In this day and age, economic and social environments are developing at a rapid pace, also it plays a crucial role in deciding consumption. The economic and social environments belong to the marketing environment. According to Kotler, marketing environment can be defined as consisting of the actors and forces outside marketing that affect markers’ ability to develop and maintain successful relationships with its target customers. The marketing environment offers both opportunities and threats. Some assert that the monitoring of the economic and social environments greatly contributes to anticipating customer requirements. However, others consider that it is not the significant element for anticipating although it sometimes proves successful. This article will attempt to demonstrate that the monitoring of the economic and social environments greatly contributes to anticipating customer requirements, although it also brings some problems, and companies should constantly watch and adapt to the marketing environment in order to seek opportunities and ward off threats.
Monitoring of Economic Environment in Marketing
The economic environment consists of factors that affect consumer purchasing power and spending patterns. It is manifest that consumer purchasing power is a vital factor in economic environment. Nowadays, the financial crisis still has detrimental impacts upon varies domains. Some studies have indicated that around 50% of businesses failed in the first three years of economic crisis, and a number of business closures have been the byproduct of an uncertain economy. However, several companies have withstood the test of time, such as Banco Popular, Ford Motor Co., Coca-Cola, Johnson & Johnson and Sears. In this situation, how far the monitoring of economic environment can help to anticipate the customer requirements has become a heated topic. Examples would be mentioned as follow:
One example is that the economy crisis has made bargain-hunting rage, even high-end brands are trying to lower their prices, such as The May Conde Nast Traveler featured an unprecedented list of “Cheap Chic” hotels. Zagat also published its first “America’s Best Meal Deals”. And after dying out in the rich early 90s, the Blue Light Special is booming again at Kmart with a different image. It is as thrifty as before, but now it is also prevalent among the youth. Another example is that the National Association of Resale and Thrift Shops, which represent more than 1,000 thrift, resale and consignment shop members nationwide, conducted a survey which showed that fourth-quarter 2008 sales were up an average of 30 percent in more than 71 percent of the stores. All these successful cases demonstrate that the marketers should always monitor the major trends and shift their marketing strategies to satisfy their customer needs. As we can see, when countries experience an economic collapse or an economic recession, consumer purchasing power would reduce which lead to consumers spending more carefully and seeking greater value in the products and services they buy. The successful companies notice this information and take swift steps to satisfy the customer needs which make they survive the economic recession, even create new opportunities for them.
Moreover, customer spending pattern is also significant in the economic environment. Hence, marketers should also watch the changes of customer spending pattern. For example, to curb its greatly increasing population, the Chinese governments make laws to limit families to one child only. As a result, Chinese children tend to be over-spoiled and fussed as never before. Several studies show that parents in the average Beijing household spend about 40 percent of their income on their cherished only child. This trend has encouraged toy companies including Denmark’s Lego Group, Japan’s Bandai Company (known for its Mighty Morphin Power Rangers) and America’s Mattel to enter the Chinese market. The example shows the significance of monitoring of the customer spending pattern and reveals that marketers should determine how economic trends affect spending pattern and how they translate into marketing threats and opportunities for the companies.
Consumers who have greatest purchasing power are likely to belong to the higher-income groups, whose higher-incomes mean that their spending patterns are less susceptible to economic changes than those of lower-income groups. Therefore, it seems that the monitoring of economic environment does not have great help in this situation. It is conceded that the monitoring of economic environment is not always effective, but it is still extremely important to anticipate customer requirements. Changes in major economic variables such as income, cost of living, spending pattern have a large impact on the market. Companies watch these variables by using economic forecasting. Companies do not have to be closed down in an economic downturn or in a boom. With proper warnings, they can take advantages of changes in the economic environment.
Monitoring of Social Environment in Marketing
Social environment in here refers to a host of domains including demographic, political and cultural environment. Kotler clearly defined the demographic environment as demography is the study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics. The demographic environment is of considerable interest to marketers because it involves people, and people make up markets.
Demographic changing greatly influences the market requirements, such as a growing population means growing customer needs to satisfy, and then marketers are able to anticipate customer needs for some products and services. Also, marketing decisions are strongly affected by developments in the political environment. The political environment includes laws, government agencies and pressure groups that influence and limit various organizations and individuals, such as legislation regulating business, growth of public interest groups and increased emphasis on ethics and socially responsible actions. In addition, the cultural environment which is made up of institutions and other forces affects society’s basic values, perceptions, preferences and behaviors. Individuals shape their basic beliefs and values when growing up in a certain society. The cultural environment plays a vital role in marketing decisions making, marketers must be aware of these cultural influences and how these influences might vary across societies.
