Micro Marketing Environmental Forces

Published Date: 23 Mar 2015 Last Modified: 02 May 2017

The LG 60PK250 Plasma HDTV was launched less than a year ago and is currently within its growth stage. To continue its growth process, a differentiated marketing strategy has been implemented in which the company should make use of annual holidays such as Christmas and Wimbledon for advertising campaigns. Moreover, a marketing strategy change has been recommended for the next 12 months that involves achieving a wider distribution network. This will be done by not only focusing on retailing outlets but also focusing on expansion into supermarkets such as Tesco with the use of competitive pricing strategies.

Introduction

LG electronics is a consumer electronics company that was founded in 1958 as GoldStar (LG, 2010). They product Korea's first ever consumer radios, TV's refrigerators, washing machines and air conditioners and were renamed as LG Electronics in 1995 (LG, 2010). Since then LG has become one of the leading electronic brands through continuous innovative product development, evolving technologies and their easy going ethos of "making our customers' lives better and easier-happier, even through increased functionality and fun" (LG, 2010).

LG was the company that produced the world's first 60-inch plasma TV in 1998 (LG, 2010). The LG 60PK250 60" Full HD Plasma TV was launched in March 2010. Although it is a relatively new product with a well-established brand name and company, it is a plasma screen television and an appropriate marketing strategy will need to be applied in order to ensure the success of the product and prolong its life cycle.

The report will analyse the internal and external marketing environment of the television industry within the UK by focusing on what makes up the internal and external environment, LG's main competitors and consumer buyer behaviour. It will use relevant theories and concepts to assess different aspects of the market and from this an appropriate marketing mix for the next 12 months will we developed and recommended to try and ensure success of the Television within the UK television industry.

Macro marketing environmental forces

Marketing Environment

Organizations can succeed if they match their products and services to the marketing environment. "A company's marketing environment consists of the actors and forces outside marketing that affect marketing management's ability to develop and maintain successful transactions with its target consumers" (Kotler et al. 2001, p. 116). The Marketing environment is made up of the Micro Environment and Macro Environment.

Micro marketing environmental forces

Political

Buyers

Economic and

competitive

Competitors

The business

Legal

Company

Suppliers

Customer

Marketing interme-

Techno-

logical

Publics

diaries

Regulatory

Societal/Green

(Adapted from Dibb et al., 2006, p. 90)

Micro environment

The micro environment comprises all those individuals and organizations that affect the operation of a business on a day-to-day basis (CIM, 2002). Below are all the areas that make up the marketing environment applied to LG.

Customers - In order to generate profit, it is necessary to 'create a customer' (CIM, 2002). It is important to predict what customers will require rather than wait and follow them. To create products and services that not only meet customers' needs but also benefit them is of high importance.

LG Electronics is one of the world's largest electronics manufacturers, producing a large variety of consumer electronics and IT products. They strive to improve their customers' lives with intelligent products, intuitive functionality and excellent performance. LG's customers "take pride in owning an object of excellence and take comfort in knowing they've made a smart, informed purchase, every time" (LG, 2010).

LG keeps close relationships with its customers in more than 180 countries through the four basic elements: values, promise, benefits, and personality. "Based on a principle of creating value for customers, LG Electronics is safely providing products that customers want, offering differentiated services, and protecting customer information" (LG, 2010).

Source: LG, 2010

(See appendix 4 for details)

Competitors - A successful company is one that provides greater customer value and satisfaction than its competitors.

LG has some top direct competitors like Sony, Samsung, Philips, Panasonic or Sharp. However, the Group, with its new topic 'World's only maintain nutrition television' and declaration as 'digitally yours' to express to the consumers that it majorly addresses the consumer obligation and make things simpler to them, has become a very mighty business in the television commerce in the present years. Consumer approval has been the centred topic from the development stage to the maturity stage and augmented product: 5 - year warranty time span and productive after sales service along with call centres are provided by the Group might also be the reason why competitors could not trounce LG in periods of sales for many years.

LG also has some indirect competitors that can damage, to a degree, its television market such as internet, PS series, or high - tech products like the I-phone, I-pad, etc.

Intermediaries - are organizations that help a company promote, sell and distribution its products to target customers. They can be wholesalers, retailers, distribution firms, marketing agencies, or financial intermediaries. Effective intermediaries, is crucial for a firm's marketing success.

Televisions, from LG's agency located at Noida, are dispatched to the local agency dealer, and then to the consumers. However, the Group values a selective circulation convention where products drop into the hands of only couple of intermediaries, not one or all. This assists the business in having a good market treatment with more command and less cost than those of intensive distribution.

Suppliers - are the key component in transformation of materials to final products and services. It is important to review how suppliers, manufacturers and intermediaries co-operate with each other.

LG establishes the win - win management with its business partners in which "LG has always been trying to grow alongside its suppliers by strengthening their competitiveness. Still, it re-established its strategic direction for purchasing and refurbished its support division for suppliers to effectively deal with the recent economic crisis as any responsible business partner would do in a similar situation" (LG, 2010).

Importantly, LG is committed to the Eco Supply Chain to develop eco-products under the Green program. It is operated in coordination with partner firms who supply parts, raw materials, and other materials to establish themselves as environmentally friendly companies. The television LG 60PK250 60" Full HD Plasma is an eco-design that shows harmonized cooperation between LG and its suppliers, in which resource consumption is reduced, components are recyclable, and safe materials are facilitated (See appendix 3 for details).

Shareholders - are the ones who "have supported, are currently supporting, or may support the organization in the future" (Palmer, 2009, p.45). They provide funds to the firm to finance its financial and non - financial performance.

LG has experienced a consecutive increase in investment by domestic investors between 2005 - 2008, while investment by foreigners has decreased and investment by the Group remains sustainable.

