MKT421 Wk 5 Environmental Factors
MKT421 Wk 5 Environmental Factors
Popular in Course
verified elite notetaker
Popular in Department
This 0 page Study Guide was uploaded by tophomework Notetaker on Thursday November 12, 2015. The Study Guide belongs to a course at a university taught by a professor in Fall. Since its upload, it has received 15 views.
Reviews for MKT421 Wk 5 Environmental Factors
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 11/12/15
Environmental Factors IKEA Ingvar Kamprad founded IKEA in 1943 and now it is the world s biggest retail furniture provider Its prices are very competitive and it was the first company to provide products in at packages IKEA has 226 stores around the globe and earned over 177 Billion of revenue as of august 2005 Its famous catalogue that is released on annual basis accounts for 70 of total marketing communication IKEA s marketing both global and domestic is affected by a number of environmental factors We will be discussing all those factors affect of global economic interdependency affect of trade agreements and other business practices and material road and communication networks Topics like social responsibility ethics and actual law cultural differences and foreign corrupt practices act of 1997 will be discussed Finally we will go through effect of political systems pressure of international relations and effect of technology on overall business In uence of Global Economic Interdependence amp Effect of Trade Practices and Agreements Trade agreements business practices and the economy help in understanding the purchasing power of the customers It means they work with earnings prices reserves loans and GDP These factors should be kept in mind when any organization decides to go global They should carefully plan their marketing mix in accordance to the target consumers Pricing is of prime importance here and should be according to prevalent economics conditions there IKEA has presence in either industrial countries or industrializing countries that is why they can sell their products easily mainly to middle class that is their prime target Importance of Demographics amp Physical Infrastructure Determining demographic and physical conditions is essential for effective marketing It includes gender discrepancy gender differences consumer behavior and cultural and religious values Thus effective marketing mix is not possible without successful profiling of target market In uence of Cultural Differences IKEA knows economic demographic and physical infrastructure is essential for its growth and prosperity that is why they have not opened their outlets in any third world country Similarly they have avoided Latin American countries as well only because of lack of proper infrastructure They do change according to changing environment and customer requirements For example they offer different mattress sizes for UK and USA They equal the competitor s offers in their products but exceed them by giving something extra keeping in mind the area For example they made bigger sized beds for USA and reduced their prices IKEA wants to maintain its Swedish style that is why names of all its products are Swedish IKEA did not take into account the target country s language or culture and kept the same Swedish names This was a big mistake They named a kid s bed as GUTVIK and this is a very rude name in German In another example of adapting to customers IKEA designers went to check out the homes of Hispanic Californians in year 2004 They came to know that Hispanics had comparatively large families and preferred bright and cheerful colors They changed their showrooms accordingly Importance of Social Responsibility amp Ethics versus Legal Obligations Marketing has social legal and moral responsibilities toward its customers Marketers can lie mislead and misinform the customers Every business should try to create customer trust on its products and avoid practices like pressure selling giving deceptive information and setting abnormally high prices Many countries have competition commission that keeps an eye on such practices and specially regulates monopolistic situations Consumers demand their right nowadays and companies have to give them what their right it and laws support them as consumerism is an organized movement by people and government IKEA follows the laws of the country if does business in for example when wood chemical issue rose that it was harmful for customers as well as environment IKEA responded by talking to its suppliers and changed its strategies This was not only to follow the laws IKEA did it to improve its image as well We all know how critically important image of the organization is A strong image when used properly can easily lead to a company to success IKEA fulfilled both legal and ethical requirements in this case and won support of millions of people IKEA may have high moral ground in Europe and USA but they did not follow the same strategy in India and Pakistan They were constantly faced with child labor issues It was because they wanted cheap labor and cheaper products and continued to do so just for the sake of providing cheap furniture to customers Effect of Political Systems amp the In uence of International Relations Political system and the laws it makes also affect the marketing activities Laws regarding competition safety of both products and workers honest business and credit protect consumers as well as business Similarly laws are there which regulate unfair pricing unfair consumer treatment and monopolies IKEA and the International Federation of Building and Wood Workers IFBWW have signed an agreement in May 1998 to encourage and endorse worker rights Credit cards are accepted at all IKEA outlets that is why credit laws also affect them Each country has different rules and regulations regarding credit cards so IKEA has to treat customers according to the local laws Similarly interest rates buyer rights and privacy practices all follow relevant laws of the country In uence of the Foreign Corrupt Practices Act of 1977 amp In uence of Local National and International Legislation The foreign Corrupt Practices Act of 1977 deals with two issues one is regarding bribery of foreign officials while second deals with accounting laws and set transparency requirements under the Security Exchange Act of 1934 These laws at made to prevent financial and moral corruption If these practices are allowed they will jeopardize the financial system and businesses will lose creditability If done at a single organization level this can shatter their image and reliability leading to a complete collapse IKEA as of today has clear and transparent accounting and audit system It has good image and credibility in the eyes of customers IKEA also stresses on importance of honest accounts management and sincere store control during its job announcements Effect of Technology Technology is one of the most important environmental factors in uencing the marketing function New systems have been developed that track changes in the market environment and analyze them Internet came as the biggest technological change in the marketing history IKEA went online to utilize its full potential and now they have a very nice official website Their website features complete catalogue of products sample pictures and videos of rooms with IEA furniture and many other interesting things They are promoting their products in a cost efficient manner and are not only reaching millions they are selling their furniture online Going a step ahead IKEA Malmo Sweden used facebook to advertise its new store opening Twelve pictures of different IKEA products were uploaded in general manager s account and customers were allowed to tag them Whole project spread like wild fire Marketing strategy adapted by IKEA is simply wonderful They are offering the same furniture all over the world and promoting Swedish image They have setup all the stores the same way they try to extend the customer s visit by presenting food and drinks and they even offer daycare for kids IKEA promotes itself as providers of low cost and maximum value furniture They have not yet included the variety they have or their ethical practices to promote their image Their campaign on the facebook was one of the best campaigns ever and successfully created ripple effect in no time It was a great effort that reached out very quickly to people gave them product knowledge and allowed them to be a part of IKEA community Reference IKEA 2010 Retrieved July 8 2010 from httpwwwikeacommsen USabout ikeafacts and figuresindexhtml
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'