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STRATEGIC MARKETING
Management Centre
What is Consumer Behaviour?
• The behaviour that consumers display in seeking, purchasing, using, evaluating and disposing of products that they expect will satisfy their needs.
• CB is the study of how individuals make decisions to spend their resources on need satisfying goods and services.
Model of Consumer BehaviourMarketing and Other Stimuli
Buyer’s Black Box
Buyer’s Response
??
Factors Influencing Consumer BehaviourCultural•Culture•Subculture•Social Class
Social•Household type•Reference groups•Roles & status
Psychological•Motivation•Perception•Learning (memory)•Beliefs & attitudes•Personality & self-concept
Consumer
BUYER DECISION PROCESS
Lifestyle
Buyers’ responses•Product service & category selection•Brand selection•Reseller selection•Purchase timing & repurchase intervals•Purchase amount
Personal•Age & lifecycle stage•Occupation•Education•Economic situation
Marketing programs•Marketing objectives•Marketing strategy•Marketing mix
Environmental influences•Economic•Technological•Political
Experiences
Decision-Making ModelDecision-Making Model
Problem recognition• occurs when the consumer’s desired state of affairs
departs sufficiently from actual state of affairs to place the consumer in a state of unrest
• can be triggered by either internal or external stimuli.• not all problems stimulate the same level of problem-
solving activity; the level depends on the magnitude of the discrepancy between the desired and existing states and the importance of the problem
Decision-Making ModelDecision-Making Model
Information Search• internal information search - memory scan based on
past experience.• external information search - major sources of
information are :• personal sources - friends & relatives• public sources - various reports & magazines.• marketer-dominated sources - advertising, sales
people• experience source - eg test driving a car
Decision-Making ModelDecision-Making Model
Evaluation of Alternatives• Set selection criteria for evaluation and
selection -- price, style, colour, brand, store
Choice• Having gone through the steps above, the consumer
makes a decision• Decide to purchase one which satisfies maximum
criteria or minimises dissatisfaction criteria
Decision-Making ModelDecision-Making Model
Post-purchase evaluation• consumer assesses how satisfied or dissatisfied they
are with the final purchase decision.• if satisfied, the purchase decision and process are
reinforced.• dissatisfaction can occur with either the retail outlet or
the product.
Decision-Making ModelDecision-Making Model
Post-purchase evaluation - cognitive dissonance
• cognitive dissonance occurs when a consumer recognises an inconsistancy between their values and their behaviour and can arise when the consumer becomes aware that unchosen alternatives have desirable attributes; this leads them to wonder whether or not they have made the right decision.
• cognitive dissonance can be reduced by reassessing unchosen alternatives or by seeking information which will validate their choice.
Steps involved in the purchase of a new jumper
• Problem Recognition– cold weather; new fashion in jumpers; old
jumper has a hole in it etc.
• Information Search– internal search (memory of last purchase);
discuss with friends/relatives; fashion magazines; advertisements in print or on television; sales assistants; window shopping.
Steps involved in the purchase of a new jumper
Alternative Evaluation• Evaluative criteria : price; colour; size; style;
brand• Determinant criteria : will vary between students
Choice• Having gone through the steps above, the consumer
makes a decision • decide to purchase using cash, lay-by, credit
Outcomes• happy with the purchase decision; dissatisfied -
cognitive dissonance.
Organisation interact with customers at each of the five stages of the decision-making process.
• Problem Recognition– through personal selling, direct mailing to let
potential customers know about new products which may fulfill a specified need.
• Information Search– advertising, personal selling.
Organisation interact with customers at each of the five stages of the decision-making process.
• Alternative evaluation– presentation of company products with
possible modification to fit specific needs.
Organisation interact with customers at each of the five stages of the decision-making process.
• Choice– easy access purchase facilities eg through
mail order or faxes
• Outcomes– use follow-up techniques to minimise cognitive
dissonance.
