Strategic marketing entails that an organization utilizes its resources in adapting with the changes in the marketing environment in which it operates. For an organization to gain competitive advantage and curve a niche over its rivals it need to cultivate and implement a niche marketing strategy that would make it capture consumers to its products in the mist of other competitive goods. In an ever increasing competitive global business arena, the need to strategies and be in tune with current trends in an industry where an organization operates, this is very germane to the success level the organization would attain. Strategic marketing entails that the organization carries out an effective planning that would coordinate the whole marketing operates of the organization and make it adapt to its environment through effective utilization of available resources. Thus, the different marketing strategies; pricing strategy, distributive strategy, promotional strategy, sales strategy, product creation and branding strategy, among others, these are synchronize in meeting the marketing objectives of the organization. The strategic marketing and management pattern goes to reflect the structure of the organization. One strategic marketing pattern adopted in contemporary times is niche marketing.
Niche Marketing Concept
Niche marketing is a marketing concept where a producer tries to differentiate his/her product from what is obtainable from the industry in which it operates. Niche marketing cuts across every industries and it is operational when an organization exhibit a product differentiation strategy, in order to make its product unique in quality, branding, taste, size and shapes. In this regards, Fuduric, et al (2005, pg 3) defines niche marketing as “a marketing scheme designed to distinguish a product from its competition, in regards to products elements such as taste or freshness, inter-alia. This is done with the motive to increase consumer product awareness and demand”.
Producers of goods use niche marketing to catch those opportunities that exist in the industries they operate, as the uniqueness and quality of the niche catcher’s product would be attractive to consumers. The product uniqueness increases consumers’ awareness of the product. For example in the agricultural industry, such professionals that grows cash crops or engage in fish farming have ways of branding their product in such as a way that would differentiate their product from others engaging in the same product production. Examples of such thriving niche marketing in the agriculture industry include the producer of certified Angus beef and Mississippi catfish.
As earlier stated niche marketing is applicable to different industries, be it in agriculture, confectionaries, electronic, automobiles, fashion, among others. Where there exist competition for products in an industry, niche marketing is applicable for gaining market opportunity, and curve greater advantage over market competitors.
Niche marketing, also deals with product value build up, alongside with product differentiation. The producer using niche marketing should be ready to add more value to the organization product in order to give it that unique quality that attracts consumers to it. Branding and labelling plays significant role in niche marketing.
The branding of a product goes a long to determine the first impression that consumers would form concerning such product. Thus, the appeal attached to a product is contributed through branding and the product’s quality.
In creating niche market, the producer, apart from laying emphases on the product’s quality, as demanded by consumers, need to adopt methods that would enhance the product’s production, and structure channel marketing that would give the product its regional identity. When this is done, the advantages associated with niche marketing would be attained. Those advantages associated with niche marketing include the following:
Niche marketing gives uniqueness associated with a product, thus differentiating it to enable producers earn more;
It creates avenue for product rearrangement in a food chain structure, in order to discover more appropriate ways of product distribution to bypass intermediaries;
Niche marketing also, intensifies the communication bond between the producer and consumers of the products. Those salient qualities the consumers desire would be easily communicated to the producer as a way of improving the quality of the product;
By satisfying the consumer through niche marketing, the producer stands to gain greater market share in the industry it operates.
In this era where consumers are becoming conscious to the effect products have on the environment, their choice and taste for products graves fro those with little or no harmful effect to the environment. Many consumers of fresh fruits and vegetables, seafood, among others, would prefer those produce with less chemical hazard causing substance. For instance, many consumer do not want organic products, they prefer those grown naturally. With this level of taste and awareness, a producer can make his product with in line with those tastes and wants the consumers’ desires. When this is done the process of niche marketing is enhanced.
Niche Marketing
A successive niche marketing strategy should be able to adequately utilize the organization’s resources in adapting to the business environment in which it operates. Here, through the strategic moves the organization is able to increase the sales level for the organization and customer patronage. In doing this, the organization’s strategy should be centred round the customers through its marketing mix. Here, strategizing should take acknowledgement of the product, place (distribution), the price, and promotional strategies in building a competitive base for the organization, through customer’s satisfaction. In this view, Oden (1997:3) argues that “many of today’s most successful organizations continue to survive because many years ago they offered the right product at the right time. Most product, market, and process venture decisions of the past were made without the benefit of strategic thinking or planning. However, present-day managers increasingly recognize that venture decisions must be made in the context of a venture strategy. As they find themselves in ever more complex and turbulent environments, their past internally oriented, reactive approach to decision making is giving way to an externally oriented proactive approach that requires more analysis”. Communication plays a significant role in contemporary marketing strategy, even more in an organization that adopts niche marketing strategy. Thus, for an organization to put up a good niche marketing strategy it must always communicate with consumer to know those changes they desire in its products, so as to keep them attracted to the product continually.
How Innocent Drinks Organization Has Adopted Niche Marketing In Its Product Enhancement
Innocent Drinks organization started operation in the production of drinks since 1998. The name ‘Innocent’ for the organization is derived to symbolize the organization’s products that are naturally made and unadulterated. “We call them innocent because our drinks are always completely pure, fresh, and unadulterated. Anything you ever find in an innocent bottle will always be 100% natural and delicious -and if it isn’t, get on the banana phone and make us beg for forgiveness” (Innocent Drinks, 2006). Innocent drinks organization involve in the production of drinks derived from its cow milk and fruit drinks. The organization has variety of brands of drinks, which are produced to give delight to its customers. The different range of the organization’s product range from smoothies; with brand for children and other varieties; superfoods; a natural smoothies produced for specific purpose such as when one feels tender; big carton smoothies for home keep and refrigeration. There is also thickies; probiotic yoghurt, and juicy waters containing juice and spring water all mixed up to make customers feel wonderful and satisfy.
Innocent Drinks has utilized the process of niche marketing in sustaining itself in the drink industry where it operates in European countries, and the United States.
The products of Innocent organization are produced in ways that consumers get the natural taste of the drinks they consume. Here, pure, fresh, and unadulterated drinks are produced in their quality form for customer’s satisfaction. The products are 100% pure of fruits or milk according to the different brands. Thus, customers are guaranteed that they are consuming hygienic, natural, and unadulterated drinks. Furthermore, the Innocent Drinks organization has different varieties of assorted smoothies, made of fruits and milk. The different brands of the organization are made to satisfy customers taste both young and old. The prices of the Innocent drinks are moderate and customer friendly. The drinks come in small bottled pack, which costs are affordable by all and sundry. Given the quality and pure unadulterated drinks consumers get from the Innocent drinks product range, they get the worth for their money. The strategy embarked by the Innocent organization where it recycle its products containers and bottles, this goes to reduce the cost of production of the organization’s product, hence, the price set for its products are low. “We are moving away from virgin finite materials to renewable materials, such as recycled plastic and plastic alternatives such as bottles made out of corn starch – a material known as Polylactic. To date, we have managed to get our plastic smoothie bottles to 50% recycled plastic (we’re working on the rest) and we have a corn starch, commercially compostable bottle due to launch in September 2006” (Innocent Drinks, 2006).
The distribution of the organization’s product is carried out through direct sales of the organization’s products to consumers by the aid of the organization’s cow van. The cow van helps to carry the organization’s product every nooks and crannies in the United Kingdom where it operates.
The promotion of the organization’s products is done through the strong brand it has built for itself. The cow van is easily recognized, and this serves as a medium of promoting the organization’s products as the vans engages in the distribution and sales of the organization varieties of drinks. The well-structured websites of the organization is another medium in which the organization promotes its ranges of products to a wider market in the international level.
All these 4 Ps of the organization’s strategic marketing are integrated to bring about the effective increase in sales of the organization’s products. Each of the strategies for product manufacturing, pricing system, promotion and distribution all are built in an integrated pattern to bring about the effective distribution of quality product at an affordable price to customers. Moreover, satisfaction of customers taste is the overall focus of the Innocent niche marketing strategies.
