This is a solution of HND college marketing principles Assignment, describes about the macro and micro environment of marketing.
Assignment 1: Macro – Micro Environment Analysis
Macroeconomic factors are the external environment factors and broad economy factors that influence our market decisions and marketing strategy. The Microeconomic factors are the internal and factors related to the immediate surrounding environment that influence our marketing strategy and marketing decisions.
The Macroeconomic factors that help in influencing the marketing decisions and marketing strategies are: -
- Political – The political environment of the U.K where the company plans to implement their marketing strategy is susceptible to change. The People have become fitness oriented and more and more people are enrolling with gyms to keep themselves fit.
- Economic – The economic factors are susceptible to change w.r.t to the government changing. Also the economy is dependent on multiple geographies which can change any instant. The disposable incomes of people have grown and the awareness has grown. Thus more and more people prefer enrolling in fitness programs (Kim, 2011).
- Social – The social culture and the environment in the customer’s eco-system is dependent on the values and the social circle of the customers. The social setup of the society has become such that increasingly people get their friends to enrol with them for the fitness service. It becomes a place for social gatherings as well.
- Technological –The technology is dynamic. It is changing constantly according to the change in the market dynamics. The customers’ needs are also changing and they are influenced by the changing technology and its elements. More and more people prefer to shop online as it is a convenient way to shop.
- Legal –the legal implications and policies of the countries also keep on changing with the changing times. Earlier it some technologies were not patented but later on some technologies are patented and other companies wanting to implement the same cannot do so because of the legal implications. These days most of the sellers are selling their product through the online medium.
The Microeconomic analysis for the company is as given below: -
|Strengths o Online Retail Store o Low cost o More Number of Centres and proximity to people due to large penetration of internet and presence in the country for a long time.||Weakness o Supplier base is less o Less products available online that in store. o Servicing cost is extra which is majorly delivery|
|Opportunities o Fitness awareness amongst people o Hectic lifestyles providing no time for consumers to indulge in fitness shopping outside.||Threats o Substitute products o New entrants in the fitness market o No Barriers to entry for other players.|
Elements of Marketing Process
The various elements of the marketing process are: -
- Discovery –It refers to the whole marketing research process to find out what the customer needs are, what are the needs and desires that are to be addressed, what the market size is and what the competitors are doing in this area to gain the competitive advantage. This process performs in detail the market, customer and competitor analysis.
- Strategy –On the basis of the information gathered during the marketing research process will help in outlining your marketing strategy. This marketing planning includes for the product, the time line and what all will be implemented to fulfill the objective. It will also determine the overall marketing strategy and action plan for introducing the new product or service.
- Implementation –This is stage that is the moment of truth. At this stage, whatever planning and strategies have been devised are put into action to achieve the required set objectives. Before you proceed with the implementation the marketer needs to be sure of the fact that the resources that are required as part of implementation are in place.
- Measurement –This phase determines the results of the implementation phase. Whatever strategies and plans were implemented, their results are measured against the expected results and improvements if any are incorporated so that the plan is fine-tuned. The results are quantified in terms of different metrics to arrive at definite conclusions and steps to be implemented thereafter.
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The market of personal fitness products has been growing at a phenomenal rate in recent years. The overall trend of the personal fitness products is also seeing a shift from “Generalized” products to “Specialized” products that cater to specific needs of the customer. For example there are specific product variants of a shoe for specific functions. We have different shoes for gym, casual wear, sportswear etc. Similar is the case for clothes as well.
Though the market of personal fitness products is growing for general products, a large segment still remains unexplored for such specialized products and that too being sold online. People generally think that what’s the use of buying different types of clothes and shoes for different fitness programs but then once they get involved in this kind of an activity they realize that body comfort should also be looked at. One cannot do exercise while wearing leather shoes. Similarly one cannot go to meetings or outside for dinner with your gym shoes (Grimley et al., 2006).
To cater to this need the market has a range of fitness products that JD sports offers online. They are trying to cut down on their stores and infrastructure cost and leverage on the technology aspect of marketing.
Also the growing awareness of personal fitness and the opening up of the culture to education and awareness has led to the demand of a specialized product for this segment.
Segmentation refers to dividing the market of the products into small parts on the basis of similar needs or demographics in order to promote the product.
