Principles And Practice OF Marketing Report Samples
The report revolves around The Body Shop Company, which deals skincare and makeup products such as shampoos with the aim of analyzing the marketing mechanism in relation to the internal and the external environment. The researcher evaluates the Company’s response based on these external factors that may negatively or positively affect the firm depending on the strategy applied to respond since it is venturing into a new market which is Australia. The Body Shop Company will thus forms the basis upon which issues will be identified and evaluated based on the customer’s competitive advantage to remain relevant due to the rapidly changing competitive environment that if not proactively planned for, may see many firms exit the market. The first section of the report highlights the changing marketing theories and their relation to the environment. On the other hand, the second section of this report showcases how the competitive environment of Shampoo, conditioners and treatments production in Australia impacts businesses. In order to understand the competitive environment, the report uses Porter’s Five Forces, PESTLE, and Buyer behavior theory in the analysis. The analysis helps the researcher uncover the relevance of studying and understanding the changing marketing strategies to firms that are success-oriented particularly where there is a stiff competition in the Shampoo, conditioners and treatments production in the UK. Further, the report presents The Body Shop Company response to its position as revealed by the Porters’ Five Forces analysis and shows the effectiveness of its reply strategies. The section two closes by an SWOT analysis of the company. The Body Shop Company was founded in the year 1976 by Anita Roddick with it’s headquarter located in West Sussex, England. Currently the Company own various diversified products with superior quality and brand image. The company owns over 2500 franchised stores on a global perspective and is partly owned by L’Oreal. 1.1 Change of marketing theories and concepts Marketing has occurred in different distinct phases since the beginning of time. These comprise of a simple trade era, production era, sales era, the marketing department era and marketing company era. Markets are changing fast in order to meet the changing world. Marketing entails business activity that mainly focuses on the customer needs and wants. Marketing is important as it aids in determining the target market. During the simple trade era, all products were available in limited supply (Adcock, Halborg and Ross, 2001). Trade in resources and exploration was the primary focus of economic activity. During this era, commodities ruled the day and as such marketing was in a different dimension compared to today. Production era replaced the simple trade era. During this time, there was mass production of goods, and that increased the availability of product options in the marketplace. It is at this point that the business philosophy “if you build, it, they will come” developed. The production era was replaced by the sales era because the pent up consumer demand became saturated. Business was not able to sell, everything that they produced. Competition in the market increased and each organization strived to have a significant share of the market. Most of the companies had to strive in order to sell their products. The issue of commoditization emerged during this era as products were viewed as commodities while price became an issue of competitive advantage (Edwards, 2000). The emergence of the marketing department led to a revolution in the marketing world. It was during this era that the firms realized the importance of sales and focused on marketing. Consumers were provided with more power in the marketplace due to affluence. Firms focused on consolidating marketing activities such as public relations, promotion and advertising in one department. The marketing company era evolved from the concept of marketing was widely accepted. The marketing concept developed in order to address the needs of the customers. Marketing was not compartmentalized during this era, and it became the primary goal of the business (Kazmi, 2007). Employees directly or indirectly became a part of the marketing system while the customers were viewed as the king. Based on the classical theory of classification, this was the final phase of marketing. Marketing theory has changed from the early days with the development of the 4Ps model. Marketing involves putting the right product in the right place at the right price at the right time. Marketing mix aids the firms determine brands and the products to offer. The product that is sold by a particular firm should meet the needs of the consumers. The place, in which the product is sold, should also be where the consumers can easily access. The target consumers should be able to get the products easily. The price of the product is of importance and should be representing the good value for the money. Meeting the value of the product does not mean that it should be the cheapest. Based on the marketing theory, customers are usually willing to pay more for the products that work well with them. Quality of products is, therefore, essential as customers mostly prefer quality products. Promotion is also an important marketing strategy. Sales promotion, advertising, personal selling and even the social media are important for organization communication. Such tools are necessary for an organization to communicate information to the right audience. The mechanism used by the organization to promote the products should be appealing to the emotions of the customers (Kazmi, 2007). Due to the need to address the needs of the customers and survive in a competitive environment the 4ps have changed to 7ps. The people, who manage the company, are also important when it comes to marketing. Having the right people to be the managers of a particular firm is important as it influences how the marketing process occurs. The processes involved in service or proper delivery to the customer is important and can be used as a marketing tool. Nearly all services include physical elements even though what the customers pay is intangible. Marketing is, therefore, necessary even if the services involved do not have physical evidence 1.2 Marketing and the Environment Marketing today is closely associated with the environment. Most of the firms are affected by many things including the environment in which they operate. The firms can control some of the factors while others are