Reference
Fuduric, Joseph A., et al (2005) “Marketing Wild Caught South Carolina Shrimp: Lessons Learned from Agricultural Niche Marketing Programs” pp. 3
Innocent Drinks (2006) “The Innocent Foundation Organization”
Oden, Howard W. (1997) Managing Corporate Culture, Innovation and Entrepreneurship. Westport, CT: Quorum Books pp. 51
Rahmann, G., et al (2001) “Opportunities and Barriers for Niche Marketing of Lamb in
European LFAs Based on Consumer attitudes to Product Quality” pp. 42
The Impact of Web 2.0 on International Marketing Practices
This essay is about Web 2.0 and its impact on international market. Before going in detail we will see what actually Web 2.0 is. The Web 2.0 is basically a term that is used for describing a variety of different web sites along with different applications that mainly allow the users to create and at the same time share their online information or any material that they have created. One of the key elements of the technology since the beginning of time was that it allows the users to share what they create, collaborate and also actively communicate. The Web 2.0 specifically differs from the other types of websites due to the fact that it does not need any additional web designing or even publishing skills for participating and this makes it very easy for the people to create and also to publish and throughout the world (Thomson 2008).
To go in detail, the Web 2.0 is more commonly referred to as the second generation of World Wide Web and it is basically a set of tools allowing the people build up their personal social or business connection and share information along with collaboration of their project online. Its common features include wiki along with social- networking sites, online communities, virtual worlds and many others (Parise, Guinan & Weinberg 2008).
Since the emergence of the Internet back in the 1990’s, it has created tremendous global effects on mostly every human being, learning inclusive. In terms of globalization, it has stimulated a wide shift mainly in the traditional boundaries in terms of teaching and this has further broadened the act of education horizon greatly. At the end of 20th century, the gradual switching mainly from monopolistic (Web 1.0) to the democratic (Web 2.0) eventually stimulated radical changes most importantly in the fields of learning and teaching (Enobun 2010).
Like many new software, this new generation of Web 2.0 basically includes many new features along with many new functions that were not available during the past years. However, this Web 2.0 is not any specific version of Web, but it is rather a set of series of different technological improvements (Tech Terms, 2008).
The most remarkable contributions of Web 2.0 are listed here with further detail discussions later on. Firstly, there are blogs which are also known as the Web logs and these are mostly involved in allowing the users to post their thoughts, their updates and stories related to their lives on the web. Secondly, there are the Wikis. These are mostly the sites like Wikipedia and many others which enable the users from all across the world to write, add and update their content regularly. Thirdly, there are the social networking sites. Different sites like Facebook, Twitter and MySpace offer the users in building and customizing their own profiles and also to communicate with their friends situated all around the world (Tech Terms, 2008).
Web 2.0 Marketing
Fourthly, there are the web applications. These are a broad range of modern and new applications which makes it possible for the users that they run their desired programs directly in any of the Web browser. The fifth most important contribution is the podcasting. Podcasting is basically a way in which the users make audio or even video files that are available on the internet and which can either be listened or viewed on any portable PC or any hand-held devices like an iPod or any mp3 player. The sixth major contribution is content hosting services. The content hosting or better called as the content sharing sites mainly allow the users to upload their content and these mostly includes YouTube, Flickr, etc. The next major contribution can be the sites which allow online shopping and lastly sites which allow users to book their hotel rooms, their flights simply through internet and drop the idea of going personally.
To go in detail of the above mentioned contributions, there are many soft drink companies which use the internet fir their marketing. The company, which greatly relies on the internet for its local and international marketing, has eventually brought every Web 2.0 technology into play to gain more profit and customers. Until recently, many of its ‘social media’ steps and efforts have openly been engaged in different blogging sites. Most commonly, the companies own historians are making daily posts on their Coca-Cola Conversations blogs; which are mostly included in the virtual worlds as discussed above. The company also employs sites like Facebook and Twitter to increase their publicity by creating their own company’s page to increase consumers and fans.
Secondly, if we talk about social networking sites in detail, then in this paragraph we will discuss about Facebook. It is the most popular site of recent times mostly in terms of social networking that is included in the Web 2.0. It actively allows the users in creating their own personalized profiles; share their profiles with many other users with similar choices and tastes hence increase the act of social networking. Besides this, the user can also choose to create their own profiles and later on make them private or even public. Facebook is known to allow the users to post their photographs, their videos, articles, music, statuses and many other things. Moreover, some of the users can also find their close friends simply by typing their names in the search box (Swabey 2008).
In order to gain popularity, Facebook and the companies who seek to increase their marketing value should efficiently achieve the following objectives. Their pages should be visually very attractive, they should be easy-recognizable and most importantly they should post content regularly. The companies should actively advertise their pages to gain more fans and more supporters otherwise no one would know of the page. Thirdly, it is very important to communicate with the fellow followers in a well-mannered and in an appropriate way. The main reason behind this is that the users will be able to open themselves and also provide feedback to the company (Podobnik, Ackermann, Grubisic and Lovrek 2013).
Web 2.0 Marketing
There are many sports company which also uses social networking sites. An example of includes Nike. Like many other global brands, Nike also has a number of Facebook pages for their fans for each of its famous product categories, including the golf line, their shoes, cloths, snowboarding along with football. Nike also has its own famous official website which mainly includes all the important product categories where the consumers can easily search for their review content for instance such as the buyer’s feedback, the number of people who has already bought any particular product or even the list of the people who has viewed any particular item before they can decide what to buy and what not to. Similarly, the users can also click on the button that is present under each item and this tells the users which product is popular and which are not. This is mostly seen in the Facebook pages (Moth 2013).
Twitter is another example of Web 2.0 with its social media marketing sites and this is also very similar to the Facebook page. Here different companies can edit their own official Twitter profile along with their backgrounds mainly as the brand image promotion. Moreover, the associated administrator of the related company can also upload different Tweets which are only allowed up to 140 characters, and eventually every user can give their feedbacks in the form of replies and even follow them just as in the case of Facebook (Moth 2013).
Another major contribution as discussed above include sites like Media toolkit which is a very useful web service that was initially developed in Croatia and it enables only real-time discovery most commonly on the global scale for most of the popular as well as some of the shared content that mainly originates from web sites in which the user seems interested in. Additionally, this Media toolkit site also predicts which of the contents will become popular in the near time. It is a very common fact that the SNSs like Twitter, Facebook, LinkedIn and many others are known to influence the overall consumption of the news mainly on the web. So we should know that whatever is shared is also being read, thus this generates more traffic to the different web sites that are sharing friendly content (Podobnik, Ackermann, Grubisic and Lovrek 2013).
Another common example which lies under the contribution of Web 2.0 includes Foursquare which is a common location that is based in SNS with around more than 1 million brands and they are using it as their SMM channel. The most common difference between this and other social networking sites like Facebook and Twitter is that the users cannot exchange their status updates along with tweets about their day to day activities but they can only exchange information that is related to their current location by simply checking into those places. Although this feature is available in Facebook, many users still prefer this site. (Podobnik, Ackermann, Grubisic and Lovrek 2013)
If we look ahead, then this Web 2.0 used by different companies may be developing some hardy roots. Over around half of the companies all across the world still plan increasing their investments mainly in different Web 2.0 technologies just to increase their international value and to gain profit (Mckinsey 2009).
References
Thomson, H. (2008) What is Web 2.0 Technology? Wikis, Blogs & Web 2.0 technology, 1, 1-5.
Parise, S., Guinan, P. J., & Weinberg, B. D. (2008) The Secrets of Marketing in a Web 2.0 World.
Enonbun, O. (2010) Constructivism and Web 2.0 in the Emerging Learning Era: A Global Perspective. Journal of Strategic Innovation and Sustainability, 6(4), 17-25.
Swabey, P. (2008) Coca Cola stays young with Web2.0.
Podobnik, V., Ackermann, D., Grubisic, T., & Lovrek, I. (2013) Web 2.0 as a foundation for Social Media Marketing: global perspectives and the local case of Croatia. Cases on Web 2.0 in Developing Countries: Studies on Implementation, Application and Use.
Moth, D. (2013) How Nike uses Facebook, Twitter, Pinterest and Google+.
Mckinsey (2009) How companies are benefiting from Web 2.