The identification of the target group for the product is based on primary research. The primary research was basically conducted to gain insight into the customer mind-set. The research was conducted in two stages. The first stage consisted of a survey of 200 people. The survey was based for two broad objectives:
- To judge the readiness of individuals to try new products in the market
- To identify the need of a Sports Apparel across different age groups.
The results of the survey have been shown below:
According to the findings of this survey as shown above, the target segment for the company should be in the age group of women and men and children of 13-40 years with a special focus on the 20-29 years age group. This group was selected according to their preference to adopt new products and use sports apparels and other products (Moschis, 1981).
Another method that was adopted was personal interviews in which about 20 females and 20 Men across different age groups were selected to gain a better understanding of the lifestyle of the target customer. The composition of the females interviewed was:
|Age Group||13-19 years||20-29 years||30-40 years|
|Number of Females||6||8||6|
|Number of Men||8||6||6|
Thus on the basis of the research the segments chosen were Males in the Age group of 13-40 and Women in the age group of 13-30 as percentage of men who are more fitness oriented is larger in the age group of 30-40 years.
Targeting is referred to as selecting a suitable segment on the basis of the product and devising a strategy to promote the product in the chosen market segment. The targeting strategy that has been chosen to promote the product is differentiated strategy as the two segments of Men and Women have totally different needs for physical activity. Thus the promotion activities will be accordingly chosen.
Discussion Guide that was used to conduct these interviews addressed following factors:
- Lifestyle of the target segment – disposable income, daily schedule, clothing, etc.
- Attitude towards sports and fitness
- Education and awareness about fitness
The conclusion from this personal interviews were that the customers preferring a product for fitness from online retailers are generally the ones who have
- High disposable income
- Conscious about their personal fitness
- No apprehensions of spending on her personal fitness and care.
- Very busy in their jobs and don’t have time to go for shopping outside
Hence, the main results of the survey were that the acceptance of the product was less in people above 40 yrs. and more in people from 13-40 yrs. with the above mentioned features. Hence this age group was selected as the target segment for promoting our brand JD Sports as a brand for Ultimate fitness
The brand of JD sports has been positioned as the one stop shop for all your sporting and exercising needs. It is a website wholly dedicated to sports war shopping only. JD Sports is an online and store based sports fashion retail brand based out of U.K. It was first established in the early 1980’s when not many people were fitness conscious. This brand used to market its products to the sports persons of the country. It has a long history of association with some of the elite sportspersons of England. It was only in the late 2000’s that JD sports began marketing and selling goods to the customers who were not sportspersons. The segment of customers who are fitness conscious and believe in maintain a level of personal fitness were the key audience and target market of JD Sports (Kim, 2011).
JD sports listed its online e-commerce portal in 2010 thereby catering to the entire UK market. JD sports also got itself listed on the London Stock exchange. It was the first of its kind dedicated sports fashion retail e-commerce portal to do that. Other major players also followed suit. JD sports brand has been endorsed by famous sports personalities in the past. To understand the openness of the e-commerce based business model we need to understand the consumer behaviour of people with respect to online shopping for sportswear.
The competitors in this arena were very less as compared to the competitors on field. The sports equipment and apparel stores in the U.K. The online apparel sellers and other e-commerce players basically market casual apparels with a small product line for the range of sports apparel. There are very less players that are a dedicated market place for sportswear and sports fitness equipment. The barriers to entry for this kind of a business are low as very less infrastructure is required. The company just requires a website or an e-commerce based website where consumers can transact. The key competitors in this area are Foot Locker, JJB Sports etc. These are established players but catering to a large market and audience. They deal in all kinds of products and brands. The key advantage and opportunity for JD Sports is the fact that they are one of its kind with a big brand name that are wholly into sportswear and fitness equipment based selling. The JD sports group operates a website by the name of www.jdsports.co.uk which is the e-commerce website for transacting. They have tie ups with leading brands of sportswear namely Adidas, Nike, Speedo, Reebok etc. These companies are actual suppliers of JD sports. They have successfully eliminated the middle man and other small suppliers which is also one of the differences from other e-commerce websites. This is advantageous for JD sports as the probability of listing of counterfeit goods and damaged goods is minimum and they can leverage on the same.
Consumer Behaviour Model
Consumers may be defined as individuals or households that buy and use goods or services.
