will in turn reduce the cost of
investment. With reduced costs and increasing investment, customers can enjoy affordable prices and wide
selection of locally manufactured brands.
Recommendation 2
The government and local manufactures of passenger cars should work together in improving logistical
factors such as transport and security in order to reduce logistics costs. The points system used in MIDP
where points are gained through export activities should assist in covering transportation costs of getting the
product from SA to other countries and not be used to reduce import duties. This could reduce the level of
trade deficit as a result of high import of components and finished products in the industry.
Recommendation 3
Manufacturers should improve their relationships with the dealers, by giving dealers a higher level of
autonomy in making decisions that affect the customer while ensuring that product and service quality are
not compromised. BMW and Toyota are examples of organisation that are achieving with regards to building
a mutual relationship with dealers. This relationship is important to getting the product at the right place and
time and for meeting customer expectations.

117

7.4.3

Recommendations from empirical findings

Empirical findings encapsulated the literature and industry analysis findings since the research problem was
formulated based on the literature and the industry analysis. Although the population size was small, there
were aspects that can be learned from the study. Three recommendations were identified based on the
empirical findings.
Recommendation 1
It is important to realise that customer service levels are important as a way in which the marketing-logistics
interface creates a sustainable competitive advantage. It is important to focus on customer service levels in
order to determine the overall customer service performance as defined in Chapter 2.
Recommendation 2
The industry should find ways of improving customer service. Based on industry analysis, the industry lags
with regards to the quality of service and product. It is important to improve customer service performance
since it is considered the primary way in which the marketing-logistics interface creates a sustainable
competitive advantage. This can be achieved by improving the relationship with dealers, improving quality of
products and continuous negotiations with the government in revamping MIDP so that it can benefit the
customer.
Recommendation 3
Management should look at improving the level of cooperation between marketing and logistics by applying
mutual goal as a technique at a greater length. As already stated above, in the study by Murphy and Poist
mutual goals was not a technique that was mostly used, however through empirical study management
realised the importance on this technique. In the current study it is still ranking low in terms of techniques
mostly used. It is important to realise that it has a very high impact on the interface; as a result organisations
should consider using it more.
7.4.4

Suggestions for further research

The industry should investigate whether the fourteen marketing-logistics interface coordination techniques
can be generalised to other interfaces such as marketing-production interface in the same organisation. It is
important that further research considers a different segment of the market if is applied in the vehicle
industry.

118

7.5

Limitations of the study

A number of limitations that can be associated with this study include:

There is limited literature and related research on the topic of the marketing-logistics interface as a
way to a sustainable competitive advantage

The marketing-logistics interface topic is fairly new in the field of marketing and logistics

Due to the limited time and financial resource, the population excluded any manufacturer of
passenger cars who manufactures all models outside SA because the marketing and logistics
covers import and export issues that are outside the scope of the study

Due to the structure of the industry in SA the population size for the dissertation was small

The marketing-logistics interface in the literature tends to discuss the interface along the four Ps of
marketing however marketing today refers to the seven Ps of marketing.

7.6

Conclusion

The research has shown the importance of the marketing-logistics interface coordination techniques, how
the interface can create a sustainable competitive advantage and issues that requires improvement in the
passenger car industry. The interface creates a sustainable competitive advantage through customer
service and all elements of marketing however logistics elements also influence customer service mainly
through pricing. In the passenger industry the main element of logistics that have an impact on customer
service is transportation cost. This element has a negative influence on pricing and as a result on customer
service. The research findings support the literature that customer service is the primary way in which the
marketing-logistics interface creates a sustainable competitive advantage.
It is important to realise that Figure 2.1 shows all elements of marketing and logistics influencing customer
service levels. It can be concluded that all elements of marketing and logistics affect customer service
levels. Based on the empirical findings, the research objectives and problem as stated in Chapter 1 were
achieved since the findings demonstrated how the interface creates a sustainable competitive advantage
and the importance and use of the fourteen interface coordination techniques. The empirical research also
supports the theoretical industry analysis where it was found that dealers have to consult with the
manufacturer to a moderate and large extent on all aspect except when offering discounts. The findings
agreed with the industry analysis on the issue of pricing and logistics costs.