LG's Shareholder Composition

Source: LG, 2010

(See appendix 1 for details)

Employees - are involved in a company's marketing plans, in which groups of people must be taken into consideration: top managers, finance staffs, R&D staffs, purchasing staffs, or manufacturing and accounting staffs.

On the way to 'Great Company, Great People', LG believes that only great people can create a great company. LG's workplace is the space of solidarity, creativity, and freedom. LG strives for greatness in what it has recognized as People Leadership which concerns with "market dominance achieved by selecting and nurturing talented team players able to internalize and execute innovation across the board" (LG, 2010). (See appendix 2 for details)

Macro EnvironmentThe macro environment, also known as the external environment, "comprises general trends and forces which may not immediately affect the relationships that a company has with its customers, suppliers, and intermediaries, but sooner or later, as this environment changes, these trends and forces will alter the nature of such micro - level relationships" (Palmer, 2009, p.51). The macro environment is beyond the control of the marketers, but it is evaluated to help a company make decisions and plans. Macro environment could be divided into a set of subject areas frequently used in the UK - SLEPT:

Socio - cultural environment

Legal environment

Economic environment

Political environment

Technological environment

SLEPT Analysis(CIM, 2002)

Socio - cultural environment: is fundamental to a business's operation in a specific community. It is crucial for a company to keep up with the changing needs of customers.

Demographic environment - "Demography is the study of populations in terms of their size and characteristics." (Palmer, 2002, p. 59) We can sub-divide the demographic environment into following categories:

Population size and growth trends

Age & sex structure

Changing family

Number of educated people

Increasing diversity

The TV LG 60PK250 60" Full HD Plasma is a high tech innovation with eco design, which can be listed as one of LG's prides. It might be an ideal product for young age groups who are focused on style and dominant features, or for older age groups who are interested in energy saving functionality. The TV can also attract both males and females who are looking for bigger screen size, better picture quality, and digital - ready TV. LG might expect the highest sale of this TV to be to households who have children aged 5-9, or households with family size 5+ (Mintel, 2009). However, the Group should never look for a higher sale of this model compared with that of LCD TV because LCD TV is always likely to be the first choice for all ages, sex, or occupations.

Cultural changes - Cultural environment is made up of institutions and factors that affect each society's values, attitudes, perception, behaviours, and so on. Marketers must be aware of cultural influences and changes across societies in order to renew the firm and adapt to the changing needs of customers. Some culture groups should be considered within a society: ethnic and racial cultures, religious cultures and classes (CIM, 2002). Cultural values are always important and highly appreciated in a society. Shifts in cultural values during years will lead to a change in customers' philosophy of life, and then result in consumption habits.

Nowadays, changes in audio-visual culture have resulted in differences in buyer behaviour. The TV LG 60PK250 Full HD Plasma is an evidence for a shift from basic need to self - esteem need of consumers. LG TVs with reputation, high technology and high quality are always every customer's desire. However, they are most preferred by high socio - economic groups.

It is the development of society that situates LG in the competition against other celebrated brands in which its products need to have competitive advantages to survive in the changing and challenging market.

Social trends - "Social changes involve changes in the nature, attitudes and habits of society. Social changes are continually happening, and trends can be identified" (CIM, 2002).

Rising living standards: higher incomes, proper and developed services in recent time can result in higher expenditure, wider ownership of luxury products like LG 60PK250 60" Full HD

Society's attitude to business: LG always strives to be consistent and systematic in full - scale implementation of social activities on raising environmental awareness, alleviating global famine and combating infectious diseases. Fundraising and volunteer work are the key points of the Group's goals and operation system.

The workforce: high skilled labours are needed for not only LG but also other manufacturers in the macro economy. Besides, there have been changes from manual jobs to an increasing intellectual employment. LG has a vision of expected core capabilities of its employees:

"Product leadership refers to the ability to develop creative, top-quality products, using specialized new technologies".

"Market leadership refers to the ability to achieve top ranking, worldwide, thanks to a formidable market presence in countries across the globe".

"People leadership refers to the market dominance achieved by selecting and nurturing talented team players able to internalize and execute innovation across the board".

(LG, 2010)

Political and legal environment: is treated as an unpredictable element in a company's marketing environment. It comprises government, politicians, and pressure groups. Changes in government policies or changes of government can exert great impacts on businesses' performance.

Legislation is a part of political process. It covers all aspects of an organization's operation. Laws and regulations are adopted by the government, in which some basic issues of economic policies are recognized: criminal law, Health and safety law, company law, tort, legal framework, employment law, contract, consumer protection, data protection. (CIM, 2002)

LG is headquartered in Seoul, Korea functioning 60 subsidiaries in 34 nations and making its products to consumers in more than 180 countries. Therefore, it will be affected to some extend if there is any change in these countries' politics, especially in Asian countries and Middle East.

However, LG is always committed to basic laws and regulations on corporate business such as customers' health guarantee, customers' information protection, environmental protection, employee right protection, and so on.

Economic environment: A state of economy in which a company operates, where trade should always be at the very heart of performance. Economic environment includes factors that can influence consumer buying power and spending patterns.

A company should keep an eye of both regional or national economic changes as well as movement in the global economy. The main aspects of economic environment are:

Income distribution and purchasing power

Consumer spending patterns

Market competitiveness

Business cycle: recession, inflation, unemployment, fluctuation of exchange rate, etc

Before a luxury product like LG 60PK250 Full HD Plasma appeared in the market, economic factors would have been taken into cautious consideration. According to Mintel (2009), there has been a trend of higher personal disposable income and consumer expenditure since 2004. This could be a good sign for LG if customers can afford that type of TV. However, the global economy has not escaped from the recession. Therefore, the product sale could be damaged by customers' attitude if they delay their purchase. Moreover, the TV market is becoming competitive when a wide range of available products are introduced by numerous manufacturers. The TV market has to face a rising number of different technological products like online video. This could make customers confused when making their purchase. The lower average price may also have benefited customers but it is not a good sign for the producer because deeper price cuts can cause market values to drop off much more steeply, especially with large screen TV's like the LG 60PK250 Full HD Plasma.

