2.1.2 BROWN GOODS RETAILING
The Brown goods can be describe as electrical goods bought for home entertainment. It included TV, VCR, HI-FI (Personal, potable or separates), Camcorder, Satellite system etc. The brown goods market worth $2.86bn in 1995. An increase of 10-11% in volume between 1993-95. The growth cycle of the brown goods markets are similar to that of the white goods as both are parts of home appliances & entertainment . Both are dependence on economic factor especially more so with camcorder & satellite perceive as luxuries. As the same as white goods, brown goods retail distribution is dominated by electrical chains like Curry & Comet. However there are still a strong network of independent specialists which focus on Customers services, expert advice & wider range of products i.e.: Hi-Fi separates. The characteristics of the brown goods markets are its price discounting & products innovation(technology). Nevertheless, the competition is fierce.
From above paragraphs, the white & brown goods market experience up & down over the half decade. Although, the dominant players are the retailing chains but the overall market is saturated and competition is becoming increasingly explosive. Hence, the environment in marketing play a vital role in its future growth. Hence , now I will analyze the Microenvironment of white & brown goods retailing.
2.2 MACROENVORONMENTS
As decried above, Microenvironment is the external and uncontrollable elements outside the company. Although, there would have different emphasis on the different environmental factors, but it is possible to identify a board framework to help to define a company marketing strategy. This is refer to PESTEL (Political, Economic, Social, Technology, Environment(nature) & Legal) environments. These elements are likely to be interrelated across the six quadrants. I will now discuss the 6 elements in turn.
MACROENVIRONMENT
ECONOMIC
POLITICS SOCIAL
COMPANY
TECHNOLOGY ENVIRONMENT LEGAL
2.2.1 POLITICAL FACTOR
This element comprises the controls & checks instituted by central and local government, government agencies and quasi-official bodies. There would also be influence from the international politic/policies. If this government decided to join EMS (single currency) then the government would shape up it policies to maintain interest rate & inflation rate in order to accomplish along with other member’s state. Consumerist/ industrial or environmental pressure group are the commonest to lobbying for some changes. So when scientific/ international pressure, government has to slaughter beef & ban beef on bone. Government agencies exist with statutory and discretionary power to control the business community in respect of a variety of issues from environmental protection and planning restrictions to commercial disclosure and public standards of decency. In addition, Professional body has long established strict code of conduct drawn up in support of control over behavior of its members i.e.: customer protocol, service level etc.
Hence, Marketer need to monitor how public interest are likely to develop into a political issues, subsequently influence marketing practice. The foreseeable future is bright for recovery & economic growth but future fluctuation in the economy might lead to political involvement in rise in interest rate. Moreover, the effect of compulsory energy labeling and withdrawal of appliances below the C rating after 1999 would encourage manufacture to built more efficient machine but at a higher price, if this not absorbed by manufacturer would pass on to the customer & may affect the growth in overall market volume. Further, there has been always the lobbying of abolishing of RRC(Retailer recommended price),where by the consumer group found little variance between the price of white goods on the market. This is followed by the investigation of MMC (Mergers and Monopolies Commissions) into price fixing in the white goods market in late 1996. This is likely to put a focus on pricing & margin on the white goods market. Since the deregulation of both industries , more electric appliance manufacturers entered in to gas appliances manufacturers market & vice versa. This in turn would allow general public to have more choices & a variance of the dual-fuel appliances, but also create a more competitive market place.
Moreover, since the General Election, the Labour party has promised the (one penny) income tax system couple with promises of long interest rate, low inflation & low unemployment. The most significant action is within a few months of the power transition , the government has already shift the power to adjust interest rate to The Bank of England. This would reflect the interest rate according to the economic market & not the political policy.
On the other hand, Brown goods markets are similar to the white goods market, they also have the problem of RRP. Moreover the predominant manufacturers are Japanese company, hence if the government changes any taxation policy, interest rate or its monetary police then it will have a effect on the goods imported from far east countries which then would affect the retailing markets.
2.2.2 ECONOMICAL ELEMENT.
The economy is a total system within which material and energy inputs are processed and converted to a finished goods and services for distribution and final use. All organizations are part of the system and nowadays they incorporate this economic data to form part of their MIS(Marketing information system).The reason being that the current events and trends in the economy will affect the overall level of demand for goods and services. It will also affect the aggregates like the stock level, prices, supplies & distribution. The possible economic developments of direct interest of marketers generally : 1)Recession –Downturn in economic activity of variable intensity, which might be a fall in GDP, Productivity, Disposable income etc.would make the market condition thin and more competitive. 2) Inflation – Rising price associated with buoyant conditions. Demand would fall since both White & Brown goods are not neccessity of life. The overall White & Brown goods market is affected by the general state of the economy and the levels of personal disposable income.