119

Further research should use a large population where sampling can be made. This being an exploratory
research that incorporated descriptive research, its findings should not be applied without further research.

120

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125

Appendix A: Questionnaire (in word format)


Please answer the following questions. All answers will be treated with the strictest confidentiality
SECTION A: Background information on the organisation and passenger vehicle industry
A.1 In which country is the parent organisation of your enterprise located?

A.2 How many passenger car brands are assembled by your organisation in SA?

A.3 How many passenger car brands are marketed by your organisation in SA?

A.4 What is your job title in the organisation?

A.5 Please indicate the number of years that you have been with the organisation
Less than 2 2-4

5-7

8-10

11-13

14 Years

Years

Years

Years

Years

or more

Years

A.6 How many years have you been employed in the motor vehicle industry?
Less than 2 2-4

5-7

8-10

Years

Years

Years

Years

11-13 Years

14 Years or more

SECTION B: About marketing-logistics interface co-ordination techniques


B.1 On a scale of 1-4 with 1 being no cooperation and 4 being a maximum cooperation, please rate the
degree of cooperation in your organisation between the marketing and logistics functions
1. No cooperation

2. Minimum cooperation

3.
cooperation

126

Moderate 4.
cooperation

Maximum

B.2 Please indicate, whether your organisation currently uses each of the following techniques to establish
cooperation between the marketing and logistics functions. If your organisation does NOT CURRENTLY
USE a specific technique, please indicate whether your organisation PLANS to use this technique within the
next two years. If you are unsure or do not know, please tick DO NOT USE or DO NOT KNOW.
In order to establish cooperation between the 1=Currently

2=Plan to 3=Do

4=

marketing

use within not use

not

organisation uses/ plans to use the following

the

know

techniques

two years

and

logistics

functions,

my using

1.Top management support:

next

Gaining top management commitment for greater


cooperation between the marketing and logistics
functions
2. Mutual goals:
Sharing and working together in achieving functional
goals between marketing and logistics
3. Joint projects:
Establishing and working together on work-related
projects that affect marketing and logistics e.g.
introduction of new a brand
4. Distribution specialist:
Designating

an

employee

within

the

marketing/logistics to act as a liaison person between


the

two

functions

marketing/logistics

in

aware

order
of

to

make

the

marketing/logistics

current and future plans


5. Information sharing:
Establishing information systems that allows sharing
of information between marketing and logistics
regarding customer needs and preferences
6. Co-ordinating committees:
Establishing joint committees to identify and discuss
matters of interest to both functions
7. Cross-functional training and education:
Providing

opportunities

for

marketing/logistics

personnel to learn about each others function

127

Do

8. Situational bargaining:

Holding negotiations without any third party


involvement to resolve issues between the marketing
and logistics functions
9. System of incentives:
A reward for working together to achieve goals that
affect overall organisation success in the market
place
10. Unified department:
Forming a single department that combines
marketing and logistics instead of having two
separate functions
11. Job switching or rotation:
Allowing personnel from marketing to work in logistics
function and vice versa
12. Joint outings:
Providing opportunities for personnel from marketing
and logistics to interact outside normal business
activities e.g. have sports events together
13. Third-party intervention:
Using a neutral person outside marketing or logistics
functions to resolve disputes between marketing and
logistics functions
14. Philosophy of co-operation:
Instilling a spirit of co-operation through written
values that are shared between marketing and
logistics functions
B.3 What OTHER techniques not mentioned above, does your organisation use or intend to use in order to
establish cooperation between the marketing and logistics functions?
______________________________________________________________________________________
______________________________________________________________________________________
B.4 On a scale of 0-5 with 0 being N/A, 1 being a very low impact and 5 being a very high impact, please
rate the impact of each of the following cooperation techniques on the extent to which the marketing and

128

logistics functions work together in your organisation. If your organisation does not use the techniques at
present, please tick N/A (not applicable)
Cooperation Techniques

0= N/A

1=

No 2=Low

or very impact

3=Moderate

4=High

5=Very

impact

impact

high

low

impact

Impact
1.

