Marketing and White Goods Industry
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Marketing Assignment One
Discuss how the Macro-environment can affect an organisations marketing approach. Use examples of companies who produce white goods to illustrate your points.
The Macro-environment, factors outside of a firms control, have a major affect on a firms marketing approach and as a cause, these factors outside the firms control are harder to monitor, some of the factors are unpredictable and restricting. To over come this firm sets its marketing approach, also known as the Four Ps (appendix 1); around the Macro-environment to ensure that a firms product is an overall success. The Four Ps approach has been criticized arguing, “That they do not take sufficient account of people, process and physical evidence.” This therefore questions the reliability of the approach. In relation to the Macro-environment, a firm is able to do a PEST analysis of the factors to see how these will affect the business and its product.
This essay will consider the white goods market and how the Macro-environment affects its marketing approach. The table (appendix 1.1), highlights the PEST factors that affect the white goods marketing approach. Some are more relevant than others when looking at the white goods market. White goods are also known as durable goods. Goods of this nature “require more personal selling and support.” Therefore the marketing of such goods is paramount to ensure successful sales. Precise marketing is often time consuming and costly but also rewarding if businesses aims are achieved.
Research into the white goods market shows that, ” since 1997, the market has been robust and benefited from a strong economy, due to high levels of personal disposable income and an active housing market with few windfalls.” This therefore emphasizes that when considering PEST analysis the economy is an important aspect when considering a marketing approach in the white goods market.
The political issues are not necessarily the most important but the most restricting to the way in which a business behaves thus the way in which it markets itself and its products. Also with the political issues legal ones are considered. The most obvious are the British Standards. British legislation set by the Government enforces overall values and attitudes. The Government has two powers it can either; control business or encourage it. Research shows that, “recent legislation has two main aims; to protect the consumer and to ensure full and fair competition” With laws in place to achieve these aims has a major effect on the ways in which products are promoted and at how much they are charged for. To overcharge a customer for a product would be going against the first aim.
Where the white goods industry is concerned, this could prove a problem although can also be of benefit to them. White goods companies like Hotpoint need to be careful when it comes to the production and promotion of their products. The products need to be specific to the purpose they are meant fulfil and satisfy consumer needs. When finding out exactly what the consumer wants and promoting the products can expensive and poses a problem as the company has to budget. Due to legislation there are advertising limitations. Recently Hotpoint have found how it can use this to its advantage and now when promoting its dishwashers has joined with the company Finish who manufacture cleaning goods, in particular dishwasher tablets. This would reduce the costs of any advertising overheads and increase both companies popularity.
Trade laws pose threats when taking account overseas marketing and distribution outside of the European Union. Other countries political values need to be taken into consideration as larger white goods companies establish factories in countries where there is cheaper labour, land and resources.
As mentioned previously the Economy has the largest affect on the marketing of a companys product. A company has no control over economic factors but, “must choose those economic influences that are relevant to their business and monitor them.” Economic factors are the most unpredictable.
The first economic influence that is most relevant to the white goods industry is VAT. The Bank of England has set VAT at 17.5%. Overall taxation on consumer goods will have an effect on price. If there is a significant rise in tax this could discourage consumer buying as price increases. Demand will fall due to white goods not being seen as an everyday good but more of a one off good. Following on, this draws attention to consumer incomes and spending. In a strong market consumer spending is high suggesting increased incomes. When there is more money within the home, people are more likely to spend the money on home improvements for example in the kitchen, buying the latest, more efficient white goods. Many may even move house thus even more home improvements. Previous evidence supports this theory.
If white goods companies are importing or exporting goods or resources trade fees and exchange rates are important. Inside the European Union trade is free and no barriers are present. When the pound is strong businesses are able to get more for their money, this is of benefit to large companies like the white goods because not only does it encourage others abroad to invest in the country therefore increasing the strength of the pound it also encourages people to invest into companies therefore increasing revenues. Where the Euro is concerned the value of the pound is much stronger, the current rates are,”Ј1 to 1.43 Euros” , meaning that there are more Euros to the Pound. More money can be spent on researching and developing goods and then advertising them. Any extra costs for imports or exports will again have an effect on the overall price of the good.
The next aspect of the Macro-environment to consider is the Social and Cultural part. This aspect can be seen as what is ethically and morally right in business behaviour. Business behaviour has an effect on buyer behaviour and all in all buyer- seller relationships. Businesses have a social responsibility not only to their customers but to their stakeholders as a whole.
During the year 2002 the white goods industry faced a great problem in that its main product, fridges that cannot be disposed of, threatening the