MKT1MDP Fundamentals of Marketing Online Tutoring

Introduction

Macroenvironmental and consumer behavior analysis is a fundamental component of strategic planning. For existing and emerging business organizations, profitability and growth is strongly dependent on how effectively the businesses respond to the macroenvironment and consumer preferences. Macroenvironmental appraisal involves scanning the business functioning climate for potential changes in specific patterns and trends, forecasting future trends, and evaluating the impact of the current and future changes on the firm’s performance (Ginter & Duncan 1990, p. 92). For this report, the Functional Water (FW) industry in Australia is selected for macroenvironment and consumer behavior evaluation. Concurrently, the purpose of this report is to employ two real-life marketing examples, Coca Cola Amatil Limited (CCA) and Asahi Group Holdings Limited (Asahi), to investigate the macroenvironment and consumer behavior in Australia for the FW industry. A critical evaluation of these environments will follow the macroenvironment and consumer behavior analysis in light of key marketing theories. Recommendations on the viability of investing in the Australian FW industry will also be provided.

Macroenvironmental Analysis

CCA and Asahi are two of the major players in the Australian FW industry that have monitored and adjusted to the political, economic, social, technological, legal and environmental conditions in the country. The PESTLE analysis (Table 1 in the Appendices section) will help in analyzing the business climate and environment in Australia.

Political

Being a constitutional monarchy with British Royalty and the Prime Minister heading the democratic government, Australia has a stable and safe political environment for conducting businesses. According to the report published by MarketLine Industry Profiles (2019, p. 21), CCA and Asahi have faced stiff market competition from other brands such as Nestle and Coca-Cola that availed the favorable political conditions in the country and improved their 2018 market shares in the FW industry (Figure 1 in Appendices section).

Economic

As a key member of the Organization for Economic Cooperation and Development (OECD), the G20, Commonwealth of Nations, and the World Trade Organization, Australia has become an economic hub. Although the GDP growth rate is set to decline by 6.67% (Figure 2 in Appendices section) by the end of  2019-20 fiscal year (FY) due to recession and substantial financial losses incurred due to the COVID-19 pandemic, the growth rate is expected to climb to 6.11% in the 2020-21 FY (Statista 2020). The revenues generated from the Australian FW market amount to $445.6 million and are expected to grow by 3% in the period 2021-2026 (Yeoh 2020, p. 7)). Moreover, the profit increased by 1% in the period 2016-2021. Despite the market entry of imported beverages, CCA and Asahi have benefitted from the conducive economic environment and have gained market recognition in the last five years.

Social

As far as the quality of life, health, wealth and education is concerned, Australia is one of the ideal countries in the world, comprising of a relatively small yet multicultural population. With an increased focus towards education and sports, the country educates and nurtures young talent, which is a huge benefit to the business industries. According to the report published by MarketLine Industry Profiles (2019, p. 25-30), both CCA and Asahi have availed the availability of a talented and dynamic workforce in Australia to recruit key employees for various managerial roles.

Technological

Australia is renowned for adopting the latest technologies, especially in the business industry, to meet the growing demands of consumers. The FW industry in Australia has not faced any noticeable technological disruption over the last five years. The technological change in the FW industry has been moderate and is governed by the dynamic trends of the manufacturing sector (Yeoh 2020, p. 40). CCA’s Project Zero is a fitting example of enhancing business profitability as the company overhauled its production, improved stock accuracy and minimized loading times to attain operational efficiency, thereby maximizing its profits through technological changes.

Legal

Australia’s legal landscape ensures fair trading for consumers and businesses through compliance of fair yet strict trading laws, consumer laws and competition laws. In this regard, the Fair Work Act 2009 is the governing law that protects the rights of businesses and customers. Moreover, Modern Slavery Act 2018, Competition and Consumer Act 2010, and Food Standards Australia New Zealand Act 1991 are some of the prominent regulations through which strict adherence to beverage quality standards, protection for consumers from unfair business practices, and mitigation of risks associated with modern slavery are ensured (Yeoh 2020, p. 42). The on-going COVID-19 pandemic has also resulted in the imposition of strict operating conditions for businesses.

