External Factors Influencing Marketing

Published Date: 02 Nov 2017

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Contribution of Marketing to the Achievement of Business Objectives

Marketing is a very important aspect in business since it contributes greatly to the success of the organization. Production and distribution depend largely on marketing.

Marketing is based on thinking about the business in terms of customer needs and their satisfaction. Marketing differs from selling because (in the words of Harvard Business School's retired professor of marketing Theodore C. Levitt) "Selling concerns itself with the tricks and techniques of getting people to exchange their cash for your product. It is not concerned with the values that the exchange is all about. And it does not, as marketing invariable does, view the entire business process as consisting of a tightly integrated effort to discover, create, arouse and satisfy customer needs." In other words, marketing has less to do with getting customers to pay for your product as it does developing a demand for that product and fulfilling the customer's needs. (2)

Marketing Promotes Product Awareness to the Public, it helps boost product sales able to come up with effective and strategic marketing plans. Marketing builds company reputation. (3)

A Marketing role will also assume the following responsibilities;

Understanding the economic and competitive features of a sector

Identifying target markets

Identifying segments within a target market

Identifying most appropriate strategies

Commissioning, understanding and acting upon market research

Understanding competitors and their strategies and likely responses

Developing new products

Auditing customers' brand experience

Establishing environmental scanning for opportunities and threats

Understanding an organisation's strengths and weaknesses

Creating a sustainable competitive advantage

Understanding where a brand needs to be in the future

Creating and delivering marketing plans to get there

Establishing management information systems to identify progress (4)

External Factors Influencing Marketing

Market factors: The growth or decline of a market will have a major impact on a business’s marketing objectives. Organisations such as Facebook can set ambitious growth targets because social networking is becoming more popular, so the market is growing.

Competitors’ actions and performance: If the market is highly competitive, such as dairy farming, it is difficult for an individual farmer to achieve a high market share. For this reason, many farmers are now starting to target niche markets, such as sales through farmers’ markets, in which there is less direct competition.

Technological change: Technology is a major cause of rapid changes in consumer tastes and markets, and therefore can make it more challenging for a business to set realistic marketing objectives. Businesses that can use technology effectively in their marketing, as Amazon and eBay have, will benefit from increased growth and an ability to set and reach ambitious marketing objectives.

Economic factors: Growth in the economy. If the economy is growing rapidly, customers will be purchasing more products, and therefore higher targets for sales and prices can be included in the business’s marketing objectives. The exchange rate, If the pound has a high value against the dollar this will encourage UK tourists to visit the USA, allowing businesses to target higher sales levels.

Suppliers: The efficiency, cost effectiveness, quality, reliability and flexibility of suppliers will all influence the ability of businesses to meet the needs of their customers.

A supplier that provides cost-effective products of high quality will help a business to achiever higher sales and higher prices.

Political factors: Government policies and pressures on issues such as child welfare and obesity have led to the advertising industry introducing voluntary restrictions on advertising during children’s television programmes.

Legal factors: Legal requirements can act as a constraint, as in the case of the ban on cigarette advertising on television. They can also act as an opportunity: for example, the need for greater safety has led to the growth of businesses providing safety equipment and training. (5,6)

Role of Marketing in a non Profit Business

Over the last 40 years, the role of marketing in not-for-profi t organizations has grown substantially as these organizations have realized the value of marketing in developing a strong understanding of customers and other stakeholders. But have you ever wondered what would happen if a charity ever fully met its strategic objectives? Would it, and should it, cease to exist? Are the techniques and tools we use in commercial marketing equally relevant in a not-for-profi t environment, where the remit is not to make shareholders rich? Is there any difference in how we use marketing techniques in a social environment, for example, when governments use marketing to reduce binge drinking among young people, or increase fruit and vegetable consumption to five or six portions a day, or increase voter registration. (7)

Marketing’s role within a marketing-oriented firm is to provide direction for the firm. The marketing concept stresses that the company’s efforts should focus on satisfying some target customers at a profit.

