Market Environment Analysis

  • Category:
    Marketing
  • Document type:
    Assignment
  • Level:
    Undergraduate
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    4
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    2824

MARKET ENVIRONMENT ANALYSIS 14

Market Environment Analysis

Executive Summary

Bindle is a giftware online company operating in Australia. This paper covers the market enviroment analysis of Bindle. First, the paper will analyse the giftware and homeware industry of Australia. Second, it will detail out the micro and micro environmental factors that affects the operation of Bindle such as political, economic, social, technological factors, competitors and suppliers. Third, the report will highlight segmentation bases for Bindle such as demographic, psychometric, behavioural and geographical segmentation. Fourth, it will identify the target markets for Bindle and lastly, it will describe the differentiation strategy that will position Bindle ahead of the competitors. In order to position itself ahead of the competitors, Bindle company should carry out product differentiation.

Market Environment Analysis

  1. Industry Overview and Product

Australian giftware and homeware industry entails a range of products and services. The industry has a combined value of AU$6.6 billion and is expected to grow in the years to come as a result of the demand for the quality and unique products (IBC, 2013). Gift market is unique, diverse and dynamic. Currently, it is valued at AU$5 billion. The industry is competitive since consumer endeavour to seek new products. Nevertheless, about 75% of the Australian gift market is imported outside the country (IBC, 2013). The industry is dominated by online companies since consumers prefer buying innovative gifts online. The industry is made up of many players including chain stores, online companies and independent retailers who compete for the market.

Bindle is an Australian online gift company that ensure its customers receive sustainable and stylish products that are tailored around specific occasions and situations. Bindle offers gifts for men, women, children as well as corporate clients (Bindle, 2016). The company offers gifts in form of gift baskets and boxes to customers around Melbourne and the entire Australia that consist of Australian-made design gifts, wines and other gift hampers. They offer gift baskets and hampers for all occasions such as Christmas, weddings, mother’s day, and birthdays among others. Each gift or bindle is made by creative individuals who bring together their expertise in wrapping and sourcing products that is personalized and entirely Australian (Bindle, 2016). And in order for them to expand their product line they should start offering home ware products as gifts ranging from cooking utensils to tableware. This will enable them expand their market.

The strategic planning technique that can be used is the BCG growth-share matrix. It is a chart that was designed to assist organisations analyse product lines and business units. BCG-matrix assist the organisation allocate necessary resources and can be used as an analytical tool in strategic management, brand marketing and portfolio analysis (BPP Learning Media, 2010). In the BCG-matrix, cash cows indicates a company with high market share in a slow industry, dogs are units with low market share in slow-growing industry, question marks are companies with low market share found in fast-growing market and stars are units with higher market share found in fast-growing industry (BPP Learning Media, 2010). The BCG-matric only ranks market shares and growth rate and implies actual profitability. According to BCG growth-share matrix analysis, Bindle falls on the dogs units indicating low growth rate and low market share.

The direct competitors of Bindle include Gift Australia, Bundle Gift Cooperation and Gift for Aussies among others. Bundles Gift Co. is a giftware company that offer beautifully personalized gifts for events such as weddings, corporate events and birthdays (IBC, 2013). On the other hand, Gift Australia is one of the popular Australian online gift companies that have been in operation since 2000. Their gift hampers range from gourmet hampers, and fashion accessories among other. The indirect competitors include Myer Australia and Interhampers. Myer is a departmental chain store located in Australia that occasionally offers gift hampers to its customers.

  1. The Company’s Micro and Macro Environment

    1. Macro Environmental Analysis

Political

The market giftware business in Australia is said to be developing fast. Giftware companies are expected to comply with the country’s political requirements including national minimum wage regulations and Hygiene and Quality regulations that influence the quality of products in companies (Australian Bureau of Statistics, 2016). Bindle will be under these strict regulations that may impacts its operations. In addition, since it is an online company, Bindle will be faced with additional strict regulations that govern online businesses.

Economic Factors

Economic growth or recession affects business operations. Despite the 2008 recession that affected the global economy, the economy of Australia is growing very fast (Economic Outlook, 2016). The sales of Bindle are affected by the customers’ expenditure and income level. Due to economic growth, consumer spending has increased which has made people afford to buy gifts. This has led to increase in the demand of gift hampers which has increased the sales and revenue of Bindle.

Social Factor

Social factors have significantly affected Bindle in relation to the changing of demographics on the basis of the customers it target markets. The changes in customer’s preferences, tastes and need for high quality and luxury products has fastened the pace of organisational change in the company in relation to meeting these terms (Economic Outlook, 2016). Also, customers demand faster response to their wants and needs which has increased online purchasing. This has increased sales for Bindle since it is an online business.

Technological Factor

Over the years, there have been new technological developments such as online businesses (Economic Outlook, 2016). Many companies have opted to adopt this changing technology with an aim of increasing sales. Technological advancement with regard to internet marketing has generally led to intense competition for Bindle. It has made it difficult for the company to grow to a greater extend. At the same time, technology has improved the operations of Bindle.

