Difference between International Marketing and Domestic Marketing - Body Shop - Case Study Example

of your Essay Sub Paper Due Table of Contents Various Elements of the MarketingProcess 2 Benefits and Costs of a Marketing Orientation 3 Difference between B2B and B2C Marketing 4 Difference between International Marketing and Domestic Marketing 5 Macro and Micro Environmental Factors 6 PESTLE Analysis 6 Porters Five Forces Analysis 8 Market Segmentation 9 Target Market 10 New Product Ideas for Body Shop 12 7Ps of the Marketing Mix 12 Conclusion 14 Bibliography 15 Various Elements of the Marketing Process The marketing process involves a series of steps which are designed to discover an unfilled gap in the market and to satisfy customer needs. The first step involves situation analysis where opportunities are identified which can benefit the company. The next step is strategy formulation around a certain value proposition. After the strategizing, tactical decisions are taken which involve formulation of the marketing mix and identifying the 7Ps i.e. Price, Product, Promotion, Place, Packaging, Positioning and People (Internet Center for Management and Business Administration Inc., 2010). Once the marketing plan is developed, the results are monitored and adapted based on consumer feedback. The entire process can be summarized in the following flow chart: Step 1: Situation Analysis: a. External Environment Analysis ( Macro and Micro ) using PEST/SWOT analysis b. Match firm capabilities with opportunities in the market Step 2: Developing Marketing Strategy a. Conduct market research to select target market segment b. Form positioning based on target market c. Develop USP to the target market Step 3: Marketing Mix Decisions a. Identify the 7Ps b. Develop product launch and promotional campaigns Step 4: Implementation and Control a. Monitor changes in the market b. Adapt strategy based on customer feedback Benefits and Costs of a Marketing Orientation There are many benefits of a marketing orientation for a company such as Body Shop that already has a concentrated strategy and vision. Its marketing orientation allows for a more focused production. Body Shop is dedicated towards being a socially responsible player in the cosmetic industry and this orientation has satisfied its customers and increased brand loyalty. This focused marketing orientation is also reflected in their entire organization where all functions are aligned with the strategic vision of providing cruelty free products to their customers in a socially responsible manner. Such an orientation can give marketing advantages and long term profitability as the market familiarity can help form loyal customers and turn one time buyers into repeat buyers (Kokemuller, 2012). However, there are costs of having a strong marketing orientation. A company that thrives on its unique selling proposition of social responsibility, it must conduct thorough market research. Acquiring market intelligence about such a niche segment can require a heavy investment (Kokemuller, 2012). Difference between B2B and B2C Marketing The key difference between Business to Business and Business to Consumer Marketing lies in the purchase motivation of the buyers. In B2B, the buyer is an organization and it does not make sense to market the product to an organization using an emotional appeal. It does make sense to focus on the features of the product and the logic behind it. Organizational buyers are looking to save time, money or resources since they are a business, hence marketing a product to a business requires a more straight forward approach (Lake, 2015). However, consumers focus on the benefits a product can give them. Their purchase motivation is more personal. Individual consumers also demand a variety of distribution channels for convenience which isn’t the norm in a B2B market. In B2C marketing, consumers are interested in quickly finding out the benefits of a product rather than its features and it is possible to use an emotional appeal to highlight the benefits (Lake, 2015). Difference between International Marketing and Domestic Marketing Domestic marketing means selling a product or a service in one’s own country. Such companies operate in a familiar area and are well aware of the geographic and demographic information of the market. Global marketing means to sell or offer ones products worldwide. International marketing is more complex than domestic marketing as it involves unfamiliar territory. There are language and translation barriers. Marketing blunders have been committed when marketing pieces were translated from one language to another and the context of the message changed completely (Grunert, 2015). There are also cultural considerations to be taken in international marketing. Cultures vary and marketing strategies must be sensitive to cultural nuances. Using a scantily clad model to sell a product in Eastern or South Asian countries would not be received well by audiences. Hence it is important to examine the cultural context of the marketing strategy to ensure than marketing mistakes are not made. Every country has its own marketing and distribution methods. Large segments of the population might be more accessible through print media rather than