Top

management 0

support:
Gaining top management
commitment

for

greater

cooperation between the


marketing

and

logistics

functions
2. Mutual goals:
Sharing

and

together

in

working
achieving

functional goals between


marketing and logistics
3. Joint projects:

Establishing and working


together on work-related
projects

that

affect

marketing and logistics


e.g. introduction of a new
brand
4. Distribution specialist:
Designating an employee
within marketing/logistics to
act as a liaison person
between the two functions in
order

to

make

marketing/logistics aware of
each others current and
future plans

129

5. Information sharing:

Co-ordinating 0

Establishing

information

systems that allows sharing


of

information

marketing

and

between
logistics

regarding customer needs


and preferences
6.
committees:
Establishing

joint

committees to identify and


discuss matters of interest to
both functions
7.

Cross-functional 0

training and education:


Providing opportunities for
marketing/logistics
personnel to learn about
each others function
8. Situational bargaining:
Holding negotiations without
any third party involvement
to resolve issues between
marketing

and

logistics

functions
9. System of incentives:
A

reward

for

working

together to achieve goals


that

affect

overall

organisation success in the


market place

130

10. Unified department:

or 0

14. Philosophy of co- 0

Forming a single department


that

combines

marketing

and logistics instead of


having

two

separate

functions
11.

Job

switching

rotation:
Allowing

personnel

from

marketing to work in the


logistics function and vice
versa
12. Joint outings:
Providing opportunities for
personnel from marketing
and logistics to interact
outside

normal

business

activities e.g. have sports


events together
13.Third-party
intervention:
Using a neutral person
outside

marketing

or

logistics functions to resolve


disputes between marketing
and logistics functions
operation:
Instilling a spirit of cooperation through written
values
between

that

are

marketing

shared
and

logistics functions

131

B.5 In your organisation, which ONE of the above mentioned techniques (technique 1 to14), do you
consider being the MOST important, and which ONE do you consider the LEAST important.
Write down the number of the technique
MOST IMPORTANT__________
LEAST IMPORTANT_________
B.6 On a scale of 1-5 with 1 being strongly disagree and 5 being strongly agree please indicate to what
extent you agree with the following statements regarding the advantages resulting from co-operation
between marketing and logistics functions in your organisation
Advantages

1=Strongly

2=

3=Neither

disagree

disagree

agree nor

4=Agree

5=Strongly
agree

disagree
Co-operation between marketing 1

and logistics result in high levels


of customer service
Co-operation between marketing 1
and

logistics

achieving

is
a

critical

to

sustainable

competitive advantage
Co-operation between marketing 1
and logistics result in the product
availability at the right price, time
and place
B.7 In what ways does co-operation between marketing and logistics creates a sustainable competitive
advantage?
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________

132

B.8 On a scale of 1-4 with 1 being to no extent and 4 to a large extent, please indicate to what extent can
dealerships in your organisation offer each of the following to customers without consulting the
manufacturer?
1=To no extent

2=To a small extent


2

3=
To
a 4=To a large
moderate extent extent
3
4

e.g. 1

Extra exterior features, e.g. 1

Extra service features, e.g. road- 1


side assistance or service plans
Extra

interior

features,

hands free device


spoilers
Discount on customer request

B.9 On a scale of 1-5 with 1 being strongly disagree and 5 being strongly agree, please rate your level of
agreement or disagreement with following statements:
Passenger cars are priced higher in SA than what they are priced in Europe
1-Strongly

2-Disagree

3-Neither agree nor disagree

4-Agree

5-Strongly agree

4-Agree

5-Strongly agree

disagree
Passenger cars are priced higher in SA than what they are priced in the US
1-Strongly

2-Disagree

3-Neither agree nor disagree

disagree
B.10 Please provide not more than three reasons on which you base your response in B.9
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________

133

Appendix B: Marketing response sheets


Response sheet 1- Olivier I
Question A.4: Respondent job title: Customer Support Manager
Question B.3-What are other techniques that your organisation use in order to establish cooperation
between the marketing and logistics functions?
Maintaining dealer-manufacturer relationship is both marketing and logistics responsibility.
Question B.7-In what ways does co-operation between marketing and logistics creates a sustainable
competitive advantage?
Cooperation between the two functions results in the company that consistently achieves high levels of
customer service and customer satisfaction.
Question B.10-Provide not more than three reasons on which you base your response in B.9
Manufacturers are faced with high production costs, which translate into high prices to the customer.
Response sheet 2-Gunning L
Question A.4: Respondent job title: Manager-Dealer relations
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
None
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
High levels of customer service, which is a critical point that determines the company long-term
success in the industry
Question B.10: Provide not more than three reasons on which you base your response in B.9:
SA is situated far from other markets and this has resulted in high transportation costs of components
required for assembling purposes. High transportation costs negatively influence the selling price of
passenger vehicles.