Technological environment: As human society develops, technological change happens. Technological development can create favourable conditions for productivity and business efficiency. New technologies provide new markets and opportunities but sometimes they can affect a firm's determination towards whether or not to invest in radical new or high technologies to achieve their targets. Shifts in technologies are sometimes problematic to several organizations. However, companies operate in an environment where technology changes must be adapted quickly to the business for improvement and innovation. They should pay attention to pace of technological change, R&D budgets, concentration on minor improvements, and increased regulations (Kotler et al. 2001).

LG Electronics is a company that thrives on innovation. It is reinforcing centre competencies to father its status as the 'Digital Leader'. LG is now developing its 'Smart Technology' which creates convenience and adds joy to customers' lives. "Smart Technology is a development philosophy that embraces sensitive communication with customers in order to provide products that everybody wants to use, and easily can". (LG UK, 2010)

Competitor analysisThe television market consists of highly competitive players, who are continuously innovating (Mintel, 2009). Competitor analysis is essential to be able to plan effective marketing strategies. According to Kotler and Armstrong (2004) there are 3 steps to analysing competitors:

Selecting which competitors to attack or avoid

Assessing competitors' objectives, strategies, strengths and weaknesses, and reaction patterns

Identifying the company's competitors

Porter's five forces is a strategic tool used to assess an industry's competitive environment based on the strengths of five generalised forces (Henry, 2008). These five forces are: threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitute products, and amount of rivalry among firms in the industry (Henry, 2008). In this case, Porters five forces can be used as an effective tool to analyse the competitor threats LG would face in the television market.

New Entrants

Economies of scale

Government policy

Capital requirements

Proprietary products/technologies

Threat of new entrants

Buyers

Price/total purchases

Buyer concentration verses firm concentration

Ability to backward integrate

Price sensitivity

Competitors

Market volumes/shares

Market sectors/product/ service type

Market responses

Bargaining power of suppliers

Suppliers

Differentiation of inputs

Supplier concentration

Threat of forward integration

Switching costs

Bargaining power of buyers

Substitutes

Switching costs and propensity to substitute

Relative price performance of substitutes

Threat of substitutes

(Adapted from Baines, Fill and Page, 2008, p. 74)

The television manufacturing industry faces intense segment rivalry due to the fact that few players dominate the market. The main competitors in the television industry are LG, Panasonic, Samsung, Sony and Toshiba, with LG being one of the best (Mintel, 2009).

Company

Brands

LG

LG

Panasonic

Panasonic, Viera

Samsung

Samsung

Sony

Sony, Bravia

Toshiba

Toshiba, Regza

(Mintel, 2009)

In the case of being threatened by new entrants, as mentioned before, the TV market is a well-established industry that is highly competitive and requires constant innovation and technological investment. This makes it an industry with high entry barriers (Kotler and Keller, 2006) therefore it is not an easy market to enter, especially when competing with a company as established as LG.

Suppliers bargaining power increases when there are a few substitutes and when there are fewer suppliers in the industry (Kotler and Keller, 2006). High costs and the importance of the product has an impact on their bargaining power as well. Televisions are considered a necessity in most homes and are an important product therefore suppliers will have some form of bargaining power however the television industry is large and will have a large number of suppliers therefore switching suppliers would be easy to do, which means that LG will have more power over its suppliers because they are a well-established and large consumer electronics company and suppliers would not want to lose business to such a mass producing company.

In the case of buyers one of the main reasons their bargaining power increases is when they have many options (Kotler and Keller, 2006). When purchasing a television, a customer considers every aspect of the product because it a long term and expensive purchase (Mintel, 2009). Consumers have a wide range of products and features to choose from when trying to buy a HD Plasma TV. Plasma screens are becoming increasingly unpopular and are the least published type of screen nowadays (Mintel, 2009), therefore in the case of this particular product consumers will have high bargaining power because of high choice and plenty of manufacturers with different prices, for example curry's and PC World. However, since the recession the amount of people willing to pay high prices for the latest technology has reduced and price has become the most important factor (Mintel, 2009).

The threat of substitute products within the television industry can be argued. It would be considered low because a television is considered an essential and few efficient substitutes are available. However, PC screens have become an increasingly popular substitute for video (Mintel, 2009). People within the UK are using more and more internet technology and online streaming websites to watch TV. Companies like Sony and Toshiba are releasing televisions that are internet compatible (Mintel, 2009) and the LG 60" HD Plasma TV will not be able to keep up. Larger TV screens have also become less popular since the recession (Mintel, 2009) which will make it harder for LG to ensure the television's success.

Due to the fact that the television industry is dominant by a small number of well established large firms that produce a range of products but have slightly different quality standards, features and style. Therefore the market can be described as a Differentiated Oligopoly (Kotler). In this case companies are better focusing on one attribute and attracting the people concerned with it (Kotler) LG has been an innovator in the television industry for a long time. Amongst many other innovations, they were the first to product a 60" plasma TV (LG, 2010). Therefore although there is high pressure within the industry LG is constantly keeping up with it by focusing on their customer needs. In 2008 they introduced their new global brand identity as "Stylish design and smart technology, in products that fit our consumers' lives" (LG, 2010).

The PLC theory is based on the idea that every product goes through a life cycle from its introduction onto a market, to its decline and withdrawal from the market (Hoffman et al., 2009). The traditional PLC curve consists of 4 stages: Introduction, Growth, Maturity and Decline (book?).

