James Heavey Marketing Strategy Assignment 1 Essay Example

James Heavey Marketing Strategy Assignment 1Â   Essay As the market environment changes, managers have to adapt their strategies and organisation. Unless these changes are made, the business will no longer fit the needs of the moment it will be made obsolete by changes in customer wants, new technologies and new competitors that have adapted more effectively (Doyle, 2002, pp. 405-406) Introduction: The marketing environment is a complex constellation of demands and constraints that a firm faces as it attempts to compete and grow. These can be both external and internal. The firm has the power to directly affect some but, by no means, all of the areas in the environment. Those areas beyond the firms control are constantly changing in various ways, it is the responsibility of the firm to take notice of and bring on board any successful changes or advances made in the industry. In the same way they need to identify problems affecting the industry as a whole and react accordingly to minimise negative effect. We will write a custom essay sample on James Heavey Marketing Strategy Assignment 1Â   specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on James Heavey Marketing Strategy Assignment 1Â   specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on James Heavey Marketing Strategy Assignment 1Â   specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Consumer satisfaction is the ultimate goal of the marketing environment. Method: The marketing environment surrounds the consumer and the marketing mix. Consumers and businesses are affected by the forces of the marketing environment. Businesses must determine a marketing strategy, implemented through the aspects of the marketing mix, which aims to satisfy themselves and customers. According to Dibb, the marketing environment is the external forces that directly or indirectly influence an organisations acquisition of inputs and generation of outputs, comprising six categories of forces: Political/legal, Economic, Societal/green (environmental) and Technological. This is also known as the PEST Analysis. Inputs that are affected include personnel, financial resources, raw materials and information etc. The outputs identified by Dibb are information (e.g. advertisements), packages, goods, services and ideas. There are three key sections to the marketing environment, these are the micro environment, the macro environment and the internal environment. The micro marketing environment contains external forces that influence a firm directly. Micro forces include suppliers, competitors, marketing intermediaries, situation and company specific, buyers, the business internal environment and the companys publics. The main micro forces are: The business internal environment: The internal environment consists of top management, finance, research and development, purchasing, sales and marketing, manufacturing and logistics. All these departments must be taken into account when designing market strategies and marketing mix programmes. Marketers must be aware of organisational factors, monitor them and modify their actions accordingly to ensure internal commencement of their marketing ideas. Suppliers: Businesses should recognise the importance of suppliers as without them there would be no end product to sell to consumer. Marketers need to be aware of aspects of supply which might, directly or indirectly, affect the ability of the firm to deliver a quality product to the consumer. Aspects such as; supplier innovations, existing deals with competitors, supply shortages, delays, strikes, recruitment difficulties, legal actions, warranty disputes, supply costs and price trends, new entrants into supply chain, or any other aspect that may affect the natural transfer of goods from supplier to manufacturer. Marketing Intermediaries: These are made up of resellers retailers, wholesalers, agents, brokers dealers and physical distributors for logistical needs, providers of marketing services, and financial facilitators of credit lines and export guarantees. Without these intermediaries, a business is unlikely to be able to deliver its products as expected by consumers. Buyers: People tend to be more willing to buy when they have buying power. Buying power can be influenced by the products absolute price, its price relative to alternative products, brand image and quality, reliability. Other reasons why consumers willingness to spend may be affected are personal expectations about future employment, income levels, prices, family size and general economic conditions. If the responses to these factors are positive then buying will increase as people will obtain more disposable income. Alternatively, if the responses are negative then buying power will decrease. The macro environment consists of all the external factors that can influence a firm, but are beyond their direct control. The macro environment is the PEST analysis. Political/legal: Government policy can have a major impact on the operation of a business. For example, laws on competitive practices will influence the number of firms operating in an industry and therefore strength of the competition. Health and safety legislation will affect work practices and production costs. Marketing tactics will be limited by consumer legislation. The political environment is of particular relevance in countries where governments are unstable and therefore investment risks are high. Economic: Economic factors will influence the future potential profit of a business. The level of consumer demand is a key variable affecting the quantity of sales and the price at which output can be sold. Interest rates will determine the cost of finance to the company. Final profits will be taxed by the government. The economic cycle of recession