Buzz marketing is defined as “thepromotion of a company or its products and services through initiatives conceived and designed to get the media and the public talking positively about that company, product or service”, according to Kirby and Marsden (2006, p.xviii). Buzz marketing involves word of mouth propagation of the products and services of the company through the “vibes” or the buzz created through other customers or a form of a campaign driven by customer hype, says Dye (2000). According to Carl (2006), though marketers knew the power of relationship based recommendations to be very powerful as a persuader of consumer decisions, the dimension of marketers “engineering” peer opinions in social networks is little understood. Therefore, the buzz can come from paid sources who muster up support for their opinions in their social circle or individuals who voluntarily express such opinions positive for the company and both the forms of communication can be included in buzz marketing (Carl, 2006).
The key enabler of buzz marketing is the influence the opinions of individuals have on other individuals known to them. “A third party is involved in the amplification of the initial marketing efforts of the company in his or her relational networks” (Thomas, 2004, p.64). Often, a company has loyal and disloyal customers, and the disloyal ones are more influential in spreading the buzz. The loyal customer already may have influenced his or her networks and the greatest impact for marketers lies in tapping the opinions of the disloyal customers (Carl, 2006). Therefore, the company need not rely on its own customer culture for the creation of the buzz, but can actively look for counter cultures, which can be real value additions to the campaign. This implies that not all individuals have the same level of ability to influence others. Therefore, the concern of marketers is to find the most influential set of people to create the buzz if it has to succeed in its campaign, be it its own set of customers or a group of individuals who have remained out of the influence of the marketer.
Apart from the people who spread the buzz, other factors aid in the success of the marketer. People cherish owning something that most others cannot. This must be used effectively by creating the urgency in influencing the customer decision. The endorsement of a celebrity can also trigger wide spread in buzz marketing, with the critical thing being how the celebrity is made to handle such a communication, according to Dye (2000). The author cites many examples, for instance, the books selected by Oprah Winfrey for her book club invariably become best sellers and publishers lobby to get their work featured by her.
Identifying the best sources that can start the buzz is crucial and the process of identification involves grouping customers according to their purchase behaviors (buzz marketing), understanding how each group influence the other groups, identifying the paths of influential communications through simulation and finding the strongest path and group, according to Dye (2000). The structured approach also dispels the myth that buzz cannot be planned and executed, but highly random.
One of the key approaches to creating buzz marketing strategy lies in getting the influential group of people or some individuals or an individual from the group to experience the product or the service of the company. If the company is right about the selection of the group, the buzz will be created invariably because of the Hawthorne effect; when people feel valued and feel an increase in their self-esteem in being the pioneers in using a product, goodwill is created (Kirby & Marsden, 2006). Buzz marketing can be peer-to-peer and performer-to-peer. While in the former, individuals voluntarily become brand ambassadors for the company, in the latter, the company uses carefully planned seeding into relational networks through rehearsed campaigns. Marketers can also launch covert buzz campaigns, where customers are not aware that they are being marketed to. But the downside is that when customers know that they have been part of a campaign, they may fee duped and this may lead to backlash for the company, according to Kirby and Marsden (2006).
The field of marketing has become so cluttered that customers view all marketing communications skeptically and the importance of buzz marketing comes from the fact that the concept relies on communications from non-marketing sources, which are perceived to be more trustworthy by customers, say Darke and Ritchie (2007). Therefore, when a message reaches the customer from a friend with the intent of convincing him about the superiority of a brand or a product, it is bound to be a sensitive issue in the ethical sense. While the receiver of the communication may place value on the opinion of the friend, the friend may be motivated by the financial and other benefits from the company (Petty & Andrews, 2008). Thus, buzz marketing poses a big ethical question on the marketing community – to what level can marketers legally invade the lives and relationships of individuals in a conscientious manner.
Buzz Marketing
According to research, the best way to ensure that the campaign is ethical is by being completely transparent to customers and the influencers in the initial stages of the campaign and that the credibility and the trustworthiness of the influencer were not negatively affected by disclosure of the affiliation of the latter with the marketing company (Creamer, 2005; Carl, 2006). Most covert communications happen to ensure the credibility of the influencer is not affected through any disclosure of benefits or affiliation to the brand or the product of the company. Such fears seem to be unfounded, considering the impact of any adverse reactions from customer who realize that they have been marketed to at a later stage.
The role of the internet in buzz marketing is being studied by marketers and the role of internet based social networking portals needs to be understood better. Though there is much hype about the potential of the internet in buzz marketing, the reality is that face-to-face interactions carry more influence compared to an online opinion from an acquaintance or a friend (Carl, 2006). But the potential of this media is very high, as the sophistication of social networking portals is increasing and the level of interactions which are happening between individuals at a great distance to each other physically is becoming higher (Kirby & Marsden, 2006). Therefore, the role of the internet cannot be ignored as the principal tool for buzz marketing in the future.
Corporate Reputation Management
According to the resource based view of management, organizations with valuable and rare tangible and intangible assets enjoy competitive advantage in the market and can be expected to yield superior returns. When the assets are not easily imitable by competition, the advantage of the company can be sustained for superior value creation and market dominance; corporate reputation is one such intangible asset that cannot be replicated by a competitor in the short term, according to Roberts and Dowling (2002). According to Fombrun and Riel (1997), it is relatively unexplored as a concept and its importance is realized only when it is threatened.
Corporate reputation is the collective opinion of the stakeholders of an organization based on its past record, according to Nakra (2000). Reputation management is about building and maintaining the repute of an organization and generating positive feedback or word of mouth. The reputation of a company not only impacts the ability of the company to sell its products, but also in securing investments, shareholder confidence, governmental support and hiring talented employees (Nakra, 2000). Once lost, it is very difficult to regain, says Winkleman (1999). This concept comes within the function of public relations and corporate communications, which concern how the organization is viewed by its different stakeholders (Nakra, 2000). While organizations have measures and checks and balances for the other performance parameters of the organization, including effectiveness, financial performance and other tangible factors, the factor of the reputation of the organization that aids in the achievement of the overall goals of the organization are not measured and grossly ignored (Nakra, 2000). This is critical for a robust buzz marketing campaign.
Reputation management for organizations is important due to the changing dimensions of product marketing, diverse communication channels, mergers and acquisitions and high levels of global activism against corporates, say Argenti and Druckenmiller (2004). As businesses go global, they face a number of public relations issues, in having to deal with a new culture and policy environment and this necessitates a good corporate reputation for the process to be smooth (Pinkham, 1998). Customer expectations from companies have also become more stringent, with more choices available. Customers base their decisions based on the level of information available about the company and the reputation of the company before committing to a deal (Nakra, 2000).
Reputation of organization arises from the past, where the actions and performance of the organization in various aspects determine the present reputation. Stake holders consider the performance and success enjoyed by the organization, especially the financial performance as an important indicator of the goodness of the organization, according to Roberts and Dowling (2002). In fact, the correlation between the financial success of the firm and its reputation can be very high. A reputed firm will be able to charge a premium for its products and services from the market. It also has the benefits of being able to attract and retain the best talent in the industry at the lowest possible costs among its competitors. It will be able to generate more value from its supply chain and thus be able to save costs, resulting in higher margins and realizations. Similar relationships are visible in the function of buzz marketing too; reputed organizations are able to sell more with a lower effort at the best prices, due to its superior products, better sales force, better channel partners and a number of other enablers, according to Dowling (2001). These are the views of the external world of the reputed organizations or the collective perception of the market or the society on the characteristics of the firm. This means that to manage reputation, organizations have to be critical of all their interactions with the stakeholders and society, as each of these interactions, from a product launch to a simple customer query have the potential to enhance or spoil the reputation of the company.
Buzz Marketing Reputation
The reputation of the organization is deeply embedded within the experiences of the employees of the organization and manifests itself as a dimension of the working culture. When an organization is reputed and this is part of the organizational perceptions of the managers in the company, the nature of their interactions with their employees and other stakeholders will be in the manner which safeguards the reputation, say Fombrun and Riel (1997). The culture of the organization is manifested in the behaviors and attitudes of the individuals and in their interactions with each other; the organizational reputation becomes an invisible part in the culture and influences it, according to the authors. Therefore, the actions of the individuals and their perceptions within the organization, or the internal identity of the organization is manifested to the external world by means of its corporate reputation (Fombrun & Rindova, 1996). The organizational culture, therefore, plays an important role in determining the reputation of the organization to the outside world, through its policies, stand on its role in society and its responsibility to the world and how these are perceived by the stakeholders.
