The Value of Market Auditing Essay Example

of routine antibiotics and ensure that animals purchased from their farmers are allowed to naturally mature, avoiding health problems associated with accelerated growth. While Abel and Cole have several strengths, they do face some weaknesses. One weakness is their lack of significant market share in the organic market since 40% of sales come from farmers who provide food grown in their own fields or raised in their own barns. The organic food market itself comprises only 1-2% of worldwide food sales. However, Abel and Cole do have opportunities that they can seize.

The organic market has experienced substantial growth, with a ?1.93bn increase amounting to a 22% rise. Over the past decade, the market has consistently expanded at an annual rate of 27%. Thanks to Phoenix Equity Partners' recent investment of ?40m, Abel and Cole can now broaden their delivery services to reach more areas and enhance their market presence.

Able and Cole are expected to profit from the growing demand for fair-trade products, as consumers spent 1.1 billion on Fair-trade Certified Products in 2006, a 42% increase compared to the previous year. However, like any small business, Abel and Cole also face challenges. The recent credit crunch has significantly affected food prices, which Abel and Cole will need to address.

One of Able and Cole's competitors, Whole Foods Market, suffered a ?10 million loss in its first year. Abel and Cole faces competition from other direct competitors like Whole Foods Market, River food, Organic Delivery Company, as well as small farmers who sell directly to customers. However, their biggest competitors are supermarkets, which are dominant players in the organic food market. According to a recent study, "box

schemes still hold only about 8 per cent" of the overall organic market. A PEST analysis helps Abel and Cole identify external factors that directly impact their business, forming part of their market audit. This analysis includes Political elements (EU, national government, local government, regulatory bodies, and trade associations), Economic factors, Sociocultural influences, and Technological aspects.

Within the realm of economic factors, taxation, interest rates, trading blocs, and government policy and market structure all play a significant role. The credit crunch, as mentioned earlier, has prompted the government to raise interest rates, which would not bode well for Abel and Cole if they were seeking funding to expand their business. Technological aspects encompass advances in software. In order to maintain an edge over their rivals, Abel and Cole, who conduct their sales online, must remain current with cutting-edge software innovations.

Finally, the sociocultural aspect of the PEST analysis involves examining demographics, culture, attitudes, and current issues/trends. The demand for fair trade and organic food is increasing as consumers view them as ethically and morally correct. When conducting a market audit, there are pros and cons to using SWOT and PEST analysis. One disadvantage of SWOT analysis is the rigid classification of factors into strengths, weaknesses, opportunities, and threats. For example,

A technological change can pose as a threat or weakness to Able and Cole. Their emphasis on culture, quality, and ethics may be viewed as a weakness, as less stringent supermarkets profit from it. However, these values also position them strongly in the box scheme delivery market, making them a strength. The SWOT analysis is advantageous because it serves as a foundation for goal setting, strategy formulation, and

implementation.

An advantage of the PEST analysis is that it increases Abel and Cole's awareness of their external environment, which is beyond their control. This allows them to implement scenario planning techniques to address the high level of uncertainty in the external environment. However, a disadvantage is that there are numerous environmental factors to consider, so Abel and Cole need to monitor the factors that have the most influence on them. In conclusion, my example of Abel and Cole's usage demonstrates that market auditing is generally more beneficial than not for small businesses.

By helping to better prepare a company, it enables the development of new products and strategies, thus facilitating growth.