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Response sheet 3-Howick A


Question A.4: Respondent job title: Customer Relations manager
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
None
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
Co-operation between marketing and logistics results in marketing communication that is based on true
organisations capabilities to deliver on its promised product at the promised time and place.
These two functions have a direct impact on customer satisfaction and quality customer service, which
are critical company success factors.
Question B.10: Provide not more than three reasons on which you base your response in B.9:
There has been no price increase in prices of cars in the past three years and this has improved
affordability.
It depends on the income group one is looking at; it is no good generalising on the issue of prices.
Although most parts are imported, rebates through MIDP are available to local manufacturers; these
rebates are transferred onto the customer as discounts.

135

Response sheet 4-Kleri C


Question A.4: Respondent job title: Product specialist
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
None
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
Co-operation between marketing and logistics results in maximum sustainable profits.
Marketing and logistics are important to achieving a high sustainable level of customer service.
Question B.10: Provide not more than three reasons on which you base your response in B.9:
There has been an improvement in passenger car affordability. This indicates that local prices are
competitive in comparison to Europe and US markets.
Some passenger cars are still overpriced but one should avoid generalising that passenger cars are
priced higher than what they are priced in the US and Europe.
It is important to consider the cost disadvantage that SA is faced with and this is not the case when
manufacturing process takes place in Europe or US.

136

Response sheet 5-Cundu B


Question A.4: Respondent job title: Customer Affairs analyst
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
No other techniques however the company is in the process of coming up with other strategies that could
improve cooperation between marketing and logistics.
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
It allows the company to deliver on promises made through advertising.
It results in marketing communication that is aligned with logistics capabilities
Question B.10: Provide not more than three reasons on which you base your response in B.9:High
prices are due to high logistics costs such as transportation of parts. It takes an average SA citizen
about 2-3 years of being employed to afford a cheaper car while a US or European citizen takes
approximately 6 months to can acquire the same car.
Response sheet 6-Van Dyk C
Question A.4: Respondent job title: Manager-Customer Services
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
Centralisation of decisions, which that affect both marketing and logistics functions.
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
Customer service is a critical point when discussing the issue of competitive advantage in the industry.
Marketing and logistics cooperation is important to achieving quality customer service while maximising
profits.
Question B.10: Provide not more than three reasons on which you base your response in B.9:
Increasing production and logistics costs have resulted in high selling prices. As these costs increase
so do the selling prices.
An average South African takes longer than a European or US citizen to can purchase a passenger car.

137

Response sheet 7-Peter F


Question A.4: Respondent job title: Marketing communication specialist
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
Value chain coordination-Bringing marketing and logistics together as part of customer value creation.
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
It results in high levels of customer service, a source of sustainable competitive advantage
Question B.10: Provide not more than three reasons on which you base your response in B.9:
Car affordability in SA is a problem; it takes an average South African approximately 160-165 weeks to
acquire a new car. In Europe and US an average citizen takes approx 24 weeks to acquire a new car.
Despite stable interest rates in the past two years, prices in SA are still much higher than in Europe and
US. The stability in interest rates and prices has boosted commercial purchases as opposed to individual
purchases.

Response sheet 8-Azure L


Question A.4: Respondent job title: Key accounts manager
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
Informal interaction, where marketing and logistics discuss work related issues informally during office
hours.
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
The company is able to capitalise on customer service as a competitive strength.
Question B.10: Provide not more than three reasons on which you base your response in B.9:
On average, it takes 3-4yrs for an average South African to can afford an economy passenger car.
Since SA is located far from other markets, local manufacturers are faced with high transportation cost of
components; high costs are then factored into the final product price resulting in affordability problems for
other market segments.

