Environmental Scanning Managing Uncertainty

1. Environmental Scanning Managing Uncertainty Teacher – ShahedRahman

2. External Environments • Economic • Technological • Political • Legal • Ethical • Socio-cultural factors • Macro environmental forces that change the movement and shape of a marketing channel

3. 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

4. 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

5. 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

6. 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

7. Need to look at • Information overload • 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

8. 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?

9. 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.

10. 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

11. 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

12. 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

13. External Channels Environment • Competitive Environment • Economic Environment • Technological Environment • Socio cultural Environment • Legal, Ethical and Regulatory Environment

14. 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

15. 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

16. Economic Environment • Economic Infrastructure • Composite of the communication, education, financial and distribution support systems in any marketing sector • Customer Buying Power • Generally provide useful insights into future channel performance. Size of the population and their buying power • Currency Stability • 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

17. 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.

18. Some other External Environment to look at • Technological Environment • Legal, Ethical and Regulatory Environment