The reputation of an organization cannot be managed if the perception of society is not considered in the picture. Corporate social responsibility (CSR) is a philosophy advocating that organizations have a moral responsibility in helping overall social development and uplift through strategic philanthropic activities, according to Carroll (1991). The sustainability of organizations depends on the environmental, social and financial sustainability (Wempe & Kaptein, 2002). The role of philanthropy and other social benefits in the development of the reputation of an organization cannot be ignored. Organizations sometime spend more on advertising their good work than doing the good work (Alsop, 2002). This has led people to view corporate philanthropy as designed for corporate gain in some covert fashion (Porter & Kramer, 2002). This can be potentially damaging to the reputation of firms. The social responsibility when met has to be advertized at the right levels of austerity. If this is not executed properly, either the organization will be accused of doing too little or of being too brash in its claims of being a caring social entity. Therefore, the CSR activities of organizations are an effective tool for the management of corporate reputation and buzz marketing.
References
Alsop, R. (2002). Perils of corporate philanthropy. Touting good works offends the public, but reticence is misperceived as inaction. The Wall Street Journal, 16 Jan 2002, Print Edition.
Argenti, P. & Druckenmiller,B. (2004). Reputation and the corporate brand. Corporate Reputation Review, Vol.6, No.4, pp.368-374.
Carl, W. (2006). Whats all the buzz about? Everyday communication and the relational basis of word of mouth and buzz marketing practices. Management Communication Quarterly, Vol.19, No.1, pp.601-634.
Carroll A.B. (1991). The pyramid of CSR: toward the moral management of organisational stakeholders. Business Horizons, July/August(1991), pp.39-48.
Darke, P. & Ritchie, R. (2007). The defensive consumer: advertizing deception, defensive processing, and distrust. Journal of Marketing Research, Vol.44(Feb), pp.114-127.
Dowling, G.R. (2001). Creating corporate reputations using buzz marketing. Oxford: Oxford University Press.
Fombrun. C & Riel, Van C. (1997). The reputational landscape. Corporate Reputation Review, Vol.1, No.1&2, pp.5-13.
Fombrun, C.J. & Rindova, V. (1996). Who’s Tops and Who Decides? The Social Construction of Corporate Reputations’, New York University, Stern School of Business, Working Paper.
Kirby, J. & Marsden, P. (2006). Connected buzz marketing: the viral, buzz and word of mouth revolution. Oxford: Butterworth-Heinemann. ISBN: 978750666343, 075066634X.
Nakra, P. (2000). Corporate reputation management: CRM with a strategic twist? Public Relations Quarterly, Summer(2000), pp.35-42.
Petty, R. & Andrews, C. (2008). Covert buzz marketing unmasked: a legal and regulatory guide to practices that mask marketing messages. American Marketing Association, Vol.27, No.1, pp.7-18.
Porter M.E. & Kramer, R.M. (2002). The competitive advantage of corporate philanthropy. Harvard Business Review, December 2002, pp.18-27.
Pinkham, D. (1998). Corporate public affairs: running faster, jumping higher. Public Relations Quarterly, Summer(1998), pp.33-37.
Roberts, P. & Dowling, G. (2002). Corporate reputation and sustained superior financial performance. Strategic Management Journal, Vol.23(2002), pp.1077-1093.
Thomas, G.M. (2004). Building the buzz marketing in the hive mind. Journal of Consumer Behaviour, Vol.4, No.1, pp.64-72.
Winkleman, M. (1999). The fickle finger of reputation. Chief Executive, Vol. 44, No.1, pp.79-86.
Wempe, J. & Kaptein, M. (2002). The Balanced Company: a Theory of Corporate Integrity. UK: Oxford Univ. Press.
International Marketing – Exploring New Products and New Markets
Any company which aspires to expand into new overseas markets faces a significant challenge in selecting the appropriate international marketing strategy to do so. An organisations strategic and managerial depth is severely tested. The challenge lies in understanding the new market, and designing and fabricating a suitable marketing mix for the dynamics of the market.
The challenge lies in being able to analyze the market for existing players, market size, and future of the industry. Expanding into a new country takes significant investment from the company in terms of organizing logistics, administration and controls, storage facilities, promotions and management costs. Hence, the right strategy to enter and exploit the market could mean a significant financial implication for the organization in the medium and long term.
Vic’s Premium Quality Meat is a family business established in a small way which has grown into a global business. Meat business in Australia was saturated, with little differentiation in products, which is when Vic’s decided to differentiate the product to create a price premium in the market. The company has to expand into overseas markets to be able to survive in the meat business. The company has decided to expand into China with its premium meat products because of China’s potential of huge demand. The market for Australian meat in China has grown by over 1500% from the mid-1990s (Bernoth, 2007). Hence, succeeding in this market is going to be very important to the company.
Perhaps the most important part of the international marketing strategy in entering a new market with a new product is the function of the marketer and the role he plays in making the venture a success. Product knowledge and a socio-cultural and economic awareness are necessary for marketing to succeed.
Organizational Strategies and Bearing on International Marketing Strategy
Porter categorized strategies into cost leadership, differentiation and focus (Porter, 1980). While the first two are generic strategies, focus is an increased attention on the business if either strategy is adopted (Dess & Davis, 1982), and hence a necessary strategic recourse in this case. Hence, between the generic strategies of cost differentiation and differentiation, a company’s entry strategy can be understood as four distinct positions taken by the company in the market (White, 1986). See Appendix 1. These four positions are as follows:
Pure Cost Position
This is a strategic position where cost differences between competitors are low, and there is little or no differentiation between products available in the market. Vic’s entered the market when the market was positioned like this, and successfully created a market for a product line which was priced higher. Hence, this international marketing strategy could mean that the company has to regress on its corporate strategy. Also, a low cost position is not viable in a market like China, which has the lowest cost structures for production anywhere in the world. Hence, Vic’s cannot use this strategy to enter China.
Pure Differentiation Position
This is a strategic position where product differentiation is high, because of which the implications of costing is low. This strategy is suitable for companies which target a niche segment of the market and hence aim to be highly profitable, at the same time be assured of business. This is the strategy Australian meat importers in China are following at present. This could be a suitable international marketing strategy for entering the market for Vic’s, as the primary strength of the company is the superiority of its products compared to local produce. Its assured customers are expats and the affluent and middle class Chinese who want safe and exclusive meat for consumption.
Differentiation and Cost Leadership Position
This is a strategic position in which the company is unique in its offerings and also prices competitively. This is suitable strategy for companies who find that the products and services they offer are unique, but the local and other substitutes that are available could compete with them. This strategy could be suitable for Vic’s in China because of the fact that there are several Australian companies who are into the meat importing business already and there is the threat of local produce which is much cheaper than imported meat.
No Competitive Advantage Position
This is an international marketing situation which is similar to a commodity market, where there are several products in the market and they are all equal in price, quality and uniqueness (Zahra et al, 2000). This situation does not apply to Vic’s business or its entry into China
The Apt Strategy
Out of the four strategic alternatives discussed above, Pure Differentiation and a combination Cost and Differentiation strategies could be the most suitable for Vic’s. Let us now explore these two strategies to find the most suitable. In both these strategies differentiation is common. Vic’s has to differentiate its products from the local produce and the existing Australian meat producers and importers to gain competitive advantage.
Vic’s has to gain cost leadership in the market with respect to the other Australian meat companies because it does not have the first mover advantage in this market. Hence, to gain competitive advantage Vic’s must be innovative and careful with its pricing strategy during the entry stage.
Vic’s has to adopt a combination of cost leadership and differentiation strategy to enter the Chinese meat market.
Coming to focus, the company needs to focus on gaining market knowledge in China, the dynamics, regulatory and the competitive forces. China has an embargo on meat imports from America, and this is aiding Australian companies in China (Australian Trade Commission, 2010). This situation could change in the future, and Vic’s has to be prepared for increased competition from other countries. Australian players in China are primarily focused on the metropolitan cities, and the new focus areas could be tier II cities, which are growing at a massive rate. This will take some serious understanding of the logistics and supply chain operations within China.
