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University of Wales MBA in Healthcare Management.

Managing Market
Course Assignment

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Zaytoun
Olive

Module leader: J. Naidoo Student Number: 15520 Word count: 3181 excluding references.

London 2011

TABBLE OF CONTENTS
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QUESTION A..............................................................................3 OVERVIEW.................................................................................4 BACKGROUND............................................................................4 THE MACRO-ENVIRONMENTAL (ME) FACTORS..............................5 POLITICAL .....................................................................................5 TECHNOLOGICAL ...............................................................................6 ECONOMICAL...................................................................................6 ENVIRONMENTAL ..............................................................................7 CONCLUSION.............................................................................8 QUESTION B..............................................................................8 COMPETITIVE ADVANTAGES........................................................8 THE MARKETING MIX.......................................................................10 THE GENERIC STRATEGIES...................................................................10 CONCLUSION...........................................................................12 REFERENCES ...........................................................................12

Question A

15520 Select an organisation and discuss how the microenvironment has influenced its marketing decisionmaking for the last 12 months, and how it is likely to influence its future decision-making.

Overview
The name Zaytoun has an Arabic origin and means olive tree in English. The history of olive tree goes back thousands of years. Land of origin of this precious tree is uncertain; however, olive trees are widespread in Palestine, Jordan, Syria, Spain, Greek, and Italy (The Olive Oil Source, 2011) In the Mediterranean culture, the word Zaytoun is connected to love, piece, and hope; it is also known as the golden oil. Even today, harvesting olives is a big cultural event, where extended families get together to support each other; the gathering itself impacts positively on strengthening the relationships among them. The word Zaytoun has also a religious meaning; it was mentioned in the holy Quran 1400 years ago in four places as well as in the Bible in many different places (The Olive Oil Source, 2011). The health care researchers have proven that there are many benefits in using olive oil in comparison with normal cooking oil. For example, olive oil contains mono-saturated fatty acids that have the potential to help the human body eliminate the cholesterol deposits in the blood vessels; as a result the risk of heart disease is minimised. Furthermore, olive oil could also be of assistance to maintain skin integrity (Hensrud, 2011)

Background
Zaytoun Company is a non-profit company founded by four campaigners in Palestine in 2004, aiming to find a market for their products in the United Kingdom (UK), which are mainly olive oil and dates (Zaytoun, 2011). The company mission statement was: We know that the best products are those that arise from the deep connection of a people to their land (Zaytoun, 2011). This is a very influential statement, which could be applied to many different aspects of life; when a person shows connection and love to what he does, the potential for better quality and higher productivity will be pushed to maximum.

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Zaytoun has become part of the World Fair Trade Organisation (WFTO) in 2009; in fact they are the first olive oil company in the world to be given this title (Social Enterprise, 2009). Part of their front-page titles is to enable the Palestinian farmers to access the international market, serve those who are at the heart of the production line and promise them access to basic human needs, and to support community projects back in the homeland of Zaytoun (Zaytoun, 2011).

The Macro-environmental (ME) factors

Kotler (2005) and others have pointed out the impact of the ME variables on marketing and drew the attention to how those variables could inflict opportunity and threat{Anonymous, 2001 #1}. The ME variables can be defined as the nonspecific, surroundings, and uncontrollable factors or forces, which might distress the organisation existence and have the potential to influence the strategic planning and the decision-making process within the organisation (Business Dictionary, 2011). Those variables or factors can be political, economical, socio-cultural, technological, legislation, and environmental. It is evident that the degree and harshness of the influence vary from one business to another according to the nature of the business in question. On many occasions, the decision makers have to adopt various contingency plans or need to adjust or alter their current management planning strategies in order to encounter those variables (Kotler et al 2005). Zaytoun as any other company has been influenced by some of the above factors, which are mainly political, economical, technological, and environmental. However, the remaining factors are deemed significant when assessing the company as a whole.

Political
The ongoing Israeli Palestinian conflicts in the Middle East that started several decades ago have an inevitable impact on Zaytouns marketing. According to the report published by Pawson (2009), for many decades Palestinian farmers have been prevented from having access to the global market; in addition, they have been prohibited to access their own land. There are various rules and regulations imposed by Israeli government from time to time, e.g. some age groups are prohibited to leave their homes at certain times. Moreover, restrictions on water usage and destruction of farms in order to build Israeli settlements have also blocked growth and development of agricultural production. Since its establishment, Zaytoun and other businesses in Palestine have been affected radically; exchanging goods in and out of the 5

15520 country has been always an issue. The Gaza siege imposed by Egyptian and Israeli officials to control the Islamist group Hamas also added hurdles; any trading business has to go through complex regulation process controlled by the Israeli government (The Olive Oil Source, 2011). Managers at the strategic level at Zaytoun took notice of this important factor. For the past year they have been working on establishing effective communication channels with the Israelis with similar interests in order to secure future expansion (Zaytoun, 2011). They have benefited from a similar initiative in the tourism industry: a collaborative agreement among national authorities of Jordan, Israel and Palestine was established this year to promote tourism in the region; their aim is to back up the Dead Sea campaign with the anticipation of winning the vote and becoming one of the New Seven Wonders of the World (Xuequan, 2011).