radio. It is important to research the audience well before deciding the media mix. Moreover, every country has its own political and legal systems, which the international marketer must abide by. Such issues are generally not a problem in domestic marketing but can become an issue for international marketing strategies (Grunert, 2015). Macro and Micro Environmental Factors PESTLE Analysis Political Factors Growing fear of terrorism has caused tighter restrictions on passengers carrying personal care and fragrance products in their hand bags when they are travelling abroad. This has had a significant impact on Body Shop sales at airport retail stores and on the overall travel retail market. Unstable security conditions can cause a demand contraction and affect sales of Body Shop as well. Economic Factors Factors such as exchange rate fluctuations, increase in value added tax and high labor costs can have an impact on Body Shop. Fluctuation in the exchange rate means that the cost of importing raw materials or finished products will be higher. Changes in law regard VAT means that a cost of selling is higher as well. As of January 1st, EU VAT will be charged in the country where products are bought and not in the country where they are sold (Dann & Ross, 2014). In 2010, VAT was raised to 20% and an increase in VAT translates to decreased consumer spending and greater inflation (Finch, 2010). Although the UK hourly labor costs have fallen by two euros in 2013, it is still high compared to other countries (BBC, 2013). A high cost of labor means a higher fixed cost is incurred and company strategies cannot be focused on well enough. Social Factors There are demographic changes which can favor Body Shop in the UK market. The 65-68 age segment stands at 10 million and one in six of the UK population is over 65 years of age (ParliamentUK, 2015). This suggests that an increase in anti-aging products is a possibility. Many consumers are now becoming more conscious of their consumption and prefer to buy from socially responsible organizations that do not harm the environment. A survey conducted by the Guardian showed that 86% of the respondents preferred buying products from companies that were socially responsible and gave back to the communities they operated in (Confino & Muminova, 2011). Technological Factors Many cosmetic companies invest heavily in their Research and Development departments in order to come up with more options for the customers and gain a competitive edge in the market. L’Oreal has formed a mascara formula that coats lashes evenly to give more volume. It has also developed a roll on technique for foundation application. Through researching on the latest techniques, it is possible to gain sustainable competitive advantage and achieve growth in the market. Environmental Factors Many consumers are becoming more ethically responsible and wish to minimize their impact on the environment. Research carried out by The Climate group in 2005 found out that 28% of consumers in the UK are concerned about climate change and support a larger market for organic and fair trade product (Bristow, 2007). The research also showed that there was a latent demand for products that would accommodate their beliefs on climate change in their spending as well. This is especially beneficial for companies which offer natural and eco-friendly products. Legal Factors Companies have to abide by the laws and regulations set by the government pertaining to the industry. This includes certification requirements such as the ISO safety standards and any international trade policy. Certification requirements are to ensure safety of the general public and promote safe practices by the businesses. International trade policy pertaining to import and export can have a direct impact on costs of supplies and companies which import their supplies must look for other options if the company resources cannot withstand government policy. Porters Five Forces Analysis Threat of New Entrants The threat of new entrants in this sector is relatively low since a great deal of capital is required to set up a business which is remotely close Body Shop. Body Shop also focuses on natural cosmetics and has ample experience in the production of such cosmetics. New entrants will have to spend considerable amount of time and money to imitate Body Shop products. Body shop also has a long heritage of using natural products behind its name and was established in 1976. This has given it a very strong brand identity which new entrants might find intimidating to begin with. Threats of Substitute Products Substitutes offer the same product at a similar or higher price. In Body Shops context, there are substitutes available but not every Body Shop product has a substitute. Hence, the overall threat of substitute products is weak. There are organic and natural cosmetic vendors in the UK but no one vendor has a product range as diverse as that of Body Shop. Buyer Power Buyer power is average in this industry. The products that are purchased are not standard and alternative supplies are not easy to find, so there is a high switching cost involved for the buyers. Due to the nature of the product and the process involved in making it, there is little threat of backward