SOCIO ECONOMIC

TRENDS

MACRO ENVIRONMENT Forces that shape opportunities and pose

threats to a company

Macro Environment

The company

Natural Environment

Technology

Demographics Economic

Political/Legal

Cultural

Natural Environment

• Natural resources that are needed as inputs by marketers or

that are affected by marketing activities

• water, forests, oil, coal, minerals

• As resources become more scarce, costs increase

Natural Environment

Changes in response to environment:

biodegradable packs, charges for packets, Wellness Warehouse,

Backsberg wine/carbon-neutral, PET bottle

Major drivers that affect Marketing

Consumer driven e.g. lobby groups, blogs, esp overseas

Formal media, e,g, Carte Blanche, newspapers, Al Gore’s

“Inconvenient Truth”

Government intervention e.g. pollution laws, legislation for

environmental reviews for new developments

Note : Corporations CAN be proactive, but tend to be reactive;

change is costly

Technological environment

• Forces that create new technologies, create new product

and marketing opportunities

• And change the way we market and communicate with customers

Internet changes the way consumers…

• …engage with each other and brands • Facebook, twitter

• ... communicate

• Led by consumers, not marketers!

• …make purchasing decisions

• Research

• Peer reviews

Technological environment: issues

Rapid pace of change High R&D cost/High Risk

Invest in human resources or fall behind

Invest in infrastructure or massive repercussions

▪ SA and internet

Marketing often partnered with R&D to ensure commercial value (flying pigs, space colonies)

Not always needs-driven Often create the need – iphone, ipad

Government regulation? (privacy?) Well managed, technology can offer huge competitive

advantage – SCM, POS Focus increasingly on on-going adaptation rather than

macro change .. Apple iphone/ipad

POLITICAL/LEGAL

ENVIRONMENT

Political Environment

• Laws, governments, agencies and pressure groups that

influence and limit various organisations and individuals in

a given society.

Political environment

• South Africa has stable political environment

• Rule of law is respected and upheld

• Many countries do not have this benefit

• Corruption may drive marketing successes/failures

Political- Legal environment

Public policy to guide commerce - sets of laws and

regulations that limit business for the good of society at

large

Increasing legislation

Protect firms

▪ Competition Act

▪ Occupational Health and Safety

Protect consumers

▪ National Gambling Act

▪ New Credit Act

▪ Tobacco Products Control Act

Protect the interests of society

▪ Lotteries Act

Legislation

affects strategy

Legal environment

• Not all laws are written

• Social codes and professional ethics

• Socially Responsible Behaviour

• Do the right thing

• Cause related marketing

• Corporate Social Responsibility CSR

• Doing well by doing good

Legal Environment

• Advertising Standards

• The Advertising Standards Authority of South Africa (also

known as the ASA) is an independent body to ensure that its

system of self-regulation works in the public interest.

• Protect children from certain forms of advertising

• Protect companies from unfair competition

• Body to maintain fair business

Economic environment

• Factors that affect consumer buying power and patterns

Economic Environment

GDP growth (6.0% in 2006; now 3.5%),

GINI coefficient

ESKOM!!

increasing costs for everyone, declining productivity

Increase in fuel price

Disposable income, Currency strength, cost of imported

goods vs local manufacture; impact of oil price:

food, airfares, car usage, car sales, taxi industry, food inflation

variations

Recession

Demographic environment

• Demography

• The study of human populations in terms of size, density, location,

age, gender, race, occupation and other statistics

Demographic Environmental Factors

• South Africa COMPLEX! Characterised by

• Young age profile (pyramid) but note the importance of Prime

Timers (over 40’s)

• Prevalence of single-parent households/ extended families

• High mortality rates

• HIV

• Rural Urban

• Income diversity (Gini Coefficient)

Changing Demographics

• On the subject of Marriage

• Divorcing or separating

• Choosing not to marry

• Choosing to marrying later

• Marrying without intending to have children

• Having children and not marrying

Cultural environment

• Consists of institutions and other forces that affect a

society’s basic values, perceptions and behaviours

• Culture of working, getting married, abiding by the rule of law,

being a good person, caring about others

• Arabic, Indian, China, Europe, Africa

• Marriage (who?when?how?multiple?roles?)

• RSA is a multi cultural country

• often segmentation also coincides with cultural differences

• Language/religion/age/gender

• Culture is hard to define • Kalk Bay versus Seapoint vs Durbanville vs Blouberg

• Soccer fans vs Rugby fans

• Teenagers versus over 35’s

How do we incorporate Macro issues into

marketing strategy?

We need to know and understand them and appreciate

their immediate and long term impact

recession and buyer behaviour

We need to use them to our advantage

refocusing on needs and character of new Black Middle Class

We need to find ways of turning changes to our

advantage

Dubai world Crisis – rise of Second hand sales

We need to identify trends which are Macro

environmentally driven

consumer attitudes towards ecology as Woolworths has done.

Examples of Macro trends

Faith Popcorn http://www.faithpopcorn.com/ 99 Lives – wearing different hats/taking on lots of roles Anchoring Atmosfear Being alive Cashing out –opting for simpler more meaningful lives Clanning Cocooning: creating a safe environment at home/preferring home than

going out Downaging Egonomics – crave recognition as individuals Eve-olution –more relational society Fanatsy adventure Icon toppling Pleasure revenge Small indulgences – wanting to reward ourselves Vigilante consumer SOS (Save our Society)

RISE OF THE INFORMAL

SECTOR

Rise of the informal sector in RSA

Macro Factors

Exclusive, discriminatory laws e.g. Group Areas Act, Job

Reservation Act, Education policies

Political Reaction .. Unrest in 1986; stayaways, boycott of white-

owned businesses, withdrawal of traditional retailers from”black

areas”, disenchantment with white owned businesses (no

opportunities) Lot of red tape to start a formal business

Limited access to capital and credit

High unemployment

Massive urbanisation as influx laws are scrapped

Limited education opportunities

Growth of informal sector

• Consumer needs

• Societal support

• Evolution of unique structure

• Stokvels/burial societies/investment clubs, shebeens, spaza’s

What is a spaza?

It’s an informal retail outlet, usually selling essential,

often perishable groceries

Stay open for long, appropriate hours, staffed by

owner’s family

Located in townships

Usually offer informal credit

Typically sell top-up, replenishments

Strong child customer base

Sell top brands, often in small packs

Now under pressure .. Having to compete with formal

retailers who are now moving into townships, but still

are relevant, particularly in very poor areas

What is a stokvel?

A group of people – usually 12… Who come together to

save, invest for common purpose

Requires commitment.. Monthly.. Which is then

redistributed

Either on a full payout monthly rotation

Or split at end of year (or biannually)

Have a strong social context

Types

Investment cartels

▪ Often increase savings by 30% by loaning out stokvel funds

Saving schemes

▪ Burial societies

▪ Christmas, back-to-school savings schemes