Mkt 421 Environmental Factors Paper
Environmental Factors Paper
Elizabeth McUne
MKT/421
December 16, 2013
Creig Foster
Environmental Factors Paper
Introduction
This paper will discuss the environmental factors that PepsiCo faces. These factors effect both the domestic, and global marketing the company does. Factors such as trade practices, demographics, cultural differences, and the Foreign Corrupt Practices Act of 1977 will all be discussed, as well as other factors that affect PepsiCo, and their marketing decisions.
Trade Practices and Agreements An environmental factor is an identifiable element to the physical, cultural, demographic, economic, political, regulatory, or technological environment that effects the survival, operations …show more content…
and growth of a company (Dictionary.com, 2013). The globalization of companies in today’s market has led to an economic interdependence that influences decisions made by companies doing business overseas. This environment means the success or failure of one company may mean the success or failure of another; the same can be said for economies. This global economic interdependence is consistently reinforced by free trade agreements between countries. When trade barriers are lowered it allows companies to remain dependent on one another. When barriers are increased, such as higher tariffs on imports, some companies might have to drop out of the race, which effects other companies in those markets. Currently PepsiCo is represented in over 200 countries (PepsiCo, 2013). The decisions PepsiCo makes influences and impacts the economies it operates in. For example, PepsiCo supports local farmers in Mexico, by buying their corn to make their products. PepsiCo’s decision in that market has led to the production of jobs, and more money in the economy (Strom, 2011).
Demographics
Demographics is another factor that can affect the marketing decisions of a company. When entering a foreign market, the people in that demographic must be considered. Age, population size, education, and even religion can be factors that will influence the success of a product in a new market. Demographics are what will help to identify and define a target market, and PepsiCo will want to ensure their products will reach the right people in the global markets, and the right products will be offered there too. Wilson (2009) states that it is critical to know your target market when crafting a business plan; understanding the target customers’ demographics will help to determine what the products you offer will be and what tactics will work best. PepsiCo will often use locally grown food to make its products, which not only helps their production, but helps market themselves in the foreign economy as a company that wants to give to the economy not just take from it.
Cultural Differences Cultural differences between counties can make it necessary for companies to have multiple marketing strategies.
One strategy will not blanket every country a product is marketed in, especially in the case of PepsiCo; operating in over 200 countries. It is important that the cultural differences are considered for the target group in each market, if they are not the strategy will not work, or could backfire completely. Not considering the cultural diversity of the counties PepsiCo operates in could be costly and embarrassing for the company. Considering these differences can alter product color, packaging, advertisement, and many other …show more content…
factors.
Social Responsibility and Ethics Every company has some responsibility to the society it operates in. Taking an active interest in the community, and not just serving the laws it has to abide by shows a true service attitude for the company, and can help to improve the support it gets from the community, and the economy of the place it serves. The global market today is led by companies that not only concern themselves with the sustainability of their product and service, but the continual improvement of the community, environment, and other issues in the areas they operate in. PepsiCo’s corporate vision shows that they are a company that concerns themselves with the communities they serve. In the corporate vision PepsiCo states, “PepsiCo’s responsibility is to continuously improve all aspects of the world in which we operate – environment, social, economic – creating a better tomorrow than today” (PepsiCo, 2013). An example of how they do this is their continual efforts to sustain fresh water. Ethics also plays a role in entering a foreign market. There are practices in the United States that may not be considered ethical in business in other markets; and the opposite can be true as well. It is important that PepsiCo, and companies like it, that operate overseas, research the ethical standards of the markets they enter. Can the company live up to the ethical standards of the market, are the regulations and laws of that country ones that the company wants to abide by, and are they ethical by the company’s standards? All of these questions have to come up. The same questions should be asked when developing a marketing strategy for the country in question.
Political Systems, International Relations, and the Foreign Corrupt Practices Act of 1977 There is extensive research that should be conducted before entering a foreign market because of the requirements that may be in place to do so.
Exporting goods and services is one of the simplest ways to enter a market, but relying on that means paying tariffs. Other options of entering a foreign market include licensing, contract management, and joint ownership. The advantages and disadvantages of each option must be weighed before a decision is made. Some countries, like Mexico, offer the option of a joint venture. A joint venture option is one of the best because it gives the company a contact in the market they are entering, making it easier to sell and market their products the way they want to. The politics of a country and the relation of a country to the United States can make entering a market more difficult. Sour relations can mean higher tariffs, or even banning products. Politics might mean regulation that isn’t standard for a company based in the United States. The United States government enacted the Foreign Corrupt Practices Act of 1977 to assist with the unethical, and political options that were available in foreign countries that are not considered in the United States. The Act addresses the issue of bribery and mandates it as an illegal business transaction. The Act was a response to over 400 companies admitting to questionable payments being made to foreign officials to obtain or sustain business in their
markets.
