Micro Environment On The Marketing Strategy Essay

Question:

Discuss About The Micro Environment On The Marketing Strategy.

Answer:

Introduction

One of the microenvironment factors that may influence the business of Shangri-La is the culture of Australia and Asia. This can be considered as a social factor as the cultural differences between the two continents may play an important role in the success of Shangri-La in Sydney. The cultural differences can be in the form of organisational behaviour or the manner in which the people in the society react to the implication of the new organisation in the city (Fleisher and Bensoussan 2015).

Another important microenvironment factor that may affect the business is the environment. The environment of Australia is different from that of Asia, as the people and the climate differ in both the countries (Armstrong et al. 2014). Thereby, continuing with work in this changing environment proved as a challenge for Shangri-La in the initial years of its business in Sydney. Thus, these two microenvironment factors may play an important role in the success of business in Sydney. At the same time, two macro environment factors may also play a crucial role in hindering its success.

One of the key macro environmental factors is that the human resource issues that include the objective of the organisation and the performance of the employees (Hillary 2017). The employees need to adapt to changing nature of the Australian business and ensure that the success of the company that was established in Hong Kong can be replicated in the foreign market of Australia. In Sydney, the culture of the customers was highly responsive thereby the organisation found it difficult to cope up with the demands of the customers.

Another key macro environmental issue is the ability to attend high level of customer satisfaction. The customer satisfaction of the people in Australia needs to be established so that the organisation can gain the trust of the people (Venter, Wright and Dibb 2015). However, with the increase in demand, it has been seen that Shangri-La has failed to manage the organisational objectives that have been set up by the organisation.

Describing the market for the product category

Shangri-La is a top brand of hotel and resorts in Hong Kong. After relocating to Sydney, the company managed to refurbish some of its facilities that include incorporating guest rooms, public areas as well restaurant. The performance indicators of Shangri-La have shown that the company have improved heavily in the last 3 to 4 years. This may be mainly because of the introduction of these new facilities in the hotels. As such, it can be said that a marketing segmentation is required so that the hotel can maintain its number one rank in the markets of Sydney. Therefore, the market of the product can be segmented by keeping in mind the marketing segmentation factors that affect the smooth running of a business. As stated by Liu et al. (2018) the market segmentation of the product category needs to consider the response of the customers.

From the analysis of the case study, it has been seen that the response of the customers in the Sydney market are prompt and provide opportunities for improvement. Therefore, it is needed that the company segregate the customers based on the affordability of the hotels and the preferences they have over the food they serve. At the same time, it is seen from the case study that Shangri-La is the number of one hotel and resort brand in Asia. However, the brand image is low in the regions of Australia and North America. This is indicative of the fact that the challenges faced from the market in Sydney are more than in the market of Hong Kong. Hamilton and Webster (2015) are of the opinion that the first duty of managers aiming to open up business in the international market is the segmentation of the customers. Thus, it can be said that segmentation of the market needs to be done based on the four factors that affect business.

Describing the segments of the market

After analysing the products of the hotel and resort along with the competitive nature of the customers, it can be said that the marketing segments can be made based on the four factors that are essential for success. According to Dibb and Simkin (2016), the marketing segmentation needs to be done to narrow down the potential customers upon whom the product and service can be delivered. This can help the managers to continue with the target market and ensure that organisational goals and targets can be achieved. Therefore, for Shangri-La, the market segmentation needs to be based on the geographic and demographic location of the Sydney market and analyse the behavioural and psychographic factors of the customers residing in the target area.

Geographic

Demographic

Behavioural

Psychographic

According to Kew and Stredwick (2017), the geographic factors include the customers that can be readily available to avail the services and products of an organisation. Usually, a certain range of customers is targeted that belong to a particular area range. However, in the case of Shangri-La, the target customers are the people residing in Sydney and other international people that opt to visit the city.

The demographic factors include the age, gender and occupation of a person. Companies aim to maintain a flexibility in this type of choice as the type of product that it manufactures may be attractive to any of the demographics. In the case of Shangri-La, the target market of the hotel is the business class of people. This is mainly because of the prices of the rooms, which Shangri-La refused to reduce.

Cross, Belich and Rudelius (2015) stated that the behavioural aspect warrants customers to have their values worth. The purchase of any goods or availing of any service may contribute to the rate of usage of the customers of a particular product. The frequency with which customers purchase a product generally accounts for their loyalty towards a product or organisation. Shangri-La needs to analyse the responses of the customers and based on it they can arrange the rate of rooms and other products.

Psychographic factors include the lifestyle, personality and attitude of the customers. The manner in which the customer's response to the demands made by society needs to be analysed by an organisation. Shangri-La target customers that enjoy a high lifestyle and class. This provides the hotel with an opportunity to address the lifestyle of the people with a personality that warrants the attitude of high-class people.