Technological
It is apparent that the advances in technology changed peoples perception of life. As an example, e-marketing has directed the way people explore the market; there is a wide range of goods that can be found on eBay. Technology could also incorporate adopting new machineries to do the business; an exceptionally wellestablished business will harness technology, e.g. e-commerce, e-marketing, and e-business, to achieve their planned goals and objectives as well as to gain competitiveness in the market place (Kotler and Armstrong 2008). In the 21st century Internet occupies almost every household. The awareness and demand of the users to explore the internet to look for their goods increases, and it is unlikely for any business to sustain without the use of internet marketing (Dixon, 2011). It is clear that internet marketing is the way forward, but dynamic considerations should be taken into account when designing the company web site, such as easy navigation between pages, colors, font, relevant information, and friendly use of online ordering (Kotler and Armstrong 2008). In respond to that Zaytoun has developed a website to address the needs and demands of their customers; there are links for UK distributors, newsletter, information on oncoming events, product descriptions, etc.

Economical
Inflation rate and recession all around the world have affected marketing radically for the past few years. Looking at the market place, Zaytoun has set their price at a very high-level; for example, a 500 ml bottle of extra virgin olive oil costs approximately 10.50, whereas a similar brand from neighboring 6

15520 region costs between 4 and 6. It could be argued that Zaytoun is a Fair Trade company and therefore the business has to push their price up to be able to gain profit enough to secure a reasonable payment for those who are at the front line production (Pawson 2009). However, managers at strategic level should be aware of the global economic situation, and re-consider their cost root analysis and come up with new contingency pricing plans to retain old customers and attract new ones. Zaytoun have already launched campaigns to attract customers, through getting involved in meetings and conferences in the UK organised by WFTO or any other individuals with similar interests; Palestinian farmers travel to the UK to talk about their experience and pass the message about the life of their own people. One of the latest talks was held in Aberdeen and sponsored by the local branch of the Scottish Palestine Solidarity Campaign (SPSC) in June this year (Arab British Chamber of Commerce, 2011). Furthermore, there are plans in place to attract new distributors in the UK, aiming to build effective long-term relationship. The new producers can enjoy the benefits of receiving the products at a very competitive price and be able to distribute them in the UK market, at the same time they will get all kinds of market support via Zaytoun newsletter, visiting farmers at the homeland of production line, and involvement in any meeting or talk in the UK (Arab British Chamber of Commerce, 2011).

Environmental
The geographical distance between Palestine and the UK is too long; transporting goods will incur higher expenses, and as a result, the total net profit will be compromised. To overcome the above issue and survive in the competitive market, Zaytoun has invested in technology; as mentioned earlier, the business uses Internet to attract new distributors and maintains current relations through emails. However, they could go further and develop an online ordering page to save time, money, and effort. The lack of water supply to the Palestinian farms caused by the Israeli occupation has affected the production as well as the expansion of the business because the possibility of planting new trees is limited. The ongoing obstacles that Palestinian farmers have to face whenever they try to reach and maintain their farms also contribute to the harm caused to agricultural trade in the region (Parson, 2009). Palestinian farmers are now aiming to use different type of trees that require small amount of water in the early days of cultivation (Gulamhusein, 2011).

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Conclusion
It is obvious that the ME forces can influence the road map of the business; Zaytoun Company has been affected quite massively by those factors. Prediction certainty of any global turbulence or any other predisposing causes of ME forces that might affect the business flow is minimal (Kotler and Armstrong 2008); a good example of that would be the volcano eruption in Iceland in 2010 that caused massive disturbances all over the world and affected various businesses and industries, mainly airlines. The managers at the strategic level should be aware of the early warning signs of the ME variables, which might directs to the unforeseen nature of the business. As a consequence, contingency plans could be put forward.

Question B
Using the same organisation, discuss how the marketing mix is used by the strategist to gain competitive advantage in its chosen sector.