The Buyer Decision Process
Need Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Postpurchase Behaviour
Types of Buying Decisions
ComplexBuying
Behaviour
Dissonance-Reducing Buying
Behaviour
Variety-Seeking
Behaviour
HabitualBuying
Behaviour
HighInvolvement
Significantdifferences
betweenbrands
Fewdifferences
betweenbrands
LowInvolvement
Life-style dimensionActivities
WorkHobbies
Social EventsVacation
EntertainmentClub
membershipCommunityShopping
Sports
Interest
FamilyHomeJobCommunityRecreationFashionFoodMediaAchievement
Opinions
ThemselvesSocial IssuesPoliticsBusinessEconomicsEducationProductsFutureCulture
Demographics
AgeEducationIncomeOccupationFamily SizeDwellingGeographyCity SizeStage in life cycle
Lifestyle Dimension
ActivitiesWorkHobbiesSocial EventsVacationEntertainment Club membershipCommunityShoppingSports
InterestFamilyHomeJobCommunityRecreationFashionFoodMediaAchievement
OpinionsThemselvesSocial IssuesPoliticsBusinessEconomicsEducationProductsFutureCulture
B. Socioeconomic and demographic variables associated with consumer lifestyle.
AgeEducationIncomeOccupation
Family SizeDwellingGeography
City SizeStage in life cycle
Individual and social factors play an important role in the consumer’s decision-making process
Individual FactorsPerceptionMotivationLearningValues, beliefs & attitudesPersonalitySelf-conceptLifestyle
Social FactorsReference groupsOpinion leadersFamilyLife cycleSocial classCultureSub-culture
Consumer Decision Making Process
Buy/Don’t Buy
Motives -Maslow’s Hierarchy of Needs
Self-Esteem
Belongingness
Safety
Physiological
SelfActualization
Social Factors: Group Influence
PublicLuxuries
PublicNecessities
PrivateLuxuries
PrivateNecessities
Gro
up In
fluen
ce o
n Pr
oduc
t Cho
ice Strong Weak
Group Influence on Brand Choice
Strong
Weak
Family - Consumer Buying Roles
Decider
Buyer
User
Influencer
Initiator
KeyFamily
DecisionRoles
Family and Lifestyle InfluencesFamily Influences
Age and Life Cycle Stage Occupation
Economic Situation
Lifestyle Identification
Activities Opinions
Interests
VALS 2Actualizers
Principle Oriented
Fulfilleds
Believers
Status Oriented
Achievers
Strivers
Action Oriented
Experiencers
Makers
Minimal ResourcesStrugglers
Abundant Resources
iVALS Wizard
Pioneer
Surfer
Upstreamer
Mainstreamer
Steps in Consumer Decision Process
Recogni-tion of problem orOpportunity
Search forMostAppropriateSolution
Evaluation ofAlternativeSolution
Evaluation ofAlternativeSolution
Search forMostAppropriateSolution
Recogni-tion of problem orOpportunity
IndividualInfluence
Environ-mentalInfluence
Marketing Planning & Implementation
• Strategic Analysis• Formulation of Strategy• Strategic Implementation
5 Major Areas
• Market-led approach to planning• Analysis• Techniques for analysis and strategy
development• Strategy formulation and selection• Implementation and Control
– The 7 S’s model– Benchmarking
Strategic Analysis
• External Analysis• Segmentation
E.g. MBA benefit segments• Internal Analysis• Developing a Future Orientation
– Forecasting– Scenario Planning
Strategic AnalysisExternal Analysis• Macro-environmental Analysis (PEST or
STEP)• Industry Analysis (Microenvironment,
Porter’s 5 competitive forces)• Competitor Analysis
– Identification, competitors’ objectives & strategies, reaction patterns, etc.
• Market Analysis– Actual & potential mkt size, trends, customers,
customer segments and distn channels
Strategic Analysis
Internal Analysis• Organisational Capabilities
– Assets• Financial, physical, operational, people, legally
enforceable, systems & mktg.