A company with a pure cost leadership position has relatively simple management bandwidth required in marketing and other functions. Its production and sales are synchronized. It produces goods at the cheapest cost and marketers sell them for as low as they can afford to. This requires a very simple management structure, low autonomy and frequent low complexity of reporting (Porter, 1980).
However, when a company goes in for product differentiation strategy, the coordination required between the various departments is high (Porter, 1980). The company has to have a senior management team to be functioning in China, as the business complexity is high. This entails a higher cost outlay for the expansion project and suitable individuals to be available for recruitment at a very senior level. Organizing its command structure and organizing its operations is the next significant complexity for Vic’s expansion into the Chinese market via a robust international marketing strategy.
The implication of the entry strategy for the country is the most critical position to take from the marketing perspective. If the pricing is too high or if the segment catered is too small, the venture could be a disaster. If the pricing is too low and if the segment cannot be defined properly, resulting in a sell to everyone situation, the company cannot survive in the long run. Thus, planning for market entry in an international expansion scenario (international marketing) is a challenging and engaging process for any organization. Vic’s has chosen to have a strategy to market its products based on its product differentiation and cost leadership or competitiveness and these are two factors which need careful balancing, as these are two opposing approaches to pricing and product development.
The Product Portfolio
Vic’s is a meat wholesaler, supplying to restaurants, butchers and customers, based out of Australia. Australian meat is known for its purity and this is a major leveraging factor for meat exports. Meat, beef, lamb and pork are the largest export products from Australia, with more than 60% of the meat produced being exported and Australia being the second largest exporter of beef, after Brazil (Australian Trade Commission, 2010). China has a meat embargo from the USA and this is a major factor for driving focus of Australian meat industry towards China, which, owing to its size is a large meat consuming nation (Ausmeat, 2010).
Vic’s deals with primal cuts in beef, lamb, pork, poultry, game and exotic meat and more processed food like handmade sausages. The products are procured from farms and butchered at Vic’s state of the art processing plants and dispatched to their ultimate destinations. These products are exported as sealed, vacuum packed containers and shipped to worldwide destinations, where they are packed and marketed. Beef and lamb are specialized into signature series, with special grass and grain fed meat being sold at a high premium because of the assured quality and meat tenderness. Such meat is sold as specialized portions, available to customers, primarily butchers, restaurants and supermarkets, who need specialized cuts to attract customers and to reduce their complexity in acquiring butchering licenses and maintaining inventory at the shop level of these special customer preferences.
international marketing dissertation topics
Vic’s also procures and markets a number of exotic and game meats, including venison, Spanish Jamon, rabbit, ducks, kangaroo and crocodile. Such exotic meats are preferred by large restaurants who seek differentiation in their offerings with such meat, which are usually signature presentations of their chefs.
The entire product range of Vic’s is assured of hormone free feeding and exclusive breeding conditions and processing with hygiene and health consciousness. Though the meat industry is mature and there are very few new opportunities in the global arena, the ultimate factors which interest consumers in meat products are price, quality, volume and traceability, with the last factor being the latest to be added because of the increasing focus on food safety and knowledge and awareness of the consumer (Australian Trade Commission, 2010).
The competitive advantage of Vic’s is the fact that its products are considered and intended to be of the best quality. The impact of the increase in awareness among consumers is a major factor which accounts for its premium pricing and quality. Due to its status of being an evolved meat consuming nation and due to its cutting edge standards in the meat processing industry, Australian meat has become one of the most preferred choices in quality and premium meat (Ausmeat, 2010). Also, the competitive advantage will lie in serving customers in China, which takes a lot of understanding of power, logistics and supply chain practices.
Vic’s practices the Ausmeat language in all its trading and product marketing and for developing specifications for its products (Vic’s, 2010). This unified language enables meat producers to phrase and specify their products as per industry standards set by Ausmeat, and thus to ensure quality of products delivered to customers (Ausmeat, 2010).
Marketing Strategy – Vic’s China
Vic’s has firmed up its strategy, organizational structure and command structure. Now it has to begin identifying the marketing strategies for itself. Vic’s has to follow a Polycentric Orientation of marketing in the EPRG framework, which places marketing entirely in the hands of the subsidiary (Wind et al, 1973). An organization’s different countries function as different business units with different marketing approaches, depending on its market dynamics.
When an organization is entering a new market, it has to understand the market in its present condition. This understanding is brought about by market segmentation. The market may be segmented in a number of ways, and discussed below are two options.
The demographic segments in the market for meat in China are,
Chinese families who buy local produce at a low cost
Chinese middle class families who can afford costlier meat for its safety
Expats – Aussies and other foreign nationals who may be resident in China
Chinese middle class families in Tier II cities who don’t have access to imported meat
Australia shipped more than 24,000 tons of sheep meat to China in 2009 and 13,000 tons of beef. This makes China the largest consumer of sheep meat and the fourth largest beef consumer in the world. Vic’s has to target to acquire about 5% market share (1850 tons) in these shipments during the first year, doubling its share in the next year (3700 tons). The premium meat demand in China grows at about 15-20% every year (Bernoth, 2007) and consumption of all meat is rising at the rate of 3-5% per annum (Thepigsite, 2007), because of change in consumption practices. The average price of a kilogram of beef is at about $7 in the open market. But this is the price of local produce and premium beef is offered at anywhere between $15-20 depending on the portion and cut (Bernoth, 2007 & Pugh, 2010). Considering an average price of $17 per kg of beef, the estimated revenue size of Vic’s could be at $314 million in the first year, doubling to over $650 million in the second year.
The primary targets for Vic’s are upscale restaurants, hotels, expats from Europe and America and the local middle class which can afford premium meat. The scope for business expansion exists because of the fact that the per capita meat consumption in China is 67 kg per person in 2008, compared to an Australian average of 120 kg per annum. High growth projections discussed above are possible because of the fact that premium quality meat is still new in China, with the main competition coming from local, small time meat enterprises and smuggled meat from North America.
Vic’s China’s Marketing Mix
Product – Vic’s should deliver top quality products in the market in line with its strategy. Its products must reflect the tastes of the customers in China, in terms of the cut, animal and the portions. The products launched by Vic’s must add significant value against the products of its Aussie competitors, in terms of variety, packaging quality and finish.
Price – Vic’s should go in for on par pricing with its Aussie competitors in China, but a premium position to the local produce. It could even enter at marginally lower price than its Aussie players in China, to bring enjoy a cost leadership in the market.
Place – Vic’s must be distributed through super markets, its own retail shops and also through the digital channel – internet and phone ordering. Vic’s meat must be available within reach to any Chinese or expat customer who lives in the geography concerned.
Promotion – Vic’s must promote its products through various media. Expats in China can easily be targeted by social networking sites and online media, while the Chinese segments have to be catered to with the mass media. The plan would be to go in for a grand launch of a retail showroom of Vic’s in Beijing or Shanghai and then building the brand from there, using various other media.
The Target Market
The target market for Vic’s is constituted of consumers and businesses that can afford and realize the value of quality meat. Australian beef importers have been primarily targeting expats and the affluent restaurants of the major cities. This is an attractive segment which is readily available, already being catered to by other importers and brands. But this could also be a segment where there is significant competition and set customer preferences, considering that Vic’s is a late entrant in the market.
There is a large market with Chinese who buy meat from the local grocer or butcher, and considering Vic’s competency in being a wholesaler of meat in Australia, this could be a segment which could provide it the success and the volumes necessary. With increasing demand for quality food products from the affluent middle class (Garnaut, 2010) and with increasing reliance on imports for meeting meat demand, the local market could be the biggest and most lucrative market for Vic’s.
The size of the affluent in China was about 2.9 million and expected to rise to 8.5 million by 2015. Adjusting for purchasing power parity, an income of $60000 per annum in the largest cities of China could be equal to $1, 00,000 to $ 1, 50,000 per annum in the US. The affluent class in China is very young (86% less than 43 years old), highly educated (83% with university degrees) and very busy (23% has less than 10 hours leisure in a week). These figures show the perfect target for a meat brand which understands the customers, is prepared to educate and elevate its customers towards quality food and create a valuable premium market for itself. This could be a very valuable segment, if it can be sold directly to, through various channels of distribution.
