ENVIRONMENTAL ANALYSIS

							ENVIRONMENTAL ANALYSIS

   THE KEY TO UNCOVERING THE
   FORCES BEHIND THE BRAND
    Macro and Micro environment
   Micro environment = Internal environment
       Dictates your ability to compete
   Macro environment = External
    Environment
       Dictates how good the industry is
Micro and Macro
    THE EXTERNAL ENVIRONMENT
 External environment are factors that
  surrounds and affects the brand but the
  brand does not have a choice but to adopt
  to the forces and maximize its effects
 Ability to adjust External factors dictates
  the success of the company
 Reading the signals properly can provide
  the brand manager with winning insights
  on which strategic route to take
    Example:
 What would the
  brand manager do
  if Barbie dolls were
  to be sold in the
  Middle East?
 Barbie is too
  shapely for the
  conservative
  Arabians!!!
Tough right? One more…..

               How would you market
                Pringles in a 3rd world
                country where they can
                hardly afford to buy
                rice and food?
    IT SEEMS THAT ENVIRONMENTAL
    FACTORS HAS AFFECTED A LOT OF
    BRANDS

 DON’T MISREAD THE ENVIRONMENTAL
  SIGNALS
 IT CAN GIVE LONG TERM PROBLEMS
  WITH NO APPARENT SOLUTIONS
 SOME PROVEN DISASTERS
    COLGATE DARKEE
 Logo is a dark man
  with a white smile.
 And was sold in South
  Africa
    COKE 7X FORMULA ???
 Coke changed their
  formula in the mid 80s
  because of the mounting
  pressure from the Pepsi
  challenge
 WRONG
 COKE WAS NOT ABOUT
  TASTE BUT RATHER
  ABOUT EMOTIONAL
  ATTACHMENTS
ALL OF THESE CAME WITH THE
DISTINCT NON-OBSERVANCE OF
CRITICAL ENVIRONMENTAL
FACTORS

   SO WHAT ARE THESE AND HOW
   DO WE MEASURE THEM?
    Internal Analysis
   Management
       Skills to manage the business
   Marketing
       Ability of the company to compete in the brand
        management arena
   Financial
       Ability of the company to spend for market share
   Distribution
       Channel penetration
 Brand Equity
 Logistics
    External Analysis
   Demographic
       Profile of the market / Market Structure
   Economic
       Propensity of the target market to buy your brand
        against competition and substitutes
 Natural
 Technological
 Political Legal
 Socio Cultural
 COMPETITIVE
 KEY SUCCESS FACTORS
    THE EXTERNAL
    ENVIRONMENTAL FACTORS
 DEMOGRAPHIC
 SOCIO-CULTURAL
 ECONOMIC
 POLITICAL
 TECHNOLOGICAL
 NATURAL
LETS TAKE A PEEK AT OUR
ENVIRONMENT FIRST


THE PHILIPPINES
    BASIC FACTS
 86 million people in estimated population
 Growth rate is at 1.9% per annum
 Literacy rate 94%
       GMA literacy rate 99%
   English literacy 73%
       GMA English Literacy 76%
   Gender Split
       50.2% male and 49.8% female
    BASIC FACTS
   Basic age split
       Below 15 years 36%
       15 to 24 = 19%
       25 to 34 = 16%
       35 to 44 = 12%
       45 and above = 17%
   Socio economic class
       AB segment = 3% (A=100,000 and above / B = 50,000)
       C = 22% (C1 = 30k to 50k / C2= 15k to 30k)
       D = 39% (8k to 15k)
       E = 36% (less than 8k)
    BASIC FACTS
   GMA socio economic classification
       A/B = 10%
       C = 37%
       D = 41%
       E = 12%
    HOW WE SPEND
 Food = 44%
 Housing = 15.4%
 Transportation and communication = 5.6%
 Fuel, Light and Water = 5.3%
 Personal Care and effects = 3.3%
 Clothing and footwear = 3.2%
 Education = 3.7%
 Household Operations = 2.7%
    Employment
 Employment rate 90.4% (1998)
 Underemployment = 23.7%
 Today the figures are worse
So… whats the take-out on the
Philippines?
    DEMOGRAPHIC
 POPULATION COMPOSITION OF THE COVERED
  AREA
 GROWTH RATES
 GENDER
 AGE
 OCCUPATION
 CIVIL STATUS
 EDUCATION
 ETC
2005 Population Profile

Total        Male         Female
85,236,913   42,874,766   42,362,147
      ECONOMY
   Dictates the viability,
    affordability of the consumer set
    to the desired brand target
    focus
   Will the consumers continue to
    buy your brand depending on
    category nature
   How much can the economy
    spend on your product / service
   FOCUS ON SPENDING
    ALLOCATION AND SPENDING
    PATTERN
   INTEREST RATES
   INFLATION
                                                               Perc
                                                                ent
                                                                 Inc
                                                               reas
                    Philippines    2003          2000           e
                                                                (De
                                                               crea
                                                               se)