Product Life Cycle (PLC)

Traditional Product life cycle

Introduction Growth Maturity Decline

£

Sales

The product life cycle can be a useful tool in analysing how a product is doing and for a firm to manage its portfolio of products (Palmer, 2008). It is also useful in helping make strategic decisions about the marketing strategy of a product and the best way to market it while it goes through the stages because the marketing mix varies at each stage. It is more descriptive rather than predictive (website). The life-cycle of different products vary, and it can be difficult to identify the stage at which the product lies in a PLC. The shape of a PLC varies as well and depends on the marketing strategies being applied to the product, as well as whether it is a product form, product class or brand that is being considered (Palmer, 2004).

A television is a product class and usually has a lifecycle of about 70 years however it is easier to identify the life-cyle of a product form for example plasma TV's. HDTV is relatively new technology that is likely to be in its growth stage and has a lot of potential for the future however plasma is an older technology that is now most likely to be in its decline stage (website). LED's and LCD's are much more popular and 3D TV's and OLED technology are being introduced as well. HDTV's lifecycle is predicted to grow and evolve over the next two decades due to the prediction and development of HDTV LCD's, OLED's, 3D TV's, Laser TV's and Holographic TV (Squidoo, 2010).

The LG 60PK250 60" HDTV is likely to fit into the growth stage of the traditional PLC as it was launched in March 2010 and combines HDTV technology with Plasma screen technology. The right kind of marketing strategy can be applied to help extend its life-cycle. (Refer to appendix 5)

BCG MatrixThe Boston Consulting Group (BCG) Matrix is a tool that was developed in order to analyse the portfolio of an organisation to assess the product's position according to its growth rate and its relative market share (Henry, 2008). It can be used to help make strategic decisions about their products and how to maximise returns on them (Henry, 2008). The growth rate is determined by looking at the growth rate of the economy and its market share is refers to its competitive position within the industry (Henry, 2008)

The position of the LG 60PK250 HDTV can only be estimated based on the knowledge available. It is a relatively new product and is priced quite high. A lot of people would rather pay that money towards purchasing an LCD screen, however all the major retailers such as Argos, Curry's, PC World etc. sell the television. LG also has a well-established brand and a loyal network of customers. For these reasons the television is likely to be a cash cow. Its market share would be relatively high due to being an LG TV as well as the fact that it is a HDTV. However its market growth is likely to be low due to the overall economic recession and PC screen technology replacing televisions.

However the BCG matrix assesses performance based on only these two factors. "It overemphasizes the importance of market share and market dominance" (Henry, 2008, p. 241). It also relies on managers judgements (Henry, 2008) and does not take into consideration other internal or external factors that could determine the success of the product. However it is a useful tool to use in conjunction with other strategic theories such as the PLC curve before.

SWOT AnalysisA SWOT analysis is a framework used to assess the strengths, weaknesses, opportunities and threats of an organisation and its marketing environment (Palmer, 2004). The strengths and weaknesses consider the internal environment and the opportunities and threats are linked to the external environment (Henry, 2008).

SWOT Analysis of the LG 60PK250 60" HD TV

Strengths

Well established and popular TV Brand

Big screen size

Built in freeview

Currently in intro/growth

Weaknesses

Plasma screen technology declining

Expensive due to screen size

No innovative technology

Opportunities

Popularity of HD TV's

Potential for growth

Increasing sales due to end of recession

Threats

Similar products available at different prices

High competition

PC/online video streaming technology taking over

Innovative technology taking over for example 3D and OLED TV's

A SWOT analysis can be useful for the general and competitive external and internal environment however it does not take into account unpredictable changes or events in the external environment (Henry, 2008). It helps identify weaknesses and opportunities for which strategies can then be developed to make improvements. However, some of the limitations of a SWOT analysis are, it is hard to identify what is a threat and what is an opportunity, sometimes the same thing can be a strength or a weakness and the analysis can be "too focused within the industry boundary" (Henry, 2008, p. 120). In this case the SWOT analysis is stronger as it has been used in conjunction with a PEST analysis which was conducted to analyse the external environment in detail.

Buyer Behaviour

If organizations want to survive in a challenging market, customers should be always at the very heart of their operation. Marketers are expected to be aware of what consumers are thinking, what they need and what they want to buy. Basic insights into buyer behaviour can be seen as a versatile key to unlock all those thorny questions.

The model of buying behaviour

Evaluation of alternatives

Information research

Purchase decision

Post-purchase behaviour

Need recognition

Source: Kotler and Armstrong, 2004, p. 198

The model is designed to synthesize and coordinate relevant concepts that reflect the problem

solving progress inside the emotional consumer. The three main components of the model are:

input, process (buyer's black box) and output (Kotler et al. 2001, p.191).

The input - The input component rests on external influences which can be observed as sources of

information affecting consumers' product - related values, attitudes, and behaviour. Firm's

marketing efforts and other stimuli like socio - cultural environment, economic environment,

technological environment and political environment are chief among those.

Marketing Efforts

The firms' marketing activities are direct components that play a pivotal role in persuading consumers to buy and use products of a manufacturer. Marketing strategies consists of products, promotion, price, and channels of distribution. We will have an in-depth insight into the marketing efforts of the product LG 60PK250 60" Full HD Plasma TV in the session marketing mix later, but some key points can be identified as:

Product: The TV can be classified as a consumer product generally acquired by the last consumers for individual consumption. It is an amazing innovation of LG which allows customers to enjoy creativity, high technology, convenience and other great values. The TV could be a big opponent against a number of other high - tech TV series in the market in 2010 because of its outstanding features providing superb crystal clear picture quality perfect for bringing the cinema experience home, or converting the living room to a sports stadium.

Promotion: LG foremost advocating of the product is through publicity crusades on TV, publish newspapers, hoardings and the internet.

Price: According to Mintel 2009, 86% of customers consider the prices of products as their first priority. The price of LG 60PK250 60" Full HD Plasma is quite high (more than 1000GBP), and this could be a disadvantage for LG since customers might delay their purchase or shift their purchase to another brand.