The job of marketing management is one of continuous planning, implementing, and control. The marketing manager must constantly study the environment and seeking attractive opportunities and planning new strategies. Possible target markets must be matched with marketing mixes the firm can offer. Then, attractive strategies really, whole marketing plans are chosen for implementation. (8)

Marketing is an unfamiliar concept for many non profit organizations. It's important that these organizations understand that marketing is more than just the old sense of making a sale or obtaining a donation. Marketing is a way to satisfying the consumer and donor needs, it helps non profit organization to make new start. (9)

Marketing a non profit organization takes the need for a new sense of satisfying not only the consumer but also the donor's needs. Use these resources to learn how you can market your non profit organization effectively. (10)

Elements of the Marketing Process

A marketing plan helps communicate important information about the company's marketing strategies with key stakeholders. A marketing plan should be collaboration between marketing and management teams within the company. When creating a marketing plan, essential elements include:

Statement of Objectives

In the statement of objectives section, communicate the things you want to achieve over the course of the plan. According to SBA Jumpstart, an organization funded by the U.S. Small Business Administration's Office of Native American Affairs, write marketing objectives so they are "S.M.A.R.T" -- be "specific" about goals; "measure" what you want to accomplish; outline the plan for "attaining" those goals; be "realistic;" and make your goals "time-sensitive."

Market Analysis

Another essential element of a marketing plan is market analysis. According to Entrepreneur Magazine, you need to understand the target market -- those who will potentially buy your product -- when writing a marketing plan. First, define the categories, characteristics and size of the target market. Next, determine the markets with the highest profit potential and least competition for your business. Build a "profile" of your target customer or customers that includes demographic information like gender, age and income level as well as behavioural and shopping tendencies.

Competitive Analysis

Another important part of a marketing plan is the competitive analysis. Before your write this section, research who the competition is, including their products and services, prices, promotional strategies and customer segments. Think about how you can fill a niche in the market that is untapped. Compile the results of your research in a table that lists each competitor, their strengths and weaknesses, pricing and promotional strategies and tactics.

Marketing Strategies

Marketing strategies are an essential element of any marketing plan. Strategies support your marketing objectives and are the "big picture" plans for accomplishing those goals. For example, if one of your marketing goals is to increase sales through your website and your customers are young entrepreneurs who frequently use technology, one of your strategies would likely be to use online marketing to reach this customer segment.

Marketing Tactics’

Finally, the marketing tactics are specific tools that support your marketing strategies. Using the previous example, if your strategy is to use online marketing to reach your customer, example of marketing tactics are search engine marketing, advertising on social media websites and email marketing. For this section, list each of your strategies that support each tactics. Include a timeline and budget for each tactic. (11, 12)

Different Elements of the Marketing Mix

Four Ps: the producer-oriented model:

Product: A product is seen as an item that satisfies what a consumer needs or wants. It is a tangible good or an intangible service. Every product is subject to a life-cycle including a growth phase followed by a maturity phase and finally an eventual period of decline as sales falls.

Price: The price is the amount a customer pays for the product. The price is very important as it determines the company's profit and hence, survival. Adjusting the price has a profound impact on the marketing strategy, and depending on the price elasticity of the product, often it will affect the demand and sales as well.

Promotion: Represents all of the methods of communication that a marketer may use to provide information to different parties about the product. Promotion comprises elements such as: advertising, public relations, personal selling and sales promotion.

Place: Refers to providing the product at a place which is convenient for consumers to access. Place is synonymous with distribution. Various strategies such as intensive distribution, selective distribution, exclusive distribution and franchising can be used by the marketer to complement the other aspects of the marketing mix.

Four Cs: the consumer-oriented model:

Product: part of the four Ps model is replaced by "Consumer", shifting the focus to satisfying the consumer needs.

Price: is replaced by "Cost", reflecting the total cost of ownership. Many factors affect Cost, including but not limited to the customer's cost to change or implement the new product or service and the customer's cost for not selecting a competitor's product or service.

Promotion: is replaced by "Communication", which represents a broader focus. Communications can include advertising, public relations, personal selling, viral advertising, and any form of communication between the organization and the consumer.

Place: is replaced by "convenience". With the rise of Internet and hybrid models of purchasing, Place is becoming less relevant. (13, 14, 15, 16)

Methods of Segmenting Markets

There are several important reasons, which businesses should attempt to segment their markets carefully. These are:

Better matching of customer needs

Better opportunities for growth

More effective promotion

Gain a higher share of the market

There are many ways in which a market can be broken down into segments. A very popular method of "demographic" segmentation looks at factors such as age, gender, income and social class. These are described briefly below:

Another approach is known as "geographic segmentation". This tries to divide markets using: regions, countries, population density. (17)

Benefits of Segmenting Markets

Market segments are groups with clear and distinct needs and characteristics relative to the larger market. Segmenting markets offer tremendous advantages to companies and marketing firms.