– Core Competence• Auditing Process
– Tools• Portfolio Analysis• SWOT Analysis• Value Chain
Organisational Assets(Internal Analysis)
• Financial assets – such as working capital• Physical ‘’ – ownership or control of facilities
& property• Operational ‘’ – prod’n plant & process
technologies• People ‘’ – quantity & quality of HR• Legally enforceable ‘’ – ownership of
copyrights & patents• Systems ‘’ – MIS & database
Organisational Assets(Internal Analysis)
MKTG:A. Customer-based ‘’
1. Image & reputation – corporate identity2. Brand franchises – customer loyalty3. Mkt. leadership, e.g. beneficial shelf positions in retail
outlets4. Country of origin – Germany is associated with efficiency
& quality5. Unique pdts. & services
B. Distribution-based ‘’1. The size & quality of the dist’n network2. Level of control over dist'n channels, e.g. Coca-Cola &
McD’s
Organisational Assets(Internal Analysis)
MKTG:C. Internally-based ‘’
1. Cost structure → pricing2. Info. Systems → MR3. Innovatory culture, e.g. 3M4. Production skills, e.g. TPS
D. Alliance-based ‘’1. Access to mkts. – local distributors2. Mgt. Expertise – from outside agencies3. Access to technological developments or processes –
through licensing or JV4. Exclusive agreements – Coca-cola & McD’s
Core Competemce (Internal Analysis)
• Define the basis of SCAs– Skills & resources needed within defined
mkts– Long term consideration
• Aim– To match organisational capability with
desired goals & the external environment • Major resource implications
– Investment & rationalisation
Core Competence
This is what a company does best & what differentiates it from the competition. Honda, CNN, 3M, &
Canon are part of the pack that put the concept into action. Rather than basing their strategies on pdts or mkts, these companies focus on competencies that given them access to multiple mkts & are tough for competitors to imitate.
The Boston Consulting Group’sGrowth-Share Matrix
20%-18%-16%-14%-12%-10%- 8%- 6%- 4%- 2%- 0M
arke
t Gro
wth
Rat
e
10x 4x 2x 1.5x 1x Relative Market Share
.5x .4x .3x .2x .1x
Stars
5
4 3 ?Question marks? ?2
1
Cash cows
6
Dogs 87
SWOT Analysis
Strengths•Cost Advantages•Financial Resources•Customer Loyalty•Modern Production
Facilities•Patents
Weaknesses•Too narrow a Pdt Line•Lack of Mgt. Depth•High Labor Cost •Obsolete Prodn Facilities•Inadequate Financing
Capabilities•Weak Market Image
Opportunities
•Add to Product Line•Enter New Markets•Acquire Firms With
Needed Technology
Threats•Changing Buyer Tastes•Likely Entry of New
Competitors•Adverse Government
Policies
Problems
Leverage
Constraints
Vulnerability
The Generic Value Chain
InboundLogistics
Opera-tions
Out-bound
Logistics
Market-ingand
sales
Serv-ice
ProcurementTechnology Development
Human resource managementFirm infrastructure
Mar
gin
Margin
Value Chain by Porter(Internal Analysis)
The concept of value chain categorises the org. as a series of processes generating value for customers & other stakeholders. It split activities into:
• Primary value activities� Inbound logistics - material handling &
warehousing� Operations - transforming inputs into the final pdt� Outbound logistics - order processing & dist’n� Mktg. & Sales – Com’n, pricing, & channel mgt.� Service - installation, repair, & parts
Value Chain by Porter(Internal Analysis)
• Secondary value activities� Procurement - procedures & information
systems� Technology development - improving the
pdt & processed systems� HRM - hiring, training, & compensation� Firm infrastructure - gen. mgt., finance,
acct’g, gov’t relations, & quality mgt.
Developing a Future Orientation
• Scenario Planning• Peter F. Drucker
Scenario Planning4 key stages in the development of simple
scenarios:• Identify the critical variables
– To use a brainstorming session to establish the factors that will drive changes in the future
• Develop possible strings of events, more than1 view or interpretation
• Refine the scenarios, consistency. E.g., a scenario wouldn’t be internally consistent if it had the UK gov’t cutting interests while at the same time the Pound was dramatically strengthening against the Euro.
• Identify the issues arising, a major impact on the organisation or not?
Scenario Planning (benefits)
• It is a useful technique to help mgrs. understand the critical issues that lie at the heart of the future of org. It can help create a framework within which to understand events as they evolve.
• It prepares mgrs. For the possibility there may be discontinuities in the external environment.
• Critically, it helps to place fundamental strategic issues on the mgt. agenda.
