BSBMKG608 DEVELOP ORGANISATIONAL MARKETING OBJECTIVES
ASSESSMENT 1
STARBUCKS MARKETING REPORT Strategic direction 1 a) Starbucks’ mission is to establish Starbucks as the premier purveyor of the finest coffee in
the world while maintaining their uncompromising principles while they grow. Their guiding principles are: • •
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Provide a great a great work environment and environment and treat each other with respect and dignity. Embrace diversity as an essential component in the way we do business. Apply the highest standards of ecellence ecellence to the purchasing! roasting purchasing! roasting and fresh delivery of our coffee. coffee.
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"evelop enthusiastically satisfied customers all of the time.
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#ontribute positively to our communities and our environment.
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$ecogni%e that profitability is essential to our future success. success.&
Target market: is men and women aged '( to )*. They account for almost half +), percent1 b) Target of its total business. Starbucks appeal to this consumer age group through hip! contemporary design that is consistent in its advertising and decor! and working to keep its products current as status symbols. ' Starbucks needs to epand its current international markets in order to diversify its income base. base. The compan company y has epand epanded ed greatly greatly in the last last few years into into intern internati ationa onall market markets. s. Starbucks has doubled in the amount of stores it possesses since '**)! but it has consistently stayed at only a /*0 international market +1Starbucks #offee #ompany2 3nvestor $elations2 4inancial 5ighlights!6 '**,- #urrently &&!&/& stores are in the 7nited States verses only (!8'8 stores stores throug throughou houtt the rest rest of the world world +Starb +Starbuck ucks s #orpor #orporati ation! on! '*&*-. '*&*-. 9o matter matter where where Starbucks goes as a corporation! it still has to consider the market of people it is selling its produc products ts to. Tea Tea is the common common bevera beverage ge of ritai ritain n and other other countr countries ies!! while while ;ormon ;ormon populations will not drink tea or coffee because of their religious background and heritage. Although Starbucks needs to broaden its market scope! it must take time and put in the proper amount of research when going into different communities and countries./ 1 c) Political factors impacting Starbucks #offee include political stability in local and global
markets! as well as! the etent of international relationships between Starbucks home country 1
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7S and countries in African continent and
Social factors such as changing values in society! shifts in consumer lifestyles! and demographic changes do have implications on Starbucks revenues on certain ways. >lobalisation of lifestyles and spread of western culture amongst developing countries in Asian and African continents can be specified as one of the most significant social factors that has had positive effects on Starbuck’s growth prospects. 5owever! certain social factors such as increasing health concern amongst population in relation to caffeine and sugar consumption belong to the list of key social issues Starbucks has to deal with. Technological factors may impact Starbucks operations through innovations in coffee preparation processes! as well as! agricultural innovations. ?ey issues in this area may relate to Starbucks competitors gaining competitive advantage thorough technological innovations in various business processes and patenting these innovations creating a barrier for Starbucks to share the benefits. Environmental factors represent another source of substantial challenges for Starbucks #offee. These challenges are associated with potential damage to brand image to be caused by activities of a wide range of environmental groups assisted by the media.
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There is a moderate threat of new entrants into the industry. The industry’s saturation is moderately high with a monopolistic competition structure. At a locali%ed level! small coffee shops can compete with the likes of Starbucks because there are no switching costs for the consumers. Even thought it’s a competitive industry! the possibility of new entrants to be successful in the industry is moderate. There is a moderately high barrier for the new entrants as they differentiate themselves from Starbuck’s product @uality! its prime real estate locations! and its store ecosystem eperience’. The epected retaliation from well established companies for brand e@uity! resources! prime real estate locations and price competition are moderately high! which creates a moderate barrier to entry.
