Macro And Micro Environment Marketing Essay
Sonys decisions are depended on both Micro and Macro environmental factors. Changes in the factors of a macro environment cannot be controlled but efforts can be made to minimize its negative impact. A micro environment consists of forces close to the company that affects a company's ability to serve its customers. In case of Sony Bravia, its Porters 5 forces and Stakeholders. These 5 forces are external influences on the actual and potential competition within any industry, which determine the ability of firms within that industry to earn a profit. The five forces include buyer power, threat of substitutes, supplier power, threat of new entrants and competitive rivalry.
Buyer Power: This is where the buyers have the ability to put a firm under pressure, which may also affect customer's sensitivity to price changes. For e.g. substitute products availability, or maybe competitors provide better features etc.
Supplier Power: Suppliers of raw materials and components etc. to a business can have more power on a firm if there is a monopoly of the suppliers; the suppliers might refuse to work with the firm or might increase the prices of less common resources.
Threat of Substitutes: In this, it's not about similar products available in the market, but products which might be replaced by the customer. For e.g. Instead of buying another smartphone, a person might select a tablet pc, or in this case, Instead of an LCD TV, a customer may want to buy a Smart TV or a 3D TV.
Competitive Rivalry: In this case, an example would be, that Samsung creates TVs of similar quality but at lower prices, which might pull customers more toward Samsung.
Threat of new entrants: This is where a firm might receive competition from a new brand from the same category and due to that lessen the profits of the firm. In this case, Sony will not be much affected by a new company because of barriers to entry, but if a company tries to sell bad quality TVs in a grey market with Sony's name, Sony's brand name would decrease.
Stake holders are people who may be directly interested in the activities of an organisation, such as customers, employees, the community, shareholders, suppliers, lenders and government. E.g. The Government may be interested in Sony's Sales record and P&L account to study the tax payments of the company.
A macro environment consists of larger societal forces that may affect the micro environment. These include environmental scanning and PESTLE Analysis. Environmental scanning is a process of gathering, analysing and formatting information for strategic purposes. It contains of both subjective information and facts in the business environment where the business operates. Environmental scanning also consists of internal and external factors. In Sony BRAVIA's case, the internal factors would be latest machineries for quality product and external factors would be innovation of new technologies, buyers expectations of value for money or maybe change in trend of using other kinds of TVs. PESTLE Analysis is another tool to analyse macro environment factors. This includes Political, Environmental, Social, Technological, Legal and Economical. PESTLE analysis is also many times combined with external micro-environmental factors and internal drivers, can be classified as opportunities and threats in a SWOT analysis.
Political: Political factors show how much the government can intervene in the decision making of a company. E.g. new tax policies, new emission laws. In this case, the directors may oppose to the way of currently used manufacturing process and or the standard of emissions by the government may change, to which Sony will have to change the whole process of manufacturing the BRAVIA TVs.
Environmental: This basically includes ecological and environmental factors like the problem of Global Warming these days, also what will be the effects of byproducts created during the manufacturing processes. In this case, Sony has also started to reduce the CO2 emissions and the waste produced during the manufacturing processes.
Social: Social factors include cultural aspects, age distributions and to be socially active and keep customers happy. This is because the social trends affect the demand for a company's products and how that company operates. In this case, Sony also has many low cost BRAVIA series TVs for people with low incomes, which doesn't let the customers down.
Technological: Technological factors include technical aspects such as the R&D team, the machineries used to reduce costs or also technological advancements. In case of Sony BRAVIA, the TVs provide all the latest technology like USB, 3D, Google TV etc.
Legal: Legal factors include laws by the government, like health and safety laws, discrimination laws etc.
Economic: The Company's decisions also change due to economic factors like Recession, Inflation, Exchange rates and increasing production costs in the lower markets.
The importance of PESTLE Analysis is that it allows the organisation to understand the factors that will impact on its operations. It enables the organisation to develop a strategy that will benefit from the environment. And it also allows the organisation to see new opportunities and identify potential threats.
2.2 - SEGMENTATION
Segmentation is the process of identifying distinct groups of customers who are similar in their needs. Through Market research, the markets and products can be segmented through Geographical, Demographical, Psychographic and according to buyer behavior.
Geographic: Geographically, market can be segmented through nations, states, regions (North, East, West, and South) or cities. For Sony BRAVIA, urban and suburban cities would be mostly looked into because of the slightly high prices of the BRAVIA TVs. Market Density can also be checked for other brand availability and preferred companies.
Demographic: Demographically, the market can be segmented through Age, gender, family size and life cycle or income. Sony, for BRAVIA can segment their TVs according to the Age groups, Ethnicity, Income groups, Family Size and Family Lifecycle. E.g. Young people would prefer having 3D experiences, Some customers may not be able to purchase 40" TVs due to low income.