Channels of distribution: The product pursues a digressive marketing conduit of circulation where it proceeds from the corporate office - regional office - dealer - consumer. It is nowadays more convenient for consumers to purchase the TV online (via amazon, tesco, etc) or in showrooms in geographic regions.

TV buyers affected by marketing strategies could form assumptions about companies, products and shops. These market beliefs then become suggestions for their decisions whether or not they are accurate. (Solomon et al. 2006) For example:

Do higher prices mean higher quality? The LG 60PK250 Full HD Plasma TV has a high price, but the attitudes of consumers towards LG brand is not really good in term of perception of quality, which appears to conflict with its "promise of satisfaction to its customers". (Mintel, 2009)

When you buy a heavily advertised product, you are paying for the label, not for higher quality. Is that true to a high price product like LG 60PK250?

Other stimuli

Buyers' decision of purchase can be influenced by political, economic, socio - cultural, and technological factors as mentioned above. However, it is highly recommended that we should have a deeper insight into characteristics affecting consumer behaviour.

Personal

Age and life cycle stage

Occupation

Economic circumstance

Life style

Personality and self - concept

Cultural

Culture

Subculture

Social class

Buyer

Psychological

Motivation

Perception

Learning

Beliefs and attitudes

Social

Reference groups

Family

Roles and status

Source: Kotler et al. 2001, p.192

Cultural factors:

As discussed above, cultural shifts are very important nowadays. The cultural shift towards a healthier life has created a big industry for television in which LG 60PK250 Full HD Plasma TV is likely to be loved by customers because of its eco design (reducing the use of hazardous substances such as lead, mercury, cadmium, and PBDE) (LG, 2010). A shift towards the self - actualization need can also be a big change, for example, LG 60PK250 Full HD Plasma TV does not only meet the basic needs of a viewer (watching news, films, listening to music) but also satisfies his highest requirement of possessing a TV (the best ever, world class, etc)

Subculture such as nationalities, religions, geographic regions may have different impacts on buyer behaviour. The Asian TV market is now developing very fast. Moreover, Asian customers are now extremely "up - to - date" and easy to be influenced. Therefore, the LG 60PK250 is expected to be in high sales in these nations.

The social class has a great influence on buyer behaviour. The LG 60PK250 Full HD Plasma TV is believed to be suited to high classes only who have quite good financial condition.

Social factors:

Reference groups which involve individuals having the same interests, ideals, or others, have a direct or indirect influence on customers' behaviour. Group members who are interested in high tech products could not ignore the LG 60PK250 Full HD Plasma TV.

In the case of expensive products like LG 60PK250 60" Full HD, family members often make joint decision. Therefore, possibility of purchase is divided into smaller proportion.

Consumer's buying roles refer to 5 positions in which group members can be:

+ Initiator: the person who first have an idea of purchase

+ Influencer: the person whose advices affect the buying decisions

+ Decider: the person who decide to purchase

+ Buyer: the person who makes the purchase

+ User: the person who uses the product

An individual can play one or several roles. However it will be more complicated to make a decision if he is involved in too many roles.

Personal factors:

In addition to age and sex, economic status, life style and personality is really important in any purchase decision. Younger age groups always want to have their own style. They can purchase the luxury TV LG 60PK250 Full HD plasma to experience a modern design, pinnacle of technology, or simply show their high class. Traditional consumers find it a waste of money to spend on an expensive TV. Customers who are not really easy going might not be satisfied with this LG product, and may wait for a better one to buy.

Psychological factors:

Motivation: Whether we want to buy the specific television LG 60PK250 60" or are just looking for a new TV for the living room. We often make enquiries such as "why do we have to buy the TV", "What are we looking for", or "what needs are we trying to satisfy". Abraham Maslow sought to explain how people are driven by particular needs at specific times by his theory of motivation in which five levels of motivation should be recognized as the following:

Self-actualization

Esteem

Love/belonging

Safety

Physiology

D

Morality

Creativity

Spontaneity

Lack of prejudice

Acceptance of facts

Self-esteem, confidence,

Respect for others, respect by others

Belonging, friendship, family, sexual intimacy

Security of work, morals, family, health, property

Breathing, food, water, sex, sleep, homeostasis, excretion

(Adapted from Baines, Fill and Page, 2008, p. 114)

LG 60PK250 full HD is the product that can satisfy all 5 needs of customers due to its excellent attributes. According to Mintel (2009), consumers are extremely motivated by bigger and better picture quality therefore the LG 60PK250 can be a good consideration.

Perception: Different customers have different ways of perceiving things. Thus, marketers always strive to better their understandings of customers' mind-sets. The high tech LG 60PK250 full HD TV has created a very impressive image towards customers by its message "Bring the cinema experience home". Its massive presence on ads, online retailers' websites has made a great contribution to positively affecting customers' perception as well.

Learning: TV consumers continually learn about new products, new features, and trends. Hence, marketers of LG 60PK250 full HD plasma have tried their best to build up the demand for the TV based upon the new trend of TV consumption: competitive price, big screen size, famous brand name, green functionality, ability to connect to PCs, added accessories included, etc.

Attitude: That is a person's evaluations or feelings towards objects and ideas. For example, when buying a TV, consumers can have their decision rule:

+ Non - Compensatory: "Simple decision rules meaning that a product with a low standing on one attribute cannot make up for this position by being better on another. People are likely to eliminate all options that do not meet some basic standards"

+ Compensatory: "consumers give a TV a chance to make up for its shortcomings"

(Solomon et al. 2006, p.232)

If a person holds such attitude as non - compensatory, he would not buy the LG 60PK250 full HD plasma because it cannot connect to the internet although its sound and picture quality is really good, or the screen size is very big and suited to his large living room.