and recovery is a big influence on the opportunities and threats to the firm. Societal/green: Consumers reflect changes in lifestyles over time. This means businesses must observe shifts in the characteristics and habits of the population. Especially where these influence segments of the existing market, e.g., as the UK population ages, new opportunities open up such as holidays aimed specifically at older people. Demographic variations may also represent a threat to companies, e.g., a fall in the birth rate would negatively affect the competitive position of Mothercare. Consumers and governments are becoming increasingly aware of the impact of business upon the environment. Organisations must now monitor their actions and consider their environmental implications. An issue of this kind can influence the corporate image of an organisation The resulting publicity can be devastating and could damage the effectiveness of the firms promotional activities. Technological: An external audit must monitor developments in technology. These can affect the production methods employed by the organisation, or the products/services offered for sale. A new manufacturing technique might make existing production too expensive for the business to remain profitable. A product may become obsolete because new technology has developed a more effective substitute. However, changes in technology also offer opportunities, such as the potential to break into new markets by producing a new, radically different, product offering. These factors are continuously changing so the firm must be sufficiently flexible to adapt to new conditions. The final environment is the internal environment. This is all the factors that are internal to the firm. The internal environment is of equal importance to the external when a firm is required to cope with change. The internal environment is also known as the marketing mix. The marketing mix is marketing tool. It is a checklist. The marketing mix focuses its attention on the various elements of marketing needed to carry out the marketing strategy and meet the needs of the customers. There are four parts to the marketing mix product, price, promotion and place. Product: Businesses must make sure their product is meeting the needs of their customers. This means paying close attention to a number of product features; how consumers will use the product, the appearance of the product, and financial factors (unless a product is deemed to be value for money it is unlikely to be purchased). Price: The pricing policy that a business chooses is often a reflection of the market at which it is aiming. Prices will not always be set at the level which will maximise sales or short run profits. There are three pricing strategies for the existing product, these are: Price leader the business will set the market price. Price taker the business will match the market price. Predator the business will undercut the market price. Promotion: There are a variety of promotional methods a firm can use including above the line promotions, such as TV advertising, and below the line promotions such as personal selling. A firm will choose a promotion method it feels is likely to be most effective in the market in which it operates. National television advertising will only be reserved for those products with a high sales turnover or wide appeal. Place: This refers to the means by which the product will be distributed to the consumer. The product must get to the right place at the right time. This means making decisions about the way in which the product will be physically distributed i.e., air, sea, rail or road. It also means taking into account how the product is sold. This could be by mail direct from the manufacturer or through retail outlets such as supermarkets. All these environmental factors in the marketing environment must be assessed and acted upon. Marketers can respond to environmental factors in two ways, either accept them as uncontrollable or confront and mould them as best they can to work with the product. If environmental forces are viewed as uncontrollable, the organisation remains passive and reactive towards the environment. The marketer will adjust marketing strategies to suit the environmental changes rather than vice versa. Alternatively, marketers who believe environmental forces can be shaped adopt a proactive approach. Once they identify what blocks a marketing opportunity, marketers can assess the power of the various parties involved and develop strategies to try to overcome these environmental forces. Results: The Marketing Environment Model: (from Marketing Concepts and Strategies Dibb, Simkin, Pride Ferrel, 2001) . In the Marketing Environment Model the nearer the environmental force is to the centre of the circle, the more directly it affects the consumer and their feelings towards the product British Airways and the Airline Industry: The airline industry has been rife with change ever since the New York terrorist attacks of September 11th 2001. The whole marketing environment has been affected so it seems a suitable and effective choice. Although British Airways is not an American airline it has still been greatly affected. The vast reduction of people travelling trans-Atlantic has meant a huge drop in revenue and, in turn, profits. Along with this factor, British Airways (or BA) has suffered the same fate of all airlines as public confidence in the safety of planes has dwindled leaving almost empty planes and cancelled flights. BA first had to review safety policies before tackling any other problems and it was vital they stayed in touch with the advances of their competitors as any bad press in the wake of such a terrible disaster could last long in the memory of the public. PEST Analysis for British Airways: Political/legal: Since 9/11, as it