N.B. The key dimension of scenario writing isn’t so much forecasting the future but helping mgrs. to understand the factors that could have a major impact on their business.
Peter F. Drucker
Managing for the Future: The 1990’s and Beyond (1990)
4 MKTG Lessons for the Future• buying customers by underpricing
boomerangs• one can use mkt. research only on what is
already in the mkt.• the customer rather than the maker defines
a mkt.• mktg. starts with all customers in the mkt.
rather than with our customers
Formulation of Strategy
Formulation of Strategy• Strategic Intent, Mission, Objectives• Strategy Formulation
– Competitive Advantage– Mkt. Position
• Mkt. leaders, challengers, followers & nichers• Offensive & defensive strategies
– Pdt. & Mkt. Strategies• Pdt/mkt matrix• PIMS• PLC
Types of Competitive Advantage
• Superior pdt or service (real benefits), such as Sony & Boeing
• Perceived advantage as a result of a pdt’s image & personality, e.g., Coca-Cola & Mercedes. They are usually built through advt’g & can also be developed through design, heritage or styling, such as Dunhill & Cartier.
• Global skillsThe C.A. includes global distribution; ability to
produce & mkt. effectively on a multi-country basis; and skills at entering new countries. E.g., C-C, McD’s & Mars
Ansoff’sProduct/Market Expansion GridExisting New
productsproducts
1. Marketpenetration
3. Productdevelopment
2. Market 4. Diversificationdevelopment
Existingmarkets
Product/Market Expansion Grid Based on Starbucks
making more sales to current customers without changing its products.
–How? Add new stores in current market areas, improvements in advertising, prices, etc.
identify and develop new markets for its current products.
–How? Review new demographic (senior consumers) or geographic (Asian, European & Australian) markets
Product/Market Expansion Grid Based on Starbucks
offering modified or new products to current markets.
–How? Increasing food offerings, sell coffee in supermarkets, extend to Frappuccino drinks.
start up or buy businesses outside current products and markets.
–How? Currently testing two new restaurant concepts – Cafe Starbucks and Circadia, or branded casual clothing.
Fad & Fashion Product’s Life CycleSa
les
volu
me
Time
Fad e.g. Tamago -chi
Fashion e.g. mini skirts
Sale
s vo
lum
e
Time
Fad e.g. Tamag -chi
Fashion e.g. mini skirts
Formulation of Strategy
• Porter’s 3 Generic Strategies• Targeting & Positioning • Brand Strategy
– Brand equity• Product Development• Alliances
– Globalisation, assets & competencies, risk, and learning & innovation
• Strategic Mktg. Plan
Porter’s 3 Generic Strategies
1. Overall Cost Leadership To achieve the lowest costs among those
competitors adopting a similar differentiation or focus strategy
E.g., Wal-Mart, Toys “R”Us & Samsung A low-cost producer creates imperfect
competition by: Reducing the bargaining power of suppliers ‘’ ‘’ ‘’ ‘’ ‘’ customers Making substitutes less attractive
Porter’s 3 Generic Strategies
2. Differentiation To cultivate those strengths that will give it a competitive
advantageE.g., Nike, Gucci, L’Oréal hair colour, Canon’s copier (quality
leader) Mkt. shares vary greatly
Sellers of luxury brands, such as Mercedes, Hermès or Cartier, earn huge margins on ea. item sold but hold a tiny share of the mkt. (differentiation + segmentation)
Others earn less exorbitant margins but posses a huge share of the mkt., such as Coca-Cola, Campbell’s soup, Quaker Oats oatmeal, Gatorade & Heinz ketchup
It creates ‘’ ‘’ in the following ways Reducing the bargaining power of customers Making substitutes less attractive Reducing rivalry
Porter’s 3 Generic Strategies3. Focus
To focus on 1 or more narrow mkt. segments rather than going after a large mkt, e.g., Naxos
Creates ‘’ ‘’ by: Reducing rivalry ‘’ pressure from substitutes
Mercedes-Benz? Engineering excellence differentiation Customer base segmentation
4. Stuck in the Middle Almost guaranteed a low profitably Firms get stuck for the following reasons:
inexorable mkt. changes, e.g., Wing On & Sincere Competitor’s actions
Connecting With Customersdetermining distinct groups of buyers (segments) with different needs, characteristics, or behaviour.
evaluating each segment’s attractiveness and selecting one or more segments to enter.
arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.