Threat of Substitutes: 5igh
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There are many reasonable substitute beverages to coffee! which are mainly tea! fruit Buices! water! soft drinks! energy drinks etc. ars and Pubs with nonCalcoholic beverages could also substitute for the social eperience of Starbucks. #onsumers could also make their own home produced coffee with household premium coffee makers at a fraction of the cost for buying from premium coffee retailers like Starbucks. There are no switching costs for the consumers for switching to substitutes! which makes the threat high.
argaining Power of uyers : ;oderate to
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argaining Power of Suppliers :
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The main inputs into the value chain of Starbucks is coffee beans and premium Arabica coffee grown in select regions which are standard inputs! which makes the cost of switching between substitute suppliers! moderately low. Starbucks! with its si%e and scale! has the power to take advantage of its suppliers but it gives its suppliers a fair partnership status! which yields them some moderately! low power. The suppliers in the industry also pose a low threat of competing against Starbucks! which lowers their power. Starbucks also forms a highly important part of the suppliers business! due its si%e and scope! which make the power of the suppliers lower. >iven these factors! suppliers pose a moderately low bargaining power.
3ntensity of #ompetitive $ivalry : 5igh to ;oderate •
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The industry has a monopolistic competition! with Starbucks having the largest markets share and its closest competitors also having a significant market share! creating significant pressure on Starbucks. #onsumers do have any cost of switching to other competitors! which crates high intensity in rivalry. Starbucks maintain some competitive advantage as it differentiates its products with premium products and services! which cause a moderate level of intensity in competition. The industry is mature and growth rate has been moderately low which cause the intensity of competition among the companies to be moderately high due to all of them seeking to increase market shaper from established firms like Starbucks. This industry does not have over capacity currently and all these factors contribute to the intensity among rivals to be moderately high.
The strength of forces and the profitability coffee and snacks industry are ;oderate. (
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1 d) Starbucks promotes e@ual opportunity in its hiring practices! makes recruiting decisions
based solely on Bob2related criteria and does not use forced labor. Dhen employing partners under the age of &! managers must comply with all Starbucks2established or legally re@uired limitations on minimum hiring age! and on hours and tasks performed by these partners to ensure any work performed does not hamper the partners education! health! safety! and mental or physical development. Also at Starbucks they treat each other with respect and dignity. This means that all partners are entitled to work in an environment that is free of harassment! bullying and discrimination.F Such as Se "iscrimination Act &,)! $acial "iscrimination Act &,8(. Marke!"# $er%&r'a"ce ( a) 3n '*&& Starbucks did a coffee giveaway for londe $oast that was pr omoted through its
social channels. Gne of the central features was a 4acebook app that allowed people to learn about the new product! claim a free cup of blonde roast and send e2cards to their friends. Starbucks also tweeted about the new brew and product giveaway! with some posts directing people back towards the 4acebook app. Starbucks also invested in 4acebook ads and Twitter ads that were targeted at certain cities to make them more personalised. This is a fairly simple but well2coordinated social campaign that likely had a big impact on promoting awareness of the new coffee. Gn the other hand Bust to show that even the biggest brands fall victim to social fails. As a P$ stunt Starbucks displayed Twitter messages that used the hashtag Hspreadthecheer on a big screen net to an ice rink at the 9atural 5istory ;useum in
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Starbucks has operations in over F* countries Starbucks is also the most recogni%ed brand in the coffeehouse segment rand recognition
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Epensive products Aggressive diminishes long term growth targets. Gverdependence in the 7S market 9egative large corporation image
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https://econsu!tanc".com/b!o/*32-eiht-a$esome-socia!-campains-rom-starbucks/
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#offee culture clash between countries
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Epansion into emerging markets Epanding product mi and offerings Epansion of retail operation Technological advances 9ew distribution channels rand etension
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3ncreased competition Price volatility in global market "eveloped countries market saturation "eveloped countries economy #hanging consumer tastes and lifestyle choices
( c) 3n Gctober '*&/ Starbucks launched a Tweet2a2#offee’ campaign that enabled people to