Consumer behaviour primarily deals with decision making process of the consumers taking into consideration the social, economic and psychological factors (East, 1997). Understanding the consumer behaviour and the factors affecting the decision making process is of special interest to marketers to develop an effective marketing strategy for their product. The analysis of consumer behaviour helps to understand the psychological and sociological factors that influence the customer. (Moschis, 1978)
The consumer behaviour model which can portray the effectiveness of a promotion strategy advertisement is the Learning theory. Learning theory is the process by which continuous experience leads to a change in the knowledge attitudes or behaviour of the consumer. Learning may take place intentionally as well as un-intentionally.
Learning theory helps to understand the following:
- The way in which consumer needs are satisfied.
- The methods of developing the specific tastes of a consumer.
- The frequency of repeating an advertisement.
- The use of visuals, symbols, sounds and other techniques to make promotion more effective.
There can be different types of learning theories:
Cognitive Learning or Thinking: In this type of theory the consumers learn through information processing and changes in the mental process. (Greenwald, 1968).
Behavioural Learning or Conditioning: According to this theory the consumers learn through association. It is also known as classical conditioning. Behavioural Learning also includes learning through reinforcement. This is called instrumental conditioning.
Modelling Processes: This type of learning is also called as modelling and is based on observation of outcomes and consequences experienced by others
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The Learning theory basically helps the marketers to promote the association of the brand with its consumers. The learning model which may be applied to the proposed promotional campaign is the cognitive learning theory.
The Cognitive approach to learning emphasizes on the fact that learning by the cognitive model is primarily because of the changes in the mental process. (Solomon, 2009). This can be done in two ways:
- Learning by rehearsal: According to this method, the desired information like the brand name or the product features are repeated again and again so that the consumer memorizes it. (Maddox, 1981)
- Learning by elaboration: This method involves learning by creating correlations with the current knowledge. Learning by elaboration mainly depends on the ability and the motivating power of the consumer to learn new things.
The cognitive theory of learning basically targets on the various ways and means to increase the retention of the consumer. The various methods by which the memory of the suggested advertising and promotion strategy has been used as per the cognitive theory have been explained below:
- Visual Impact: Visuals always help to increase retention. The packaging and layout of website has been given a sporty look so that people can quickly relate and recall the brand linked to sportswear and other apparels.
- Brand Name: The brand name itself is a big retention of the need and the use of the brand. If the brand name is abstract it is difficult to memorize it and correlate it with the use. The name of our brand is very catchy i.e. JD sports itself suggests that it is a brand for promoting sports goods. .
- Brand Benefits: Communicating the benefits of the brand is important to generate good recall. The benefit that needs to be communicated is of convenience and performance improvement (Rosenstock, 1988).
- Frequency of Advertisement: The most important element to increase the retention is the frequency of the advertisement. However, too many advertisements can also make the consumers lose interest in the advertisement. The duration of the advertisement should also be limited to 30 sec.
The brand name and logo of any brand is important as that is the first image of the brand the consumer gets. The logo of JD Sports has been designed in a curved font to give it a more casual look. The next important element is to select the right medium for promotion. For this the Men, Women and Teenagers in the age group of 13-40 who are ready to adopt new products were surveyed about the main influencing factors for trying the products.
The graph above indicates that the people in target age group who are open to trying new products and adopt new products primarily based on the advertisement rather than recommendations from family or peers or instructors / doctors. Thus the advertising and branding of any fitness product should be strong. (Resnik, 1977).
The price of the products will be competitive and according to the market prices however convenience fee would be charged for delivering the products to the residence of the customers.
The distribution strategy for the products would be mainly online and exclusive stores where internet penetration is less. The Customers can place the order from anywhere and the goods would be delivered from the warehouse in that region. Each country would list its available products on the website dedicated to the same. JD Sports would eb having separate websites for different countries.
TV and print ads should be used to make people aware of the product and since the product deals with a sensitive issue, the television and print ads will be brief without details. Teasers and print ads may be given in sports related magazines, newspapers and fashion magazines.
Another method of promotion can be through Television commercials. The ads would primarily highlight the benefits of the products and not the usage details. The ads will emphasize on all day long freshness and performances that can be enhanced using designated sportswear especially in sports like swimming, athletics etc. (Shamdasani, 1993).
