Introduction
The free market economic model dominates the world economy. With the exception of china, Cuba and North Korea, the rest of the world’s economies are dominated by free market principles where forces of demand and supply dictate market trends.
In the theory of the firm, business operate in conditions dictated by the two forces but that operate on larger context of microeconomic and macroeconomic environments. The microenvironment represents the market conditions and/or elements that a firm has control over and which it can easily be manipulated to suit its marketing operations.
They are the factors that determine the firm’s provision of goods or services. The factors may include intermediaries, the competing firms, and conditions within the firm itself. On the other hand the macro environment refers to the expanded business space that is characterized by forces beyond the individual firm’s control.. They include demographic factors that largely involve characteristics and trends of the population, economy, political climate, cultural characteristics, technology, and natural forces.
In the free market environment, firms are in business to make profit. One of the most important concepts in capitalism is marketing. Due to competition, firms try to entice customers to buy their products to make extra money. Competition is brought due to the presence of multiple players in different industries and sectors in the economy. Food and snack industry is one of the biggest scores in the above economic order that employs millions of people in the US and worldwide.
Stacy’s Pita Chip Company, a manufacturer of healthy, baked, natural snack foods, and a leading player in the snack and food market will form the basis of analysis in this paper. Both the micro and macro business environments in which it operates will be analyzed as well as the marketing mix that it has adopted to sell its products. The company has wide variety of products on offer to its customers.
This paper is supposed to specifically analyze the marketing approach of cinnamon and sugar chips. It’s important to note that the company has no explicit marketing approach that explicitly focuses on the product. The marketing strategy that it has adopted focuses all the products under the Pitaman brand name. The paper will therefore be focusing on cinnamon in reference to the overall strategy adopted by Pitaman.
Macro and Micro business environment
Microenvironment
The microenvironments in which Stacy’s operate as include the company itself, marketing techniques, intermediaries, suppliers, and competitors.
The current environment of the company refers to the departments and management of the company. The various departments may include finance, research, development, and accounting. All the departments have a role to play in the making of marketing decisions.
Stacy’s is a relatively small company compared to industry leader such as Frito North America or Kraft Foods Inc. before it was purchased by PepsiCo, the company only had a handful of employees and served the city of Boston. However, popularity of its products and capital injection from new owners has enabled its expansion and presence of its products nationwide. By the end of Q1 of the year 2005, the company had over 200 employees comprising of both permanent and contracted staff.
In the microeconomic environment, suppliers form one of the most critical aspects of a firm’s operations. Delay in receiving supplies has a negative ripple effect since customers will not be served in time. This is likely to lead to customer satisfaction and customer relationship is likely to be affected as a result.
Stacy’s operates in a highly competitive environment where snack manufacturers are very specific about supplies. Stacy’s has however managed to keep reliable suppliers and there is not any time that customers have experiences delays due to shortage f the snacks they offer.
In marketing intermediaries can be referred to as a “necessary evil”. Intermediaries have grown to be one of the most critical elements in the microeconomic environment.
They include distributors, resellers, marketing agencies, and financial providers who help in the distribution channel of the products to the customer. They help in the promotion and distribution of its products to the consumer at the end of the distribution channel. Stacy’ operates in a microeconomic environment where they have engaged the services of major reseller chains such as Wal-Mart.
According to the company, “its products can be found in food retailers across the nation including Shaws, Stop & Shop, Roche Brothers, Gelsons, Wild Oats, Whole Foods, Costco (where it is the top-selling snack item), and BJ’s Wholesale Club”. The company has independent reseller points across the country and since its acquisition by PepsiCo, the acquirer’s network of distribution has helped greatly in enhancing the availability of the products to the end consumers.
Perhaps the biggest asset that a firm can have in the microeconomic environment is its customers. The customer base may range from domestic to international consumers. It also includes government as well as reseller markets. A big part of Stacy’s market is comprised of consumers that purchase products for personal and household use.
They form the bulk of the consumer base of the company. Since the company does not deal in products that help manufacture snacks, the business consumers are not very critical to its success. Like the consumer market, the reseller market is composed of all the intermediaries that buy Stacy’s products to sell at a profit.
