Global Marketing Environment

Master of Business
Marketing
HBM420
Fundamentals & Practices
Of
Marketing
Individual Assignment: Global Marketing Environment
Executive Summary
The purpose of this report is to critically evaluate the information contained in ‘The
Global Marketing Environment’ (Kotler 2007 ch. 5)and discuss marketing managerial
implications as applicable to accounting software company MYOB. In doing so,
numerous scholarly reviewed journal articles are cited, as well as specifically sourced
company information and data, from both print and online databases, and websites.
Focusing firstly on the internal marketing environment, we are presented with who and
what make up the internal environment and how their actions, or potentially differing
perceptions of what constitutes value, can reflect on the marketing aims and objectives of
senior management. It is noted that differing perceptions can result in a decline of value
of the end product for the consumer.
Next, we explore the notion that MYOB is not capable of changing with its customers
and that competitors can offer a better product with the same perceived value. Evidence
does however tend to suggest that due to the high priority that MYOB places on customer
service and support, that this is an area they have paid particular attention to. With
specific product examples, MYOB can prove these statements to have little substance.
Of the external marketing environment, demographics, technology and politics have all
played a part in shaping the company that MYOB are today. (Kotler, 2007) analyses
these areas in great detail, and much of what (Kotler, 2007) writes in terms of managerial
implications relates closely to the structure with which MYOB operates its business.
Journal articles lay heavy claim to MYOB being in the right place at the right time, by
capitalising on the introduction of the GST in Australia. Whilst this may be the case,
MYOB not only had sell themselves to a pre-information technology generation, they had
to do it better than their rivals; and they clearly did.
Research was also conducted into the field of global expansion of software companies, as
it was determined to be an area that (Kotler, 2007) neglected to analyse. According to
journal articles, MYOB followed similar trends to other software companies, and pursued
local ahead of global expansion. Once they had secured a strong base, MYOB took
bigger steps, and are now at the forefront of the accounting software industry in more
than seven countries worldwide. Finally, recommendations are made as to the likely
conclusions and consequences of MYOBs use of the identified marketing concepts.
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Table of Contents
Page
Executive Summary
2
1.
Introduction
1.1
Company overview
1.2
Scope of report
4
4
5
2.
The Marketing Organization
2.1
The internal environment
2.2
Competition
2.3
The external environment
2.3.1 Demography
2.3.2 Technology
6
6
7
8
8
9
3.
The Political Environment
3.1
MYOBs response to the introduction of the GST
10
10
4.
Going Global
4.1
Choosing overseas markets
11
11
5.
Conclusion and Recommendations
13
6.
List of References
15
7.
Appendices
Appendix 1 – Scholarly reviewed journal articles
16
17
8.
List of Tables
Table 1 – MYOBs customer market
5
3
1. Introduction
1.1
MYOB is a global provider of business management software, services and
support to small to medium sized enterprises (SME) and accounting practices. MYOB
uses its knowledge and expertise to help more than 500,000 SMEs worldwide build better
businesses. MYOB believe it to be their local knowledge and expertise that delivers the
edge for their customers.(MYOB-Ltd 2007)
Upon entry into the software development market in 1991, MYOB had the vision of
equipping SMEs with powerful, accessible and affordable business management systems,
aimed at alleviating administrative burdens, and giving business owners the insight to run
their businesses more successfully. MYOB has maintained a focus on providing quality
customer support ensuring their customers gain maximum return on their investment.
Success in helping empower business owners has resulted in rapid growth for MYOB;
growth that can be attributed to recommendations by existing customers; which is still an
important source of business today.(Maguire 2007)
Globalisation and technological advances have forced businesses into an environment of
intense competition and as such, businesses must look for smarter and more efficient
ways to operate. MYOB offers businesses the capability to increase efficiency, and move
from the cumbersome old-school techniques of cost management and accounting using
spreadsheets and databases, into the modern age of end-to-end solutions.
It is through their continued analysis of customer needs across the global marketing
environment, and their execution of the principles within, that MYOB have been able to
concentrate their focus on key global marketing strategies in order to generate more
customers and revenue.