Considering that meat consumed per person in about 70 kg per annum in China, this affluent segment is bound to be the leader in consumption, consuming average or above average quantities of meat. The numbers of these affluent is concentrated in the three major cities of China, Beijing, Shanghai and Guangdong (33% in 2007 and estimated to be more than 50% by 2015). This shows a concentrated set of customers who are educated, affluent and shop in supermarkets, are bound to expect high quality of food and general quality of living. Consumption decisions of the affluent class in China are hinged on luxury or social status, environmental consciousness or high quality and convenience (Hedrick-Wong, 2007).
By being present in Shanghai, Beijing and Guangdong, Vic’s could target 33% (1 million households) of the affluent population, with potential consumption of 70 million tons of meat (at the rate of 70kg average consumption per individual per annum) in the first year. This is a sizeable market which is available to Vic’s to exploit and grow. The key will lie in understanding consumer behavior of this class of people, where they buy, why they buy and what they buy. The socio-economic factors, ethnocentricity and culture of the locale are also very important because of the cultural diversity in a large country like China.
Competition
The main competitors for Vic’s in China are local butchers and other Australian meat brands already present in China. While the local butchers could be eventually unviable and become dependent on imported meat, due to lack of support from Government and due to sheer un-suppliable demand (Garnaut, 2010), other Australian meat brands could be the major competitors for Vic’s.
As of 2008, premium meat had touched only about 5% of the market available for such quality meat (Pugh, 2010). This means that Australian have a lot of space to grow and expand within China. But the real competition is going to come from other meat exporting nations, like the US, Brazil and New Zealand. Each of these countries has their own strengths in meat exporting. US beef is banned; aiding other countries, but this is a medium term advantage and could go away. Brazil is a low cost producer of beef, and also the largest exporter of beef and with its low cost production capacity. This makes Brazil a significant competitor for Australian beef. New Zealand is strong in game and exotic meats, with even Aussie companies procuring such meat from the Kiwis.
Another factor in competition that needs to be considered is that China’s meat consumption is composed of 65% pork and 20% poultry (Liu & Deblitz, 2007). This preference could place significant strain on Vic’s which is string in beef. This also presents an opportunity to cater to the top of the pork eating segment with the exotic pork it serves in the form of Spanish Jamon. The changing consumption patterns also mean that beef consumption holds significant opportunity for Vic’s, whose strong point is beef production.
The largest Australian player in mainland China is Elder’s, one of the pioneers in exporting meat to Australia and holds 50% of the market for premium meat exported from Australia. Other meat importers are marginal and small players. Elder’s is a major meat producer in Australia and is right now targeting supermarket chains and internet business to touch retail customers. It has all among been targeting restaurants and expats through ultra-high pricing, to customers who look for Australian meat specifically and for signature dishes in upscale restaurants.
The market position as of 2010 finds the industry for restaurants and expats being stagnant, with meat importers having to set up their own supply chain to cater to the other segments in the market. This creates an attractive opportunity for Vic’s to get its business model right and go for the mass market, which its other Australian competitors are only now beginning to target.
Price
Vic’s, like its Australian competitors has to import meat in containers and process, package and market its finished products in China. This serves two purposes – to cater to the differences in meat consumption preferences in China and also to reduce costs by handling bulk of the processing in China and utilizing its low cost labor and other infrastructure. This will also enable Vic’s to have much leverage in promoting and discounting its product, by having much better control over its cost and hence it’s pricing structure.
The cost of production, transportation and processing and delivering products to customers takes about $10 per kg for Vic’s, to get the product to shelves in supermarkets, as per the study conducted by the management team which designed the market entry vehicle for the company early in the year. This provides a leeway of about $7-10, depending on the product, for Vic’s to leverage on for its profits and its marketing expenses.
In such a scenario, Vic’s can practice simple markup pricing to support a fixed profit for each product unit sold, and utilize a portion of these profits for its marketing budgeting. This method of pricing is suitable because the price is not the deciding criteria and because the competition in the premium meats segment is still low. This allows the few players present in the market to effectively exploit being the pioneers in the industry in China, this must be factored into the international marketing strategy.
Also, the decided marketing strategy of the company is to use a combination of product differentiation and cost leadership in its business. Such a pricing strategy will allow Vic’s to set its expectations of profit at an early stage and then fix its price to accommodate for these strategic positions it intends to take.
Vic’s can fix a markup of 50% approximately on all its products and allocate 10-20% of this to promotions and discounts. This will allow the company to be strategically placed in the supply channel and retail segment and also afford it a healthy to very high profit margin in China. The discounting could be to the retailer and the butcher, as discounting a premium product to the customer could erode the value of the upscale brand in the long run. Thus, the discounts passed on to the channel will enable Vic’s to command a special position within its channel and thus create valuable loyalty from butchers and supermarkets.
Channels of Distribution
Vic’s will enter as a wholesaler of meat, by setting up its cold storage and warehouses in Shanghai. It will start operating through supermarkets and restaurants in its first phase. It will have a sales team of 5 people, under a sales head, who will market the product to supermarkets, retail chains and large butchers. The ordering mechanism will work on a daily basis, considering the perishable nature of the products. The customer will place an order through the phone or through a dedicated internet account with Vic’s and the order will be fulfilled the next day. This mechanism will enable its channel to be fast and responsive to evolving market demands, this must be incorporated into the international marketing strategy.
To enable such a channel, Vic’s has to develop its logistics capability in China. Chinese logistics providers are traditionally single person operated with low costs and standards of operation quality. Since meat transportation is a complex operation and considering the value of the merchandise, Vic’s will set up its own logistics service, which will deliver products based on orders. This is not different from the logistics model it uses in Australia, with its own fleet for servicing orders in the market.
This initial channel setup will require a management team, to handle sales and logistics and also investments in resources like commercial vehicles, software and other management tools. The sales team will be composed of 5 people at the initial stage, to build relationships with major clients, and the proposed compensation for each sales person would be $12000 per annum, considering that the middle class of China earns above $6000, and this salary could bring in experienced sales people from the meat industry in China. They will be supervised by a sales manager, who will be paid approximately $25000. The sales team will be supported by a back end operations team which will be three strong and will cost the company $25000 per annum.
From the second year onwards, Vic’s will start targeting its consumers and butchers, through its own retail outlets and e-commerce. This will enable consumers to directly buy from Vic’s and buy all of Vic’s products under one roof. This will also enable Vic’s to earn higher margins, by cutting down on the discounts or margins it has to afford when selling through the channel. This channel strategy will take better understanding of the market and consumer behavior in China, which is why this plan is deferred to the second year.
Advertising, Sales Promotions and PR Plans
In the first year, when Vic’s is going through the retailer and the trade, it need not go in for mass marketing and advertising. It knows who its customers are and it can directly contact them for generating business. So, during the first year, the business promotion will be focused on PR and sales promotions. After a grand launch of the brand in Shanghai, Vic’s must embark on a PR mission to ensure that all stakeholders and major decision makers in the meat trade in China perceive Vic’s as an important player in the market and a serious competitor and value addition in the market. This could involve participating in trade shows, agriculture meets, food fests, chambers of commerce and prominent business councils and key ingredient in international marketing strategy.
Depolying an international marketing strategy, Vic’s must embark on a sales mission to get Vic’s into as many supermarkets, menus and restaurants as possible, in as many meat shops as possible. This will be possible through aggressive sales promotions, having great discounts for retailers and butchers, who prefer to stock Vic’s in their stores. The focus of the promotion must be in adding value to the customer, in enabling the restaurant to utilize its premium status among its consumers and to enable them to make better margins by selling Vic’s rather than other meat brands.
From the second year, Vic’s has to enter mass international marketing through various media, including television, radio and outdoor advertising. This is necessary because of the fact that the segments catered are larger and more widespread to target through rich media, like a direct sales pitch. The focus of these advertisements has to be the natural taste of Australian meat and beauty of Australia and the heritage of Vic’s. This will create a strong connection with the affluent customers who are being targeted in this channel. Such advertising will also create run offs to the wholesale business also.
