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Arun Rasika K 2nd MBA “A”
1. Imagine yourself as the CEO of a large firm in an industry in which you are interested. Please (1) identify major trends in the general environment, and (2) analyze their impact on the firm. (Use Internet resources.) Industry Firm : : Retailing Future Group of Kishore Biyani
Major Trends in Retailing Environment: In essence, retail change has been driven in the past by the interaction of consumer, retailer and government: in the 1990s the role of technology is increasingly important as an agent of change. To understand the retail environment it is important to glean a knowledge of the inter-relationships between the factor. we will consider how changes in the consumer environment – demographic, socio-economic and lifestyle trends – have impacted upon retail change. At the same time, government has been a major agent of change. Retailers are regulated by an array of laws and ordinances which impinge on their operations. This can be on licences to operate, which goods to sell, hours of operation, health and safety matters through to planning ordinances on where to locate the business. The types of merchandise on sale and the formats developed are a response to such interactions; however, retailers do influence consumers and government on product choice and format development. For example, the UK slowdown of the introduction of GM foods has been driven by retailers’ refusal to stock these products. The role of technology is not discussed in length here as it embraces most chapters of the book, especially those on logistics and Internet retailing. It should be acknowledged here, however, that technology should be seen in its widest sense. For the consumer, technology has freed up time as capital goods replace labour in the home. Communications in both a physical and information sense have given access to wider geographical markets. Retailers embrace the IT revolution through sharing data with their suppliers and communicating with their customers, especially those with loyalty card schemes. New technologies have been applied throughout the supply chain to ensure that products can be designed/tested, manufactured and distributed through supply chains quicker and at a lower cost than ever before.
retail enterprise technology is stuck in the mud: "Antiquated technology impedes effective organization and process change.Markets and companies have grown due to the links between innovation and technology." Wang identified five major trends that are reshaping the retail technology landscape: 1)Mobility 2)SocialNetworking 3) Cloud computing: SaaS offers a number of agility benefits. partner at Altimeter Group." according to Wang. Marks & Spencer’s links with its main supplier. "Gaming theory can be applied to how retailers incent people to buy things and what offers to present them with. Take the case of chilled foods in UK supermarkets. 5) Video and unified communications: The combination of a deluge of data and more visual fluency (see the phenomenal growth of YouTube) means video and other visual representations such as pictograms." said Ray Wang." But while consumer technology change is accelerating. heat maps and bubble maps will become the fastest-growing way of communicating. In response to the demand for ready meals. "Retail companies need to fail faster. noting that these types of games can serve as testing labs for what motivates people. and then succeed from there. "Businesses and individuals are driving technology adoption. Northern Foods and BOC Transhield . file from http://www.'" said Wang. goes back to a chance meeting of the current chairman. It is perhaps appropriate that we now turn to the factors which have promoted change in the consumer environment. 4) Analytics and game theory: The popular Facebook game Farmville is really about "a set of incentives to take care of your 'farm. not the organization's CIO. with an M&S executive on a flight to Northern Ireland.downloadoCode=&partnerID=&content=story&storyID=381 "Today's retail enterprises are facing new challenges that are unlike those of any other era. grew to supply M&S and latterly other supermarket chains with these product lines. "even if it hurts. Initial dairy lines were introduced into M&S stores but a main catalyst for growth was the harnessing of BOC gases technology to distribute chilled and frozen products from warehouse to store. They need to experiment and innovate. Northern Foods. such as the ability to test applications without worrying about high investment costs and the ability to flex capacity up and down to deal with busy seasons. Christopher Hawkins." noted Wang. "There's an acceleration of ." he said. So retailers have to learn what they need to know about using today's technology to their advantage. two businesses.