• What is the difference between a market segment and a market target?
Brand Strategy
4 options for overall brand strategy• Corporate brand
– 1 corporate name across all its pdt.– Heinz uses this unified approach (Baked Beans, Cream of
Mushroom Soup, Tomato Ketchup)– Gives the opportunity of create economies of scale
• Multi-brand (or discrete branding)– Each pdt. is given its own unique brand name.– Such as P&G’s washing powder, Daz, Ariel, Bold– Appropriate if the org. is competing in a no. of different
segments & the consumers’ perception of a pdt’s position in 1 segment may adversely affect the consumers’ perceptions of another pdt.
Alliances• Globalisation
– Means of responding to the challenge– E.g., parts & components can be sourced
worldwide– Joint initiatives give access to expertise &
contacts in local mkts. and greatly help the process of mkt. entry
• Assets & competencies– Causes: downsizing, contract out & huge cost of
pdt. development– Inter-organisational synergy, the combined effect
of 2 or more orgs. working together is greater than their individual effect.
Alliances
• Risk– Spreading of financial risk,– ‘Go-it-alone’? Co-operative ventures can promote
industry stds. & common practices. E.g., VHS vs. Betamax
– Reduction of pdt. dev. time & ‘’ associated with pdt. launching
• Learning & innovation– Technology & skills transfer are often essential in
generating meaningful commercial benefit– Learning & knowledge transfer generated SCA
via collaborative ventures, Morrison & Mezentseff (1997)
Developing Relationships
Common principles of relationship MKTG• Use appropriately
Not all transactions are relational in nature. E.g., impulse buys or 1-off purchases don’t require, or offer, scope to develop relationships.
• Establish relationship drivers– MR techniques facilitate understanding of what is
important to building/maintaining relationships.– By identifying how customer expectations are set
& evaluated, orgs. are more able to generate +ve interactions.
Innovation Audit
1. Output – the no. of your innovations which reach the mkt.
2. SuccessIllustration (based on Table 77 of Davidson, H.)Innovation Criteria 3yrs ago
This yr.• No. of sig. innovations in past 5 yrs• No. successful• % success rate• % total sales in p/s launched in past 5 yrs• % incremental sales• Average annual sales per new pdt/s ($/£)• Incremental payback ‘’ ‘’ ‘’ (yrs)
CASE STUDY
CONTENTS1.Introduction2.Situation Analysis 3.Strategy Development4.Recommendation
1.INTRODUCTIONCompany background- Foundation in 1976- High quality skin & body care retailer- Was the first company to be certified to the
Humane Cosmetics Standard- Famous for inspired skin & hair care
products & use minimal packaging- Speedy selling frequency- Gained many awards
Company background
• Mission Statement
- To dedicate our business of social environmental change
- To balance the financial & human needs of our stakeholders
- A commitment to purchase only materials & products which meet the Company’s environmental & animal protection policies
- To ensures care, honestly, fairness & respect
- To passionately campaigns for the protection of environment
2.SITUATION ANALYSIS
2.1 Consumer Analysis2.2 Competitor Analysis2.3 Market Analysis2.4 Environmental Analysis2.5 Internal Analysis
2.1 Consumer Analysis--STP
• Segmentation Level- Niche Marketing
• Segmentation Base- Psychographic—Focused at lifestyle & personality differences
Targeting--Characteristic of potential/current Body Shop users
• Appeal to nature/natural products • Concern about environmental protection • High ethical standard• Caring • Animal lovers
X Targeting--Characteristic of Non potential Body Shop users
• Indifferent between natural and artificial products
• Not concern about the environmental protection
• Self-centered• Non animal lovers
Positioning
• The pioneer who fascinate the well being of the society by developing and promoting the non-animal tested natural products.