uncontrollable. Firms should, therefore, strive to understand their marketing environment so that they can be able to regulate and manage some of the impacts of the adverse factors. The marketing environment of a firm can be divided into macro, micro and internal environment. The brands of products chosen in a particular environment determine whether the product will be marketed successfully. The internal environment comprises of factors that affect the firm within. The internal environment of the company includes the capital assets, firm’s structure, and the employees. Capital assets needed by The Body Shop Company in order to develop the Shampoo, conditioners and treatments market are easily available since Australia has many banks and finance societies that can give the company the finance to start a business. Qualified employees needed by the company can also be got easily since Australia is one of the country’s which has a high population with most of the individuals learned (Edwards, 2000). 4ps marketing is important for The Body Shop Company as it aids in marketing of the Shampoo, conditioners and treatments in Australia. Based on the product that is Shampoo, conditioners, and treatments, The Body Shop Company should make them in a way that is attractive to the consumers. The brand of the Shampoo, conditioners and treatments should also be selected and built in order to attract more consumers. The place in which the customers get the Shampoo, conditioners and treatments should be easily accessible. The company should also decide whether to attend trade fairs or make online submissions. The price of the product should meet its value. The price of the Shampoo, conditioners and treatments should be compared to those of the competitors, and they should be fair in order to attract a large number of consumers. Factors such as the customer’s price sensitivity should be checked as that could lead to the company gaining a larger market share. Promotion is important, and the method of promotion depends on the type of business. The Body Shop Company can reach a large audience through advertising the Shampoo, conditioners and treatments online and using the billboards. The best time, to promote the products, should also be checked keenly. During festive seasons and when there are discounts promotion especially through the use of TV or radio should be emulated. Before choosing the best promotion strategy, the company should check how their competitors do promotion (Adcock, Halborg and Ross, 2001). Task 2 2.0 Internal environment. The Body Shop Company portrays a strong financial performance over the years driven by effective profit and revenue generation policies. In addition to this, The Body Shop Company has qualified employees, and its supply chain comprises of experts that further strengthens its operations. On the other hand, the firm has a strong strategy with respect to its business model. The model depicts possession of many suppliers by the organization with the supplies collected in an effective manner. The business model shows that The Body Shop Company performs each departmental work efficiently hence more efficient than other industry players. In March 2006, L’Oreal took part of the company by about £652.3 million. During the same year, Anita and Gordon Roddick, who are the owners of the company, made about £130 million from the sales. The company has the ability to venture into a new market in Australia since it has the qualified personnel that has worked in order to ensure it expands into other countries such as Greece and even Korea (Penge, 2010). The strategy is that of a combination of activities aiming at product affordability that ensures customers access the products that suits their budget with the quality still upheld. Online sales and marketing are embraced by the company with most of the products sold to the customers on the online platform. On the other hand, the weakness of the firm arises from those internal factors that present a problem to The Body Shop Company in its bid to effectively compete in the market. 2.1 External environment 2.1.1 PESTLE analysis The PESTLE analysis gives information on the macro level factors that affect Body Shop Company and the various decisions that it makes. Political Factors There are many political factors that affect The Body Shop Company on its venture to the new market in Australia. The major political decision, that affects the company in Australia, is the tax rate that is levied by the government on new entrants. The tax rate levied on the Body Shop Company will affect the company in the form of corporation tax that will in turn affect the income tax. Australian political system is a federal monarchy with a parliamentary democracy thus providing The Body Shop Company with a low-risk political environment that could interfere with its activities. It can act as an advantage to the company as compared to when it ventured into less stable political nations such as in Middle East. Since Australia is politically stable, the company has a safe environment in which it can do business without interference. Australia as a country has experienced about 23 years of uninterrupted growth and therefore The Body Shop Company can easily thrive well (Penge, 2010). Australia political framework is the same as that compared to the Commonwealth countries structure and since UK is also within Commonwealth the company can easily venture into the new market without much difficulty. Some of the countries that the company has successfully ventured in include:
Economic Factors The current state of economic environment in Australia will have a great impact on The Body Shop Company. From statistical analysis, the year from 2009 the country has had an economic rollercoaster (Okamoto, 2010). Australia has faced various financial problems since the global financial crisis that occurred in 2007 that led to negative figures in the GDP growth. Today the economic freedom of Australia is at 82 thus it is one of the third freest economies according to the 2014 index. The company is keen to keep pace with the ever fluctuating economic factors. The firm has continuously examined the economic issues that impact greatly on the company operations. The business cycles embraced in the country, inflation, economic growth, unemployment rates and policies as well as interest rates may negatively or positively affect the company(OECD, 2008). Market fluctuations based on factors such as terrorism or politics rarely occur in Australia giving the company an upper hand of venturing into the market (Okamoto, 2010).