give the gift of a I( gift card Bust by putting both Jtweetacoffee’ and a friends handle in a tweet. The coffee wasn’t free though and in order for it to work users had to link their Starbucks account to Twitter and their credit card to the account. Analysis by research firm ?eyhole found that by "ecember more than '8!*** fans had tweeted a coffee and that /)0 of users bought multiple gift cards. 3t suggested that around I&*!*** worth of coffee had been bought through the promotion. Even more importantly for Starbucks! it now knows the Twitter handle! mobile phone 3" and customer 3" for at least ()!*** customers. , This is a great eample of the use of social media affectively. The promotion let the company to be in the trending topics! letting more people to see it and also gave the chance to the loyal customers to suggest their friends the products of the company is offering. #ustomers of Starbucks can pay for their coffee through an app on their mobile phones. This is not a well2known fact for most of the coffee drinkers. Advertisements and even small posters in Starbucks stores can spread this. This can be very advantageous for Starbucks against its competitors.&* . ) ;arketing opportunities
http://scho!ar.har#ard.edu/,!es/nithineeredd"/,!es/starbucks_case_ana!"sis.pd https://econsu!tanc".com/b!o/*32-eiht-a$esome-socia!-campains-rom-starbucks/ 1 http://$$$.businessinsider.com.au/starbucks-does-better-211-'%op&1customers-canpa"-$ith-their-iphone-and-b!ackberr"s-1 0
Starbucks biggest growth is in its 3nternational segment. The emerging markets of ra%il! 3ndia! #hina! South Africa and ;eico with a growing middle2class population continue to offer significant opportunities to add new stores and serve more customers. Starbucks should grow in these emerging markets by winning locally. Starbucks must remain relevant to the customer in order to grow in these markets! and its management teams should have the freedom to operate within their overall framework to tailor store format! introduce local product mi and price points to the needs! lifestyles and tastes of each individual marketCcommunity. Starbucks has great growth opportunities in Tea and 4resh Kuice products mi. They should build up these products along the same line of their core coffee products. Also as consumer tastes and lifestyle shift towards more snacks and beverages options! Starbucks should tailor its menu’s and epand to give healthier product offerings in its mi. #offee beans are a significant input into Starbucks value chain and there have been wide fluctuations in the market prices of high @uality coffee beans. Starbucks could mitigate this price volatility risky by implementing an effective hedging strategy like future contracts to lock in their estimated @uantity inputs at a low swing price so that the future costs can be managed to a greater etent. Starbucks invest very little in advertising and marketing initiatives. 3t would be recommended that Starbucks make significant investments in advertising and marketing initiatives in the face of increased competition in the market. Their mobile apps business drove &*0 of the sales in the 7S! so it would be recommended for further building to stream lining ease of use and payment process which would help drive more customers! decrease wait time in stores and increase efficiency. 3ntegrating Starbucks loyalty program with the mobile application would also be recommended.&& / a) The dye used in food and beverage items at Starbucks to give a brightly coloured reddish
hue is derived from tiny crushed beetles. The dye! known as cochineal dye! is used in many other products such as lipstick! yogurt and shampoo. The use of this dye makes the consumption of these food or beverage items not vegan2friendly. A petition started on #hange.org that prompted Starbucks to reformulate the products containing this dye with a replacement using lycopene! which is derived from tomatoes. Starbucks acknowledged that the dye used in certain products contained the cochineal dye. 5owever! the dye is used fre@uently in many companies and products so Starbucks did not apologi%e for the use of this ingredient but reported that the company underwent a thorough evaluation and decided to remove it from the ingredient list. The #hange.org petition had received a lot of attention and with over F!*** signatures gathered! which was the main motivation for Starbucks to make the change. Starbucks! in keeping accordance with their mission statement and drive to be environmentally friendly! decided to head the potential crisis head on and rectify the problem before it received any more negative attention from consumers or the media. Starbucks acknowledged the issue and then used bolstering and corrective action to move forward with the change. / b) Starbucks identified a specific time frame in which the new reformulated beverages can be
epected in store2 Kune '*&/. The Starbucks #ompany took notice of the influ of negative feedback for the use of cochineal dye and announced the change on their company blog. The evaluation and consideration of feedback from loyal consumers prevents the issue from becoming a crisis or creating any negative media attention. 11
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The Dall Street Kournal reported that the companys 7.S. president! #liff urrows! said that Lafter a thorough! yet fastidious! evaluation! 3 am pleased to report that we are reformulating the affected products to assure the highest @uality possible.
