3. scanning the environment

8/2/2019 3. Scanning the Environment

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Value delivery rests on the proper grasp of theenvironment


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Gathering Information Understanding the Environment is the starting point of

Marketing.

All the Opportunities & Threats come from theEnvironment. Hence it is not separate from Marketing.

Most of these forces are non controllable but the companymust respond. e.g. Decline of Stock Market, Rise ofTerrorism. Along with these few predictable long term

factors need to be considered.


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Pestle Analysis

Points to evaluate:What are the key political factors likely to affect the

industry?

What are the important economic factors?Which socio - cultural aspects are most important?

What technological innovations are likely to occur?

What current and impending legislation may affect

the industry?What are the environmental considerations?


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Macro Environmental factors


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Social Environment Social factors mainly refer to demographic factors,

which comprise factors like population growth rate,cultural aspects, age distribution and healthconsciousness.

Position of women changing rapidly (can end up as a

threat or an opportunity for different industries)


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Population and Demographics Population growth

Population age mix

Literacy Household patterns

Geographical shifts


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Population and demographicsPopulation Growth: Main factor since people make the market. World Population of 6.7 Billion, is a major concern.

Population growth is more in developing countries. Lessdeveloped nations account for 76%. Growing population doesnot necessarily mean growing market unless the market hassufficient purchasing power.

Population of Europe and central Africa almost static. Japanshows a decreasing trend.

India poised to take over china in terms of population (India 1.2 billion and China 1.3 billion)

Male to female ratio 1000:940 in India


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Population Age Mix: Kids, Youth, Middle age,Senior Citizens.

Mexico has very young population while Japanwithworlds oldest population.

Global trend towards ageing population

However median age of Indian population is 23.8yrs

Youth segment is increasingly lucrative in SouthAsia


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Household patterns: Joint family to nuclear family,Single parents etc

Literacy: Varies from country to country and from onestate to another. Demand for quality goods, books,travel and high supply of skills.

Geographical Shifts in Population: from villages to

town.


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Global Socio cultural sphere Techno intoxication of Consumers. Face book Digital socialization (online party)

Spread of consumerist culture and monoculture(Coke and English!)

Advent of Next society borderlessness

Emergence of iGen (20 + group) and Tweens

(8to14 age group) Hectic pace of life at the same time flexible

working system


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Analyzing the socio - cultural

Environment

1

Fad

Trend

Megatrend


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Economic Environment

These include interest rates, taxation changes, economicgrowth, inflation and exchange rates etc.

Some examples:

Higher interest rates may deter investment / purchasesbecause it costs more to borrow

a strong currency may make exporting more difficultbecause it may raise the price in terms of foreign currency

inflation may provoke higher wage demands from

employees and raise costs higher national income growth may boost demand for a

firm's products


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Natural Environment

Concerns includes pollution, climate change, depletion ofnon-renewable energy sources and waste disposal.

The growing desire to protect the environment is having animpact on many industries such as the travel andtransportation industries (for example, more taxes beingplaced on air travel) and the general move towards moreenvironmentally friendly products and processes isaffecting demand patterns and creating businessopportunities.

Shunning of plastics and other non degradable products


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Toyota Experienced Success

with Green Cars

Toyota Prius


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Jute bags


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Technological Environment The sequence is reversed PEST becomes TSEP.

Technological factors refer to automation, the rate oftechnological change and R&D activity. These factors

greatly influence other areas or aspects, including theminimum efficient production level, quality, costs and

even outsourcing decisions.


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Technology Environment Corporate Sphere: Production Processes, logistics,

communication, information processing, processes &operations all are impacted.

Communication at the speed of thought anywhere anytime. PC/Smart Phones People working 24/7. VideoConferencing.

Online shopping, bar coding and computer aided design

are all improvements to the way we do business as a resultof better technology. Technology can reduce costs, improvequality and lead to innovation


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Spheres where Technology impacts are

happening IT & Telecom are ahead of all the sectors in terms

of impact of technology.

Technological breakthrough in ICE

Convergence phenomenon convergence of ITand CT and ET

PC journeys from utility device to connectivity

device to entertainment deviceWorld defined by fully loaded mobile phones- It

gives music, movies, video, photography, voicemail, e-mail, sms, mms and more


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Political Environment

These refer to government policy such as the degree ofintervention in the economy. What goods and servicesdoes a government want to provide? To what extentdoes it believe in subsidizing firms? What are itspriorities in terms of business support?.

Form of Government and Stability of Government

Government Legislations


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Legal Environment consumer laws; these are designed to protect

customers against unfair practices such as misleadingdescriptions of the product

competition laws; these are aimed at protecting smallfirms against bullying by larger firms and ensuringcustomers are not exploited by firms with monopolypower

employment laws; these cover areas such as labor laws,dismissal, working hours and minimum wages.

health and safety legislation; these laws are aimed atensuring the workplace is safe.


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Legal Environment

Increase in

business legislation


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Important questions: Give a detailed account of the different macro-

environmental factors that affect the Businesses

Explain fad, trend and mega-trend with examples

3. scanning the environment

Documents