Environmental

Environmental factors can have an effect on Bindle. In Australia, every company in any industry sector is required to take into consideration the environmental requirements. Companies in the country are bound by regulatory scrutiny from Environmental Protection Agencies concerning the conduct of their business (Australian Bureau of Statistics, 2016). In addition, as a result of the changing culture of people in terms of health and environment consciousness, people tend to buy products and services from companies that are environmentally conscious. This has worked well for Bindle since they offer environmentally-friendly products.

Australia imposes regulations and laws to giftware and homeware companies such as bindle. Some of the regulations include Work and Safety Act, and Trade Practice Act among others (Australian Bureau of Statistics, 2016). The country has developed a national system for the validity of the quality of products for consumer and environmental safety. Online businesses are also controlled and regulated in the country. This means that there are intense legal regulations governing Bindle. These regulations affect the operations of Bindle and its ability to make profit.

    1. Micro Environmental Analysis

Customers

Bindle offer its products to people who need gifts for specific occasions. These gifts are tailor-made and hand-wrapped (Bindle, 2016). The company focus on customers who are environmentally conscious and prefer products that do not destroy the environment. The company boosts a wealth of customer relationship. It high quality and unique products has given the company a competitive edge over its competitors (Coyne, 2004). Online operations have enabled the company access different customers from different regions in Australia.

Suppliers and Intermediaries

Bindle does not manufacturer gifts. What it does is outsource its products from different suppliers. Each bindle is a combination of several efforts from talented people who bring their personality and creativity to the products. One bindle contain different products from different suppliers and individuals (Bindle, 2016). The company engages local artisans who are able to manufacture and produce Australian products. The artisans also produce the boxes and hampers that contain the products and they hand-wrap them. It is the inter-relationship of different suppliers and artisans that make the bindle unique.

Competitors

The main competitors of Bindle include Gift Australia, Interhampers and Bundle Gift Cooperation. The Interhampers is considered Australian largest gift manufacturing company in Australia (Olivera, 2015). It offers quality, value and service to its consumers which have led to their growth. On the other hand, Bundles Gift Co. is a giftware company that operate in Australia and offer gifts for all events and occasions. Gift Australia is one of the popular Australian online gift companies that has operated for 16 years (Olivera, 2015). This is the major online competitor of Bindle. The intense competition has made Bindle have small market share.

  1. Market Segmentation

The segmentation bases that are used by Bindle include demographic, behavioural, and geographic segmentation.

Segmentation Table

Segmentation base

Segmentation Variables

Geographical Segmentation

Melbourne

Major metropolitan area

Demographic Segmentation

Under 5, 18-35, above 35

Occupation

Professionals, entrepreneurs

Women, men, children

Behavioral Segmentation

Frequency of Buying

Loyal customers/ Heavy buyers

Psychographic Segmentation

Interests

adventurers people who buy gifts, people with family values

Activities

Gift buyers

preferences

People who value relish lifestyle,

Demographic Segmentation

The target market for Bindle in terms of demographic has been classified according to age, generation as well as occupation (Campbell et al., 2002). It has also been classified according to the purpose with which the product serves and also according to the different life stages their customers belong to. Apart from occasion, Bindle provides its customers with different products depending on aspects such as age. The company classifies the different types of products based on the age and gender of their customers (Bindle, 2016). Bindle therefore targets women who require gifts for occasions such as mother’s day. In addition, Bindle can target their market according to their income status. For example, there are customers who are interested in purchasing expensive gift hampers for their family members and friends. Therefore, Bindle can target customers who fall in this category of income earners.

Psychographic Segmentation

This kind of segmentation involves lifestyle of individual customers. It also entails the customer’s activities together with their corresponding interests and opinions (Campbell et al., 2002). It classifies individuals according to the way they spend their leisure. Bindle can target a market that includes individuals who relish an extravagant lifestyle according to their levels of income. Therefore, the company can seek market from such persons by targeting customers who are entrepreneurs and those that are self-employed. They can do this by offering premium gift hampers to individuals who can afford them.

Behavioral Segmentation

Behavioral segmentation separates customers into classes with regard to their knowledge, response, their rate of usage and also their readiness stage to purchase a certain product (Campbell et al., 2002). It is renowned that building market segments most at times commence with the behavior variables. Customers in this segment can by characterized into light, medium and heavy users. Light users are those that buy Bindle gift once but do not come for more. On the other hand, heavy users are those customers who return back to buy more and more gifts. Therefore, Bindle can use this as a marketing strategy by targeting customers who buy gifts and come back to buy more in different occasions. They can be classified as loyal customers. In order to attract loyal customers, Bindle can offer exceptional customer service and occasional discounts (Campbell et al., 2002).

Geographic Segmentation

Geographic classification involves dividing people in relation to nations, countries or regions (Campbell et al., 2002). This criterion brings together both geographic and demographic data to form a definite profile. As an online store, Bindle does not divide its customers according to countries. However, the company offers almost 75 per cent of its products to customers living in Melbourne. The largest geographical market segment for Bindle is Melbourne.

