Essay on Marketing Analysis

This essay has a total of 4124 words and 43 pages.

Marketing Analysis




1. Introduction

The assignments mainly consists of the following parts:

Firstly, an analysis of Ecover's current position in the market.
Secondly, how Ecover is changing its competitive strategy.
Thirdly, consumer behaviour towards detergent.
Finally, an outline for new marketing strategy for Ecover to enter the supermarket.


2. Background

Ecover was founded in 1979 by Frans Bogaerts.It was a modest little detergent company in
Malle in northern Belgium. Pierres Magnin a successful Swiss businessman dealing with
pharmacies and health food stores, suggested Bogaerts to develop an eco-friendly detergent
free of harmful chemicals (which was to be banned by the Swiss government as a part the
proposed environmental regulations). Thus they entered the detergent market in Swiss and
other key markets. Environmental disasters have made more and more people aware of the
urgent need to protect the natural environment.


3 Marketing Audit

Marketing audit give a picture of where the company is, how did it get there and where is
it heading. It goes through the through the strength, weakness, opportunities and threat
of the company. This analysis is called the SWOT analysis. It is divided into two major
parts:


External Factors and Internal Factors

Strength and weakness are concerned with the internal factors and opportunity and threat
are concerned with the external factors.



3.1 External Factors

Here only opportunities and threats are analysed as these are supposed to be listed as
anticipated events or trends outside the business that have implications for performance.
These factors are not controllable by the company.


Some of the factors discussed here are:

1. Macro environment
2. The Market
3. Competition


3.1.1Macro Environment

Macro Environment consists of Political (P), Economical (E), Social (S) and Technological
(T) factors that affect the Company. Continuous monitoring of these variables is an
important marketing function. As Corporations today, Ecover is also sensitive to Macro
Environmental changes. Some of the PEST factors that affected Ecover are discussed below.




Political:

Marketing strategy is deeply affected by political trends. Issues like new laws,
regulations, change in foreign policies etc brings change to t he business world.


Opportunities

Ban on environmentally harmful chemicals (1980) contained in detergents by the Swiss
government was an opportunity for Ecover to capitalise in the green detergent market.


By 1990, all EU countries except France banned the use of phosphates in washing powders.

Press reports told of the adverse effects of phosphates on river life.

Threats

In December 1991, the European Council's Environment Ministers agreed to set up an
eco-labelling scheme. This was a major threat to Ecover as this would undercut the major
difference between them and the conservative detergents.





Economical:

Economic trends affecting business include depression (world-wide economic collapse),
interest rates, inflation unemployment, consumer price index real GNP, personal income
savings rate and capacity utilisation. Companies must choose those economic influences
that are relevant to their business and monitor them. Not only the national economic
factors should be considered but also the regional and global economic factors.



Social:

Important aspects of social environment are beliefs, attitudes, lifestyle changes, age
distribution etc. The relevance of the social environment to a particular business will
vary depending on the nature of the business. As Ecover is a consumer-products company,
the impact of social environmental is very crucial.


The society in which people grow up shapes their beliefs, values and norms. The people
living in a particular society hold many core beliefs and values that tend to persist.



Opportunities

In USA, people are used to promotions and discounts and were price conscious. But recent
cases showed that it could be changed with appropriate media interest.


A medical research showed that over past 20 years the occurrence of allergies due to
optical brighteners in traditional detergents has increased 5-fold.


Threats

People found the green detergents to be time consuming and were reluctant to buy the green products.
Too less people knew about environment safety.



The social environment is a challenge to Ecover as they need to educate the people about environmental pollution.


Technological:

The factors that affect the technological environment are new product and process
technologies, and materials. A marketing strategist should analyse technological changes
and capitalise on them. New technologies that provide superior value in satisfying needs
stimulate investment and economic activity.


Opportunities

As Ecover needed to introduce new products in order to compete in the market, they
co-operated with Henkel and made use of their labs and other sources. As a result of this,
they developed a phosphate-free-dish-washing machine powder.


The re-invention of pre-war technology based on renewable natural raw materials offered a breakthrough for Ecover.