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1.2
This report critically evaluates the information contained in ‘The Global
Marketing Environment’ (Kotler 2007)followed by an exploration into the marketing
managerial implications associated with MYOB. In doing so, numerous journal articles
will be utilised, as well as specifically sourced company information and data. Finally,
recommendations will be made as to the likely conclusions and consequences of MYOBs
use of the identified marketing concepts.
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2. The Marketing Organization
When examining the global marketing environment, we need to begin by evaluating the
operations of the marketing organization. Who or what make up the marketing
organization? What internal and external factors may contribute to, or hinder
management’s ability to succeed with the product they are trying to market? What are the
likely consequences when groups within the organization are not focussed on the same
objectives?
2.1
First and foremost, the marketing management needs to ensure that they have a
clear understanding of their aims and objectives. (Kotler 2007)states that
marketing management has the task of attracting and building relationships with
customers by creating customer value and satisfaction. (Kotler 2007)fails to
elaborate on this statement, ignoring the ramifications associated with various
organisational departments having a different perception as to what constitutes
value. What R&D considers a representation of value to the customer may not
emulate what purchasing perceives value to be. Purchasing may believe the
supplies they procure to be of satisfactory quality, only to find out otherwise when
manufacturing produce the final product. Without first agreeing on what
constitutes value, the marketing organization cannot move forward with senior
management’s aims and objectives. Organizations adopting the marketing concept
must ‘think customer’ and work together to deliver value to customers, thus
ensuring that the customer keeps coming back.(Kotler 2007)
Retailers
Accountants
SMEs
Taxation Office
QuickTime™ and a
TIFF (LZW) decompressor
are needed to see this picture.
International Markets
Table 1. MYOBs Customer Markets. (Kotler 2007)
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2.2
Once the marketing organization conquers the internal environment, they face
fierce competition from the external market. I agree with (Kotler 2007)viewpoint, that to
be successful, an organizations product must provide greater customer value and
satisfaction than its competitors, but consider this statement to be missing depth. If an
organization wants to gain a real competitive edge on its adversaries, it must be prepared
to go the extra mile with their after sales service (not just the product). This is a strategy
that MYOB have built a solid reputation around. MYOB has a superior product, but it is
their commitment to customer support and after sales service that has seen them rapidly
grow to become the largest accountancy software provider in Australia, (Kelly
2007)whilst enjoying a 70% share of the New Zealand accounting software
market.(Pullar-Strecker 2007) In Australia, MYOBs growth has largely been attributed to
services, offering capabilities to small to medium sized enterprises (SME) that were
previously only available to large organizations.(Hayes 2004)
The biggest threat to MYOBs dominance in Australia and New Zealand comes from
emerging software group Reckon Group LTD. Reckon are differentiating themselves
from MYOB by incorporating ‘best-of-breed’ technology.(Kelly 2007) It seems Reckon
consider MYOB to be cheap and easy for the undereducated, and believe their product
represents the more sophisticated business management tool that today’s SMEs require.
MYOB mitigate against this, using their Exonet software as an example of a flexible
business management package that grows with their clients. Commitment to their
customer base during times of fast market change and globalisation, has enabled MYOB
to offer solutions to customers with rapidly expanding businesses, saving the costly and
time consuming rigmarole associated with changing software companies and learning
new systems.(MYOB-Ltd 2007)
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2.3
From the microenvironment of marketing, which contains the organization,
intermediaries, competitors and customers, we move into the macroenvironment.
The macroenvironment is affected by six major forces:(Kotler 2007)
–
Demographic forces
–
Economic forces
–
Natural forces
–
Technological forces
–
Political forces
–
Cultural forces
(Kotler 2007)goes into significant detail of all areas of the macroenvironment. I would
like to draw the readers’ attention to the demographic, technological and political
environment, and how MYOB successfully reflects an understanding of the concepts and
values associated with each environment.
2.3.1 Demography is the study of human populations in terms of size, density, location,
age, sex, race occupation, and other statistics. (Kotler 2007)Traditionally, MYOB have
taken great care in steering their product in the direction of the stereotypical generation X
(gen X) consumer; economically cautious, environmentally conscious consumers more
interested in job satisfaction and better quality of life than sacrificing personal happiness
for growth and promotion.(Kotler 2007)More recently however, MYOB has recognised
the sudden and rapid growth of Apple Mac users, both in Australia and overseas as the
coming of age of generation Y (gen Y).