Stronger Positioning

Improved Efficiency

Competitive Advantages

Targeted Media (18)

Analyse Different Methods of Researching a Market

The Five Basic Methods of Market Research,

Surveys With concise and straightforward questionnaires, you can analyze a sample group that represents your target market. The larger the sample, the more reliable your results will be. Survey should be in-person surveys are one-on-one interviews, telephone survey, mail surveys, and online surveys.

Focus groups. In focus groups, a moderator uses a scripted series of questions or topics to lead a discussion among a group of people. A focus group usually lasts one to two hours, and it takes at least three groups to get balanced results.

Personal interviews. Like focus groups, personal interviews include unstructured, open-ended questions. They usually last for about an hour and are typically recorded.

Observation. When you observe consumers in action by videotaping them in stores, at work, or at home, you can observe how they buy or use a product. This gives you a more accurate picture of customers' usage habits and shopping patterns.

Field trials. Placing a new product in selected stores to test customer response under real-life selling conditions can help you make product modifications, adjust prices, or improve packaging. (19)

Current Technology Impacts on Marketing Activity

One approach would be to study emerging technologies with rapidly declining costs. Each of these emerging technologies spawns myriad applications that have the potential to dramatically impact existing markets. The interactive ability rapidly customizes marketing strategy by identifying individuals at particular points in time and under particular demand conditions. Five of these technologies include enhanced search services, biometrics and smart cards, enhanced computational speed, M-commerce, and GPS tracking. (20)

Case Study JD P.l.c

JD Sports Fashion Plc has long been established as the leading UK specialist multiple retailer of fashionable branded and own brand sports and casual wear, principally through the growth of its main retail fascia, JD Sports.

The JD Group now has well over 900 stores covering both sports and branded fashion but it all started when John David Sports was founded in 1981 with one shop in Bury. By 1983 the fledgling business was expanding into the Arndale Centre in Manchester and throughout the 1980s there were further openings, largely in the North and Midlands. The first London store was opened in Oxford Street in 1989 and by the time of JD’s stock market flotation in 1996 there were 56 stores. Maximum advantage was being taken from the growth in sales of international sports brands such as adidas, Nike, Reebok and Puma and the trend to wear sportswear more and more in everyday life rather than largely on sports fields. Additionally, JD had already developed its reputation as the most innovative visual merchandiser of sportswear with the best and most exclusive and stylish ranges.

The business continued to grow organically until 2002 when it acquired nearly 200 further stores with the acquisition of First Sport. Nearly all of the stores retained from this acquired portfolio have subsequently been converted to the JD fascia. In 2005, JD also purchased over 70 stores from Allsports, thereby further consolidating its position as the leading UK retailer of fashionable sports and casual wear. JD operates in both the UK and Republic of Ireland and, through Chausport, in France.

The JD Group also has a significant branded young fashion offering following the acquisition of Scotts in December 2004 and Bank Fashion in December 2007. These fascias have a combined portfolio of more than 100 stores across the UK and are well known for their dynamic approach to the branded fashion market with a new mix of brands introduced each season. Both of these fascias trade online at www.bankfashion.co.uk and www.scottsonline.co.uk.

2009 saw further expansion of the JD Group through the acquisition of Chausport which operates from 75 small stores in France.

In addition in 2009, JD acquired the world famous rugby heritage brands 'Canterbury' and 'Canterbury of New Zealand' as well as 'Kooga Rugby' brands.

JD has a controlling interest in www.getthelabel.com. This site is aimed at providing families with their branded fashion needs at attractive prices.

2001 saw further European expansion of the JD Group through the acquisition of Champion Sports which has 23 stores in Ireland and a 50.1% share of Sprinter which has 47 stores in Spain.

Also in 2011 another rugby brand, ‘Kukri’ was added to the Group and the 8 stores trading as Cecil Gee were acquired from Moss Bros.

In 2012 the JD Group acquired the trade and assets of Blacks Leisure Group Plc when it went into administration trading from 290 stores under the Blacks and Millets fascias.

JD Sports Fashion plc has been 57% owned by Pentland Group plc since mid 2005, a group whose principal interests are in sports and fashion brands, such as Lacoste and Speedo. (21)

JD Sports Positioned its Product

The Distribution businesses delivered a small operating profit of £1.1 million (2011: £0.2 million) with good performances from Focus, Kukri, Canterbury and Nicholas Deakins offset by investment at Topgrade Wholesale to build Getthelabel.com and ongoing weak performance in Kooga. (23)

How Products are Distributed?

