Marketing theory

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Company Overview

The company that will be examined is a hypothetical CD store named "LIVE RECORDS". The store targets 15-0 year old, educated males and females. The CD store will target a niche market for the latest cutting edge, world music. All major cultural styles are stocked, for example, Latin, African, and contemporary styles from America, Europe, and the UK. The store is placed in an inner Sydney location and has a long term strategy to develop the store online to reach a larger target audience. Current promotion relies on the store's web site and some direct marketing. This paper will examine the macro marketing environment for LIVE RECORDS. Macro-Marketing is defined as a social process that directs an economy's flow of goods and services from producers to consumers in a way that effectively matches supply and demand and accomplishes the objectives of society. Therefore with macro-marketing the emphasis is not on activities of individual organisations but, rather on how the whole marketing system operates (McCarthy et al, 14, 6). Various factors affect LIVE RECORDS in the macro-marketing environment and each of these key factors will now be analysed.

Demographic Factors

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Demographics trends are those concerning the human population in terms of various factors including size, density, location, gender, race, and occupation. Demography is a very important environmental factor that affects marketers and influences the direction of an organization's marketing strategy (Kotler et al, 001).

Various demographic opportunities exist for LIVE with a higher number of kids with disposable income tending to buy more luxury items like CDs. There is an increasing demographic trend in Australia that suggests that young people have more money to spend and as CD's are one of the items that youths are considered to buy most frequently, this creates a significant opportunity for LIVE (Tulich, 14). Young adults also tend to know about what the latest cutting edge styles of music are which fits in with the concept of LIVE RECORDS. According to Tulich, teenagers are likely to spend any money they have on them and these luxury items are purchased at least once a week (Tulich, 14, ). This creates a significant opportunity for LIVE with 15-1 year old, young adults falling within the store's target market.

The 001 Australian Census highlighted that almost 0% of the Australian population in that year, had home Internet access (HREF1). This creates an opportunity for LIVE who largely rely on their website for promotion. A further opportunity exists in the long term with LIVE strategy to create an online store.

With an inner city location, the increasing urbanisation of the Australian society also creates an opportunity for LIVE, with more people moving to the city. (HREF). Further demographic opportunities exist with Australia's increasing multiculturalism. Statistics suggest that the Australian society is becoming increasingly culturally diverse and as a provider of cutting edge, world music, LIVE is in a unique opportunity to capitalize on this trend (HREF).

As can be seen emerging demographic trends create a number of opportunities for LIVE however, threats also exist. According to the 001 Australian census the medium age of the population in Australia in 001 was 5 compared to 4 in the 16 census. Future trends suggest that by 01 the medium age of the Australian population will increase to 4-4 years old with 1-% of the population over 65 (HREF). This poses a significant, long term threat to LIVE whose target population is based around a much younger audience. As a provider of cutting edge, world music LIVE relies on a young, up-to-date audience to purchase its CDs. Australia's aging society could dramatically decrease the size of LIVE's target audience.

Technological Environment

Technological developments affect marketing in two basic ways new products and new processes. The faster pace of technological change creates both obstacles and opportunities that companies need to adjust to (Mccarthy et al, 14).

For LIVE, numerous opportunities exist in the technological environment, like possible advancements in CD technologies where you could maybe have games, as well as video clips and interviews that can be played and watched on the computer or television when you listen to the CD. This would add to the attractiveness of a CD as a purchase item. Another possible advancement that would create an opportunities is the introduction of technology that would stop CDs being copied as this would reduce the threat of burning CDs which has a negative impact on original CD sales. Of course this new technology would have to exist without reducing the playability of the CD otherwise this could also reduce the number of CD purchases, for example, if CDs couldn't be copied but the technology meant that they couldn't be played in computers either. This may stop a potential consumer for purchasing a CD at all.

The other big technological opportunity for LIVE is to be able to enter the virtual shopping world by creating an online store. As was mentioned in the demographic trends, more Australians are using the Internet and in line with this, more Australians are purchasing products online. Some of the products that have been most successful for online purchases include books and CDs with the rise of sites such as www.amazon.com. An online store would not just increase the target audience nationally for LIVE RECORDS but it creates the possible opportunity of opening the store to a global audience. This creates a significant long-term opportunity for LIVE.

