Table of Contents
Marketing environment refers to all forces that have a bearing on the functioning of a firm. A given marketing environment will offer threats and opportunities to a given firm. Successful marketing highly depends on regular monitoring of the environment by gathering information regarding it, analyzing the information and finally focusing on the likely impact of such information on the firms’ current and future operations. The macro environmental analysis is, therefore, an analysis of the external forces that influence all firms in an industry. These forces are uncontrollable in nature, hence cannot be controlled by a firm’s management. They include political, economical, social- cultural, technological, legal and environmental factors.
Government agencies, political parties and other pressure groups have created tremendous pressures and constraints for marketing activities. The political climate created by the ruling Government can either encourage or discourage investments in an economy. This can be, through the degree, to which the government intervenes in the economy. The government praises the nestle products thus increasing the marketability of its products. The government thus supports the company since it boosts the economy through the large income it earns. This increases the amount to the government through the tax it submits (Teague, 2008, p. 74).
People alone cannot make markets they must spend and be willing to spend. Thus, the economic environment is a significant force that affects the marketing activities of every firm in an industry. A firm should be keen on the pattern of income distribution, variation of geographic income distribution, trends of consumers’ savings, the borrowing patterns along with Governmental, legal restrictions and finally the economic trends such as the business cycles, inflation levels and interest rates.
The business cycle is an economic occurrence marked by alternating periods of prosperity and depression. The boom period characterization is through a rise in the rate of investment, volume of employment, production output, income levels and aggregate demand in the market. These developments occur through a phenomenon rise in the general price levels (inflation). As economic activities increase, the price levels rises leading to an inflationary period. The recession period follows characterized by falling prices, investments, volume of employment, income levels and aggregate demanded. The depression period follows when all relevant indicators and economic variables reach their minimal level (Slideshare, 2009, para. 5).
Recovery follows when the economic activities revival occurs slowly, and prices, volume of employment, and aggregate demand start to rise. Prosperity or boom period follows, and thus, the cycle continuous. A marketer thus needs to understand the stage the economy is in, so as know how to operate. Inflation is an economic characteristic defined by continuous rise in the general or average price levels. It occurs when the members of an economy try to acquire more output or resources than the economy can make at a given time. Inflation places a challenge to the marketer especially in pricing and cost control activities. The consumers’ purchasing power declines, causing a decline in the spending rate of consumers. Firms decrease their sales promotions during this time (Hill & Jones, 2009, p. 67).
Interest rates from banks make the long-term investments non-viable, due to the high cost of borrowing. During this time, firms design promotional activities meant to show that their products are cheaper. However, the Nestle Company effect by the economic status is not much because of the products it produces and markets. That is why in 2008, even with the economic downfall it still managed to make profits. This is because they deal with basic products that people require for survival.
Social cultural factors
The background that people grow up in shapes their basic beliefs, values, culture and norms. The task facing marketing executives is the complex lifestyle of the society, social values and even customs. The society is not 100% convinced of their products due to the contamination of e-coli and the contamination of the pet products. However, the society still supports the company due to its concern for its customers the company looks at the needs of small babies, elderly, sick and even the rich (Nestlé, 2009, p.32).
Technology is the systematic application of scientific knowledge to practical tasks of mankind. Technological advances breakthrough in marketing is in several ways such as start of new industries, radical changes and stimulation of the target customers and firms not related to the new technology. The company produces frozen foods to reduce the chances of perishing.
These include forces such as the weather or climate. This affects the company marketing strategies through the effect on the transport sector. The current climate can affect the company's food supply due to warmth that can cause perishing of the products (Partridge, 2007, p. 36).
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These affect the marketing strategies of a firm through the laws the Government passes. These laws affect how companies operate in the economy such s requirements of a company to recycle materials. The company recycles its bottles as required by law. They are also looking at the possibility of ensuring that they produce uncontaminated products to avoid lawsuits that can lead to their closure (Iba, 2009, p. 54).