The rate of unemployment in Australia is also increasing and that could work to the advantage of the company as it will easily get the individuals to employ. The current state of unemployment in the country is as stated by the Australian Bureau of Statistic.
Technological Factors New technological developments, that have taken place in Australia, have led to a revolution in the business world. Some of the technologies that have developed in Australia include the internet and the use of more advanced communication devices. The Company pays close attention to technological changes. Technology impacts on the growth and expansion of The Body Shop Company. The Company recognizes the need to remain technologically relevant in order to satisfy and benefit both the Company and the customers. The firm's product have delivered a higher levels of satisfaction to the firm’s customers. It is because the Company ensures that goods are readily available in the stores. The Company has personalized the services offered by the staff, and this has helped ensure the customer’s experience worthy. The Body Shop Company can easily thrive in the Australian technological environment since it has even embraced the idea of online business models in order to sell their products. Legal Factors Just like all companies, The Body Shop Company must abide by the legal requirements within the Australian jurisdiction. Some of the legal requirements that may affect the operation of the company in Australia include: Wage legislation-There is legislation in Australia that affects companies such as Body Shop company on the minimum wage that it should pay to the workers. The minimum wage in Australia is about $16.88 per hour (Dollery, Crase and Johnson, 2006). Due to the large number of employees Body Shop Company is also affected by temporary shifts, National minimum wage as stipulated in the legislative policy. Environmental Factors The Body Shop Company firm also upholds the environmental factors that are defined by whether the company ethically executes its activities. Such factors as changes in the weather and climate, pollution and recycling laws, waste management and use of eco-friendly products and practices are upheld by the Company(North, 1997). The Body Shop Company projects to be socially responsible, and this can be revealed through the payment of much attention to the practice of corporate social responsibility. The company is focused on satisfying all its stakeholders via performing utmost obligations that are in line with the corporate governance. 2.1.2 Porter’s Five Forces model The Body Shop Company faces stiff competition in a saturated industry particularly from its major competitors such as Arbonne, which is a vegan cosmetics company dealing with shampoos in Australia. With the analysis of the Porter’s Five Forces, we can explain the competitive environment of The Body Shop Company. Threats of Substitute Products and Services With respect to the Shampoo, conditioners and treatments industry, the threats, to substitute products, are high for the Shampoo, conditioners, and treatments. In dealing with these threats, The Body Shop Company has opened more stores in remote areas for the provision of efficient, convenient transportation systems for its customers. The company has only imposed premium prices for Shampoo, conditioners and treatments in case of economic recession to shift the customer to lower specialized price of other competitors. The company has also opened a number of branches in different countries such as Korea and Greece. Since the company has ventured into other countries, venturing into Australia is just an opportunity it should grab. Threats of New Entrants Entry into the Shampoo, conditioners, and treatments industry calls for huge initial capital investment to be competitive and create an effective brand image which ensured a relatively low threat of new entry. The new entrants, The Body Shop Company, has to plan for a long period as well as seek for regulatory permission that further requires more time. Therefore, there is a minimal threat of new entrants into the Shampoo, conditioners and treatments industry. It is also justified by the strong brand image of existing firms that have already conquered loyal customers via superior policies and strategies. Competition among the Existing Firms There is an extremely high intensity of competition in Australia amongst the existing Shampoo, conditioners and treatments manufacturing companies resulting from the numerous high capital investment and strong policies firms. It shows that major players in the Shampoo, conditioners, and treatments industry draw their customers from each other leading to more severe competition. However, the Body Shop Company are far much preferred as compared to other company’s products that have tried to imitate the firm’s products and sell at relatively low prices.Bargaining Power of Buyers There is a benefit from various options of zero switching costs to shift from a firm to another based on stiff competition. The customers’ position is thus very high with respect to bargaining power. Shifts in prices that are rated cheaper by the customers based on uncompromised product quality leads to shifts of customers. The customers in the Shampoo, conditioners, and treatments industry in Australia expect both quality and low-priced products, and hence companies have to stress on maintaining their prices relatively rational besides high-quality products maintenance. Bargaining Power of Suppliers The supplier’s position in Australia Shampoo, conditioners, and treatments industry is relatively low since the top Shampoo, conditioners and treatments firms have the direct contract with suppliers who fear losing the contract hence weak bargaining power amongst the suppliers. Despite this low bargaining power, the suppliers prefer supplying to the Shampoo, conditioners and treatments manufacturing companies directly as this is rated as best opportunities for their growth. Hence lower bargaining powers amongst the suppliers. 