The multi-pronged international marketing strategy of promoting the product through attractive trade discounts is a push strategy and advertising and communicating directly with consumers is a pull strategy. When both the push and pull strategies are applied in tandem, the effectiveness of the marketing program is higher than using just the push or the pull strategies in isolation from each other.
Budgeting
The first two years will need high marketing expenditure, with the brand needing to be established in the market and with each year targeting a new segment of customers, from the trade to the consumer. This will reduce profits from the first two years, but considering the string growth in meat consumption; such expenditure is justified as shown below:
2018
2019
2020
Units Sold (Metric Tons)
1,850
3,200
4,000
Cost/ton (USD)*
10,000
11,000
12,000
Advertising / Promotion expenditure per ton(USD)
2,500
2,500
2,200
Management Expenditure per ton(USD)
500
600
600
Total Cost/ton(USD)
13,000
14,100
14,800
Price/ton(USD)
15,000
16,000
17,000
Profit/ton(USD)
2,000
1,900
2,200
Total Profit (USD Million)
3.7
6.4
8
*Cost/Ton includes cost of logistics, transportation, taxes, packaging and other levies and duties
Conclusion
Vic’s is entering China, a very promising market for meat producers in Australia. The environment at present is very conducive to expand into this country, and hence the company is building its strategies to find the best way to enter the market and cater to Chinese customers. The company has so far firmed up its entry strategy, organizational structure and control mechanisms and marketing strategy. Now the company has to go ahead and start its China project, by working towards setting up its supply chain in China, getting the necessary clearances and licenses and recruiting the people required.
Appendix 1
International Marketing Strategic Entry Positions for a New Market
Strategic Entry Positions for a New Market
Source: Roderick E. White (1986). Generic Business Strategies, Organizational Context & Performance: An Empirical Investigation. Strategic Management Journal, Vol 7, Pp 217-231.
References
Australian Trade Commission (2010), Meat overview international marketing journal Vol 1:54
Thepigsite (2007). The story behind China’s rising pork prices.
Pugh, Wendy (2010). China to buy more Australian meat, Rabobank’s Voss
Liu, Hongbo & Deblitz, Claus (2007). Determinants of meat consumption in China. Asian Agribusiness Research Center, Working Paper 40.
Garnaut, John (2010). Getting Aussie beef into Chinese hot pots. International Marketing
Dr. Hedrick-Wong, Yuwa (2007). Understanding the affluent consumers of China. The Insight Bureau, Issue 17-July 2007.
Bernoth Ardyn, (2007), Slow roast to China.
Dess GG & DS Davis (1982). An Empirical Examination of Porter’s (1980) Generic Strategies: an Exploratory Field Study and a Panel Technique. Academy of Management Proceedings.
Porter ME (1980). International Marketing Competitive Strategy Techniques for analyzing Industries and Competitors. NY: The Free Press
Roderick E. White (1986). Generic Business Strategies, Organizational Context & Performance: An Empirical Investigation International Marketing. Strategic Management Journal, Vol 7, Pp 217-231.
Vic’s Premium Quality Meat, Company Profile (2008).
Wind Yoram, Douglas P. Susan & Perlmutter V. Howard (1973). Guidelines for developing international marketing strategies. Journal of Marketing, Vol 37 (April 1973), pp 14-23
Ethical Consideration within the Retail Sector – Marketing Ethics
Many companies and businessmen often face obstacles as to what practices can ethically be done in order to make money or achieve objectives (Marketing Ethics). Fraud and deception taken up by some companies is not only wrong in the moral sense but restricts the prosperity of the economy as a whole. These practices although may not be illegal in a given geographical boundary yet it cannot be undertaken with a clear conscience.
From a customer’s view point the retailing is the first tie in the distribution chain. Hence it is essential for retailers to be ethical in business practices as they affect the lives of many people. Ethical decisions have a strong significance when it comes to ensuring order and justice in a society. However, difficulty persists as to what falls under the folds of order and justice. In the retail industry, the one department often criticized for unethical actions in business is the marketing department. This negativity can be attributed to the fact that marketing tends to represent the most noticeable department to the public at large. For instance, fabricated pricing, misleading advertisements and deceiving sales pitches from sales personnel often result in hurt or angry customers as well as the media.
Moral constraints persist in the dynamics of marketing functions. For instance, contemporary marketing experts often debate that deceitful marketing is bound to be unsuccessful as the market will shove those who disrupt the common morality. Ethics depicts a form of social control, which is especially critical to the individual customers, the salespeople and the organisation itself. Marketing ethics gives birth to a more socially responsible and culturally penetrating business community. The adherence to marketing ethics has the prospective of being favorable to the society as a whole in the short as well as the long run term; therefore it should be a substantial part of any business model.
There is a pressing concern towards ethical issues, such as poor working conditions, child labor, associations with third world countries, green issues, grey imports and environmental concerns which have led to a change in attitude of the western world to consider a more socially responsible approach. The societal marketing concept stresses the need for organizations to achieve a balance between satisfying customers, achieving profits and maintain the well-being of the society; when making marketing decisions. An organization can play a role in creating a positive impact on the society if it produces useful products in an environmental friendly manner.
Marketing Ethics
Over the years, organizations have evolved and realized their social responsibilities. Organizational social commitment consists of four kinds of responsibilities: legal, economic, philanthropic and ethical. These four classifications have been in existence for decades; however, in recent years social and ethical dimensions have attained increasing importance. Firms come into being to provide goods and services with an aim to maximize profits. In their efforts to attain maximum profits they often forget their responsibilities towards the society. Consumers these days place pressing importance on the need to protect the environment and hence this has put pressure on companies to realize their responsibilities and act in the favor of the society as well satisfying the customers and looking after the well-being of the society in which they operate.
Ethical Considerations
Green issues
Every business has a two-way relationship with the society. While the business contributes to the society in the form of products and services, the society provides an environment for the businesses to flourish and grown in. Since, the survival of a business depends upon the society, businesses need to perform in a manner that does not harm the environment but is useful to it. For example, companies need to be conscious of the environment they operate in and thoughtful about issues such as ozone layer depletion and global warming. Until recently, cfc (chlorofloro-carbon) which leads to the damaging of the ozone layer was used in the manufacturing of refrigerator compressors in most countries. However, today many companies have adopted various alternatives to cfc and banned its use from production processes. Companies should also take notice of fair practices when it comes to employment such as providing equal employment opportunities to everyone and a safe and fit work environment along with fair compensation packages.
Sourcing of products
Companies operating with global supply chains came under immense pressure by the consumer groups, trade union and the government in the 1990’s to ensure healthy working conditions for those producing their goods in the less developed countries. Various media campaigns have been carried out which shed light on the poor working environment in factories in the less developing countries emphasizing the need for marketing ethics and trading.
This has resulted in the growing importance of marketing ethics in the corporate responsibility agenda of major corporations. Many companies today have established social and environmental criteria for the selection of their business ventures; which includes securing appropriate standards for the labor conditions and work environment in their supply chain. Also, corporate codes of practice are being implemented so as to their ventures according to a range of social and environmental criteria, including an organisation’s efforts to secure adequate labor conditions in their supply chain, and retailers are increasingly implementing corporate codes of practice so as to certify that the working conditions of the labor involved in the production of their goods meet or exceed international labor standards.
For example, Primark’s rating fell in the consumer polls drastically in 2008 after it was discovered that a few of Primark’ suppliers were using child labor. On the other hand, Marks & Spencer had a high rating in consumer polls due to their –‘plan A’ initiative, which comprised of performing life-cycle assessment on their clothing and included carrying out life-cycle assessments on their clothing and developing a clothes recycling arrangement with Oxfam. Primark changing its suppliers and creating a website for the promotion of marketing ethics and its ethical trading records as a comeback for the child labor allegations highlights the significance of showing customers that you are sourcing responsibly.
Product Safety
Every day, a variety of new goods are produced and sold in different geographical boundaries and on virtual markets i.e. online. Increased trading and more refined designs can make it challenging to determine the products consumer purchases are safe for them or not. Product safety is an ethical obligation for every company in the retail business as they have a responsibility to provide consumers with products of value that they pay for and that are safe for use.