Technology
Technology has a vital and growing role in a company’s marketing approach. Technology has created a bridge directly from a company to the consumer. Sales profitability has increased due to this new way of communicating with customer. It allows a company like PepsiCo, to reach everyone in all 200 countries it operates in via the internet. PepsiCo has realized the importance of technology and has created applications for smartphones like the Pepsi Loot App. Not only is the customer awarded for “checking in” on the application by receiving points, and coupons, but the company gains an insight to their customers they didn’t have before (Peterson, 2011). Through technology PepsiCo, and companies like PepsiCo, can connect better with consumers and are able to do better research, and therefore better marketing than ever before.
Conclusion
The ability to understand the influence that environmental factors have on marketing can make or break a company. It is vital that companies, like PepsiCo, research and develop marketing plans that can overcome environmental factors. Demographics, culture, and politics all play a role in how a marketing strategy will be successful. If the proper research and consideration isn’t taken, the results can be very costly, unethical, or offensive. Any environmental factor that is not fully considered creates a weak link in a marketing strategy.
References
PepsiCo. (2013). Company. Retrieved December 14, 2013, from http://www.pepsico.com/Company/Our-Mission-and-Vision.html
Peterson, T. (2011). Brands Must Embrace Digital to Remain Relevant: Social Consumer 2011. Retrieved December 14, 2013, from http://www.dmnews.com/brands-must-embrace-digital-to- remain-relevant-social-consumer-2011/article/198979/
Strom, S. (2011). For Pepsi, a business decision with social benefit. Retrieved December 14, 2013, from http://www.nytimes.com/2011/02/22/business/global/22pepsi.html?_r=2&pagewanted=pr int
Wilson, E. (2009). Know Your Target Market. Entrepreneur. Retrieved December 14, 2013, from http://www.entrepreneur.com/marketing/article202334.html
Elizabeth McUne
MKT/421
December 16, 2013
Creig Foster
Environmental Factors Paper
Introduction
This paper will discuss the environmental factors that PepsiCo faces. These factors effect both the domestic, and global marketing the company does. Factors such as trade practices, demographics, cultural differences, and the Foreign Corrupt Practices Act of 1977 will all be discussed, as well as other factors that affect PepsiCo, and their marketing decisions.
Trade Practices and Agreements An environmental factor is an identifiable element to the physical, cultural, demographic, economic, political, regulatory, or technological environment that effects the survival, operations …show more content…
and growth of a company (Dictionary.com, 2013). The globalization of companies in today’s market has led to an economic interdependence that influences decisions made by companies doing business overseas. This environment means the success or failure of one company may mean the success or failure of another; the same can be said for economies. This global economic interdependence is consistently reinforced by free trade agreements between countries. When trade barriers are lowered it allows companies to remain dependent on one another. When barriers are increased, such as higher tariffs on imports, some companies might have to drop out of the race, which effects other companies in those markets. Currently PepsiCo is represented in over 200 countries (PepsiCo, 2013). The decisions PepsiCo makes influences and impacts the economies it operates in. For example, PepsiCo supports local farmers in Mexico, by buying their corn to make their products. PepsiCo’s decision in that market has led to the production of jobs, and more money in the economy (Strom, 2011).
Demographics
Demographics is another factor that can affect the marketing decisions of a company. When entering a foreign market, the people in that demographic must be considered. Age, population size, education, and even religion can be factors that will influence the success of a product in a new market. Demographics are what will help to identify and define a target market, and PepsiCo will want to ensure their products will reach the right people in the global markets, and the right products will be offered there too. Wilson (2009) states that it is critical to know your target market when crafting a business plan; understanding the target customers’ demographics will help to determine what the products you offer will be and what tactics will work best. PepsiCo will often use locally grown food to make its products, which not only helps their production, but helps market themselves in the foreign economy as a company that wants to give to the economy not just take from it.
Cultural Differences Cultural differences between counties can make it necessary for companies to have multiple marketing strategies.