Threats

The postmodern technologies used by Ecover's competitors were a threat to Ecover.


3.1.2 The Market

The Market evaluation include the market size, growth rates and developments, Customer's
choice, how when and where do customers buy, market segmentation and distribution.





Market size:

Opportunities

The eco-friendly detergent market was very small in 80s as they were very few people
concerned about environmental safety. As more and more people became aware of the harmful
chemicals in other detergents, Ecover's market began to expand.



Europe was always a big market for Ecover as Europe had more than 20,000 health food stores.

USA is a potential market but the people are unaware of the harmful ingredients and needed to be educated.

Threats

More and more companies were introducing green products into the market

US success of chains, such as, whole foods, beard and circus and Mrs Gooch's health
orientated chain stores began to appear in Europe in the mid eighties, expanding the
number of competitors on green detergent market



Customers:

Companies like Ecover attempt to create customer value in order to attract and retain
customers. Their aim is to deliver superior value to their target customers. Consumers
decide upon purchases on the basis of judgements about the values offered by suppliers.


Here we discuss Ecover's opportunities and threats on customers.

Opportunities
Ecover's customers were ready to give up supermarket shopping to purchase Ecover products
at the health food store. Ecover had a very strong emotional relationship with their
customers.


A survey on consumer attitudes (please see appendix 1) shows that some of the customers
were willing to buy Ecover products even if they had to pay more. The consumers in Western
Europe were ready to contribute to a better environment through their purchase behaviour.


Threats

For most costumers the purchase of a detergent was not a considered choice. They found
Ecover detergents to be time consuming and didn't have time to care about the environment,
as they were busy in their works.


In countries like Japan only 42% of the existing customers were ready to pay more for eco-friendly products.

US customers were more price conscious and they need to be educated.

Most of the customers were not sure whether the eco-friendly detergents would do the job
as effectively as other detergents.




3.1.3 Competition:

Here we look into Ecover's competitors, their objectives and strategies, their strength
and weakness and their size and shares. The weaknesses of the competitor are
opportunities, and strengths are threats to Ecover.



Opportunities

No too much competitors for detergents in the health food stores and pharmacies

In early 1990s in Belgium, the Netherlands the UK and Scandinavia, the competitors
together had only less than 30% of the market.


Competitors only set up in no more than 5 countries, whereas Ecover operated in all
European countries, Japan, USA and Canada



Threats

By 1980s more than 20 producers followed Ecover in selling eco-friendly cleaning products
through health stores, pharmacies speciality stores and even via mail.


More health-oriented chain stores began to appear in Europe in the mid-80s expanding the
number of competitors in the green market.


By 1990, Ecover had number of competitors in the green market. They were Held
(Switzerland), Awalan (Germany), Urtekram (Denmark), Ark (UK), Planet (USA), and Akwarein
(Netherlands).


In the mass market Ecover saw the actual competitors. Companies like Unilever, P&G and
Henkel were always a threat to Ecover.


The giant companies' products didn't offer much margin to the supermarkets. The
supermarkets reacted to this by launching their own detergents for lower prices.


Reckitt & Colman turned out to be the first actual competitor in the green market as they
were the first to react to the ban of benzene in detergents by launching a range of
washing powder in Germany and Sweden.



Competitors had more product line than Ecover's and occupied the major shelf spaces in Super markets.

Ecover's competitors like Unilever had the advantage of huge advertisement budgets. The
advertisement budget for Unilever's dishwashing liquid (only UK) was more than Ecover's
world wide turnover.


(please see appendix 2 for competitors' market share.



3.2 Internal Factors


These are Micro factors that can be controlled by the company. Micro Environment Scanning
is often practiced at the product/market or Strategic Business Unit (SBU) level. It helps
to assess the performance of the business based on environmental developments. This can be
done by analysis of operating results, strategic issues analysis, marketing mix
effectiveness, marketing structure and marketing system.


3.2.1Operating Results

This look into the sales, market share, profit margin and costs of Ecover.