They include major supermarkets and snack outlets that have incorporated Stacy’s products due to rise in demand. The government market mainly centers on buying of food for charity or hunger relief programs. Thy also buy foods for stocking of strategic reserves. While the US government may not be engaged in such activities, Stacy’s works with many not for profit companies to avail the healthy snacks that are associated with it.
Other intermediaries like marketing research firms, advertising and consulting have all played an important role in the growth of the company. In the year 2005, the company announced that it was taking its snack business to the UK effectively signaling its intention to pout its footprint on the international market. Besides the local market therefore, the other important factor in the microeconomic environment is the international clients and Stacy’s is implementing the plans.
Business firms operate in a competitive environment. Competitors form part of the microeconomic environment where firms present similar or substitute products that sell based on quality or affordability. The snack and food industry in which Stacy’s operates in is saturated with many companies that offer the same products. As a result, competition is intense and any company that would like to survive must come up with strategies to maintain or grow their market share.
Another important aspect in the microenvironment are the stakeholders. They form all the interested groups that affect the business operations of the firm. They include the communities that surround the firm in its area of operations. In Stacy’s case, the company has been involved with local groups that advocate for the consumption of healthy foods. The Randolph Chamber of Commerce in 2005 for instance praised the company for its socially conscious approach in the production of healthy foods that have no cholesterol.
Macro-environment
One of the most important factoring the macroenvironment in business is demography. It includes the size, density, race, genders, distribution, ethnicity, and occupation activities of the population that supports a firm’s business activities. Demographic factors come in handy in the development of market segments.
In the American market where Stacy’s operates, the largest consumers of the type of snacks Stacy’s is offering are teenagers and young adults who fall between the ages of 13-35 years. There is also the age group of 35-44 years who consume almost a third of the national average of salted snacks.
The economic environment also forms a critical factor in the macroenvironment of business forms. It determines the purchasing power of the market segment that the firm targets. Stacy’s operate in the American market where per capita income is one of the highest in the world.
Growth that the company has experienced since its founding in 1997 can be attributed to the capacity of its potential clients to buy the products offered by the company. The economic environment in which this company operates is highly differentiated and spending patterns differ greatly. As a result, every product that Stacy’s is offering has customer hence the success acquired by the new products it has introduced.
The natural environment in which a firm operates also makes up one of the critical elements of the macroeconomic factors. In Stacy’s case, it includes the raw materials that the company uses to manufacture its products and as well as the amount of pollutants, the company adds to the environment.
At a time when environmental consciousness is a top priority for governments and corporations, it is important that the policies and business operations that the company pursues be environmental friendly. Failure to which, a company can easily suffer backlash from consumers that can irreparably damage its reputation.
Perhaps the most critical of all macroeconomic factors in the current business environment is technology. Technology nowadays is dynamic and businesses that do not adopt capital-intensive technologies are at risk of losing out in the competitive business world.
In 2005, Stacy’s opened a high capacity factory in Randolph, Massachusetts that operates on a 24 hour basis. The main aim was to produce products continuously so satisfy the growing demand for the company’s products. A continuous update of the firm’s technological assets will help keep up with the competition through production high quality products.
The political environment greatly affects business operations. This ranges from the laws that have enacted to govern business to the stability of the politics of that particular territory. The political environment where Stacy operates is very mature and rarely do political shocks directly affect the food and snack industry.
The laws that exist in the US make it possible for the thriving small businesses through availability of credit and a vibrant market supported by a high per capita rate. At its inception, the above factors played a crucial role in the success that the company experienced.
Marketing Mix
Marketing is all about identification of the needs of a target market and packaging the products in a targeted way so that the products can move and the firm makes a profit (Kotler and Phillip 38). It involves firms getting out of their way to satisfy customers’ wants better than what competition offers.
Stacy’s products like cinnamon and sugar chips are targeted at health conscious consumers. Thy make the core segment of Stacy’s cinnamon and sugar chips.
Success in target marketing can only be brought by doing research an incorporating four factors that Jerome McCarthy referred to as the four P’s. The combination of all the four factors is what is referred to as the marketing mix that is important for firms to carry out research on the potential customers to understand their needs that consumers want for easier identification of the segment.