  1. Market Targeting and Consumer Profile

Based on demographic segmentation, Bindle can target their customers according to their age. The company can target different segments; urban town women, ‘home builders’, professionals, as well as boomers in Transition (Johnson et al., 2014). The company should sell its products to these target markets as they are more focus on spending their income on such items. These segments entails group of people who appreciate receiving and giving gifts.

The most dominant target market is the urban town women between ages of 35 to 50. These women are married and probably earn average income and are socially active (Johnson et al., 2014). They therefore enjoy buying gifts to friends and families. In addition, boomers in transition are between 50 and 65 and are undergoing positive life transition. For instance, they are changing the appearance of their homes and remodeling in many ways. They are people who will be interested in receiving gifts containing homeware products. Substantial amount of their income is used to travel and decorate homes. The home builders are those who typically range between 40 to 60 and high spending ability that they can buy gifts for their families. In additional, professionals between ages 25 and 40 will be a great target market (Johnson et al., 2014). They earn average income, represent a group of individuals who enjoy life and do not mind using their money to buy gifts for their families and friends.

  1. Differentiation and Positioning

Bindle has a capable financial resource. With their strong financial records, they can go forward and create markets with their new product. Moreover, the company owns a resourceful organization capability in terms of experienced artisans (Bindle, 2016). They have a large number of loyal customers who earn the company stable profits which develops the company. All these factors position the company ahead of most of its competitors. The uniqueness of its products coupled with quality can increase their sales and enhance their brand reputation (Bindle, 2016). Bindle business strategy is differentiation. Bindle can position itself by differentiating itself from the competitors. Differentiation may be in terms of service, product, people, and channel differentiation.

Bindle can use product differentiation strategy. This can be done by spending large amount of capital in advertising and promotion to differentiate itself from the competitors and create a unique image of the brand. In addition, offering additional products can give them a competitive edge over the competitors (Campbell et al., 2002). Use of unique marketing and advertising initiatives in order to entice its customers to buy its products can differentiate itself from others and position them on top. Differentiation strategy can enable them succeed and retain its competitive edge (Thompson, 2005). Nevertheless, since most of its competitors are large companies that have been in operation for long, Bindle only takes up small amount of market share. On the positioning map, Bindle is in the middle since players such as Gift Australia and Interhampers have established brands and customer loyalty and take up a large percentage of market share.

  1. Conclusion and Implications for Marketing Strategy

Bindle is an Australian online giftware company that provides gift hampers in special occasions such as birthdays, weddings and mother’s day etc. Gift market is unique, diverse and dynamics is valued at AU$5 billion. The company is affected by macro environmental factors. For instance, they benefit from technological advancement and can potentially grow due to economic growth in Australia. Nevertheless, the strict legal and political regulations impact the operations of the company. The target market for Bindle can be classified according to demographic, behavioral and psychometric segmentation. The company mainly targets its customers in terms of age variation. The major target groups for Bindle include young professionals aged 25-40, women aged 35-50 and home builders.

The lesson the company should learn is that, in order to position itself ahead of the competitors, Bindle should carryout product differentiation. They can do this by investing more on advertisement and promotional activities. In addition, adding a new product can strengthen their brand image. The company can capitalize on and add unique homeware products to their product lines. Many people will appreciate homeware product in the gift hampers and this will enhance the company’s market share. They will be able to target new market, increase their sales and build its brand image. Introduction of homeware products will able the company position itself ahead of the competitors.

References

Australian Bureau of Statistics 2016, Finding government statistics, Australian Government Business, Retrieved 5th August 2016 from https://www.business.gov.au/Info/Plan-and-Start/Develop-your-business-plans/Marketing-research/Finding-government-statistics

Bindle 2016, About Bindle Gifts. Retrieved 5th August 2016 from http://bindle.com.au/

BPP Learning Media 2010, Business Essentials: BusinessStrategy, London, BPP Learning Media.

Campbell, D. Et al 2002, Business Strategy: An Introduction, Oxford, A Butterworth Heinemann.

Coyne, K. P 2004, «Sustainable Competitive Advantage-What It Is, What It Isn’t», Business Horizons, vol. 29, no. 1, pp. 54-61.

Economic Outlook, ACT Budget 2016 – 2017, Retrieved 5th August 2016 from ttp://apps.treasury.act.gov.au/budget/budget-2016-2017/budget-in-brief/economic-outlookh

IBC 2013, Australian Home and Housewares Market Overview, International Business Council, the home authority, p.1-12.

Johnson, Scholes, Whittington, Angwin & Regner 2014, Exploring Corporate Strategy, Prentice Hall, Ed 10.

Olivera, J 2015, Succeed in Australia’s Giftware and Homeware Sectors, UK Trade and Investment, Retrieved 5th August 2016 from http://www.slideshare.net/lauramatich/ukti-australia-march-2015-presentation-jolivera

Thompson, A 2005, «Strategies for Staying Cost Competitive.» Harvard Business Review, vol.62, no. 1 pp. 110-17.