Ecostore Marketing Analysis - Case Study Example

Ecostore Marketing Analysis Name Institution Course Date Executive Summary Australian market for cleaning and personal care product has registered remarkable growth in the past few decades. In 2014, the market recorded 3.5% growth, which was largely driven by increase in household spending by Australians. The growth has made the market attractive to domestic and foreign firms that are looking to grab a share of this promising market. Ecostore is one of the dominant firms in this industry providing eco-friendly and sustainable cleaning and personal care products and services. Despite the high competition that Ecostore faces in the market, the analysis has found that the company commands a significant market share and this is made possible by the effective marketing strategies the company has adopted in light of product, price, distribution and promotional strategy. However, to remain competitive, it is suggested that Ecostore should consider enhancing its marketing strategies, which include differentiating from rivals through introduction of innovative and unique products, adopting competitive pricing strategy and investing more in promotion with more focus on different social media platforms. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 5 Ecostore’s Marketing Background 5 Marketing Mix 8 Product and Services 8 Suppliers 9 Customers 10 Marketing Strategies 10 Price 10 Promotion 11 Distribution 12 Competitor Analysis 13 Recommendations 14 Conclusion 15 References 16 Appendix 19 Introduction Australian market for cleaning and personal care product has registered remarkable growth in the past few decades. In 2014, the market recorded 3.5% growth, which was largely driven by increase in household spending by Australians (Euromonitor International 2015). The growth has made the market attractive even to importers that are targeting this market, which is projected to continue experiencing positive growth in the coming years. The Euromonitor International (2016) report indicate that the output for the Australian cleaning and personal care products will experience about 1.3% growth from 2016-2020. Ecostore is one of the largest cleaning and personal care products in Australia. The success of this New Zealand-based company is attributed largely to the effective marketing strategies that the company has employed over the years, thus giving it a competitive edge over rivals in the industry. This report describes the marketing environment and strategy of Ecostore. Ecostore’s Marketing Background Australian cleaning and personal care product market has been experiencing remarkable growth in the past few years due to the growth in household spending by the Aussies. The industry registered 3.5% growth in 2014 and is projected to continue recording growth in the coming years (Ecostore 2016). Ecostore is one of the largest cleaning and personal care Product Company in Australia. Ecostore was founded in 1993 in New Zealand but has since grown to become a global brand with presence in Australia, Korea, Singapore, Hong Kong and the United States. Ecostore produces and sell cleaning and personal care products that can be found in more than 900 supermarkets in Australia (Kirk 2016). Sustainability has become an important part of a business model. Husser et al. (2003, p. 658) notes that most companies have made sustainability part of their business model. Sustainability involves doing business in a manner that promotes the long-term wellbeing of the company, society and the environment. To most companies, sustainability is part of their corporate social responsibility (CSR). Although sustainability has become a priority interest for corporations, the subject has been controversial. Milton Friedman argued that the corporate responsibility of a company is to maximize wealth for its shareholders (Friedman & Miles 2002, p. 2). On the contrary, Freeman (1994, p. 410) suggested in his stakeholder theory that a company has a responsibility to not only maximize wealth for its investors, but also ensure that they promote economic, social and environmental sustainability. Ecostore is an example of a company that has made sustainability a priority and integrated it as part of its business mode. Ecostore’s sustainability practices can be analyzed using the triple bottom line. The triple bottom line is an accounting framework consisting of three parts namely economic, social and environmental aspects of sustainability. On economic sustainability, Ecostore has ensured that the company registers positive financial performance since it was founded. In 2012, the company posted a turnover of $30 million which translated to good profit for the company (Ecostore 2016). By posting good financial performance, this indicates that the company would be sustainable into the future Social sustainability is an element of sustainability that focuses on the promoting the social wellbeing of the people and include