Understanding of the external business environment

*PEST analysis helps to identify market trends that might impact on a business growth or decline such as political, economic, social—cultural and technological factors. Analysing these trends also helps to identify opportunities and threats for developing strategies. For example, most relevant factors for a business in the New Zealand movie industry could be political trends such as government subsidies, legislation and regulations. As for economic factors, interest and exchange rates and international trade can affect the business. Social cultural trends such as changing lifestyles of people and diversification of population may impact on the industry. Technological factors that may be relevant to the movie industry in New Zealand are information and communication.

*A strong understanding of the external business environment helps to identify market trends that might impact on a business growth or decline. It also helps identify opportunities and threats for developing strategies, assess potential profitability for new products, understand the balance of power in a particular industry. Businesses can use PEST or Porter’s five forces tools to better understand their business environment. For example, Kodak and Motorola failed to understand their external business environment and it put them out of business.

Segmentation, targeting and positioning

Developing a marketing strategy consists of 4 steps such as dividing your market into segments, choosing your target markets and the position you would like establish in those markets and then developing a marketing mix.

Segmentation means grouping your customers according to characteristics, behaviours, cities or countries and needs.

After you have segmented your market, the next step is to find appropriate target segments, on which to focus your efforts.

Positioning is the process of designing a company’s offerings and messages so that both the company and its products occupy desirable competitive positions in your target customers’ minds. It is also about telling why your product is better, having consistent brand communication and being included on customers’ shopping list. An example of constant reminder to your consumers can be a slogan.

For example, you can advertise that you have a luxury product, but if consumers are not convinced, it is not really positioned as a luxury product.

Potatoes case:

Fun Pragmatic parents: usually buying from supermarkets, need pictures on the packaging e.g clocks to show cooking time…

Classic providers: need to be reminded of the benefits, pictures of finish meal on packaging…

Old fashioned idealists: want to see the potatoes in the bag…

Health concerned cooks: health benefits on packaging show potatoes can be tasty without the fat and salt…

Experimental indulgers: Packaging is important; make potatoes sexy, instead of old favourite.

Quick solution seekers: Microwavable options,

The Marketing mix (4ps)

The marketing mix involves 4 elements such as Products, Pricing, Place and Promotion

Products (Customer solution)

Product is defined as the bundle of value offered for the purpose of satisfying consumers’ wants and needs.

Pricing (Customer cost)

Price is the amount of money customers pay for the product.

Place (convenience)

Place is where products and services are sold and the systems needed to get them to the customer. It can be a physical or virtual place.

Promotion (communication)