138

Appendix C: Logistics response sheets


Response sheet 1-Van der Walt P
Question A.4: Respondent job title: Logistics and quality control manager
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
Dealer-manufacturer relationship management-Both marketing and logistics functions are responsible for
developing and maintaining relationships with the dealer network.
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
It results in an efficient distribution process.
Question B.10: Provide not more than three reasons on which you base your response in B.9:
There are passenger cars that are sold almost at the same price as in the US and Europe.
Prices are higher especially for the locally manufactured cars however this is beyond manufacturers
control. Prices could come down if manufacturers can procure most parts locally than what it is now.
Response sheet 2-Stevenson B
Question A.4: Respondent job title: Senior buyer-Mechanical parts
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
No other technique
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
Through customer service, since both are responsible in ensuring the availability of the product at the
right place, time and price.
Question B.10: Provide not more than three reasons on which you base your response in B.9:
Some passenger cars are not priced higher than in the US and Europe.
Comparing developed markets and SA could be inappropriate because of different economic positions.

139

Response sheet 3-Shapiro N


Question A.4-Respondent job title: Logistics operations manager
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
No other techniques
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
The organisation is able to deliver a sustainable quality service during and after sale.
Question B.10: Provide not more than three reasons on which you base your response in B.9:
SA is not in a strong position to can manufacture most of the required parts for assembling and for
after-sale service. This results in high importation of parts that translate into high selling prices.
Local manufacturers are at a cost disadvantage in SA due to high logistics and production costs.
Response sheet 4-Watson G
Question A.4: Respondent job title: Logistics coordinator
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
None
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
It results in high and sustainable level of customer service.
Question B.10: Provide not more than three reasons on which you base your response in B.9:
SA car prices are approx 25% higher than in the US and Europe.
Despite MIDP benefits, logistics costs are still high in SA, mainly due to high importation of parts. This
has a negative impact on car selling prices.

140

Response sheet 5-Anderson A


Question A.4: Respondent job title: Manager-Logistics services
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
None
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
The company is in a position to provide the product at the right time, place and at a reduced cost. This
means the company is able to meet customer expectations and achieve high levels of customer
service while maximising profits.
Question B.10: Provide not more than three reasons on which you base your response in B.9:
High importation of parts and lack of skilled labour have resulted in high logistics and production
costs. These costs are factored into the selling price and negatively impact on affordability.
Response sheet 6-Meiring J
Question A.4: Respondent job title: Logistics and distribution specialist
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
None
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
It results in customer satisfaction at all times since the product is available at the right time and place.
Question B.10: Provide not more than three reasons on which you base your response in B.9:
SA assembles some car models however it uses a large content of imported parts, this then increases
import and transportation costs. High import and transport costs translate into high selling prices of
finished products.

141

Response sheet 7-Mohale G


Question A.4: Respondent job title: Logistics consultant
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
None
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
Customer service levels are important to the companys success and cooperation between marketing
and logistics is important in this regard.
Co-operation between marketing and logistics creates sustainable long-term profits and customer
satisfaction, two aspects of sustainable competitive advantage. It allows the organisation to deliver the
product at the right time, place, quantity and quality
Question B.10: Provide not more than three reasons on which you base your response in B.9:
Logistics costs such as transportation are high in SA and this have negatively influenced selling
prices of cars.

142

Response sheet 8-Simon N


Question A.4: Respondent job title: Logistics manager
Question B.3: What are other techniques that your organisation uses in order to establish
cooperation between the marketing and logistics functions?
None
Question B.7: In what ways does co-operation between marketing and logistics creates a
sustainable competitive advantage?
The company is able to deliver on its promised product at the right time, quantity, quality, price and
place.
A company that is in a position to meet its promises experiences high levels of customer service.
Question B.10: Provide not more than three reasons on which you base your response in B.9:
Passenger cars are priced approximately 25-30% higher in SA than in the US and Europe, and this has
negatively affected affordability mainly among individual buyers.
Importing a large content of required parts for assembling and for after-sale service has had a negative
influence on transportation costs and selling prices.

143