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Starbucks is a strong corporation that is in a growing industry. Starbucks is taking a strong stand in the coffee industry and initiating promising strategic and environmental goals. 3t is also securing coffee supplies from 3ndia as well as #hina in order to keep its costs under control. Gver the net few years! Starbucks will continue to grow in the international market. ;ost of its stores are currently domestic! but over the net few years the percentage of foreign stores will escalate. Starbucks is handling the transition from a domestic to international company very smoothly. 3t is taking the right steps to allow it to succeed in its long term goals. Starbucks is a company that takes their global product and customi%es it to fit local and cultural needs of different regions and communities. They have a transnational business model that allows them to have a universal product that can be tailored to fit national needs. Starbucks has to be aware of the changes in the government and culture in order to better forecast the problems that they will be facing. 3t is important for Starbucks to continue its strong system of communication in order to continue growing as a business. There are many organi%ational and managerial implications of running an international business! but Starbucks is working diligently to overcome those problems. Gne problem that they had to overcome is the ability to understand the international contet. 3t is important to understand a culture before a company begins marketing to a different country or region. The $3# nations are going to play a maBor part in the future of Starbucks as they begin to grow and influence the coffee market. These nations have millions of people that are begging to embrace coffee! and it is important that Starbucks has a strong market presence in these areas. 3f Starbucks epands internationally through the undertaking of new countries! it will be difficult and time consuming! but it will also greatly improve their company as a whole. ut in the end! the undertaking of new regions and countries will allow Starbuck to gain a strong hold on the coffee industry as a whole. y opening additional stores in the countries that Starbucks already is currently marketing to! Starbucks can epand internationally without the additional funds for research and without the additional time and money it takes by epanding into a new market. Starbucks has a strong international business model! but it still has to continue building its goals and epectations. Starbucks will never be finished growing as a businessM therefore! it is important to keep its goals in mind and its strategies in place in order to overcome any obstacle that might stand in its way.
BSBMKG608 DEVELOP ORGANISATIONAL MARKETING OBJECTIVES
ASSESSMENT ( 1) Strategic Grganisation documents
The mission! vision and values of an organisation are generally defined and recorded in a range of documents. These are important sources of information for the marketing manager in determining what the marketing department needs to achieve. These sources include the:
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Strategic plan ;arketing plan Annual report #ustomer service charter Policy and procedure documents.
Strategic Plan
The strategic plan is a document that establishes the overall direction of the organisation it includes the vision! mission! values! goals and obBectives of the organisation and how these are going to be achieved.
;arketing plan
A marketing plan is a document outlining the strategic marketing obBectives of an organisation and eplains all the activities re@uired to implement them. 3t becomes the basis for internal communication! distribution of task and responsibilities and allocation of resources.
As the marketing manager! you must ensure that the marketing efforts of the organisation are directed towards achieving the obBectives outlined in the marketing plan. This document should become a constant source of reference throughout the marketing management process.
Annual report
The organisation’s annual report is a comprehensive document detailing the organisation’s financial performance and activities for the year. The content of this report may include pricing trends! company market involvement! individual reports from the chief eecutives officer and chief financial officer in addition to the re@uired financial documents.
#ustomer service charter
A customer service charter is a published document aimed at informing both staff and customers of the services provided and obBectives of the organisation. This sets the customers’ epectations at a level that must be met by the organisation. A customer service charter can be as specific as defining how many times the phone may ring before it must be answered.
Policies and procedures
Policies and procedures document how an organisation functions. They eist to provide a common way of approaching routine tasks and to ensure the organisation complies with its legal and ethical obligations.
As the marketing ;anager! you must be aware of the policies that affects you and ensure that your team and outcomes they achieve! abide by these policies. Dhile these policies will cover every area of business operation! there are a number that directly affect or are influenced by marketing activities. Some of these are: • • • • • •
#ustomer service #omplaints Product development "ocument design and control Advertising Privacy.
Policies should be reviewed regularly! to ensure they are still current and relevant to the tasks being undertaken () As the marketing manager! you must ensure that the marketing efforts of the organisation are
directed towards achieving the obBectives outlined in the marketing plan. This document should become a constant source of reference throughout the marketing management process.