Environmental

Blessed with the natural beauty of beaches, forests and mountains, Australia’s increasing number of tourists and industrial growth has posed some environmental challenges. The country was severely affected by the 2019-20 bushfires as global warming as resulted in adverse climate change. Moreover, Australia is one of the driest lands continents in the world. Since plastic is a major constituent of oceanic and land pollution, the Australian FW industry has particularly been impacted by the use of non-biodegradable plastic bottles that have increased the packaging costs of business companies (Yeoh 2020, p. 29).

Moreover, the Five-Force and SWOT analyses (see Table 2 & Figure 3 in the Appendices section) also reveal key macroenvironmental findings for a potential entrant in Australia’s FW industry.

Consumer Behaviour Analysis

The Australian FW industry is governed by consumer preferences that encompass health-related benefits and sports drinks as the major drivers of industrial manufacturing and production. The increasing awareness amongst consumers regarding various health problems have driven the customer behavior and demands for functional and fermented beverages to boost immunity. Moreover, beverage products manufactured domestically have been marketed and broadly distributed to increase consumer awareness and improve the growth of domestic brands (Yeoh 2020, p. 9). Increased participation of consumers in sporting activities has also raised the demand for sports drinks. Energy drinks have caught the eye of time-poor consumers, such as students and younger consumers, which form a substantial part of the Australian education and sports industry. The COVID-19 pandemic has compelled beverage brands towards online marketing to sell their products, and this has enabled the customers to purchase these products while maintaining social distancing and lockdown measures (Yeoh 2020, p. 4). For the last five years, the demand for functional beverages has driven Australia’s FW industry and is expected to grow in the next five years. Due to aggressive advertising and marketing campaigns, consumer behavior can be relied upon to the extent of brand loyalty. Consumer behavior is also governed by different varieties and an innovative mix of flavors. Health-conscious consumers have also employed home equipment, such as juicers, to prepare their healthy drinks, and this behavior has posed problems to the beverage brands in Australia. Furthermore, environmentally friendly packaging has also captured the interests of consumers having environment-friendly preferences for packaged beverages (MarketLine Industry Profiles 2019, p. 15).

Critical Thinking

As far as Australia’s FW industry is concerned, segmentation, targeting and positioning is highly relevant due to the changing behavior and preferences of the consumers. Since customers are more careful about healthy lifestyles and environment-friendly products, these preferences have transformed into needs described in the theoretical concept of Maslow’s Hierarchy of Needs (Lester 2013, p. 15). Health is a basic necessity of life which is also influenced by the environment in which people live. Therefore, targeting consumers who are aware of health and environmental risks and positioning the businesses in regions where such people reside is crucial for a new entrant in Australia’s FW industry. Moreover, the Network Theory highlights the significance of the relationships the beverage brands can form by creating product segmentation (Mullins & Rhodes 2007, p. 1). For instance, energy drinks that contain caffeine can attract students who intend to study late at night or people who have to stay awake for night shifts. Similarly, sports drinks can become popular amongst people who prefer an active lifestyle that comprises of exercises, workouts and sports-related activities.

Targeting the customers’ needs corresponds to the Marketing Orientation Theory, which enunciates that the success of businesses depends on how well they can understand and fulfil the needs of customers than their rivals (Gheysari et al. 2012, p. 544). Furthermore, the Theory of Planned Behaviour can play a pivotal role in understanding how consumers think and behave (Hoppe, Vieira & Barcellos 2013, p. 71). This can help FW businesses in predicting how consumers would react to a new product, and it would ultimately help in diversifying the product segmentation. CCA and Asahi have dominated the FW market in Australia by segmenting their products and targeting each product towards its separate consumer base. These companies have also positioned their business locations strategically by employing aggressive advertising campaigns in urban regions. Therefore, it can be affirmed that segmentation, targeting and positioning are relevant to the FW industry in Australia.