The process - The process is concerned with the psychology factors and personality represent internal influences that affect consumers' decision making process. The act of making consumer decisions consists of three stages: need recognition (motivation development), pre - purchase search (information gathering), and evaluation of alternatives (product evaluation).

Need recognition

The recognition of need is likely to occur when consumers have to face problems. Motivation development is involved in this stage. A person, for example, needs a new TV for his new luxury living room.

Pre - purchase search

Customer starts seeking information about alternative ways, which can be divided into two main sorts: internal search (his own experience) or external search (word of mouth, usage of his reference group which includes individuals interested in domestic furniture, or gaining information from newspapers, etc)

Evaluation of alternatives

After gathering quite useful information, the customer tends to narrow down from a wide range of products available, from the total set (all alternatives) to the awareness set (including evoked set - specific brands he considers in making a purchase choice - Alba, Sony, Samsung, LG, inept set - brands he exclude from purchase - Sharp, inert set - brands he is indifferent towards - JVC,). The awareness set will be narrowed to the consideration set (evoked set), and then the choice set - LG. Facing different types of LG TVs, the customer continually uses the model above to find out his final product based on his personality, attitudes, economic status, etc.

The output - The output shifts the focus on the activity of purchase (dealer choice, purchase time, purchase amount) and post - purchase evaluation. After deciding to purchase the TV LG 60PK250 60" If they realize that expectations are not satisfied, the result is referred to cognitive dissonance. Consumers can handle dissonance in a number of ways: return the product, complain to friends or colleagues, or try internal psychology processes. We can see some post purchase evaluations of the LG 60PK250 full HD plasma by customers as following:

Lan, Scotland - "Occasional TV watcher": Picture quality, price, ease of use, but only 2 HDMI sockets, no VGA inpu.t

Lan, Edinburgh - "Multi-purpose viewer": Im loving everything about my 60" Lg ! It was good value for money and looks fantastic, and on HD channels is brilliant. Sound if anything but still very good.

Confirmed purchaser: Great size and picture. Not bad but the sound quality could have a little more guts within it......had to purchase a cinema sound to enhance this.

John, Spennymoor - "Film and documentary lover": Very Good picture quality on both Freeview and external source (scart). Design of frame is excellent with very narrow border compared with my previous flat screen. When wall mounted the plugs protrude too far meaning extra spacers were need on the wall bracket. Controls could be more intuitive, Selecting Channels is a bit clumsy unless favourites is used. Only 1 favourites list.

(Source: Reevoo 2010)

Companies are aware that they cannot profitably serve all consumers in a given market, at least not all consumers in the same way. There are too many different kinds of consumers with too many different kinds of needs. This is why one must divide up the total market, choose the best segments and design strategies for profitability serving chosen segments (Kotler and Armstrong, 2006). This process involves three steps: segmentation, targeting and positioning.

Segmentation Targeting and Positioning

Segmentation

The television market consists of many types of customers and needs. The marketer has to determine which segments offer the best opportunity for achieving company objectives.

Segmentation can be identified as:

" A strategy of creating and applying different marketing programs intended to satisfy similar needs and wants of members of individual groups, for example different consumer segments"

(Vignali, Vranesevic and Vrontis, 2008, p.301)

In other words, each consumer group or segment has a unique demand depending on the product's price, characteristics, points of sale and ways of selling it. Therefore, each segment is characterized by a different perception (on the consumer's part) of the products and services.

However, it can be said that unlike mass market, market segmentation can help achieve competitive advantage over its competitors (Palmer, 2004).

Segmenting and Targeting Our Consumer Markets

Targeting is:

"The process of evaluating each market segment's attractiveness and selecting one or more segments to enter"

(Kotler and Armstrong, 2006, p.47)

After LG has defined its market segments, it can then target one or many segments of a given market. Below is a three step process involved in segmentation and market targeting.

Step 3

The Target Market

Step 2

The Segmented Market

Step 1

The Disaggregated Market

The characteristics of individual consumers are understood

Consumers are grouped into segments on the basis of having similar characteristics

The most attractive segments are judged and a marketing mix strategy is designed for those segments

Is broken down

And grouped

The Market

So as to facilitate market selection

Product

Price

#1 #2 Sales and distribution

Promotion #3

Other marketing mix elements

C1 C4

C2

C7

C8

C6

C5 C3

C1 C4

C2

C3 C5

C6

C8 C7

#1 #2 #3

C1 C6

C2 C4 C7

C3 C5 C8

Adapted from Vignali, Vranesevic and Vrontis (2008)

Step 1

The Television market as a whole is made up of different people with different characteristics. These characteristics are described by Kotler et al. (2005) under 'Bases for Segmenting Consumer Markets'.

Step 2

Kotler et al. (2005) explain that consumer and business marketers use many of the same variables to segment their markets. Moreover, the authors further explain that business buyers segment geographically or by benefits sought, user status, usage rate and loyalty status. Yet business marketers also use additional variables of demographic segmentation (industry and company size).

It can be said that television manufacturers usually make use of geographic and demographic elements specifically. They target regions in the world with attractive geographic sizes and demographic households of high income with large family sizes. However, this does not mean that televisions are bought by only high income people or households. The LG 60PK250 is a modern up to date television and appeals to different kinds of social economic classes as well. The product consists of features like '2 HDMI inputs', 'Freeview' and a wide 60 inch screen (LG, 2010). The tables below show what consumers look for in new televisions.

Important Considerations in Buying a TV by Demographics

Base: 2,000 internet users aged 16+

Source: Mintel (2009)

From the market data, it is deduced that the LG 60PK250 television based on its 'Freeview' feature should be targeted more towards older people from the age of 55+. This will be one target segment. Screen size is most important to age groups from 45 to 54 and least important to age groups from 20-24. Moreover, the feature of HDMI slots seems to be most important to age groups from 25 to 44.