#onsult Stakeholders
There are a number of different people in an organisation who will be interested in or affected by! the marketing obBectives you establishM therefore it is important to involve them in he process of developing obBectives. These stakeholders may include:
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#hief Eecutive Gfficer oard of "irectors Gther manager Staff.
3nformed people are supportive people. y involving key stakeholders in setting your marketing obBectives! you will ensure that they ownership of the obBectives and once in place! support their achievements. ?ey stakeholders may also assist in the process of developing marketing obBectives in the following ways:
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Provide valuable feedback on the current status of the organisation #onfirm the mission! vision ana values Assist with research and analysis of opportunities Analyse the eternal and internal factors Support implementation of the obBectives.
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Nalue chain analysis A value chain analysis can help an organisation to harness its strengths. The value chain! also known as value chain analysis! is a concept that was first described and popularised by ;icheal Porter in his &,( bestseller! #ompetitive advantage: #reating and sustaining superior performance. A value chain is a series of interlinked value2adding activities that convert inputs into outputs! which! in turn! adds to the bottom line and helps to create competitive advantage.
Products pass through all activities of the chain in se@uential order at each stage the product gain some value. The purpose of each activity in the value chain is to: • •
#reate value for the customer Establish a price that eceeds the cost of producing the product! therefore generating s profit.
A value chain typically consist of these core +primary- activities! which contribute directly to creating a product or service for the customer:
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3nbound distribution or logistics ;anufacturing operations Gutbound distribution or logistics ;arketing and selling After2sales service.
The product life cycle
A product goes through different stages which can be labelled as 3ntroduction’! growth’! maturity’ and decline’. These stages considered together represent a product’s lifecycle. ;arketing can target a range of products +a brand-! a single product or the organisation as a whole. Oour marketing approach should vary according to what it is that the organisation wishes to market. Oour marketing may also need to vary based on the life cycle of product. A new product will re@uire a different approach compared to an established product. 4or eample! you can focus more on the proven value of an established product! whereas! efforts need to be focused on convincing customers of the value of new product.
;arketing ;i
;arketing mi is the blend of product! price! place and promotion that will engage with the target market. All four of these variables must be considered and acted upon to produce the best result. The mi is only as good as good as its weakest component. The aim of this process is to gain advantage over competitors and achieve competitive success. •
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Product = Product always needs to be addressed first. 3t is the heart of the marketing mi. As well as the discreet product or service! you should also consider customer benefit! warranty! service following sale! brand! company image! delivery! installation! etc. Place = Dhen and where the customer re@uires the product. This includes storage and transportation +keeping in mind that the product must reach its final destination in a usable condition- as well as distribution. Promotion = The aim of promotion is to engage with the target market by informing! educating! persuading and reminding them about the benefits of an organisation or product. Personal selling! advertising! sales promotion and public relations are all type of promotion activity. Price = This is what the buyer must echange for product. Price is the most fleible of the componentsM it may be lowered or raised relatively fre@uently compared to other aspects of the mi. Price is an important competitive weapon
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3ntegrally related Enterprise risk management ;ultiple Probability 3mpact >raph
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3ntegrally related Enterprise risk management ;ultiple Probability 3mpact >raph 7tili%e specific resource to achieve sub2goals that support defined mission "one by middle level management 3nternal business environment #overs particular unit 9eeds to be done before strategic analysis tech.
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3ntegrally related Enterprise risk management ;ultiple Probability 3mpact >raph Shorter term 7tili%e specific resource to achieve sub2goals that support defined mission #overs particular unit 3nternal business environment
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;arketing metrics
;arketing metrics are a set of measures that are utilised to determine the marketing performance of the organisation. To effectively achieve this aim! the chosen metrics should reflect the organisation. To effectively achieve this aim! the chosen metrics should reflect the organisation’s industry and strategic position at a point in time.
Again! the metrics should relate to the mission and strategy of the organisation and should investigate the following areas. #ustomer satisfaction
3f customers are not satisfied with an organisation! they will eventually find another organisation that meets their needs making customer satisfaction vitally important to an organisation. Poor customer satisfaction is usually an indicator of future decline! even if the current situation is positive.
;arketing share
;arketing share refers to the organisation’s revenues as portion of total revenue generated for that market. ;arket share can be determined by comparing total sales of the organisation to total sales across the industry or by identifying the organisation’s respective share of usage by consumers.