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2.3.2 It is here that demography clashes with technology, and MYOB has seen an
opportunity to capitalise by providing the same products, service and support to Mac
users as it does to the PC faithful.(MYOB-Ltd 2007)Mac usage has long been associated
with consumers of higher education levels, more affluent income, and a greater
technological know-how. Whilst Mac’s are generally more expensive than the average
PC, their reputation for ease-of-use and reliability has seen them become a system of
choice for an increasing number of small business owners.(BusinessWire 2007)
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3. The Political Environment
3.1
The political environment refers to government agencies, pressure groups and
laws that influence and limit various organizations and individuals in a given
society.(Kotler 2007) In this discussion, MYOBs target market is the SMEs, and the
political association to this group stems from the introduction of the goods and services
tax (GST) into Australia in 2000. Many industry specialists were curious to see how well
MYOB, and other accounting software companies would respond to the change in the
political marketing environment. After some initial headaches, possibly the best thing to
happen to MYOB in Australia was the introduction of the GST. It was at this time that
MYOB and it’s closest competitor Quicken, together held an 80% share of the accounting
software market in Australia. (Australian 2007)But was it as simple as being in the right
place at the right time for MYOB?
According to journal articles, MYOB had to work very closely with the Australian
Taxation Office (ATO) in the lead up to the tax system change to ensure it’s customers
were not left without the support the company (MYOB) was famous for. Unfortunately
for all accounting software companies, a lot of the details needed during the preparatory
stages of the GSTs introduction just weren’t available.(Howard 2001)A software
development consultative group was set up to liase with the ATO and Treasury,
guaranteeing that all regulatory requirements and legislative changes were taken into
account when designing the new software.(Australian 2007)After all, what use would the
software package be to the consumer if it didn’t make life easier than pen and paper?
Again MYOB would capitalise on its service capabilities, with the introduction of
MYOB classes for SME business owners. While classes were not provided free of
charge, they were very low-tech and helped to ease the minds of the GST nervous
consumer, especially the gen Xers that were new to computers. Yet another great
example of MYOBs dedication to building long-term relationships with its customers
through its service, rather than the physical product.
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4. Going Global
4.1
Something(Kotler 2007)has failed to address in his analysis of the global market
is the question “Where to now?” How does an organizations know which global market
they should attempt to penetrate next? We have been presented with the information
required by marketing managers to make an assessment about market structure and
trends, but(Kotler 2007)has fallen short in his suggestions of what to do with this
information. What I believe has been neglected is some advice for successful global
expansion using what had previously been discussed.
Traditionally, organizations in the software industry move from one market to another
based on close geographical distance. But considering the nature of software
organizations and the Internet,(Tyrvainen 2007) is geographical distance really a barrier
anymore?(Tyrvainen 2007), present an interesting report on the theory that organizations
no longer need to be ‘stepwise’ when taking their business abroad. They suggest that
psychic and cultural distance no longer play as big a part in determining whether or not
an organization will attempt to break into a new market.(Tyrvainen 2007)Contrary to this,
MYOB were stepwise in their approach, choosing New Zealand as their first target when
turning global. (Hayes 2004) The geographic positioning was without doubt the best
option for MYOB, as management was able to move into New Zealand and instantly
provide the same service and support that they do in Australia, with very little difference
in operating costs.(Tyrvainen 2007)New Zealand’s culture differs little from Australia’s,
and this move paid dividends for the company. MYOB were not the only organization
taking the geographic approach, as managers from SMEs from New Zealand favoured
Australia as their initial step into the global market.(Tyrvainen 2007)
With their first steps into the global market secure, MYOB took bigger steps to capitalise
on the global accounting software market, and with the acquisition of software company
Solution 6, MYOB moved from small business products and services in Australia and
New Zealand, to mid-sized to large businesses in seven countries across the globe.