practices such as philanthropic initiatives. Ecostore sustainability practice with regards to social sustainability is seen with its support of the Fairground Foundation, which is a not-for-profit organization that focuses on promoting health and more sustainable society through leadership (Shop Naturally 2016). Every year, Ecostore ensures that part of its profit is donated to the Fairground Foundation to enable the organization improve the lives of people in the society and communities where they live through health, culture and sustainability. An example of Fairground Foundation project that has been supported by Ecostore is the eco-housing that the foundation has built right at Auckland city center (Stop Press 2012). Ecostore is also promotes social sustainability by empowering people in the communities where the company does business or gets its supplies. For instance, Harry and his wife Nancy are both patrons of Women Empowering Women in Papua New Guinea where the company sources its palm oil (Ecostore 2015). With the help of funds provided by Ecostore, WEW is able to undertake its activities that include promoting gender rights, fighting sexual harassments and helping women experiencing domestic violence. Ecostore also promotes sustainability by promoting the health and wellbeing of the people that use its products. The company ensures that its products are made using eco-friendly and healthy products. For instance, instead of using petrochemicals that exposed users to health risks, Ecostore is currently committed to using certified sustainable palm oil that is not only healthier, but also safer to use (Ecostore 2015). This way, the company supports sustainability by ensuring that the health and wellbeing of the people that uses its products is assured. Ecostore’s commitment to sustainability is also seen through its environmental sustainability practices. Unlike its competitors in the market, Ecostore having been founded by environmentalists has ensured that its activities and practices promote environmental sustainability (Stop Press 2012). First, Ecostore’s environmental sustainability commitment is seen as it became the first company to start using post-consumer recycled plastic for packaging in New Zealand (Sustainable Business Network 2003). The company collects used plastic bottles discarded on the streets, which it recycles and use for packaging its products. This way, the company has been able to eliminate waste on the streets, thus promoting environmental sustainability. Second, Ecostore promotes environmental sustainability through its commitment to using green sources of energy. Ecostore understands that the continued use of fossil fuel is a threat to the environment. Therefore, as part of its effort in the fight against environmental pollution, the company has partnered with Vector to install solar panels in its stores in Freeman’s Bay (Ecostore Online 2016). Ecostore, through Fairground Foundation is also working towards promoting environmental sustainability by building organic gardens at different schools, in addition to working towards getting a car-pooling system off the ground in Auckland (Ecostore 2016). These efforts are aimed at promoting environmental sustainability. Additionally, the company promotes environmental sustainability by adopting sustainable supply chain. Ecostore has been working with suppliers on the ground, such as those in Papua New Guinea by promoting encouraging them to ensure that the palm is planted organically to promote environmental sustainability (Ecostore 2015). Marketing Mix Product and Services Ecostore is an eco-friendly and sustainable cleaning and personal care product manufacturer and distributor. The company provides a wide range of cleaning and personal care products under different categories that make up its product portfolio, including laundry, skin care, dish, hair, home, baby, hand and body wash and ultra-sensitive products (Ecostore 2015). Ecostore products that fall under laundry include fabric softener, laundry powder, laundry liquid and wool & delicates. As for skin care, the products in this category include body lotion, hand cream, body butter and lip balm (Ecostore 2016). Dish products include dish liquid, dishwasher tablets, rinse aid and dishwasher powder. Hair products include normal shampoo, normal conditioner, volumising shampoo, volumising conditioner, dandruff control conditioner and shampoo and ultra-sensitive shampoo and conditioner. Home products provided by Ecostore include toilet cleaner, liquid scourer, multi-purpose spray, glass & surface spray and bathroom & shower spray. Baby products include baby soap, baby shampoo, bubble bath, baby moisturizer, nappy balm, and sleepytime bath. The only services that Ecostore provide are the transportation services. This involves distributing the products board by the customers to their preferred destinations (Ecostore Online 2016). Suppliers Ecostore depends on external suppliers for the raw materials