Changes in the marketing environment are a source of opportunities and threats to be managed. The process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends is called environmental scanning .
LO 3-1Explain how environmental scanning provides information about social, economic, technological, competitive, and regulatory forces.
Tracking Environmental Trends
Environmental trends typically arise from five sources: social, economic, technological, competitive, and regulatory forces. As shown in and described later in this chapter, these forces affect the marketing activities of a firm in numerous ways. To illustrate how environmental scanning is used, consider the following trends:
Coffee industry marketers have observed that the percentage of adults who drink coffee declined from 75 percent in 1962 to 49 percent in 2004, and then increased to 64 percent in 2012. The percentage of adults who drink coffee prepared away from home, however, has declined from 31 percent in 2008 to 24 percent today. Age-specific analysis indicates that the percentage of 18- to 24-year-olds that drink coffee rose from 16 percent in 2003 to 50 percent in 2012.
What types of businesses are likely to be influenced by these trends? What future would you predict for coffee?
You may have concluded that these changes in coffee consumption are likely to influence coffee manufacturers, coffee shops, and supermarkets. If so, you are correct. Due to the recent growth trend, manufacturers are offering new flavors and seasonal blends, coffee shops such as Starbucks are automating to prepare drinks faster and make purchases more convenient, and supermarkets are adding boutiques and gourmet brands. The recent decline in away-from-home consumption has also led to changes. McDonald’s, for example, has recently started selling bags of ground coffee in some of its stores. Predicting the future requires assumptions about the number of years the trends will continue and their rate of increase or decline. Do you believe the recent growth in coffee consumption by the 18- to 24-year-old age group will continue?
Environmental forces affect the organization, as well as its suppliers and customers.
Environmental scanning also involves explaining trends. Why did coffee consumption decline for many years and then increase again recently? One explanation for the decline is that consumers switched from coffee to other beverages such as tea, soft drinks, juices, and bottled water. The increase may be the result of new coffee products distributed in coffee shops, supermarkets, and vending machines. The recent decline in away-from-home consumption may be the result of economic forces that cause consumers to reduce discretionary expenditures and also the growing use of single-cup brewing formats at home. Identifying and interpreting trends, such as the changes in coffee consumption, and developing explanations (such as those offered in this paragraph) are essential to successful environmental scanning.3
An Environmental Scan of Today’s Marketplace
What other trends might affect marketing in the future? A firm conducting an environmental scan of the marketplace might uncover key trends such as those listed for each of the five environmental forces.Although the list of trends in is far from complete, it reveals the breadth of an environmental scan—from the way consumers are changing how they use media, to the increasing impact of new technologies such as robots, to the growth of online privacy advocacy and regulation. These trends affect consumers and the organizations that serve them. Trends such as these are described in the following discussion of the five environmental forces.