All of these elements have some impact on consumption, when marketers attempt to anticipate the customer needs, they should aware of all of these elements and how they influence the customer requirements, thereby making their marketing strategies appropriately. To demonstrate the importance of monitoring the social environment to anticipate customer needs, we take the monitoring of demographic environment as an example.
Demographic environment refers to population size and growth trends, changing age structure of a population, the changing family, rising number of educated people and so on. Demographic shifts have important implications for marketing managers. For example, the rising ageing population will make a growing demand for healthcare products, pensions and services to cater to older consumer needs. The over-50s are becoming more comfortable with technology. An independent report conducted by Saga Holidays found that rather than keeping away from new media, over a quarter (27%) of the 1,000 people aged 50 and over questioned purchase goods online. The same analysis discovered that a third (37%) regularly send text messages. Meanwhile, a recent survey by Continental Research of the growth of the so-called ‘silver surfer’ market revealed that in the last year, home Internet use among the over-55s has increased by more than 50%, growing from 2.9 million in 2004, to 4.4 million in 2005. The findings will remind travel companies to capture this fast-growing and affluent section of the holidaying public. Saga’s website provides a good example of how travel retailers can target older travelers. At web design consultancy Foviance, director Catriona Campbell considered companies that want to capture older web users need to make their websites accessible and simple to use. To build on its brand as an over-50s specialist, Saga launched an online travel shop, SAGAtravelshop.com. The website makes consumers able to buy dynamically package trips as well as buy package holidays. Now over-60s are more affluent and active, with lifestyles that are more similar to those of people in their 40s and 50s. Indeed, some companies, like Saga Holiday, are already aware of this demographic shift and adapting product marketing and design to cater to older consumer demands.
The changing family also plays a vital role in the demographic environment. The changing family which means the notion of the ideal family -mum, dad and two kids- has lately been changed. People are marrying later and having fewer children. Also, the number of working women is increasing including working mothers. This trend has boomed the child day-care business, cleaning and catering services, increased consumption of convenience foods, career-oriented women’s clothing and many other business opportunities. For instance, Britain and America are around the top of both the convenience-food league and the working-woman league. The increasing of working women is pushing the time-saving trend and the consumption of time-saving products like convenience foods. Mark Price, who is the marketing director of Waitrose, Britain’s top-of-the-range supermarket, pointed out that the company’s biggest item in meals at its Canary Wharf (London) branch is the ready-mixed Caesar salad in a box. It costs £1 ($1.70) less if you buy all the ingredients and mix them yourself, however, people prefer the convenient but expensive one. Ready meals from supermarkets become increasingly popular in Britain. Ten years ago, the sector barely existed while now it is worth £1.5 billion and is growing at 6% a year. These days, Tesco launches 1,200 new convenience products a year and the variety boosts consumption at the same time.
Also, it is difficult to monitoring the demographic, political and cultural environments at the same time, and it is complicated to analyze all elements to anticipate the customer requirements. Furthermore, similar to the economic environment, some cases prove that the monitoring of the social environment to anticipating customer requirements cannot be always valid, especially when some unpredictable affairs happens. In the April of 2008, Carrefour which is a French retail firm encounter a sudden crisis in China. The crisis stems from the widely spreading posts on the BBS, with some political reasons the posts call on all Chinese people not to go shopping in Carrefour on 1st May. And this appeal achieved a huge number of netizens’ supports. The survey of “whether or not boycott Carrefour” conducted by Sina Finance showed that over 560,000 users asserted that they would not go to Carrefour in the whole month. It is not difficult to image that what a large loss for Carrefour, however, it is cannot be monitored because Carrefour is extremely popular in China which have 73 hypermarkets, 8 supermarkets and 8 champions around the China.
To conclude, although it is difficult to monitor the social environment and the monitoring is not always valid to anticipate customer requirements, there is no doubt that the monitoring of social environment greatly contributes to anticipating customer requirements. Therefore, the smart marketers know how to track the demographic trends and indicate what their target customers want, and then take swift actions to cater this situation.