that it uses to manufacture its cleaning and personal care products. The company’s suppliers are made up mainly of farmers that plant different products that the company uses for manufacturing of its products. For instance, Papua New Guinea palm farmers are major suppliers of Ecostore as they supply the company with palm oil (Ecostore 2015). New Britain Palm Oil Ltd, which is the largest palm oil producer in Australia, is also a major supplier of the company. Other suppliers of the company include petrochemical producers. Customers The success of Ecostore is linked to the fact that that company has been able to get a large market for its customers. The market for Ecostore is huge considering that the company has diverse product portfolio for different category of customers. The major customers of Ecostore products are supermarkets. Currently, the company’s products are available in more than 900 supermarkets in Australia and in other countries, such as Malaysia, the U.S., and Singapore among others (Ecostore 2016). Ecostore also sells directly to wholesalers that form its major customers. Additionally, the company sells its products directly to individuals in need of cleaning and personal care products that the company has on its stores. Marketing Strategies Price Price is a major factor that influences consumer purchasing decisions (Ferrell & Hartline 2013, p. 82). Therefore, a company must ensure that the right pricing strategy is adopted that is capable of attracting customers to the brand instead of those of the competitors. Analysis indicates that Ecostore adopts premium pricing strategy. The prices of the company’s products are set relatively higher than competitors. For instance, whereas Omo, which is its main competitor, charges only AU$6 per kilo and Earth Choice AU$6.65 per kilo for a laundry powder, Ecostore charges AU$8.35 per kilo for the same, which is relatively higher (Ecostore 2015). Ecostore adopts premium pricing strategy to create favorable perception of customers in the market (Rao 2009, p. 32). Promotion Promotion is an important marketing activity that a company that hopes to succeed in a competitive business environment must undertake. Hooley et al. (2008, p. 13) argue that merely producing quality products than competitors and charging affordable prices is not enough to win a market. Rather, a company must ensure that customers are made aware of the existence of the product in the market and why they need to buy the product instead of those of the competitors. For this reasons, companies are investing heavily in promotion to attract customers to their brand and the same applies to Ecostore that have invested a lot on promotion to enable it enhance its brand presence. Ecostore use a variety communication tools to promote its products. First, the company uses print ad as a tool for promoting its product. Ecostore has been running a print ad with the message, “result is more important” (Ecostore 2016). This is a powerful promotional strategy as it tells the audience that they would get result they desire by choosing Ecostore brands. Ecostore also uses social media campaign to promote its products. The company also operates its official website (http://www.ecostore.com.au/) that it uses to promote its brand. Other than media advertising, Ecostore uses traditional communication tools to promote its products. The communication tools include sales promotion, loyalty programme and sponsoring events, such as sporting and cultural events in Australia, New Zealand and in other countries, where the company operates. Distribution Distribution is an important marketing mix element that defines how a company makes the products accessible to customers. Doyle (2009, p. 22) suggests that a good distribution strategy is that which ensures that a customer can get the products easily, and within a short time. Ecostore employs a variety of distribution strategies to make its products easily accessible to its targeted customers. First, Ecostore uses supermarkets as its distribution points. Currently, the company’s products are available in more than 900 supermarkets in Australia and in other parts of the world. Using supermarkets as distribution points has ensured that customers can get the products easily whenever they check in a supermarket to shop. Secondly, with the proliferation of the internet and increased demand for online shopping, Ecostore has introduced an online shopping experience (http://www.ecostoreonline.com.au/) that allows customers from any part of the world to shop online and have the products distributed to their doorsteps by the company (Ecostore Online 2016). Additionally, Ecostore distributes its products with the help of sales force and through trade fairs. Competitor Analysis The Australian cleaning and personal care products are highly competitive. Although Ecostore commands a significant market share in the industry, it faces stiff competition from other well-established competitors. Its