integration so buyers cannot demand concessions or discounts. Power of Supplier Supplier power is low as there is a high switching cost involved for the supplier. Buyers have the power to negotiate deals with supplying vendors as there are a lot of brands in the market. With the advent of e-commerce, customers can directly buy products from the main supply of the company so supplier competition threat is also low. Competitive Rivalry The competitive rivalry in the cosmetic industry is strong. There is a high fixed cost involved with setting up and running a cosmetic venture and hence exit barriers are high. The growth of the cosmetic market has been average and there is stiff competition between the brands such as Loreal, Revlon, Avon, Lancome, Mac etc. Market Segmentation Market Segmentation can be done on the basis of : 1. Geographic Segmentation 2. Demographic Segmentation 3. Psychographic Segmentation The Body Shop has shops all over the world and it must take into account customer needs in different geographic areas. For example, Muslim countries like Indonesia and Pakistan may not appreciate a product which contains alcohol. Or it can take into account weather conditions in some locations such as dryness to market moisturizing products in their portfolio. Body Shop has customers which include women and a small portion of men. They belong to middle of upper class and are people who buy organic or all natural products. The main target audience for the Body Shop is the 20-25 aged women segment. Initially, The Body Shop only focused on women as its primary audience but in recent years, it has also entered the men skin care market. Changing lifestyles and the rise of the metrosexual man has meant that men are now more concerned with how they look. Body Shop is catering to that demand with its unique value proposition. Target Market Based on the segmentation factors, the target market for Body Shop consists of middle to upper class women and a small portion of men who live in urban or suburban areas. They have an annual income of 40,000-60,000 pounds and have at least a bachelor’s degree. Two major age groups that make up the target market consist of women without children in the 35-49 and the 18-24 young females age group. Mintel reports suggest that individuals in the 18-24 categories are most likely to have purchased a body care product within the last 6 months. Hence these two age groups are the center of Body Shops target market. To target the men demographic, it would be wise to advertise in GQ and other similar magazines while supplementing it with a targeted online marketing campaign. To target women, advertising in female magazines about promotions etc. would be a viable option. Ansoff Matrix To consider different growth strategy options, the Ansoff Matrix can be a useful tool. It uses a firm’s present and potential products and customers to find out ways to grow. There are four possible product-customer/market combinations which include: 1. Market Penetration 2. Product Development 3. Market Development 4. Diversification To cater to an existing market with existing products through market penetration, Body shop can use sales promotion techniques which include discounts, bundled discounts and buy 1-get 1 free offers. A new product in an existing market could involve entering the baby care/children market. This could include products such as moisturizing creams, diaper creams and bath items meant for babies and children. This would involve extensive product development. Market development for Body Shop would mean increasing the sales of their new cosmetics for men range. This could be done via promotion through above the line and below the line methods. A new product in a new market would mean diversification but that does not go well with the concentrated vision of the Body Shop. New Product Ideas for Body Shop Based on the Ansoff Matrix, Body Shop has an opportunity in terms of product development i.e. it can enter existing markets with new products while keeping their vision and mission in tact. With this as the foundation, Body Shop can start a bath and body as well as skin care items meant for children. Alternatively it can also enter the baby care market. The Body shop can also start a Home Accessories department where they source their materials from communities with a rich heritage which will go in line with their goal of ‘giving back to the community’. 7Ps of the Marketing Mix Products The Body Shop products are organically grown products that use natural ingredients and have not been tested on animals. These products are in line with the vision of the company which is to support human rights, supports fair trade and be a socially responsible company that gives back to the community. The product packaging itself also reflects the values of the company. Body Shop products give the company its competitive advantage in the market and are an option for consumers who wish to buy responsibly. Price Body Shop products are at a medium price range but accordingly to a research conducted by R. MacDonald, people prefer the products of Body Shop as they are worth the amount paid (MacDonald, 2005). This shows that the pricing strategy that is followed by the Body Shop reflects its brand value. Although