insurance. if not all. enhance and track reputation over time. Maureen Johnson of The Store presented a picture of the changing consumer in the year 2015. This is a trend that has been apparent in the UK for decades as consumers find other avenues for their hard-earned cash rather than spending it on shopping. housing and utilities. Johnson went on to argue that consumers would be less likely to shop in the ‘planned’ conventional method with an increase in more remote shopping and social. more affluent. . more demanding." said Wang. as well as quantify its real business impact on the industry and its individual businesses. consumers remain cautious. Amid this complex and everchanging environment. better educated and time pressured’ were some of the terms used to describe the European consumer of tomorrow. yet overall trust in companies continues to decline while the expectations all stakeholders have of companies continue to rise. special or immediate modes for fixed store retailing. Alexander Littner of the Boston Consulting Group showed that US consumers were spending less of their disposable income on retailing and fast-moving consumer goods in general than other categories such as healthcare. In another session at the same conference. ‘Older. Translating these attributes into shopping behaviours. However. insecure.unified communications convergence that can be applied to learning. the industry needs to better understand and address the expectations all key stakeholders have in order to protect. The changing consumer At the annual ECR Europe conference in May 2001. of these attributes can be applied to many consumers today. selling. employee training. discerning. Consumer confidence is improving. etc. In order to discuss the changing consumer in more depth we shall look at: _ demographic trends _ socio-economic trends _ lifestyle trends Impact of trends in Retailing Industry: The retail industry is beginning to show modest signs of recovery. Of course some.
Political changes are also altering the characteristics of the marketplace. political and social patterns in the region. The particular characteristics. cars. In order to take advantage of the region's emerging opportunities. even the types of products that they need and want are changing. to the outside observer. . marrying later and having fewer children. with more women working. The first of these trends is a gradual improvement in the standard of living. an obvious contrast to China's relatively backward but fast-growing economy. Extended families. Put together. The third trend is a move towards urbanization. local retailers and manufacturers must keep a close view on the rapidly changing economic. better incomes and greater demands for housing. so do expectations. of all these countries affect trading conditions and must be taken into consideration by businesses and retailers wishing to operate in the region. The large population. The distinctions between the newly industrialized economies of Hong Kong. investment in infrastructure and rising incomes all contribute to a positive and improving trading environment. these changes are resulting in massive infrastructure development. For example. The second trend relates to a change in family structure. where the accessibility of markets was traditionally limited by the political regime. sound economic growth. both large and small. However. With this development come new jobs. where investment in infrastructure and a move to the cities is fundamentally altering lifestyles. This has led to a host of new retailing opportunities.The Asia Pacific Rim region offers bright prospects for retailers and manufacturers. South Korea and Taiwan which have established a powerful trading presence within the region may appear to be less extreme. leading to increasing demand for a wide range of consumer items. While the Pacific Rim is characterized by such contrasts. Economically powerful Japan with the region's highest gross domestic product (GDP) is. there are also some important trends which apply more generally to the region. food and clothing. which previously may have shared a home. while the prospects for companies seeking to expand their horizons are encouraging. Thailand. consumer products. Indonesia and the Philippines. but are nonetheless also important. the return of Hong Kong to China in 1997 and China's transition to a socialist market economy are likely to have far-reaching effects for retailers of all kinds. are increasingly splitting into more than one unit. Singapore. those seeking to capitalize on these Pacific Rim opportunities must respect the inherent diversity of the region. As families gear up for their new urban lifestyles. Even in China. with consumers having more purchasing power than before. As incomes rise. The newly industrialized economies themselves contrast with Malaysia. accompanied by a change in the types of jobs which people do. the move towards a socialist market economy is under way.
