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Market Analysis: Outlining the Process Essay

1. Introduction

In order to be successful when marketing, companies should undergo a planning process, enabling to create a marketing audit which is one of the most valuable tools in marketing. A marketing audit is defined as “a systematic process for assessing marketing opportunities, helping organisations to stay in touch with marketplace trends and to keep abreast of customer needs” (Dibb, 2002). Marketing audits allow companies to identify its own strengths and weakness in relation with their external opportunities and threats and understand how they relate to the environment in which they operate. For a successful marketing audit, 4 stages need to be assessed and completed; Macro analysis, micro analysis, TOWS/SWOT analysis and identification of key or critical success factors.

2. The Marketing Environment

The factors and forces that affect a company’s capability to operate effectively in providing products and services to its customers is known as the Marketing Environment (Jobber, 2007). It is important for companies to take into consideration every aspect of the marketing environment as each element could possibly directly affect them. This means companies such as Pedigree pet food should always be analysing these factors to be able to ensure they remain within the market.

3. Macro Analysis

The macro-environment looks at the bigger issues which affect all markets, such as legal and environmental factors. Companies have no influence what so ever over any of the elements within the macro environment. These are known as P.E.S.T.L.E. factors; P.E.S.T.L.E. is the political, economic, socio-cultural, technological, legal and environmental factors which directly affect companies.

3.1 Political factors

There are many regulations Pedigree need to stay up to date with such as the statute Feeding Stuffs Regulations 2005. This statute states that all pet foods must be clearly and truthfully labelled, giving ingredients, percentages (of oils, fats, fibres etc.) direction and description of the product, best before dates and other such things you expect to find on human food packaging. The EU legislation forces manufacturers, including Pedigree, to disclose the content of their pet food. This will adversely affect the attractiveness of certain ingredients. If pedigree weren’t to comply with this regulation they could face a fine of £5000.

3.2 Economic factors

The recent recession will have had a huge impact on Pedigree as hundreds of people lost their jobs making it a huge struggle for many people to cope with prices of pet foods and vets bills, forcing them to abandon/neglect their pets. As different animal charities have stated over 50% more animals have become stray and abandoned during 2011 compared to the same time frame in 2010 and at least 20 dogs are being put down by local authorities each day. This will have a large impact on Pedigree as their customers are shown to be just no longer purchasing pet food or trying to find cheaper alternatives.

3.3 Sociocultural factors

Many different factors have affected the macro environment within the pet food sector over the last few years; by looking at Pedigree pet foods in particular we can see many different elements which would need to be considered within their marketing audit. For example, pet health care has grown between 3% and 4% each year since 2006. This rapid growth within the sector affects Pedigree as it shows them that owners are becoming more interested and careful about what their pets are consuming.

This shows that many owners are expecting human standards of quality for their pets’ products and are more aware of their pets weight control as a third of dogs and a quarter of cats are considered to be overweight. Therefore Pedigree needs to be aware of owners’ concerns and make their food appear more appetising and healthier than other leading competitors. It also has prompted the initiative within owners to buy more specific pet foods for the specific breed and age of their animal, this opens up an opportunity for Pedigree to widen their range and use clever marketing techniques in order to ensure that owners stay loyal to their brand. With much concern over pet health there will be a growing impact in pet treat sales also.

3.4 Technological factors

It is believed by many retail analysts that electrical retailing provides many advantages to larger companies. Therefore having an easily accessible website is a great benefit to Pedigree as their customers can look for updates, new/improved products, find out more about the brand and buy online, therefore making them more available. Also with new technologies, pet food companies are becoming increasingly able to introduce new forms of pet food that are low in fat and calories yet still extremely nutritious. These products would most definitely appeal well to all of Pedigree’s customers as it is becoming more noticeable that owners’ health concerns often extend to their pets.

3.5 Legal factors

The legal factors in which concern Pedigree pet foods are the same as the political factors spoke about above and are the same as those designed for the human food industry. Although there is also a specific legislation governing pet food under which it states laws restricting the residue levels of veterinary substances in meat and those of pesticides in different products.

3.6 Environmental factors

As interest in the environment grows, Pedigree should be aware of their customers’ interests to be more environmentally friendly. The Pet Food Manufacturers Association proudly states on its website its interest in the minimisation of all waste, efficient use of energy, the provision of labelling and other such things. In order to appeal highly to their target customers Pedigree could develop more appropriate packaging such as recycled boxes and also recognise the amount of harmful emissions their factories could be releasing into the environment.

4. Micro Analysis

The micro environment is all of the factors within a company’s immediate environment which affect its capabilities to operate effectively as organisations are effected by everything around them, it is specific to a particular company. Therefore micro analysis contains internal and external processes which need to be reviewed. We can use Porter’s Value Chain model to help us assess internal processes, such as human resources and outbound logistics, to find how Pedigree need to adapt in order to benefit themselves, their customers and their employees.

By looking at this model we can see that for marketing success the marketers of Pedigree need to build relationships with other company departments, suppliers, competitors and other actors close to the company which could affect its ability to serve its customers. By doing so, each department will be combining in order to make up the company’s value delivery network (Kotler, Armstrong, Wong, Saunders, 2008). After completing this we move on to review the company’s immediate environment.

We can do this easily by looking at Porters Five Forces Model.

