Ethics of Segmentation, Internal, External and Customer Environments - Assignment Example

Market Analysis Name Institution Date PART A Q1. Internal, External and Customer Environments All the factors within the business that affects its operations constitute its internal environment. These comprise factors such as employees, organizational culture, and management, among others. For example, the effectiveness of employees with regard to their motivation, talents, skills and hard-work is a vital internal environment in ensuring there is higher organizational performance. Similarly, the leadership of the management team may impact on the effectiveness of communication within a firm. On the other hand, the external environment relates to all those factors outside a firm and which the firm has no control. For example government legislation, taxes, technology, competition, social-economic, and political factors. For example, competition is a critical external environment of a firm in that any firm must ensure that analyses its rivals well in order to survive in the industry. In competition analysis, SWOT analysis should be applied where a firm assesses its strengths, weaknesses and the opportunities and threats it faces in the industry. Similarly, socio-economic factors comprise issues such as the attitudes, values and concerns of customers of an organization and their economic purchasing power to buy its products. Customer environment involves internal and external customers. Internal customers are generally employee colleagues within an organization. For example, an employee from Procurement department may be a customer to an employee in Finance department when he seeks some service from the latter. On the other hand external customer is a customer who buys goods or services from a firm. Q2. Sustainable competitive advantage This is a long-term competitive benefit to a certain firm that cannot be easily copied by its rivals. It is a competitive advantage that occurs when an organization attains or develops an aspect or a number of aspects which allows it to outdo its rivals. Such aspects may include effective customer loyalty programs, access to highly skilled human resources, access to natural resources, strategic location, excellent customer service, or having sole knowledge on how to produce something unique. Sustainable competitive advantage can be looked at from Resource-Based View of the firm where four criteria are considered: are the resources of value? are they scarce?, are they hard to imitate?, and are they hard to substitute? All these criteria have to be met for a firm to have a sustainable competitive advantage. For example, McDonald’s has multiple sources for its supplies and this has enabled it to consistently offer cheap meals and has nice facilities and excellent customer service. On the other hand, Starbucks Coffee selects strategic locations for establishing new stores. They establish stores near each other and this make the storefront sell the company. For this reason, there is little that Starbuck spends in its media campaign such as advertising. Q3. Ethics of Segmentation Ethics is a branch of philosophy that deals with what is right or wrong to do. Market segmentation relates to a way of categorizing the customers into smaller groups called segments, each having common features. When customers are grouped into various segments, unethical practices do occur. This is because segmentation is a form of selective marketing which may be used to discourage the demand resulting from what could be referred to as undesirable market segments. For example, unethical issues may occur when there are attitudes towards ethnic minority or the gay in the industry. In other words, it can be argued that segmentation discriminates against some groups of people. When segmenting the markets, some segments may be offered items with cheaper prices and others high price or even differences in products range depending on the seller’s perception about the market characteristics. Further, the distribution channels may be designed in such a way that some segments get the products with ease while others encounter difficulties in accessing the products. For this reason it can be argued that segmentation should be carried out in a way that every consumer is served equitable and conveniently to avoid unethical issues but also in a way that everyone’s needs are served well. Q4. Customer Relationship Management and Differentiation Customer Relationship Management (CRM) is an overall plan of a firm to manage all the relationships with its existing and want-to-be customers. Differentiation is a strategy whose aim is to make a firm unique in being valuable to customers in the industry. The areas of differentiation can be product service, sales, marketing, delivery, image, etc. CRM and differentiation are related in that CRM aims to identity varying customer needs and serve them in way that customers are retained and differentiation will thus help in ensuring there is customer segmentation to enhance the customer satisfaction. Differentiation is what makes an organization different in the industry. The aim of differentiation is mainly to paint a perception in the mind of consumers that they are getting something unique and of higher quality as compared to what is given by the rivals. For example, a firm may differentiate from competition by being a price leader where it offers lower prices than its rivals and this is important in an industry where price is a sensitive thing in decision making. Similarly, a firm may differentiate itself as one offering excellent customer experience where it offers more pleasant shopping experience and extra services such as free transport, as compared to its rivals. PART B Q1. Marketing Program contribution to Brand Equity Generally speaking, brand equity refers to a value proposition derived by a firm from a product which has built reputable name. Brand equity is achieved when a product is made easier to remember, spot, and ensuring they are reliable and of high value. This paper will evaluate the marketing program of Red Bull on how it leads to brand equity. Red Bull enhances its brand equity through the 4Ps (product, place, price and promotion) marketing mix. First, Red Bull is a unique product. The taste of Red Bull is like any other. The product is also exceptional in that it has a functional effect when compared with other energy soft drinks. Second, the product is sold in a range of places such retail outlets as well as food and drink joints, and therefore it is easy to obtain. Further, premium pricing strategy is applied by Red Bull. The product’s price is above the price of rival products. Due to the quality and the benefits of the product, the consumers pay a premium. This is reflected on the fact that Red Bull is the world’s popular energy drink in its selling volume. Fourth, Red Bull applies innovation in its promotional activities thereby creating a long-term impression on the mind of its consumers. The slogan surrounding Red Bull’s promotional activities is “Red Bull gives people wiiings”. This message means that Red Bull enlarges the existing boundaries making the impossible possible and thereby nurture the people’s talent to help them achieve their goals and aspirations. Further, the above-the-line promotion is largely used by Red Bull which creates a lasting impression of being a top brand in the consumers’ mind. There is organization of a series of events across the word by Red Bull. During these events, the top champion athletes showcase their experience, skills and talents. Some of events organized by Red Bull across the world are FMX and Red Bull X-Fighters. Therefore, Red Bull uses push marketing where it relies on positive message passed from one consumer to another through the word of mouth. Here, consumers who buy Red Bull tell other consumers either via conversation or personal communication. In conclusion, Red Bull’s 4Ps marketing mix has effectively made it build a brand that is memorable, easily recognizable and of superior quality. This is the reason that Red Bull has turned to be best-selling energy drink in the world. Q2. Brand extensions in future strategy Since Red Bull Energy Drink was launched, it has introduced other products such as Red Bull Cola and Red Bull Energy shots in 2008 and 2009 respectively. Red Bull hopes to extend its current products line to meet the ever changing consumer needs. In its product line extension strategy, Red Bull is considering launching energy drink with both wellness and health advantages. Today, many consumers are increasingly valuing the importance of healthy living and as such Red Bull would extend its products to bring on board energy drinks that provide both health and wellness advantages. Consumers are increasingly seeking a one-stop solution due to their pathetic lifestyle and for this reason Red Bull can offer drinks that can both enhance functional performance and offer healthy benefits simultaneously. Going forward, Red Bull will have to launch energy drink that uses natural components and nutritious ingredients like Vitamin C. The perceived benefits of this energy drink are enhanced memory, increased immunity and stress free feeling. Further, dietary ingredients such as glucosamine and ginseng should be used to make this energy drink so as to impress the health-conscious individuals including the older people. The second part of brand extension strategy is Red Bull energy drinks designed for females. Many females today in the middle and upper classes are increasingly becoming image-conscious and therefore are looking for drinks that would satisfy their inner welfare. This can be explained by the fact that many of these female consumers are increasingly embracing collagen beverages something that seeks to improve the beauty benefits of such consumers. For this reason, Red Bull should contemplate coming up with products specifically designed for females. The female population in Far East especially in Singapore is large and this market represents a huge growth potential something that Red Bull can take advantage of. In conclusion, Red Bull should seek to extend its products line by considering the changing market needs for it to stay competitive in the market. Read More