By far the biggest technological threat that exists for LIVE and creates the biggest challenge for the store with is with the rapid changes that occur with technology. As technology improves, the threat of substitutes for CDs, like DVDs, Mini Discs and MP files may become a significant threat for the ongoing success of LIVE (McCarthy et al, 14). An even bigger threat, which is also linked to the legal environment, is the increase in CD burning allowing people to easily copy CDs. This poses a significant threat to LIVE.

Economic Environment

The economic environment is affected by the interaction of all parts of a macro- economic system. This then affects such things as national income economic growth and inflation. The economic environment may vary from one country to another, but the world's economy is becoming increasingly linked with the globalization (McCarthy et al, 14).

Many opportunities exist in the economic environment, for example, with the exchange rate. When the Australian dollar is strong, imports become cheaper to buy which creates an opportunity for LIVE as an importer of world music, increasing the store's profit margin. On the other hand however, a weaker exchange rate makes imports more expensive the opposite impact would occur for LIVE. This is an example of how LIVE or any business is affected by the world economy.

Along with the opportunities, LIVE also has threats with the up and downs in the economy, inflation is one of the threats because the costs rise very fast so LIVE would have no choice but to increase prices to keep up profitability.

The possibility of recession periods is another threat for LIVE when people don't want to spend their money on luxury items like CDs. People tend to save more during these periods.

Cultural Environment

The cultural environment affects how people live and why they behave as they do. Many variables make up the cultural and social environment, some examples are the languages they speak, their religious beliefs, the type of food they eat, their music, the way they view their marriage and family (McCarthy et al, 14).

According to the 001 Australian census, in the 0th century Australia became more culturally diverse (HREF), which creates the market for world music in Australia, a gives LIVE an opportunity to sell different types of music. Breaking the store in different groups is another opportunity in this cultural environment, and adding the right colours and the right pictures, respecting differing cultures. An example of this would be to create a store design separating the different styles of music, and then making that section culturally sensitive where appropriate.

Globalization is a big threat in the cultural environment, due to the fact that as LIVE has targeted the multicultural population of Australia , because people's tastes are merging in result of the huge percentage of the population using the internet, everyone has access to the same type of advertisements and music all over the world. This means that there will be a diminished market for diverse cultural music because society will have similar tastes, but it also is an opportunity in the sense, that especially with an online store LIVE will be able to target world markets more easily (Kotler et al, 001).

Political and Legal Environment

The attitudes and reaction of people, social critics and governments all affect the political environment. Consumers in the same country usually share a common political environment, but this environment can also have a dramatic effect in opportunities at a local or international level. One of the aims of the consumer movement was to exert pressure on governments to pass legislation that provided greater protection for consumer in their dealings with businesses. This could be divided in two basic groups laws dealing with freedom of competition and consumer protector laws (McCarthy et al, 14). Marketing decisions are strongly affected by laws, government agencies, pressure groups and society and these factors influence how a marketer must conduct its activities (Kotler et al, 001).

The biggest threats in the political environment involve Australia's protection and tariff policy. The reduction of tariffs would actually create an opportunity for LIVE with cheaper import prices but increased protection laws has the adverse effect and makes imported goods more expensive in the marketplace. This has a negative impact on LIVE. Other legal issues that are currently threats include the huge amount of illegal CD copies that are either made by individuals or even more damaging, are mass produced and illegally sold in markets or overseas. This would however also become an opportunity if the government decided to crack down on illegal copies and sales and the market buying original CDs would subsequently increase.

Natural Environment

The natural environment includes those natural resources that are included in production or that are affected by marketing activities. Trends in this environment include shortages of raw materials, increased cost of energy, increased level of pollution and government intervention in natural resource management (Kotler et al, 001).

Based on the societal trend of increasing environmental awareness, an opportunity for LIVE in the natural environment is to create environmentally friendly, non polluting packaging, especially considering that the young population, which is LIVE's target market, are very environmentally conscious.

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