they are priced higher than their competition in the market, their competitive edge brings back loyal customers who buy their products because of the company values. Promotion The Body Shop uses advertising, public relations, personal selling and sales promotion techniques as part of its promotional campaign. Their advertising campaign consists of advertising their 5 main values and showcasing their commitment to sustainability which includes: 1. Against Animal Testing 2. Support Community Fair Trade 3. Activate Self Esteem 4. Defend Human Rights 5. Protect our Planet (The Body Shop, 2015) The Body Shop retail staff consists of well-trained individuals who then personally sell the product by helping customers find out which product is best for them and catering to their individual needs. The sales promotion techniques are more common and yearly discounts as well as seasonal discounts are common. Place Since The Body Shop is a B2C business, their location is such where consumers can easily access them. This includes retail stores on high street as well as inside popular shopping malls so it is adequate to say, The Body Shop uses intensive and selective distribution techniques. However, not all retail stores are solely owned by the company and some are run on a franchising basis. People The Body Shop engages in personal selling so improving customer service is a priority for them. They have a training and development program for their employees so that everyone is on the same page in terms of the Company’s culture, values and direction (The Body Shop, 2015). Physical Evidence The Body Shop’s branding as well as advertising campaign all highlights its commitment to its values. It’s well trained staff who believe in the philosophy to its website where the competitive edge of the company is emphasized; all aspects are in line with the company vision. Partners Since the Body Shop is a company with such a commitment to its values, its charity, The Body Shop Foundation, should partner with frontline organizations that are fighting causes that are in line with the company values (The Body Shop, 2015). This way, The Body Shop can assist those working to achieve progress in areas of human and animal rights as well as environmental protection. Conclusion Overall, The Body Shop is a company that has taken its competitive advantage of sustainable business operations and integrated it throughout its operations. Its products are animal cruelty free and vegetarian, they have set up their own fair trade program called Community Fair Trade and its advertising campaigns aim to active self-esteem. They have opportunity in various markets such as the children’s section as well as Home Apparel section but analysis shows that due to macro environmental factors, the company must tread carefully. Bibliography BBC, 2013. BBC: UK labour costs below EU average - Eurostat data. [Online] Available at: http://www.bbc.com/news/world-europe-22098519 [Accessed 8 March 2015]. Bristow, S., 2007. Business And Climate Change: Rising Public Awareness Creates Significant Opportunity. [Online] Available at: http://unchronicle.un.org/article/business-and-climate-change-rising-public-awareness-creates-significant-opportunity/ [Accessed 8 March 2015]. Confino, J. & Muminova, o., 2011. The Guardian: What motivates consumers to make ethically conscious decisions?. [Online] Available at: http://www.theguardian.com/sustainable-business/motivates-consumers-environmental-ethical-decisions [Accessed 8 March 2015]. Dann, K. & Ross, E., 2014. The Guardian: New EU VAT regulations could threaten micro-businesses. [Online] Available at: http://www.theguardian.com/small-business-network/2014/nov/25/new-eu-vat-regulations-threaten-micro-businesses [Accessed 8 March 2015]. Finch, J., 2010. The Guardian: Budget 2010: VAT rise to 20% could cause double-dip recession. [Online] Available at: http://www.theguardian.com/uk/2010/jun/22/vat-rise-recession-fears [Accessed 8 March 2015]. Grunert, J., 2015. Global and Domestic Marketing. [Online] Available at: http://business.lovetoknow.com/wiki/Global_and_Domestic_Marketing [Accessed 8 March 2015]. Internet Center for Management and Business Administration Inc., 2010. The Marketing Process. [Online] Available at: http://www.netmba.com/marketing/process/ [Accessed 8 March 2015]. Kokemuller, N., 2012. Chron: Advantages & Disadvantages of Market Orientation. [Online] Available at: http://smallbusiness.chron.com/advantages-disadvantages-market-orientation-18941.html [Accessed 8 March 2015]. Lake, L., 2015. About Marketing: Understanding the Difference Between B2B and B2C Marketing. [Online] Available at: http://marketing.about.com/od/plantutorialsandsamples/a/b2cvsb2b.htm [Accessed 8 March 2015]. MacDonald, R., 2005. A template for shareholder value creation on M&As. Strategic Direction, Volume 21, pp. 3-10. ParliamentUK, 2015. Parliament: The ageing population. [Online] Available at: http://www.parliament.uk/business/publications/research/key-issues-for-the-new-parliament/value-for-money-in-public-services/the-ageing-population/ [Accessed 8 March 2015]. The Body Shop, 2015. About Us: The Body Shop. [Online] Available at: http://www.thebodyshop.com/content/services/aboutus_company.aspx [Accessed 8 March 2015]. Read More