An example can be taken of the Yamaha group; it ensures that products and services are not harmful in any way to the consumer’s well-being. If an issue of the sort arises it is immediately dealt with and steps are taken to compensate and prevent the recurrence. In the contemporary retail industry online trading has reached its apex. However, new online products could often be unsafe and cause serious injuries or death if they fail to meet safety standards. Consumers cannot assess the products safety, toughness and inspect labels as the goods are not physically available when purchasing online. Second-hand products available online could also be unsafe as they may fail to meet the desired standards, have damaged or missing parts vital for safe operation, may not be sold with a manual for safe use and assembly instructions or may have been modified by the prior owner causing it to be unsafe.
Grey Imports
Products that are sold through non-authorized channels are known as “grey or parallel imports’. These grey imports may appear to be cheap on surface, yet they may be far from cheap when it comes to compliance issues being addressed. They raise financial as well as safety concerns for the purchasers. As these products are not imported with the consent of the manufacturer they do not fall under the manufacturer’s warranty.
Also since these non-authorized products may not pass through regular safety checks that authorized products do they could have potential harmful impact on oneself and one’s family. Moreover, no after sales support is provided as dealer and brokers are not allowed to provide service and spare parts to grey imports which mean maintenance cannot be done by specialized professionals. Grey or parallel imports often have little or no value when reselling as compared to authorized products.
Corporate Social Responsibility (CSR)
The concept of corporate social responsibility is very often linked with the concept of business ethics. Therefore, the main aim of many retailers’ ethics is focused upon the role ethical responsibility plays in order to contribute to the sustainable economic development; healthy work environment for employees, safe society for individuals, the local community and society at large to improve their quality of life. Marketing and marketers play an imperative part in the growth of corporate strategy and respond to the corporate social responsibility agenda.
Business organizations make use of scarce resources in order to produce goods and services to satisfy the customers. To carry out these activities companies need to be cost effective, innovative productive in operations. In order to become successful companies should portray sensitivity to the expectations of the customers when it comes to social issues and environmental well-being (Kotler, 2003). In order to be operating in a socially responsible manner organizations should be concerned for the people and the environment in which the business activity takes place. It is expected that firms that are socially responsible will outperform those less responsible financially in the long run. This can be as a result of customer loyalty and trust, better employee morale or public policies in favor of ethical conduct and overall marketing ethics.
According to an article by Lichtenstein and et al., theory and recent evidence indicated by researchers suggests that a corporation that is socially responsible can have a relatively positive effect on customer attitudes towards the particular corporation (Lichtenstein and et al, 2004). International companies take initiative by donating millions of dollars to non-profit organizations in the form of philanthropy, cause related marketing, employee voluntarism and various novel marketing programs. An example can be of Avon, cosmetic company which raised $200 million for education regarding breast cancer and early diagnosis services through breast cancer awareness crusade.
Consumer’s Perception
Consumers are in need of ways to attain information about the products and services they purchase without having the expertise to judge. The fact that consumers are not well-informed anymore and neither are they self-sufficient; both have a significant impact on the the importance of business ethics when dealing with consumers. Firstly, there was a time when customers could analyze and judge on their own whether the quality of a product or service was up to mark. However, now products and services are created by experts with specialized skills. This results in difficulty to judge the quality by a layman, hence companies need to be honest with the consumers and tell them if the product is of acceptable quality standards and performs the functions they need it for. Secondly, people were self-sufficient previously and could produce what they needed to in order to survive on their own. This situation has changed as people have become progressively dependent on goods that have been created by experts, machinery and high quality resources. As a result the customer has little choice but to accept the product as an honest one and trust the organization’s intentions. Hence, this makes it essential for the companies to look out for what falls under the best interest of their customers.
Other Socially Responsible Clothing Retailers
Marks and Spencer is a British retailer which specializes in clothing items and luxury food products. In 2007, this retailing giant announced a five-year plan which made serious vows and commitments to becoming “a carbon neutral, zero-waste-to-landfill, ethical-trading, sustainable-sourcing, health-promoting business.” ASOS is the second largest online retailer in the world, and its brand under the name of green room acts as a podium devoted to collections with an ethical or eco-conscious story to tell. Offering a range of organic recycled and fair trade clothing, accessories, footwear and beauty, ASOS green room makes it easy to shop more responsibly without the sharp price tag. As of 2012, H&M has raised over $4.5 million USD, through a 5 year partner program with UN charity organization UNICEF. Starting in February 2013, H&M will offer patrons a voucher in exchange for used garments. Donated garments will be processed by I:CO, a retailer that recycles used clothing with the goal of creating a zero-waste economy. The initiative is similar to a clothes-collection voucher program launched in April 2012 by Marks & Spencer in partnership with Oxfam.
Marketing Ethics Conclusion
Companies have a moral obligation towards their consumers or potential customers. They must not be deceitful and sell products that are safe for the users. However, it is not entirely clear as to what is morally preferable and where does the advertising cross the overly deceptive boundary and the extent of harm that manipulative advertising can do to people. Hence, it is better to be on the safe side and take extra precautions where the well-being of human life is concerned.
The responsibilities of a business are further illustrated in the steps that should be taken by manufacturers in order to ensure that goods of acceptable safety standards are provided to customers. Firstly business should give priority to safety. If costs are being raised in order to meet safety requirements that does not mean they should dismiss it. Products that may lead to serious injuries are often are often the ones that need the highest safety standards.
Secondly, businesses should take responsibility of any accidents caused by the product rather than blame it on product misuse. Consumers should be made aware about the proper usage of products that have a tendency to be harmful. Some consumers can still be harmed if they use products appropriately. Also, if products are continuously being misused there should be ways to make the misusing of it less harmful to the user.
Thirdly, business must monitor and check the manufacturing process on its own. Often products produced are defected as a result of mismanagement in the manufacturing process. Companies must keep a check on its activities and have a quality control team to ensure that safe and non-defected products pass through to the consumers. Sometimes external quality assessment teams or companies can be hired for an unbiased testing process.
Fourthly, when a product is prepared to be marketed, companies should have a product safety staff in-line to assess the market strategy and advertising for potential safety problem. How a product is being used in an advertisement can have a significant impact in encouraging people to use the product that way. Hence, advertisers should refrain from portraying the usage of product in a harmful manner such as showing people driving cars while texting at the same time.
Fifthly, when a product lands in the marketplace, firms should make sure that written information about the products performance is readily available to the consumers. In order to ensure the product is used in the proper manner and not misused information should be explained in detail about its proper use and made public. Warning labels are found on many products as a result of this. Lastly, companies should investigate and respond to consumer complaints. Consumers being the users can provide a good source of product safety testing and complaints can help the company determine where it lacks and what safety standards the product may lack.
In conclusion, it can be determined that the contemporary retail industry has evolved over the past decade. Previously little importance was given to matters of environmental well-being; the main objective being to maximize profits no matter what the impact it had on one’s surroundings. However, the situation is more subtle now with the consumer becoming more conscious of the environment and sensitive towards its sustainability. Retail businesses have realized the need to be socially responsible in order to gain the consumers trust, loyalty and to satisfy the market. It may incur a cost yet the outcome is far reaching for the overall growth and sustainability of not only the business but the society as a whole.
References
Gundlach, G.T. and Murphy, P.E. (1993), “Ethical and legal foundations of relational marketing ethics exchanges”, Journal of Marketing, Vol. 57 No. 4, pp. 35-46.
Kotler, P. 2003. A Framework for Marketing Ethics Management. (11th Ed). Pearson Custom Publishing.
Lichtenstein, Donald R., Minette E. Drumwright, and Bridgette M. Braig. 2004. “The Effect of Corporate Social Responsibility on Customer Donations to Corporate-Supported Nonprofits.”Journal of Marketing 68 (October): 16-33.
Murphy, P.E., Laczniak, G.R., Bowie, N.E. and Klein, T.A. (2005), Marketing Ethics, Pearson Prentice Hall, Upper Saddle River, NJ.
Nantel, J. and Weeks, W.A. (1996), “Marketing Ethics is there more to it than the utilitarian approach?” European Journal of Marketing, Vol. 30 No. 5, pp. 9-19.
Urban, G.L. (2005a), “Customer advocacy: a new era in marketing?”, Journal of Public Policy and Marketing, Vol. 24, Spring, pp. 155-9.