In 1997-98, consumer spending is forecast to grow at average of 4.1% and 1.8% respectively.
2.2.3 SOCIOLOLOGICAL ELEMENT.
This covered society-wide influences and changes that can affect the marketing environment. They are divided into two board areas :1)Demographic factors & 2) Cultural factors.
Demographic factor
These concern the population aggregates & patterns within a society for examples: 1) Population size, 2) Growth trends, 3) Changing family structure, 4) Rising in diversity (EU), 5) Rising number of educated people. This is important because it involve people & people make up markets. Furthermore, they are the building block of the pattern of lifestyle within a society.
UK has experienced in rent years a slowing down in Birth-rate, after a period oif high birth statistics in50 & 60s. compound the advance of medicine enabling people to live longer. Thus the country has more ‘grey’ people than teenagers, hence there are plenty of old people pension & with abundant of money to purchase. This is good for retailing market of white & brown goods. On the other hand this would lead to a decline of teens (between 18-25), which might in turn reduce the demand of Brown goods ie: Midi/mini hifi & potable audio system.
In UK we experienced a major changes in household & family size and make-up. There are two main trend. 1) More women are coming out to work & social changes has lead to late marriage & career couples with no children are most common. Instead , they would have abundant of money & will in turn spend more on white & brown goods.
2) There is a glowing numbers of single parent family which in turn would increase the household numbers. These household changes have had a major effect on the pattern of demand white & brown goods.
Since UK join the EC/EU, it ensure freedom of movement of goods between the continent & UK. This open a new channel for the customers—more choice , great ranges and more competitive prices. All competitor around EC would be able to compete on equal ground. Moreover, with the increase of the educated people would in turn increase the demand for quality products & competitive price.
Cultural factors
This is a complex matter that reflect society’s beliefs and values, perception, preferences and behavioural norms. It is all embracing & multidimentional. In society at large, culture can be distinguish as the core beliefs and values that people hold. They can be product of family upbringing, education system, national history, religion, aesthetic development etc. Environmental awareness is an interesting reflection of how society-wide concerns have delivered a strong message to the government and business at large.
2.2.4 TECHNOLOGICAL ELEMENT.
Technology is a touchstone of economic progress, a leading source of competitive advantage commercially and an indispensable part of everyday lifestyle. Technology advance needs to be seen as a force for ‘creative destruction’ in that the development of new products has an elimination effect on the existing products.one good examples would be the creation of Xerography photocopying eliminate the carbon paper markets. While others innovation in the fields of Information Technology, Biotechnology, Fibre-Optics etc further quantum leaped in the overall market development. The development of CAD & CAM, enable Intricate design more quickly and manufactured them more cost effectively. So Those company which did not invest in the technology would loss out or perhaps been keep out of the market place.
Initially, Marketing needs will be identified by research among customers. This inturn should lead to a more market/customers oriented rather then product/technologist oriented research. Then, the company should devote/commit themselves to a high spending R&D.
2.2.5 ENVIRONMENTAL ELEMENT.
The environmental element concern the natureal resources that are needed as inputs by marketers or that are affected by marketing activities. People is more & more aware of the important of protecting our mother nature. As not only we are using/ enjoying the nature but billion of others species & so will our descendents. Concern continues to mount about the depletion of the ozone layer and the resulting ‘greenhouse effect’. The emerge a lot of Green Party, which lobbying to government & industrial to stop polluting the environments.
These are worries of pollution:
- Shortage of raw materials
- Increased cost of energy
- Increase pollution
- Lack of natural resource management
As mention above , with the increase cost of energy, we see the introduction of compulsory labelling of energy efficiency on eventually all Whites’ goods. This in effect would rise the average price of all domestic appliances because more expensive to manufacture.
Althogh all new refrigerators and freezers have been CFC free, there have been concern and worry how really safe is the new replacement gas. Moreover the government has laid out targets to limit emission of HFC to 1990 level by millenium. What does this imply ? is the government trying to tell us that HFC is not very green as well.
The issues of Recyclable materials are going to be an increasingly important issues in the near future. Car manufacturer already use this strategy to promote their new car and succeed. It is likely that the white & brow goods market is going to follow on the same road.
Moreover with outbreak of E.coli in 1996, as well as other food hygiene, would put pressure on manufacture of white goods market to develop new frige with better thermostate and perhaps a microchips that will be able to monitor & control the tempreture itself.