Total Income                       2,437,24       2,187,2
                                                                11.4
(in P1,000)                           9,601        50,217

Total Expenditure                 2,038,465      1,791,13
                                                                13.8
(in P1,000)                            ,969         2,882

Total Saving                       398,783,632   396,117,335     0.7
(in P1,000)
Average Income
                                      147,888       145,121      1.9



Average Expenditure                   123,690       118,839      4.1


Average Saving                         24,198        26,282    (7.9)
        Ice Cream Consumption
Country         Production         Rank   Consumption               Rank
                (M hecto liters)          (per capita, in liters)
United States   61.3               1      22.5                      2
China           23.6               2      1.8                       12
Canada          5.4                3      17.8                      3
Italy           4.6                4      8.2                       9
Australia       3.3                5      17.8                      4
France          3.2                6      5.4                       10
Germany         3.1                7      3.8                       11
Sweden          1.3                8      14.2                      6
Switzerland     1.0                9      14.4                      5
New Zealand     0.9                10     26.3                      1
Finland         0.7                11     13.9                      7
Denmark         0.5                12     9.2                       8
Ice Cream Consumption per
region
    WE are officially a Noodle
    Country
   Instant noodles have become a quick fix
    band aid solution for consumers

   5.00 per pack with huge extenders has
    made the product the most sought after
    “tawid gutom” meal

   Brought about by poor economy
    SPAM Jammed?

   At almost Php100?
   Economy takes its toll
   Pinoys cannot afford
   The price discriminates the market

   Quality difference no longer a factor to price….
    Pinoys did not see value in the product
   Before SPAM already reached upper C, now
    Upper B market is the lowest market segment
    that they reach
    In times like these
   Economic downturn
       Lower purchase cost with all measures
       Give valued solutions – help your customer
        augment the difficulty
   Economic upswing
       Offer premium brands
       Higher consumption ideas


   Ride with the tide
    Always look for leading
    indicators
   Car sales
   Mall traffic
   Premium brand movement
   Real estate
   OFW remmittance

   NEUTRAL – inflation

   ILLUSIONS
       Exchange Rate
       Stock exchange
    Micro indicators
 Harvest in specific areas
 Mining
 Agriculture
 Fishery


   Seasonal spending – TOWN FIESTAS
    What matters
 Not the level of income
 But the level of disposable income.


   Higher disposable income should not be
    diverted to savings… if not the economy
    takes a standstill

   To help the economy… you have to spend
    Socio-cultural
   Basic way of doing things
   The basic beliefs, traditions,
    customs of your market
   Does it run in congruence with
    your product offering and brand
    personality
   Brand associations are critical
    in managing the socio cultural
    environment
    101 ways to know a PINOY
 1. You point with your lips.
 2.    You eat using hands and you have it down to
  a technique.
 3.    Your other piece of luggage is a balikbayan
  box.
 4.    You nod upwards to greet someone.
 5.    You put your foot up on your chair and rest
  your elbow on your knee while eating.
    101 ways to know a PINOY
 1. You think that half-hatched duck eggs are a
  delicacy.
 2.    You have to kiss your relative on the cheek as
  soon as you enter the room.
 3.    You're standing next eight big boxes at the
  airport.
 4.    You collect items from hotels or restaurants
  "for souvenir."
 5.    You smile for no reason.

    101 ways to know a PINOY
 1. You flirt by having a foolish grin in your face
  while raising your eyebrows repeatedly.
 2.     You go to a department store and try to
  bargain the prices.
 3.     You use an umbrella for shade on hot summer
  days.
 4.     You scratch your head when you don't know
  the answer.
 5.     You never eat the last morsel of food on the
  table.
 101 WAYS TO KNOW A PINOY

1. You like bowling.
2. You know how to play pusoy and mah-
jong.
3. You find dried up morsels of rice stuck on
your shirt.
4. You prefer to sit in the shade instead of
basking in the sun.
5. You add an unwarranted "H" to your
name, i.e. "Jhun," Bhoy," "Rhon."
   101 WAYS TO KNOW A PINOY
1. You put hands together in front of you as if
to make a path and say "excuse, excuse" when
you pass in between people or in front of the TV.
2. Your middle name is your mothers maiden
name.
3. You like everything imported or "state-side."
4. You check the labels on clothes to see where
it was made before buying.
5. You hang your clothes out to dry.
  101 WAYS TO KNOW A PINOY
1.     You are perfectly comfortable in a
squatting position with your elbows resting on
your knees.
2. You consistently arrive 30 minutes late for
all events.
3. You always offer food to all your visitors.
4. You say "comfort room" instead of
"bathroom."
5. You say "for take out" instead of "to go"
101 WAYS TO KNOW A PINOY