The JD sports brand can also use the medium of Social media to market its stores and e-commerce portals. The sports brand needs to be endorsed by famous athletes from the U.K. Customers should be able to relate to the person endorsing the brand. The company also sells football related accessories. The game of Football originated in England. They can endorse the highly followed English premier league in U.K to market their products. JD sports should try and leverage the USP of offering branded goods and comparatively cheap prices as they have eliminated the presence of external suppliers. They directly procure the products from original suppliers like Nike, Reebok etc. and get the products listed on their web portal. Special discounts can be offered in the form of coupon codes for frequent shoppers of JD Sports.
Extended Marketing Mix
In addition to the four P’s of marketing mix, that are Product, Price, Place and Promotion, there are three additional attributes that are part of the marketing mix. These are: -
- Physical evidence – This is the fifth element of the marketing mix. When the consumer goes to the store to buy the product whatever he sees externally is the packaging and availability of the product. Whenever consumer sees competitor products, he / she tends to pick the product whose physical attribute is more appealing and influences the decision.
- Process– This is the sixth element of the marketing mix. Every product influences the customer in a different way. The process attribute is the way the customers are handled after sales. The complaint handling of service issues would be through a dedicated call centre and product delivery would be through a known courier company like DHL, FedEx etc.
- People –People is the seventh element of the marketing mix. People are the helm of all strategies that are implemented to successfully market and deliver the product to the end consumer (Hoch, 1986).
JD sports needs to understand that apart from the key marketing mix the extended marketing mix is also important. JD sports needs to ensure the packaging of the products should be based on the sports theme. They can offer free sportsperson posters to the customers on ordering goods from their website. The JD sports brand needs to be positioned as a dedicated sports fashion website and store which shall sell sports apparel to men, women and teenagers in the age group of 13-40. They can also market products for people above the age of 40 who are interested in personal fitness. These products can be basically home gyms and other portable sports and fitness equipment.
B2B vs. B2C
The fundamental differences between Business to Business and Business to Consumer marketing is that: -
- In business to business (B2B) marketing the focus of the communication is the product and its features and specifications. Whereas in business to consumer (B2C) marketing the focus of marketing communication activities is the customer needs and how the product addresses the needs i.e. the use of the product.
- For B2B business the company focuses on only one distribution channel whereas in B2C the company focuses on multiple distribution channels to ensure customer convenience (Shamdasani, 1993).
- The B2B market is more interested in the knowledge about the product and in depth reading materials whereas in B2C the customer just cares about the benefits and till what extent these benefits address the needs of the customer.
- In B2B market there is no emotional decision involved. The decisions are based on logic whereas in B2C market the decisions are more emotional and less scientific.
- In B2B marketing the focus is always the relationship and buying is in Bulk. In B2C marketing the focus is the sale and buying can never be in bulk.
JD sports can market the products to schools and other colleges for the sports team practice and playing purposes. They can also arrange for tie ups with the same to enlarge their customer base. They can sponsor inter college sports events to market their products.
Marketing it abroad
The key differences between International and Domestic marketing are: -
- Domestic marketing is limited to the marketing of a product or service in a particular geography whereas International marketing has no such limitations. It is across geographies and across regions.
- In domestic marketing there is a limitation on the use of technology whereas in international marketing there are more opportunities and there is no limitation on the use of technologies.
- Political relations are not tested in domestic marketing whereas they are tested in international marketing. They become an important point of influence and consideration of the marketing strategy (Tilt, 1952).
- In International marketing, more resources and more cost is involved as distribution system is to be developed according to the laws of the entering geography. In domestic marketing there is no such requirement.
JD sports needs to work on its distribution strategy to sell the products in other countries. They need to custom make their website to cater to a particular geography and tie ups with the supplier in that geography itself to avoid incurring high costs on the same. They can use a hub and spoke model to distribute the ordered products in the respective geographies by focusing on a single stored warehouse.
In this ever growing industry of e-commerce, products based on only fitness and sports are increasingly being made available. Owing to the growing awareness of people especially in the age group of 13-40 years, the target segment presents a huge customer base for JD sports. The convenience based business model of selling online is definitely the strategy that should be pursued by JD sports going forward (Solomon, 2009). They should also plan to explore new geographies for marketing these products.
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