Psychographic: Social Class, lifestyle and personality are some ways to psychologically segment a market. Sony doesn't use this segment for BRAVIA, because TVs cannot be sold according to lifestyles or personality.
Behavioral: Occasions, benefits sought, user status, usage rate, loyalty, attitude towards product are behaviours which customers have before using a product. There will be customers with benefit expectations like getting something free or exchange offers, and customers who are sensitive to prices and would think a lot before buying. So Sony uses this segmentation through giving free products etc.
Some of the benefits of segmentations are, firstly improving the focus of a company. The better the focus you have, the better the returns will be. Sony BRAVIA for example, focuses most on the quality of the product, so even though their prices are a little high, they have a wide range of TVs which includes low cost TVs, through which Sony targets consumers of not only all income groups, but also family lifecycles. Secondly, Customer Retention, similar to the previous example, by targeting most of the income groups and lifecycles, there will be a BRAVIA Television for any customer who enters a Sony Showroom or an electronic shop. Also Increase in profitability. Segmentation increases competitiveness, customer retention and communication to a targeted marketing. Thus if it affects these many factors of a business, then it will definitely increase the profitability of the firm. One of the USP (Unique Selling Point) of Sony BRAVIA due to these factors is that you will never see a person bargain for a BRAVIA television, because they are targeting segments who don't have the need to bargain or negotiate.. Thus the profitability is high.
There are three basic types of target segments, Mass Marketing, Segment Marketing, and Niche marketing. There are also few requirements for segmenting a market. Firstly, it should be measurable, i.e. the size of the market, the profiles of the market or the purchasing power of a particular market. Secondly, Accessibility, this sees that the segmented markets can be easily reachable and served by the various marketing methods like the 4ps of marketing. Next is if the market size is substantial and are profitable enough. Another one is Differential marketing; this is where the firm sees that different market segments respond differently to different marketing mix elements. Lastly, it will be actionable or will effective programs can be done to attract and serve the customers of a particular segment.
Mass Marketing: Mass Marketing is an undifferentiated marketing. Targeting a mass market means covering most or the whole market. To do this, companies need large resources. In a mass market, the same product is offered to all customers may they be low in income or rich in income. All the customers are treated as one and no distinction is made among them.
Segment Marketing: In a segmented marketing strategy, a company or a firm divides the market into various different segments. The company then chooses various segments to market their brands. This means it is differentiated marketing. For e.g. with brand names such as BRAVIA, VAIO, Tablet, Handycam, Cyber-shot, Walkman, Xplod, Sony hi-fi, Memory stick and PlayStation, Sony has established itself as a value leader across its various product categories of Audio/Visual Entertainment products, Information and Communications, Recording Media, Business and Professional products.
Niche marketing: It is basically a concentrated marketing in which segments are subdivided into smaller segments. Niche is also a group of customers with similar needs, but the size in niche is small. For e.g. Sony has divided its smart TV and 3D TV focusing on a smaller market than that of an LCD.
There are also certain advantages and disadvantages of market segmentation. The Advantages: It guides market research in a particular market, it improves satisfaction to the firm through better business, it improves forecasting because you get a better and an accurate information on a particular segment market and not as a whole market, and it will also help in identifying competition in a particular market and will show opportunities to which the company can act upon to gain Brand Name.
The Disadvantages: This increases the marketing costs as it will have to be marketed differently for different segments, there will be a rapid increase in no. of products for different segments of markets, and Segmentation also limits the general population and targets different people with different segments of the market.
Sony targets mass and niche markets for the BRAVIA series
The low cost Plasma TVs or the smaller LEDs will be less in price so that even customers with a low amount of income can buy the products and Sony can target a larger market for such TVs.
The latest LEDs, 3D TVs and the Smart TVs due to the technology involved, are high in prices. So they aim at a smaller market, mostly suburbs and big cities where people have more income.
They can also use customer relationship strategy with other companies like hotels, in which Sony provides them with the BRAVIA TVs at lower prices or with extra benefits so that the hotel company would like to do business again with them. This increases the profits of the company.
BRAVIA HD LED TVs can also be targeted at sports loving people as the games are much preferred in HD quality.
2.3 - TARGETING STRATEGY
Targeting Strategy is the way a firm segments its targeted market. Target Market is one segment selected for special attention by a firm, which may serve that segment with a different marketing mix.
Evaluation of Targeting Strategies
Market Research is a process of defining a market problem and opportunities, collecting and systematically analyzing information and recommending actions to improve the productivity and profits of the company. This can be done in two ways, Primary research and Secondary research. Primary Research is first hand data which is collected for the first hand through questionnaires, interviews, sampling and many other ways. These topics might be already researched on, and taking information from previous research is called Secondary Research. In this, the research is already done and is available for people to view and use for better effectiveness. Primary Research may be selected over Secondary as the Secondary data may be old and outdated; countering that Secondary Research may be chosen over Primary because collecting primary data may be costly.