has since become known, the government brought in stricter policies for security at airports and new requirements on board aircraft, e.g. inaccessible cockpits. The amount of security personnel has been increased and luggage is now inspected more frequently and effectively. Passengers are also now checked twice for any hidden items. The government also introduced a partnership with industry to help restore passenger confidence in flying. Economical: The Stock Market entered a recession on 9/11 and trading had to be suspended for fear of total collapse. While recent economic indicators give evidence that we are emerging from the recession, the stock market is still declining. Concerns over questionable corporate ethics and accounting scandals have handcuffed the market. While the productivity and consumption numbers continue to improve slowly, stock prices continue to drop. While investors continue to wait for the proverbial next shoe to drop on the stock market, the economy remains at a standstill. In the months ahead, many believe we will see a slow recovery. While recent GDP numbers were favourable, there is an expectation for slower growth going forward. However, 9/11 is not believed to be the primary cause of the more recent stock market decline. The primary drivers in the market today are accounting scandals, questions over corporate ethics, and the war on terrorism in both Afghanistan and possibly now Iraq. Weak unemployment numbers are also making investors apprehensive and to a certain extent, these nerves can be tied to 9/11. BA has shown a steady increase in turnover since 9/11 and there are no reasons to believe this upsurge will not continue. It is obviously affected by the economy though and a few years of growth would be greatly appreciated by all those in the airline industry. Societal/green: In terms of society BA needs top reflect changes in its consumer lifestyles. Current needs when it comes to flying are primarily centred around safety. To be competitive in the current climate BA need to not only spend billions on improving safety aspects and regulations, but also spend a fortune on advertising to let the public know what they are doing and that BA are among the market leaders when it comes to aircraft safety. Winning the publics confidence is probably more effective now in gaining customers than at any other time in history, so this area needs particular attention to detail. Environmental issues are still of great importance even in the present climate. Issues such as air pollution studies, fuel studies, health studies and noise pollution studies are all high on the agenda of competitors so it is vital BA are seen to be equally concerned about preserving the future of our planet. These issues can require a substantial budget, but money recouped through new consumers, and loyalty from existing consumers, should make the initial outlay soon look like a profitable investment. Technological: It is important for the image of a market leader such as BA to keep up to date with the latest technology. They are expected to have the fastest, most efficient, planes, the comfiest seats and the best service if they are to sustain their present market share and relatively expensive prices. The extra money made on the price is expected to go towards the extensive cost of maintaining such standards. However, in the wake of 9/11, extra emphasis has been placed on obtaining technology to improve passenger safety. Bigger budgets have been allocated to the safety aspect as airlines aim to restore passenger confidence in their airline since the New York terrorist attacks. Recovery in the Travel and Tourism Industry The behaviour of the TBR (Travel Business Roundtable) over the September period provides considerable insight into the sensitivity of the travel and tourism industry to external shocks. When thinking about the industrys recovery, it is also helpful to examine the past. Following the 1990-91 national recession, it took approximately one additional year for the travel and tourism industry to recover. This may be explained in part by the fact that the rebound in consumer confidence followed a most uneven pattern, involving sharp up-down swings lasting until the end of 1993. Similarly today, weak consumer confidence coupled with the uncertainty of safety as well as economic uncertainty, indicates that the recovery for the industry may take even longer than expected. To that end, TBR continues to support an economic stimulus package that addresses the needs of the travel and tourism industry and advocates action that will encourage people to travel now. Conclusion As things currently stand in the industry, no airline has taken a significant lead in attracting consumers back. This may be to do with the fact many are still sceptical about flying. Every airline must be at its most responsive to new ideas and improvements, at least until the industry as a whole has drifted out from underneath the giant public magnifying glass that has hovered for the last fourteen months. The market environment shows us what forces affect a business. It identifies these forces as either micro environment, macro environment ( both are external factors), or the internal environment (the marketing mix). It also illustrates which forces affect the consumer more directly than others. The market environment is always changing and it is vital any organisation is able to keep up with these changes. Marketers need to identify which environmental factors can be moulded to suit marketing strategies but also which strategies need to be altered to fit in with those factors that can not be. Failure to keep up with these changes and show unresponsive behaviour to the market can often lead to a drop in sales and loss of market share. In theory a responsive business is a successful business.