The following essay is a situation analysis of the macro-environment for a Melbourne based Australian phone cover manufacturing organisation, called Kind.
Kind creates a range of covers for all types of mobile phones which are recyclable, biodegradable and trendy. Kind conducts their own research, development, design and manufacture. The organisation was founded by a group of generation Y, tech savvy and environmentally conscious people who saw an opportunity to create accessories in an industry considered to be consumerist. A view supported by Downie and Glazebrook (2007), “Mobile phones have been described as the ultimate example of consumerism.”(p. 1).
Kind’s idea for their latest range of covers specifically include hypo colour, (cover changes colour when activated by heating or cooling through personal touch), mood sensitive covers (cover changes colour relative to the emotion being felt by the person), and gel moulded covers with finger grips. They believe their value proposition is to provide a range of products that offer their customers socially responsible fun, feelings and functionality by being a customer-centred company.
The following discussion under the sub-headings will analyse the six components of the mobile phone industry macro-environment specifically identifying trends that may impact Kind’s target market, marketing-mix and planned marketing strategies.
“The demographic environment shows a changing age structure in the population, changing family patterns, geographic population shifts, a better-educated and more-white-collar population, and increasing ethnic diversity.”, (Kotler, Brown, Adam, Burton & Armstrong, 2010, p. 160).
This holds true for Kind’s market in Australia with the population ageing, birth rates falling and increased life expectancy, older people are predicted to outnumber younger people by 2050. This may pose a potential threat to Kind’s target market in that there will be greater competition for customers entering the market or more creativity required to find new markets. Kind may need to expand their product range to cater for the older generations with covers that address issues like restricted mobility and loss of coordination from conditions such as arthritis. Reinforced by Kotler, et al., (2010) “The Boomer market will only grow in importance in coming years, as more boomer reach retirement age.” (p. 145). This is a trend that Kind should keep a close eye on and begin research and development in.
Looking at Australia’s current family pattern Kotler, et al., (2010), states “smaller family sizes resulting from a desire to improve personal living standards, the increased number of women working outside the home”, (p. 141), supports the view that there is market for the mobile phone industry because the parents feel there is a security need to stay connected to their children. “For children aged 5-8 years, almost all of them (95%) used their mobile phone more to contact family” (Australian Bureau of Statistics, 2010). This new group is otherwise referred to as “’tweens’ aged between six and 13.” (Downie & Glazebrook, 2007, p. 1).
It must be noted that Kotler, et al., (2010) defines the tweens as aged between 10 and 14, regardless, this group is increasing in market share and are demonstrating a trend towards strong purchases of entertainment products. Added pressure is placed on parents by the tweens who have grown up accustom to consumerism and “are motivated by status and aesthetics in their purchasing decision.” (Downie & Glazebrook, 2007, p. 1). This trend may be met by the inter-changeability of mobile phone covers because they are an economical means of maintaining the tweens attention and status with their existing phones. An economical argument for parents to easily identify with and one which Kind can target.
Kind has a product that appeals to a variety of demographic group for varying reasons. The youth group, often further defined as Generation X and Y demonstrate trends which Kind should consider when analysing their target market.
Generation X is environmentally conscious, financially wary, value quality and is well educated, contributing to the growth in white-collar population significantly. Generation Y are technically savvy, communicate using mobile phone, email and chat rooms and have driven the “Markets for teens’ toys and games, clothes, furniture and food” (Kotler, et al., 2010, p. 144). Whilst they are often viewed as selfish, statistics support the fact that they are “a civic-minded generation with a conscience”, (McQueen, 2007, p. 43). “figures released by the Australian Bureau of Statistics which showed that in 2002, 28% of young people aged 18-24 had undertaken voluntary work in the previous 12 months”, (McQueen, 2007, p. 43).
A response to these characteristics may be a marketing-mix which communicates the social conscious benefits of Kind’s products whilst promoting the professional business use it also contains and the interchange ability making the product fun, easily. Kind would be remiss to not target the civic-mindedness of Generation Y by setting up a charity fund or trade-in cover exchange that gives something back to the community.
Given Kind’s target market is Australia wide, population changes between states is not really relevant. However, shifts between rural and urban areas should be considered given the Australia Bureau of Statistics (2010) reports increases in urban population and decline in rural populations, particularly those affected by drought. The relevance in this statistic is that more households with access to mobile phones are located in the metropolitan area, Australia Bureau of Statistics (2010).
In developed countries such as Australia, mobile phones are moving towards no longer being considered a luxury item and more one of necessity given the use of mobile phones as the preferred method of communication for generation Yers and white-collar Xers use as a business tool. The Bureau of Australian Statistics (2007) survey results have indicated a 7.7% growth in communications services each year on average with most of this attributed to the household use of mobile phone and internet services.
This is relevant to the consumer spending habit in the current economic context which has affected income levels and household expenditure. “More recently, the global financial crisis has led to a sharp decline in demand for luxury products, as more people have become unemployed, or are unsure of their job security.” (Kotler, et al., 2010, p. 149). This is a win-win situation for a mobile phone cover manufacturer given that sales will continue at a steady rate or if people do decide to maintain an existing mobile phone, they will want to ensure that it is adequately protected to last longer or give it a new look, therefore the consumers spending pattern is less likely to alter for this kind of product.