Type of Televisions Bought by Demographics

Source: Mintel (2009)

The table shows that 'Plasma TV's' are clearly the least popular and the reasons behind this are the lack of features and functions. There are a lot of areas of improvement for this television. However, they seem to appeal to a range of age groups from 16 to 34. The research detailed in the tables above shows a mean of what features consumers are interested in. These are important factors for LG since it will help in targeting specific markets.

People who keep up with new innovative products would buy the television upon release. Their purchasing behavior is strong and they are not price sensitive, so long as they are receiving the benefits sought. 'Usage rate' can be another way to group television buyers. In which consumers are considered to be heavy, medium or light users. Moreover, 'lifestyle' grouping can impact on buying behaviors, in which individuals enjoy the luxury of having large screen televisions within their households.

Step 3

After a company has defined its market segments, it can then enter one or many segments of a given market. Target marketing involves: "evaluating each market segment's attractiveness and selecting one or more segments to enter" (Kotler and Armstrong, 2006, p.47). A company should target segments in which it can profitably generate the greatest customer value and sustain it over time. There are 3 types of different market targeting strategies:

Undifferentiated; "A market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer"

(Vignali, Vranesevic and Vrontis, 2008, p.320).

In this strategy, a company estimates that it will realize greater benefits if it ignores possible consumer segments and enters the market with a unique marketing mix. Clearly this cannot be the best possible targeting strategy for LG 60PK250.

Differentiated; "A market coverage strategy in which a firm decides to target several market segments and designs separate offers for each"

(Vignali, Vranesevic and Vrontis, 2008, p.321).

This strategy implies the company's approach to the market by covering all segments with a separate marketing mix for each individual segment.

Concentrated; "A market coverage strategy in which a firm goes after a large share of one or a few submarkets"

(Vignali, Vranesevic and Vrontis, 2008, p.321).

In this strategy a company implies its orientation on one or several reasonably as similar as possible consumer segments. This approach is particularly appropriate for companies with insufficient resources or funding for a differentiated approach (Kotler and Armstrong, 2006).

After one is familiarized with the different targeting strategies, it can be deduced that LG need to target a 'Differentiated' market for their LG 60PK250. Kotler et al. (2005) explain that the advantages of this approach lie in strengthening the product or service position in different consumer segments. Below is a typical target strategy diagram that the company can find most suitable for their LG 60PK250.

Company's Marketing Mix 1

Segment 1

Company's Marketing Mix 2

Segment 1

Company's Marketing Mix 3

Segment 1 Differentiated

Market

Source: Vignali, Vranesevic and Vrontis (2008, p.320)

Developing a 'Position' within the Target Market

Having chosen a segment to target, a company must decide how to position itself in relation to its competitors for that segment. Market positioning is defined as:

"Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers"

(Kotler and Armstrong, 2006, p.49)

Marketers can position their offering on:

Attribute or Benefit - A frequently used positioning strategy that exploits a particular product attribute or benefit. For example economy, reliability and durability are frequently used attribute/benefit positions.

Quality or Price - This strategy can be thought of in terms of a continuum from high fashion/quality and high price to good value (rather than low quality) at a reasonable price.

Use or User - This positioning strategy represents how a product is used or associates the brand with a user or class of users.

Competitors; Against or Away - This strategy consists of two positioning alternatives, 'Against a competitor' or 'Away from competitor'. In which a company releases a product or service stating that it is better than its competitor or competitors.

Adapted from Keegan and Green (2005)

It can be deduced that a suitable market positioning strategy for the LG 60PK250 is the combination of two; price and user. The company needs to consistently manufacture good quality products for a reasonable price since the selected television is aimed as a luxury product. This is because the television has a large screen size and would usually be used in households with large living rooms.

In comparison to its main competitors, the pricing of this TV comes in much lower than other TV's with the same screen sizes. The main feature of this TV is the screen size, which might be seen as one of the stand out features. In return, the type of consumer who would buy this TV would be motivated mainly by this feature and the fact that it comes in at a lower price than its competitors. Moreover, the price of the TV itself is comparatively high, this in return requires an individual with a high disposable income alongside the desire to own a larger than average TV.

This type of buying behavior can be related directly to 'Maslow's Hierarchy of Needs' in which an individual will be motivated to buy this television due to 'Esteem needs' and 'Aesthetic needs' (Kotler et al., 2005). For this TV, the basic characteristics that should be expected from the consumer are status, self-esteem and looks.

The next section goes on to explain the marketing mix used for this TV.

Marketing Mix

The term 'marketing mix' became popularised after Neil H. Borden published his 1964 article, The Concept of the Marketing Mix. Borden began using the term in his teaching in the late 1940's after James Culliton described the marketing manager as a 'mixer of ingredients'. He composed a twelve-item list of elements which the manufacturers should consider when developing their marketing mix policies and procedures. The ingredients in Borden's marketing mix included product, planning, pricing, branding, distribution channels, personal selling, advertising, promotions, packaging, display, servicing, physical handling, and fact finding and analysis. Later these were grouped into the four categories that today are known as the 4 P's of marketing:

Product - Defining the characteristics of your product or service to meet the customers' needs.

Price - Deciding on a pricing strategy and identifying the total cost to the user.

Promotion - Includes advertising, personal selling and sales promotions. Public Relations are included within Promotion by many people (PR departments tend to see it as a separate discipline).

Place - Sometimes known as distribution. Looking at location and where a service is delivered in order to satisfy customer needs.

There are other models that could be used to represent the marketing mix. For example two American scholars, Boom and Bitner (1981), incorporated a further 3 P's into the mix; Physical evidence, Process and People. However, these were devised to apply more to physical products with a strong service component, or a service with little or no physical component. This is not relevant to the context of this report. Each of the 4 P's will now be investigated and critically analysed in the context of a top of the range television.

