ENVIRONMENTAL SCANNING MANAGING UNCERTAINTY Teacher Shahed Rahman EXTERNAL

ENVIRONMENTAL SCANNING MANAGING UNCERTAINTY Teacher – Shahed Rahman

EXTERNAL ENVIRONMENTS Economic Technological Political Legal Ethical Socio-cultural factors Macro environmental forces that change the movement and shape of a marketing channel

SOME TRUTH Variability – � Environments are never static � Marketing channels depend on the ever changing environment � How channel members remain connected to another is related to environmental influences Potency� Current conditions in the channel environment influence the strength of the channel relationship Distinctiveness� Each channel member is unique � Changing environmental changes effect channel participants in a different way

ENVIRONMENTAL SCANNING Environmental Scanning involves the appraisal, prediction and monitoring of external factors that can impact a channel system Environmental factors effect to the uncertainty in which marketing channels operate Channel members must work together to provide products and services for consumers whose needs are always changing Shrimps price increased – change the menu – restaurant manager failed to modify the menu – lost thousands dollars selling shrimp at a loss >>> FAILED TO REACT TO A CHANGE ENVIRONMENT

WORKING SYSTEM Composed of mutually dependent parts ( channel members ) that support various processes Working system feature 4 stages Input ----- Knowledge � Transformation ----Editing/design/production � Output ----- Textbook � Adjustment ----- Revised Edition � Proactive – rather than reactive � Channel members cannot the just wait for something to be happen � Proactively participate in their working system �

MARKET INTELLIGENCE Must obtain useful and usable environmental information known as market intelligence Channel members can then adjust in response to this market intelligence received from and about the environment Technology has dramatically increased – so easy to get information

NEED TO LOOK AT Information overload 1. 2. Where Capacity if channel members to manage data is strained because excessive amounts of information To avoid information overload, channel members first decide which information will be most useful for making channels decisions Information accuracy Should concern about the quality of market information available to them � Many research companies have prospered from selling huge database to channel members �

INFORMATION ACCURACY Source Reliability - Is the source of information credible ? Data Collection Method Sampling Design – Who were the respondents ? Information Context- what purpose the information was collected?

NEED TO LOOK AT Information Rivalry � There is a certain level competition exist in the industry. So company or medium can keep the information to themselves � This is unethical if we hack others computer system and gain the company information regarding their next move.

DIFFERENT EFFECT Different External Stimuli affect channel members in different ways For example a recent news about coffee can decrease the sale in supermarket but increase the sale Starbucks

CHANNEL DYNAMISM Channel dynamism suggests that the environmental forces concurrently flowing from and directed towards marketing channels are constantly changing. Channel members should be Flexible Capable of adapting market place changes � Changing environmental stimuli do not just effect a single member within a marketing channel � Prepared Based on market intelligence – be prepared for this � Also see the opportunities and risk associated with it � Attuned � To perform effectively inspite of uncertain conditions, they should work together

DECISION SUPPORT SYSTEM For larger channel members, market intelligence is best gathered through a decision support system A DSS features or co ordinate – � Set of data systems � Tools � Techniques � Along with supporting software and hardware for environmental scanning Information that is to useful to marketing or channel decision making should be entered into a DSS

EXTERNAL CHANNELS ENVIRONMENT Competitive Environment Economic Environment Technological Environment Socio cultural Environment Legal, Ethical and Regulatory Environment

COMPETITIVE ENVIRONMENT Competition can occur at any level in marketing channels Horizontal Competition � Between channel member operating at the same level and generally within the same market. Eg. Sears, Kmart is competing for the discount oriented customers Vertical Competition � Occurs when channel members operating at different channel levels compete for a share of the same market. Eg IBM direct sellers vs retail outlet

COMPETITIVE ENVIRONMENT System Competition � Complete channel units. United Airlines, Delta Airlines and American Airlines all for air travelers Network Competition � Recently emerged in the market place � Occurs among networks of channel member competing across industries and markets. � Purpose of maximising utility among partners

ECONOMIC ENVIRONMENT Economic Infrastructure � Customer Buying Power � Generally provide useful insights into future channel performance. Size of the population and their buying power Currency Stability � Composite of the communication, education, financial and distribution support systems in any marketing sector Channel members often find that they have to protect themselves against the falling value of foreign currencies National Trade Policies � Garments business owner got an advantage for the trade policies

SOCIO-CULTURAL ENVIRONMENT Cultural Diversity � Culture is also changing – More ethnic coming in the market. In UK it’s a big number of Indian consumers Social Issues – � Green Marketing New Product Channels � ATM will replace the traditional banking channels � Online business is a new channel in future people might order everything online.

SOME OTHER EXTERNAL ENVIRONMENT TO LOOK AT Technological Environment Legal, Ethical and Regulatory Environment