In the UK, “90 per cent of people between the ages of 15 and 34 owned or used a mobile phone in February 2003, and 52 per cent aged 11 to 14” (5). To meet the different needs and desires of age groups and genders, Sony Ericsson has an enormous variety of phones to suit every individual (17 different models on the market); from the simple and easy to use T100, to the sophisticated and revolutionary hi-tech P900. The T610 with its sleek styling and integrated camera has unquestionably been a successful phone, and demand is outstripping supply.
Sony Ericsson T610
It has absolutely everything you would want in a mobile phone, and its price is very reasonable (free on monthly tariffs). Katsumi Ihara, president of Sony Ericsson said "The DNA of Sony Ericsson is very product-focused. A product with the Sony Ericsson brand should have a 'wow' factor. It has to be something very cool, stylish, and very innovative" (6)
Technological environment
Changes in technology are changing the way businesses operate; technological factors are vital for competitive advantage, and are a major driver for change and efficiency. As consumers, we tend to take the manufacturing processes of products for granted, so long as they meet our expectations. However technology has a profound effect on consumer products, and indeed in all areas of marketing. R&D on technological advances (although usually very costly and risky) can affect the “materials, components and products, the processes by which products are made, administration and distribution systems, product marketing and the interface between the organisation and the consumer” (7).
Technological advances over the past decade or so have changed the old ‘brick’ style phones to ‘slick and slim’ ones. The P900, probably the most sophisticated and hi-tech mobile on the market, has definitely set the standards for other producers to follow. It has over 65,000 colours, is able to take still pictures and video, can send and receive email via WAP, can be used as a PDA, has Bluetooth and infrared capabilities and a built in MP3 player with 32MB of memory. Sony Ericsson has also just released its first 3G mobile, the Z1010 which is a dual UMTS/GSM-GPRS phone (8). Also nowadays, changing the front and back cover and downloading polyphonic ringtones has become commonplace, especially for teenagers. In terms of marketing, the media has been very effective for the T610, through television and newspaper adverts, billboards and online marketing (websites and banner ads). You can even purchase your mobile phone from online with the accessories that go with it, and there is a 24 hour online support system, with FAQs etc.
Economic/competitive environment
This covers both macro and micro-economic variables that have an affect not only on competition within organisations, but also on the ability of a firm to invest in stocks and new products, as well as the propensity of consumers to buy the finished goods. All businesses are affected by economic factors, both nationally and globally, however these economic factors are largely outside the control of the individual firm. Macroeconomic influences generated by government policies include: direct and indirect taxation, government spending, interest rates, exchange rates and international trading blocs. Consumer confidence and behaviour is affected when an economy is in a boom, recession or recovery.
The microeconomic environment concerns market structures, “because these will influence what sort of competition is up against, what scope the organisation has to manipulate the 4Ps and how broad an impact the organisation’s marketing activities could have on the market as a whole” (9). Main market structures include: monopoly (where a firm controls 25 % or more of a market), oligopoly (where several firms dominate a market), monopolistic competition (where many unique producers each meet a market segment’s needs) and perfect competition (where there are a large range of producers, of which none are big enough to influence the market).
The mobile phone industry is clearly an oligopoly, where several firms account for a large share of the market, and even though Nokia dominates the market (around 55 % market share), Sony Ericsson has increased from 4 % in September 2002 to 6.6 % the following year and in fact reported its first profits in the third quarter of 2003 since being created in October 2001; "the company still has ambitions to capture 10% of the market" (10). VAT in the UK is one of the lowest in Western Europe at 17.5%, and current interest rates of 4% (expected to rise, therefore cost of taking out a mortgage will increase) show that the UK economy is fairly healthy and in a state of recovery.
Political/legal environment
Political and legal factors can have a direct impact on the way businesses operate. Governments, both national and European, local authorities and other regulatory bodies have significant influence on the character of the general business environment through their policies and resultant legislation. Firms have an obligation to conform to the laws of the societies within which they do business (e.g. safety laws, pollution controls of manufacturing processes, copyright and patents for innovation protection), and this is in addition to the general laws of contract and commerce. Authoritative bodies include: national and local governments, the EU, regulatory bodies (of which some rules and regulations are voluntary) and influences on the political and legal environment (particularly by the pressure of public opinion, the media and pressure groups). In short, “the greater the understanding of the EU and national political processes, the more an organisation can move with change rather than risk being left behind” (11).
With the ever ongoing debate that mobile phones are harmful and that their radiation can cause cancer in human beings, regulatory bodies such as Ofcom impose the government’s law that a mobile “phone's maximum SAR (Specific Absorption Rate) level absorbed by the body must be less than 1.6W/kg (watts per kilogram)” (12). By conforming to these UK and EU laws, all Sony Ericsson handsets e.g. T610 at 1.21W/kg, are below the maximum SAR level. On 1 December 2003, the government imposed a ban on all drivers using their mobiles whilst driving and insisted that all drivers must have a phone cradle if they wish to use their phone; sales of cradles and hands free kits have rocketed ever since.
Over the past few pages, I have described and explained the key elements of the macro-external environment (STEP), and have tried to show and relate some of those factors to my chosen UK company, Sony Ericsson. Through my findings, it is clear that although these external factors are beyond the control of a firm, each and every aspect is important in its own right and in fact, there is much interdependence between them e.g. health concerns of using mobile phones brought about to the public’s attention by consumerism forced the government to implement legislation that would curb mobile phone radiation levels. Concerning Sony Ericsson, I think the socio-cultural and technological environments are the most important, for consumer expectations and attitudes and fashion/fads are forever changing. Also, technology is advancing at such a phenomenal rate (new technological developments every 6 months) that the organisation has to keep pace with change and even anticipate it, in order to survive!
Bibliography
- Brassington and Pettitt, 2003, Principles of Marketing, Prentice Hall, Third Edition, p.1105
- http://www.marketingteacher.com/Lessons/lesson_marketing_environment.htm
- Brassington and Pettitt, 2003, Principles of Marketing, Prentice Hall, Third Edition, p.47
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Paul Durman, Jan 18 2004, Sony Ericsson dials winning numbers with T610 phone, Sunday Times, Business, p.7
- Brassington and Pettitt, 2003, Principles of Marketing, Prentice Hall, Third Edition, p.67
- http://www.gsmarena.com/
- Brassington and Pettitt, 2003, Principles of Marketing, Prentice Hall, Third Edition, p.72
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Paul Durman, Jan 18 2004, Sony Ericsson dials winning numbers with T610 phone, Sunday Times, Business, p.7
- Brassington and Pettitt, 2003, Principles of Marketing, Prentice Hall, Third Edition, p.85
Other references
- Lancaster, Massingham and Ashford, 2002, Essentials of Marketting, McGraw-Hill, Fourth Edition
- Kotler and Armstrong, 2001, Principles of Marketing, Prentice Hall, Ninth Edition