Competitive Advantages
ME forces could be seen as a double-edged sword; they can open doors to new opportunities and at the same time they can trigger threats. Kotler et al. (2005) have touched on a very interesting point: that some strategists realise that ME forcers are beyond the company influence; therefore, they sometimes have to wait and see what the environment can offer. If the outcome is an opportunity, they will benefit from it, and if it is a threat, they will prepare to avoid it. On the other hand, there are others who will watch and interact at the same time, and on many occasions they will try to influence the environment to serve their goals. A good example of this would be a company strategist trying to arrange an under-table agreement with a government official to influence a tender for his company benefit in return for a payment; this is of course is an illegal act, but some people do it.

15520 There is an interesting model at the National Health Service in the UK, which is a responsive approach to deal with the deteriorated patients outside the intensive care unit. In summary, there are triggers (so called early warning scores) to determine the unwell patients in the hospital wards; the nurse or the doctor will respond to those triggers at the right time in order to prevent any life threatening consequences. This model could fit nicely to marketing to avoid threat (Roberts, 2008). Confronting the ME to gain competitive advantage in the 21st century is becoming a very difficult task to achieve (Kotler et al 2005). There are many definitions of competitive advantage looking at various aspects of this concept. The resultant common theme among them is to gain competiveness and uniqueness; this will necessitate sustaining value, retaining profit, and reaching customer satisfaction as much as possible (Rumelt and Kunin 2003). This will lead to another approach developed by an American advertising advocate E. St. Elmo Lewis, which is called AIDA or AIDAS (Fig. 1). A stands for Attention, i.e. drawing customer awareness or attention; I for Interest, i.e. digging deep into details in order to engage customers and make them interested in the product; D for Desire, i.e. fully engaging the customers with the product and trying to convince them that this product is a musthave; and A, the last and the most important, stands for Action, i.e. when customers take action to purchase the product (Ferrell and Hartline 2005). Some writers go a bit further and add to this approach an S, which stands for Satisfaction, i.e. making sure that customers are satisfied with the product; this is to assure retaining customers and securing loyalty to a certain extent (Hadzi, 2011).

Figure1: the AIDA/S Cycle

15520 There are many other approaches and models used to analyse the environment surrounding the company, such as marketing mix (the four or the seven Ps), Porters five forces, and Porters generic strategies.

The Marketing Mix

The marketing mix or what is known as the 4 Ps is a model developed by Jerome McCarthy in 1960s (Banting and Ross 1973). The variables of his model include product, price, promotion, and place; it is a way of looking back and forward in order to assess where the business stands in the market, aiming to find a way to get those variables to a better stage in order to retain customers and achieve competitiveness. Zaytoun has benefited from this model and applied the promotion variable to their business; they worked hard to establish channels of engagement with their UK customers. Customers can visit farmers in Palestine during the harvesting season; both farmers and customers can enjoy the experience and share food and accommodation at decent price. As a result, customers can feel that they are part of the process, and Zaytoun can retain them for many years to come if they know exactly how to keep them satisfied (Paswon 2009). In relation to the product, there are recent plans towards cultivating date palms, as they can survive on just one third of the water necessary for other fruits as well as providing more alternatives to the market (Gulamhusein, 2011). Although Zaytoun is part of WFTO, in my view the price is still an issue. According to Pawsons report (2009), only 31% of the profit goes back to the farmer, whereas 31% go to the exporting organisation, 29% towards the UK cost, and 9% again to the exporting organisation. Revisiting those percentages and the overall price might be deemed crucial at some stage in order to help the business to survive in the current challenging environment.

The Generic Strategies

Porter enriched the marketing research by introducing the generic strategies in the early 1980s. The three strategic business units (SBU) are the Focus, Differentiation, and Cost (Fig. 2), where Differentiation stands for uniqueness or quality, Cost means aiming to keep the price as low as possible to engage the massive market, and Focus stands for concentrating on a narrow segment of population with an aim to combine cost and differentiation together (e.g. private jet industry).

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15520 Porter (2004) also argues that a good competitor is the one who is able to stay at edge of the value; generate it, maintain it, and sustain it. He also states that in a large organisation it is possible that different SBUs can work at different levels, but it is necessary to make sure that they are not working against each other, as this might lead to organisation blockage - being stuck in the middle.

Figure 2: Porters Generic Strategies.

