Assignment 1 Critical Essay
This essay will attempt to critically explain how the poor economic climate in the UK might affect the marketing mix of a start-up retail venture in the high street.
This essay will walk through the processes of starting a retail business venture in the high street and discuss how the economy and the marketing mix directly effects each step. To do this it will be vital to explore the current economic climate and what a poor economic climate means?
A definition of a poor economic climate “a recession is a decline in growth, domestic product for two consecutive quarters and a depression as a prolonged recession resulting in falling prices, ...view middle of the document...
A process of investigation and testing is then implemented to identify the market segment the business will appeal too, and to discover if the intended business will fulfil the needs and expectations of those the business intends to supply too “Market segmentation is the process of dividing consumers into homogenous groups”.(De Pelsmacker,P.,geuenes,M., & Bergh,J.(2007)marketing communications a European perspective .first ed.Harlow: Pearson education limited.)
A poor economic climate has little ill effect upon this stage as development and much of the product testing can be done at very little or no cost. The greatest impact the economic climate plays would be in the markets which have opened up. Consumers are looking for cheaper products and alternatives to their current consumer patterns (Sue Tabbit(2013)the guardian. http://www.the guardian.com/enterprise/supplier.care,01/12/13) as a result high unemployment and an uncertain economic future, companies selling medium quality products at cheaper prices are reaping the benefits of the poor economic climate, as the supermarket chain Aldi has shown with a 200% increase in UK profits in 2011. (Sky news (2012)discount chain Aldi profits soar 200% http://news.sky.com/991623/discount-chain-aldi-profits-soar-200-percent, 29/11/13)
Many high street businesses are flourishing in the recession such as ninety nine pence stores, pound stores and resale stores such as Cash Generator due to the economic climate many of which appeal to the revised consumer culture of value for money being one of the main driving forces. (Tom Geoghegan(2009)How the recession has changed your high street. http://WWW.news.BBC.co.UK/1/hi/8318595.stm, 01/12/13)
It is important to ensure the customer feels that they are getting good value for a product and the supplier will have an influence as to the sale price of the product which makes it very important to maintain a good relationship with the supplier. Many businesses have tried to negotiate for cheaper prices from their suppliers and have had to be dropped as a customer as a result of over enthusiastic negotiating in an effort to reduce costs that the supplier is unable to fulfil or perhaps unwilling if the supplier is in an economically stable country India for example. (Sue Tabbit(2013)the guardian. http://www.the guardian.com/enterprise/supplier.care,01/12/13)
Once the business is in a position to begin to approach investors, the poor economic climate once again becomes a barrier to new start up business. This is due to investors and banks being more cautious and in some cases reluctant to lend or invest (2011,BIS.(business growth, access to finance, and performance outcomes in the recession) .london:BIS. http://WWW.gov.uk/government/uploads/system/uploads/attachment_data/file/32223/11-1415-buiness-growth-finance-performance-in-recession.pdf, 29/11/13).
This is partly due to the cause of the recession. US banks had invested into many borrowers...