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(Hayes 2004) This reflects the conclusion that(Tyrvainen 2007), came to; that close
geographic distance is the managerial preference for global expansion.(Tyrvainen 2007)
It is my opinion that MYOB made the right choice to ‘stay local’ when expanding their
operations globally. They (MYOB) simply took what was proven to be as very successful
product to a new, yet familiar market. Once established in New Zealand, they received
the recognition they deserved for their product, service and their approach to ‘thinking
customer,’ and were able to command respect from the rest of the world. More recently,
MYOBs Asian operation delivered growth of almost 40% in a twelve-month period.
(Chappell 2007)
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5. Conclusion and Recommendations
From analysing peer-reviewed journal articles and various other sources of informative
authoritative media, and relating them back to accounting software company MYOB, it
can be concluded that the information provided by(Kotler 2007)in relation to the global
marketing environment is highly accurate and succinct.(Kotler 2007)does however, on
more than one occasion, neglect to explore topics to their full potential. Firstly, there was
no examination as to the ramifications associated with differing organisational
departments understanding of the concept of ‘value.’ Without a shared understanding,
senior management cannot set realistic aims and objectives for the organization, and
marketing management cannot deliver on the expectations of senior management.
We are then faced with the prospect of industry competition and how to provide the
consumer with greater value than our competitors. Whilst(Kotler 2007)touches on the
fact that all industry has competition, the articles used go one step further by illustrating
the effectiveness at which MYOB has been able to provide consumers with an industry
leading product, and then capitalise on its reputation for customer service and support
putting the MYOB at the forefront of it’s industry, both in Australia and abroad.
By targeting a particular demographic, and having the flexibility to adapt to technological
change demanded by these groups, as well as dealing with changes in political
infrastructure, it is little wonder that MYOB have sustained such a solid reputation for
customer care and service. Whilst MYOBs physical product is what firstly attracts the
consumer, the intangible product (the service and support) seems to be what hangs on to
them.
Having now established itself as an industry leader in Australia, MYOB set out to
replicate its product globally; and did so with great success. By first establishing a base in
a familiar international market, MYOB laid the foundations for global expansion. By
2004, just 13 years after its initial market entry, MYOB had moved into seven
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international markets, some as culturally diverse and high-tech as Singapore and Hong
Kong. All the while, MYOB remained focussed on ‘thinking customer,’ and it certainly
paid off.
MYOBs managerial team certainly have their aims and objectives very clear, and look to
remain focussed on maintaining the product and service standards that have brought them
to where they are today. My recommendation is that they keep doing what has worked for
them for the last 16 years. They have proven they can change with the times, respond to
competition and circumstances that are beyond their control and still provide the quality
of product and service that customers expect, so why change now?
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6. List of References
Australian, T. (2007). PC pins down paper chase – Tax time. The Australian: I04.
BusinessWire (2007) MYOB Announces Release of FirstEdge v3; $99 Entry-Level Mac
Small Business Accounting Software Goes Universal. Business Wire Volume, 1 DOI:
Chappell, T. (2007) MYOB says strong financial performance to continue in H207.
Australian Associated Press Financial News Wire Volume, 1 DOI:
Hayes (2004). Taking care of business – The world according to Craig Winkler. The
Australian: C07.
Howard (2001). “GST: A retro view.” Australian CPA 71(7): 36.
Kelly, R. (2007) Reckon Ltd first half NPAT increases 16.2 per cent. Australian
Associated Press Financial News Wire Volume, 1 DOI:
Kotler, P. (2007). Marketing, Pearson Education Australia.
Maguire, S. (2007). “The adoption of e-business and knowledge management in SMEs.”
Benchmarking: An International Journal 14(1): 37-58.
MYOB-Ltd. (2007). “2006 Annual Report.” Retrieved 18/07/07, 2007.
MYOB-Ltd. (2007). “Company Overview.” Retrieved 18/8/2007, 2007, from
myob.com.au.
MYOB-Ltd. (2007, 18/08/07). “MYOB strengthens focus on Mac.” Retrieved 18/08/07,
from myob.com.au.
Pullar-Strecker, T. (2007) Packaged software costs less than Xero – MYOB. Infotech
Weekly Volume, DOI:
Tyrvainen, A. O. a. P. (2007). “Market entry and priority of small and medium sized
enterprises in the software industry: An empirical analysis of cultural distance,
geographic distance and market size.” Journal of International Marketing 15(3): 26.
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7. Appendices
Appendix 1 – please see attached journal articles.
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