Zaytoun has already benefited from Porters strategies and invested in differentiation and focus SBUs; their focus is solely on the UK market. The socio-cultural factors benefited them. In the recent years, the UK customers have become aware of the healthy eating habits and their positive impact on the quality of life. The advancements in the education level of the customers have also contributed to this, there is also a campaign among UK residents about health benefits of olive oil and organic products; as a result, the demand for organic olive oil in the UK is increasing. However, the current international recession has impacted negatively on marketing. To survive in such a challenging climate and erratic environment, people tend to cut down on their spending, and search for alternatives to buy their goods at lower price. However, there will always be a minority of wealthy individuals who will be less affected by the economic downturn. These groups could be able to afford buying their goods at any price, e.g. a person like the singer Cheryl Cole who earns a fortune and spends thousands on make up and accessories will not hesitate to spend 10 on a bottle of olive oil, if she is sure that this product will fit into her 11

15520 healthy diet. Zaytoun could direct their focus on similar customers to gain loyalty, attain and retain competiveness As mentioned earlier, Zaytoun has joined the WFTO; this is also a focus. Zaytoun managers are aware of the importance of having WFTO logo displayed alongside their company goals and objectives, and that this will have a positive impact on attracting UK customers. Another focus is on people supporting the Palestinian communities and the cooperative nature of the business.

Conclusion
The ME factors can play a very important role in the marketing world; these variables can easily influence the direction of the business towards success or failure. A good business leader continuously uses assessment tools to evaluate the surrounding environment of his business and is able to react to the elements of threat or opportunity at the right time, with the right product, and in the right place. There are many models and approaches developed to assist those at the strategic level of management; however, adopting one over another is not an issue. What does matter is adopting the right model for the business; on many occasions the leaders have to combine more than one. Zaytoun are still in the toddler stage in business. There are still more lessons to be learned. However, they have already taken the first steps to climb the marketing ladder by adopting some of the models and approaches. Having said that, there are issues to be covered and room for growth and improvement, e.g. price, neighboring competitors, as well as dealing with political instability. Also, instead of focusing on the UK market only, they could try some other markets worldwide where lower expenses could contribute to higher profit.

References
Arab British Chamber of Commerce (2011) Olive Oil from Palestine, [WWW], Available: http://www.abcc.org.uk/_db/_documents/Palestine.pdf [Accessed 22/11/2011]. Business Dictionary (2011) Macro-environment, [WWW], Available: http://www.businessdictionary.com/definition/macroenvironment.html [Accessed 17/11/2011]

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Banting, P.M. and Ross, R. E. (1973) The Marketing Matrix. Journal of the Academy of Marketing Science, vol. 1, pp. 1-11. Dixon, B. (2011) Internet Marketing: small firms just dont get it, Start your Business, vol. 56, April, pp. 21. Ferrell, O. C. and Hartline, M. (2005) Marketing Strategies, 5th edition. Thomason South Western. Gulamhusein, K. (2011) Seeds of Justice. EMEL, vol 83, no. 8, August, pp.72. Hadzi, I. (2011) AIDAS Marketing, [WWW], Available: http://ihadzi.hubpages.com/hub/AIDAS-AIDAS-Marketing [Accessed 18/11/2011]. Hensrud, D. (2011) Olive oil: What are the health benefits? [WWW], Available: http://www.mayoclinic.com/health/food-andnutrition/AN01037 [Accessed 15/11/2011] Kotler, P. and Armstrong, G. (2008) Principles of Marketing, 12th edition. New Jersey: Prentice Hall. Kotler, P., Wong, V., Saunders, J. and Armstrong, G. (2005) Principles of Marketing, 4th edition. Prentice Hall Europe. Pawson, C. (2009) The Zaytoun story, [WWW], Available: http://www.zaytoun.org/files/2011/10/Zaytoun_Media_Pack_Repro.p df [Accessed 20/11/2011] Porter, M.E. (2004) Competitive Advantage: Creating and Sustaining Superior Performance, revised edition. New York: The Free Press. Roberts, T. (2008) The Early Warning Score: Is it the Right Tool for the Job? British Journal of Anaesthetic and Recovery Nursing, vol 9, pp. 75-78. Rumelt, R.P. and Kunin, E. (2003) What in the world is completive advantage? The Anderson School, University of California, Policy working paper. Social Enterprise (2009) The bottom line: Ethical oil is a first for Fair trade, [WWW], Available: http://www.socialenterpriselive.com/section/features/people/200908 26/the-bottom-line-ethical-oil-first-fairtrade [Accessed 21/11/2011]

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15520 The Olive Oil Source (2011) History of the Olive, [WWW], Available: http://www.oliveoilsource.com/page/history-olive [Accessed 15/11/2011] Zabriskie, P. and Hamad, J. (2006) The Tomatoes of Wrath. The TIMES , vol. 167, no. 17, pp. 47-47. Zaytoun (2011) [WWW], Available: http://www.zaytoun.org/ [Accessed 15/11/2011] Xuequan, M. (2011) [WWW], Available: http://www.xinhuanet.com/english2010/ [Accessed 20/11/2011]

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