;ore specific metrics may be used to determine market share vary and should be specific to the market and organisational strategy.
rand e@uity
This is the intangible value added to product because of the brand it bears. This may be ac@uired through effective marketing! to the etent that brand becomes synonymous with the product for eample! ?leene for tissues or lue2tack for re2usable adhesives. rans e@uity may be determined on the three levels: the organisational level! product level and customer level.
At the organisational level! the value of the brand as an intangible asset is determined by:
4irm value = +tangible assets measureable’ intangible assetsQbrand e@uity
The second level is the product. This may be determined by comparing the price of e@uivalent branded and no2name’ products! assuming that all other variables are controlled. $evenue should also be considered! to better understand the value of brand e@uity at the product level.
The third level to consider when determining brand e@uity is that of the customer. At the customer level! you should consider the organisation’s mind share’! i.e. how aware consumers are of the organisation’s brand. This may be determined by the formula:
$espondents with unaided awareness Qmind share+0Total respondents
Establish ;arketing GbBectives
9ow that you have completed all of the preparatory work! you can move on to establishing marketing obBectives for your organisation. This final step re@uires you to develop marketing obBectives based on your understanding of the organisationRs epectations and capabilities! and in the contet of the marketing opportunities you previously evaluated.
4or each marketing obBective you establish! it is important to fully eamine the risk management strategies re@uired to ensure that the obBective is able to met by the organisation.
4inally! you need to document all of your work to date by recording the marketing obBectives in writing and make this document available to management and relevant key stakeholders.
Dhat skills will you need
3n order to establish marketing obBectives! you must be able to: • •
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"evelop marketing obBectives Ensure obBectives are consistent and compatible with the organisationRs capabilities and purpose 7ltilise risk management strategy "ocument and report on marketing obBectives.
usiness and market needs
The marketing obBectives you establish are proBections of what you intend to achieve in the future! so you must ensure that they are consistent with the forecast needs of both the business and the market itself.
Trend analysis is an effective way for companies to determine future results in economic marketplaces. A business trend analysis is a study of a companyRs financial performance over an etended period of time. $eviewing past information can provide you with information regarding current trends and where a market niche may be for a product.
Technology provides you with an incredible amount of information. 5owever! raw data by itself does not provide much assistance in developing marketing. 3t is the conversion of this raw data into significant facts! relationships! trends and patterns that gives your organisation a competitive edge!
The ability to accurately gauge customer response to changes in your business strategy and other environmental factors gives you a powerful competitive advantage. 3t will assist you in making analytical decisions about which marketing opportunities to pursue.
Trend analysis can also provide critical economic information about current business situations! by identifying products trends! determining the strength of an industry or capitali%ing on emerging markets. Trend analysis also helps to eliminate uncertainties in business! such as slow sales! overstocking products and seasonal consumer demand. Trend analysis
Grganisations operate in an ever changing environment M it is imperative to constantly monitor market trends and developments to determine the best marketing strategy.
These trends and developments can include: • • • • • • •
"emographic trends Ecological and environmental trends Economic trends +local! regional! national! internationalPoliticalCgovernment activities! for eample! interest rates! deregulation 3ndustry trends Penetration of new technologies Social and cultural factors.
The process of identifying trends is critical for both long2term forecastingM providing a better understanding of what industry can epect for the future.
Political events
Political events such as elections may influence business activities or markets relevant to your business activities. Dar or internal conflicts in the international arena can create unstable environments that may have a negative effect on the success of the business activity planned
for the chosen market. ;ore generally! in times of crisis consumer behavior changes to a focus on security and basic life re@uirements such as essential food items! shelter and basic health care.
Economic trends
Economic trends refer to those that influence the money available for consumers to spend and the factors that influence how spend it. This includes factors such as average household income! unemployment data! gross national product! inflation! interest rates and business cycles. Oour data may have identified long2term changes in the economic prosperity of the target market that may also have influenced their levels of disposable income and how they choose to spend it.
These trends! both positive and negative! should be eplored so that you can determine what impact they may have on the planned marketing activity in target market.