This model shows how each element affects the competitive rivalry of an industry. A change within any of the five forces would require Pedigree (or any other business) to re-assess the marketplace as there would be an overall change in industry information. Pedigree can analyse each element of this model, giving them further knowledge about whom and what can affect them and how they can prevent/sustain this. For example, Pedigree would analyse their suppliers, by doing so they will be able to gain a further relationship with them and learn more about them in order to ensure they are getting the best quality for their money and guarantee they are reliable and financially sound therefore gaining stability themselves. By analysing things such as buyers and suppliers, Pedigree will be sustaining a place in the market and helping themselves achieve their set marketing objectives.

5. TOWS

After gathering all our macro and micro environmental analysis we use it to assess our opportunities and threats from our external environment. This is called SWOT or TOWS analysis which is the strengths, weaknesses, opportunities and threats companies have to consider within their marketing planning. SWOT is defined as “a distillation of the findings of the internal and external audits which draws attention to the critical organisational strengths and weaknesses and the opportunities and threats facing the company” (Kotler et al 2005). Logically, it is important to identify the threats and opportunities first as we can then consider the strengths and weaknesses within the context of the factors that outline our companies opportunities and threats. Therefore this is a much more strategic and analytical process to that of the standard SWOT analysis.

5.1 Opportunities and Threats

The purpose of identifying the main threats and opportunities a company faces is to allow managers to anticipate what potential developments could have an impact on the company and therefore prepare or divert such things. One opportunity Pedigree has is the current economic climate. As the economic conditions slowly improve pet ownership is beginning to increase all over the country meaning that a successful marketing campaign could really boost sales for Pedigree. A threat would be within demographic changes as single parenthood increases which suggest an increase in trends towards pets that need little care and less food. A threat Pedigree would have during every business near would be its competition. Pedigree would have to take into consideration every move their competitors make through production range and pricing etc. to ensure they sustain stability within their marketing sector.

5.2 Strengths and Weaknesses

When writing about the strengths and weaknesses we do not list all the features of a company, just those which relate to critical success factors and are measured relative to a company’s competition. The strengths and weaknesses relate to the factors inside a company. One strength in which Pedigree has is that it’s a market leader within its sector, although it does not appear to be a favourite as many reviews go on to criticise their products, especially in the dry food area, for having too many controversial ingredients such as animal fat, caramel colour and particularly corn, which is linked to many canine allergies.

A particular weakness Pedigree has is their excessive product range; although they are trying to cover the entire market they are over riding some of their own products and have several low-volume brands which could be taking valuable costs in things such as production which could be spent improving their more popular products to decrease their overall weaknesses. Pedigree, as well as being a well-known pet food brand also raises money from donations to help shelter and rescue organisations. This is beneficial to them as it raises their profile within the market and demonstrates their real concern for animals’ wellbeing rather than just their own profit. In 2010 they raised $1,392,098 worldwide as they are a global company with store presence all over the world. They also pride themselves in donating food to animal welfare organisations.

6. Benefits of Marketing Analysis

The market planning and research process enables us to take data in order to create information which will help us guide out business decisions.

6.1 Short term benefitsBy constantly sustaining good market analysis
Pedigree will be able to decrease any risks there could be involving things such as the introduction of new products or services, or advertising campaigns which may be unsuccessful. By continually learning about customer and competitor interests they can prevent things that may cost them substantial amounts of money or reputation. Market analysis enables companies to see what they need to change in order to meet their markets needs more profitably and appropriately.

6.2 Medium term benefits

Marketing analysis helps companies identify when it is appropriate for them to discontinue a particular product. For example, if sales rates were decreasing market analysis allows companies to find out why and therefore change or give a more suitable product a higher profile which will save them money in production.

6.3 Long term benefits

If Pedigree conducts good market research and analysis therefore making quality decisions based on fact, they will be able to ensure survival within their business sector. It is vital for companies to use the data they find appropriately in order for the analysis to have been highly beneficial. It means they will be able to stop themselves from going ahead with anything that may prove unsuccessful and find new paths to be able to perform marketing strategies which provide full advantage to the company.

7. Challenges and Difficulties in Market Analysis

It is highly important for companies to implement a continuous process of marketing analysis although this can prove quite difficult. One challenge a company may face is finding out about their competitors and what they plan to do next, whether that be bring out a new product which could lead customers away from your product or bring one out which may rival yours. This is because companies don’t tend to unleash this information until their new development has started. Another difficulty would be that maintaining an up to date market analysis would be extremely time consuming as the many factors within it are changing and adapting all the time.

Also because there are so many factors the company has to consider and an easy option for beneficial change may not be easy to find. For example, what the customers want compared to what suppliers you use may differ and therefore make it a lot more difficult to find an easy solution. If a company takes their market analysis and interprets it the wrong way this can be even more damaging. It is extremely important the market analysis is carefully looked at and taken into consideration before any big decisions are made.

8. References

Dibb, S. (2002) Marketing Segmentation Success: Making It Happen! Routledge. Jobber, D. (2007) Principles and practice of marketing. 5th edition. London: McGraw Hill. Kotler, P. Armstrong, G. Wong, V. Saunders, J. (2008) Principles of marketing. 5th European edition. Essex: Pearson Education Limited. Kotler et al (2005)


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