Hong Kong. the Asia Pacific Rim region includes China. Retailers involved with consumer goods need to be particularly vigilant as these products are particularly sensitive to environmental factors.. social and cultural factors. "Marketing managers who fail to recognize changes in environmental forces leave their firms unprepared to capitalize on marketing opportunities or to cope with threats created by changes in the environment". Taiwan. demographic. Japan and the developing countries Indonesia. consisting of those elements which are external to the business and have a broader effect on it. Malaysia. Material for the case studies is sourced from a range of academic.This review is about the the impact of these aspects of the wider marketing environment on retailing in the Asia Pacific Rim and uses a series of short case studies to illustrate the impact of the key economic. legal. Kotler defines the marketing environment as ". In recent times the region has enjoyed considerable growth and has remained relatively unaffected by the 1990s global recession." When the marketing environment changes. Economic factors Economic conditions in the Asia Pacific region are affected by a range of economic factors which have an impact on spending power and behaviour. .. South Korea. The micro-environment concerns aspects which are close to the individual business and over which the business has some control. The marketing environment is sometimes broken down into two components: the micro. the newly industrialized economies (NIEs) of Singapore. According to Dibb et al. sometimes also called the wider marketing environment. The figures for 1993 indicate a total GDP of almost US$5.the actors and forces that affect the company's ability to develop and maintain successful transactions and relationships with its target customers. business and statistical publications. technological. It comprises 'non-controllable' actors and forces that impact on the company's market and marketing practice. These include economic.8 trillion. threats and opportunities. Retailers wishing to capitalize on such opportunities must be ready to predict likely outcomes and act quickly.) The marketing environment The marketing environment is a set of forces which either directly or indirectly influences a business' acquisitions of inputs or generation of outputs. (For the purposes of this paper. The full extent of this growth will be subject to factors such as the effects of Japanese recession the significant increase in China's economy and a slight slowing of the economies in Hong Kong.and macro-environment. demographic.. Singapore and Taiwan. with a further 40 per cent growth expected by the end of the century. political. This paper is concerned with the macro-environment. political and sociocultural factors. companies face uncertainty. the Philippines and Thailand.
Japan has seen a decline in private investment accompanied by a fall in consumption and profits. The size of the combined populations of these countries means that this relationship is bound to impact significantly on other trading conditions in the region. Of the countries reviewed in this paper. Meanwhile. Here again. Hong Kong and Taiwan has been emerging. and Malaysia is particularly rich in natural energy resources. the highest growth is expected from Thailand and Malaysia. In the run-up to the hand-over of power in Hong Kong. China is also experiencing a rapid increase in its economy. economic and technological forces. the Japanese economy has suffered as a result of world recession. For such businesses the attractions of Thailand and Malaysia are obvious: both countries enjoy relatively low levels of inflation.821 in 1993. These trends are illustrated by the GDP figures and trends shown in Table I. not all countries are likely to contribute equally to this growth. Industry : Retailing A retail marketing environment consists of the external actors and forces that affect the retailers ability to develop and maintain successful transactions and relationships with its target customers.As shown in Table I. . You may try the following sites. This is due to an influx of direct foreign investment as labour-intensive businesses migrate from Japan and the NIEs to] cheaper areas. with a GDP per capita of US$33. despite these setbacks. Japan remains the second biggest global economy. However. As reforms take shape. with predictions suggesting that double figure growth rates will continue. The macro environment consists of legal. social. a three-way economic relationship between China. Since 1991. We can distinguish between the retailers’ micro environment and macro environment. Identify the changes that are occurring in it and its wider environment (using tools like the PESTLE categories to direct your search). cheap labour. the diversity of economic outlook is starkly illustrated. Table II gives further details by summarizing some key economic factors currently affecting … 1. Select an industry of your choice.
The third purpose of Government Regulation is to protect the larger interest of society against unbridled business behaviour. The second purpose of Government regulation is to protect consumers from unfair retail practices. Retailers are keenly interested in the size of the population. values and norms. government agencies and pressure groups that influence and constrain various organisations and individuals in society. In short. in turn. Social/Cultural Enviornment In recent years. density. a retailer must communicate with consumers. The legislation has a number of purposes. anticipate problems. the concept of social responsibility has entered into the marketing literature as an alternative to the marketing concept. This environment is composed of laws. these changes influence the behaviour of consumers which. will have to continuously measure the changes – qualitative as well as quantitative – that are taking place in the population structure. The ripples of these changes will reach the organisation forcing it to alter or amend the existing marketing practices in vogue.Demographic Environment The first environmental fact of interest to retailers is population because people make up markets. Some firms. Political/Legal Enviornment Retail marketing decisions are substantially impacted by developments in the political / legal environment. So laws are passed to prevent unfair competition. professional groups and others who impose restrictions on marketing process and its impact may be felt by retailers in doing their business. The implication of socially responsible marketing is that retail firms should take the lead in eliminating socially harmful products such as cigarettes and other harmful drugs etc. mobility trends. Unfair consumer practices have been defined and are enforced by various agencies. . The retail marketing executive needs a good working knowledge of the major laws protecting competition consumers and the larger interests of society. its geographical distribution. age distribution and social ethnic and religious structure. would adulterate their products. The first is to protect from each others. There are innumerable pressure groups such as consumer activists. mass media. respond to complaints and make sure that the firm operates properly. Further. tell lies in their advertising. will have a direct impact in the retailer’s business. Retail firms. deceive through their packages and bait through their prices. if left alone. Legislation affecting retail business has steadily increased over the years. The society that people grow up in shapes their basic beliefs. social workers. To avoid negative consequences brought on by active consumer groups. Demographic structure is seldom static for long and changes in its composition often test the residency of a marketing firm.