current direct competitors include Omo, Earth Choice, Fab, Radiant, Select, Homebrand, Surf and Planet Ark. In addition, Ecostore faces indirect competition from brands such as the ALDI brands, Cold Power, Biozet Attack and Coles Brands (Euromonitor International 2016). Ecostore brands compare with the competitors in light of product strategy in the sense that Ecostore provides a variety of products compared to its competitors. For instance, whereas most of the competitors provide one or two products, such as laundry and skin care products, Ecostore has a product portfolio consisting of laundry, skin care, dish, hair, home, baby, hand and body wash and ultra-sensitive products. Besides, Ecostore provides eco-friendly and sustainable products, an aspect that most of its competitors, such as Omo, Earth Choice, Fab, Surf and Planet Ark does not embrace as a business model. Regarding pricing strategy, Ecostore’s products are more expensive than most of its competitors. Ecostore’s prices are almost the same as that of Planet Ark as seen with their laundry products that sells at AU$8.35 per kilo both. However, the other competitors, such as Omo charges relatively lower prices compared to Ecostore. Regarding promotion, Ecosystem use similar strategy with its competitors in the sense that all the competitors like Ecostore use social media, website, and sales promotion in promoting their products (Ecostore 2015). However, whereas Ecosystem uses print ads in promoting its products, its main competitors rely mainly on television adverts. For instance, Omo runs a television ad dubbed “dirt is good” ad on television while Ecostore relies on print advertisement. Lastly, on distribution strategy, Ecostore use similar strategy as its main competitors. Analysis of competitors’ distribution strategy indicates that all uses supermarkets as their distribution points, which is similar to Ecostore (Chapman-Smith 2013). Besides, almost all these major competitors have introduced online shopping platform for their products. Recommendations Ecostore commands a significant market share in cleaning and personal care product market. However, considering the growing competition, the company should enhance its marketing strategies to ensure sustainable competitive advantage. To achieve this, the company should consider differentiating its products from those of rival companies by introducing innovative and unique products into its product portfolio as this will give it an edge over rivals. Second, the company currently uses premium pricing strategy that makes its products more expensive than its rivals. However, Ecostore should consider changing its pricing strategy by adopting a competitive pricing strategy that will see the company make its products more affordable and cheaper relative to its competitors. This way, Ecostore will be able to attract even the price conscious customers to its brands as noted by Shankar et al. (2012, p. 41). Additionally, Ecosystem should consider expanding its social media campaign to include Instagram, YouTube, Twitter and WhatsApp to help enhance its brand awareness. Moreover, the company should ensure that it engages more on CSR initiatives to enhance its image as an ethical and sustainable brand. Conclusion Ecostore has recorded remarkable success as a cleaning and personal care product manufacturer and distributor. Ecostore’s success is attributed to effective marketing strategies that the company has adopted over the years that include providing eco-friendly and sustainable products. Besides, the company has adopted effective promotional, pricing and distribution strategies that have given it an edge over competitors. However, the company needs to do enhance its marketing mix elements to achieve a sustainable competitive advantage. 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Shop Naturally 2016, Ecostore, viewed 7 October 2016 http://www.shopnaturally.com.au/ecostore-non-toxic-cleaning-products.html Stop Press 2012, Sustainability: Ecostore, viewed 7 October 2016 http://stoppress.co.nz/news/sustainability-ecostore Sustainable Business Network 2003, Ecostore develops innovative plant-based packaging solution, viewed 7 October 2016 http://sustainable.org.nz/sustainability-stories/ecostore-develops-innovative-plant-based-packaging-solution#.V_dEovRrJdg Appendix Ecostore SWOT Analysis Strengths Strong growth Strong distribution network Strong brand image and reputation Effective leadership & management team Commitment to innovation Development of eco-friendly and sustainable products Weaknesses Weak business units Focus on few markets Opportunities Growing demand for eco-friendly and sustainable products Expand to emerging markets, such as China, India and Brazil Growing economies Threats Increasing competition High tax rates Rising raw materials cost Technological changes Fluctuating currency and interest rates Ecostore’s Positioning Chart Earth Choice Ecostore Omo Surf Planet Ark Select Radiant Read More