One strategy will not blanket every country a product is marketed in, especially in the case of PepsiCo; operating in over 200 countries. It is important that the cultural differences are considered for the target group in each market, if they are not the strategy will not work, or could backfire completely. Not considering the cultural diversity of the counties PepsiCo operates in could be costly and embarrassing for the company. Considering these differences can alter product color, packaging, advertisement, and many other …show more content…
factors.
Social Responsibility and Ethics Every company has some responsibility to the society it operates in. Taking an active interest in the community, and not just serving the laws it has to abide by shows a true service attitude for the company, and can help to improve the support it gets from the community, and the economy of the place it serves. The global market today is led by companies that not only concern themselves with the sustainability of their product and service, but the continual improvement of the community, environment, and other issues in the areas they operate in. PepsiCo’s corporate vision shows that they are a company that concerns themselves with the communities they serve. In the corporate vision PepsiCo states, “PepsiCo’s responsibility is to continuously improve all aspects of the world in which we operate – environment, social, economic – creating a better tomorrow than today” (PepsiCo, 2013). An example of how they do this is their continual efforts to sustain fresh water. Ethics also plays a role in entering a foreign market. There are practices in the United States that may not be considered ethical in business in other markets; and the opposite can be true as well. It is important that PepsiCo, and companies like it, that operate overseas, research the ethical standards of the markets they enter. Can the company live up to the ethical standards of the market, are the regulations and laws of that country ones that the company wants to abide by, and are they ethical by the company’s standards? All of these questions have to come up. The same questions should be asked when developing a marketing strategy for the country in question.
Political Systems, International Relations, and the Foreign Corrupt Practices Act of 1977 There is extensive research that should be conducted before entering a foreign market because of the requirements that may be in place to do so.
Exporting goods and services is one of the simplest ways to enter a market, but relying on that means paying tariffs. Other options of entering a foreign market include licensing, contract management, and joint ownership. The advantages and disadvantages of each option must be weighed before a decision is made. Some countries, like Mexico, offer the option of a joint venture. A joint venture option is one of the best because it gives the company a contact in the market they are entering, making it easier to sell and market their products the way they want to. The politics of a country and the relation of a country to the United States can make entering a market more difficult. Sour relations can mean higher tariffs, or even banning products. Politics might mean regulation that isn’t standard for a company based in the United States. The United States government enacted the Foreign Corrupt Practices Act of 1977 to assist with the unethical, and political options that were available in foreign countries that are not considered in the United States. The Act addresses the issue of bribery and mandates it as an illegal business transaction. The Act was a response to over 400 companies admitting to questionable payments being made to foreign officials to obtain or sustain business in their
markets.
Technology
Technology has a vital and growing role in a company’s marketing approach. Technology has created a bridge directly from a company to the consumer. Sales profitability has increased due to this new way of communicating with customer. It allows a company like PepsiCo, to reach everyone in all 200 countries it operates in via the internet. PepsiCo has realized the importance of technology and has created applications for smartphones like the Pepsi Loot App. Not only is the customer awarded for “checking in” on the application by receiving points, and coupons, but the company gains an insight to their customers they didn’t have before (Peterson, 2011). Through technology PepsiCo, and companies like PepsiCo, can connect better with consumers and are able to do better research, and therefore better marketing than ever before.
Conclusion
The ability to understand the influence that environmental factors have on marketing can make or break a company. It is vital that companies, like PepsiCo, research and develop marketing plans that can overcome environmental factors. Demographics, culture, and politics all play a role in how a marketing strategy will be successful. If the proper research and consideration isn’t taken, the results can be very costly, unethical, or offensive. Any environmental factor that is not fully considered creates a weak link in a marketing strategy.
References
PepsiCo. (2013). Company. Retrieved December 14, 2013, from http://www.pepsico.com/Company/Our-Mission-and-Vision.html
Peterson, T. (2011). Brands Must Embrace Digital to Remain Relevant: Social Consumer 2011. Retrieved December 14, 2013, from http://www.dmnews.com/brands-must-embrace-digital-to- remain-relevant-social-consumer-2011/article/198979/
Strom, S. (2011). For Pepsi, a business decision with social benefit. Retrieved December 14, 2013, from http://www.nytimes.com/2011/02/22/business/global/22pepsi.html?_r=2&pagewanted=pr int
Wilson, E. (2009). Know Your Target Market. Entrepreneur. Retrieved December 14, 2013, from http://www.entrepreneur.com/marketing/article202334.html