The market for the industry Nestle
The market of the food industry is globally located and has an extraordinarily large number of business users. The purchasing power of consumers in this industry is high due to the necessity of the products of the industry. Purchases in this industry are high at all times for the food products that are basic. This is because food is a basic commodity for mankind’s survival. However, the industry has several market targets based on various factors such as geographic, demographic and behavioral. The sales in this industry’s market are extremely high. The market is ahead on the technological factor this is due to the products of the industry perish ability. The products package should be an excellent one to reduce the chances of the products perishing. Technological measures should be taken for preservation purposes. The market of the company is geographically segmented since it is located in over 100 countries thus it meets the need of many. The market is also demographically segmented since the company produces food supply of the infants, aged, normal and sick in the society. The market can also be said to be behavioral segmented in that it caters for individual, middle sized and large customer base (Allen, 2005, p. 54).
Customers are the individuals who consume the products of a firm. The aim of marketing is to meet and satisfy its target customers needs and wants. In the Nestle Company, its target customers are several. They range from individual to industrial customers. The customers include the following: Babies who use the Gerber products such as baby cereals, prepared baby foods, water juice, and foods for infants, preschoolers and toddlers. Patients who use professional brands, such as impact liquid meals, for trauma patients. Diabetic patients also consume the liquid meals of the nestle company. Food professionals who use the nestle products. They buy products in wholesale to resell them later. Individuals who want to lose weight use the opti-fast weight loss products. Nestle products also serve the animals needs through the pet products. They also sell to customers such as general mills who make products such as frozen pizzas and other frozen food products (Boyle, 2008, p.34).
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All these customers prefer to use the products of nestle company since they are of the best quality and top selling brands. These customers purchase the products in different ways according to their purchasing power. Individual customers buy in small scale, in the retail shops, while the industrial customers buy in large-scale quantities at the distributors.
Strengths: the company is the largest food producer in over 100 countries. It produces products for all its target customers need and wants such as drinks, patient’s food, children food, pet products and raw material products, for general millers (Madura, 2006, p. 76). It has the greatest sales every year, for example, in the year 2008 its sales totaled to $ 101 billion. It has the largest market population and thus is not affected by the economic downfall since its most products are basic needs for survival. The company received the title of the most admirable food companies in the fortune magazine for the twelve years in a row in 2008. They have the best distribution channels that ensure there is no shortage of the products. They also refurnish their product often to ensure their customer needs are always met.
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The company sales in the organic foods were flat in the year 2008 (Teague, 2008, p. 67). The general mills lack of technological innovations leads to lack of creation of new products and new market niche. The company has reduced the level of sugar in its products due to parents fearing diabetic conditions for their children.
Since they lead in the market, they should consider providing healthy products since the society today concerns itself with healthy products. They should also produce products that are allergy free. They should also start cafeterias in main towns to market their products.
They face significant competition from other companies like Pepsi. They are facing high costs of dairy products thus cutting their profit margin. They also face the threat of having the pet products contaminated and returned to them. They also face the threat of their products rejection if the contamination of e-coli is discovered in their food supply (Böhm, 2009, p. 43).
The company will boost its marketing strategies if it produces healthy products. This will capture a wider market niche since the society will change, and solve the crisis of the e-coli contamination to bring back it cookie dough to the market. This will boost its sales and thus increase its profitability. It will also change the perspective of the society that is part of the macro environmental analysis. The company should also find products that are allergy free to check the health of its customers; this will make more sales due to their hygienic issue. The company can participate and organize social events to boost the social cultural force. This can be done in all the countries in which its market its products.
It can thus be concluded that the Nestle Company is affected in various ways by the macroeconomic environment. This can be seen by how it strive to ensure that the society gets the best quality always. It also aims to earn more profits not only for its growth but also for the growth of the economy. In this way, it satisfies the political force of the macroeconomic environment. The company though is not affected much by the economic forces since the product it produces are consumed even in recession periods. The company can reduce its chances of legal suits through conducting research on the contaminated products by e-coli and the pet products by rat poison. Through such actions, the company reduces its chances of closure, due to production of harmful products to humans and animals.