Kind creates a range of covers for all types of mobile phones which are recyclable and biodegradable which would place their products in a very favourable position from a pollutant perspective.
“Some trend analysts believe that the decade after 2010 will be seen as the ‘Earth Decade’ and that protection of the natural environment will be the main worldwide issue facing business and the public.” (Kotler, et al., 2010, p. 151). Kind would be wise to examine their use of non-renewable resource they may use in the production of their products as well as the operations of their organisation. It is not just about the products they product being environmentally friendly, but the way in which they produce them as well. Knowing their carbon footprint and those within their supply and distribution chains would speak volumes. Even the way in which they market their products could be an opportunity to reinforce their green message, i.e. no use of print media in the marketing-mix.
Kind has to also keep up with the issues affecting the mobile phone issues, such as the growing public concern of the mineral tantalum use in mobile phones. Research using Wikipedia (2010), reports that this is a product which is mined, with great affect on the natural environment. Exports of this mineral have been cited as helping to finance present-day civic conflict over areas in the Congo which are abundant in natural resources. Kind may find benefit in highlight the fact that the use of their product protects the longevity of a mobile phone, thus minimising the reliance on mining and people may actually view a purchase of this product as actually helping the people in Congo.
The fast pace of technological advance is probably the most challenging aspect to Kind’s products. Given the current variety of shapes and sizes of mobile phones in the market and the constant stream of new models, keeping up with this market requires Kind to be highly adaptable and have the ability to implement changes in products quickly. It may be savvy to target only the most popular makes and models dependant on the demographic being targeted.
“The political environment consists of laws, government agencies and pressure groups that influence and limit various organisations and individuals in a given society.” (Kotler, et al., 2010, p. 155).
Given that Kind is a manufacturing business, distributing Australia wide, they need to keep abreast of developments which may affect manufacturing and marketing throughout all the States and Territory. Kind will be required to ensure that any packaging they develop conforms with current legislation along with any competitions run Australia wide meet all the State laws on gaming and lotteries.
Again, in with reference to the mobile phone industry, who are in media reports regarding concerns over public health risks from the radio waves they emit causing an uncommon form of brain tumour as discussed by Lavelle (2005), Kind could assign some research and development actions towards addressing a solution to these concerns. This could be view by consumers as dangerous positioning as they are actually agreeing with a pressure group that there is a risk and attacking the market that directly feeds them.
“The cultural environment shows long-run trends towards the use of branded products as a means of self-expression, decreasing organisational loyalty, an increasing appreciation for nature, and a search for more meaningful and enduring values.” (Kotler, et al., 2010, p. 160). Kind produces products which fit this trend fantastically as long as they market their environmental and social conscience and continue to develop products which allow the consumer to express themselves.
The cultural environment is made up of secondary beliefs. Central to societies need to communicate is the belief that they cannot do so unless they have a mobile phone. It could be argued that the secondary belief is that they have to look good and have the trendiest cover while they do it supported by Kotler, et al., (2010). “Many people use products, brands and services as a means of self-expression”, (p. 157).
There may also be an opportunity for Kind to tap into the different subcultures as they are open to shifts in values and are impacted by popular activities. The possibilities are endless for Kind, in that if their organisation is highly adaptable, and new product lines can be easily implemented, they can keep pace with these subcultures. For example, monthly covers with the latest number one hit music artist on it.
Kind can decide to take a proactive approach to the marketing and really build their products into something that shapes public opinion. As an example, the health risk on mobile phones and the potential for Kind to capitalise on providing a solution may seem risky but they are could make a real statement, leading the way and would be shaping the public opinion.
Kind’s analysis of target market has demonstrated that are a few areas demographically that hold value. These are the change in age structure with Baby Boomer demands on a solution for mobility and coordination issues, Gen X parents demanding to feel safer by being connected to their children, but notably highly influence in their purchasing decisions by the status and aesthetic tweens and finally the youth groups demanding to be socially networked via technology.
Economic trends are not of great concern on these target markets as the need to communicate using mobile phones is demonstrating continued strong growth.
The predicted trend towards the ‘Earth Decade’ being the main worldwide issue provides the greatest opportunity for Kind. Their marketing-mix, product range and company values are well positioned to maximise the benefits associated with this trend.
Kind is in an industry that is at the forefront of technological advances and must pay close attention to ensure that they maintain connection meaning they may have to restrict their product line to only the most popular makes and models.
Political and cultural trends on the health risks associated with mobile phones are a concern to the target market. However, the consumers appear to be remaining ignorant. This could be an opportunity for Kind, but the risks associated with this should be carefully researched before taking any action.
The long-run trend towards an appreciation of nature and products being used to express ones self is primed for the products that Kind produces. Further supported by the secondary belief that people have to look good while they communicate using their phone is an almost perfect market for Kind’s products. The adaptability of Kind’s products and organisation can easily lend itself to different subcultures and any such changes within them.
In summary, Kind’s value proposition, to provide a range of products that offer their customers socially responsible fun, feelings and functionality by being a customer-centred company, has a large potential market with what appears to be matched by an actual market. The key is to translate this into demand.
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