Product

Augmented product

After-

Sales service

Delivery

And credit

Actual product

Features

Brand name

Quality level

Design

Core benefit

Packaging

Warranty

Installation

(Adapted from Kotler and Armstrong, 2004, p. 279)

When classifying the product TV's are mainly considered a consumer product, to satisfy personal or family needs, but also as a business-to-business product, usually as part of a business's operations. When considering its behavioural category (Baines, 2008), it would come under the 'shopping product' group, but maybe thought of as a 'speciality product' as it is a top of the range television and due to its 60'' screen. Shopping products do not require the mass distribution strategies that are associated with 'convenience products'. The volumes of purchases are relatively low, but margins are usually high, however, in this case the margins may be being used to cover research and development costs as discussed later.

Shopping products such as TV's are not purchased frequently, and as a result consumers do not always have sufficient up to date information to make a buying decision. A TV is a large purchase (especially in the case of this set) and therefore buyers may undertake some research, if only to find out about latest features, e.g. its HD capability. Consumers often give time and effort to planning these large purchases (to minimise their risk), they will visit several stores, use word of mouth for price comparisons, the internet, and the experience of other customers. Often brand loyalty can be questioned, with customers being happy to switch brands in order to get the right level of functionality and overall value they require.

Marketing communications have been used to establish a strong brand name in this case, so that when consumers are ready to start the purchasing process they are able to associate the brand LG with the product category. The manufacturer and retailers must work together to provide customers with the information they need when and how they need it (Boehringer, 1996). In addition they need to instil the consumer with the confidence to proceed to purchase, and create an overall sense of value in the purchase.

Branding enables consumers to make associations with certain attributes or feelings about a particular brand; in this case, LG's brand. This can give some companies/TVs a competitive advantage (Boehringer, 1996). A customer does not have to have previously purchased a product from the given brand in order to understand and enjoy its brand image. In the context of this television, branding has provided information about durability, quality, price and performance without the customer feeling the need to perform time consuming comparison tests.

Consumers will look more closely at brand value in this difficult economic climate. This brand with high quality associated with its products will have a lower perceived purchase risk, in a climate where large purchases are infrequent and significant. A television can be thought of as essential by some segments of the population, but in general, it is considered a luxury product (especially considering its size). A TV with a strong brand image will provide a certain amount of psychological reassurance to the customer (Baines, 2008). In the context of this difficult economic climate, another view could be taken. With low amounts of disposable income customers will be looking at cheaper TV's (generally sets with a weaker brand image) this could mean that brand image may not be as important as it was a few years ago, and price may be more important than long term quality. Customers may also see the size of this set excessive and unnecessary.

A successful company such as LG will not just have one product or TV available, they have various different sizes and specifications, to cover all segments of the market, ranging from small cheap sets to large HD televisions, such as this model.

TV manufacturers are on the whole enjoying relatively consistent sales. The recession has affected sales slightly; however, many people regard a television as a necessity not a luxury. Sales of old types of TV- (non flat screen, no free view, no HD) are beginning to decline whilst new technology is providing buoyancy to the market. New TVs are mostly flat screen, with free view included, and more expensive models have HD. Some are even 3D ready and claim to be the future of home entertainment. This model is a good example of this new generation of sets. With Development completed, sales are now moving from Introduction to Growth. Profit margins are currently still quite low in order to cover Research and Development costs.

As environmental issues are becoming increasingly prominent, the materials used to package televisions are mostly capable of being recycled (e.g. cardboard). Packaging is often used to promote a brand, however this is not the case for TVs as they are usually presented and purchased in full view of the consumer, without packaging. Therefore the packaging is mainly used to preserve the product, preventing any damage, tampering or deterioration (Baines, 2008). The biggest role packaging plays is mostly to prevent damage during transit to the retailers and to the customer's location. The packaging is also important to communicate messages to the customer. For TVs these messages are mainly about the contents of the product, its features and specifications, usually displaying a large image of a television across one or two of the panels to ensure the customer has the correct set.

Price

Product quality is a very important concept when considering product pricing levels (Baines, 2008). A high quality TV will satisfy both the customer's aesthetic needs, for a stylish looking set, and their functional needs, for high performance and picture quality; therefore justifying the TVs higher price. The American Society for Quality defines quality as a subjective term, suggesting that each person has their own definition of quality. From this, the term "perceived quality" was coined (Baines, 2008). This highlights the importance of branding, which will get across the quality of the television set to the customer. There is also a 'perceived value' which can be described as 'what we get for our money'. The most basic way a customer with no skilled technical knowledge can see what they are getting for their money is to look at the size of the screen, the picture quality, and to see what extras it comes with.

How a company prices its products depends on its pricing objectives. The main pricing objective of most television companies would be to maximise sales and profit. However, there are many different approaches that could be used to achieve this objective. These approaches can change customer perceptions on the products quality and value, and sometimes for the worse. For example, if a company were to reduce its prices, it may build the perception that the set may be of poor quality, reducing its perceived value. This set does not really run this risk as it's priced at around £1,300-£1,500.

A cost-oriented approach could be taken by the company. This takes into account the total costs of a product, (but does not consider any non-cost factors, such as brand image) with an additional percentage mark up (Baines, 2008). The idea is if a company can make a set amount above what their costs are, they will make a profit. In this economic climate some television companies may see this as the most appropriate approach, merely surviving till the market begins to pick up and customers look for more luxury products.

Another approach would be to be more demand-oriented. This works on the basis that the firm sets prices according to how much customers are prepared to pay. This doesn't always work in the context of TVs, with the possible exception of limited addition top spec sets like a 3D screen where the company knows there will be a short term high demand, which could possibly apply to this LG model.

The most applicable approach in this industry is a competitor-oriented one;