Technological Enviornment The most dramatic force shaping people’s lives is technology. MARG etc. For example. adoption of new technology often is prevented by constraints imposed by internal and external resources. Total purchasing power is a function of current income. Marketers should be cognizant of major trends in the economic environment. they are totally unpredictable and secondly. the cost of all inputs positively respond to upward swing of economic condition – which will affect the output price and consequently affect the sales. The changes in economic conditions can have destructive impacts on business plans of a firm. economic swings affect marketing activity. Further. Advances in technology are an important factor which affect detail marketers in two ways. in the event of increase in prices. The effect on consumers also influences the marketing through changes in consumer habits. savings and credit availability. offer social / cultural forecasts in this connection. This is an indirect influence. For example. no economy is free from the tendency of variation between boom and depression. In any event. Economic Enviornment Retail markets consist of purchasing power as well as people.People live in different parts of the country may have different cultural values – which has to be analysed by retail business people/firm. How effectively these challenges could be converted into opportunities depend on wellthought-out marketing programmes and strategies. Retail marketers have a keen interest in anticipating cultural shifts in order to spot new marketing opportunities and threats. Conversely. At . rising costs and up and down business cycles. This will help them to reorient their strategy to fulfill the demands of their consumers. both directly and through the medium of market place. marketers of foods. First. For example. Retail marketing firms are susceptible to economic conditions. These changes in economic conditions provide marketers with new challenges and threats. exercise equipment and so on will want to cater to this trend with appropriate products and communication appeals. prices. consumers often curtail or postpone their expenditures. because they affect purchasing power. during time of fall in prices. Economic forecasters looking ahead through the next decade are likely to find their predictions clouded by the recurrent themes of shortages. whether it is a free economy or controlled economy. Several firms such as ORG. consumers are much less conscious of small price differences and would buy luxury and shopping products.
serving the needs of shoppers is what the industry does best and is critical to its reputation. With the help of weighing machine. among investors and analysts. This suggests that the retail industry is meeting the product safety challenge and weathering the crisis well among all stakeholders.the same time. but also shows that the industry is helping enhance our standard of living. Earlier. Despite recent headline-grabbing issues. products can be measured with the result customer satisfaction can be enhanced. this argument may not sustain. has a profound impact in . product safety emerges as a strength of the industry across all audiences. and encouraging and supporting employees to volunteer for charitable causes. But in the long run. The retail marketers must be alert to the negative aspects of any innovation that might harm the users and create consumer distrust and opposition Strengths and Opportunities to Improve Reputation Meeting the Needs of Shoppers For all stakeholder audiences. In the following areas where technology have been extensively used. • • • • Packing of the products Printing the name of the shop on the product visibly Modern refrigerators where merchandise can be used for a long time and Billing. retail marketers need to understand the changing technological environment and how new technologies can serve human needs. is core to defining the industry’s reputation. Delivering high-quality products to consumers. Technology has helped retailers to measure the products with modern weighing machines. The value retailers offer their customers not only is key to driving shoppers to the store. In fact. donating a share of its corporate profits to charitable giving. particularly new. They need to work closely with research and development people to encourage more consumer oriented research. Technological change faces opposition from one group of people-telling that it may lead to retrenchment of employees. convenience and cleanliness also emerge in the study as key strengths that are important in defining the reputation of the industry. product safety is the single most important driver. it should be remembered that technological progress creates new avenues of opportunity and also poses threat for individual firms. who tend to prioritize issues that pose the greatest risk. “Giving Back” Philanthropic efforts through supporting local charities and causes. they have used balances which could not measure the merchandise correctly. Customer service. innovative products of the future.