1. You say "open" or "close" the light.
2. You ask for a "pentel-pen" or a "ball-pen"
instead of just "pen."
3. You asked for "Colgate" instead of
"toothpaste."
4. You refer to the refrigerator as the "ref" or
"pridyider."
5. You say "kodakan" instead of take a picture.
  101 WAYS TO KNOW A PINOY

1. You order a McDonald's instead of "hamburger"
(pronounced ham-boor-jer)
2. You say "Ha" instead of "What."
3. You say "Hoy" get someone attention.
4. You answer when someone yells "Hoy."
5. You turn around when someone says "Psst"
   101 WAYS TO KNOW A PINOY
1. You say "Cutex" instead of "nail polish."
2. You say "he" when you mean "she" and vice
versa.
3. You say "array" instead of "ouch."
4. Your sneeze sounds like "ahh-ching" instead
of "ahh-choo."
5. You prefer to make acronyms for phrases such
as "OA: for over acting or "TNT" for, well, you
know.
    101 WAYS TO KNOW A PINOY
1. You say "air con" instead of "a/c" or air
conditioner.
2. You say "brown-out" instead of "black-out."
3. You use a "walis ting-ting" or "walis tambo" as
opposed to a conventional broom.
4. You use a "Weapons of Moroland" shield
hanging in the living room wall.
5. You have a portrait of "The Last Supper"
hanging in your dining room.
 101 WAYS TO KNOW A PINOY

1. You own a karaoke system.
2. You own a piano that no one ever
plays.
3. You have a tabo in the bathroom.
4. Your house has too many
burloloys.
5. You have two to three pairs of
tsinelas at your doorstep
  101 WAYS TO KNOW A PINOY

1. Your house has an ornate wrought iron
gate in front of it.
2. You have a rose garden.
3. You have a shrine of the "Santo Niño" in
your living room.
4. You have a "barrel man" (you pull up the
barrel and you see something that looks
familiar. Schwing...)
 5. You cover the living room furniture with
bedsheets
  101 WAYS TO KNOW A PINOY

1. Your lamp shades still have the plastic
cover on them.
2. You have plastic runners to cover the
carpets in your house.
3. You refer to your VCR as a "beytamax."
4. You have a rice dispenser.
5. You own a turbo boiler.
  101 WAYS TO KNOW A PINOY
1. You own one of those fiber optic flower
lamps.
2. You own a lamp with oil that drips down the
strings.
3. You have a giant wooden fork and spoon
hanging somewhere in the dining room.
4. You have a giant wooden tinikling dancer
on the wall.
5. You have capiz shells chandeliers, lamps,
or placemats
    POLITICAL ENVIRONMENT
   Investment confidence
   Investment = Projected
    Returns
   Projected returns can be
    realized using fixed and
    stable political scenarios
   Extreme political situations
       Kidnappings
       Coup de etat
       Insurgency
       Political uncertainty
   Poor political situation = no
    foreign investment = no jobs
    = poor economy
    China Crisis?
   Hostile takeover of all
    private companies

   The Communist Party
    running the whole country

   Emergence of classless
    society
    POLITICAL ENVIRONMENT
   Bottomline: Did the
    consumer confidence
    increase or decrease?

   Increase means higher
    spending

   Decrease means
    tendency to save
    Legal Environment
   Laws that are passed that would affect a business

   Anti Terror Bill
   Anti Smoking Law
   Cheap Medicines Act
   E Vat Implementation
   EPIRA Law
   Increase in Minimum Wage
TECHNOLOGICAL
ENVIRONMENT



            Technological
             breakthroughs that
             ends one brand’s
             foothold on a evolving
             category
Lets take a look at the past


                   Categories can be
                   replaced due to a
                   technological
                   shift
TiVO to change the ad industry
    What TiVo can do…
 Record shows without commercials
 Record multiple shows
 Data transfer
 Internet capable
Monitors and gets signal from trusted source

Allow minimal deviations
With the TiVo… what will happen
     to advertising?
    OTHER
   NATURAL
       Topography
       Weather
            El nino
            La nina
       Land Structure
       Seawater or desert?
    Competitive Environment
 Price Cuts?
 Gentile?


   In what mode do competitors compete
    against one another?
    Pharmaceuticals
   Very gentile
   They know that there would be enough room for
    everyone to make a profit
   No price cuts
   No expensive marketing gimmicks

   But this has started to change
   Generics law
   Cheap Medicine Act