2.1.3 Strategic Targeting Theory Segmentation Strategy This strategy assists to segment its target market based on the company’s failure or success segment. The Body Shop Company operations initially will open a small store but would be expanded in the future to capture new markets (Adcock, Halborg and Ross, 2001). With the knowledge of Australia people being quality conscious, The Body Shop Company will ensure the delivery of standard products. Targeting Strategy Targeting strategy aims at assisting the firm to determine the business feasibility. The Body Shop Company target in Australia will incorporate all age groups. The firm needs to provide a range of products to the targeted customers embracing a well-planned and unique strategies.Positioning Strategy It stresses on specification of the product characteristics and brands close to the competitors’ product within the market. 2.1.4 Buyer behavior theory Social-cultural factors The Company greatly upholds the massive impact social-cultural factors have on the firm’s marketing strategies and the overall sales market share. A firm needs to consider social and cultural factors as the customers in Australia usually do shopping in bulk that is highly determined by social changes happening in the last decades. The firm appreciates these changes and hence appreciate how they have influenced the shopping behavior hence the firm has subsequently expanded its stock of products. The company is also keen on the changes in the demographic factors like increase of women employees and young people who love Shampoo, conditioners, and treatments. It has forced it to consider these trends and proactively update the organization accordingly. Therefore, the firm has complied with these changing trends and put emphasis on operational improvements as well as supply chain management to boost the overall organizational performance. The ageing population in Australia generally affects the market but presents an opportunity for The Body Shop Company to sell their products that are of importance to the skin especially the shampoos and the cosmetics (Edwards, 2000). The company needs to adapt and make products that are more appealing to the aging population. 2.1.4 SWOT Analysis Strengths Brand loyalty- Body Shop Company greatly depends on its brand reputation which is important when it comes to sales and marketing of their products. Because of the unique products that the company makes, it is viewed by many clients as one of the environmentally friendly companies. L’Oreal’s support-Since the company is a subsidiary of one of the best marketers known as L’Oreal it has high chances of increasing its sales. Charity support- The Company contributes in various charity functions by giving financial donations from the products that they sell. Since it participates in charity functions, this improves its image in the general society. Alliances of this company to other competitive companies in the whole globe have all worked uniquely to map this company worldwide. The company, for instance, formed an alliance with Greenpeace in the UK to save the whales in 1986 which was an act of social activism.The qualified staff within the company that strives to produce the best has made the company grow in terms of service delivery and profits. Weaknesses Slow service-Because most of the Body Shop products are always in a shopping Center, which is at times crowded they might be low service production which in turn may discourage the customers. Opportunity Male products-The increase in the use of some of the male products especially those used for grooming increases demand that the company should take advantage of. Product development-Since the company has L’Oreal it can take advantage of her vast experience in research methodology in order to improve their existing products. Threats Brand comparison- L’Oreal, who is one of the subsidiary owner can harm the company’s reputation since the public perception is that she is unethical while the company is ethical. Competition-Body Shop Company can face competition in Australia if some of the companies in Australia also venture in producing the natural based products similar to those that they produce. 3.0 Conclusion Due to the changing nature of marketing strategies, The Body Shop Company should focus on its strengths in order to reach a wide range of consumers. The company should also embrace technological advancement in its production of services and marketing in order to compete competitively with other companies in the market share.
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