Consumer Analysis—Motivation
Emotion Needs • Help to protect the natural environment • Help to save animal lives • Peer group recognition/appreciation
Physical Needs• Having sensitive skin• Daily usage
Consumer Analysis – Unmet Needs
• Household products e.g. house fragrance, scented candle
• Beverage products e.g. healthy drink/snack
• Beauty center e.g. facial, slimming
2.2 Competitor Analysis
Identifying Strategic Group
* SIMILAR STRATEGIC CHARCTERISTICS:
• Product : natural, pure ingredients• Price : low med, HK$100 – 400• Place : retail shop owned,
convenient• Promotion: advertising, free gifts,
coupon• Target Ordinance: lady, 18-30 years
old, family
Full Line
Broad line, Good
services,
Low- med. price
Full line, Good
services,Med. price
Full line, Good services,Low price
Narrow line, Well
services,
Med-high price
Narrow line,Well service,Low-med
price
Narrow line, Good
services,
Med. price
Narrow Line
A MAP OF STRATEGIC GROUP
High GEOGRAPHICAL COVERAGE Low
• Product Range- Soaps, creams, lotions, fragrance, body
& hand care, hair care, facial, foot, home décor etc
• Strategies- Shipment guarantee- Birthday card for 25% off- 10% off all purchases when accrue UK
250- On-line shopping
Strength Weakness- Natural packaging - Limited
promotion- Diversification - Lack of ATL & PR- Wide product variety- Royalty program- High reputation
• Product Range- Body & hand, bath & shower, face care
& make-up
• Strategies- Monthly promotion
e.g. Lavender month, honey month- On-line shopping
Strength Weakness- Traditional packaging - Old packaging- Premium image - Low brand
awareness- Low coverage- Weak advertising
• Product Range- Skin care, hair care, sensory therapy,
bath & body
• Strategies- Free gifts- Membership, enjoy discount- On-line shopping
Strength Weakness- Unique product - Limited coverage- Young image - low brand
awareness
Strength Weakness- Loyal brand - Traditional - Geographic coverage packaging- Employees
• Product Range- Skin & health care products key brand
No7 & Botanic, Dental care, foot, bath & body, hair, fragrance, make-up, sun care, hand etc.
• Strategies
- Achieve modest sales growth
- Simple goal
- Advantage card
- Celebrity
- Free sample
Strength Weakness- Well known brand - Rely on stores
- Sufficient capital - Image
- Competencies - Weak product
effectiveness
2.3 Market AnalysisThreat of
new Entrants -
HIGH
Intensity of Rivalry - HIGH
Bargaining power of supplier -
MEDIUM
Bargaining power of buyers - LOW
Threat of
Substitutes - MEDIUM
• Threat of New Entrants– HIGH – market is growing; minimal
government intervention; high profit margin
• Bargaining Power of Suppliers– MEDIUM – threat of resource shortage;
not the key customers to suppliers
• Bargaining Power of Buyers– LOW – differentiated products; brand
loyalty causing high switching cost; low price sensitivity
• Threat of Substitutes– MEDIUM – DIY by consumers; take pills or
medicines made from natural ingredients
• Intensity of Rivalry– HIGH – high yield market; more participants are
anticipated to enter
Natural health industry, cosmetics market and its sub-markets are attractive to companies to enter
• Alternative distribution channels and their relative strengths– Direct Marketing: On – line Purchase
Relative low operating cost, ease of purchase
– Beauty SalonHelps to upgrade brand image & perceived value, strengthen the credibility
– Fashion/Retail StoreFashionable and trendy
– Dept Stores: Supermarkets or SuperstoresEnlarge the distribution coverage and source of sales & profit
• Industry Trends
– Rivalry will be intensified– Companies are expanding their natural
products lines as a result of high awareness of healthy life importance by consumers
– Backward integration strategy becomes a common way for market participants to ensure product quality, low production cost and efficient logistics control
– Celebrity
Current Key Success Factors
Quality and natural products Brand recognition and reputation Customer loyalty Professional and personalized service from
well-trained staffs Closed relationship with suppliers to ensure
quality materials and sufficient supply and decrease other operating costs such as logistics, time spent on quality check and communication etc
Future Key Success Factors
Economies of scale because of intense competition
Able to provide extensive range of natural products
Commitment to environmentally responsible and protection to win public support
Backward integration or setting up on plants and manufacturing department to get rid of resource shortage threat
2.4 Environmental Analysis
PEST Analysis Threats Opportunities TrendsPolitical/Legal Government regulation
Impact from New Legislation
Positive factor: Restriction on behaviors
Sourcing from developing countries
i.e., steel co and public utilizes have to invest billion of dollars for pollution control equipment
Protect co from unfair competition
Affect on products supply, especially terrorism issue, it makes export activities not stable
Tax legislation, Trademark legislation & Patent protection
(packaging regulation or export issue)
Protect customer from abnormal business practice
International trade regulations, i.e. Tariff TradeAgreement
Employment laws
i.e. Sales increase on some Retail industries due to the change of immigration policy of HK/China
• PEST – EconomicsPEST Analysis Threats Opportunities TrendsEconomic Trends in GNP Exchange rates
affect overseas ventures.