Strengths


Increased sales by four times in four years (BEF 50m in 1985,
BEF 200m in 1990)

Ecover accounted for more than 70% of detergents sold via health food stores in UK,
Scandinavia, Netherlands and Belgium and around 50% in France and Switzerland.


Ecover's dish washing liquid represented40% of Ecover's turnover.


Weaknesses

The retail price was 4 times more than the ex-factory price

Ecover was selling only 1000 tons of detergent powder annually (by 1992). But this was not
enough to enter the mass market.


Market share in France, Switzerland, Germany and Austria
was low compared to Belgium, Netherlands, UK and Scandinavia

Ecover couldn't match the large brands' profit per square metre of shelf space in the supermarkets.


3.2.2 Strategic Issues analysis

These include Marketing objectives, market segmentation and competitive advantage
Strengths


Had a specific marketing objective in the beginning-targeted a speciality stores, especially health food store.

The eco-label was the key competitive advantage.

Ecover enjoyed the segment consisting environmental conscious people.

By 1992, Ecover was sold through 15000 stores worldwide.


Weakness

Ecover jumped into the mass market without a proper knowledge of the market segment. I.e.
when evaluating marketing segments, the company should examine two broad issues, market
attractiveness and the company's capability of competing in the segment.


Ecover couldn't recognise customers who liked promotional offers and couponing.

Ecover tried to make a major segment by educating the people about the ‘harmful
ingredients'. i.e. didn't try to act according to the existing major segment (price
conscious)



3.2.3Marketing Mix Effectiveness:

This can be evaluated by the 4 Ps . i.e. Product, price, promotion and place. This is
basically the effectiveness of promoting the right product at the right price in the right
place.



Strength

Positioned at the right place-pharmacies and health food stores
Ecover products had the eco-friendly image.

Re-filling tanks in health food stores helped clients to save money and shop better profit margin

Free booklets explaining the competitive advantage were distributed.

Ecover was successful in reducing cost for each wash by 10% and thus almost equalising the price of normal detergents.


Weakness



The ease of use and the brightness were not up to the standard of the traditional detergents..

Price of detergent was 20-30% higher than traditional detergents.

Lack of distributor support.

Competitors were also operating via mail order but Ecover didn't offer this facility.

Reckitt & Colman was the first to launch benzene free detergent powder in Sweden after
benzene was banned in the hospitals. Being an eco friendly company Ecover could have used
this opportunity.



3.2.4 Marketing:

Here am evaluating the pluses and minuses of Ecover's marketing.



Strengths
The educational aspects of marketing strategy turned to be very successful.

Marketing team was very successful in making customers loyal to Ecover.

Expanded its marketing team in Belgium

Ecover offered supermarkets a margin of four times than that of the traditional detergents






Weakness


The marketing team of Ecover could not make use of Ecover's agents and importers in
planning a marketing strategy for entering in supermarkets.


Lack of advertisements.

Ecover couldn't attract ‘promotions & couponing' loving customers
Marketing team was not successful in making the majority of the people ‘green
conscious'. Only less than 1% of detergent market aware of Ecover products




4. The changing competitive strategy of Ecover


"Competitive strategy concerns how to create competitive advantage in each of t he
business in which a company competes" (Porter, 1987)


In the earlier years Ecover was well protected from large firms as the competitors were
not interested in the small food stores' market. This helped Ecover to build a reputation
in the market. As the numbers of competitors were increasing, Ecover had to improve its
Competitive strategies.


By 1990, the green detergent market began to attract the attention of t he traditional
detergent producers. This was a major threat for Ecover and had to find an alternative
marketing strategy that would succeed in competition with the traditional detergent
producers' strategy of massive advertising.


The green manufacturers were competitive with the major brands in liquid cleaners. Ecover
sold their liquid detergent for a lesser price than that of the supermarket leader's
normal price.


Although powdered detergent never gave a big margin, Ecover introduced it to make its
product line bigger. As the making of powder was expensive, subcontractors were used for
it. But, this cut Ecover's margin, and traces of banned chemicals were found in the final
product. Seeing this as a major threat, Ecover set up its own factory in 1990. This helped
them to reduce the cost by about 50%.


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