In order to develop a market strategy a business must use the primary and secondary market information that it collects to analyse the competitiveness of its product or services and to gain an understanding of the external environment in which it is operating. This requires continuous scanning of the market to spot market opportunities. Assessing the business can be done by a PESTLE analysis: Political Economic Social Technology Legal Environment My company Herbal Essence takes these issues seriously, it believes that to be successful it needs to be fully informed about its external environment.
The political elements tend to not affect my product Herbal Essence Shampoo. However, the government’s policies have an affect on my product, because of the changes that it makes on the interest rates, which affects the product financially. The price of my product is affected by the charges from the government on export taxes. My product will not be affected by pressure groups such as “green peace” or “NSPCC” because my product doesn’t and won’t harm the environment, as there is no animal testing being done by my product nor any other protests.
The economic element is quite a similar factor as the political. However, Unemployment is an affect on the production and sales of my product. If unemployment is high, then there is less disposable income to spend on products each week, which lead to less sales of my shampoo. There is a big advantage as more disposable income but the problem could be that it is difficult to recruit workers. The exchange rate would affect my business because if the pound is strong than it will be bad for my business if I would export my goods then people who buy goods overseas will find them too expensive. The economic influence on consumer spending is the main effect on my business. Because when income (wages, salaries) rise than there will be more sales. If retail sales rise and population increases then there will be more consumers to buy my product.
The technological element is another factor that has the greatest affect on my product, mainly on the production of my product. Mainly because of the change from mechanization to automation, this has lead to more efficient production, also cheaper and much faster production. There will be more out puts in a shorter time and less recruitment costs. Technology has also been beneficial for my products research and development.
Invention and Innovation, CAD (Computer Aided Design) has a positive effect as creation of prototypes is quicker. Internet is one of the increasing opportunities for almost every business such as having websites of your business my herbal shampoo business has a website which allows me to sell my shampoo online as well as advertising takes place leading to an increase on my sales. The internet allows a potentially large audience, cheaper advertising, interactive. Internet is also helpful in allowing businesses to get a much faster customer response.
The social element is the most important factor for my businesses sales because of habits and trends. Buying habits, such as spending with credit/debit cards will likely lead to more sales because people are more likely to spend more, because the will not know how much they are spending, but with cash they will know how much money is going out of there hands. Trends of people such as, one stop shopping has increased, as a result of the trend towards larger retail outlets. This means less distribution costs for my product, however ‘prices have to be lower because of extreme competition. 24 hours shopping such as the internet facility has allowed, customers are more likely to buy my product and there is an increase in sales.
The Environmental factor, since consumers are environmentally aware, businesses need to be careful not to upset them because this will decrease the amount of sales. However, this is not a problem for my product because my product is free from animal testing, or biodegradable packaging etc. The Legal factor, Legal rules and regulations can be either an opportunity or a constraint on an organization. My business is aware of all the legal factors and the product is kept that way. The description of my shampoo is true and accurate I have no false or misleading claims of my product.