JD St George Limited; fashion retail, which includes results of fashion retail trading companies Bank Fashion Sports Fashion Plc is engaged in retail and distribution of sport and athletic inspired fashion, footwear, apparel and accessories. It operates in three segments: sport retail, which includes results of sport retail trading companies JD Sports Fashion Plc, John David Sports Fashion (Ireland) Limited, Chausport SA and Duffer of Limited and RD Scott Limited, and distribution businesses, which includes results of distribution companies Topgrade Sportswear Limited, Nicholas Deakins Limited, Canterbury Limited (including global subsidiary companies), Kooga Rugby Limited and Nanny State Limited. On June 21, 2010, it acquired further 29% interest in Hallco 1521 Limited. On August 4, 2010, it acquired footwear and apparel brand, Nanny State, from D.R.I.P Brands Limited and D.R. Shoes Limited. On February 16, 2011, it acquired further 31% interest in Focus Brands Limited. (24)

Pricing Strategies

The price charged for a product will depend on a number of factors: the cost to make it, the level of profit required, competitor prices and the price consumers are willing to pay. The demand for necessities, such as bread and fuel, is unlikely to change much as prices fluctuate.

There are different pricing strategies which can be adopted to generate demand.

Market penetration: introducing a new product at a lower price to help gain market share.

Competitive pricing: often used for well known products or brands that is in high demand. Prices are similar to competitors. To be competitive, JD must ensure it doesn’t charge higher prices for the same goods than other sports and fashion retailers.

Strategic pricing: This might be used to position an exclusive product or brand to make it more desirable for consumers and generate demand or demonstrate value. By buying in large volumes, the company’s unit costs are lower. For example, discounts achieved by bulk purchases of trainers means the cost for each pair is lower than that paid by smaller retailers. This ensures JD remains competitive. (25)

Promotional Strategy

The purpose of promotion is to create awareness in consumers or generate interest and desire to buy products. Promotion can also be used to create or change a brand image and maintain market share.

Above-the-line:

JD promotional activity uses a mix of above-the-line and below-the-line promotions. Its above-the-line activities include:

Paid-for advertising in newspapers and magazines. JD advertises in high circulation titles, such as the men’s lifestyle magazine FHM and the music magazine NME

Product placements in a range of publications are used to promote the different brands

TV and radio advertising. Radio advertising in particular allows JD to target its key 13-20 year old audience quickly and in a way that young people find relevant.

Although these types of media reach a wide audience, they can be costly. It is also difficult to measure response rates.

Below-the-line:

Below-the-line promotions offer opportunities to communicate directly with consumers. For example:

E-mail helps JD to regularly contact its database of consumers with promotions and product information. Magazines and leaflets present product and lifestyle content.

Sales incentives, promotions and competitions with celebrities generate excitement and interest in the brand. This reinforces its youthful appeal. For example, JD partnered with adidas to provide VIP tickets for an exclusive N-Dubz event at the O2 Arena for JD.

Sponsorship and product endorsement by celebrities and music artists are used to highlight new ranges and products. For example, Tinchy Stryder promoted the Star in the Hood clothing range and The View promoted The Duffer of St George range in a press campaign.

A JD partnership with the Manchester Evening News Arena not only puts the brand in the arena itself, but also enables the company to feature competitions and offer prizes to capture potential custom.

JD also uses impactful photography and high quality point-of-sale materials in stores and window displays to attract consumers and increase footfall.

Growth of social media such as Facebook and Twitter also enables the company to use consumer recommendations as part of its promotional activities. It is estimated that every person viewing a page may pass on information to another 150 people. (26)

Aims and Objectives

Every business has aims and objectives. JD aims to make profits, in order to make profits JD has to set smart targets, which are practical objectives which have to be achieved. It breaks down the objectives into achievable targets. The targets have to be specific, measurable, achievable, and relevant and time specific (SMART) in order to be accomplished.

In order to be successful JD should set out aims and objectives, looking back at last year's success. E.g looking back at JD's success which made revenue of £300m and £12.4m in operating profit.

Their objectives which lead up to their goals could be to:

open new stores

expand existing stores

introduce loyalty or store cards

introduce wider stock

open concessions

buy out a rival company

update website regularly- online shopping

set individual targets for employees (27)

Target Markets for marketing Activity

This case study focuses on how JD (part of JD Sports Fashion PLC), the UK’s leading retailer of fashionable sports and leisure wear, uses market research to support and develop its business. As a B2C retailer, JD’s performance depends on providing the most desirable brands and products at the right price and in the right locations to meet with the demands of the consumer.