Behavioral strategy can be used by studying behaviors of every different target segment, including where they live, or what they read. This information is needed to know whether the company will be able to provide their customer the products where they would buy. E.g. If many companies buy their raw materials from the same distributer, then even you should keep a good relationship from that distributor.
- Buyer Behavior
Buyers are not only consumers, but also organizations.
Consumer buying behavior consists of actions a person takes in purchasing and using products and services, including the mental and social processes that come before and after these actions. A buyer passes through making choices about which products and services to buy, and this process of making choices is known as purchase decision process. There are also factors which represent both the objective attributes of a brand and the subjective ones a consumer uses to compare different products and brands, which is called evaluation criteria. In this, a consumer evaluates the product of what features it gives, what brand name they get etc. Motivation is a big contributor which energizes the force that stimulates behavior to satisfy a need. Personality also refers to a person's or a customer's consistent behaviors or responses to recurring situations like making decisions as to what to buy at what cost etc. A customer also represents the anxieties felt because the consumer cannot anticipate the outcomes of a purchase, but sometimes believes that there may be negative consequences. Some customers may also have a favorable attitude towards and consistent purchase of a single brand over time; this is because of brand loyalty. Consumer buyer behavior also changes when they here influencing of people talking about the brand and the lifecycle of a particular product, as to how much time will it work for etc. It also describes the stages a new product goes through in the marketplace.
Environmental influences which affect consumer buying could be cultural, economic, personal, physiological, psychological, social influences and many more. For e.g. a person who buys according to cultural influences might think of buying a TV with a higher energy efficient rating than the other, or a customer who buys according to psychological influence may buy Sony Bravia TVs thinking of the status symbol.
Organizational buying is very similar to individual buyer behavior with some contextual differences. Organizations buy in furtherance of organizational objectives, such as to manufacture and deliver goods and services to members, customers or the community. The organizations buying are mostly influenced by the demand, i.e. by demand for an end product or for a product or service sold by the buyer's customers. The demand for components by a manufacturer will be dependent on demand coming from their customers, the retailers and wholesalers, who in turn are reacting to demand from their customers, the consumer's decisions also changes according to the PESTLE factors.
In case of Sony, CONSUMER BUYING:
The life cycle of BRAVIA TVs is usually between 4-5 years. Although some users might use it for longer time periods, because they might not be financially stable to buy the newer models.
Tech savvy customers will look for each and every feature available in the TV. Like USB & HDMI Connectivity, Frames per second & refreshing rate of a TV, FM Radio & Digital Surround Sound, 3D Superior - Resolution to name a few.
There are even buyers who look for some benefit or the other. Apart from getting the best quality in the BRAVIA series, buyers will look for other benefits like either exchange offers, free items, longer warranty period for free, special discounts and many more.
Sony itself will look for benefits and superior quality of raw materials to be provided by the suppliers. So that they can provide their customers value for their money.
As mentioned earlier, outside organizations like Hotels, Airports etc. can be captured, and once these organizations like the quality and prices provided, they would be automatically keener to do business again.
- POSITIONING AND TAGLINE
Position is basically the location, the thing that first comes in a consumers mind by hearing the Brands name. Positioning is not what you do to product; it is what you do in a consumers mind. A brand is a name or symbol used to identify a company and differentiate them from others products of competitors.
Sony is one of the world's greatest brands in the eye of the consumer. Sony products are considered to be high quality, unique, and convenient. Mainstream culture has embraced Sony's innovation.
Once the market is segmented, Sony needs to position itself in the mind of the consumer.
Firstly, Benefit. The customer knows the benefits of owning a Sony TV.
Attribute: This strategy emphasizes on the key attributes of the TV. This works best only when customers know the benefits of the product. E.g. Integrated USB.
Customer: This positioning strategy is very focused, which emphasizes the superiority of the TV according to a particular group of customers.
Competitor: This positioning strategy is an aggressive, one in which Sony has to claim its TVs to be superior. This strategy would be suitable for Sony as it has a lot of competitive brands in the market.
Quality: This strategy will have to be used by Sony because their product prices are higher than their competitors, the customer will be ready to pay that much only if he is assured that the quality is correspondingly high.
Sony uses the tagline "Color like.no.other" for BRAVIA.
The bouncy ball TV advert featured 250,000 brightly-colored rubber balls bouncing down a San Francisco street. What was so spectacular is that it was not computer animated. The advertisement was made by former Danish photographer Nicolai Fuglsig.
Previous taglines for BRAVIA include "Paint", "Play-Doh" and "Pyramid"
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