2.2.6 LEGAL ELEMENT.
This is composed of Laws and Government agencies which exert some sort of influence and constraint on organization. The legislation has been affecting business has increased steadily over the past two decades. The most important legislation are 1) RTA 1976 and FTA 1973 which is designed to prevent unfair competition which established the Office Fair Trading and Monopolies and Mergers Commission. And as a member state , UK is also subject to Art.85-86 of Treaty of Rome concerning practices hindering competition and addresses abuses of a dominant market. 2) TDA1968, CCA1974, SOGA 1979 & UCTA1977 is intended to ensure the right of the consumers is protected with regard to the originality, quality & durability of goods. It is important therefore the marketer not only need to know the current legislative framework, but also of the ways in which it is likely to develop and how.
In short, companies should seek to demonstrate good corporate citizenship by upholding the letter & spirit of the law and generally behaving in a responsible manner.
In addition, United Kingdom is a member state of the European Union, hence it has to allow the enforcement of European legislation that pass through the European Parliament. It will prevail over the domestic English law. Moreover, if a case is appeal over European Court and judgement has been given, then English court has to upheld it.
Another matter is that UK has sign up to the EMU- Social Chapter & the essence of that is the minimum working time & wages, this in turn would affect the retail market. The increase of wages might increase the production cost which then might pass to consumers.
On the other hand, a new legislation has been pass recently that protect the right of general public consumers in that 1)if the goods purchase got problems after one year of purchase then the dealer would replace it & 2)if it broke down within two years of purchase then it would be repair under warranty. These would not affect the retailer directly because all the warrantee would be cover by the manufacturer. However, the would affect the retailer after sale warranty which bring in million of profit to the retailer. Which would affect the future operation of the retailers.
BIBLIOGRAPHY.
- R.Wilson & C.Gilligan Stategic Marketing Management
2nd Ed.(1997) Butterworth
- P.Kotler Marketing Management & Control
1997 Prentice hall
- G.Lancaster & L.Massingham Essentials of Marketing
1997 Mc.Graw-Hill
- Adock , Bradfield Marketing (Principle & Practice)
Halborg, Ross 2ed. 1995 Pitman Pub.
- D.Cook & D.Walters Retail Marketing
1st ed. 1991 Prentice Hall
- Keynotes ‘Household Appliances-White goods’ (1997)
- Keynotes ‘Household Appliances- Brown goods’
- Keynotes ‘Retailing in the UK’
- Mintel ‘Retailing in Electrical goods’
- Journal of Marketing management.
- Marketing Week
- Http//www.
Oxford English Dictionary.(1991)
Philip Kotler, marketing books (1991), refer to the Bibliograpky.
British Charter Institute of Marketing (CIM)
Kotler identifies the impotant in this external role the need for marketers to develop an ‘outside-in’ perspective.
Ie: pricing, product management & promotion
ie: Government policies, social pressure, Technology advances ,Recession etc.
Refer to the Frog tale in V.Charlotte, ‘Boiled Frog Syndrome’, Managemant Today, March 1989
quated from Retail Marketing books refer in bibliography.
Sources from Keynotes (white goods)(1997) & Mintel refered in bibliography
There is a trend then that consumers change their appliances not because tear & worn but for some new model & design reason.
Also sold via Department stores ie: John Lewis and the catalogue stores ie: Argos or mail orders. But the latter mostly sell small appliances as most white goods need a big floodplace to display.
Sometime refer to ‘Boy’s toy’
Figure quate from Keynotes (Brown goods)(1996)
refer back to page 1 (marketing environment)
ie: Changes in economic factors like investment may affect technological issues such as innovation.
for energy consumption, water consumption and performance.
An EU scheme was set up to label all appliances with ratings starting in 1995- 99
European Commission has imposed import dutu on colour TV sets from far east countries.
Quated in Adcock, Bradfield, Halborg & Ross book on Marketing refer in Bibliography.
The ‘Baby Boom’ in the post war periods.
Those of middle age between 35-54 age group.
A commentary on the commercial realities of technology by American economist, Schumpeter. This is expounded in the ‘five forces’ model of Michael Porter.
Computer aided design & Computer aided manufacturing.
Some pharmaceutical multinationals devote 25% of turnover on R&D.
Like Green Peace & Friends of the Earth etc
To label all appliances with ratings for energy consumption, water consumption and performance.
Instead they are using HFC(hydroflurocarbons)
Restrictive Trade Practices Act 1976 and Fair Trading Act 1973
the is the case of Curry, profitable ‘MASTERCARE’ plan.