Founded in 1981 in Mossley, near Manchester, JD today is a nationally recognised UK high street fascia. For 20 years, the business expanded through organic growth, meaning that growth was generated by building sales revenue through increasing its network of stores.

Growth: JD has expanded more rapidly in recent years through acquisitions (inorganic growth), significantly increasing its JD store base through the purchase of First Sport (2002) and All:sports (2005). Through the purchase of Scotts (2004), Bank (2007) and, most recently, Blacks (2012), it has diversified the business into the young branded fashion and outdoor markets.

The Group has also made international acquisitions including Chausport (France), Champion Sports (Ireland) and Sprinter (Spain) as it has expanded its business overseas. The group has also secured brands such as The Duffer of St George, Sergio Tacchini (under UK licence) and the fashion brands Chilli Pepper, Nanny State and Sonneti. The JD Sports Fashion Group now has over 900 stores across the UK and Europe and a reputation for stocking exclusive and stylish ranges. (28)

Macro and Micro Environmental Factors

macro marketing environment

The political environment includes all laws, government agencies and lobbying groups that influence or restrict individuals or organisations.

The economic environment consists of all factors-such as salary levels, credit trends and pricing patterns that affect consumer spending habits and purchasing power.

The socio-cultural environment includes institutions and other forces that affect the basic values, behaviours, and preferences of the society-all of which have an effect on consumer marketing decisions.

The technological environment consists of those forces that affect the technology with which can create new products, new markets and new marketing opportunities. (29)

Micro Environmental Factors

Customers

All businesses need customers. The firm's marketing plan should aim to attract and retain customers through products that meets their "wants and needs" and excellent customer service.

Employees

Employing staff with relevant skills and experience is essential. This process begins at recruitment stage and continues throughout an employee's employment via ongoing training and promotion opportunities.

Suppliers

Suppliers provide businesses with the materials they need to carry out their business activities. Close supplier relationships are an effective way to remain competitive and secure quality products.

Shareholders

As organisations require investment to grow, they may decide to raise money by floating on the stock market i.e. move from private to public ownership. Shareholder pressure to increase profits will affect organisational strategy.

Media

Positive media attention can "make" an organisation and negative media attention can "break" an organisation. Organisations need to mange the media so that the media help promote the positive things about the organisation and reduce the impact of a negative event on their reputation.

Competitors

Competitor analysis and monitoring is crucial if an organisation is to maintain or improve its position within the market. If a business is unaware of its competitor's activities they will find it very difficult to "beat" their competitors.(30)

Marketing Mix of JD

The marketing mix is often termed the 4Ps. It is a useful way of looking at how organisations reach their consumers. For example, businesses need to create a mix that involves:

the right products

sold in the right place

at the right price

Using the most suitable forms of promotion.

Founded in 1981 in Mossley, in Manchester, with a single shop, JD today is a well-recognised brand. With 335 stores JD is the UK’s leading retailer of fashionable sports and casual wear. For 20 years JD expanded through organic growth. It opened up stores in new locations to grow its customer base and increase revenues. It traded on the rising trend, particularly amongst young people, of wearing sportswear in everyday life.

The JD Sports Fashion Group has also expanded in recent years by acquisition and now has a number of businesses in its portfolio. It has increased its JD store base through the acquisition of First Sport and All:sports as well as acquiring Scotts and Bank (young male and female branded fashion) in the UK.

The Group also made international acquisitions including the French sports fashion retailer Chausport and Champion Sports in Ireland. The JD Sports Fashion Group has also acquired brands such as The Duffer of St George, Nicholas Deakins, Canterbury of New Zealand, Kooga, Kukri and also the fashion brands Chilli Pepper, Nanny State and Sonneti. Brands such as Mckenzie, Brookhaven, Carbrini and Pure are exclusive brands are only available at JD stores.

With over 500 stores in the UK, Ireland and France, the JD Sports Fashion Group has a reputation for stocking the most exclusive and stylish lifestyle products. (31,32)

Conclusion:

JD’s marketing mix has created a unique position for the brand within the mind of its consumers whilst remaining true to its corporate values.

The company focuses on stocking the products its consumers want, as well as offering distinctive or exclusive ranges that can only be bought at JD. This, combined with its choice of strategies for placing and positioning the brand, has resulted in significant growth for the business.

JD Sports Fashion PLC advises that the company will outperform the market. This forecast advised investors to purchase equity in JD Sports Fashion PLC. (22)