- Student: Andrew B
- Textbook: N/A
- Course: Marketing 421
Environmental Factors of Marketing
Vigilance is essential if a company wants to maintain and sustain a competitive advantage in its chosen market, as changes in the business environment need to be acknowledged and acted upon. Agility is also vital, with the ability to alter strategies and plans when needed. The need to look at international markets to aid growth is very much part of modern business, and the team in place must b able to rise to the challenge. It is important to remember that different cultures have different routines; that which is considered fine in the USA may not be elsewhere.
A good example is Hasbro Toys, the biggest retailer in what is a very specialized area. With more than 500 stores in the USA, and 400 in the international field, the company has latterly opened more new units overseas than at home, and is likely to continue doing so. Hasbro Toys now has stores in countries such as Sweden, Denmark and Luxembourg, all in the European arena, as well as a franchising agreement with an operator in Israel. Marketing in an international sense is therefore an essential part of the business, and it is here that understanding different cultures comes into play. For example, it is not difficult to see that business practices in the UK differ greatly to those in Japan. In embracing the international market so successfully, Hasbro Toys has actively demonstrated it can do what we outlined in the first paragraph.
Any company that wishes to trade overseas needs to have a strong understanding of the requirements for foreign trade, including the many restrictions that are met by US companies in certain international markets. The tariff, for example, is a tax that is levied on many imported products by foreign governments. Exporters may also face a quota, which means there is a limit on the quantity of goods that may be exported. Quotas are put in place to safeguard local businesses in the foreign market. Less often seen is an embargo, which actually bans the import of certain specific goods.
Hasbro Toys had the sense and know-how to establish an independent international division, and this has proved vital in its desire to expand into the international market. However, it is not just overseas that businesses such as this face problems; environmental factors in the home market are also hurdles to be overcome. The acronym STEEP is a well known one in business circles, and it stands for the collected factors that are Sociological, Technological, Environmental, Economical and Political. All of these must be taken into account in all areas of business, not just the foreign markets.
In recent years, Hasbro Toys has been held to account over fair business practices; the company was found to have pressurized some manufacturers into providing exclusive deals. This issue, which included threats to remove lines from shelves if the companies concerned did not comply, cost the company many millions of dollars, as well as knocking a hole in its reputation as a business. This is an example, in terms of STEEP, of an economical factor. The company has had to revamp its marketing approach in order to convince the authorities that similar would not happen again.
As with all areas of business, technology has had an enduring impact on the marketing methods at Hasbro Toys. This is no surprise, as it is essential that commercial entities understand the importance of technology in the current era. Many companies have implemented highly technological systems in their operations – Wal-Mart and Target, for example – but Hasbro Toys was somewhat slow on the uptake. A change in the approach to quality has also been implemented, as today’s consumer undoubtedly demands better than they were previously used to. In terms of advertising, quality had to improve at Hasbro Toys, and it clearly has done so.
Responsibility and Ethics
Social responsibility and ethics are also important to the likes of Hasbro Toys when it comes to marketing; for example, Hasbro Toys is a leading light in the national toy drive known as Toys for Totts, which is run during the holiday season. The company has made a great deal of this in its marketing campaigns, and to a notable effect. The social impact of being part of such an initiative is very important to a company such as Hasbro Toys, as it would be to many such businesses in different market sectors. It is notable that the company has put much emphasis on ethics in its advertising and marketing campaigns of late, with careful observation of areas that may be misleading to customers. This is no surprise given the incident mentioned above.
We have seen that, in order to remain in a competitive position, international trade is a must. The home market is no longer enough, and marketing executives need to look carefully at all aspects of foreign trade. Ethics are more important than ever, even in the domestic market, and the social impact of businesses needs to be carefully considered. To gain in the market, the company needs to be on the ball in all these areas, all the time.