Table: Market segmentation

(Source: Created by author)

Explaining the positioning of business

Kiel (2014) stated that marketing positions are determined by the manner in which a particular organisation can implement itself in the market. The response of the people and the quality and quantity of service or product provided by an organisation determines its marketing position. As such, it needs to be clear that the marketing position cannot be determined without proper analysis of the market factors, which includes the competitors, external environment and the internal environment. At the same time, according to Bruwer (2017), the response of the customers needs to be noted so that the position can be determined in a proper manner. In the case of Shangri-La, the competitor of the company has been seen as Four Seasons, Westin, Sheraton and Intercontinental. Based on this, and the analysis conducted by ANA Harbour Grand Hotel it can be seen that Shangri-La is ranked fourth among the competitors in terms of service rendered to the customers. However, the position improved in 2002, and the company went up to third place. Recent readings have evidenced the fact that Shangri-La is the number one among the competitors after analysing the key indicators such as services rendered, occupancy ranking, average revenue per day and revenue share index.

Managing the marketing mix elements

Kolk (2016) is of the opinion that the marketing mix elements are important to be considered by a manager. This is because the managers need to identify the factors that can help in satisfying the customers. Hence, the seven elements of the marketing mix need to be considered for analysing the success.

Product: The products offered by Shangri-La can help in attracting the customers of Sydney. The introduction of the renovated model in the hotels is an indication that the hotel had the aim of becoming the best in the business. This is one area of the marketing mix element that Shangri-La has dealt with in an experienced manner. The responses of the customers of Sydney has been analysed and based on the analysis new product development have helped the hotel to beat its competitors in the market.

Price: According to Lehman and Morton (2017), the price is one factor that needs to be managed by every manager. This is because customers look for a quality product with a pocket-friendly price. Hence, in the case of Shangri-La, the price factor needs to be improved so that customer satisfaction can be obtained. Customers tend to provide value to the products and services that provide authentic experience at a cheap rate. In the case of Shangri-La, the rate of the rooms is high making the hotel target only the high-class people. Reduction of the rate can help Shangri-La, to attract more customers from a different class of people.

Place: The place of the hotel needs to be such that every person can access it. Shangri-La is situated keeping in view two of the most famous structure in Sydney, The Harbour Bridge and the Opera House. Thus, it is considered as one of the best strategies adopted by the managers to attract customers and ensure that objectives of the hotel are attained.

Promotion: In the case of promotion, it is necessary that organisations find the cheapest and effective way to reach the customers (Mose 2016). Shangri-La can promote the hotel and the new renovations by using social media and advertisement via setting up billboards in the streets of Sydney.

People: The target market of Shangri-La is the high-class society because of its position and the rate of the rooms that the hotels have set. This provides opportunities for the hotel to gain more revenue as well as make the organisation loose potential clients from the middle class of the society.

Process: The process by which Shangri-La can generate revenue is by promoting itself in the business market and by ensuring that the quality and innovation nature exists.

Physical evidence: As stated by Walter, Fernandes and Fernandes (2017) physical evidence refers to the manner in which customers can feel a product or service. In the case of Shangri-La, the physical evidence can be obtained by visiting the place

Reference

Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education.

Bruwer, J.P., 2017. The conduciveness of the economic environment and small, medium and micro enterprise sustainability.

Cross, J.C., Belich, T.J. and Rudelius, W., 2015. How marketing managers use market segmentation: An exploratory study. In Proceedings of the 1990 Academy of Marketing Science (AMS) Annual Conference (pp. 531-536). Springer, Cham.

Dibb, S. and Simkin, L., 2016. Market segmentation and segment strategy. Markefing theory: A student text, Sage, Los Angeles, pp.251-279.

Fleisher, C.S. and Bensoussan, B.E., 2015. Business and competitive analysis: effective application of new and classic methods. FT Press.

Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University Press, USA.

Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business imperatives. Routledge.

Kew, J. and Stredwick, J., 2017. Business environment: managing in a strategic context. Kogan Page Publishers.

Kiel, I.H., 2014. Entrepreneurial marketing. Person

Kolk, A., 2016. The social responsibility of international business: From ethics and the environment to CSR and sustainable development. Journal of World Business, 51(1), pp.23-34.

Lehman, G. and Morton, E., 2017. Accountability, corruption and social and environment accounting: Micro-political processes of change. In Accounting Forum (Vol. 41, No. 4, pp. 281-288). Elsevier.

Liu, J., Liao, X., Huang, W. and Liao, X., 2018. Market segmentation: A multiple criteria approach combining preference analysis and segmentation decision. Omega.

Mose, A., 2016. Analysis of Macro and Micro Environment on the Marketing Strategy Formulation and the Influence to the Competitive Advantage (Case Study). Academy of Strategic Management Journal, 15, pp.35-41.

Venter, P., Wright, A. and Dibb, S., 2015. Performing market segmentation: a performative perspective. Journal of Marketing Management, 31(1-2), pp.62-83.

Walter, C.E., Fernandes, C.M. and Fernandes, P.O., 2017. Innovation in micro and small enterprises: a conceptual proposal for research. South American Development Society Journal, 3(08), pp.162-177.

How to cite this essay: