Environmental Factors and Marketing Decisions
Will a successful marketing plan in one country work in another country? This is unlikely to occur due to many different cultural, political, economic, technological, and competitive environments. Marketing mixes require adjustments to meet local conditions and companies that understand these environmental factors can create advantages when positioning their products or services. Wal-Mart is a global organization and uses market research to understand the market environments before making marketing decisions.
Wal-Mart operates over 6,100 stores worldwide, employs 1.8 million associates, and operates in 15 different countries (Annual Report, 2006, p. 12). Lee Scott, Chairman and CEO stated, "Today, we find ourselves operating 2,285 international stores, buying products from 70 countries, and doing 20% of our business abroad. Wal-Mart's marketplace is clearly the world" (Annual Report, 2006, p. 13).
Wal-Mart stores are primarily service providers that include tangible goods. Without offering these tangible goods at everyday low prices, sales would probably decrease significantly. The domestic branding Wal-Mart advertises is "Everyday Low Prices." Yet, if Wal-Mart stocked the same products in every store around the globe, it would not generate the sales and profits it realizes today. Wal-Mart must adjust the marketing mix based on the major elements of the marketing environment.
Environmental factors around the globe impact the organization's marketing decisions. These factors that are important to marketers include social, economic, political/legal, technological, and competitive environments. The social environment focuses on groups of people, their number, characteristics, behavior, and growth projections (Bearden et al, 2003, p. 26). The economic environment includes issues surrounding the purchasing power of consumers to satisfy their wants and needs (Bearden et al, 2003, p. 33). The political/legal environment includes issues related to government activities and specific laws and regulations that affect marketing practices (Bearden et al, 2003, p. 34). The technological environment encompasses factors and trends related to innovations that affect new product development and how marketing activities are performed (Bearden et al, 2003, p. 37). The competitive environment surrounds all organizations that attempt to serve similar customers with brands or products (Bearden et al, 2003, p. 38).
Cultural diversity is an important part of the social environment and companies must adjust their product "P" in the marketing mix. For instance, McDonalds includes items that reflect local tastes, including the Maharaja Mac (made of mutton) in India, the Tatsuta Burger in Japan, the McPork Burger with Thai Basil in Thailand, and the McTempeh Burger (made from fermented soybeans) in Indonesia (Armstrong-Kotler, 2005, p. 528). McDonald's successfully...