Low Interest Rate
Unemployment Rate is around 8% in HK
Interest rates i.e., terrorism: lower the exchange rate of US dollars; and
Increase buying power
Retail industry tends to use female as the main workforce
Levels of discretionary income
pull down the stock market
Price competition
Exchange rates
Inflation rates Unemployment levels
Fiscal Policies
• PEST – Social
PEST Analysis Threats Opportunities TrendsSocial Social movement (i.e., the consumer movement)
Decreasing Birth Rate
China Overall Academic background increased
Socio-cultural drift (i.e., working wives, lifestyles)
Major buying power belongs to Youngster and women, thus, affect the society buying habit
Thus, lifestyles change, birth rate decreasing
Demographic changes
PEST – TechnologyTechnical Threats Opportunities Trends
R&D Doubt on new technologies, i.e. Telemarketing & online shopping
Advancement in Technology
Technology level growth dramatically fast for the recent 50 years
Technological forecasts
Substantial amount of experiment is Required for new technologies
More co choose this channel for new product launch
Huge spending on R&D for many industry
• PEST – Social
PEST Analysis Threats Opportunities TrendsSocial Social movement (i.e., the consumer movement)
Decreasing Birth Rate
China Overall Academic background increased
Socio-cultural drift (i.e., working wives, lifestyles)
Major buying power belongs to Youngster and women, thus, affect the society buying habit
Thus, lifestyles change, birth rate decreasing
Demographic changes
PEST – TechnologyTechnical Threats Opportunities Trends
R&D Doubt on new technologies, i.e. Telemarketing & online shopping
Advancement in Technology
Technology level growth dramatically fast for the recent 50 years
Technological forecasts
Substantial amount of experiment is Required for new technologies
More co choose this channel for new product launch
Huge spending on R&D for many industry
The major strategic uncertainties and information read:
New tests and regulations- Production cost would be high and the profit margin would be reduced.- Specific quality standards to meet regulatory needs.
• Due to terrorism, economic would be not stable, no more investment on capital
• Consumers health safety – demand for reliable products
Scenarios
• To be a unique leader• Consider to develop superior
detoxification and aromatherapy products• Real threats from short to long term
2.5 Internal Analysis
• Resources Audit• The value chain• Core competence• Strategy
Resources Audit
Physical & Financial Resources• Strong retail outlet, global presence, a 300 million
pound company• Gross margin is high (overall increase of 1.3% to
60.8%), operating margin is low (2.5 last year, and 5.9 this year)
Human ResourcesNew management team which brings in new concept
Intangible ResourceStrong brand equity
4. New Company Recommendation
New Company Recommendation – STP
Segmentation • Demo-Psychographic
Targeting • Couples with 1-2 child/kid (aged below 15)• Mid to high income • Only giving the best to their child/kid • Animal lovers
Positioning
• The most reliable all natural skin care products for your baby/kind
Brand Equity • The most reliable friend who take care
of your child/kid
New Company Recommendation – 4Ps• Brand -- NUBE “New Born Baby”• Price -- Premium pricing (most expensive in
the market) • Product -- All natural, non animal tested skin
care products for baby & kids• Place -- Exclusive listing, only available at
specialized stores, clinic, premium drug stores
• Promotion -- Informative/scientific approach, niche advertising/promotion e.g. doctors/nurses