Many scholars assert that the best way to achieve success in target marketing is to include marketing mix that is supported by four P’s. The four P’s are the product, price, place, and promotion.
Stacy’s Pita Chip Company
Product
Stay’s has a wide variety of products among them, Simply Naked Pita Chip, Multigrain Pita Chips, Italian Harvest Pita Chips and Cinnamon and Sugar chips that it advertises directly into the market.
These products are unique since they do not contain cholesterol and have a low fat content. The products are specifically meant for the health conscious clientele who technically make up the market segment that the company is targeting.
Price
The pricing of the products from Stacy’s is friendly to customers. According to the company, it has taken measures to provide friendly prices especially at this time of the credit crunch. The company has settled on products that target consumers have found affordable all along.
Place
This is where Stacy’s products are available. The products according to the company are available in all major retail centres nationwide. It ensures easy accessibility of the products by the targeted segment of the population. The place can also include the physical store like the retail outlets mentioned above as well as the online stores that where customers can order through the internet.
Promotion
This is the mode of communication that the company is using to market it products. Stacy’s has used both electronic and print media to advertise its products especially cinnamon sugar chips.
4 C’s
The four C’s approach to marketing was first proposed by Robert F. Lauterborn in an effort to help companies adopt ways that encouraged niche marketing as opposed to mass marketing. The model is consumer oriented and involves the consumer, cost, convenience, and communication. He argues that the four C’s (Lauterborn, et al 48) can replace the four P’s.
In the approach, the product is replaced by the satisfaction of consumer needs. Pricing is replaced by cost where it’s assumed there is a costs incurred when the consumer does not choose the product or when he chooses to buy al alternative. Place is replaced by convenience which implies on the ease with which the products is accessed by the consumer.
Communication takes the place of promotion. Lauterborn argues that promotion for the sake of promotion does not help in marketing. Instead, firms through promotions should seek to communicate with customers. Stacy’s has adopted a targeted approach different from what traditional marketing recommends. It nevertheless includes elements of the 4P’s and 4C’s. Dew Nick captures the approach as follows
“They are their brand, so instead of television commercials, they give away chips in person at trade shows, events, and grocery stores. Their web site is a consistent reflection of the pair as well. Healthy recipes featuring Stacy’s Pita Chips, photos of the team, accompany information about the company and products and every page features a hand-drawn caricature of Stacy herself. The approach worked so well that in 2006, when the Andruses were selling US$60 million in chips a year” (Dew, 2011).
The company has held a variety of targeted marketing campaigns that have incorporated the four P’s. One of the promotions is the “To Stacy, From Stacy” campaign where the company sent to every one in the country a box full of chips. The company then asked the recipients to purchase a gift from Stacy’s for anyone that they felt needed. The main objective was to produce awareness through word of mouth.
In the above promotion, the product was the company’s chips including cinnamon chips. All the boxes sent out ere free of charge. Though the recipients were asked to purchase the chips for a friend as a gift, the fact that the company sent free products meant a lot. The campaign targeted the entire country, an ambitious marketing style that achieved nationwide exposure for the product.
The company has highlighted the success of the campaign and has included it its website a lit of Stacy’s who went on their way to support it. That was success from any marketing point of view.
Conclusion
Stacy’s prospects look bright. The company is still young and focuses marketing and expansion will sure increase its sales. It is important for firms to carry out research first on the needs of their customers to establish a market segment in targeted marketing is going to succeed.
Incorporating the 4P’s is important. However, Lauterborn’s model that includes the four C’s should be given priority alongside 4P’s because of its emphasis on niche carving. When a firm carves out its niche, it assured of a rock solid base that it can rely on in bad economic times and sometimes when, marketing campaigns do not succeed. Stacy’s has adopted the 4P’s for its targeted marketing campaigns. There are many more ways that firms can incorporate the approach to increase sales through marketing.
Works Cited
Kotler, Phillip and Gary, Armstrong. Principles of Marketing: (Version 14/E). New Jersey: Pearson Education Inc. 2012. Print.
Lauterborn, Robert, et al. Integrated Marketing Communications. New York: NTC Business Books, a division of NTC Publishing Group. 1993. Print.
Dew, N. (2011). Identity Chip – The Story of Stacy’s PIta Chips.