however. fair wages are a fundamental expectation of the industry. the industry is seen more favorably in the area of providing opportunities for job advancement. Responsibility to Employees Employment issues are undoubtedly one of the most challenging issues for the industry. and build stores that blend into the local community.shaping the industry’s reputation. yet one that the industry is not meeting. and addressing these expectations is critical to the industry’s ability to mobilize advocates on its behalf and reduce the number of vocal critics speaking out against new stores and the industry as a whole. The study shows that the industry is not yet meeting expectations for addressing landuse issues. as a result. On average. Most audiences surveyed expect to see retailers act in a more collaborative and cooperative way with local communities and governments. Philanthropy can generate significant pride in their employers and. For many retail companies. the retail industry is meeting the very high expectations of stakeholders and represents a core reputation strength. . Land Use is the single mostimportant driver of reputation among community activists. Across all audiences. the industry is viewed more negatively thanpositively for working to ensure that stores take up less land and space. Retailers expected to be leaders in developing creative and innovative solutions to suburbansprawl and blight. the study shows that the industry still needs to be seen as a partner in solving the key issues facing communities. plays a very important role in defining reputation that in turn helps to enhance employee engagement and recruit new employees.Audiences also expect retailers to plan ahead when building stores to reduce traffic and congestion. However. The data reinforces that employees are also members of the communities and are often recipients of the philanthropic efforts by retailers. Expectations to give back are especially important among retail employees. APCO’s reputation research for dozens of Fortune 500 companies in other industries rarely finds philanthropy to be as important as it is for this sector. Listening and collaborating is not enough. Listening to the community and entering into a dialogue on community concerns is the top priority for most audiences and an area where the industry has yet to fully meet most stakeholders’ expectations. The industry’s most important opportunity to enhance reputation is building ties with local communities and cooperating with local governments to address community concerns. Partnering with Communities While the industry is meeting expectations for giving back through its philanthropic activities. Despite increasing expectations society has for what companies are expected to do to give back. employees play a very important role in giving back to their communities through employeevolunteerism programs.
Despite recent efforts by some retailers to promote green products. Interestingly. the industry is generally viewed as meeting expectations for responsible waste and recycling practices. The study suggests that labor relations issues have much less impact than what we might expect. Green Products emerge as one of the top opportunities for building reputation. While individual audiences differ in their environmental priorities. Almost as important as Energy Efficiency in demonstrating environmental leadership.The study clearly shows that environmental expectations are particularly important in defining the reputation of the retail sector. Demonstrating leadership on green products is especially important for policymakers and can help to build the reputation capital needed to create a more favorable policy environment. Employees also place a high premium on green products when assessing the reputation of the industry. Labor Relations (how the industry is viewed in dealing fairly with employees who wish tounionize) has very little impact on the industry’s reputation for all audiences except policy-makers. . The industry receives particularly high marks for offering recyclable bags. The data suggests an opportunity to build greater awareness of the industry’s leadership in this area to enhance reputation. Land Use is the single most important driver of reputation among community activists and addressing this expectation is critical to the industry’s ability to mobilize advocates on its behalf and reduce the number of vocal critics speaking out against new stores and the industry as a whole.Highlighting an industry’s “success stories” and emphasizing the chances an employee has to move up through the ranks could help repair perceived weaknesses in wages offered. overall the most impactful way to demonstrate environmental responsibility is through efforts to promote energy efficiency. Although slightly less important in defining reputation than the other environmental drivers. Environment Stakeholder expectations for addressing environmental issues continue to grow for all industries. the study shows that there is room for improvement in communicating the industry’s leadership. Addressing waste and recycling issues is the most important environmental expectation for community activists and a key strength that should be leveraged to mobilize more advocates on the industry’s behalf.
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